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-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-03290

Name of Fund: BlackRock Variable Series Funds, Inc.

BlackRock Advantage Large Cap Core V.I. Fund (Formerly BlackRock Large Cap Core V.I. Fund)

BlackRock Advantage Large Cap Value V.I. Fund (Formerly BlackRock Large Cap Value V.I. Fund)

BlackRock Advantage U.S. Total Market V.I. Fund (Formerly BlackRock Value Opportunities V.I. Fund)

BlackRock Basic Value V.I. Fund

BlackRock Capital Appreciation V.I. Fund

BlackRock Equity Dividend V.I. Fund

BlackRock Global Allocation V.I. Fund

BlackRock Global Opportunities V.I. Fund

BlackRock Government Money Market V.I. Fund

BlackRock High Yield V.I. Fund

BlackRock International V.I. Fund

BlackRock iShares Alternative Strategies V.I. Fund

BlackRock iShares Dynamic Allocation V.I Fund

BlackRock iShares Dynamic Fixed Income V.I. Fund

BlackRock iShares Equity Appreciation V.I. Fund

BlackRock Large Cap Focus Growth V.I. Fund (Formerly BlackRock Large Cap Growth V.I. Fund)

BlackRock Managed Volatility V.I. Fund

BlackRock S&P 500 Index V.I. Fund

BlackRock Total Return V.I. Fund

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

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

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

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

Date of fiscal year end: 12/31/2017

Date of reporting period: 06/30/2017

Item 1 – Report to Stockholders

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

The Markets in Review

Dear Shareholder,

In the 12 months ended June 30, 2017, risk assets, such as stocks and high-yield bonds, delivered strong performance. These markets showed great resilience during a period with big surprises, including the aftermath of the U.K.’s vote to leave the European Union and the outcome of the U.S. presidential election, which brought only brief spikes in equity market volatility. However, interest rates rose, which worked against high-quality assets with more interest rate sensitivity. Aside from the shortest-term Treasury bills, most U.S. Treasuries posted negative returns, as rising energy prices, modest wage increases and steady job growth led to expectations of higher inflation and anticipation of interest rate increases by the U.S. Federal Reserve (the “Fed”).

The global reflationary theme — rising nominal growth, wages and inflation — was the dominant driver of asset returns during the period, outweighing significant political upheavals and economic uncertainty. Reflationary expectations accelerated after the U.S. election in November 2016 and continued into the beginning of 2017, stoked by expectations that the new administration’s policies would provide an extra boost to U.S. growth.

The Fed has responded to these positive developments by increasing interest rates three times in the last six months, setting expectations for additional interest rate increases and moving toward normalizing monetary policy. For its part, the European Central Bank also began to signal its intent to wind down asset purchases and begin the long move toward policy normalization, contingent upon further improvement in economic growth.

In recent months, growing skepticism about the near-term likelihood of significant U.S. tax reform and infrastructure spending has tempered enthusiasm around the reflation trade. Similarly, renewed concern about oversupply has weighed on energy prices. Nonetheless, financial markets — and to an extent the Fed — have adopted a “wait-and-see” approach to the economic data and potential fiscal stimulus. Although uncertainty has persisted, benign credit conditions, modest inflation and the outlook for economic growth have kept markets relatively tranquil.

In the fifth edition of our Global Investor Pulse Survey, we heard from 28,000 individuals across 18 countries, including more than 4,000 respondents from the United States. While retirement remains the single most important issue for American investors, only a third of respondents feel confident that they will have enough retirement income, and nearly 40% of respondents have yet to begin saving for retirement. We encourage you to talk with your financial advisor and visit blackrock.com for further insight about investing in today’s markets.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of June 30, 2017
	6-month			12-month
U.S. large cap equities (S&P 500® Index)		9.34	%		17.90	%
U.S. small cap equities (Russell 2000® Index)		4.99			24.60
International equities (MSCI Europe, Australasia, Far East Index)		13.81			20.27
Emerging market equities (MSCI Emerging Markets Index)		18.43			23.75
3-month Treasury bill (BofA Merrill Lynch 3-Month U.S. Treasury Bill Index)		0.31			0.49
U.S. Treasury securities (BofA Merrill Lynch 10-Year U.S. Treasury Index)		2.08			(5.58	)
U.S. investment grade bonds (Bloomberg Barclays U.S.Aggregate Bond Index)		2.27			(0.31	)
Tax-exempt municipal bonds (S&P Municipal Bond Index)		3.26			(0.28	)
U.S. high yield bonds (Bloomberg Barclays U.S. Corporate High Yield 2% IssuerCapped Index)		4.92			12.69
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

THIS PAGE NOT PART OF YOUR FUND REPORT 1

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Advantage Large Cap Core V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock Advantage Large Cap Core V.I. Fund

          Investment Objective

BlackRock Advantage Large Cap Core V.I. Fund’s (the “Fund”) investment objective is to seek high total investment return.

On March 27, 2017, the Fund’s Board approved a proposal to change the name of BlackRock Large Cap Core V.I. Fund to BlackRock Advantage Large Cap Core V.I. Fund. The Board also approved certain changes to the Fund’s investment strategies. These changes were effective on June 12, 2017.

         Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund outperformed its benchmark, the Russell 1000^® Index.

What factors influenced performance?

• In sector terms, information technology (“IT”) was the prime contributor to relative performance due to strength among semiconductor and software holdings. Consumer discretionary also aided results, in particular media, household durables and hotels, restaurants & leisure. Selection in materials and underweight exposure to telecommunication services benefited as well. The main detractors from performance were health care and financials. Pharmaceutical and biotechnology weakness weighed in health care, while banks and capital markets were a drag in financials.

• On a stock-specific basis, IT holdings Lam Research Corp. and Activision Blizzard Inc. were the top individual contributors. Lam performed very well on the back of strong execution and growing demand for its products, driven by the build-out of 3D NAND capacity, for which the company is a key supplier. The valuation remained reasonable, reflecting ongoing concerns that this may be the peak of the cycle, resulting in strong stock performance while the fundamentals continued to improve. Activision outperformed amid consistently strong earnings results, allaying investor worries earlier in the period about weak Call of Duty sales. Investor excitement continued to grow around the company’s new content like Overwatch and Destiny 2, and the secular shifts in the industry such as the movement to digital monetization and eSports.

• Cruise operator Carnival Corp. also added value. Carnival outperformed early in the period after a report from competitor Royal Caribbean confirmed strengthening demand in both the Caribbean and Mediterranean markets. Later, the company delivered strong earnings results, which

indicated ongoing favorable supply/demand dynamics in all of the developed cruise markets, leading to continued improvement in pricing power. Elsewhere, an underweight to poor-performing Exxon Mobil Corp. proved advantageous.

• Conversely, financial holdings Goldman Sachs Group Inc. and JPMorgan Chase & Co. detracted from relative results. Goldman underperformed after the company reported an uncharacteristically weak quarter reflecting poor performance in its core FICC (fixed income, currencies and commodities) trading business. JPMorgan underperformed as the yield curve flattened and optimism around the Trump administration’s pro-growth policy initiatives weakened, reflecting the current uncertain environment in Washington DC.

• Underweights to Amazon.com Inc. and Facebook Inc., two of the so-called “FANG” stocks, also weighed as both posted gains of more than 25% for the first half of the year.

Describe recent portfolio activity.

• During the six-month period, the Fund’s exposure to the industrials and real estate sectors materially increased, particularly within machinery, industrial conglomerates and equity real estate investment trusts. Exposure to utilities increased as well. The largest reductions were in IT and financials, largely with respect to communications equipment and banks. Energy exposure also declined.

Describe portfolio positioning at period end.

• Relative to the Russell 1000^® Index, the Fund ended the period with its largest sector overweight in consumer discretionary, followed by materials and industrials. The most notable underweights were financials, consumer staples and energy. That said, the Fund remained diversified across stock selection insights.

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, 2017

BlackRock Advantage Large Cap Core 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. 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 III Shares prior to January 27, 2009, 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  Under normal circumstances, the Fund seeks to invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in large cap equity securities and derivatives that have similar economic characteristics to such securities. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name BlackRock Large Cap Core V.I. Fund.

³  An index that measures the performance of the large cap segment of the U.S. equity universe. It is a subset of the Russell 3000^® Index and includes approximately 1,000 of the largest securities based on a combination of their market capitalization and current index membership. The index represents approximately 92% of the total market capitalization of the Russell 3000^® Index.

      Performance Summary for the Period Ended June 30, 2017

				Average Annual Total Returns
	6-Month Total Returns5			1 Year5			5 Years5			10 Years5
Class I4		9.62	%		23.63	%		14.24	%		5.81	%
Class II4		9.52			23.39			14.05			5.64
Class III4		9.42			23.25			13.92			5.52	6
Russell 1000® Index		9.27			18.03			14.67			7.29

⁴  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend 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. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name BlackRock Large Cap Core V.I. Fund.

⁵  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

⁶  The returns for Class III Shares prior to January 27, 2009, 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. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

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

      Expense Example

	Actual						Hypothetical8
	Beginning Account Value January 1, 2017		Ending Account Value June 30, 2017		Expenses Paid During the Period7		Beginning Account Value January 1, 2017		Ending Account Value June 30, 2017		Expenses Paid During the Period7		Annualized Expense Ratio
Class I		$1,000.00		$1,096.20		$2.96		$1,000.00		$1,021.97		$2.86		0.57	%
Class II		$1,000.00		$1,095.20		$3.84		$1,000.00		$1,021.12		$3.71		0.74	%
Class III		$1,000.00		$1,094.20		$4.41		$1,000.00		$1,020.58		$4.26		0.85	%

⁷  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).

⁸  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

BlackRock Advantage Large Cap Core V.I. Fund

      Portfolio Information as of June 30, 2017

Sector Allocation	Percent of Net Assets
Information Technology		22	%
Health Care		14
Financials		14
Consumer Discretionary		13
Industrials		11
Consumer Staples		8
Energy		5
Materials		4
Real Estate		3
Utilities		3
Telecommunication Services		2
Short-Term Securities		8
Liabilities in Excess of Other Assets		(7	)

For Fund compliance purposes, the Fund’s sector classifications refer to 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 the investment adviser. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

Disclosure of Expenses

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transac-

tion or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Advantage Large Cap Core V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 1.7%
HEICO Corp., Class A		72	$	4,468
L3 Technologies, Inc.		10,652		1,779,736
Raytheon Co.		40,563		6,550,113
				8,334,317
Air Freight & Logistics — 0.3%
XPO Logistics, Inc. (a)		20,139		1,301,584
Auto Components — 0.1%
Delphi Automotive PLC		8,379		734,419
Automobiles — 0.3%
Thor Industries, Inc.		15,871		1,658,837
Banks — 5.3%
Bank of America Corp. (b)		438,762		10,644,366
Citigroup, Inc.		14,329		958,324
Citizens Financial Group, Inc.		165,335		5,899,153
JPMorgan Chase & Co.		15,923		1,455,362
Popular, Inc.		10,391		433,409
SunTrust Banks, Inc.		98,933		5,611,480
Synovus Financial Corp.		36,264		1,604,319
U.S. Bancorp		3,739		194,129
Western Alliance Bancorp (a)		3,575		175,890
				26,976,432
Beverages — 1.2%
Coca-Cola European Partners PLC		9,593		390,147
Dr. Pepper Snapple Group, Inc.		62,606		5,704,033
				6,094,180
Biotechnology — 4.8%
Amgen, Inc.		34,103		5,873,560
Biogen, Inc. (a)		20,878		5,665,454
Celgene Corp. (a)		41,479		5,386,878
Gilead Sciences, Inc.		105,242		7,449,029
				24,374,921
Building Products — 1.0%
Allegion PLC		2,720		220,646
JELD-WEN Holding, Inc. (a)		4,747		154,088
Masco Corp.		124,898		4,772,353
				5,147,087
Capital Markets — 3.7%
CME Group, Inc.		12,268		1,536,444
Evercore Partners, Inc., Class A		22,207		1,565,594
Intercontinental Exchange, Inc.		87,279		5,753,432
Morningstar, Inc.		3,715		291,033
S&P Global, Inc.		43,041		6,283,556
SEI Investments Co.		64,243		3,454,989
				18,885,048
Chemicals — 1.6%
AdvanSix, Inc. (a)		13,055		407,838

Common Stocks	Shares		Value
Chemicals (continued)
Cabot Corp.		50,684	$	2,708,046
Eastman Chemical Co.		56,457		4,741,823
LyondellBasell Industries NV, Class A		2,120		178,907
				8,036,614
Commercial Services & Supplies — 0.1%
LSC Communications, Inc.		15,573		333,262
R.R. Donnelley & Sons Co. (b)		28,102		352,399
				685,661
Communications Equipment — 0.0%
Cisco Systems, Inc.		2,307		72,209
InterDigital, Inc.		938		72,507
				144,716
Consumer Finance — 0.3%
Discover Financial Services		27,549		1,713,272
Containers & Packaging — 1.5%
Avery Dennison Corp.		26,157		2,311,494
Packaging Corp. of America		25,018		2,786,755
Silgan Holdings, Inc.		37,946		1,205,924
WestRock Co.		17,743		1,005,318
				7,309,491
Diversified Consumer Services — 0.1%
H&R Block, Inc.		7,588		234,545
Diversified Financial Services — 0.6%
Berkshire Hathaway, Inc., Class B (a)		17,518		2,967,024
Diversified Telecommunication Services — 0.3%
Level 3 Communications, Inc. (a)		6,366		377,504
Verizon Communications, Inc.		9,898		442,045
Zayo Group Holdings, Inc. (a)		15,843		489,549
				1,309,098
Electric Utilities — 1.8%
Portland General Electric Co.		76,400		3,490,716
Westar Energy, Inc.		105,805		5,609,781
				9,100,497
Electrical Equipment — 1.2%
Rockwell Automation, Inc.		37,241		6,031,552
Electronic Equipment, Instruments & Components — 1.9%
CDW Corp.		20,022		1,251,976
Dolby Laboratories, Inc., Class A		5,993		293,417
Flex Ltd. (a)		117,405		1,914,876
FLIR Systems, Inc.		2,189		75,871
TE Connectivity Ltd		17,524		1,378,788
Tech Data Corp. (a)		20,115		2,031,615
Zebra Technologies Corp., Class A (a)		25,014		2,514,407
				9,460,950

Portfolio Abbreviation
S&P	Standard & Poor’s

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock Advantage Large Cap Core V.I. Fund

Common Stocks	Shares		Value
Equity Real Estate Investment Trusts (REITs) — 3.2%
Brixmor Property Group, Inc.		3,964	$	70,876
Duke Realty Corp.		14,643		409,272
Gaming and Leisure Properties, Inc.		32,458		1,222,693
Host Hotels & Resorts, Inc.		4,437		81,064
Outfront Media, Inc.		44,819		1,036,215
Prologis, Inc.		13,421		787,007
Simon Property Group, Inc.		34,910		5,647,042
Ventas, Inc.		84,357		5,861,124
Weingarten Realty Investors		28,761		865,706
				15,980,999
Food & Staples Retailing — 2.1%
Walgreens Boots Alliance, Inc.		43,877		3,436,008
Wal-Mart Stores, Inc.		95,337		7,215,104
				10,651,112
Food Products — 2.0%
Archer-Daniels-Midland Co.		142,061		5,878,484
Hershey Co.		8,599		923,275
Ingredion, Inc.		10,168		1,212,127
McCormick & Co, Inc., Non-Voting Shares		3,276		319,443
Tyson Foods, Inc., Class A		30,879		1,933,952
				10,267,281
Health Care Equipment & Supplies — 3.1%
Baxter International, Inc.		100,113		6,060,841
Hill-Rom Holdings, Inc.		445		35,426
IDEXX Laboratories, Inc. (a)		32,794		5,293,607
Masimo Corp. (a)		28,114		2,563,435
West Pharmaceutical Services, Inc.		16,061		1,518,086
				15,471,395
Health Care Providers & Services — 2.8%
Aetna, Inc.		718		109,014
AmerisourceBergen Corp.		2,691		254,380
Centene Corp. (a)		12,152		970,702
Express Scripts Holding Co. (a)		8,181		522,275
Humana, Inc.		8,831		2,124,915
McKesson Corp.		8,032		1,321,585
UnitedHealth Group, Inc.		46,456		8,613,872
				13,916,743
Health Care Technology — 0.6%
Veeva Systems, Inc., Class A (a)		48,773		2,990,273
Hotels, Restaurants & Leisure — 3.2%
Carnival Corp.		84,507		5,541,124
Choice Hotels International, Inc.		5,514		354,275
Extended Stay America, Inc.		105,198		2,036,633
Hilton Grand Vacations, Inc. (a)		12,350		445,341
International Game Technology PLC (a)		15		275
McDonald’s Corp.		49,052		7,512,804
				15,890,452
Household Durables — 0.0%
D.R. Horton, Inc.		5,008		173,127
Household Products — 0.5%
Energizer Holdings, Inc.		52,819		2,536,368
Industrial Conglomerates — 2.5%
3M Co.		38,813		8,080,478
Honeywell International, Inc.		35,660		4,753,121
				12,833,599
Insurance — 4.0%
Aon PLC		3,213		427,168
First American Financial Corp.		21,721		970,711
FNF Group		7,701		345,236

Common Stocks	Shares		Value
Insurance (continued)
Hartford Financial Services Group, Inc.		8,168	$	429,392
Lincoln National Corp.		67,198		4,541,241
Marsh & McLennan Cos., Inc.		81,568		6,359,041
Principal Financial Group, Inc.		5,386		345,081
Prudential Financial, Inc.		56,479		6,107,639
Unum Group		14,364		669,793
				20,195,302
Internet & Direct Marketing Retail — 1.3%
Amazon.com, Inc. (a)		7,010		6,785,680
Internet Software & Services — 4.8%
Alphabet, Inc., Class A (a)		11,462		10,655,992
Alphabet, Inc., Class C (a)		6,497		5,904,019
Facebook, Inc., Class A (a)		40,275		6,080,720
VeriSign, Inc. (a)		13,116		1,219,263
Yelp, Inc. (a)		18,828		565,217
				24,425,211
IT Services — 3.8%
Accenture PLC, Class A (b)		45,663		5,647,600
Booz Allen Hamilton Holding Corp		37,119		1,207,852
Fidelity National Information Services, Inc.		71,634		6,117,544
Mastercard, Inc., Class A		51,447		6,248,238
				19,221,234
Leisure Products — 1.1%
Hasbro, Inc.		48,401		5,397,196
Life Sciences Tools & Services — 0.1%
Mettler-Toledo International, Inc. (a)		1,028		605,019
Machinery — 3.2%
Dover Corp.		7,821		627,401
Illinois Tool Works, Inc.		34,997		5,013,320
Ingersoll-Rand PLC		40,344		3,687,038
PACCAR, Inc.		59,327		3,917,955
Stanley Black & Decker, Inc.		19,772		2,782,514
				16,028,228
Media — 2.9%
CBS Corp., Class B, Non-Voting Shares		50,427		3,216,234
Comcast Corp., Class A		214,044		8,330,592
Lions Gate Entertainment Corp., Class B (a)		19,730		518,504
Scripps Networks Interactive, Inc., Class A (b)		11,139		760,905
Time Warner, Inc.	��	16,740		1,680,863
				14,507,098
Metals & Mining — 0.3%
Newmont Mining Corp.		14,690		475,809
Reliance Steel & Aluminum Co.		13,812		1,005,652
Steel Dynamics, Inc.		1,605		57,475
				1,538,936
Multiline Retail — 1.0%
Target Corp.		97,217		5,083,477
Multi-Utilities — 1.2%
Black Hills Corp.		7,147		482,208
CMS Energy Corp.		124,214		5,744,898
				6,227,106
Oil, Gas & Consumable Fuels — 5.2%
Anadarko Petroleum Corp.		88,853		4,028,595
ConocoPhillips		120,413		5,293,355
Devon Energy Corp.		102,794		3,286,324
Exxon Mobil Corp.		70,504		5,691,788
Phillips 66		14,523		1,200,907

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Advantage Large Cap Core V.I. Fund

Common Stocks	Shares		Value
Oil, Gas & Consumable Fuels (continued)
Suncor Energy, Inc.		64,434	$	1,881,473
Tellurian, Inc. (a)(b)		18,944		190,008
Valero Energy Corp.		69,047		4,657,911
				26,230,361
Paper & Forest Products — 0.4%
Domtar Corp.		49,737		1,910,896
Personal Products — 0.8%
Estee Lauder Cos., Inc., Class A		42,968		4,124,069
Herbalife Ltd. (a)(b)		1,511		107,780
				4,231,849
Pharmaceuticals — 2.9%
Bristol-Myers Squibb Co.		79,629		4,436,928
Catalent, Inc. (a)		4,720		165,672
Johnson & Johnson		16,266		2,151,829
Merck & Co., Inc.		106,166		6,804,179
Zoetis, Inc.		17,291		1,078,613
				14,637,221
Professional Services — 0.7%
Equifax, Inc.		6,495		892,543
ManpowerGroup, Inc.		14,048		1,568,459
Robert Half International, Inc.		23,386		1,120,891
				3,581,893
Real Estate Management & Development — 0.1%
CBRE Group, Inc., Class A (a)		18,431		670,888
Retail — 0.1%
Blue Apron Holdings, Inc., Class A (a)		73,297		684,594
Road & Rail — 0.2%
Norfolk Southern Corp.		4,342		528,421
Union Pacific Corp.		2,251		245,156
				773,577
Semiconductors & Semiconductor Equipment — 3.5%
Analog Devices, Inc.		66,725		5,191,205
Intel Corp.		226,301		7,635,396
KLA-Tencor Corp.		4,895		447,941
Lam Research Corp.		259		36,630
Maxim Integrated Products, Inc.		100,361		4,506,209
				17,817,381
Software — 4.6%
Activision Blizzard, Inc.		34,466		1,984,208
Adobe Systems, Inc. (a)		49,389		6,985,580
CDK Global, Inc.		12,522		777,115
Dell Technologies, Inc., Class V (a)		28,967		1,770,173
Fortinet, Inc. (a)		9,075		339,768
Microsoft Corp.		80,023		5,515,985
VMware, Inc., Class A (a)(b)		64,448		5,634,689
				23,007,518

Common Stocks	Shares		Value
Specialty Retail — 2.5%
Aaron’s, Inc.		1,031	$	40,106
Best Buy Co., Inc.		6,034		345,929
Home Depot, Inc.		34,927		5,357,802
Lowe’s Cos., Inc.		89,932		6,972,428
Staples, Inc.		10,578		106,520
				12,822,785
Technology Hardware, Storage & Peripherals — 3.3%
Apple Inc.		88,278		12,713,798
HP, Inc.		9,133		159,645
NCR Corp. (a)		72,561		2,963,391
NetApp, Inc.		22,320		893,916
				16,730,750
Textiles, Apparel & Luxury Goods — 0.5%
Carter’s, Inc.		3,831		340,767
NIKE, Inc., Class B (b)		34,015		2,006,885
				2,347,652
Tobacco — 1.2%
Altria Group, Inc.		62,035		4,619,746
Philip Morris International, Inc.		1,260		147,987
Reynolds American, Inc.		17,875		1,162,590
				5,930,323
Wireless Telecommunication Services — 1.3%
Telephone & Data Systems, Inc.		44,964		1,247,751
T-Mobile U.S., Inc. (a)		85,632		5,191,012
				6,438,763
Total Long-Term Investments (Cost — $461,408,692) — 98.8%				499,042,532
Short-Term Securities
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (c)(d)		22,950,740		22,950,740
SL Liquidity Series, LLC, Money Market Series, 1.27% (c)(d)(e)		16,460,221		16,461,867
Total Short-Term Securities (Cost — $39,414,252) — 7.8%				39,412,607
Total Investments (Cost — $500,822,944) — 106.6%				538,455,139
Liabilities in Excess of Other Assets — (6.6)%				(33,325,005	)
Net Assets — 100.0%			$	505,130,134

      Notes to Schedule of Investments

(a) Non-income producing security.

(b) Security, or a portion of the security, is on loan.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Schedule of Investments (continued) BlackRock Advantage Large Cap Core V.I. Fund

(c) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity		Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Loss			Change  in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		16,275,353		6,675,387		22,950,740		$22,950,740		$35,613			—			—
SL Liquidity Series, LLC, Money Market Series		15,692,070		768,151		16,460,221		16,461,867		26,349	1		$(1,075	)		$(159	)
Total								$39,412,607		$61,962			$(1,075	)		$(159	)

¹  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(d) Current yield as of period end.

(e) Security was purchased with the cash collateral from loaned securities.

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

      Derivative Financial Instruments Outstanding as of Period End

Futures Contracts
Contracts Long	Issue	Expiration		Notional Value		Unrealized Depreciation
54	S&P 500 E-Mini Index		September 2017	$	6,536,430		$(18,152	)

      Derivative Financial Instruments Categorized by Risk Exposure

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

		Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Total
Liabilities — Derivative Financial Instruments
Futures contracts	Net unrealized depreciation1		—		—		$18,152		—		—	$	18,152

¹ Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

For the six months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Total
Net Realized Gain from:
Futures contracts		—		—		$155,396		—		—		$155,396
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts		—		—		$  72,130		—		—		$  72,130

      Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts - long	$	3,268,215

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

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock Advantage Large Cap Core V.I. Fund

      Fair Value Hierarchy as of Period End

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

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

	Level 1			Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks1	$	499,042,532			—		—	$	499,042,532
Short-Term Securities		22,950,740			—		—		22,950,740
Subtotal	$	521,993,272			—		—	$	521,993,272
Investments Valued at NAV2									16,461,867
Total Investments								$	538,455,139
Derivative Financial Instruments3
Liabilities:
Equity contracts	$	(18,152	)		—		—	$	(18,152	)

¹ See above Schedule of Investments for values in each industry

² As of June 30, 2017, certain investments of the Fund were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

³ Derivative financial instruments are futures contracts, which are valued at the unrealized appreciation (depreciation) on the instrument.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Advantage Large Cap Core V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $16,213,539) (cost — $461,408,692)	$	499,042,532
Investments at value — affiliated (cost — $39,414,252)		39,412,607
Cash		212,077
Cash pledged for futures contracts		445,000
Receivables:
Investments sold		1,279,903
Securities lending income — affiliated		4,316
Capital shares sold		14,025
Dividends — affiliated		17,890
Dividends — unaffiliated		324,341
From the Manager		116,279
Variation margin on futures contracts		2,430
Prepaid expenses		1,255
Total assets		540,872,655
Liabilities
Cash collateral on securities loaned at value		16,461,565
Payables:
Investments purchased		18,475,492
Capital shares redeemed		177,843
Distribution fees		67,430
Investment advisory fees		190,867
Officer’s and Directors’ fees		1,685
Other accrued expenses		109,038
Other affiliates		4,024
Transfer agent fees		254,577
Total liabilities		35,742,521
Net Assets	$	505,130,134
Net Assets Consist of
Paid-in capital	$	351,725,824
Undistributed net investment income		2,967,266
Accumulated net realized gain		112,823,001
Net unrealized appreciation (depreciation)		37,614,043
Net Assets	$	505,130,134
Net Asset Value
Class I — Based on net assets of $177,570,506 and 5,076,980 shares outstanding, 200 million shares authorized, $0.10 par value	$	34.98
Class II — Based on net assets of $4,539,207 and 129,796 shares outstanding, 100 million shares authorized, $0.10 par value	$	34.97
Class III — Based on net assets of $323,020,421 and 9,299,611 shares outstanding, 100 million shares authorized, $0.10 par value	$	34.73

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 207 (Unaudited)	BlackRock Advantage Large Cap Core V.I. Fund
Investment Income
Dividends — unaffiliated	$	4,729,819
Securities lending income — affiliated — net		26,349
Dividends — affiliated		35,613
Foreign taxes withheld		(41,702	)
Total investment income		4,750,079
Expenses
Investment advisory		1,164,639
Transfer agent		2,481
Transfer agent — class specific		518,744
Distribution — class specific		410,234
Accounting services		56,954
Professional		40,256
Printing		35,336
Custodian		15,810
Officer and Directors		13,004
Miscellaneous		7,617
Total expenses		2,265,075
Less:
Fees waived by the Manager		(4,062	)
Transfer agent fees reimbursed — class specific		(342,452	)
Total expenses after fees waived and/or reimbursed		1,918,561
Net investment income		2,831,518
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated		104,274,794
Investments — affiliated		(1,075	)
Futures contracts		155,396
		104,429,115
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		(60,732,023	)
Investments — affiliated		(159	)
Futures contracts		72,130
		(60,660,052	)
Total realized and unrealized gain		43,769,063
Net Increase in Net Assets Resulting from Operations	$	46,600,581

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Statements of Changes in Net Assets BlackRock Advantage Large Cap Core V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	2,831,518		$	5,228,756
Net realized gain		104,429,115			40,746,201
Net change in unrealized appreciation (depreciation)		(60,660,052	)		3,376,349
Net increase in net assets resulting from operations		46,600,581			49,351,306
Distributions to Shareholders1
From net investment income:
Class I		—			(2,047,574	)
Class II		—			(53,362	)
Class III		—			(2,999,067	)
From net realized gain:
Class I		—			(12,366,480	)
Class II		—			(370,135	)
Class III		—			(23,127,170	)
Decrease in net assets resulting from distributions to shareholders		—			(40,963,788	)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(50,627,908	)		4,719,038
Net Assets
Total increase (decrease) in net assets		(4,027,327	)		13,106,556
Beginning of period		509,157,461			496,050,905
End of period	$	505,130,134		$	509,157,461
Undistributed net investment income, end of period	$	2,967,266		$	135,748

¹ Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock Advantage Large Cap Core V.I. Fund

	Class I
	Six Months     Ended     June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	31.91		$	31.40		$	33.26		$	33.80		$	25.55		$	23.00
Net investment income1		0.22			0.39			0.36			0.34			0.30			0.39
Net realized and unrealized gain (loss)		2.85			2.91			(0.16	)		3.86			8.27			2.54
Net increase from investment operations		3.07			3.30			0.20			4.20			8.57			2.93
Distributions:2
From net investment income		—			(0.40	)		(0.39	)		(0.36	)		(0.32	)		(0.38	)
From net realized gain		—			(2.39	)		(1.67	)		(4.38	)		—			—
Total distributions		—			(2.79	)		(2.06	)		(4.74	)		(0.32	)		(0.38	)
Net asset value, end of period	$	34.98		$	31.91		$	31.40		$	33.26		$	33.80		$	25.55
Total Return3
Based on net asset value		9.62	%4		10.55	%		0.52	%		12.36	%		33.56	%		12.75	%
Ratios to Average Net Assets
Total expenses		0.73	%5		0.72	%		0.71	%		0.73	%		0.73	%		0.69	%
Total expenses after fees waived and/or reimbursed		0.57	%5		0.58	%		0.56	%		0.57	%		0.58	%		0.59	%
Net investment income		1.30	%5		1.26	%		1.08	%		0.97	%		1.03	%		1.56	%
Supplemental Data
Net assets, end of period (000)	$	177,571		$	175,947		$	184,151		$	212,067		$	219,418		$	191,227
Portfolio turnover rate		86	%		50	%		31	%		48	%		42	%		110	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵ Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Financial Highlights (continued) BlackRock Advantage Large Cap Core V.I. Fund

	Class II
	Six Months     Ended     June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	31.93		$	31.42		$	33.27		$	33.79		$	25.56		$	23.01
Net investment income1		0.19			0.34			0.30			0.28			0.25			0.35
Net realized and unrealized gain (loss)		2.85			2.90			(0.16	)		3.87			8.25			2.54
Net increase from investment operations		3.04			3.24			0.14			4.15			8.50			2.89
Distributions:2
From net investment income		—			(0.34	)		(0.32	)		(0.29	)		(0.27	)		(0.34	)
From net realized gain		—			(2.39	)		(1.67	)		(4.38	)		—			—
Total distributions		—			(2.73	)		(1.99	)		(4.67	)		(0.27	)		(0.34	)
Net asset value, end of period	$	34.97		$	31.93		$	31.42		$	33.27		$	33.79		$	25.56
Total Return3
Based on net asset value		9.52	%4		10.37	%		0.34	%		12.23	%		33.28	%		12.59	%
Ratios to Average Net Assets
Total expenses		0.88	%5		0.88	%		0.85	%		0.89	%		0.86	%		0.85	%
Total expenses after fees waived and/or reimbursed		0.74	%5		0.75	%		0.73	%		0.74	%		0.75	%		0.74	%
Net investment income		1.11	%5		1.09	%		0.91	%		0.81	%		0.86	%		1.42	%
Supplemental Data
Net assets, end of period (000)	$	4,539		$	5,170		$	5,333		$	6,203		$	6,080		$	4,603
Portfolio turnover rate		86	%		50	%		31	%		48	%		42	%		110	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Annualized.

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights (concluded) BlackRock Advantage Large Cap Core V.I. Fund

	Class III
	Six Months     Ended     June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	31.74		$	31.25		$	33.11		$	33.66		$	25.46		$	22.92
Net investment income1		0.17			0.31			0.27			0.24			0.22			0.32
Net realized and unrealized gain (loss)		2.82			2.88			(0.17	)		3.84			8.22			2.54
Net increase from investment operations		2.99			3.19			0.10			4.08			8.44			2.86
Distributions:2
From net investment income		—			(0.31	)		(0.29	)		(0.25	)		(0.24	)		(0.32	)
From net realized gain		—			(2.39	)		(1.67	)		(4.38	)		—			—
Total distributions		—			(2.70	)		(1.96	)		(4.63	)		(0.24	)		(0.32	)
Net asset value, end of period	$	34.73		$	31.74		$	31.25		$	33.11		$	33.66		$	25.46
Total Return3
Based on net asset value		9.42	%4		10.26	%		0.23	%		12.07	%		33.16	%		12.49	%
Ratios to Average Net Assets
Total expenses		0.98	%5		0.97	%		0.96	%		0.98	%		0.99	%		0.94	%
Total expenses after fees waived and/or reimbursed		0.85	%5		0.86	%		0.84	%		0.85	%		0.86	%		0.87	%
Net investment income		1.01	%5		0.98	%		0.80	%		0.69	%		0.75	%		1.30	%
Supplemental Data
Net assets, end of period (000)	$	323,020		$	328,040		$	306,567		$	322,418		$	300,005		$	232,024
Portfolio turnover rate		86	%		50	%		31	%		48	%		42	%		110	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (Unaudited) BlackRock Advantage Large Cap Core V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Advantage Large Cap Core V.I. Fund (the “Fund”) (formerly known as BlackRock Large Cap Core V.I. Fund). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

2. Significant Accounting Policies:

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

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

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

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

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Core V.I. Fund

3. Investment Valuation and Fair Value Measurements:

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

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

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

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

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

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

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Core V.I. Fund

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

As of June 30, 2017, certain investments of the Fund were valued using NAV as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

4. Securities and Other Investments:

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Citigroup Global Markets, Inc.	$	4,832,982	$	(4,832,982	)	—
Goldman Sachs & Co.		287,579		(287,579	)	—
JP Morgan Securities LLC		5,153,037		(5,153,037	)	—
Morgan Stanley		5,591,078		(5,591,078	)	—
State Street Bank and Trust Co.		348,863		(348,863	)	—
Total	$	16,213,539	$	(16,213,539	)	—

¹  Cash collateral with a value of $16,461,565 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Core V.I. Fund

5. Derivative Financial Instruments:

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

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

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

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

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $250 Million	0.500%
$250 Million - $300 Million	0.450%
$300 Million - $400 Million	0.425%
Greater than $400 Million	0.400%

Distribution Fees: The Company, on behalf of the Fund, entered into a Distribution Agreement and a Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL

ongoing distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the relevant share

class of the Fund as follows:

	Class II			Class III
Distribution Fee		0.15	%		0.25	%

For the six months ended June 30, 2017, the following table shows the class specific distribution fees borne directly by each share class of the Fund:

Class II	Class III		Total
$3,452		$406,782		$410,234

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Core V.I. Fund

receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class II	Class III	Total
$179,674	$4,639	$334,431		$518,744

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $4,062.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. Effective June 12, 2017, the contractual waiver was extended through April 30, 2019. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, there were no fees waived.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $2,667 for certain accounting services, which is included in accounting services in the Statement of Operations.

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

Class I	0.05	%
Class II	0.07	%
Class III	0.08	%

The Manager has agreed not to reduce or discontinue this contractual reimbursement through April 30, 2019 unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed — class specific in the Statement of Operations:

	Class I	Class II	Class III	Total
Transfer agent fees reimbursed	$135,180	$3,026	$204,246	$342,452

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

Class I	1.25	%
Class III	1.40	%
Class III	1.50	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2019, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived and/or reimbursed by the Manager.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Core V.I. Fund

cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 71.5% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 75% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $10,330 for securities lending agent services.

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

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

During the period ended June 30, 2017, the Fund did not participate in the Interfund Lending Program.

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

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the six months ended June 30, 2017, the purchase and sale transactions and any net realized gains (losses) with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:

Purchases	Sales		Net Realized Gain
$17,504,678		$52,509,485	$15,355,921

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $428,602,897 and $465,243,314, respectively.

8. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Core V.I. Fund

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	502,197,375
Gross unrealized appreciation	$	42,147,220
Gross unrealized depreciation		(5,889,456	)
Net unrealized appreciation	$	36,257,764

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

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

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

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

With exchange-traded futures, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (concluded) BlackRock Advantage Large Cap Core V.I. Fund

with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Fund.

Concentration Risk: As of period end, the Fund invested a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting such sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

11. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class l
Shares sold		21,923		$	745,666			94,700		$	2,914,564
Shares issued in reinvestment of distributions		—			—			449,540			14,414,054
Shares redeemed		(458,610	)		(15,528,785	)		(895,068	)		(28,046,866	)
Net decrease		(436,687	)	$	(14,783,119	)		(350,828	)	$	(10,718,248	)
Class ll
Shares sold		10,680		$	365,031			51,189		$	1,579,995
Shares issued in reinvestment of distributions		—			—			13,197			423,497
Shares redeemed		(42,774	)		(1,424,699	)		(72,213	)		(2,256,990	)
Net decrease		(32,094	)	$	(1,059,668	)		(7,827	)	$	(253,498	)
Class lll
Shares sold		32,751		$	1,110,856			537,136		$	15,388,629
Shares issued in reinvestment of distributions		—			—			819,291			26,126,237
Shares redeemed		(1,069,982	)		(35,895,977	)		(829,886	)		(25,824,082	)
Net increase (decrease)		(1,037,231	)	$	(34,785,121	)		526,541		$	15,690,784
Total Net Increase (Decrease)		(1,506,012	)	$	(50,627,908	)		167,886		$	4,719,038

12. 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.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 23

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶  BlackRock Advantage Large Cap Value V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock Advantage Large Cap Value V.I. Fund

            Investment Objective

BlackRock Advantage Large Cap Value V.I. Fund’s (the “Fund”) investment objective is to seek long-term capital appreciation.

On March 27, 2017, the Fund’s Board approved a proposal to change the name of BlackRock Large Cap Value V.I. Fund to BlackRock Advantage Large Cap Value V.I. Fund. The Board also approved certain changes to the Fund’s investment objective and investment strategies. These changes were effective on June 12, 2017.

            Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund outperformed its benchmark, the Russell 1000^® Value Index.

What factors influenced performance?

• In sector terms, information technology (“IT”) and consumer discretionary were the prime contributors to relative performance. The semiconductor industry was the main source of strength in IT, while hotels, restaurants & leisure and household durables drove gains in consumer discretionary. Selection within energy and an underweight to the sector also aided results. The main detractors from performance were financials and consumer staples. Capital markets weakness weighed in financials, while an underweight to tobacco proved disadvantageous in consumer staples. Utilities was a drag as well.

• On a stock-specific basis, IT holding Lam Research Corp. was the top individual contributor. Lam performed very well on the back of strong execution and growing demand for its products, driven by the build-out of 3D NAND capacity, for which the company is a key supplier. The valuation remained reasonable, reflecting ongoing concerns that this may be the peak of the cycle, resulting in strong stock performance while the fundamentals continued to improve.

• Cruise operator Carnival Corp. and media firm Comcast Corp. also added value. Carnival outperformed early in the period after a report from competitor Royal Caribbean confirmed strengthening demand in both the Caribbean and Mediterranean markets. Later, the company delivered strong earnings results, which indicated ongoing favorable supply/ demand dynamics in all of the developed cruise markets, leading to continued improvement in pricing power. Comcast outperformed after

delivering consistently strong earnings results that exceeded expectations in both the cable and broadcast businesses. Further, management’s comments on its wireless strategy (to be launched in 2H17) suggested less ambition in building out its own network, alleviating “tail risk” concern of accelerating capital spending.

• Conversely, underweights to Oracle Corp. and Philip Morris International Inc. detracted from relative results as both posted gains of about 30% for the first half of the year.

• A position in specialty retailer Urban Outfitters also weighed. The stock underperformed as same-store sales and gross margin trends continued to fall short of expectations, reflecting deteriorating mall traffic trends, a highly promotional apparel retail environment, and company-specific execution issues.

Describe recent portfolio activity.

• During the six-month period, the Fund’s exposure to the real estate sector materially increased, largely with respect to equity real estate investment trusts. Exposure to utilities and consumer staples increased as well. The largest reduction was in IT, where exposure was reduced across several industries, including communications equipment, hardware and semiconductors. Consumer discretionary and energy also saw notable declines.

Describe portfolio positioning at period end.

• Relative to the Russell 1000^® Value Index, the Fund ended the period with its largest sector overweights in consumer discretionary and materials. The most notable underweights were financials and energy. That said, the Fund remained diversified across stock selection insights.

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, 2017

BlackRock Advantage Large Cap 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. 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 III Shares prior to January 27, 2009, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares, as adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

² Under normal circumstances, the Fund seeks to invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in large cap equity securities and derivatives that have similar economic characteristics to such securities. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed a different investment objective and different investment strategies under the name BlackRock Large Cap Value V.I. Fund.

³ An unmanaged index that is a subset of the Russell 1000^® Index that consists of those Russell 1000^® securities with lower price-to-book ratios and lower expected growth values.

Performance Summary for the Period Ended June 30, 2017
		Average Annual Total Returns
	6-Month Total Returns5	1 Year5	5 Years5	10 Years5
Class I4	6.14%	21.20%	14.01%	4.21%
Class II4	6.04	20.92	13.78	4.04
Class III4	5.96	20.76	13.60	3.856
Russell 1000® Value Index	4.66	15.53	13.94	5.57

⁴  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend 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. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed a different investment objective and different investment strategies under the name BlackRock Large Cap Value V.I. Fund.

⁵  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

⁶  The returns for Class III Shares prior to January 27, 2009, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares, as adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

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

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

      Expense Example

	Actual			Hypothetical8
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period7	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period7	Annualized Expense Ratio
Class I	$1,000.00	$1,061.40	$4.19	$1,000.00	$1,020.73	$4.11	0.82%
Class II	$1,000.00	$1,060.40	$5.21	$1,000.00	$1,019.74	$5.11	1.02%
Class III	$1,000.00	$1,059.60	$5.92	$1,000.00	$1,019.04	$5.81	1.16%

⁷ 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).

⁸ Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365. See “Disclosure of Expenses” on the following page for further information on how expenses were calculated.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

BlackRock Advantage Large Cap Value V.I. Fund

Portfolio Information as of June 30, 2017
Sector Allocation	Percent of Net Assets
Financials	25%
Health Care	14
Energy	10
Industrials	9
Consumer Staples	9
Information Technology	8
Consumer Discretionary	7
Utilities	6
Real Estate	5
Materials	3
Telecommunication Services	3
Short-Term Securities	4
Liabilities in Excess of Other Assets	(3)

For Fund compliance purposes, the Fund’s sector classifications refer to 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 the investment adviser. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

Disclosure of Expenses

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction

or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Advantage Large Cap Value V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 1.4%
L3 Technologies, Inc.		1,256	$	209,852
Raytheon Co.		7,716		1,245,980
				1,455,832
Air Freight & Logistics — 0.1%
XPO Logistics, Inc. (a)		1,556		100,564
Auto Components — 0.5%
Delphi Automotive PLC		1,235		108,248
Lear Corp.		2,542		361,167
				469,415
Automobiles — 0.2%
Thor Industries, Inc.		1,488		155,526
Banks — 11.2%
Bank of America Corp.		133,715		3,243,926
Citigroup, Inc.		17,271		1,155,084
Citizens Financial Group, Inc.		36,201		1,291,652
First Horizon National Corp.		15,991		278,563
JPMorgan Chase & Co.		17,762		1,623,447
Popular, Inc.		14,682		612,386
SunTrust Banks, Inc.		22,712		1,288,225
Synovus Financial Corp.		17,610		779,066
U.S. Bancorp		4,770		247,658
Wells Fargo & Co.		17,660		978,541
Western Alliance Bancorp (a)		2,768		136,186
				11,634,734
Beverages — 0.7%
Dr. Pepper Snapple Group, Inc.		8,054		733,800
Molson Coors Brewing Co., Class B		329		28,406
				762,206
Biotechnology — 3.0%
Amgen, Inc.		6,518		1,122,595
Biogen, Inc. (a)		834		226,314
Celgene Corp. (a)		3,120		405,194
Gilead Sciences, Inc.		18,996		1,344,537
				3,098,640
Building Products — 0.7%
JELD-WEN Holding, Inc. (a)		2		65
Masco Corp.		19,063		728,397
				728,462
Capital Markets — 4.5%
BGC Partners, Inc., Class A		942		11,907
CME Group, Inc.		2,839		355,556
Evercore Partners, Inc., Class A		4,744		334,452
Intercontinental Exchange, Inc.		17,250		1,137,120
Morgan Stanley		13,043		581,196
Morningstar, Inc. (b)		1,290		101,059
S&P Global, Inc.		7,212		1,052,880

Common Stocks	Shares		Value
Capital Markets (concluded)
SEI Investments Co.		19,830	$	1,066,457
				4,640,627
Chemicals — 1.6%
AdvanSix, Inc. (a)		785		24,523
Cabot Corp.		4,598		245,671
Eastman Chemical Co.		12,523		1,051,807
LyondellBasell Industries NV, Class A		3,865		326,167
				1,648,168
Commercial Services & Supplies — 0.3%
LSC Communications, Inc.		5,038		107,813
R.R. Donnelley & Sons Co. (b)		17,751		222,598
				330,411
Communications Equipment — 0.7%
Cisco Systems, Inc.		22,014		689,038
Consumer Finance — 1.4%
American Express Co.		3,904		328,873
Discover Financial Services		18,004		1,119,669
				1,448,542
Containers & Packaging — 0.6%
Avery Dennison Corp.		1,120		98,974
Silgan Holdings, Inc.		12,112		384,919
WestRock Co.		2,718		154,002
				637,895
Diversified Financial Services — 1.9%
Berkshire Hathaway, Inc., Class B (a)		11,708		1,982,984
Diversified Telecommunication Services — 1.3%
AT&T Inc.		23,537		888,051
Level 3 Communications, Inc. (a)		2,574		152,638
Verizon Communications, Inc.		6,966		311,102
				1,351,791
Electric Utilities — 2.5%
OGE Energy Corp.		8,487		295,263
Portland General Electric Co.		24,009		1,096,971
Westar Energy, Inc.		22,506		1,193,268
				2,585,502
Electrical Equipment — 0.9%
Rockwell Automation, Inc. (b)		5,437		880,577
Electronic Equipment, Instruments & Components — 1.2%
CDW Corp.		2,935		183,526
Dolby Laboratories, Inc., Class A		240		11,750
FLIR Systems, Inc.		255		8,838
TE Connectivity Ltd		2,224		174,984
Tech Data Corp. (a)		4,433		447,733

Portfolio Abbreviation
S&P	Standard & Poor’s

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock Advantage Large Cap Value V.I. Fund

Common Stocks	Shares		Value
Electronic Equipment, Instruments & Components (concluded)
Zebra Technologies Corp., Class A (a)		3,777	$	379,664
				1,206,495
Energy Equipment & Services — 0.4%
Baker Hughes, Inc.		2,602		141,835
Diamond Offshore Drilling, Inc. (a)		5,440		58,915
Dril-Quip, Inc. (a)		2,271		110,825
Nabors Industries Ltd.		11,231		91,420
				402,995
Equity Real Estate Investment Trusts (REITs) — 4.7%
Brixmor Property Group, Inc.		2,552		45,630
Duke Realty Corp.		6,709		187,517
Gaming and Leisure Properties, Inc.		15,460		582,378
Host Hotels & Resorts, Inc.		5,799		105,948
Kimco Realty Corp.		7,187		131,881
Outfront Media, Inc.		22,931		530,165
Prologis, Inc.		9,920		581,709
Simon Property Group, Inc.		6,707		1,084,924
Ventas, Inc.		18,738		1,301,916
Weingarten Realty Investors		12,258		368,966
				4,921,034
Food & Staples Retailing — 2.4%
Walgreens Boots Alliance, Inc.		7,421		581,138
Wal-Mart Stores, Inc.		25,107		1,900,098
				2,481,236
Food Products — 2.5%
Archer-Daniels-Midland Co.		32,301		1,336,615
Hershey Co.		339		36,398
Ingredion, Inc.		3,580		426,772
McCormick & Co, Inc., Non-Voting Shares (b)		1,147		111,844
Pilgrim’s Pride Corp. (a)		4,588		100,569
Tyson Foods, Inc., Class A		9,496		594,734
				2,606,932
Health Care Equipment & Supplies — 3.2%
Alere, Inc. (a)		315		15,810
Baxter International, Inc.		22,151		1,341,022
IDEXX Laboratories, Inc. (a)		5,625		907,987
Masimo Corp. (a)		2,920		266,246
Medtronic PLC		3,337		296,159
West Pharmaceutical Services, Inc.		5,181		489,708
				3,316,932
Health Care Providers & Services — 2.6%
Aetna, Inc.		1,203		182,651
AmerisourceBergen Corp.		1,534		145,009
Centene Corp. (a)		5,690		454,517
Express Scripts Holding Co. (a)		11,996		765,825
McKesson Corp.		332		54,627
UnitedHealth Group, Inc.		5,626		1,043,173
				2,645,802
Health Care Technology — 0.3%
Veeva Systems, Inc., Class A (a)		5,607		343,765
Hotels, Restaurants & Leisure — 2.0%
Carnival Corp.		10,022		657,143
Extended Stay America, Inc.		18,507		358,296
International Game Technology PLC (a)		2,914		53,326
McDonald’s Corp.		6,723		1,029,695
				2,098,460
Household Products — 1.5%
Energizer Holdings, Inc.		17,053		818,885

Common Stocks	Shares		Value
Household Products (concluded)
Procter & Gamble Co.		8,224	$	716,722
				1,535,607
Industrial Conglomerates — 1.8%
3M Co.		4,792		997,646
General Electric Co.		20,412		551,328
Honeywell International, Inc.		2,178		290,306
				1,839,280
Insurance — 5.7%
First American Financial Corp.		9,962		445,202
FNF Group		4,073		182,593
The Hanover Insurance Group, Inc.		1,727		153,064
Hartford Financial Services Group, Inc.		8,181		430,075
Lincoln National Corp.		17,741		1,198,937
Marsh & McLennan Cos., Inc.		14,333		1,117,401
Principal Financial Group, Inc.		3,315		212,392
Prudential Financial, Inc.		14,108		1,525,639
Unum Group		6,838		318,856
Validus Holdings Ltd.		6,072		315,562
				5,899,721
Internet Software & Services — 0.1%
Alphabet, Inc., Class A (a)		70		65,078
Yelp, Inc. (a)		2,101		63,072
				128,150
IT Services — 1.3%
Accenture PLC, Class A (b)		175		21,644
Booz Allen Hamilton Holding Corp		4,215		137,156
Fidelity National Information Services, Inc.		13,803		1,178,776
				1,337,576
Leisure Products — 1.0%
Hasbro, Inc.		9,535		1,063,248
Machinery — 3.2%
Colfax Corp. (a)		2,287		90,039
Dover Corp.		2,758		221,247
Illinois Tool Works, Inc.		6,054		867,235
Ingersoll-Rand PLC		8,031		733,953
PACCAR, Inc.		12,992		857,992
Stanley Black & Decker, Inc.		3,925		552,365
				3,322,831
Media — 1.3%
Comcast Corp., Class A		15,896		618,672
Lions Gate Entertainment Corp., Class B (a)		3,755		98,681
Time Warner, Inc.		6,715		674,253
				1,391,606
Metals & Mining — 0.5%
Newmont Mining Corp.		4,391		142,224
Reliance Steel & Aluminum Co.		5,247		382,034
				524,258
Multiline Retail — 1.1%
Target Corp.		21,369		1,117,385
Multi-Utilities — 3.2%
Black Hills Corp.		15,065		1,016,436
CenterPoint Energy, Inc.		38,747		1,060,893
CMS Energy Corp.		26,683		1,234,089
				3,311,418
Oil, Gas & Consumable Fuels — 9.6%
Anadarko Petroleum Corp.		26,478		1,200,513

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Advantage Large Cap Value V.I. Fund

Common Stocks	Shares		Value
Oil, Gas & Consumable Fuels (concluded)
Chevron Corp.		16,133	$	1,683,156
ConocoPhillips		29,804		1,310,184
Devon Energy Corp. (b)		38,990		1,246,510
Exxon Mobil Corp.		24,875		2,008,159
Phillips 66		9,005		744,623
Suncor Energy, Inc.		11,863		346,400
Tellurian, Inc. (a)(b)		6,960		69,809
Valero Energy Corp.		18,065		1,218,665
Williams Cos., Inc.		2,429		73,550
				9,901,569
Paper & Forest Products — 0.5%
Domtar Corp.		12,532		481,479
Personal Products — 1.1%
Estee Lauder Cos., Inc., Class A		11,682		1,121,238
Pharmaceuticals — 5.4%
Bristol-Myers Squibb Co.		17,313		964,680
Catalent, Inc. (a)		1,605		56,336
Johnson & Johnson		11,393		1,507,180
Merck & Co., Inc.		36,453		2,336,273
Pfizer, Inc.		17,662		593,267
Zoetis, Inc.		2,050		127,879
				5,585,615
Professional Services — 0.3%
ManpowerGroup, Inc.		1,919		214,256
Robert Half International, Inc.		2,012		96,435
				310,691
Real Estate Management & Development — 0.0%
CBRE Group, Inc., Class A (a)		546		19,874
Retail — 0.1%
Blue Apron Holdings, Inc., Class A (a)		15,202		141,987
Road & Rail — 0.4%
Norfolk Southern Corp.		3,619		440,432
Semiconductors & Semiconductor Equipment — 2.4%
Analog Devices, Inc.		1,095		85,191
Intel Corp.		51,110		1,724,451
Maxim Integrated Products, Inc.		16,170		726,033
				2,535,675
Software — 2.0%
Adobe Systems, Inc. (a)		7,460		1,055,142

Common Stocks	Shares		Value
Software (concluded)
Dell Technologies, Inc., Class V (a)		4,914	$	300,295
Oracle Corp.		491		24,619
VMware, Inc., Class A (a)(b)		8,407		735,024
				2,115,080
Specialty Retail — 1.2%
Best Buy Co., Inc.		2,273		130,311
Lowe’s Cos., Inc.		14,629		1,134,186
				1,264,497
Technology Hardware, Storage & Peripherals — 0.7%
HP, Inc.		6,122		107,013
NCR Corp. (a)		12,939		528,429
NetApp, Inc.		3,452		138,253
				773,695
Tobacco — 0.5%
Philip Morris International, Inc.		2,744		322,283
Reynolds American, Inc.		2,770		180,161
				502,444
Wireless Telecommunication Services — 1.3%
Telephone & Data Systems, Inc.		16,957		470,557
T-Mobile U.S., Inc. (a)		13,800		836,556
				1,307,113
Total Common Stocks — 99.0%				102,597,034
Total Long-Term Investments (Cost — $95,208,213) — 99.0%				102,597,034
Short-Term Securities
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (c)(d)		3,096,117		3,096,117
SL Liquidity Series, LLC, Money Market Series, 1.27% (c)(d)(e)		1,555,125		1,555,281
Total Short-Term Securities (Cost — $4,651,242) — 4.5%				4,651,398
Total Investments (Cost — $99,859,455) — 103.5%				107,248,432
Liabilities in Excess of Other Assets — (3.5)%				(3,596,398	)
Net Assets — 100.0%			$	103,652,034

      Notes to Schedule of Investments

(a) Non-income producing security.

(b) Security, or a portion of the security, is on loan.

(c) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity			Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Loss		Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund,
Institutional Class		2,392,712		703,405			3,096,117		$3,096,117	$	13,185			—		—
SL Liquidity Series, LLC, Money Market
Series		3,499,173		(1,944,048	)		1,555,125		1,555,281		6,403	1		$(458)	$	136
Total									$4,651,398	$	19,588			$(458)	$	136

¹  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(d) Current yield as of period end.

(e) Security was purchased with the cash collateral from loaned securities.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Schedule of Investments (continued) BlackRock Advantage Large Cap Value V.I. Fund

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

      Derivative Financial Instruments Outstanding as of Period End

Futures Contracts
Contracts Long	Issue	Expiration	Notional Value		Unrealized Depreciation
9	S&P 500 E-Mini Index	September 2017		$1,089,405		$(3,167)

      Derivative Financial Instruments Categorized by Risk Exposure

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

		Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Total
Liabilities — Derivative Financial Instruments
Futures contracts	Net unrealized depreciation1		—		—		$3,167		—		—	$	3,167

¹  Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

For the six months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Total
Net Realized Gain from:
Futures contracts		—		—		$89,556		—		—	$	89,556
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts		—		—		$(3,167)		—		—	$	(3,167	)

      Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts — long	$1,488,383

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

      Fair Value Hierarchy as of Period End

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

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

	Level 1			Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks1	$	102,597,034			—		—	$	102,597,034
Short-Term Securities		3,096,117			—		—		3,096,117
Subtotal	$	105,693,151			—		—	$	105,693,151
Investments Valued at NAV2									1,555,281
Total Investments								$	107,248,432
Derivative Financial Instruments3
Liabilities:
Equity contracts	$	(3,167	)		—		—	$	(3,167	)

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

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock Advantage Large Cap Value V.I. Fund

²  As of June 30, 2017, certain investments of the Fund were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

³  Derivative financial instruments are futures contracts, which are valued at the unrealized appreciation (depreciation) on the instrument.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Advantage Large Cap Value V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $1,530,504) (cost — $95,208,213)	$	102,597,034
Investments at value — affiliated (cost — $4,651,242)		4,651,398
Cash		24,846
Cash pledged for financial futures contracts		40,000
Receivables:
Investments sold		538,073
Securities lending income — affiliated		1,060
Capital shares sold		95,884
Dividends — affiliated		4,448
Dividends — unaffiliated		59,661
From the Manager		34,706
Variation margin on futures contracts		405
Prepaid expenses		244
Total assets		108,047,759
Liabilities
Cash collateral on securities loaned at value		1,555,191
Payables:
Investments purchased		2,578,422
Capital shares redeemed		109,786
Distribution fees		1,310
Investment advisory fees		43,614
Officer’s and Directors’ fees		220
Other accrued expenses		52,625
Other affiliates		794
Transfer agent fees		53,763
Total liabilities		4,395,725
Net Assets	$	103,652,034
Net Assets Consist of
Paid-in capital	$	73,627,514
Undistributed net investment income		632,200
Accumulated net realized gain		22,006,510
Net unrealized appreciation (depreciation)		7,385,810
Net Assets	$	103,652,034
Net Asset Value
Class I — Based on net assets of $94,473,277 and 7,382,902 shares outstanding, 100 million shares authorized, $0.10 par value	$	12.80
Class II — Based on net assets of $6,530,975 and 509,418 shares outstanding, 100 million shares authorized, $0.10 par value	$	12.82
Class III — Based on net assets of $2,647,782 and 209,655 shares outstanding, 100 million shares authorized, $0.10 par value	$	12.63

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Advantage Large Cap Value V.I. Fund
Investment Income
Dividends — unaffiliated	$	1,048,134
Securities lending income — affiliated — net		6,403
Dividends — affiliated		13,185
Foreign taxes withheld		(9,844	)
Total investment income		1,057,878
Expenses
Investment advisory		384,970
Transfer agent		2,480
Transfer agent — class specific		103,805
Professional		32,239
Printing		13,062
Accounting services		13,046
Officer and Directors		10,084
Distribution — class specific		7,437
Custodian		5,700
Miscellaneous		4,377
Total expenses		577,200
Less:
Fees waived by the Manager		(42,974	)
Transfer agent fees reimbursed — class specific		(101,379	)
Total expenses after fees waived and/or reimbursed		432,847
Net investment income		625,031
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated		20,962,411
Investments — affiliated		(458	)
Futures contracts		89,556
		21,051,509
Net change in unrealized appreciation (depreciation on):
Investments — unaffiliated		(15,555,798	)
Investments — affiliated		136
Futures contracts		(3,167	)
		(15,558,829	)
Total realized and unrealized gain		5,492,680
Net Increase in Net Assets Resulting from Operations	$	6,117,711

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Statements of Changes in Net Assets BlackRock Advantage Large Cap Value V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	625,031		$	1,222,135
Net realized gain		21,051,509			8,536,426
Net change in unrealized appreciation (depreciation)		(15,558,829	)		2,467,491
Net increase in net assets resulting from operations		6,117,711			12,226,052
Distributions to Shareholders1
From net investment income:
Class I		—			(1,140,896	)
Class II		—			(62,189	)
Class III		—			(16,917	)
From net realized gain:
Class I		—			(5,972,331	)
Class II		—			(388,346	)
Class III		—			(123,751	)
Decrease in net assets resulting from distributions to shareholders		—			(7,704,430	)
Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(3,251,155	)		(5,208,753	)
Net Assets
Total increase (decrease) in net assets		2,866,556			(687,131	)
Beginning of period		100,785,478			101,472,609
End of period	$	103,652,034		$	100,785,478
Undistributed net investment income, end of period	$	632,200		$	7,169

1 Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock Advantage Large Cap Value V.I. Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	12.06		$	11.49		$	12.74		$	13.22		$	10.73		$	9.59
Net investment income1		0.08			0.15			0.14			0.15			0.14			0.15
Net realized and unrealized gain (loss)		0.66			1.41			(0.36	)		1.47			3.46			1.15
Net increase (decrease) from investment operations		0.74			1.56			(0.22	)		1.62			3.60			1.30
Distributions:2
From net investment income		—			(0.16	)		(0.15	)		(0.16	)		(0.16	)		(0.16	)
From net realized gain		—			(0.83	)		(0.88	)		(1.94	)		(0.95	)		—
Total distributions		—			(0.99	)		(1.03	)		(2.10	)		(1.11	)		(0.16	)
Net asset value, end of period	$	12.80		$	12.06		$	11.49		$	12.74		$	13.22		$	10.73
Total Return3
Based on net asset value		6.14	%4		13.60	%		(1.72	)%		12.22	%		33.61	%		13.58	%
Ratios to Average Net Assets
Total expenses		1.11	%5,6		1.09	%		1.08	%		1.08	%		1.08	%		1.01	%
Total expenses after fees waived and/or reimbursed		0.82	%5,6		0.82	%		0.77	%		0.77	%		0.78	%		0.82	%
Net investment income		1.24	%5,6		1.29	%		1.14	%		1.10	%		1.10	%		1.41	%
Supplemental Data
Net assets, end of period (000)	$	94,473		$	92,795		$	93,983		$	109,570		$	115,094		$	97,758
Portfolio turnover rate		92	%		47	%		29	%		35	%		41	%		114	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

⁶  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Financial Highlights (continued) BlackRock Advantage Large Cap Value V.I. Fund

	Class II
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	12.09		$	11.52		$	12.77		$	13.25		$	10.75		$	9.60
Net investment income1		0.07			0.13			0.12			0.13			0.11			0.12
Net realized and unrealized gain (loss)		0.66			1.40			(0.36	)		1.46			3.47			1.16
Net increase (decrease) from investment operations		0.73			1.53			(0.24	)		1.59			3.58			1.28
Distributions:2
From net investment income		—			(0.13	)		(0.13	)		(0.13	)		(0.13	)		(0.13	)
From net realized gain		—			(0.83	)		(0.88	)		(1.94	)		(0.95	)		—
Total distributions		—			(0.96	)		(1.01	)		(2.07	)		(1.08	)		(0.13	)
Net asset value, end of period	$	12.82		$	12.09		$	11.52		$	12.77		$	13.25		$	10.75
Total Return3
Based on net asset value		6.04	%4		13.35	%		(1.96	)%		11.94	%		33.39	%		13.35	%
Ratios to Average Net Assets
Total expenses		1.26	%5,6		1.27	%		1.19	%		1.23	%		1.20	%		1.18	%
Total expenses after fees waived and/or reimbursed		1.02	%5,6		1.03	%		0.96	%		0.97	%		0.98	%		1.00	%
Net investment income		1.04	%5,6		1.10	%		0.95	%		0.92	%		0.90	%		1.22	%
Supplemental Data
Net assets, end of period (000)	$	6,531		$	6,060		$	5,680		$	4,002		$	5,324		$	3,682
Portfolio turnover rate		92	%		47	%		29	%		35	%		41	%		114	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³ Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴ Aggregate total return.

⁵  Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

⁶  Annualized.

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights (concluded) BlackRock Advantage Large Cap Value V.I. Fund

	Class III
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	11.92		$	11.37		$	12.61		$	13.12		$	10.66		$	9.52
Net investment income1		0.05			0.11			0.10			0.10			0.09			0.12
Net realized and unrealized gain (loss)		0.66			1.38			(0.36	)		1.44			3.44			1.14
Net increase (decrease) from investment operations		0.71			1.49			(0.26	)		1.54			3.53			1.26
Distributions:2
From net investment income		—			(0.11	)		(0.10	)		(0.11	)		(0.12	)		(0.12	)
From net realized gain		—			(0.83	)		(0.88	)		(1.94	)		(0.95	)		—
Total distributions		—			(0.94	)		(0.98	)		(2.05	)		(1.07	)		(0.12	)
Net asset value, end of period	$	12.63		$	11.92		$	11.37		$	12.61		$	13.12		$	10.66
Total Return3
Based on net asset value		5.96	%4		13.17	%		(2.11	)%		11.72	%		33.16	%		13.26	%
Ratios to Average Net Assets
Total expenses		1.36	%5,6		1.35	%		1.34	%		1.32	%		1.33	%		1.26	%
Total expenses after fees waived and/or reimbursed		1.16	%5,6		1.18	%		1.13	%		1.13	%		1.14	%		1.15	%
Net investment income		0.89	%5,6		0.92	%		0.78	%		0.73	%		0.74	%		1.13	%
Supplemental Data
Net assets, end of period (000)	$	2,648		$	1,930		$	1,810		$	1,931		$	1,576		$	987
Portfolio turnover rate		92	%		47	%		29	%		35	%		41	%		114	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

⁶  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (Unaudited) BlackRock Advantage Large Cap Value V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Advantage Large Cap Value V.I. Fund (the “Fund”) (formerly known as BlackRock Large Cap Value V.I. Fund). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

2. Significant Accounting Policies:

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

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

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

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

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

Investment Valuation Policies: The Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the New York Stock Exchange (“NYSE”) (generally 4:00 p.m., Eastern time) (or if the reporting date falls on a day the NYSE is

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Value V.I. Fund

closed, investments are valued at fair value as of the period end). U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

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

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

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

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

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

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

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

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Value V.I. Fund

value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

As of June 30, 2017, certain investments of the Fund were valued using NAV as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

4. Securities and Other Investments:

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value1		Cash Collateral Received2			Net Amount
Citigroup Global Markets, Inc.	$	529,927	$	(529,927	)	—
Deutsche Bank Securities, Inc.		2,771		(2,771	)	—
Goldman Sachs & Co.		69,107		(69,107	)	—
JP Morgan Securities LLC		686,937		(686,937	)	—
Morgan Stanley		21,397		(21,397	)	—
State Street Bank & Trust Company		220,365		(220,365	)	—
Total	$	1,530,504	$	(1,530,504	)	—

¹  Securities loanded with a value of $2,771 have been sold and are pending settlement as of 06/30/17.

²  Cash collateral with a value of $1,555,191 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Value V.I. Fund

5. Derivative Financial Instruments:

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

Futures Contracts: The Fund invests in long and/or short positions in futures and options on futures contracts to gain exposure to, or manage exposure to changes in interest rates (interest rate risk), changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

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

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

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.75%
$1 Billion - $3 Billion	0.71%
$3 Billion - $5 Billion	0.68%
$5 Billion - $10 Billion	0.65%
Greater than $10 Billion	0.64%

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

	Class II	Class III
Distribution Fee	0.15%	0.25%

For the six months ended June 30, 2017, the following table shows the class specific distribution fees borne directly by each share class of the Fund:

Class II	Class III	Total
$4,729	$2,708	$7,437

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Value V.I. Fund

receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent - class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class II	Class III	Total
$95,336	$6,289	$2,180	$103,805

Expense Limitations, Waivers and Reimbursements: The Manager has agreed to voluntarily waive 0.05% of its investment advisory fee payable by the Fund. This voluntary waiver may be reduced or discontinued at any time without notice. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, the amount waived was $25,665.

With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $1,560.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. Effective June 12, 2017, the contractual waiver was extended through April 30, 2019. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, there were no fees waived.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $526 for certain accounting services, which is included in accounting services in the Statement of Operations.

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

Class I	0.00	%
Class II	0.05	%
Class III	0.11	%

The Manager has agreed not to reduce or discontinue this contractual reimbursement through April 30, 2019 unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed - class specific in the Statement of Operations:

	Class I	Class II	Class III	Total
Transfer agent fees reimbursed	$95,336	$4,882	$1,161	$101,379

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

Class I	0.60	%
Class II	0.75	%
Class III	0.85	%

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Value V.I. Fund

Prior to June 12, 2017, the Fund expense limitations as a percentage of average daily net assets were as follows:

Class I	1.25	%
Class II	1.40	%
Class III	1.50	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2019, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of outstanding voting securities of the Fund. For the six months ended June 30, 2017, the amount waived was $15,749.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 71.5% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 75% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $2,493 for securities lending agent services.

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

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

During the period ended June 30, 2017, the Fund did not participate in the Interfund Lending Program.

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

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the six months ended June 30, 2017, the purchase and sale transactions and any net realized gains (losses) with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:

Purchases	Sales	Net Realized Gain
$7,304,471	$11,790,622	$2,941,625

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

Notes to Financial Statements (continued) BlackRock Advantage Large Cap Value V.I. Fund

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $91,841,267 and $93,008,886, respectively.

8. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	101,274,329
Gross unrealized appreciation	$	7,123,052
Gross unrealized depreciation		(1,148,949	)
Net unrealized appreciation	$	5,974,103

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

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

Counterparty Credit Risk: Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (concluded) BlackRock Advantage Large Cap Value V.I. Fund

of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.

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

Concentration Risk: As of period end, the Fund invested a significant portion of its assets in securities in the financial sector. Changes in economic conditions affecting such sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

11. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017					Year Ended December 31, 2016
	Shares			Amount		Shares			Amount
Class l
Shares sold		221,784		$	2,808,545		214,822		$	2,473,890
Shares issued in reinvestment of distributions		—			—		588,001			7,113,227
Shares redeemed		(535,615	)		(6,760,455)		(1,286,398	)		(14,879,343)
Net decrease		(313,831	)	$	(3,951,910)		(483,575	)	$	(5,292,226)
Class ll
Shares sold		66,360		$	830,255		194,495		$	2,194,408
Shares issued in reinvestment of distributions		—			—		37,157			450,535
Shares redeemed		(58,178	)		(732,610)		(223,479	)		(2,574,630)
Net increase		8,182		$	97,645		8,173		$	70,313
Class lll
Shares sold		70,542		$	886,012		46,118		$	529,587
Shares issued in reinvestment of distributions		—			—		11,767			140,668
Shares redeemed		(22,797	)		(282,902)		(55,137	)		(657,095)
Net increase		47,745		$	603,110		2,748		$	13,160
Total Net Decrease		(257,904	)	$	(3,251,155)		(472,654	)	$	(5,208,753)

12. 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.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 23

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Advantage U.S. Total Market V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock Advantage U.S. Total Market V.I. Fund

      Investment Objective

BlackRock Advantage U.S. Total Market V.I. Fund’s (the “Fund”) investment objective is to seek long-term growth of capital.

On March 27, 2017, the Board of Directors (“the Board”) of BlackRock Variable Series, Inc. approved a proposal to change the name of BlackRock Value Opportunities V.I. Fund to BlackRock Advantage U.S. Total Market V.I. Fund. The Board also approved certain changes to the Fund’s investment strategies. In addition, fund management has determined to change the benchmark indices against which the Fund compares its performance. These changes were effective on June 12, 2017.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund outperformed its former benchmark, the Standard & Poor’s (“S&P”) SmallCap 600^® Value Index. Effective June 12, 2017, the Fund adopted the Russell 3000^® Index as its new benchmark in conjunction with changes in the Fund’s investment strategy. For the same period, the Fund underperformed its new benchmark. The following discussion of relative performance pertains to the S&P SmallCap 600^® Value Index, except where noted.

What factors influenced performance?

• Stock selection in the consumer discretionary sector contributed to performance, mostly within the hotels, restaurants & leisure industry. Stock selection in energy was also a positive contributor, led by the energy equipment and & services and oil, gas, & consumable fuels industries. Selection in financials, where performance was primarily concentrated in banks, also helped.

• Stock selection in the materials sector, largely within the metals and mining industry, was the largest detractor. Weakness in real estate, which was concentrated in equity real estate investment trusts, was an additional detractor. The combination of an underweight position and adverse stock selection in the consumer staples sector, largely within the beverages and food & staples retailing industries, also weighed on results.

• During the period, the Fund held a small weighting in derivatives that detracted from relative performance. The purpose of these derivatives was to maintain equity exposure at a time in which the Fund’s transition to its new strategy had resulted in an above-average weighting in cash.

Describe recent portfolio activity.

• Effective June 12, 2017, the Fund changed its name to BlackRock Advantage U.S. Total Market V.I. Fund. Concurrently, there were changes to the Fund’s investment strategy.

• During the period, the Fund’s weighting in the information technology sector increased, mostly within software & services industry. The Fund’s allocation to industrials decreased, particularly among capital goods companies. Additionally, the Fund raised its weighting in consumer staples and reduced its exposure to materials.

Describe portfolio positioning at period end.

• Relative to the Russell 3000^® Index, the Fund’s largest sector overweights were in health care, consumer discretionary and materials. Its largest underweights were in energy, telecommunication services and financials.

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

Portfolio Information

Sector Allocation	Percent of Net Assets
Information Technology		21	%
Financials		16
Health Care		15
Consumer Discretionary		13
Industrials		10
Consumer Staples		8
Energy		5
Materials		4
Real Estate		3
Utilities		3
Telecommunication Services		1
Short-Term Securities		4
Liabilities in Excess of Other Assets		(3	)

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

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock Advantage U.S. Total Market 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  Under normal circumstances, at least 80% of the Fund’s net assets (plus the amount of any borrowings for investment purposes) in equity securities of U.S. issuers and derivatives that have similar economic characteristics to such securities. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name “BlackRock Value Opportunities V.I. Fund”.

³  An index that measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

⁴  An unmanaged index that is a subset of the S&P 600^® Index that consists of those stocks in the S&P 600^® Index exhibiting the strongest value characteristics.

Performance Summary for the Period Ended June 30, 2017
		Average Annual Total Returns
	6-Month Total Returns6	1 Year6	5 Years6	10 Years6
Class I5	1.47%	19.94%	13.28%	5.70%
Class II5	1.36	19.72	13.09	5.53
Class III5	1.37	19.68	13.06	5.48
Russell 3000® Index	8.93	18.51	14.58	7.26
S&P SmallCap 600® Value Index	0.86	21.79	15.44	7.59

⁵  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name “BlackRock Value Opportunities V.I. Fund”..

⁶  For a portion of the period, the Fund’s investment adviser 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. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

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

Expense Example
	Actual			Hypothetical8
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period7	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period7	Annualized Expense Ratio
Class I	$1,000.00	$1,014.70	$4.40	$1,000.00	$1,020.43	$4.41	0.88%
Class II	$1,000.00	$1,013.60	$5.24	$1,000.00	$1,019.59	$5.26	1.05%
Class III	$1,000.00	$1,013.70	$5.39	$1,000.00	$1,019.44	$5.41	1.08%

⁷  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).

⁸  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock Advantage U.S. Total Market V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Advantage U.S. Total Market V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 2.5%
Boeing Co.		3,884	$	768,061
HEICO Corp., Class A		45,717		2,836,740
Raytheon Co.		16,582		2,677,661
				6,282,462
Air Freight & Logistics — 1.4%
Forward Air Corp.		12,749		679,267
Hub Group, Inc., Class A (a)		66,268		2,541,378
XPO Logistics, Inc. (a)		4,363		281,981
				3,502,626
Airlines — 1.0%
Hawaiian Holdings, Inc. (a)		56,147		2,636,102
Auto Components — 0.9%
Cooper-Standard Holdings, Inc. (a)		80		8,070
Lear Corp.		8,830		1,254,566
Tenneco, Inc.		15,119		874,332
				2,136,968
Banks — 7.0%
Bank of America Corp.		212,132		5,146,322
Banner Corp.		26,690		1,508,252
Capital Bank Financial Corp., Class A		1,924		73,304
Cathay General Bancorp (b)		20,376		773,269
Citigroup, Inc.		37,231		2,490,009
Citizens Financial Group, Inc.		1,548		55,233
First Horizon National Corp.		83,521		1,454,936
First Merchants Corp.		136		5,459
JPMorgan Chase & Co.		47,325		4,325,505
QCR Holdings, Inc.		904		42,850
Sandy Spring Bancorp, Inc. (b)		3,594		146,132
TriState Capital Holdings, Inc. (a)(b)		24,847		626,144
Wintrust Financial Corp.		13,928		1,064,656
				17,712,071
Beverages — 1.6%
Dr. Pepper Snapple Group, Inc.		487		44,371
PepsiCo, Inc.		33,537		3,873,188
				3,917,559
Biotechnology — 4.1%
Alexion Pharmaceuticals, Inc. (a)		8,153		991,976
Amgen, Inc.		16,326		2,811,827
Biogen, Inc. (a)		1,637		444,216
Celgene Corp. (a)		14,009		1,819,349
Exelixis, Inc. (a)		22,686		558,756
Gilead Sciences, Inc.		51,853		3,670,155
Xoma Corp. (a)(b)		15		105
				10,296,384
Building Products — 0.0%
JELD-WEN Holding, Inc. (a)		86		2,792
Ply Gem Holdings, Inc. (a)		2,622		47,065
				49,857
Capital Markets — 2.7%
BGC Partners, Inc., Class A		105,080		1,328,211
CME Group, Inc.		5,343		669,157
Evercore Partners, Inc., Class A		23,150		1,632,075
Houlihan Lokey, Inc.		196		6,840
Intercontinental Exchange, Inc.		22,623		1,491,308
Moelis & Co., Class A		220		8,547
Morgan Stanley		1,718		76,554
S&P Global, Inc.		10,380		1,515,376
				6,728,068

Common Stocks	Shares		Value
Chemicals — 1.0%
AdvanSix, Inc. (a)		30,338	$	947,759
Stepan Co.		13,475		1,174,211
Trinseo SA		4,787		328,867
Valhi, Inc.		2,611		7,781
				2,458,618
Commercial Services & Supplies — 0.8%
ARC Document Solutions, Inc. (a)		339		1,410
Brink’s Co.		29,744		1,992,848
CECO Environmental Corp. (b)		77		707
				1,994,965
Communications Equipment — 1.1%
Cisco Systems, Inc.		71,961		2,252,379
InterDigital, Inc.		5,738		443,547
				2,695,926
Construction — 0.0%
M/I Homes, Inc. (a)		51		1,456
Consumer Finance — 0.4%
American Express Co.		621		52,313
Discover Financial Services		8,286		515,306
Enova International, Inc. (a)		405		6,014
Green Dot Corp., Class A (a)		9,146		352,395
				926,028
Diversified Consumer Services — 0.0%
Grand Canyon Education, Inc. (a)		310		24,307
Diversified Financial Services — 0.5%
Berkshire Hathaway, Inc., Class B (a)		7,212		1,221,496
Elevate Credit, Inc. (a)(b)		8,376		66,338
Gain Capital Holdings, Inc.		341		2,124
				1,289,958
Diversified Telecommunication Services — 1.4%
Cogent Communications Holdings, Inc.		82		3,288
FairPoint Communications, Inc. (a)		193		3,020
Level 3 Communications, Inc. (a)		2,923		173,334
Verizon Communications, Inc.		77,036		3,440,428
				3,620,070
Electric Utilities — 1.3%
Duke Energy Corp.		10,408		870,005
Portland General Electric Co.		36,668		1,675,361
Westar Energy, Inc.		14,635		775,948
				3,321,314
Electrical Equipment — 0.3%
Generac Holdings, Inc. (a)(b)		23,675		855,378
Electronic Equipment, Instruments & Components — 1.9%
Anixter International, Inc. (a)		24,072		1,882,430
Insight Enterprises, Inc. (a)		3,946		157,801
KEMET Corp. (a)		3,985		51,008
Sanmina Corp. (a)		18,308		697,535
Tech Data Corp. (a)		20,438		2,064,238
				4,853,012
Energy Equipment & Services — 0.5%
Baker Hughes, Inc.		175		9,539
Newpark Resources, Inc. (a)(b)		163,339		1,200,542
Pacific Ethanol, Inc. (a)(b)		13,773		86,081
Schlumberger Ltd.		629		41,413
				1,337,575

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock Advantage U.S. Total Market V.I. Fund

Common Stocks	Shares		Value
Equity Real Estate Investment Trusts (REITs) — 4.6%
Brixmor Property Group, Inc.		1,252	$	22,386
Cedar Realty Trust, Inc. (b)		138,458		671,521
Cherry Hill Mortgage Investment Corp.		1,858		34,317
CoreSite Realty Corp.		13,296		1,376,535
DCT Industrial Trust, Inc.		1,295		69,205
DiamondRock Hospitality Co.		20,263		221,880
DuPont Fabros Technology, Inc.		18,510		1,132,072
Equity Lifestyle Properties, Inc.		6,738		581,759
New Residential Investment Corp.		51,565		802,351
PS Business Parks, Inc.		329		43,556
QTS Realty Trust, Inc., Class A		10,730		561,501
Retail Opportunity Investments Corp.		5,483		105,219
RLJ Lodging Trust		16,293		323,742
Ryman Hospitality Properties, Inc.		2,681		171,611
Simon Property Group, Inc.		15,372		2,486,575
Summit Hotel Properties, Inc.		30,251		564,181
Terreno Realty Corp.		32,415		1,091,089
Ventas, Inc.		18,621		1,293,787
				11,553,287
Financials — 0.0%
Federal Agricultural Mortgage Corp.		25		1,618
Food & Staples Retailing — 1.9%
Performance Food Group Co. (a)		18,837		516,134
SUPERVALU, Inc. (a)(b)		132,368		435,491
Wal-Mart Stores, Inc.		50,804		3,844,847
				4,796,472
Food Products — 0.8%
Archer-Daniels-Midland Co.		18,002		744,923
Dean Foods Co.		19,097		324,649
Hershey Co.		2,757		296,019
Pinnacle Foods, Inc.		7,981		474,071
Tyson Foods, Inc., Class A		3,616		226,470
				2,066,132
Gas Utilities — 0.1%
One Gas, Inc.		1,701		118,747
Southwest Gas Holdings, Inc.		260		18,996
				137,743
Health Care Equipment & Supplies — 1.8%
Accuray, Inc. (a)(b)		42,595		202,326
Baxter International, Inc.		2,956		178,956
Masimo Corp. (a)		30,537		2,784,364
Medtronic PLC		16,204		1,438,105
				4,603,751
Health Care Providers & Services — 2.6%
Express Scripts Holding Co. (a)		3,844		245,401
Landauer, Inc.		16,600		868,180
LHC Group, Inc. (a)		2,765		187,716
Owens & Minor, Inc. (b)		11,750		378,233
UnitedHealth Group, Inc.		10,897		2,020,522
WellCare Health Plans, Inc. (a)		15,814		2,839,562
				6,539,614
Health Care Technology — 0.2%
Medidata Solutions, Inc. (a)		7,541		589,706
Hotels, Restaurants & Leisure — 2.3%
Bloomin’ Brands, Inc.		69,676		1,479,221
McDonald’s Corp.		20,091		3,077,138
Papa John’s International, Inc. (b)		18,080		1,297,421
				5,853,780

Common Stocks	Shares		Value
Household Durables — 0.8%
iRobot Corp. (a)(b)		9,037	$	760,373
Taylor Morrison Home Corp., Class A (a)		45,943		1,103,091
TopBuild Corp. (a)		2,401		127,421
				1,990,885
Household Products — 1.0%
Kimberly-Clark Corp.		357		46,092
Procter & Gamble Co.		27,424		2,390,002
				2,436,094
Industrial Conglomerates — 2.4%
3M Co.		18,687		3,890,447
Honeywell International, Inc.		16,211		2,160,764
				6,051,211
Insurance — 3.3%
American Equity Investment Life Holding Co. (a)(b)		24,807		651,928
Aon PLC		145		19,278
Employers Holdings, Inc.		34,362		1,453,513
Horace Mann Educators Corp.		33,970		1,284,066
Infinity Property & Casualty Corp.		626		58,844
James River Group Holdings, Ltd.		23,281		924,954
Marsh & McLennan Cos., Inc.		15,659		1,220,776
Selective Insurance Group, Inc.		51,906		2,597,895
				8,211,254
Internet & Direct Marketing Retail — 1.2%
Amazon.com, Inc. (a)		3,189		3,086,952
Internet Software & Services — 4.3%
Alphabet, Inc., Class A (a)		5,761		5,355,886
Alphabet, Inc., Class C (a)		3,000		2,726,190
Facebook, Inc., Class A (a)		18,353		2,770,936
YuMe, Inc.		745		3,501
				10,856,513
Investment Companies — 0.0%
OM Asset Management PLC		6,007		89,264
IT Services — 4.0%
Accenture PLC, Class A (b)		6,946		859,081
CACI International, Inc., Class A (a)		7,602		950,630
CSG Systems International, Inc.		296		12,012
Euronet Worldwide, Inc. (a)		9,129		797,601
Hackett Group, Inc.		5,102		79,081
International Business Machines Corp.		1,102		169,521
Mantech International Corp. — Class A		430		17,793
Mastercard, Inc., Class A		23,428		2,845,331
Travelport Worldwide Ltd.		16,901		232,558
Visa, Inc., Class A		45,081		4,227,696
				10,191,304
Leisure Products — 0.7%
Brunswick Corp.		26,663		1,672,570
Hasbro, Inc.		806		89,877
Malibu Boats, Inc., Class A (a)		62		1,604
				1,764,051
Life Sciences Tools & Services — 1.0%
PRA Health Sciences, Inc. (a)		34,910		2,618,599
Machinery — 0.7%
Alamo Group, Inc.		1,422		129,132
Briggs & Stratton Corp.		5,769		139,033
Chart Industries, Inc. (a)		37,129		1,289,490
Illinois Tool Works, Inc.		530		75,923

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Advantage U.S. Total Market V.I. Fund

Common Stocks	Shares		Value
Machinery (continued)
PACCAR, Inc.		381	$	25,161
				1,658,739
Media — 2.7%
Comcast Corp., Class A		116,812		4,546,323
Meredith Corp. (b)		11,315		672,677
Time Warner, Inc.		7,705		773,659
Walt Disney Co.		6,639		705,394
				6,698,053
Metals & Mining — 0.8%
Materion Corp.		29,812		1,114,969
Newmont Mining Corp.		29,186		945,335
				2,060,304
Miscellaneous — 0.1%
Bank of the Ozarks, Inc.		3,187		149,375
Inter Parfums, Inc.		4,589		168,187
				317,562
Mortgage Real Estate Investment Trusts (REITs) — 0.2%
Arbor Realty Trust, Inc.		67,843		565,811
Multiline Retail — 0.6%
Big Lots, Inc. (b)		6,926		334,526
Target Corp.		23,156		1,210,827
				1,545,353
Multi-Utilities — 1.4%
Avista Corp.		7,824		332,207
CMS Energy Corp.		53,073		2,454,626
NorthWestern Corp.		13,395		817,363
				3,604,196
Oil, Gas & Consumable Fuels — 4.5%
Alon USA Energy, Inc.		1,482		19,740
Anadarko Petroleum Corp.		26,904		1,219,827
Chevron Corp.		12,256		1,278,668
ConocoPhillips		67,752		2,978,378
Devon Energy Corp.		36,496		1,166,777
Eclipse Resources Corp. (a)(b)		270,798		774,482
Exxon Mobil Corp.		27,422		2,213,778
Phillips 66		8,202		678,223
Valero Energy Corp.		14,550		981,543
Williams Cos., Inc.		1,872		56,684
				11,368,100
Paper & Forest Products — 2.0%
Boise Cascade Co. (a)(b)		72,478		2,203,331
Domtar Corp. (b)		70,938		2,725,438
				4,928,769
Personal Products — 0.1%
Estee Lauder Cos., Inc., Class A		1,333		127,941
Herbalife Ltd. (b)		695		49,574
				177,515
Pharmaceuticals — 5.0%
Bristol-Myers Squibb Co.		30,871		1,720,132
Catalent, Inc. (a)		78,990		2,772,549
Corcept Therapeutics, Inc. (a)(b)		5,559		65,596
Johnson & Johnson		27,118		3,587,440
Merck & Co., Inc.		67,702		4,339,021
				12,484,738
Professional Services — 0.0%
Insperity, Inc.		146		10,366

Common Stocks	Shares		Value
Professional Services (continued)
Startek, Inc. (a)		24	$	294
				10,660
Retail — 0.1%
Blue Apron Holdings, Inc., Class A (a)		37,981		354,743
Road & Rail — 1.0%
ArcBest Corp.		33,245		684,847
Union Pacific Corp.		17,252		1,878,915
				2,563,762
Semiconductors & Semiconductor Equipment — 2.3%
Advanced Energy Industries, Inc. (a)		3,843		248,604
Analog Devices, Inc.		347		26,997
Cabot Microelectronics Corp.		84		6,202
Entegris, Inc. (a)		36,940		810,833
Intel Corp.		126,633		4,272,597
IXYS Corp. (a)		16,845		277,100
Texas Instruments, Inc.		3,053		234,867
				5,877,200
Software — 4.7%
A10 Networks, Inc. (a)		23		194
Adobe Systems, Inc. (a)		23,723		3,355,381
Bottomline Technologies, Inc. (a)		71,686		1,841,613
Dell Technologies, Inc., Class V (a)		13,497		824,802
Microsoft Corp.		35,658		2,457,906
Oracle Corp.		25,163		1,261,673
Paycom Software, Inc. (a)(b)		27		1,847
Paylocity Holding Corp. (a)		778		35,150
Verint Systems, Inc. (a)		37,865		1,541,105
VMware, Inc., Class A (a)(b)		7,434		649,955
				11,969,626
Specialty Retail — 2.7%
Aaron’s, Inc.		40,300		1,567,670
Big 5 Sporting Goods Corp. (b)		162		2,114
Home Depot, Inc.		14,319		2,196,535
Lowe’s Cos., Inc.		39,716		3,079,181
				6,845,500
Technology Hardware, Storage & Peripherals — 3.0%
Apple Inc.		52,084		7,501,138
Textiles, Apparel & Luxury Goods — 1.2%
NIKE, Inc., Class B		36,063		2,127,717
Wolverine World Wide, Inc. (b)		31,312		877,049
				3,004,766
Tobacco — 2.6%
Altria Group, Inc.		31,606		2,353,699
Philip Morris International, Inc.		29,539		3,469,356
Reynolds American, Inc.		8,200		533,328
Turning Point Brands, Inc. (a)		4,476		68,662
				6,425,045
Trading Companies & Distributors — 0.3%
Applied Industrial Technologies, Inc.		13,212		780,169
Wireless Telecommunication Services — 0.0%
Boingo Wireless, Inc. (a)		2,969		44,416
Total Common Stocks — 99.4%				250,865,099
Total Long-Term Investments (Cost — $246,804,346) — 99.4%				250,865,099

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Schedule of Investments (continued) BlackRock Advantage U.S. Total Market V.I. Fund

Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (c)(d)		939,749	$	939,749
SL Liquidity Series, LLC, Money Market Series, 1.27% (c)(d)(e)		7,746,077		7,746,852
Total Short-Term Securities (Cost — $8,687,259) — 3.5%				8,686,601

Total Investments (Cost — $255,491,605) — 102.9%	$	259,551,700
Liabilities in Excess of Other Assets — (2.9)%		(7,278,271	)
Net Assets — 100.0%	$	252,273,429

      Notes to Schedule of Investments

(a) Non-income producing security.

(b) Security, or a portion of the security, is on loan.

(c) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity		Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Gain		Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		8,781,802		(7,842,053)		939,749	$	939,749		$14,140			—	—
SL Liquidity Series, LLC, Money Market Series		33,718,069		(25,971,992)		7,746,077		7,746,852		68,198	1		$1,647	$862
Total							$	8,686,601		$82,338			$1,647	$862

¹  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(d) Current yield as of period end.

(e) Security was purchased with the cash collateral from loaned securities.

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

      Derivative Financial Instruments Outstanding as of Period End

Futures Contracts
Contracts Long	Issue	Expiration	Notional   Value		Unrealized   Depreciation
14	S&P 500 E-Mini Index	September 2017		$1,694,630	$(7,358)

      Derivative Financial Instruments Categorized by Risk Exposure

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

	Commodity Contracts	Credit Contracts	Equity Contracts	Foreign Currency Exchange Contracts	Interest Rate Contracts	Other Contracts	Total
Liabilities — Derivative Financial      Instruments
Futures contracts                                              Net unrealized  depreciation1	—	—	$7,358	—	—	—	$7,358

¹  Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock Advantage U.S. Total Market V.I. Fund

For the six months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts				Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Net Realized Gain from:
Futures contracts		—		—		$	34,855			—		—		—		$	34,855
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts		—		—		$	(7,358	)		—		—		—		$	(7,358	)

      Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts — long $ 847,315

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

      Fair Value Hierarchy as of Period End

Various inputs are used in determining the Fair Value Investments. For information about the Fund’s policy regarding valuation of investments, refer to the Notes to Financial Statements.

The following tables summarize the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks1	$	250,865,099		—		—	$	250,865,099
Short-Term Securities		939,749		—		—		939,749
Subtotal	$	251,804,848		—		—	$	251,804,848
Investments Valued at NAV2								7,746,852
Total Investments							$	259,551,700

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

²     As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

Derivative Financial Instruments1
Liabilities:
Equity contracts	$	(7,358)	—	—	$(7,358)

¹  Derivative financial instruments are futures contracts, which are valued at the unrealized appreciation (depreciation) on the instrument.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Advantage U.S. Total Market V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $7,517,785) (cost — $246,804,346)	$	250,865,099
Investments at value — affiliated (cost — $8,687,259)		8,686,601
Cash		2,447
Cash pledged for futures contracts		58,000
Receivables:
Investments sold		3,471,576
Securities lending income — affiliated		8,231
Capital shares sold		19,862
Dividends — affiliated		7,337
Dividends — unaffiliated		256,053
From the Manager		56,043
Variation margin on futures contracts		640
Prepaid expenses		601
Total assets		263,432,490
Liabilities
Cash collateral on securities loaned at value		7,740,052
Payables:
Investments purchased		2,968,564
Capital shares redeemed		144,898
Distribution fees		1,530
Investment advisory fees		114,444
Officer’s and Directors’ fees		759
Other accrued expenses		186,837
Other affiliates		1,977
Total liabilities		11,159,061
Net Assets	$	252,273,429
Net Assets Consist of
Paid-in capital		204,668,701
Undistributed net investment income		686,815
Accumulated net realized gain		42,865,209
Net unrealized appreciation (depreciation)		4,052,704
Net Assets	$	252,273,429
Net Asset Value
Class I — Based on net assets of $243,849,888 and 8,604,876 shares outstanding, 100 million shares authorized, $0.10 par value	$	28.34
Class II — Based on net assets of $3,064,899 and 108,443 shares outstanding, 100 million shares authorized, $0.10 par value	$	28.26
Class III — Based on net assets of $5,358,642 and 241,513 shares outstanding, 10 million shares authorized, $0.10 par value	$	22.19

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Advantage U.S. Total Market V.I. Fund
Investment Income
Dividends — unaffiliated1	$	1,667,708
Dividends — affiliated		14,140
Securities lending — affiliated — net		68,198
Foreign taxes withheld		(3,567	)
Total investment income		1,746,479
Expenses
Investment advisory		947,857
Transfer agent		2,477
Transfer agent — class specific		227,376
Professional		44,854
Accounting services		29,236
Custodian		19,373
Printing		17,015
Officer and Directors		11,199
Distribution — class specific		9,646
Miscellaneous		6,962
Total expenses		1,315,995
Less:
Fees waived by the Manager		(42,942	)
Transfer agent fees reimbursed — class specific		(149,433	)
Total expenses after fees waived and reimbursed		1,123,620
Net investment income		622,859
Realized and Unrealized Gain (Loss)
Net realized gain from:
Investments — unaffiliated		36,397,233
Investments — affiliated		1,647
Futures contracts		34,855
Foreign currency transactions		(17	)
		36,433,718
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		(33,381,773	)
Investments — affiliated		862
Futures contracts		(7,358	)
Foreign currency translations		26
		(33,388,243	)
Net realized and unrealized gain		3,010,637
Net Increase in Net Assets Resulting from Operations	$	3,668,334

¹  Includes non-recurring dividends in the amount of $464,138.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Statements of Changes in Net Assets BlackRock Advantage U.S. Total Market V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	622,859		$	626,144
Net realized gain		36,433,718			18,083,477
Net change in unrealized appreciation (depreciation)		(33,388,243	)		32,110,679
Net increase in net assets resulting from operations		3,668,334			50,820,300
Distributions to Shareholders1
From net investment income:
Class I		—			(628,029	)
Class II		—			(3,111	)
Class III		—			(8,867	)
From net realized gain:
Class I		—			(6,427,714	)
Class II		—			(86,226	)
Class III		—			(201,410	)
Decrease in net assets resulting from distributions to shareholders		—			(7,355,357	)
Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(11,496,454	)		(13,315,761	)
Net Assets
Total increase (decrease) in net assets		(7,828,120	)		30,149,182
Beginning of period		260,101,549			229,952,367
End of period	$	252,273,429		$	260,101,549
Undistributed net investment income, end of period	$	686,815		$	63,956

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock Advantage U.S. Total Market V.I. Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	27.93		$	23.24		$	26.96		$	27.48		$	19.39		$	17.16
Net investment income1		0.07	2		0.07			0.07			0.10			0.09			0.09
Net realized and unrealized gain (loss)		0.34			5.43			(1.80	)		1.35			8.13			2.23
Net increase (decrease) from investment operations		0.41			5.50			(1.73	)		1.45			8.22			2.32
Distributions:3
From net investment income		—			(0.07	)		(0.07	)		(0.08	)		(0.13	)		(0.09	)
From net realized gain		—			(0.74	)		(1.92	)		(1.89	)		—			—
From return of capital		—			—			(0.00	)4		—			—			—
Total distributions		—			(0.81	)		(1.99	)		(1.97	)		(0.13	)		(0.09	)
Net asset value, end of period	$	28.34		$	27.93		$	23.24		$	26.96		$	27.48		$	19.39
Total Return5
Based on net asset value		1.47	%6		23.65	%		(6.61	)%		5.22	%		42.40	%		13.54	%
Ratios to Average Net Assets
Total expenses		1.03	%7		1.01	%		1.01	%		1.02	%		1.00	%		0.95	%
Total expenses after fees waived and reimbursed		0.88	%7		0.92	%		0.90	%		0.90	%		0.90	%		0.87	%
Net investment income		0.50	%2,7		0.28	%		0.26	%		0.37	%		0.37	%		0.48	%
Supplemental Data
Net assets, end of period (000)	$	243,850		$	250,567		$	220,681		$	260,860		$	279,345		$	213,871
Portfolio turnover rate		115	%		78	%		61	%		57	%		66	%		47	%

¹  Based on average shares outstanding.

²  Net investment income per share and the ratio of net investment income to average net assets includes $0.05 per share and 0.37%, respectively, resulting from a special dividend.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Financial Highlights (continued) BlackRock Advantage U.S. Total Market V.I. Fund

	Class II
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	27.88		$	23.21		$	26.91		$	27.43		$	19.35		$	17.13
Net investment income1		0.05	2		0.03			0.02			0.05			0.05			0.06
Net realized and unrealized gain (loss)		0.33			5.41			(1.77	)		1.34			8.12			2.22
Net increase (decrease) from investment operations		0.38			5.44			(1.75	)		1.39			8.17			2.28
Distributions:3
From net investment income		—			(0.03	)		(0.03	)		(0.02	)		(0.09	)		(0.06	)
From net realized gain		—			(0.74	)		(1.92	)		(1.89	)		—			—
From return of capital		—			—			(0.00	)4		—			—			—
Total distributions		—			(0.77	)		(1.95	)		(1.91	)		(0.09	)		(0.06	)
Net asset value, end of period	$	28.26		$	27.88		$	23.21		$	26.91		$	27.43		$	19.35
Total Return5
Based on net asset value		1.36	%6		23.40	%		(6.76	)%		5.03	%		42.25	%		13.31	%
Ratios to Average Net Assets
Total expenses		1.21	%7		1.20	%		1.18	%		1.19	%		1.14	%		1.16	%
Total expenses after fees waived and reimbursed		1.05	%7		1.09	%		1.07	%		1.07	%		1.04	%		1.04	%
Net investment income		0.34	%2,7		0.10	%		0.08	%		0.20	%		0.22	%		0.31	%
Supplemental Data
Net assets, end of period (000)	$	3,065		$	3,351		$	3,120		$	3,764		$	4,701		$	3,968
Portfolio turnover rate		115	%		78	%		61	%		57	%		66	%		47	%

¹  Based on average shares outstanding.

²  Net investment income per share and the ratio of net investment income to average net assets includes $0.05 per share and 0.37%, respectively, resulting from a special dividend.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Annualized.

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights (concluded) BlackRock Advantage U.S. Total Market V.I. Fund

	Class III
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	21.89		$	18.36		$	21.73		$	22.50		$	15.90		$	14.09
Net investment income1		0.03	2		0.01			0.01			0.04			0.02			0.04
Net realized and unrealized gain (loss)		0.27			4.29			(1.43	)		1.11			6.67			1.83
Net increase (decrease) from investment operations		0.30			4.30			(1.42	)		1.15			6.69			1.87
Distributions:3
From net investment income		—			(0.03	)		(0.03	)		(0.03	)		(0.09	)		(0.06	)
From net realized gain		—			(0.74	)		(1.92	)		(1.89	)		—			—
From return of capital		—			—			(0.00	)4		—			—			—
Total distributions		—			(0.77	)		(1.95	)		(1.92	)		(0.09	)		(0.06	)
Net asset value, end of period	$	22.19		$	21.89		$	18.36		$	21.73		$	22.50		$	15.90
Total Return5
Based on net asset value		1.37	%6		23.41	%		(6.78	)%		5.07	%		42.08	%		13.28	%
Ratios to Average Net Assets
Total expenses		1.30	%7		1.29	%		1.29	%		1.25	%		1.32	%		1.21	%
Total expenses after fees waived and reimbursed		1.08	%7		1.11	%		1.09	%		1.09	%		1.09	%		1.08	%
Net investment income		0.25	%2,7		0.08	%		0.06	%		0.18	%		0.13	%		0.28	%
Supplemental Data
Net assets, end of period (000)	$	5,359		$	6,184		$	6,152		$	8,002		$	8,764		$	11,262
Portfolio turnover rate		115	%		78	%		61	%		57	%		66	%		47	%

¹  Based on average shares outstanding.

²  Net investment income per share and the ratio of net investment income to average net assets includes $0.04 per share and 0.34%, respectively, resulting from a special dividend.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (Unaudited) BlackRock Advantage U.S. Total Market V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Advantage U.S. Total Market V.I. Fund (the “Fund”) (formerly known as BlackRock Value Opportunities V.I. Fund). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

2. Significant Accounting Policies:

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

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

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

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

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

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Advantage U.S. Total Market V.I. Fund

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

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

• Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the NYSE. Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of trading on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

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

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (continued) BlackRock Advantage U.S. Total Market V.I. Fund

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

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

As of June 30, 2017, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

4. Securities and Other Investments:

Warrants: Warrants entitle the Fund to purchase a specified 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 of the warrants, if any. If the price of the underlying stock does not rise above the strike price before the warrant expires, the warrant generally expires without any value and the Fund will lose any amount it paid for the warrant. Thus, investments in warrants may involve more risk than investments in common stock. Warrants may trade in the same markets as their underlying stock; however, the price of the warrant does not necessarily move with the price of the underlying stock.

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Advantage U.S. Total Market V.I. Fund

parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Citigroup Global Markets, Inc.	$	2,868,987	$	(2,868,987	)	—
Deutsche Bank Securities, Inc.		957,459		(957,459	)	—
Goldman Sachs & Co.		65,339		(65,339	)	—
JP Morgan Securities LLC		1,721,330		(1,721,330	)	—
Morgan Stanley		1,676,554		(1,676,554	)	—
SG Americas Securities LLC		14		(14	)	—
State Street Bank & Trust Co.		228,102		(228,102	)	—
Total	$	7,517,785	$	(7,517,785	)	—

¹  Cash collateral with a value of $7,740,052 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Derivative Financial Instruments:

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

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

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

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

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of Fund’s net assets:

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Notes to Financial Statements (continued) BlackRock Advantage U.S. Total Market V.I. Fund

Average Daily Net Assets	Investment Advisory Fees
First $1 Billion	0.75%
$1 Billion - $3 Billion	0.71%
$3 Billion - $5 Billion	0.68%
$5 Billion - $10 Billion	0.65%
Greater than $10 Billion	0.64%

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

For the six months ended June 30, 2017, the following table shows the class specific distribution fees borne directly by each share class of the Fund:

Class II	Class III	Total
$2,424	$7,222	$9,646

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class II	Class III	Total
$218,285	$3,284	$5,807	$227,376

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in the fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $1,605.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2019. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived by the Manager.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $1,306 for certain accounting services, which is included in accounting services in the Statement of Operations.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Advantage U.S. Total Market V.I. Fund

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

Class I	0.07	%
Class II	0.09	%
Class III	0.01	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2019, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed — class specific in the Statement of Operations.

	Class I	Class II	Class III	Total
Transfer Agent Fees Reimbursed	$141,903	$1,983	$5,547	$149,433

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

Class I	0.55	%
Class II	0.70	%
Class III	0.80	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2019, unless approved by the Board, including a majority of the Independent Directors or by a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, the amount waived by the Manager was $41,337.

Prior to June 12, 2017, the expense limitations as a percentage of average daily net assets are as follows:

Class I	1.25	%
Class II	1.40	%
Class III	1.50	%

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 71.5% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 75% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $26,838 for securities lending agent services.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

Notes to Financial Statements (continued) BlackRock Advantage U.S. Total Market V.I. Fund

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

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the six months ended June 30, 2017, the purchase transactions with affiliated funds in compliance with Rule 17a-7 under the 1940 Act were $63,609,833.

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $288,422,583 and $293,933,558, respectively.

8. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$256,145,492
Gross unrealized appreciation	$	7,797,932
Gross unrealized depreciation		(4,391,724	)
Net unrealized appreciation	$	3,406,208

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments and may experience difficulty in selling those investments in

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (concluded) BlackRock Advantage U.S. Total Market V.I. Fund

a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.

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

11. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		134,451		$	3,755,482			327,636		$	7,975,556
Shares issued in reinvestment of distributions		—			—			251,991			7,055,742
Shares redeemed		(500,504	)		(14,012,483	)		(1,102,731	)		(26,953,529	)
Net decrease		(366,053	)	$	(10,257,001	)		(523,104	)	$	(11,922,231	)
Class II
Shares sold		703		$	19,551			1,234		$	31,358
Shares issued in reinvestment of distributions		—			—			3,196			89,337
Shares redeemed		(12,444	)		(350,760	)		(18,686	)		(468,111	)
Net decrease		(11,741	)	$	(331,209	)		(14,256	)	$	(347,416	)
Class III
Shares sold		11,804		$	256,777			16,572		$	323,624
Shares issued in reinvestment of distributions		—			—			9,584			210,277
Shares redeemed		(52,801	)		(1,165,021	)		(78,719	)		(1,580,015	)
Net decrease		(40,997	)	$	(908,244	)		(52,563	)	$	(1,046,114	)
Total Net Decrease		(418,791	)	$	(11,496,454	)		(589,923	)	$	(13,315,761	)

12. 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.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 23

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Basic Value V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock Basic Value V.I. Fund

      Investment Objective

BlackRock Basic Value V.I. Fund’s (the “Fund”) investment objective is to seek capital appreciation and, secondarily, income.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund underperformed its benchmark, the Russell 1000^® Value Index.

What factors influenced performance?

• Stock selection within the energy sector was the most significant detractor from performance over the period. Falling oil prices weighed on the Fund’s overweight positions in oil producers Gulfport Energy Corp., Apache Corp. and Devon Energy Corp. While exposure to these names has been maintained based on company-specific value opportunities, the Fund trimmed the positions to reduce and diversify the portfolio’s energy risk exposure.

• Stock selection in consumer staples, specifically an overweight position in grocery store operator The Kroger Company, detracted. The stock came under pressure after the company lowered 2017 earnings guidance and in the wake of the announced acquisition of Whole Foods by Amazon. The Fund maintained the position on the view that Kroger is a quality franchise and well-positioned relative to its peers to withstand the secular pressures impacting the food retailing industry.

• Credit card holdings Discover Financial Services, Inc. and Capital One Financial Corp. drove the Fund’s underperformance within the financials sector. Both stocks underperformed after disappointing first quarter earnings results revealed higher-than-expected loss provisions. While banks can offset higher loss provisions through improved margins from higher interest rates, credit card companies do not have the same

interest rate exposure. The Fund reduced exposure to credit card companies in favor of banks within the financials sector.

• The most significant positive contributor to relative performance was an overweight allocation to and stock selection within the health care sector. Most notably, overweight positions in drug companies Baxter International Inc. and Novartis International AG generated positive performance following strong first quarter earnings results.

• Within materials, an overweight position in specialty chemicals manufacturer Akzo Nobel NV benefited relative performance after PPG Industries placed a bid to acquire the Dutch company.

• Within consumer discretionary, a position in Newell Brands Inc., a marketer of a wide range of consumer products, outperformed in the period.

Describe recent portfolio activity.

• During the period, the Fund’s allocation to the information technology (“IT”) and consumer staples sectors increased modestly, while the weightings in financials and energy declined.

Describe portfolio positioning at period end.

• Relative to the Russell 1000^® Value Index, the Fund ended the period with the largest sector overweights in IT, health care, financials, telecommunications and utilities, while the most significant underweights were in industrials, real estate, consumer staples and energy.

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

      Portfolio Information

Sector Allocation	Percent of Net Assets
Financials	27%
Health Care	16
Information Technology	13
Energy	9
Consumer Staples	7
Consumer Discretionary	7
Utilities	7
Telecommunication Services	4
Industrials	3
Materials	3
Short-Term Securities	10
Liabilities in Excess of Other Assets	(6)

For Fund compliance purposes, the Fund’s sector classifications refer to 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 the investment adviser. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock Basic 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 invests primarily in equity securities that Fund management believes are undervalued, which means that their prices are less than Fund management believes they are worth.

³  An unmanaged index that is a subset of the Russell 1000^® Index that consists of those Russell 1000^® securities with lower price-to-book ratios and lower expected growth values.

Performance Summary for the Period Ended June 30, 2017
		Average Annual Total Returns
	6-Month Total Returns5	1 Year5	5 Years5	10 Years5
Class I4	(0.79)%	11.42%	12.59%	5.06%
Class II4	(0.86)	11.20	12.40	4.89
Class III4	(0.93)	11.11	12.28	4.77
Russell 1000® Value Index	4.66	15.53	13.94	5.57

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

⁵  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

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

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

Expense Example
	Actual			Hypothetical7
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period6	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period6	Annualized Expense Ratio
Class I	$1,000.00	$992.10	$3.61	$1,000.00	$1,021.17	$3.66	0.73%
Class II	$1,000.00	$991.40	$4.44	$1,000.00	$1,020.33	$4.51	0.90%
Class III	$1,000.00	$990.70	$4.99	$1,000.00	$1,019.79	$5.06	1.01%

⁶  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).

⁷  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock Basic Value V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Basic Value V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 0.1%
Northrop Grumman Corp.		1,480	$	379,931
Raytheon Co.		1,647		265,958
				645,889
Airlines — 0.2%
Delta Air Lines, Inc.		20,104		1,080,389
Auto Components — 0.8%
Lear Corp.		27,170		3,860,314
Banks — 13.6%
Bank of America Corp. (a)		516,505		12,530,411
Citigroup, Inc.		352,770		23,593,258
JPMorgan Chase & Co.		232,527		21,252,968
KeyCorp		193,630		3,628,626
Regions Financial Corp.		311,578		4,561,502
				65,566,765
Beverages — 0.3%
PepsiCo, Inc.		12,354		1,426,763
Biotechnology — 2.5%
Gilead Sciences, Inc.		172,874		12,236,022
Capital Markets — 2.3%
Morgan Stanley		88,115		3,926,404
Nasdaq, Inc.		100,090		7,155,434
				11,081,838
Chemicals — 0.6%
Akzo Nobel NV — ADR		101,899		2,956,090
Communications Equipment — 5.0%
Cisco Systems, Inc.		775,921		24,286,327
Consumer Finance — 5.2%
Capital One Financial Corp.		124,500		10,286,190
Discover Financial Services		169,010		10,510,732
SLM Corp. (b)		348,596		4,008,854
				24,805,776
Containers & Packaging — 1.5%
Avery Dennison Corp.		12,262		1,083,593
Bemis Co., Inc.		31,763		1,469,039
Crown Holdings, Inc. (a)(b)		29,478		1,758,657
Graphic Packaging Holding Co.		81,322		1,120,617
Owens-Illinois, Inc. (b)		67,654		1,618,284
				7,050,190
Diversified Telecommunication Services — 1.9%
Verizon Communications, Inc.		206,520		9,223,183
Electric Utilities — 3.6%
American Electric Power Co., Inc.		21,969		1,526,186
Duke Energy Corp.		14,130		1,181,127
Exelon Corp.		403,277		14,546,201
				17,253,514

Common Stocks	Shares		Value
Equity Real Estate Investment Trusts (REITs) — 0.2%
Brixmor Property Group, Inc.		51,410	$	919,211
Food & Staples Retailing — 4.2%
CVS Health Corp.		20,234		1,628,028
Kroger Co.		362,929		8,463,504
Walgreens Boots Alliance, Inc.		127,478		9,982,802
				20,074,334
Food Products — 1.8%
General Mills, Inc. (a)		66,142		3,664,267
Hormel Foods Corp. (a)		24,880		848,657
JM Smucker Co. (a)		22,392		2,649,645
Mondelez International, Inc., Class A		39,799		1,718,919
				8,881,488
Health Care Equipment & Supplies — 7.6%
Baxter International, Inc.		246,962		14,951,079
Hologic, Inc. (b)		46,553		2,112,575
Medtronic PLC		52,583		4,666,741
Zimmer Biomet Holdings, Inc.		115,514		14,831,998
				36,562,393
Household Durables — 1.0%
Newell Brands, Inc.		90,621		4,859,098
Independent Power and Renewable Electricity Producers — 2.9%
AES Corp.		1,097,796		12,196,514
Dynegy, Inc. (a)(b)		194,009		1,604,454
				13,800,968
Industrial Conglomerates — 0.3%
Honeywell International, Inc.		10,489		1,398,079
Insurance — 5.3%
American International Group, Inc.		62,604		3,914,002
Hartford Financial Services Group, Inc.		115,436		6,068,470
Lincoln National Corp.		67,093		4,534,145
Prudential Financial, Inc.		64,385		6,962,594
XL Group Ltd.		97,467		4,269,055
				25,748,266
Internet Software & Services — 0.9%
eBay, Inc. (b)		119,075		4,158,099
IT Services — 0.2%
First Data Corp., Class A (b)		55,803		1,015,615
Media — 4.1%
Comcast Corp., Class A		188,609		7,340,662
Interpublic Group of Cos., Inc. (a)		228,719		5,626,487
Omnicom Group, Inc. (a)		21,944		1,819,158
Scripps Networks Interactive, Inc., Class A (a)		69,558		4,751,507
				19,537,814
Metals & Mining — 0.5%
Reliance Steel & Aluminum Co.		31,596		2,300,505

Portfolio Abbreviation
ADR	American Depositary Receipts

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock Basic Value V.I. Fund

Common Stocks	Shares		Value
Multiline Retail — 0.8%
Dollar General Corp.		55,221	$	3,980,882
Multi-Utilities — 0.1%
Public Service Enterprise Group, Inc.		13,734		590,699
Oil, Gas & Consumable Fuels — 9.4%
Apache Corp. (a)		101,218		4,851,379
ConocoPhillips		212,794		9,354,424
Devon Energy Corp.		303,857		9,714,308
Gulfport Energy Corp. (b)		336,082		4,957,209
Marathon Oil Corp.		388,207		4,600,253
Marathon Petroleum Corp.		82,936		4,340,041
Occidental Petroleum Corp.		15,947		954,747
Suncor Energy, Inc.		81,715		2,386,078
Valero Energy Corp.		61,285		4,134,286
				45,292,725
Personal Products — 0.2%
Unilever NV — NY Shares (a)		19,736		1,090,809
Pharmaceuticals — 6.3%
Novartis AG — ADR (a)		114,911		9,591,621
Pfizer, Inc.		610,768		20,515,697
				30,107,318
Professional Services — 2.0%
Nielsen Holdings PLC		255,250		9,867,965
Road & Rail — 0.7%
Norfolk Southern Corp.		27,578		3,356,243
Semiconductors & Semiconductor Equipment — 3.9%
NXP Semiconductors NV (b)		14,307		1,565,901
QUALCOMM, Inc.		309,830		17,108,813
				18,674,714
Software — 1.1%
Oracle Corp.		106,978		5,363,877
Technology Hardware, Storage & Peripherals — 2.1%
Apple Inc.		69,503		10,009,822

Common Stocks	Shares		Value
Thrifts & Mortgage Finance — 0.2%
New York Community Bancorp, Inc. (a)		79,365	$	1,042,062
Tobacco — 0.5%
Philip Morris International, Inc.		19,202		2,255,275
Wireless Telecommunication Services — 1.7%
Telephone & Data Systems, Inc.		269,283		7,472,603
United States Cellular Corp. (a)(b)		19,830		759,886
				8,232,489
Total Common Stocks — 95.6%				460,593,810
Preferred Stocks
Food Products — 0.4%
Tyson Foods, Inc., 4.75% (c)		31,368		2,126,123
Total Long-Term Investments (Cost — $399,015,932) — 96.0%				462,719,933
Short-Term Securities
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (d)(e)		18,317,081		18,317,081
SL Liquidity Series, LLC, Money Market Series, 1.27% (d)(e)(f)		28,312,707		28,315,538
Total Short-Term Securities (Cost — $46,635,450) — 9.7%				46,632,619
Total Investments (Cost — $445,651,382) — 105.7%				509,352,552
Liabilities in Excess of Other Assets — (5.7)%				(27,510,364	)
Net Assets — 100.0%			$	481,842,188

      Notes to Schedule of Investments

(a) Security, or a portion of the security, is on loan.

(b) Non-income producing security.

(c) Convertible security.

(d) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity		Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized gain		Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		9,004,744		9,312,337		18,317,081	$	18,317,081	$	22,727			—		—
SL Liquidity Series, LLC Money Market Series		15,486,989		12,825,718		28,312,707		28,315,538		28,524	1		$1,275		$(1,892)
Total							$	46,632,619	$	51,251			$1,275		$(1,892)

¹  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(e) Current yield as of period end.

(f) Security was purchased with the cash collateral from loaned securities.

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

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock Basic Value V.I. Fund

      Fair Value Hierarchy as of Period End

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

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments1	$	462,719,933		—		—	$	462,719,933
Short-Term Securities		18,317,081		—		—		18,317,081
Subtotal	$	481,037,014		—		—	$	481,037,014
Investments Valued at NAV2								28,315,538
Total Investments							$	509,352,552

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

²  As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Basic Value V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $27,656,979) (cost — $399,015,932)	$	462,719,933
Investments at value — affiliated (cost — $46,635,450)		46,632,619
Receivables:
Investments sold		687,555
Securities lending income — affiliated		5,410
Capital shares sold		841,951
Dividends — affiliated		12,271
Dividends — unaffiliated		211,462
From the Manager		104,920
Prepaid expenses		1,311
Total assets		511,217,432
Liabilities
Cash collateral on securities loaned at value		28,312,546
Payables:
Investments purchased		487,409
Capital shares redeemed		27,580
Distribution fees		18,470
Investment advisory fees		235,953
Officer’s and Directors’ fees		1,984
Other accrued expenses		287,137
Other affiliates		4,165
Total liabilities		29,375,244
Net Assets	$	481,842,188
Net Assets Consist of
Paid-in capital	$	409,558,638
Undistributed net investment income		3,218,639
Undistributed net realized gain		5,363,741
Net unrealized appreciation (depreciation)		63,701,170
Net Assets	$	481,842,188
Net Asset Value
Class I — Based on net assets of $388,283,195 and 25,737,815 shares outstanding, 300 million shares authorized, $0.10 par value	$	15.09
Class II — Based on net assets of $4,990,128 and 332,021 shares outstanding, 100 million shares authorized, $0.10 par value	$	15.03
Class III — Based on net assets of $88,568,865 and 5,926,647 shares outstanding, 100 million shares authorized, $0.10 par value	$	14.94

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Basic Value V.I. Fund
Investment Income
Dividends — unaffiliated	$	5,167,928
Securities lending — affiliated — net		28,524
Dividends — affiliated		22,727
Foreign taxes withheld		(35,901	)
Total investment income		5,183,278
Expenses
Investment advisory		1,519,963
Transfer agent — class specific		488,718
Distribution — class specific		135,071
Accounting services		60,052
Professional		38,414
Custodian		28,841
Printing		27,209
Officer and Directors		13,200
Transfer agent		2,480
Miscellaneous		7,714
Total expenses		2,321,662
Less:
Fees waived by the Manager		(2,476	)
Transfer agent fees reimbursed — class specific		(320,239	)
Total expenses after fees waived and/or reimbursed		1,998,947
Net investment income		3,184,331
Realized and Unrealized Gain (Loss)
Net realized gain from:
Investments — unaffiliated		4,661,385
Investments — affiliated		1,275
		4,662,660
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		(12,155,138	)
Investments — affiliated		(1,892	)
		(12,157,030	)
Total realized and unrealized loss		(7,494,370	)
Net Decrease in Net Assets Resulting from Operations	$	(4,310,039	)

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Statements of Changes in Net Assets BlackRock Basic Value V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	3,184,331		$	7,398,267
Net realized gain		4,662,660			11,127,761
Net change in unrealized appreciation (depreciation)		(12,157,030	)		62,151,962
Net increase (decrease) in net assets resulting from operations		(4,310,039	)		80,677,990
Distributions to Shareholders1
From net investment income:
Class I		—			(5,872,962	)
Class II		—			(67,020	)
Class III		—			(1,460,033	)
From net realized gain:
Class I		—			(9,240,298	)
Class II		—			(121,410	)
Class III		—			(2,595,104	)
Decrease in net assets resulting from distributions to shareholders		—			(19,356,827	)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(42,504,061	)		23,301,671
Net Assets
Total increase (decrease) in net assets		(46,814,100	)		84,622,834
Beginning of period		528,656,288			444,033,454
End of period	$	481,842,188		$	528,656,288
Undistributed net investment income, end of period	$	3,218,639		$	34,308

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock Basic Value V.I. Fund

	Class I
	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,
				2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	15.21		$	13.36		$	16.42		$	17.44		$	12.80		$	11.43
Net investment income1		0.10			0.23			0.24			0.25			0.22			0.22
Net realized and unrealized gain (loss)		(0.22	)		2.19			(1.20	)		1.51			4.65			1.38
Net increase (decrease) from investment operations		(0.12	)		2.42			(0.96	)		1.76			4.87			1.60
Distributions:2
From net investment income		—			(0.22	)		(0.25	)		(0.27	)		(0.23	)		(0.23	)
From net realized gain		—			(0.35	)		(1.85	)		(2.51	)		—			—
Total distributions		—			(0.57	)		(2.10	)		(2.78	)		(0.23	)		(0.23	)
Net asset value, end of period	$	15.09		$	15.21		$	13.36		$	16.42		$	17.44		$	12.80
Total Return3
Based on net asset value		(0.79	)%4		18.19	%		(5.95	)%		9.93	%		38.07	%		14.05	%
Ratios to Average Net Assets
Total expenses		0.85	%5		0.84	%		0.86	%		0.85	%		0.84	%		0.79	%
Total expenses after fees waived and/or reimbursed		0.73	%5		0.73	%		0.73	%		0.72	%		0.72	%		0.71	%
Net investment income		1.32	%5		1.63	%		1.47	%		1.40	%		1.41	%		1.79	%
Supplemental Data
Net assets, end of period (000)	$	388,283		$	409,216		$	393,370		$	468,876		$	448,299		$	363,954
Portfolio turnover rate		16	%		45	%		50	%		39	%		47	%		42	%
	Class II
	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,
				2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	15.16		$	13.33		$	16.38		$	17.40		$	12.77		$	11.40
Net investment income1		0.09			0.20			0.21			0.22			0.19			0.20
Net realized and unrealized gain (loss)		(0.22	)		2.18			(1.18	)		1.51			4.64			1.38
Net increase (decrease) from investment operations		(0.13	)		2.38			(0.97	)		1.73			4.83			1.58
Distributions:2
From net investment income		—			(0.20	)		(0.23	)		(0.24	)		(0.20	)		(0.21	)
From net realized gain		—			(0.35	)		(1.85	)		(2.51	)		—			—
Total distributions		—			(0.55	)		(2.08	)		(2.75	)		(0.20	)		(0.21	)
Net asset value, end of period	$	15.03		$	15.16		$	13.33		$	16.38		$	17.40		$	12.77
Total Return3
Based on net asset value		(0.86	)%4		17.88	%		(6.07	)%		9.75	%		37.85	%		13.89	%
Ratios to Average Net Assets
Total expenses		1.02	%5		1.02	%		1.02	%		1.02	%		1.01	%		0.95	%
Total expenses after fees waived and/or reimbursed		0.90	%5		0.90	%		0.90	%		0.89	%		0.89	%		0.87	%
Net investment income		1.15	%5		1.47	%		1.30	%		1.23	%		1.24	%		1.63	%
Supplemental Data
Net assets, end of period (000)	$	4,990		$	5,280		$	5,466		$	6,233		$	6,715		$	6,058
Portfolio turnover rate		16	%		45	%		50	%		39	%		47	%		42	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Financial Highlights (concluded) BlackRock Basic Value V.I. Fund

	Class III
	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,
				2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	15.08		$	13.28		$	16.32		$	17.35		$	12.74		$	11.37
Net investment income1		0.08			0.18			0.19			0.20			0.17			0.19
Net realized and unrealized gain (loss)		(0.22	)		2.17			(1.17	)		1.50			4.62			1.38
Net increase (decrease) from investment operations		(0.14	)		2.35			(0.98	)		1.70			4.79			1.57
Distributions:2
From net investment income		—			(0.20	)		(0.21	)		(0.22	)		(0.18	)		(0.20	)
From net realized gain		—			(0.35	)		(1.85	)		(2.51	)		—			—
Total distributions		—			(0.55	)		(2.06	)		(2.73	)		(0.18	)		(0.20	)
Net asset value, end of period	$	14.94		$	15.08		$	13.28		$	16.32		$	17.35		$	12.74
Total Return3
Based on net asset value		(0.93	)%4		17.72	%		(6.15	)%		9.63	%		37.65	%		13.81	%
Ratios to Average Net Assets
Total expenses		1.16	%5		1.04	%		1.13	%		1.11	%		1.12	%		1.05	%
Total expenses after fees waived and/or reimbursed		1.01	%5		1.00	%		1.01	%		1.00	%		1.00	%		0.98	%
Net investment income		1.02	%5		1.25	%		1.19	%		1.11	%		1.14	%		1.52	%
Supplemental Data
Net assets, end of period (000)	$	88,569		$	114,160		$	45,197		$	54,394		$	47,184		$	38,758
Portfolio turnover rate		16	%		45	%		50	%		39	%		47	%		42	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Annualized.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (Unaudited) BlackRock Basic Value V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Basic Value V.I. Fund (the “Fund”). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

2. Significant Accounting Policies:

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

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

Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

SEC Reporting Modernization: U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Financial Statements (continued) BlackRock Basic Value V.I. Fund

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

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

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

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

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

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

4. Securities and Other Investments:

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.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Basic Value V.I. Fund

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Citigroup Global Markets, Inc.	$	23,302,340	$	(23,302,340	)	—
Deutsche Bank Securities Inc.		1,734,047		(1,734,047	)	—
JP Morgan Securities LLC		961,771		(961,771	)	—
Morgan Stanley		892,861		(892,861	)	—
State Street Bank & Trust Co.		765,960		(765,960	)	—
Total	$	27,656,979	$	(27,656,979	)	—

¹  Cash collateral with a value of $28,312,546 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (continued) BlackRock Basic Value V.I. Fund

Average Daily Net Assets	Investment Advisory Fees
First $1 Billion	0.60%
$1 Billion - $3 Billion	0.56%
$3 Billion - $5 Billion	0.54%
$5 Billion - $10 Billion	0.52%
Greater than $10 Billion	0.51%

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

	Class II	Class III
Distribution Fee	0.15%	0.25%

For the six months ended June 30, 2017, the following table shows the class specific distribution fees borne directly by each share class of the Fund:

Class II	Class III	Total
$3,878	$131,193	$135,071

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class II	Class III	Total
$355,435	$5,221	$128,062	$488,718

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in the fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $2,476.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived by the Manager.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $2,739 for certain accounting services, which is included in accounting services in the Statement of Operations.

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

Class I	0.06	%
Class II	0.08	%
Class III	0.09	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Basic Value V.I. Fund

by a vote of a majority of the outstanding voting securities of the Fund. The following table shows the class specific expense reimbursements shown as Transfer agent fees reimbursed — class specific in the Statement of Operations.

	Class I		Class II		Class III		Total
Transfer Agent Fees Reimbursed	$	236,392		$3,152	$	80,695	$	320,239

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

Class I	1.25	%
Class II	1.40	%
Class III	1.50	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 71.5% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 75% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $10,376 for securities lending agent services.

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

6. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $79,101,718 and $126,072,200, respectively.

7. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (continued) BlackRock Basic Value V.I. Fund

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	450,008,859
Gross unrealized appreciation	$	76,359,781
Gross unrealized depreciation		(17,016,088	)
Net unrealized appreciation	$	59,343,693

8. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

9. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

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

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

Concentration Risk: As of period end, the Fund invested a significant portion of its assets in securities in the financials sector. Changes in economic conditions affecting such sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (concluded) BlackRock Basic Value V.I. Fund

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017							Year Ended December 31, 2016
		Shares		��	Amount				Shares			Amount
Class I
Shares sold			479,293		$	7,285,845				513,208		$	7,180,733
Shares issued in reinvestment of distributions			—			—				997,564			15,113,260
Shares redeemed			(1,651,933	)		(25,150,404	)			(4,036,476	)		(56,435,698	)
Net decrease			(1,172,640	)	$	(17,864,559	)			(2,525,704	)	$	(34,141,705	)
Class II
Shares sold			4,289		$	64,155				—			—
Shares issued in reinvestment of distributions			—			—				12,491		$	188,430
Shares redeemed			(20,513	)		(309,269	)			(74,442	)		(1,035,844	)
Net decrease			(16,224	)	$	(245,114	)			(61,951	)	$	(847,414	)
Class III
Shares sold			511,481		$	7,670,957				5,548,659		$	78,156,015
Shares issued in reinvestment of distributions			—			—				269,920			4,055,137
Shares redeemed			(2,152,927	)		(32,065,345	)			(1,655,158	)		(23,920,362	)
Net increase (decrease)			(1,641,446	)	$	(24,394,388	)			4,163,421		$	58,290,790
Total Net Increase (Decrease)			(2,830,310	)	$	(42,504,061	)			1,575,766		$	23,301,671

11. 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.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Capital Appreciation V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock Capital Appreciation V.I. Fund

          Investment Objective

BlackRock Capital Appreciation V.I. Fund’s (the “Fund”) investment objective is to seek long-term growth of capital.

          Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund outperformed the benchmark Russell 1000^® Growth Index and the broad-market S&P 500^® Index. The following discussion of relative performance pertains to the Russell 1000^® Growth Index.

What factors influenced performance?

• In sector terms, information technology (“IT”) was the largest contributor to relative performance, led by internet software & services holdings. The consumer sectors also aided results. Internet & direct marketing retail names, positioning within specialty retail and lack of exposure to media companies benefited in consumer discretionary, while beverages and an underweight to food & staples retailing added in consumer staples. Conversely, health care was a prime detractor from returns due to weakness in biotechnology. Financials also weighed on performance, in particular bank and diversified financial services holdings.

• In stock specifics, the top individual contributor was Tencent Holdings Ltd. Tencent continues to outperform as its revenue growth accelerates, proving the investment adviser’s thesis of growing monetization of the company’s dominant WeChat communication platform.

• Positions in Activision Blizzard Inc. and Amazon.com Inc. also added value. Activision shares gained following strong earnings performance and increased investor confidence in video game secular growth. Amazon outperformed as continued underperformance among traditional retailers focused investors on its share gain opportunities. In addition, the company’s advertising opportunity has come to the fore.

• The largest individual detractor was Alexion Pharmaceuticals Inc. Early in the period, Alexion underperformed despite reporting fourth-quarter 2016 earnings and 2017 guidance that were in line with expectations. Later, the company disclosed that its regional office in Brazil is being

investigated for alleged sales irregularities pertaining to its flagship product Soliris. While Soliris sales in Brazil account for less than 5% of overall revenue, the news heightened investor concerns over the company’s sales practices and management’s control of its operations. The company then also announced the departure of its interim Chief Financial Officer, head of R&D and head of Human Resources. While not entirely surprising, the departures further contributed to negative sentiment.

• Elsewhere, the position in Acuity Brands Inc. was a drag. The LED-lighting leader underperformed after reporting weaker than expected results in its fiscal 2017 first and second quarters due to an industry slowing in short-cycle business. While management does not expect the business to rebound substantially until 2018, its fiscal third quarter (reported in late June) showed improvement and Acuity beat consensus expectations on both top line and margin. An underweight to Apple Inc. also weighed on returns. Despite first-half strength, the investment adviser maintains its underweight.

Describe recent portfolio activity.

• Due to a combination of portfolio trading activity and market movement during the six-month period, the portfolio’s weighting in IT substantially increased, particularly within software and internet software & services. Health care and real estate exposures also increased. Exposure to financials and industrials decreased, largely with respect to diversified financial services, banks and airlines. Energy saw declines as well.

Describe portfolio positioning at period end.

• As of period end, the Fund’s largest sector overweight relative to the Russell 1000^® Growth Index was IT, followed by financials and health care. Industrials and consumer staples were the largest portfolio underweights.

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, 2017

BlackRock Capital Appreciation 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. 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, as adjusted to reflect the distribution and/or service (12b-1) fees applicable to the Class III Shares.

²  The Fund invests primarily in a diversified portfolio consisting primarily of common stock of U.S. companies that the investment adviser believes have exhibited above-average growth rates in earnings over the long-term.

³  An unmanaged index that measures the performance of the large cap growth segment of the U.S. equity universe and consists of those Russell 1000^® securities with higher price-to-book ratios and higher forecasted growth values.

⁴  An unmanaged index that covers 500 leading companies and captures approximately 80% coverage of available market capitalization.

Performance Summary for the Period Ended June 30, 2017
		Average Annual Total Returns
	6-Month Total Returns6	1 Year6			5 Years6			10 Years6
Class I5	17.50%		22.88	%		14.25	%	7.73%
Class III5	17.29		22.56			13.93		7.467
Russell 1000® Growth Index	13.99		20.42			15.30		8.91
S&P 500® Index	9.34		17.90			14.63		7.18

⁵  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.

⁶  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

⁷  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, as adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

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

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

Expense Example
	Actual			Hypothetical9
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period8	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period8	Annualized Expense Ratio
Class I	$1,000.00	$1,175.00	$4.26	$1,000.00	$1,020.88	$3.96	0.79%
Class III	$1,000.00	$1,172.90	$5.66	$1,000.00	$1,019.59	$5.26	1.05%

⁸  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).

⁹  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

BlackRock Capital Appreciation V.I. Fund

    Portfolio Information as of June 30, 2017

Sector Allocation	Percent of Net Assets
Information Technology	42%
Consumer Discretionary	20
Health Care	16
Financials	7
Industrials	6
Consumer Staples	4
Materials	2
Real Estate	2
Energy	1
Telecommunication Services	1
Short-Term Securities	5
Liabilities in Excess of Other Assets	(6)

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

Disclosure of Expenses

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Capital Appreciation V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 1.2%
TransDigm Group, Inc. (a)		16,752	$	4,504,110
Banks — 5.4%
Bank of America Corp.		364,439		8,841,290
First Republic Bank		55,625		5,568,064
SunTrust Banks, Inc.		35,638		2,021,387
SVB Financial Group (b)		10,487		1,843,510
Wells Fargo & Co.		42,659		2,363,735
				20,637,986
Beverages — 3.5%
Constellation Brands, Inc., Class A		57,071		11,056,365
Dr. Pepper Snapple Group, Inc.		25,137		2,290,232
				13,346,597
Biotechnology — 7.7%
Alexion Pharmaceuticals, Inc. (b)		94,987		11,557,068
Biogen, Inc. (b)		24,134		6,549,002
Celgene Corp. (b)		59,925		7,782,460
Regeneron Pharmaceuticals, Inc. (b)		4,052		1,990,099
Vertex Pharmaceuticals, Inc. (b)		15,113		1,947,612
				29,826,241
Capital Markets — 0.4%
S&P Global, Inc.		10,582		1,544,866
Chemicals — 2.3%
Monsanto Co.		31,907		3,776,513
Sherwin-Williams Co.		15,000		5,264,400
				9,040,913
Diversified Financial Services — 1.4%
Berkshire Hathaway, Inc., Class B (b)		31,883		5,400,024
Diversified Telecommunication Services — 0.4%
Zayo Group Holdings, Inc. (b)		55,452		1,713,467
Electrical Equipment — 1.9%
Acuity Brands, Inc. (a)		35,790		7,275,391
Equity Real Estate Investment Trusts (REITs) — 2.1%
Equinix, Inc.		11,016		4,727,627
SBA Communications Corp. (b)		24,484		3,302,892
				8,030,519
Health Care Equipment & Supplies — 3.1%
Becton Dickinson and Co.		29,287		5,714,187
Boston Scientific Corp. (b)		228,039		6,321,241
				12,035,428
Health Care Providers & Services — 4.6%
UnitedHealth Group, Inc.		96,634		17,917,876
Hotels, Restaurants & Leisure — 1.2%
Domino’s Pizza, Inc.		21,933		4,639,487

Common Stocks	Shares		Value
Industrial Conglomerates — 1.0%
Roper Technologies, Inc.		17,232	$	3,989,725
Internet & Direct Marketing Retail — 13.4%
Amazon.com, Inc. (b)		30,338		29,367,184
Netflix, Inc. (b)		68,491		10,233,240
Priceline Group, Inc. (b)		6,537		12,227,589
				51,828,013
Internet Software & Services — 14.9%
Alibaba Group Holding Ltd. — ADR (a)(b)		40,745		5,740,971
Alphabet, Inc., Class A (b)		28,382		26,386,178
Facebook, Inc., Class A (b)		80,209		12,109,955
Tencent Holdings Ltd.		369,700		13,262,973
				57,500,077
IT Services — 6.6%
Cognizant Technology Solutions Corp., Class A		61,598		4,090,107
Global Payments, Inc.		57,870		5,226,818
PayPal Holdings, Inc. (b)		40,873		2,193,654
Visa, Inc., Class A		147,580		13,840,052
				25,350,631
Multiline Retail — 0.9%
Dollar Tree, Inc. (b)		47,777		3,340,568
Oil, Gas & Consumable Fuels — 0.8%
Pioneer Natural Resources Co.		19,479		3,108,459
Pharmaceuticals — 0.9%
Zoetis, Inc.		55,407		3,456,289
Professional Services — 2.0%
Equifax, Inc.		56,012		7,697,169
Semiconductors & Semiconductor Equipment — 5.6%
Advanced Micro Devices, Inc. (b)		220,087		2,746,686
ASML Holding NV		45,322		5,905,910
Broadcom Ltd.		31,746		7,398,405
NVIDIA Corp.		22,922		3,313,604
Teradyne, Inc.		75,368		2,263,301
				21,627,906
Software — 11.8%
Activision Blizzard, Inc.		76,929		4,428,803
Adobe Systems, Inc. (b)		44,944		6,356,879
Autodesk, Inc. (b)		78,220		7,886,140
Microsoft Corp.		311,541		21,474,521
salesforce.com, Inc. (b)		20,771		1,798,769
Snap, Inc., Class A (a)(b)		131,797		2,342,033
Zendesk, Inc. (b)		44,823		1,245,183
				45,532,328
Specialty Retail — 3.1%
Home Depot, Inc.	��	51,861		7,955,477

Portfolio Abbreviation
ADR	American Depositary Receipts

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock Capital Appreciation V.I. Fund

Common Stocks	Shares		Value
Specialty Retail (continued)
Ulta Beauty, Inc. (b)		13,366	$	3,840,586
				11,796,063
Technology Hardware, Storage & Peripherals — 1.6%
Apple Inc.		43,438		6,255,941
Textiles, Apparel & Luxury Goods — 1.6%
NIKE, Inc., Class B		101,449		5,985,491
Total Common Stocks — 99.4%				383,381,565

Preferred Stocks — 1.0%	Shares		Value
Palantir Technologies, Inc., Series I (Acquired 2/07/14, cost $2,858,021) (b)(c)(d)		466,235	$	3,734,542
Total Long-Term Investments (Cost — $301,106,828) — 100.4%				387,116,107
Short-Term Securities
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (e)(f)		203,035		203,035
SL Liquidity Series, LLC, Money Market Series, 1.27% (e)(f)(g)		19,523,204		19,525,156
Total Short-Term Securities (Cost — $19,730,027) — 5.1%				19,728,191
Total Investments (Cost — $320,836,855) — 105.5%				406,844,298
Liabilities in Excess of Other Assets — (5.5)%				(21,338,749	)
Net Assets — 100.0%			$	385,505,549

      Notes to Schedule of Investments

(a) Security, or a portion of the security, is on loan.

(b) Non-income producing security.

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

(d) Restricted security as to resale, excluding 144A securities. The Fund held restricted securities with a current value of $3,734,542, representing 0.9% of its net assets as of period end, and an original cost of $2,858,021.

(e) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity			Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Gain		Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		3,707,694		(3,504,659	)		203,035	$	203,035	$	7,231			—		—
SL Liquidity Series, LLC, Money Market Series		4,725,932		14,797,272			19,523,204		19,525,156		81,880	1		$908		$(1,417)
Total								$	19,728,191	$	89,111			$908		$(1,417)

¹  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(f) Current yield as of period end.

(g) Security was purchased with the cash collateral from loaned securities.

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

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Capital Appreciation V.I. Fund

      Fair Value Hierarchy as of Period End

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

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Aerospace & Defense	$	4,504,110		—			—	$	4,504,110
Banks		20,637,986		—			—		20,637,986
Beverages		13,346,597		—			—		13,346,597
Biotechnology		29,826,241		—			—		29,826,241
Capital Markets		1,544,866		—			—		1,544,866
Chemicals		9,040,913		—			—		9,040,913
Diversified Financial Services		5,400,024		—			—		5,400,024
Diversified Telecommunication Services		1,713,467		—			—		1,713,467
Electrical Equipment		7,275,391		—			—		7,275,391
Equity Real Estate Investment Trusts (REITs)		8,030,519		—			—		8,030,519
Health Care Equipment & Supplies		12,035,428		—			—		12,035,428
Health Care Providers & Services		17,917,876		—			—		17,917,876
Hotels, Restaurants & Leisure		4,639,487		—			—		4,639,487
Industrial Conglomerates		3,989,725		—			—		3,989,725
Internet & Direct Marketing Retail		51,828,013		—			—		51,828,013
Internet Software & Services		44,237,104		$    13,262,973			—		57,500,077
IT Services		25,350,631		—			—		25,350,631
Multiline Retail		3,340,568		—			—		3,340,568
Oil, Gas & Consumable Fuels		3,108,459		—			—		3,108,459
Pharmaceuticals		3,456,289		—			—		3,456,289
Professional Services		7,697,169		—	��		—		7,697,169
Semiconductors & Semiconductor Equipment		21,627,906		—			—		21,627,906
Software		45,532,328		—			—		45,532,328
Specialty Retail		11,796,063		—			—		11,796,063
Technology Hardware, Storage & Peripherals		6,255,941		—			—		6,255,941
Textiles, Apparel & Luxury Goods		5,985,491		—			—		5,985,491
Preferred Stocks:
Software		—		—			$    3,734,542		3,734,542
Short-Term Securities		203,035		—			—		203,035
Subtotal	$	370,321,627	$	13,262,973			$    3,734,542	$	387,319,142
Investments Valued at NAV1									19,525,156
Total Investments								$	406,844,298
1    As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

During the six month ended June 30, 2017, there were no transfers between Level 1 and Level 2.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Schedule of Investments (concluded) BlackRock Capital Appreciation V.I. Fund

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

	Preferred Stocks
Assets:
Opening Balance, as of December 31, 2016	$	3,771,841
Transfers into Level 3		—
Transfers out of Level 3		—
Accrued discounts/premiums		—
Net realized gain (loss)		—
Net change in unrealized appreciation (depreciation)1,2		(37,299	)
Purchases		—
Sales		—
Closing Balance, as of June 30, 2017	$	3,734,542
Net change in unrealized appreciation (depreciation) on investments still held at June 30, 20172	$	(37,299	)

¹  Included in the related net change in unrealized appreciation (depreciation) in the Statement of Operations.

²  Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at June 30, 2017 is generally due to investments no longer held or categorized as Level 3 at period end.

The following table summarizes the valuation approaches used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) to determine the value of certain of the Fund’s Level 3 investments as of period end.

	Value		Valuation Approach		Unobservable Inputs		Range of Unobservable Inputs Utilized
Assets:
Preferred Stocks	$	3,734,542		Market		Revenue Multiple1		10.75	x
						Revenue Growth Rate1		131.00	%

¹  Increase in unobservable input may result in a significant increase to value, while a decrease in the unobservable input may result in a significant decrease to value.

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Capital Appreciation V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $19,295,300) (cost — $301,106,828)	$	387,116,107
Investments at value — affiliated (cost — $19,730,027)		19,728,191
Foreign currency at value (cost — $21)		21
Receivables:
Investments sold		1,777,249
Securities lending income — affiliated		50,333
Capital shares sold		635
Dividends — affiliated		2,143
Dividends — unaffiliated		40,355
From the Manager		82,648
Prepaid expenses		941
Total assets		408,798,623
Liabilities
Cash collateral on securities loaned at value		19,522,737
Payables:
Investments purchased		1,925,173
Capital shares redeemed		1,285,555
Distribution fees		51,713
Investment advisory fees		207,959
Officer’s and Directors’ fees		1,204
Other accrued expenses		295,680
Other affiliates		3,053
Total liabilities		23,293,074
Net Assets	$	385,505,549
Net Assets Consist of
Paid-in capital	$	271,503,035
Accumulated net investment loss		(453,020	)
Accumulated net realized gain		28,448,091
Net unrealized appreciation (depreciation)		86,007,443
Net Assets	$	385,505,549
Net Asset Value
Class I — Based on net assets of $135,004,535 and 13,319,232 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.14
Class III — Based on net assets of $250,501,014 and 24,950,832 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.04

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Capital Appreciation V.I. Fund
Investment Income
Dividends — unaffiliated	$	1,268,852
Dividends — affiliated		7,231
Securities lending — affiliated — net		81,880
Foreign taxes withheld		(10,566	)
Total investment income		1,347,397
Expenses
Investment advisory		1,230,044
Transfer agent		2,480
Transfer agent — class specific		383,166
Distribution — class specific		307,952
Accounting services		41,324
Printing		30,371
Professional		28,149
Custodian		18,289
Officer and Directors		12,025
Registration		31
Miscellaneous		6,346
Total expenses		2,060,177
Less:
Fees waived by the Manager		(871	)
Transfer agent fees reimbursed — class specific		(238,361	)
Total expenses after fees waived and reimbursed		1,820,945
Net investment loss		(473,548	)
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated		21,726,781
Investments — affiliated		908
Foreign currency transactions		(197	)
		21,727,492
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		39,331,350
Investments — affiliated		(1,417	)
		39,329,933
Net realized and unrealized gain		61,057,425
Net Increase in Net Assets Resulting from Operations	$	60,583,877

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statements of Changes in Net Assets BlackRock Capital Appreciation V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment loss	$	(473,548	)	$	(803,733	)
Net realized gain		21,727,492			11,433,518
Net change in unrealized appreciation (depreciation)		39,329,933			(9,402,200	)
Net increase in net assets resulting from operations		60,583,877			1,227,585
Distributions to Shareholders1
From net realized gain:
Class I		—			(3,477,222	)
Class III		—			(6,437,188	)
Decrease in net assets resulting from distributions to shareholders		—			(9,914,410	)
Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(30,966,410	)		(8,176,154	)
Net Assets
Total increase (decrease) in net assets		29,617,467			(16,862,979	)
Beginning of period		355,888,082			372,751,061
End of period	$	385,505,549		$	355,888,082
Undistributed (accumulated) net investment income (loss), end of period	$	(453,020	)	$	20,528

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Financial Highlights BlackRock Capital Appreciation V.I. Fund

	Class I
	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,
				2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	8.63		$	8.86		$	9.02		$	9.80		$	8.50		$	7.62
Net investment income (loss)1		(0.00	)2		(0.00	)3,4		(0.01	)		(0.01	)		(0.00	)3		0.07
Net realized and unrealized gain (loss)		1.51			0.01			0.63			0.87			2.86			0.99
Net increase from investment operations		1.51			0.01			0.62			0.86			2.86			1.06
Distributions:5
From net investment income		—			—			—			—			(0.00	)3		(0.07	)
From net realized gain		—			(0.24	)		(0.78	)		(1.64	)		(1.56	)		(0.11	)
Total distributions		—			(0.24	)		(0.78	)		(1.64	)		(1.56	)		(0.18	)
Net asset value, end of period	$	10.14		$	8.63		$	8.86		$	9.02		$	9.80		$	8.50
Total Return6
Based on net asset value		17.50	%7		0.10	%		6.73	%		9.02	%		33.82	%		13.84	%
Ratios to Average Net Assets
Total expenses		0.92	%8		0.92	%		0.93	%		0.91	%		0.93	%		0.86	%
Total expenses after fees waived and reimbursed		0.79	%8		0.80	%		0.79	%		0.79	%		0.80	%		0.77	%
Net investment income (loss)		(0.08	)%8		(0.06	)%4		(0.15	)%		(0.10	)%		(0.00	)%3		0.81	%
Supplemental Data
Net assets, end of period (000)	$	135,005		$	124,752		$	139,045		$	166,586		$	180,580		$	191,093
Portfolio turnover rate		26	%		89	%		70	%		102	%		158	%		63	%

¹  Based on average shares outstanding.

²  Amount is greater than $(0.005) per share.

³  Amount is greater than $(0.005) per share.

⁴  Net Investment Income per share and the ratio of net investment income to average net assets include $0.01 per share and 0.07%, respectively, resulting from a special dividend from TransDigm Group, Inc. in October 2016.

⁵  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁶  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁷  Aggregate total return.

⁸  Annualized.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights (concluded) BlackRock Capital Appreciation V.I. Fund

	Class III
	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,
				2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	8.56		$	8.81		$	8.97		$	9.76		$	8.48		$	7.61
Net investment income (loss)1		(0.02	)		(0.03	)2		(0.04	)		(0.03	)		(0.03	)		0.06
Net realized and unrealized gain (loss)		1.50			0.02			0.63			0.86			2.84			0.97
Net increase (decrease) from investment operations		1.48			(0.01	)		0.59			0.83			2.81			1.03
Distributions:3
From net investment income		—			—			—			—			(0.00	)4		(0.05	)
From net realized gain		—			(0.24	)		(0.75	)		(1.62	)		(1.53	)		(0.11	)
Total distributions		—			(0.24	)		(0.75	)		(1.62	)		(1.53	)		(0.16	)
Net asset value, end of period	$	10.04		$	8.56		$	8.81		$	8.97		$	9.76		$	8.48
Total Return5
Based on net asset value		17.29	%6		(0.13	)%		6.49	%		8.68	%		33.40	%		13.57	%
Ratios to Average Net Assets
Total expenses		1.18	%7		1.18	%		1.17	%		1.18	%		1.19	%		1.11	%
Total expenses after fees waived and reimbursed		1.05	%7		1.06	%		1.05	%		1.05	%		1.06	%		1.02	%
Net investment income (loss)		(0.34	)%7		(0.32	)%2		(0.40	)%		(0.35	)%		(0.27	)%		0.72	%
Supplemental Data
Net assets, end of period (000)	$	250,501		$	231,136		$	233,706		$	233,723		$	207,582		$	134,612
Portfolio turnover rate		26	%		89	%		70	%		102	%		158	%		63	%

¹  Based on average shares outstanding.

²  Net Investment Income per share and the ratio of net investment income to average net assets include $0.00 per share and 0.07%, respectively, resulting from a special dividend from TransDigm Group, Inc. in October 2016.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Financial Statements (Unaudited) BlackRock Capital Appreciation V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Capital Appreciation V.I. Fund (the “Fund”). The Fund is classified as diversified. 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. Class III Shares were redeemed on December 31, 2007 and sales of Class III Shares recommenced on June 15, 2010.

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

2. Significant Accounting Policies:

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

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

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

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

Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Capital Appreciation V.I. Fund

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (continued) BlackRock Capital Appreciation V.I. Fund

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

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

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

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

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

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

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

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

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

As of June 30, 2017, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Capital Appreciation V.I. Fund

4. Securities and Other Investments:

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.

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount2
Barclays Capital, Inc.	$	6,788	$	(6,788	)		—
Citigroup Global Markets, Inc.		8,115,532		(8,115,532	)		—
Deutsche Bank Securities, Inc.		458,803		(457,099	)		$1,704
Goldman Sachs & Co.		248,695		(248,695	)		—
JP Morgan Securities LLC		4,901,027		(4,901,027	)		—
Merrill Lynch, Pierce, Fenner & Smith		389,341		(389,341	)		—
Morgan Stanley		489,848		(489,848	)		—
SG Americas Securities LLC		1,189,435		(1,189,435	)		—
State Street Bank and Trust Co.		3,495,831		(3,495,831	)		—
Total	$	19,295,300	$	(19,293,596	)		$1,704

¹  Cash collateral with a value of $19,522,737 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

²  The market value of the loaned securities is determined as of June 30, 2017. Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by the counterparty.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (continued) BlackRock Capital Appreciation V.I. Fund

the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fees
First $1 Billion	0.65%
$1 Billion — $3 Billion	0.61%
$3 Billion — $5 Billion	0.59%
$5 Billion — $10 Billion	0.57%
Greater than $10 Billion	0.55%

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

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III is $307,952.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class III		Total
$131,772	$	251,394	$	383,166

Expense Limitations, Waivers, Reimbursements and Recoupments: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $871.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived by the manager.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $2,020 for certain accounting services, which is included in accounting services in the Statement of Operations.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Capital Appreciation V.I. Fund

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

Class I	0.07	%
Class III	0.08	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed — class specific in the Statement of Operations.

	Class I		Class III		Total
Transfer Agent Fees Reimbursed	$	85,508	$	152,853	$	238,361

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

Class I	1.25	%
Class III	1.50	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived and/or reimbursed by the Manager.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 71.5% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 75% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $32,384 for securities lending agent services.

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

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the six months ended June 30, 2017, the purchase and sale transactions and any net realized gains with affiliated funds in compliance with Rule 17a-7 under the 1940 Act were $655,544 and $145,995, respectively.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Notes to Financial Statements (continued) BlackRock Capital Appreciation V.I. Fund

6. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $100,161,638 and $129,183,043, respectively.

7. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

Tax cost	$	320,972,111
Gross unrealized appreciation	$	88,638,534
Gross unrealized depreciation		(2,766,347	)
Net unrealized appreciation	$	85,872,187

8. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

9. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

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

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

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (concluded) BlackRock Capital Appreciation V.I. Fund

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

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

Concentration Risk: As of period end, the Fund invested a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting such sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		218,580		$	2,025,438			777,970		$	6,572,821
Shares issued in reinvestment of distributions		—			—			401,138			3,477,222
Shares redeemed		(1,354,419	)		(12,988,247	)		(2,421,144	)		(20,728,474	)
Net decrease		(1,135,839	)	$	(10,962,809	)		(1,242,036	)	$	(10,678,431	)
Class III
Shares sold		341,309		$	3,146,494			2,536,670		$	20,090,081
Shares issued in reinvestment of distributions		—			—			748,085			6,437,188
Shares redeemed		(2,394,330	)		(23,150,095	)		(2,810,719	)		(24,024,992	)
Net increase (decrease)		(2,053,021	)	$	(20,003,601	)		474,036		$	2,502,277
Total Net Decrease		(3,188,860	)	$	(30,966,410	)		(768,000	)	$	(8,176,154	)

11. 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.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Equity Dividend V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock Equity Dividend V.I. Fund

      Investment Objective

BlackRock Equity Dividend V.I. Fund’s (the “Fund”) investment objective is to seek long-term total return and current income.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund outperformed its benchmark, the Russell 1000^® Value Index, and underperformed the broad-market S&P 500^® Index. The following discussion of relative performance pertains to the Russell 1000^® Value Index.

What factors influenced performance?

• During the period, the largest contribution to relative performance came from stock selection in the information technology (“IT”) sector. Most notably, selection in the software and technology hardware, storage & peripherals industries proved beneficial. Within health care, a combination of stock selection and an overweight to the health care providers & services and pharmaceuticals industries contributed to relative results. Additionally, a combination of stock selection and allocation decisions in energy boosted relative returns, with the majority of the outperformance in the sector driven by an underweight to the energy equipment & services industry. Stock selection within and an underweight to the telecommunication services (“telecom”) sector also contributed to performance, as did selection within the consumer discretionary sector.

• The largest detractor from relative performance came from a combination of stock selection and allocation decisions within the consumer staples sector. In particular, selection in the food & staples retailing industry and underweights to the household products and tobacco industries negatively affected relative returns. The portfolio’s cash position, which averaged 4.7% for the period, also represented a drag on performance. Further, a combination of stock selection within and an underweight to the utilities sector weighed on relative returns, as did stock selection in the industrials sector.

Describe recent portfolio activity.

• Over the six-month period, the Fund’s exposure to the industrials, energy, health care, utilities and telecom sectors was increased. Conversely, exposure to consumer staples, consumer discretionary, financials, information technology and real estate was decreased.

Describe portfolio positioning at period end.

• The Fund’s largest allocations were in the financials, health care and industrials sectors. Relative to the benchmark, the Fund had overweight positions in the industrials, IT, health care, financials and materials sectors, with underweights to real estate, consumer staples, consumer discretionary, telecom 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.

      Portfolio Information

Sector Allocation Percent of
Net Assets

Financials	27	%
Health Care	16
Industrials	11
Energy	10
Information Technology	10
Consumer Staples	6
Utilities	5
Consumer Discretionary	5
Materials	3
Telecommunication Services	2
Short-Term Securities	11
Liabilities in Excess of Other Assets	(6	)

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

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock Equity Dividend 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. The returns for Class III Shares prior to July 1, 2011, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares, as adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

²  The Fund seeks to achieve its objective by investing primarily in a diversified portfolio of equity securities. Under normal circumstances, the Fund will invest in at least 80% of its assets in equity securities and at least 80% of its assets in dividend paying securities. The Fund’s total returns prior to October 1, 2010 are the returns of the Fund when it followed a different objective and different investment strategies under the name BlackRock Utilities & Telecommunications V.I. Fund.

³  An unmanaged index that is a subset of the Russell 1000^® Index that consists of those Russell 1000^® securities with lower price-to-book ratios and lower expected growth values.

⁴  An unmanaged index that covers 500 leading companies and captures approximately 80% coverage of available market capitalization.

Performance Summary for the Period Ended June 30, 2017
		Average Annual Total Returns
	6-Month Total Returns6	1 Year6	5 Years6	10 Years6
Class I5	6.35%	17.94%	11.96%	6.24%
Class III5	6.20	17.71	11.66	5.987
Russell 1000® Value Index	4.66	15.53	13.94	5.57
S&P 500® Index	9.34	17.90	14.63	7.18

⁵  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns. The Fund’s total returns prior to October 1, 2010 are the returns of the Fund when it followed a different objective and different investment strategies under the name BlackRock Utilities & Telecommunications V.I. Fund.

⁶  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

⁷  The returns for Class III Shares prior to July 1, 2011, the recommencement of operations of Class III Shares, are based upon the performance for the Fund’s Class I Shares, as adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

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

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

Expense Example
	Actual			Hypothetical9
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period8	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period8	Annualized Expense Ratio
Class I	$1,000.00	$1,063.50	$3.43	$1,000.00	$1,021.47	$3.36	0.67%
Class III	$1,000.00	$1,060.00	$4.70	$1,000.00	$1,020.23	$4.61	0.92%

⁸  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).

⁹  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock Equity Dividend V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Equity Dividend V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 2.6%
Lockheed Martin Corp.		13,040	$	3,620,034
Northrop Grumman Corp.		17,254		4,429,274
				8,049,308
Air Freight & Logistics — 0.6%
United Parcel Service, Inc., Class B		16,900		1,868,971
Banks — 16.9%
Bank of America Corp.		450,860		10,937,864
Citigroup, Inc.		166,680		11,147,558
JPMorgan Chase & Co.		133,820		12,231,148
KeyCorp		94,750		1,775,615
SunTrust Banks, Inc.		52,927		3,002,019
U.S. Bancorp		84,900		4,408,008
Wells Fargo & Co.		146,665		8,126,708
				51,628,920
Beverages — 1.7%
Coca-Cola Co.		47,835		2,145,400
Diageo PLC		97,320		2,875,992
				5,021,392
Capital Markets — 3.4%
Goldman Sachs Group, Inc.		17,190		3,814,461
Invesco Ltd.		42,528		1,496,560
Morgan Stanley		113,510		5,058,006
				10,369,027
Chemicals — 3.0%
Dow Chemical Co.		128,755		8,120,578
Praxair, Inc.		6,755		895,375
				9,015,953
Communications Equipment — 0.8%
Motorola Solutions, Inc.		26,760		2,321,162
Containers & Packaging — 0.5%
International Paper Co.		28,270		1,600,365
Diversified Telecommunication Services — 1.5%
BCE, Inc.		16,485		742,484
Verizon Communications, Inc.		85,760		3,830,042
				4,572,526
Electric Utilities — 3.5%
Exelon Corp.		44,810		1,616,297
FirstEnergy Corp.		76,637		2,234,735
NextEra Energy, Inc.		32,085		4,496,071
PG&E Corp.		33,630		2,232,023
				10,579,126
Energy Equipment & Services — 0.4%
Halliburton Co.		28,200		1,204,422
Equity Real Estate Investment Trusts (REITs) — 0.4%
Weyerhaeuser Co.		35,030		1,173,505
Food & Staples Retailing — 0.8%
Kroger Co.		100,990		2,355,087
Food Products — 0.3%
Mondelez International, Inc., Class A		22,400		967,456

Common Stocks	Shares		Value
Health Care Equipment & Supplies — 1.0%
Becton Dickinson and Co.		10,660	$	2,079,873
Smith & Nephew PLC		52,210		901,593
				2,981,466
Health Care Providers & Services — 6.9%
Aetna, Inc.		36,693		5,571,098
Anthem, Inc.		36,011		6,774,749
Cardinal Health, Inc.		8,410		655,307
McKesson Corp.		16,240		2,672,130
Quest Diagnostics, Inc.		21,625		2,403,835
UnitedHealth Group, Inc.		16,182		3,000,466
				21,077,585
Hotels, Restaurants & Leisure — 0.0%
Hilton Worldwide Holdings, Inc.		2,156		133,349
Household Products — 1.0%
Procter & Gamble Co.		33,335		2,905,145
Industrial Conglomerates — 5.7%
3M Co.		10,755		2,239,083
General Electric Co.		238,995		6,455,255
Honeywell International, Inc.		30,160		4,020,026
Koninklijke Philips NV (a)		129,710		4,617,515
				17,331,879
Insurance — 6.3%
Allstate Corp.		14,960		1,323,062
American International Group, Inc.		91,700		5,733,084
Marsh & McLennan Cos., Inc.		27,959		2,179,684
MetLife, Inc.		76,540		4,205,108
Prudential Financial, Inc.		34,020		3,678,923
Travelers Cos., Inc.		16,268		2,058,390
				19,178,251
Machinery — 0.3%
Pentair PLC		12,430		827,092
Media — 2.4%
Comcast Corp., Class A		130,660		5,085,287
Publicis Groupe SA		29,960		2,233,015
				7,318,302
Multiline Retail — 0.8%
Dollar General Corp.		34,360		2,477,012
Multi-Utilities — 1.4%
Dominion Resources, Inc.		22,120		1,695,056
Public Service Enterprise Group, Inc.		58,840		2,530,708
				4,225,764
Oil, Gas & Consumable Fuels — 10.1%
Anadarko Petroleum Corp.		13,000		589,420
Chevron Corp.		38,433		4,009,715
Enbridge, Inc.		30,177		1,201,346
Exxon Mobil Corp.		32,105		2,591,837
Hess Corp. (a)		66,589		2,921,259
Marathon Oil Corp.		110,940		1,314,639
Marathon Petroleum Corp.		44,550		2,331,302
Occidental Petroleum Corp.		72,300		4,328,601
Royal Dutch Shell PLC, Class A — ADR (a)		50,650		2,694,074

Portfolio Abbreviations
ADR	American Depositary Receipts
GDR	Global Depositary Receipts

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock Equity Dividend V.I. Fund

Common Stocks	Shares		Value
Oil, Gas & Consumable Fuels (concluded)
Suncor Energy, Inc.		154,960	$	4,524,832
TOTAL SA — ADR (a)		83,638		4,147,608
				30,654,633
Personal Products — 1.2%
Unilever NV — NY Shares (a)		68,465		3,784,061
Pharmaceuticals — 7.6%
AstraZeneca PLC		76,796		5,144,092
Johnson & Johnson		13,145		1,738,952
Merck & Co., Inc.		96,880		6,209,039
Pfizer, Inc.		303,150		10,182,810
				23,274,893
Professional Services — 1.3%
Experian PLC		117,580		2,413,087
Nielsen Holdings PLC		41,220		1,593,565
				4,006,652
Road & Rail — 0.5%
Union Pacific Corp.		15,265		1,662,511
Semiconductors & Semiconductor Equipment — 2.0%
QUALCOMM, Inc.		29,880		1,649,974
Taiwan Semiconductor Manufacturing Co. Ltd. — ADR		122,580		4,285,397
				5,935,371
Software — 5.1%
Constellation Software, Inc.		1,240		648,696
Microsoft Corp.		88,065		6,070,320
Oracle Corp.		177,800		8,914,892
				15,633,908
Specialty Retail — 1.3%
Gap, Inc. (a)		55,380		1,217,806

Common Stocks	Shares		Value
Specialty Retail (concluded)
Home Depot, Inc.		17,795	$	2,729,753
				3,947,559
Technology Hardware, Storage & Peripherals — 2.3%
Lenovo Group Ltd.		2,078,000		1,311,492
Samsung Electronics Co. Ltd. — GDR		5,459		5,666,964
				6,978,456
Tobacco — 0.8%
Altria Group, Inc.		16,735		1,246,255
Philip Morris International, Inc.		11,155		1,310,155
				2,556,410
Wireless Telecommunication Services — 0.6%
SK Telecom Co. Ltd — ADR		66,040		1,695,247
Total Common Stocks — 95.0%				289,312,766
Total Long-Term Investments (Cost — $252,354,060) — 95.0%				289,312,766
Short-Term Securities
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (b)(c)		14,993,225		14,993,225
SL Liquidity Series, LLC, Money Market Series, 1.27% (b)(c)(d)		17,939,842		17,941,636
Total Short-Term Securities (Cost — $32,936,655) — 10.8%				32,934,861
Total Investments (Cost — $285,290,715) — 105.8%				322,247,627
Liabilities in Excess of Other Assets — (5.8)%				(17,559,686	)
Net Assets — 100.0%			$	304,687,941

      Notes to Schedule of Investments

(a) Security, or a portion of the security, is on loan.

(b) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity		Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Gain		Change  in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		11,807,360		3,185,865		14,993,225	$	14,993,225	$	37,382			—		—
SL Liquidity Series, LLC, Money Market Series		5,710,743		12,229,099		17,939,842		17,941,636		17,306	1		$151		$(1,727	)
							$	32,934,861	$	54,688			$151		$(1,727	)

¹  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(c) Current yield as of period end.

(d) Security was purchased with the cash collateral from loaned securities.

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

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock Equity Dividend V.I. Fund

      Fair Value Hierarchy as of Period End

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

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Aerospace & Defense	$	8,049,308		—		—	$	8,049,308
Air Freight & Logistics		1,868,971		—		—		1,868,971
Banks		51,628,920		—		—		51,628,920
Beverages		2,145,400	$	2,875,992		—		5,021,392
Capital Markets		10,369,027		—		—		10,369,027
Chemicals		9,015,953		—		—		9,015,953
Communications Equipment		2,321,162		—		—		2,321,162
Containers & Packaging		1,600,365		—		—		1,600,365
Diversified Telecommunication Services		4,572,526		—		—		4,572,526
Electric Utilities		10,579,126		—		—		10,579,126
Energy Equipment & Services		1,204,422		—		—		1,204,422
Equity Real Estate Investment Trusts (REITs)		1,173,505		—		—		1,173,505
Food & Staples Retailing		2,355,087		—		—		2,355,087
Food Products		967,456		—		—		967,456
Health Care Equipment & Supplies		2,079,873		901,593		—		2,981,466
Health Care Providers & Services		21,077,585		—		—		21,077,585
Hotels, Restaurants & Leisure		133,349		—		—		133,349
Household Products		2,905,145		—		—		2,905,145
Industrial Conglomerates		12,714,364		4,617,515		—		17,331,879
Insurance		19,178,251		—		—		19,178,251
Machinery		827,092		—		—		827,092
Media		5,085,287		2,233,015		—		7,318,302
Multiline Retail		2,477,012		—		—		2,477,012
Multi-Utilities		4,225,764		—		—		4,225,764
Oil, Gas & Consumable Fuels		30,654,633		—		—		30,654,633
Personal Products		3,784,061		—		—		3,784,061
Pharmaceuticals		18,130,801		5,144,092		—		23,274,893
Professional Services		1,593,565		2,413,087		—		4,006,652
Road & Rail		1,662,511		—		—		1,662,511
Semiconductors & Semiconductor Equipment		5,935,371		—		—		5,935,371
Software		15,633,908		—		—		15,633,908
Specialty Retail		3,947,559		—		—		3,947,559
Technology Hardware, Storage & Peripherals		5,666,964		1,311,492		—		6,978,456
Tobacco		2,556,410		—		—		2,556,410
Wireless Telecommunication Services		1,695,247		—		—		1,695,247
Short-Term Securities		14,993,225		—		—		14,993,225
Subtotal	$	284,809,205	$	19,496,786		—	$	304,305,991
Investments Valued at NAV1								17,941,636
Total Investments							$	322,247,627

¹  As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Equity Dividend V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $17,384,679) (cost — $252,354,060)	$	289,312,766
Investments at value — affiliated (cost — $32,936,655)		32,934,861
Foreign currency at value (cost — $2,024)		2,060
Receivables:
Investments sold		502,049
Securities lending income — affiliated		3,618
Capital shares sold		40,966
Dividends — affiliated		10,285
Dividends — unaffiliated		616,989
From the Manager		109,610
Prepaid expenses		585
Total assets		323,533,789
Liabilities
Cash collateral on securities loaned at value		17,942,160
Payables:
Investments purchased		528,692
Capital shares redeemed		21,667
Distribution fees		53,492
Investment advisory fees		148,879
Professional fees		16,173
Officer’s and Directors’ fees		293
Custodian fees		14,354
Other accrued expenses		118,426
Other affiliates		1,712
Total liabilities		18,845,848
Net Assets	$	304,687,941
Net Assets Consist of
Paid-in capital	$	257,041,702
Undistributed net investment income		1,510,624
Accumulated net realized gain		9,178,667
Net unrealized appreciation (depreciation)		36,956,948
Net Assets	$	304,687,941
Net Asset Value
Class  I  — Based on net assets of $36,285,082 and 3,072,815 shares outstanding, 100 million shares authorized, $0.10 par value	$	11.81
Class  III — Based on net assets of $268,402,859 and 22,783,100 shares outstanding, 100 million shares authorized, $0.10 par value	$	11.78

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Equity Dividend V.I. Fund
Investment Income
Dividends — unaffiliated	$	3,821,552
Dividends — affiliated		37,382
Securities lending — affiliated — net		17,306
Foreign taxes withheld		(129,410	)
Total investment income		3,746,830
Expenses
Investment advisory		840,966
Transfer agent		2,480
Transfer agent — class specific		307,914
Distribution — class specific		305,925
Accounting services		28,994
Professional		22,203
Custodian		14,336
Printing		19,853
Officer and Directors		11,305
Miscellaneous		5,712
Total expenses		1,559,688
Less:
Fees waived by the Manager		(4,462	)
Transfer agent fees reimbursed — class specific		(307,914	)
Total expenses after fees waived and reimbursed		1,247,312
Net investment income		2,499,518
Realized and Unrealized Gain (Loss)
Net realized gain from:
Investments — unaffiliated		7,457,581
Investments — affiliated		151
Foreign currency transactions		3,020
		7,460,752
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		7,061,802
Investments — affiliated		(1,727	)
Foreign currency translations		34
		7,060,109
Net realized and unrealized gain		14,520,861
Net Increase in Net Assets Resulting from Operations	$	17,020,379

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Statements of Changes in Net Assets BlackRock Equity Dividend V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	2,499,518		$	3,253,492
Net realized gain		7,460,752			8,682,192
Net change in unrealized appreciation (depreciation)		7,060,109			20,643,955
Net increase in net assets resulting from operations		17,020,379			32,579,639
Distributions to Shareholders1
From net investment income:
Class I		(142,311	)		(572,333	)
Class III		(857,715	)		(2,692,740	)
From net realized gain:
Class I		—			(1,013,606	)
Class III		—			(6,297,460	)
Decrease in net assets resulting from distributions to shareholders		(1,000,026	)		(10,576,139	)
Capital Share Transactions
Net increase in net assets derived from capital share transactions		30,073,239			120,900,587
Net Assets
Total increase in net assets		46,093,592			142,904,087
Beginning of period		258,594,349			115,690,262
End of period	$	304,687,941		$	258,594,349
Undistributed net investment income, end of period	$	1,510,624		$	11,132

¹ Distributions for annual periods determined in accordance with federal income tax regulations.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock Equity Dividend V.I. Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	11.15		$	10.04		$	10.90		$	10.78		$	8.95		$	8.17
Net investment income1		0.11			0.21			0.19			0.20			0.19			0.21
Net realized and unrealized gain (loss)		0.60			1.42			(0.25	)		0.80			1.99			0.78
Net increase (decrease) from investment operations		0.71			1.63			(0.06	)		1.00			2.18			0.99
Distributions:2
From net investment income		(0.05	)		(0.19	)		(0.18	)		(0.20	)		(0.20	)		(0.20	)
From net realized gain		—			(0.33	)		(0.62	)		(0.68	)		(0.15	)		(0.01	)
Total distributions		(0.05	)		(0.52	)		(0.80	)		(0.88	)		(0.35	)		(0.21	)
Net asset value, end of period	$	11.81		$	11.15		$	10.04		$	10.90		$	10.78		$	8.95
Total Return3
Based on net asset value		6.35	%4		16.40	%		(0.61	)%		9.34	%		24.52	%		12.12	%
Ratios to Average Net Assets
Total expenses		0.88	%5,6		0.89	%5		1.00	%		0.99	%		1.04	%		0.96	%
Total expenses after fees waived and reimbursed		0.67	%5,6		0.70	%5		0.79	%		0.78	%		0.84	%		0.83	%
Net investment income		1.99	%5,6		1.98	%5		1.79	%		1.81	%		1.95	%		2.35	%
Supplemental Data
Net assets, end of period (000)	$	36,285		$	35,256		$	30,527		$	35,694		$	36,658		$	34,558
Portfolio turnover rate		16	%		23	%		25	%		18	%		18	%		4	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

⁶  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Financial Highlights (concluded) BlackRock Equity Dividend V.I. Fund

	Class III
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014				2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	11.13		$	10.03		$	10.89		$	10.77			$	8.95		$	8.17
Net investment income1		0.10			0.18			0.17			0.17				0.17			0.20
Net realized and unrealized gain (loss)		0.59			1.42			(0.25	)		0.80				1.97			0.77
Net increase (decrease) from investment operations		0.69			1.60			(0.08	)		0.97				2.14			0.97
Distributions:2
From net investment income		(0.04	)		(0.17	)		(0.16	)		(0.17	)			(0.17	)		(0.18	)
From net realized gain		—			(0.33	)		(0.62	)		(0.68	)			(0.15	)		(0.01	)
Total distributions		(0.04	)		(0.50	)		(0.78	)		(0.85	)			(0.32	)		(0.19	)
Net asset value, end of period	$	11.78		$	11.13		$	10.03		$	10.89			$	10.77		$	8.95
Total Return3
Based on net asset value		6.20	%4		16.06	%		(0.82	)%		9.07	%			24.12	%		11.90	%
Ratios to Average Net Assets													��
Total expenses		1.15	%5,6		1.13	%5		1.16	%		1.24	%			1.28	%		1.21	%
Total expenses after fees waived and reimbursed		0.92	%5,6		0.95	%5		1.03	%		1.03	%			1.09	%		1.06	%
Net investment income		1.75	%5,6		1.73	%5		1.59	%		1.56	%			1.71	%		2.24	%
Supplemental Data
Net assets, end of period (000)	$	268,403		$	223,338		$	85,163		$	22,619			$	20,567		$	12,379
Portfolio turnover rate		16	%		23	%		25	%		18	%			18	%		4	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

⁶  Annualized.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (Unaudited) BlackRock Equity Dividend V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Equity Dividend V.I. Fund (the “Fund”). The Fund is classified as diversified. 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. Class III Shares were redeemed on December 31, 2007 and sales of Class III Shares recommenced on July 1, 2011.

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

2. Significant Accounting Policies:

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

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

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

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

Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Financial Statements (continued) BlackRock Equity Dividend V.I. Fund

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

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

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

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Equity Dividend V.I. Fund

instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately-held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

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

As of June 30, 2017, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

4. Securities and Other Investments:

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (continued) BlackRock Equity Dividend V.I. Fund

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Citigroup Global Markets, Inc.	$	4,565,692	$	(4,565,692	)	—
Credit Suisse Securities LLC		3,624,310		(3,624,310	)	—
Deutsche Bank Securities, Inc.		2,869,895		(2,869,895	)	—
JP Morgan Securities LLC		5,578,749		(5,578,749	)	—
Morgan Stanley		725,450		(725,450	)	—
State Street Bank & Trust Co.		20,583		(20,583	)	—
Total	$	17,384,679	$	(17,384,679	)	—

¹  Cash collateral with a value of $17,942,160 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.60%
$1 Billion - $3 Billion	0.56%
$3 Billion - $5 Billion	0.54%
$5 Billion - $10 Billion	0.52%
Greater than $10 Billion	0.51%

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

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III is $305,925.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Equity Dividend V.I. Fund

Class I	Class III	Total
$36,826	$271,088	$307,914

Expense Limitations, Waivers, Reimbursements and Recoupments: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in the fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $4,462.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived by the Manager.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $1,161 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Manager has contractually agreed to reimburse all transfer agent fees for Class I and III. The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed — class specific in the Statement of Operations.

	Class I	Class III	Total
Transfer Agent Fees Reimbursed	$36,826	$271,088	$307,914

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

Class I	1.25	%
Class III	1.50	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived and/or reimbursed by the Manager.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 71.5% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (continued) BlackRock Equity Dividend V.I. Fund

securities lending income as follows: 75% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $6,405 for securities lending agent services.

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

6. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $71,493,011 and $42,867,562, respectively.

7. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

Tax cost	$285,558,230
Gross unrealized appreciation	$	41,627,074
Gross unrealized depreciation		(4,937,677	)
Net unrealized appreciation	$	36,689,397

8. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

9. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (concluded) BlackRock Equity Dividend V.I. Fund

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

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

Concentration Risk: As of period end, the Fund invested a significant portion of its assets in securities in the financials sector. Changes in economic conditions affecting such sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017					Year Ended December 31, 2016
	Shares			Amount		Shares		Amount
Class I
Shares sold		152,362			$1,756,772		508,947		$5,352,774
Shares issued in reinvestment of distributions		12,516			142,311		144,726		1,585,939
Shares redeemed		(254,546	)		(2,931,281)		(530,755)		(5,460,031)
Net increase (decrease)		(89,668	)		$(1,032,198)		122,918		$1,478,682
Class III
Shares sold		3,903,312			$44,590,072		11,932,893		$122,634,261
Shares issued in reinvestment of distributions		75,569			857,715		818,081		8,990,200
Shares redeemed		(1,262,646	)		(14,342,350)		(1,174,386)		(12,202,556)
Net increase		2,716,235			$31,105,437		11,576,588		$119,421,905
Total Net Increase		2,626,567			$30,073,239		11,699,506		$120,900,587

11. 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.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Global Allocation V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank  Guarantee

Fund Summary as of June 30, 2017 BlackRock Global Allocation V.I. Fund

      Investment Objective

BlackRock Global Allocation V.I. Fund’s (the “Fund”) investment objective is to seek high total investment return.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund underperformed both its reference benchmark and the broad based all-equity benchmark, the FTSE World Index. The Reference Benchmark is comprised as follows: 36% S&P 500^® Index; 24% FTSE World (ex-U.S.) Index; 24% BofA Merrill Lynch Current 5-Year U.S. Treasury Index; and 16% Citigroup Non-US Dollar World Government Bond Index. The Fund invests in both equities and bonds, and therefore, the Reference Benchmark provides a more accurate representation of the Fund’s composition and is a more comparable means for measurement. The following discussion of relative performance pertains to the Reference Benchmark. The following commentary (and referenced allocation percentages) are based on the economic exposures of the Fund, which reflect adjustments for futures, swaps and options (except with respect to fixed income securities), and convertible bonds, and may vary relative to the market value.

What factors influenced performance?

• Within equities, an overweight to Japan detracted from performance. From a sector perspective, stock selection in financials weighed on returns. An overweight in energy also detracted, although this was partially offset by stock selection within the sector. Stock selection in telecommunication services (“telecom”), materials, and utilities contributed to performance.

• An underweight to fixed income contributed to performance. Within fixed income, exposure to credit was additive. Exposure to commodities, notably gold related securities, and to cash and cash equivalents detracted from performance. Finally, currency management negatively impacted returns, principally due to an overweight to the U.S. dollar.

• The Fund uses derivatives, which may include options, futures, swaps and forward contracts both to seek to enhance returns of the Fund and to hedge (or protect) against adverse movements in currency exchange rates, interest rates and movements in the securities markets.

Describe recent portfolio activity.

• During the six-month period, the Fund’s overall equity allocation decreased from 57% to 55% of net assets. Within equities, the Fund reduced exposure to the United States and Japan. From a sector perspective, the Fund increased exposure to utilities, telecom, energy, materials, and consumer discretionary, and decreased exposure to financials, information technology (“IT”), consumer staples, real estate, industrials, and healthcare.

• The Fund’s overall allocation to fixed income increased from 25% to 32% of net assets. Within fixed income, the Fund increased exposure to government and corporate bonds.

• The Fund’s allocation to commodity-related securities increased from 3% to 4% of net assets.

• Reflecting the above changes, the Fund’s cash and cash equivalent holdings decreased from 15% to 9% of net assets. During the six-month period, the Fund’s cash position helped mitigate portfolio volatility and served as a source of funds for new investments.

Describe portfolio positioning at period end.

• Relative to its Reference Benchmark, the Fund was underweight equities and fixed income and overweight commodity-related securities and cash and cash equivalents. Within equities, the Fund was overweight Japan and Europe, and underweight the United States. Within Europe, the Fund was overweight France and the Netherlands, and underweight Switzerland. From a sector perspective, the Fund was overweight energy, consumer discretionary, telecom, and utilities, and underweight financials, consumer staples, IT, health care, real estate, and industrials. Within fixed income, the Fund was underweight developed market government bonds, and overweight corporate debt. With respect to currency exposure, the Fund was overweight the U.S. dollar and Indian rupee, and underweight the Canadian dollar, Japanese yen, Swiss franc, and Australian dollar.

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.

      Overall Asset Exposure

			Reference
	Percent of Fund’s Net Assets1		Benchmark2
Portfolio Composition	6/30/17	12/31/16	Percentage
U.S. Equities	26%	28%	35%
European Equities	14	14	13
Asia Pacific Equities	14	14	9
Other Equities	1	1	3
Total Equity Securities	55	57	60
U.S. Dollar Denominated Fixed Income Securities	21	16	24
U.S. Issuers	18	12	—
Non-U.S. Issuers	3	4	—
Non-U.S. Dollar Denominated Fixed Income Securities	11	9	16
Total Fixed Income Securities	32	25	40
Commodity-Related Securities	4	3	—
Cash & Short-Term Securities	9	15	—

¹  Exposure based on market value and adjusted for the economic value of futures, swaps and options (except with respect to fixed income securities), and convertible bonds.

²  The Reference Benchmark is an unmanaged weighted index comprised as follows: 36% of the S&P 500 Index^®; 24% FTSE World (ex U.S.) Index; 24% BofA Merrill Lynch Current 5-Year U.S. Treasury Index; and 16% Citigroup Non-U.S. Dollar World Government Bond Index. Descriptions of these indexes are found on the following page of this report to shareholders in the “Performance Summary” section.

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock Global Allocation 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 invests in a portfolio of U.S. and foreign equity securities, debt and money market securities, the combination of which will be varied from time to time with respect to types of securities and markets in response to changing markets and economic trends.

³  This unmanaged capitalization-weighted index is comprised of 2,539 equities from 35 countries in 4 regions, including the United States.

⁴  The Reference Benchmark is an unmanaged weighted index comprised as follows: 36% S&P 500^® Index; 24% FTSE World (ex U.S.) Index; 24% BofA Merrill Lynch Current 5-Year U.S. Treasury Index; and 16% Citigroup Non-U.S. Dollar World Government Bond Index.

      Performance Summary for the Period Ended June 30, 2017

	6-Month Total Returns6			Average Annual Total Returns
				1  Year6			5 Years6			10  Years6
Class I5		7.74	%		11.95	%		6.79	%		4.92	%
Class II5		7.70			11.81			6.63			4.76
Class III5		7.63			11.64			6.52			4.66
FTSE World Index		11.60			19.40			11.48			4.45
Reference Benchmark		7.91			9.61			7.33			4.95
U.S. Stocks: S&P 500® Index7		9.34			17.90			14.63			7.18
Non-U.S. Stocks: FTSE World (ex U.S.) Index8		14.11			20.86			8.14			1.74
U.S. Bonds: BofA Merrill Lynch Current 5-Year U.S. Treasury Index9		1.18			(2.52	)		0.90			4.18
Non-U.S. Bonds: Citigroup Non-U.S. Dollar World Government Bond Index10		5.91			(5.01	)		(0.80	)		3.21

⁵  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.

⁶  For a portion of the period, the Fund’s investment adviser waived a portion of its fees. Without such waiver, the Fund’s performance would have been lower.

⁷  This unmanaged index covers 500 leading companies and captures approximately 80% coverage of available market capitalization.

⁸  This unmanaged capitalization-weighted index is comprised of 1,927 equities from 34 countries, excluding the United States.

⁹  This unmanaged index is designed to track the total return of the current coupon five-year U.S. Treasury bond.

¹⁰  This unmanaged market capitalization-weighted index tracks 22 government bond indexes, excluding the United States.

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

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

      Expense Example

	Actual				Hypothetical13
			Including Dividend Expense and Broker Fees and Expenses on Short  Sales	Excluding Dividend Expense and Broker Fees and Expenses on Short  Sales		Including Dividend Expense and Broker Fees and Expenses on Short Sales		Excluding Dividend Expense and Broker Fees and Expenses on Short Sales
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period11	Expenses Paid During the Period12	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period11	Ending Account Value June 30, 2017	Expenses Paid During the  Period12
Class I	$1,000.00	$1,077.40	$3.86	$3.71	$1,000.00	$1,021.08	$3.76	$1,021.22	$3.61
Class II	$1,000.00	$1,077.00	$4.69	$4.53	$1,000.00	$1,020.28	$4.56	$1,020.43	$4.41
Class III	$1,000.00	$1,076.30	$5.20	$5.05	$1,000.00	$1,019.79	$5.06	$1,019.93	$4.91

¹¹ For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.75% for Class I, 0.91% for Class II and 1.01% for Class III), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).

¹² For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.73% for Class I, 0.88% for Class II and 0.98% for Class III), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).

¹³ Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365. See “Disclosure of Expenses” on the following page for further information on how expenses were calculated.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock Global Allocation V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example shown on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction

or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Consolidated Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Global Allocation V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Belgium — 0.5%
Anheuser-Busch InBev SA		382,021	$	42,193,743
Umicore SA		186,664		12,984,573
				55,178,316
Brazil — 0.1%
Azul SA — ADR (a)(b)		422,732		8,911,191
Canada — 0.3%
Encana Corp.		3,316,442		29,184,690
Platinum Group Metals Ltd. (a)(b)		2,001,316		1,672,300
Platinum Group Metals Ltd. (a)(b)		420,794		353,690
				31,210,680
China — 0.5%
Alibaba Group Holding Ltd. — ADR (a)(b)		301,895		42,537,005
Brilliance China Automotive Holdings Ltd.		3,746,000		6,822,629
China Mobile Ltd. — ADR		58,567		3,109,322
CLP Holdings Ltd.		353,000		3,732,744
Want Want China Holdings Ltd. (b)		2,876,000		1,940,615
				58,142,315
Czech Republic — 0.0%
CEZ AS		170,522		2,968,075
Finland — 0.3%
Nokia OYJ		5,724,949		35,103,901
France — 2.8%
Accor SA		332,575		15,600,862
AXA SA		639,906		17,522,806
Cie Generale des Etablissements Michelin		112,566		14,981,898
Compagnie de Saint-Gobain		269,250		14,379,340
Danone SA		929,441		69,761,757
Dassault Aviation SA		12,111		16,925,175
Safran SA		419,741		38,492,975
Sanofi		257,152		24,640,349
Sodexo SA		112,584		14,550,654
TOTAL SA		445,971		22,141,176
TOTAL SA — ADR (b)		17,306		858,205
Ubisoft Entertainment SA (a)		247,769		14,066,176
Unibail-Rodamco SE		68,089		17,156,890
Vinci SA		171,550		14,633,501
				295,711,764

Common Stocks	Shares		Value
Germany — 1.7%
Bayer AG, Registered Shares		356,750	$	46,238,531
Deutsche Telekom AG, Registered Shares		1,366,283		24,627,267
Evonik Industries AG		334,923		10,719,489
GEA Group AG		274,999		11,291,781
Innogy SE (c)		1,383,490		54,449,405
Siemens AG, Registered Shares		99,388		13,671,241
Vonovia SE		389,785		15,508,086
				176,505,800
Hong Kong — 0.6%
CK Infrastructure Holdings Ltd.		339,000		2,847,692
Hang Lung Properties Ltd.		701,000		1,751,902
HKT Trust & HKT Ltd. (d)		2,086,000		2,735,930
Jardine Matheson Holdings Ltd.		47,200		3,030,050
Link REIT (b)		431,000		3,278,634
Power Assets Holdings Ltd.		303,000		2,674,577
Sino Land Co. Ltd.		1,288,000		2,110,238
Sun Hung Kai Properties Ltd.		2,834,083		41,633,176
Swire Pacific Ltd., Class A		277,500		2,708,860
Wharf Holdings Ltd.		438,000		3,624,313
				66,395,372
India — 1.0%
Coal India Ltd.		2,960,073		11,179,678
Hero MotoCorp Ltd.		68,071		3,894,966
Infosys Ltd.		1,552,193		22,467,617
Kotak Mahindra Bank Ltd.		875,587		13,311,090
Maruti Suzuki India Ltd.		88,781		9,906,055
Oil & Natural Gas Corp. Ltd. (a)		860,030		2,091,738
Reliance Industries Ltd.		1,699,503		36,259,070
State Bank of India		1,162,529		4,921,695
Yes Bank Ltd. (e)		267,208		6,050,031
				110,081,940
Indonesia — 0.1%
Siloam International Hospitals Tbk PT (a)		11,459,834		9,716,460
Ireland — 0.0%
Medtronic PLC		48,937		4,343,159

      Portfolio Abbreviations

ADR	American Depositary Receipts	GBP	British Pound	PLN	Polish Zloty
AUD	Australian Dollar	JPY	Japanese Yen	REIT	Real Estate Investment Trust
BRL	Brazilian Real	LIBOR	London Interbank Offered Rate	S&P	Standard & Poor’s
CAD	Canadian Dollar	MXN	Mexican Peso	SGD	Singapore Dollar
CVA	Certification Van Aandelon	NOK	Norwegian Krone	SGX	Singapore Exchange Ltd.
	(Dutch Certificate)	NVDR	Non-Voting Depository Receipts	SPDR	Standard & Poor’s Depositary Receipts
ETF	Exchange-Traded Fund	NZD	New Zealand Dollar	TOPIX	Tokyo Price Index
EUR	Euro	OTC	Over-the-Counter	USD	U.S. Dollar
EURIBOR	Euro Interbank Offered Rate	PCL	Public Company Limited	ZAR	South African Rand
FTSE	Financial Times Stock Exchange	PIK	Payment-in-kind

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Common Stocks	Shares		Value
Italy — 0.9%
Ei Towers SpA (b)		327,959	$	18,972,432
Enel SpA		4,569,416		24,508,100
Luxottica Group SpA		279,334		16,259,515
RAI Way SpA (c)		1,717,772		8,565,905
Snam SpA		343,316		1,498,288
Telecom Italia SpA (a)		27,353,930		25,307,150
Telecom Italia SpA, Non-Convertible Savings Shares		735,479		544,273
				95,655,663
Japan — 8.3%
Aisin Seiki Co. Ltd.		248,139		12,755,987
Ajinomoto Co., Inc.		958,500		20,726,773
Alfresa Holdings Corp.		108,400		2,095,710
Alpine Electronics, Inc.		76,900		1,153,741
Asahi Group Holdings Ltd.		369,300		13,907,941
Asahi Kasei Corp.		1,401,100		15,115,506
Astellas Pharma, Inc.		135,265		1,657,903
Bridgestone Corp. (b)		533,932		23,082,720
Canon Marketing Japan, Inc.		91,900		2,094,976
Chiyoda Corp.		301,000		1,777,966
Chubu Electric Power Co., Inc.		331,100		4,403,186
COMSYS Holdings Corp.		110,400		2,279,457
Daikin Industries Ltd.		126,400		12,967,636
Denso Corp.		596,420		25,310,956
East Japan Railway Co.		467,451		44,780,043
Exedy Corp. (b)		66,700		1,885,744
FUJIFILM Holdings Corp.		72,400		2,610,560
Futaba Industrial Co. Ltd.		205,421		1,863,795
GS Yuasa Corp.		1,014,000		4,425,777
Hino Motors Ltd.		191,600		2,139,325
Hirose Electric Co. Ltd.		18,700		2,676,054
Hitachi Chemical Co. Ltd.		415,100		12,444,950
Hoya Corp.		593,974		30,923,102
Inpex Corp.		1,965,539		18,978,191
Japan Airlines Co. Ltd.		1,093,800		33,881,201
Japan Tobacco, Inc.		79,200		2,783,730
Kamigumi Co. Ltd.		200,000		2,102,365
KDDI Corp.		354,100		9,365,105
Keyence Corp.		9,000		3,962,051
Kinden Corp.		340,600		5,499,124
Koito Manufacturing Co. Ltd.		134,600		6,960,239
Komatsu Ltd.		750,900		19,273,687
Kubota Corp.		786,696		13,297,364
Kuraray Co. Ltd.		138,100		2,514,669
Kurita Water Industries Ltd.		77,600		2,122,677
Kyocera Corp.		55,000		3,196,640
Kyushu Railway Co.		246,800		8,004,739
Mabuchi Motor Co. Ltd.		56,300		2,814,036
Maeda Road Construction Co. Ltd.		133,000		2,655,334
Makita Corp.		65,100		2,410,916
Medipal Holdings Corp.		124,200		2,302,925
Mitsubishi Electric Corp.		2,495,700		36,094,320
Mitsubishi Estate Co. Ltd.		883,900		16,522,566
Murata Manufacturing Co. Ltd.		175,928		26,858,230
Nintendo Co. Ltd.		57,400		19,217,042
Nippo Corp.		129,000		2,596,192
Nippon Telegraph & Telephone Corp.		88,060		4,156,793
Nippon Television Holdings, Inc.		187,600		3,162,923
Nitto Denko Corp.		216,100		17,845,828
NTT DOCOMO, Inc.		247,000		5,841,719
Okumura Corp.		898,751		6,057,077
Otsuka Holdings Co. Ltd.		75,300		3,214,955
Renesas Electronics Corp. (a)		770,600		6,737,606
Rinnai Corp.		69,423		6,485,937

Common Stocks	Shares		Value
Japan (continued)
Rohm Co. Ltd.		310,053	$	23,905,529
Sawai Pharmaceutical Co. Ltd.		37,200		2,089,238
Secom Co. Ltd.		40,300		3,066,226
Seino Holdings Co. Ltd.		141,700		1,889,065
Seven & i Holdings Co. Ltd.		35,000		1,444,256
Shimamura Co. Ltd.		19,100		2,341,507
Shin-Etsu Chemical Co. Ltd.		492,334		44,808,735
SHO-BOND Holdings Co. Ltd.		25,200		1,273,543
SKY Perfect JSAT Holdings, Inc.		214,600		924,345
Stanley Electric Co. Ltd.		92,800		2,812,292
Subaru Corp.		492,364		16,695,108
Sumitomo Electric Industries Ltd.		813,148		12,579,734
Sumitomo Mitsui Financial Group, Inc.		977,747		38,175,608
Suzuken Co. Ltd.		57,900		1,927,381
Suzuki Motor Corp.		998,989		47,589,812
Toda Corp.		940,896		5,877,043
Toho Co. Ltd.		84,500		2,605,976
Tokio Marine Holdings, Inc.		521,223		21,689,795
Tokyo Gas Co. Ltd.		5,652,070		29,439,910
Tokyo Steel Manufacturing Co. Ltd.		263,500		2,233,199
Toray Industries, Inc.		1,509,600		12,665,047
Toyota Industries Corp. (b)		638,377		33,763,954
Trend Micro, Inc.		76,500		3,953,752
TV Asahi Holdings Corp.		132,200		2,388,250
Ube Industries Ltd.		3,837,346		9,905,367
West Japan Railway Co.		178,600		12,636,947
Yamada Denki Co. Ltd.		330,500		1,643,261
Yamaha Corp.		75,900		2,627,579
Yamato Kogyo Co. Ltd.		60,800		1,561,812
				884,510,260
Netherlands — 1.1%
ABN AMRO Group NV — CVA (c)		615,728		16,311,809
ING Groep NV		2,006,157		34,631,899
Koninklijke Philips NV		1,494,018		53,185,189
Randstad Holding NV		222,614		12,978,672
Unilever NV CVA		43,894		2,423,033
				119,530,602
Portugal — 0.1%
Jeronimo Martins SGPS SA		65,709		1,282,890
NOS SGPS SA		927,709		5,630,272
				6,913,162
Singapore — 0.3%
CapitaLand Ltd.		8,067,450		20,499,550
ComfortDelGro Corp. Ltd. (b)		1,947,000		3,252,085
Singapore Telecommunications Ltd.		1,661,000		4,690,798
				28,442,433
South Korea — 0.5%
Coway Co. Ltd.		33,890		3,079,988
Doosan Bobcat, Inc.		540,439		16,836,821
Hyundai Motor Co.		103,870		14,482,093
KT&G Corp.		108,426		11,091,079
LG Chem Ltd. (b)		15,868		4,037,985
POSCO		12,297		3,080,301
SK Telecom Co. Ltd.		14,310		3,326,889
				55,935,156
Spain — 0.3%
Cellnex Telecom SAU (c)		1,375,461		28,426,000
Gas Natural SDG SA		340,087		7,960,930
				36,386,930

See Notes to Consolidated Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Common Stocks	Shares		Value
Sweden — 0.6%
SKF AB, Class B		2,102,731	$	42,698,882
Svenska Handelsbanken AB, Class A		1,218,747		17,455,048
				60,153,930
Switzerland — 0.7%
Nestle SA, Registered Shares		581,311		50,700,595
Novartis AG, Registered Shares		38,737		3,235,570
UBS Group AG, Registered Shares (a)		1,210,125		20,579,249
				74,515,414
Taiwan — 0.4%
Cathay Financial Holding Co. Ltd.		1,739,000		2,862,441
Cheng Shin Rubber Industry Co. Ltd.		2,874,323		6,112,822
Chunghwa Telecom Co. Ltd.		1,043,000		3,700,041
Far EasTone Telecommunications Co. Ltd.		1,090,000		2,776,210
Formosa Chemicals & Fibre Corp.		737,000		2,312,109
Formosa Petrochemical Corp.		527,000		1,817,546
Formosa Plastics Corp.		786,000		2,394,602
Fubon Financial Holding Co. Ltd.		1,720,000		2,737,061
Hon Hai Precision Industry Co. Ltd.		1,013,200		3,894,732
Nan Ya Plastics Corp.		986,000		2,445,603
Taiwan Mobile Co. Ltd. (a)		1,146,000		4,313,744
Uni-President Enterprises Corp.		1,959,000		3,926,490
				39,293,401
Thailand — 0.2%
Advanced Info Service PCL		771,200		4,029,673
Intouch Holdings PCL, Class F		2,288,100		3,783,860
PTT Global Chemical PCL		1,633,000		3,296,783
Siam Cement PCL		222,600		3,288,032
Siam Cement PCL — NVDR		21,200		314,420
Thai Oil PCL		744,200		1,730,698
				16,443,466
United Arab Emirates — 0.3%
NMC Health PLC		939,783		26,779,444
United Kingdom — 3.6%
BAE Systems PLC		1,699,304		14,028,297
Berkeley Group Holdings PLC		294,760		12,394,583
BP PLC		1,415,222		8,168,946
BP PLC — ADR (b)		926,149		32,091,063
GlaxoSmithKline PLC		2,340,508		49,823,240
GW Pharmaceuticals PLC — ADR (a)(b)		22,211		2,226,653
HSBC Holdings PLC		5,753,012		53,399,515
Liberty Global PLC, Class A (a)		166,396		5,344,640
Meggitt PLC		1,775,391		11,031,904
Michael Kors Holdings Ltd. (a)		642,188		23,279,315
National Grid PLC		100,363		1,243,553
Royal Dutch Shell PLC, A Shares		1,018,217		27,074,363
Royal Dutch Shell PLC, Class A — ADR (b)		947,690		50,407,631
Shire PLC		163,926		9,038,752
Smiths Group PLC		687,514		14,294,808
Spire Healthcare Group PLC (c)		2,486,553		10,510,293
Vodafone Group PLC		16,455,598		46,733,364
Vodafone Group PLC — ADR		536,980		15,427,435
				386,518,355
United States — 25.4%
3M Co.		6,191		1,288,904
AbbVie, Inc.		20,731		1,503,205
Acadia Healthcare Co., Inc. (a)(b)		303,441		14,983,919
Accenture PLC, Class A		13,768		1,702,826
Adobe Systems, Inc. (a)		12,419		1,756,543
Advance Auto Parts, Inc.		142,365		16,598,335
Aetna, Inc.		347,434		52,750,904
Air Products & Chemicals, Inc.		351,668		50,309,624

Common Stocks	Shares		Value
United States (continued)
Alliance Data Systems Corp.		4,025	$	1,033,177
Allstate Corp. (m)		281,212		24,870,389
Alphabet, Inc., Class C (a)		55,781		50,689,868
Altria Group, Inc.		35,215		2,622,461
Amazon.com, Inc. (a)		96,609		93,517,512
Amdocs Ltd.		28,473		1,835,370
American International Group, Inc.		12,381		774,060
American Tower Corp.		16,568		2,192,278
Ameriprise Financial, Inc.		7,598		967,149
Amgen, Inc.		12,059		2,076,922
Anadarko Petroleum Corp.		943,374		42,772,577
Analog Devices, Inc.		9,328		725,718
Anthem, Inc.		147,978		27,839,101
Apple Inc.		721,250		103,874,425
Axalta Coating Systems Ltd. (a)		1,036,545		33,210,902
Axis Capital Holdings Ltd.		21,223		1,372,279
Bank of America Corp.		3,556,195		86,273,291
Bank of New York Mellon Corp.		15,305		780,861
Baxter International, Inc.		71,866		4,350,768
Bed Bath & Beyond, Inc. (b)		171,948		5,227,219
Berkshire Hathaway, Inc., Class A (a)		17		4,329,900
Berkshire Hathaway, Inc., Class B (a)		219,142		37,116,081
Biogen, Inc. (a)		57,254		15,536,445
Boeing Co.		7,669		1,516,545
Bristol-Myers Squibb Co.		40,848		2,276,051
Brookdale Senior Living, Inc. (a)(b)		1,097,112		16,138,518
Capital One Financial Corp.		14,946		1,234,839
Cardinal Health, Inc.		20,912		1,629,463
Catalent, Inc. (a)		388,859		13,648,951
CenterPoint Energy, Inc.		21,538		589,710
Charles Schwab Corp. (b)		482,541		20,729,961
Charter Communications, Inc., Class A (a)(b)		86,206		29,038,491
Chevron Corp.		5,700		594,681
Chubb Ltd.		204,285		29,698,953
Cisco Systems, Inc.		31,773		994,495
Citigroup, Inc.		732,240		48,972,211
Colgate-Palmolive Co.		44,129		3,271,283
Comcast Corp., Class A		1,955,221		76,097,201
CommScope Holding Co, Inc. (a)		779,969		29,662,221
Constellation Brands, Inc., Class A		9,559		1,851,865
Cooper Cos, Inc.		1,658		396,958
Crown Holdings, Inc. (a)		20,649		1,231,919
Cummins, Inc.		5,638		914,596
CVS Health Corp.		185,443		14,920,744
Delta Air Lines, Inc.		537,298		28,874,395
Discover Financial Services		256,752		15,967,407
DISH Network Corp., Class A (a)		228,716		14,354,216
E.I. du Pont de Nemours & Co.		773,663		62,442,341
Edgewell Personal Care Co. (a)		542,487		41,239,862
Electronic Arts, Inc. (a)		151,932		16,062,251
EQT Corp. (b)		295,033		17,285,983
Expedia, Inc. (b)		109,978		16,381,223
Facebook, Inc., Class A (a)		404,183		61,023,549
Fifth Third Bancorp		26,666		692,249
Ford Motor Co.		1,150,295		12,871,801
Fortune Brands Home & Security, Inc.		310,376		20,248,930
General Dynamics Corp.		9,899		1,960,992
General Electric Co.		170,471		4,604,422
Gilead Sciences, Inc.		777,041		54,998,962
Global Payments, Inc.		157,808		14,253,219
Goldman Sachs Group, Inc.		124,610		27,650,959
Goodyear Tire & Rubber Co.		26,447		924,587
H&R Block, Inc.		66,697		2,061,604
Hartford Financial Services Group, Inc.		57,540		3,024,878
HCA Healthcare, Inc. (a)		346,671		30,229,711

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Common Stocks	Shares		Value
United States (continued)
Helmerich & Payne, Inc. (b)		15,823	$	859,822
Home Depot, Inc.		148,973		22,852,458
Illinois Tool Works, Inc.		8,366		1,198,429
Intel Corp.		36,849		1,243,285
International Paper Co. (b)		28,616		1,619,952
Intuit, Inc.		50,649		6,726,694
Invitae Corp. (a)		226,218		2,162,644
Jawbone Health Hub, Inc. (Acquired 1/24/17, cost $0) (a)(e)(f)		333,860		910,536
Johnson & Johnson		33,201		4,392,160
JPMorgan Chase & Co.		472,327		43,170,688
Kansas City Southern		373,335		39,069,508
KLA-Tencor Corp.		14,742		1,349,040
Lear Corp.		8,396		1,192,904
Liberty Broadband Corp., Class A (a)		69,988		6,004,271
Liberty Broadband Corp., Class C (a)		170,954		14,830,259
Liberty Media Corp. — Liberty Formula One (Acquired 1/23/17, cost $2,449,566) (a)(f)		89,252		3,248,435
Liberty Media Corp. — Liberty SiriusXM Group, Class A (a)		255,387		10,721,146
Liberty Media Corp. — Liberty SiriusXM Group, Class C (a)		422,367		17,612,704
Lookout, Inc. (Acquired 3/04/15, cost $936,169) (a)(e)(f)		81,954		52,451
Lowe’s Cos., Inc.		688,995		53,417,782
ManpowerGroup, Inc.		7,705		860,263
Marathon Oil Corp. (b)		1,782,843		21,126,690
Marathon Petroleum Corp.		1,081,474		56,593,534
Marsh & McLennan Cos., Inc.		282,131		21,994,933
Masco Corp.		546,516		20,882,376
Mastercard, Inc., Class A		155,646		18,903,207
McDonald’s Corp.		13,343		2,043,614
McKesson Corp.		6,628		1,090,571
MetLife, Inc.		474,779		26,084,358
Microsoft Corp.		304,534		20,991,529
Mohawk Industries, Inc. (a)		81,997		19,817,855
Mondelez International, Inc., Class A		93,423		4,034,939
Morgan Stanley		919,401		40,968,509
NextEra Energy Partners LP (b)		377,717		13,971,752
NextEra Energy, Inc. (b)		353,516		49,538,197
Northrop Grumman Corp.		7,016		1,801,077
Nuance Communications, Inc. (a)		203,587		3,544,450
Omnicom Group, Inc. (b)		8,666		718,411
O’Reilly Automotive, Inc. (a)		67,246		14,709,390
Packaging Corp. of America		17,922		1,996,332
PepsiCo, Inc.		33,177		3,831,612
Perrigo Co. PLC		416,854		31,480,814
Pfizer, Inc.		2,026,696		68,076,719
Phillips 66		15,621		1,291,700
Prudential Financial, Inc.		14,438		1,561,325
Pure Storage, Inc., Class A (a)		1,213,177		15,540,797
PVH Corp.		6,366		728,907
QUALCOMM, Inc.		1,225,407		67,666,975
Ralph Lauren Corp. (b)		169,046		12,475,595
Raytheon Co.		7,993		1,290,710
Reinsurance Group of America, Inc.		12,292		1,578,170
Rockwell Automation, Inc.		7,303		1,182,794
Royal Caribbean Cruises Ltd.		6,541		714,473
Sabre Corp. (b)		726,068		15,806,500
Schlumberger Ltd. (b)		246,413		16,223,832
Scripps Networks Interactive, Inc., Class A (b)		15,125		1,033,189
Sempra Energy		185,243		20,886,148
Simon Property Group, Inc.		7,634		1,234,876
Snap, Inc., Class A (a)(b)		660,394		11,735,201
St. Joe Co. (a)		1,376,362		25,806,787
Starbucks Corp.		239,079		13,940,696

Common Stocks		Shares		Value
United States (continued)
Stryker Corp.			5,611	$	778,695
SunTrust Banks, Inc.			275,874		15,647,573
Target Corp.			527,788		27,598,035
Tenet Healthcare Corp. (a)(b)			1,067,196		20,639,571
TESARO, Inc. (a)(b)			47,285		6,613,280
Thermo Fisher Scientific, Inc.			18,918		3,300,623
Travelers Cos., Inc.			29,178		3,691,892
TripAdvisor, Inc. (a)(b)			263,029		10,047,708
Tyson Foods, Inc., Class A			13,855		867,739
United Continental Holdings, Inc. (a)			646,840		48,674,710
United Rentals, Inc. (a)			11,519		1,298,306
UnitedHealth Group, Inc.			26,310		4,878,400
Unum Group			235,827		10,996,613
Urban Outfitters, Inc. (a)(b)			370,618		6,871,258
Valero Energy Corp.			32,528		2,194,339
VeriFone Systems, Inc. (a)(b)			717,435		12,985,573
VeriSign, Inc. (a)(b)			19,712		1,832,428
Verizon Communications, Inc.			1,023,857		45,725,454
Visa, Inc., Class A			189,667		17,786,971
Vistra Energy Corp.			345,664		5,803,699
VMware, Inc., Class A (a)(b)			161,223		14,095,727
WABCO Holdings, Inc. (a)			8,893		1,133,946
Western Digital Corp.			10,103		895,126
WestRock Co.			301,204		17,066,219
Williams Cos., Inc.			1,419,823		42,992,240
Williams-Sonoma, Inc. (b)			313,551		15,207,223
Wyndham Worldwide Corp.			17,612		1,768,421
Zimmer Biomet Holdings, Inc.			316,845		40,682,898
					2,697,915,852
Total Common Stocks — 50.6%					5,383,263,041
Corporate Bonds		Par   (000)
Australia — 0.2%
Quintis Ltd., 8.75%, 8/01/23 (c)	USD		28,698		21,523,500
Brazil — 0.0%
Odebrecht Finance Ltd., 4.38%, 4/25/25 (c)			5,283		2,033,955
Canada — 0.0%
BC ULC/New Red Finance, Inc., 4.25%, 5/15/24 (c)			2,724		2,706,812
Chile — 0.0%
Inversiones Alsacia SA, 8.00%, 12/31/18 (a)(c)(g)			7,809		273,306
China — 0.0%
Celestial Nutrifoods Ltd., 0.00%, 6/12/11 (a)(e)(g)(h)	SGD		11,400		1
China Milk Products Group Ltd., 0.00%, 1/05/12 (a)(e)(g)(h)	USD		4,800		24,000
					24,001
France — 0.2%
BNP Paribas SA, 2.40%, 12/12/18			12,339		12,443,511
Danone SA, 2.59%, 11/02/23 (c)			8,441		8,235,690
					20,679,201
Germany — 0.2%
Bayer Capital Corp. BV, 5.63%, 11/22/19 (c)(h)	EUR		17,100		23,776,801
Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH, 5.50%, 1/15/23 (c)	USD		2,396		2,485,643
					26,262,444

See Notes to Consolidated Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Corporate Bonds		Par   (000)		Value
India — 0.0%
REI Agro Ltd.:
5.50%, 11/13/14 (a)(e)(g)(h)	USD		2,291	$	11,455
5.50%, 11/13/14 (a)(c)(e)(g)(h)			6,148		30,740
Suzlon Energy Ltd., 5.75%, 7/16/19 (c)(h)(i)			1,448		1,592,800
					1,634,995
Ireland — 0.0%
GE Capital International Funding Co., 2.34%, 11/15/20			3,061		3,085,473
Italy — 0.2%
Intesa Sanpaolo SpA, 3.88%, 1/15/19			10,073		10,321,521
Telecom Italia SpA, 5.30%, 5/30/24 (c)			7,626		8,178,885
					18,500,406
Luxembourg — 0.2%
Allergan Funding SCS, 3.45%, 3/15/22			7,672		7,908,428
Intelsat Jackson Holdings SA:
7.50%, 4/01/21			6,886		6,352,335
8.00%, 2/15/24 (c)			2,264		2,439,460
					16,700,223
Mexico — 0.0%
Trust F/1401, 5.25%, 12/15/24 (c)			3,282		3,418,203
Netherlands — 0.1%
Bio City Development Co. BV, 8.00%, 7/06/18 (a)(c)(e)(g)(h)			21,400		6,751,700
Constellium NV, 7.00%, 1/15/23 (c)	EUR		853		1,001,691
Cooperatieve Rabobank UA, 3.95%, 11/09/22	USD		2,236		2,335,305
					10,088,696
Singapore — 0.2%
CapitaLand Ltd., 1.95%, 10/17/23 (c)(h)	SGD		8,750		6,508,081
Global Logistic Properties Ltd., 3.88%, 6/04/25	USD		11,371		10,812,491
					17,320,572
Spain — 0.2%
Telefonica Participaciones SAU, 4.90%, 9/25/17 (c)(h)	EUR		12,800		13,581,561
Telefonica SA, 6.00%, 7/24/17 (h)			4,100		4,414,967
					17,996,528
Switzerland — 0.1%
UBS Group Funding Switzerland AG, 4.13%, 9/24/25 (c)	USD		5,294		5,549,356
United Arab Emirates — 0.1%
Dana Gas Sukuk Ltd., 7.00%, 10/31/17 (c)(h)			17,922		13,799,825
United Kingdom — 0.0%
Delta Topco Ltd. (2.00% PIK) (Acquired 1/24/17, cost $1,290,009), 2.00%, 7/23/19 (e)(f)(j)			1,029		1,532,188
United States — 3.5%
AbbVie, Inc.:
2.50%, 5/14/20			8,959		9,062,862
2.30%, 5/14/21			7,254		7,236,003
Activision Blizzard, Inc., 2.30%, 9/15/21			2,004		1,990,942
AliphCom (Acquired 11/11/15, cost $3,000,000), 15.00%, 4/28/20 (a)(e)(f)(g)(h)(k)			3,000		75,300
AliphCom (Acquired 4/27/15-7/21/15, cost $44,575,000), 15.00%, 4/28/20 (a)(e)(f)(g)(h)(k)			44,575		1,118,833
Ally Financial, Inc., 3.50%, 1/27/19			5,076		5,145,795
American Express Credit Corp., 2.70%, 3/03/22			16,079		16,227,136
American Tower Corp., 3.40%, 2/15/19			3,455		3,527,189

Corporate Bonds		Par   (000)		Value
United States (continued)
Apple Inc.:
3.35%, 2/09/27	USD		13,843	$	14,152,156
3.20%, 5/11/27			13,435		13,591,921
AT&T Inc., 3.00%, 6/30/22			16,497		16,505,529
Bank of America Corp.:
3.30%, 1/11/23			8,853		9,027,386
Series L, 2.60%, 1/15/19			4,145		4,184,033
Becton Dickinson and Co.:
2.68%, 12/15/19			3,446		3,488,193
3.13%, 11/08/21			7,784		7,928,689
2.89%, 6/06/22			6,370		6,389,913
Berkshire Hathaway, Inc., 2.75%, 3/15/23			5,851		5,928,526
Cablevision Systems Corp., 5.88%, 9/15/22			2,917		3,066,496
CCO Holdings LLC/CCO Holdings Capital Corp., 5.13%, 5/01/27 (c)			6,745		6,896,763
Citigroup, Inc.:
2.70%, 3/30/21			8,295		8,350,046
2.90%, 12/08/21			3,808		3,846,586
Cobalt International Energy, Inc.:
2.63%, 12/01/19 (h)			12,966		3,371,160
3.13%, 5/15/24 (h)			16,167		3,233,400
E.I. du Pont de Nemours & Co., 2.20%, 5/01/20			9,040		9,089,060
eBay, Inc., 3.80%, 3/09/22			4,124		4,309,580
Edgewell Personal Care Co.:
4.70%, 5/19/21			4,581		4,878,765
4.70%, 5/24/22			4,269		4,557,157
Ford Motor Credit Co. LLC:
5.00%, 5/15/18			6,602		6,770,873
2.55%, 10/05/18			2,352		2,367,481
2.26%, 3/28/19			3,325		3,334,064
Forest Laboratories LLC, 5.00%, 12/15/21 (c)			3,933		4,294,065
General Electric Co., 5.55%, 5/04/20			970		1,065,551
General Motors Financial Co., Inc., 3.45%, 4/10/22			3,371		3,426,278
Goldman Sachs Group, Inc., 2.60%, 12/27/20			26,282		26,421,952
Hilton Worldwide Finance LLC/Hilton Worldwide Finance Corp., 4.63%, 4/01/25 (c)			5,896		6,080,250
Hughes Satellite Systems Corp., 7.63%, 6/15/21			1,337		1,519,166
JPMorgan Chase & Co.:
2.30%, 8/15/21			11,436		11,369,465
4.35%, 8/15/21			3,482		3,726,976
2.16%, 1/15/23 (k)			9,159		9,214,522
Medtronic, Inc., 3.15%, 3/15/22			9,377		9,703,667
Mylan, Inc., 2.55%, 3/28/19			5,702		5,743,163
Oracle Corp., 1.90%, 9/15/21			12,771		12,658,705
QUALCOMM, Inc.:
3.00%, 5/20/22			9,831		10,082,025
2.60%, 1/30/23			8,305		8,274,703
Sherwin-Williams Co.:
2.25%, 5/15/20			5,135		5,146,487
2.75%, 6/01/22			2,965		2,963,230
Synchrony Financial, 3.75%, 8/15/21			2,199		2,258,648
T-Mobile USA, Inc.:
4.00%, 4/15/22			1,349		1,403,904
6.00%, 4/15/24			5,324		5,696,680
Verizon Communications, Inc.:
3.13%, 3/16/22			40,128		40,720,249
2.45%, 11/01/22			2,068		2,027,083
2.63%, 8/15/26			3,994		3,673,665

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Corporate Bonds		Par   (000)		Value
United States (continued)
Volkswagen Group of America Finance LLC, 2.45%, 11/20/19	USD		3,429	$	3,447,956
					370,570,227
Total Corporate Bonds — 5.2%					553,699,911
Floating Rate Loan Interests (k)
Norway — 0.1%
Drillships Financing Holding, Inc. (Ocean Rig), Tranche B-1 Term Loan, 8.25%, 3/31/21			5,513		3,535,472
United States — 0.4%
Fieldwood Energy LLC:
Closing Date Loan (Second Lien), 8.42%, 9/30/20			4,979		2,750,954
FLLO Facility (First Lien), 8.42%, 9/30/20			2,958		2,329,753
Reserve Based Term Loan, 8.30%, 8/31/20			2,191		2,043,498
Hilton Worldwide Finance LLC, Series B-2 Term Loan, 3.22%, 10/25/23			14,486		14,523,733
Neiman Marcus Group, Inc., Other Term Loan, 4.34%, 10/25/20			3,996		2,988,480
Seadrill Operating LP (Seadrill Partners Finco LLC), Initial Term Loan, 4.30%, 2/21/21			14,058		8,940,872
Sheridan Investment Partners II LP, Senior Secured Term Loan, 4.71%, 12/16/20			11,710		9,953,603
Sheridan Production Partners II-A LP, Senior Secured Term Loan, 4.71%, 12/16/20			1,629		1,384,701
Sheridan Production Partners II-M LP, Senior Secured Term Loan, 4.71%, 12/16/20			608		516,458
					45,432,052
Total Floating Rate Loan Interests — 0.5%					48,967,524
Foreign Agency Obligations
Brazil — 0.1%
Petrobras Global Finance BV, 6.13%, 1/17/22			16,123		16,630,875
Mexico — 0.2%
Petroleos Mexicanos:
4.88%, 3/11/22 (c)(k)			8,570		9,242,745
4.63%, 9/21/23			9,338		9,450,056
					18,692,801
South Korea — 0.1%
Export-Import Bank of Korea:
2.88%, 9/17/18			3,344		3,375,628
2.63%, 12/30/20			6,819		6,848,676
					10,224,304
Total Foreign Agency Obligations — 0.4%					45,547,980
Foreign Government Obligations
Argentina — 0.6%
Provincia de Buenos Aires, 8.95%, 2/19/21 (c)			1,128		1,254,900
Republic of Argentina:
6.88%, 4/22/21			8,001		8,561,070
3.88%, 1/15/22	EUR		5,376		6,101,834
5.63%, 1/26/22	USD		9,061		9,278,464

Foreign Government Obligations		Par   (000)		Value
Argentina (continued)
7.50%, 4/22/26	USD		19,959	$	21,505,823
6.88%, 1/26/27			13,422		13,905,192
					60,607,283
Australia — 1.5%
Commonwealth of Australia:
5.75%, 5/15/21	AUD		50,304		43,937,958
5.75%, 7/15/22			90,335		81,146,513
5.50%, 4/21/23			15,451		13,943,115
3.00%, 3/21/47			33,803		23,637,673
					162,665,259
Brazil — 1.0%
Brazil Notas do Tesouro Nacional:
Series B, 6.00%, 8/15/22	BRL		31		28,565,661
Series F, 10.00%, 1/01/18			62		18,848,752
Series F, 10.00%, 1/01/23			162		48,469,849
Federative Republic of Brazil:
4.88%, 1/22/21	USD		5,401		5,660,248
2.63%, 1/05/23			7,792		7,217,340
					108,761,850
Canada — 1.0%
Canadian Government Bonds:
0.50%, 8/01/18	CAD		108,088		82,932,202
0.75%, 3/01/21			26,548		20,072,933
					103,005,135
Germany — 0.5%
Bundesrepublik Deutschland, 0.00%, 8/15/26	EUR		45,299		49,896,473
Hungary — 0.3%
Republic of Hungary:
6.25%, 1/29/20	USD		8,189		8,958,766
6.38%, 3/29/21			22,780		25,616,110
					34,574,876
Indonesia — 0.3%
Republic of Indonesia:
6.88%, 1/17/18 (c)			5,918		6,071,868
4.88%, 5/05/21			2,427		2,606,617
3.70%, 1/08/22 (c)			3,549		3,647,293
2.63%, 6/14/23 (c)	EUR		12,497		14,976,902
					27,302,680
Japan — 1.1%
Government of Japan (2 Year):
0.10%, 3/15/18	JPY		6,086,800		54,205,125
0.10%, 10/15/18	7,006,100				62,459,093
					116,664,218
Mexico — 1.2%
United Mexican States:
Series M, 6.50%, 6/10/21	MXN		15,265		83,784,044
Series M-10, 8.50%, 12/13/18			7,621		42,948,225
					126,732,269
New Zealand — 0.5%
New Zealand Government Bonds, 6.00%, 5/15/21	NZD		60,171		49,924,713

See Notes to Consolidated Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Foreign Government Obligations		Par   (000)		Value
Poland — 1.3%
Republic of Poland:
5.00%, 3/23/22	USD		3,654	$	4,055,940
3.25%, 7/25/25	PLN		99,691		27,127,283
2.50%, 7/25/26			99,820		25,450,309
2.50%, 7/25/27			330,063		82,870,917
					139,504,449
Saudi Arabia — 0.1%
Kingdom of Saudi Arabia, 2.38%, 10/26/21 (c)	USD		11,679		11,492,136
Turkey — 0.3%
Republic of Turkey, 11.00%, 3/02/22	TRY		101,694		29,452,226
United Kingdom — 1.0%
United Kingdom Gilt:
0.50%, 7/22/22	GBP		25,505		32,900,747
2.75%, 9/07/24			54,137		79,410,434
					112,311,181
Total Foreign Government Obligations — 10.7%					1,132,894,748
Investment Companies		Shares
ETFS Physical Palladium Shares (a)(l)			80,940		6,530,984
ETFS Physical Platinum Shares (a)(l)			67,020		5,921,217
ETFS Physical Swiss Gold Shares (a)(l)(m)			230,215		27,724,769
iShares Gold Trust (a)(l)(n)			2,098,037		25,050,562
SPDR Gold Shares ETF (a)(l)(m)			2,765,033		326,329,195
Total Investment Companies — 3.7%					391,556,727
Non-Agency Mortgage-Backed Securities		Par   (000)
Commercial Mortgage-Backed Securities — 0.1%
Logistics UK PLC, Series 2015-1A, Class F, 3.90%, 8/20/25 (c)(e)(k)	GBP		6,637		8,644,400
Preferred Securities
Capital Trusts
Netherlands — 0.0%
ING Groep NV, 6.00% (k)(o)	USD		3,944		4,032,740
United Kingdom — 0.4%
HSBC Holdings PLC, 6.38% (k)(o)			15,355		16,084,363
Lloyds Bank PLC, 13.00% (k)(o)	GBP		9,063		22,150,504
					38,234,867
United States — 0.7%
American Express Co., Series C, 4.90% (k)(o)	USD		5,229		5,315,279
Citigroup, Inc., Series O, 5.88% (k)(o)			9,736		10,224,845
General Electric Co.:
6.38%, 11/15/67 (k)			5,004		5,054,040
Series D, 5.00% (k)(o)			8,409		8,925,313
Goldman Sachs Group, Inc.:
Series L, 5.70% (k)(o)			8,140		8,471,705
Series M, 5.38% (k)(o)			8,537		8,970,680
Morgan Stanley, Series H, 5.45% (k)(o)			5,940		6,150,870
NBCUniversal Enterprise, Inc., 5.25% (c)(o)			6,235		6,626,932
Prudential Financial, Inc.:
5.88%, 9/15/42 (k)			4,679		5,213,342
5.63%, 6/15/43 (k)			3,105		3,411,619

Capital Trusts		Par   (000)		Value
United States (continued)
USB Capital IX, 3.50% (k)(o)	USD		2,096	$	1,861,038
					70,225,663
Total Capital Trusts — 1.1%					112,493,270
Preferred Stocks		Shares
United States — 1.9%
Anthem, Inc., 5.25% (h)			413,686		21,850,895
Dominion Resources, Inc.:
6.38% (h)			90,219		4,312,468
Series A, 6.75% (b)(h)			339,511		17,084,194
Domo, Inc., Series D-2, (Acquired 4/01/15 - 4/12/17, cost $23,596,895), 0.00% (a)(e)(f)			2,798,626		24,739,854
Dropbox, Inc., Series C (Acquired 1/28/14, cost $28,835,783), 0.00% (a)(e)(f)			1,509,632		18,130,680
Grand Rounds, Inc., Series C (Acquired 3/31/15, cost $5,939,231), 0.00% (a)(e)(f)			2,139,107		6,502,885
Lookout, Inc., Series F (Acquired 9/19/14-10/22/14, cost $10,936,522), 0.00% (a)(e)(f)			957,404		9,535,744
Palantir Technologies, Inc., Series I (Acquired 3/27/14, cost $11,447,321), 0.00% (a)(e)(f)			1,867,426		14,958,082
Stericycle, Inc., 5.25% (h)			52,343		3,503,840
U.S. BancorpSeries F, 6.50% (k)			181,462		5,387,607
Uber Technologies, Inc., Series D (Acquired 6/10/14, cost $17,574,548), 0.00% (a)(e)(f)			1,132,888		61,040,005
Wells Fargo & Co., Series L, 7.50% (h)			3,356		4,400,085
Welltower, Inc., Series I, 6.50% (h)			160,085		10,607,232
					202,053,571
Total Preferred Stocks — 1.9%					202,053,571
Trust Preferreds
United States — 0.4%
Citigroup Capital XIII, 7.54%, 10/30/40 (b)(k)			374,448		9,728,159
GMAC Capital Trust I, Series 2, 6.97%, 2/15/40 (b)(k)			405,551		10,625,436
Mandatory Exchangeable Trust, 5.75%, 6/03/19 (a)(c)(h)			161,896		26,455,425
Total Trust Preferreds — 0.4%					46,809,020
Total Preferred Securities — 3.4%					361,355,861
U.S. Treasury Obligations		Par   (000)
U.S. Treasury Inflation Indexed Notes, 0.38%, 1/15/27	USD		99,007		97,251,351
U.S. Treasury Notes:
0.75%, 12/31/17 (l)			30,000		29,939,850
1.13%, 7/31/21			22,739		22,163,528
1.88%, 4/30/22			361,737		361,665,961
1.75%, 5/31/22-6/30/22			704,005		699,671,550
2.25%, 2/15/27			210,269		209,291,769
Total U.S. Treasury Obligations — 13.3%					1,419,984,009

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Warrants		Shares		Value
Australia — 0.0%
Quintis Ltd. (Issued/exercisable 8/01/11, 1 share for 1 warrant, Expires 7/15/18, Strike Price AUD 1.28)			3,244,408	$	159,768
Quintis Ltd. (Issued/exercisable 8/01/11, 1 share for 1 warrant, Expires 7/15/18, Strike Price AUD 1.28)			523,292		25,769
Total Warrants — 0.0%					185,537
Total Long-Term Investments (Cost — $8,723,898,709) — 87.9%					9,346,099,738
Short-Term Securities
Money Market Funds
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (n)(p)			11,307,431		11,307,431
SL Liquidity Series, LLC, Money Market Series, 1.27% (n)(p)(q)			269,196,037		269,222,956
Total Money Market Funds — 2.6%					280,530,387
Time Deposits		Par   (000)
Canada — 0.1%
Royal Bank of Canada, 0.05%, 7/03/17	CAD		531		409,621
Japan — 0.0%
Sumitomo Mitsui Banking Corp., (0.26)%, 7/03/17	JPY		472,512		4,201,036
United Kingdom — 0.0%
Citibank N.A., 0.05%, 7/03/17	GBP		174		226,423
Total Time Deposits — 0.1%					4,837,080

U.S. Treasury Obligations		Par   (000)		Value
U.S. Treasury Bills (r):
0.80%, 7/06/17-8/03/17	USD		384,000	$	383,929,509
0.78%, 7/13/17-8/10/17			160,000		159,944,450
0.81%, 7/20/17			297,797		297,687,113
0.84%, 7/27/17			168,000		167,908,104
0.85%, 8/17/17			188,000		187,787,560
0.90%, 8/31/17			8,000		7,987,904
0.95%, 9/07/17			27,000		26,952,966
Total U.S. Treasury Obligations — 11.6%					1,232,197,606
Total Short-Term Securities (Cost — $1,517,553,248) — 14.3%					1,517,565,073
Options Purchased
(Cost — $43,606,072) — 0.4%					42,298,383
Total Investments Before Options Written and Investments Sold Short
(Cost — $10,285,058,029) — 102.6%					10,905,963,194
Options Written
(Premiums Received — $20,024,775) — (0.2)%					(16,226,878	)
Investments Sold Short		Shares
Canada — (0.3)%
Bank of Montreal			181,914		(13,357,381	)
Royal Bank of Canada			227,598		(16,525,777	)
					(29,883,158	)
United States — (0.5)%
Caterpillar, Inc.			151,500		(16,280,190	)
Procter & Gamble Co.			182,296		(15,887,096	)
Prologis, Inc.			404,169		(23,700,470	)
					(55,867,756	)
Total Investments Sold Short (Proceeds — $77,521,799) — (0.8)%					(85,750,914	)
Total Investments Net of Options Written and Investments Sold Short — 101.6%					10,803,985,402
Liabilities in Excess of Other Assets — (1.6)%					(169,116,945	)
Net Assets — 100.0%				$	10,634,868,457

      Notes to Consolidated Schedule of Investments

(a) Non-income producing security.

(b) Security, or a portion of the security, is on loan.

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

(d) A security contractually bound to one or more other securities to form a single saleable unit which cannot be sold separately.

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

(f) Restricted security as to resale, excluding 144a securities. The Fund held restricted securities with a current value of $141,844,993, representing 1.3% of its net assets as of period end, and an original cost of $150,581,044.

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

(h) Convertible security.

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

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

(k) Variable rate security. Rate as of period end.

(l) All or a portion of the security is held by a wholly-owned subsidiary. See Note 1 of the Notes to Consolidated Financial Statements for details on the wholly-owned subsidiary.

(m) All or a portion of the security has been pledged as collateral in connection with outstanding OTC derivatives.

See Notes to Consolidated Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

(n) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Shares Purchased			Shares Sold			Shares Held at June 30, 2017		Value at June 30, 2017		Income				Net Realized Gain			Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		3,489,583		7,817,848	1		—			11,307,431		$  11,307,431		$	17,400				—			—
SL Liquidity Series, LLC, Money Market Series		304,751,698		—			35,555,661	2		269,196,037		269,222,956			1,200,333	3		$	26,439		$	(17,277	)
iShares Gold Trust		2,098,037		—			—			2,098,037		25,050,562			—				—			1,804,312
iShares iBoxx $ High Yield Corporate Bond ETF		122,665		—			(122,665	)		—		—			93,976				368,124			(353,624	)
Total												$305,580,949		$	1,311,709			$	394,563		$	1,433,411

¹  Represents net shares purchased.

²  Represents net shares sold.

³  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(o) Perpetual security with no stated maturity date.

(p) Current yield as of period end.

(q) Security was purchased with the cash collateral from loaned securities.

(r) Rates are discount rates or a range of discount rates at the time of purchase.

      Derivative Financial Instruments Outstanding as of Period End

Futures Contracts
Contracts Long (Short)	Issue	Expiration	Notional Value			Unrealized   Appreciation  (Depreciation)
934	SGX Nifty 50 Index	July 2017		USD	17,780,558		$    (62,578	)
(141)	Euro STOXX 50 Index	September 2017		USD	5,525,401		193,933
(8)	FTSE 100 Index	September 2017		USD	754,643		21,285
(185)	NASDAQ 100 E-Mini Index	September 2017		USD	20,915,175		297,253
(102)	Nikkei 225 Yen Index	September 2017		USD	9,098,155		(25,189	)
(1,316)	Russell 2000 Mini Index	September 2017		USD	93,060,940		(397,719	)
(47)	S&P 500 E-Mini Index	September 2017		USD	5,689,115		40,108
Total						$	67,093

Forward Foreign Currency Exchange Contracts
Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
NOK	83,901,000	USD	9,804,153	Morgan Stanley & Co. International PLC		7/27/17		$    251,478
EUR	31,065,000	USD	35,008,395	Deutsche Bank AG		8/31/17		589,540
EUR	31,065,000	USD	35,055,303	UBS AG		9/14/17		570,351
EUR	14,129,000	PLN	60,068,031	Deutsche Bank AG		9/26/17		10,262
EUR	23,722,000	USD	26,994,617	Goldman Sachs International		10/12/17		253,014
EUR	23,413,000	USD	26,708,616	UBS AG		10/19/17		194,863
								1,869,508
USD	24,383,884	NZD	35,319,000	UBS AG		9/07/17		(1,464,767	)
EUR	9,477,000	PLN	40,378,654	Deutsche Bank AG		9/26/17		(16,892	)
USD	9,493,682	AUD	12,721,000	Deutsche Bank AG		9/29/17		(272,236	)
USD	24,107,795	AUD	32,654,000	Citibank N.A.		10/12/17		(956,622	)

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	23,749,259		AUD	32,193,000	Goldman Sachs International		10/12/17		$   (961,306	)
USD	26,061,750		NZD	37,908,000	JPMorgan Chase Bank N.A.		10/19/17		(1,659,400	)
									(5,331,223	)
Net Unrealized Depreciation									$(3,461,715	)

Exchange-Traded Options Purchased

Description	Put/ Call		Expiration Date	Strike Price			Contracts	Value
Wynn Resorts Ltd.		Call	9/15/17		USD	140.00	108		$63,450

OTC Options Purchased

Description	Put/ Call		Counterparty	Expiration Date	Strike Price		Notional Amount (000)			Contracts		Value
TOPIX Index		Call	Goldman Sachs International	7/14/17	JPY	1,600.00			—		3,323,259	$	667,027
SPDR Gold Trust ETF1		Call	Morgan Stanley & Co. International PLC	7/21/17	USD	121.00			—		303,025		74,241
SPDR Gold Trust ETF1		Call	Morgan Stanley & Co. International PLC	7/21/17	USD	123.00			—		176,339		20,279
TOPIX Index		Call	Société Générale	8/10/17	JPY	1,600.00			—		3,360,766		994,123
SPDR Gold Trust ETF1		Call	Morgan Stanley & Co. International PLC	8/18/17	USD	121.00			—		286,216		218,955
GBP Currency		Call	JPMorgan Chase Bank N.A.	8/21/17	USD	1.28		GBP	66,761		—		1,856,818
EUR Currency		Call	UBS AG	9/08/17	USD	1.14		EUR	67,569		—		1,300,665
TOPIX Index		Call	UBS AG	9/08/17	JPY	1,600.00			—		2,259,159		852,554
EUR Currency		Call	BNP Paribas S.A.	9/14/17	USD	1.14		EUR	67,824		—		1,170,005
ETFS Gold Trust1		Call	Morgan Stanley & Co. International PLC	9/15/17	USD	125.00			—		339,528		271,622
EUR Currency		Call	UBS AG	9/27/17	USD	1.14		EUR	68,178		—		1,275,810
SPDR Gold Trust ETF1		Call	Morgan Stanley & Co. International PLC	9/29/17	USD	122.00			—		382,741		501,391
SPDR Gold Trust ETF1		Call	JPMorgan Chase Bank N.A.	10/20/17	USD	122.00			—		236,240		379,090
USD Currency		Call	BNP Paribas S.A.	10/27/17	BRL	3.19		USD	33,999		—		2,188,414
SPDR Gold Trust ETF1		Call	JPMorgan Chase Bank N.A.	11/17/17	USD	120.00			—		290,645		768,416
Euro STOXX 50 Index		Call	Citibank N.A.	12/15/17	EUR	3,650.00			—		8,499		464,973
SPDR Gold Trust ETF1		Call	Morgan Stanley & Co. International PLC	12/15/17	USD	120.00			—		274,048		931,763
Aflac, Inc.		Call	Goldman Sachs International	1/19/18	USD	85.00			—		164,809		135,143
Allstate Corp.		Call	Goldman Sachs International	1/19/18	USD	80.00			—		60,448		598,435
BB&T Corp.		Call	Goldman Sachs International	1/19/18	USD	40.00			—		117,386		730,728
Capital One Financial Corp.		Call	Goldman Sachs International	1/19/18	USD	80.00			—		120,164		859,173
Charles Schwab Corp.		Call	Goldman Sachs International	1/19/18	USD	40.00			—		191,733		997,012
CIT Group, Inc.		Call	Goldman Sachs International	1/19/18	USD	42.00			—		72,214		545,216
CME Group, Inc.		Call	Goldman Sachs International	1/19/18	USD	115.00			—		67,280		740,080
E*Trade Financial Corp.		Call	Goldman Sachs International	1/19/18	USD	35.00			—		257,301		1,344,398
Fifth Third Bancorp		Call	Goldman Sachs International	1/19/18	USD	25.00			—		191,733		462,077
Franklin Resources, Inc.		Call	Goldman Sachs International	1/19/18	USD	45.00			—		277,576		721,698
Manulife Financial Corp.		Call	Goldman Sachs International	1/19/18	CAD	22.00			—		240,624		489,858
MetLife, Inc.		Call	Goldman Sachs International	1/19/18	USD	52.50			—		191,733		910,732
SunTrust Banks, Inc.		Call	Goldman Sachs International	1/19/18	USD	55.00			—		164,674		769,851

See Notes to Consolidated Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Description	Put/ Call		Counterparty	Expiration Date	Strike Price			Notional Amount (000)			Contracts		Value
Synchrony Financial		Call	Goldman Sachs International	1/19/18		USD	35.00			—		307,448	$	215,214
TD Ameritrade Holding Corp.		Call	Goldman Sachs International	1/19/18		USD	40.00			—		310,189		1,457,888
Travelers Cos., Inc.		Call	Goldman Sachs International	1/19/18		USD	135.00			—		112,552		188,525
Wells Fargo & Co.		Call	Goldman Sachs International	1/19/18		USD	55.00			—		407,017		1,363,507
EUR Currency		Call	UBS AG	3/27/18		USD	1.20		EUR	268,091		—		3,514,025
EUR Currency		Call	Barclays Bank PLC	5/18/18		USD	1.19		EUR	135,126		—		2,711,275
Euro STOXX 50 Index		Call	Deutsche Bank AG	9/21/18		EUR	3,426.55			—		3,336		797,616
BP PLC		Call	UBS AG	1/18/19		USD	40.00			—		911,223		856,550
Chevron Corp.		Call	UBS AG	1/18/19		USD	125.00			—		288,940		579,325
ConocoPhillips Co.		Call	UBS AG	1/18/19		USD	52.50			—		471,334		1,107,635
Exxon Mobil Corp.		Call	UBS AG	1/18/19		USD	95.00			—		196,444		269,128
Occidental Petroleum Corp.		Call	UBS AG	1/18/19		USD	75.00			—		422,166		489,713
Royal Dutch Shell PLC — ADR, Class A		Call	UBS AG	1/18/19		USD	60.00			—		520,137		702,185
Schlumberger Ltd.		Call	UBS AG	1/18/19		USD	90.00			—		284,352		213,264
Suncor Energy, Inc.		Call	UBS AG	1/18/19		USD	35.00			—		613,513		711,675
TOTAL SA - ADR		Call	UBS AG	1/18/19		USD	60.00			—		626,551		407,258
Total													$	38,825,330

¹  All or a portion of the security is held by a wholly-owned subsidiary. See Note 1 of the Notes to Consolidated Financial Statements for details on the wholly-owned subsidiary.

OTC Interest Rate Swaptions Purchased

Description

Counterparty

Put/ Call

Exercise Rate

Pay/Receive Exercise Rate

Floating Rate Index

Expiration Date

Notional Amount (000)

Value

10-Year Interest Rate Swap

Bank of America N.A.

Call

2.06%

Receive

3-month LIBOR

9/05/17

USD

136,511

$

387,406

10-Year Interest Rate Swap

Bank of America N.A.

Call

2.10%

Receive

3-month LIBOR

10/16/17

USD

136,853

768,127

30-Year Interest Rate Swap

Goldman Sachs International

Put

1.50%

Pay

6-month EURIBOR

7/10/17

EUR

25,157

419,505

5-Year Interest Rate Swap

Goldman Sachs International

Put

0.46%

Pay

6-month EURIBOR

10/03/17

EUR

270,541

676,810

5-Year Interest Rate Swap

Deutsche Bank AG

Put

1.07%

Pay

6-month JPY LIBOR

4/04/18

JPY

2,370,178

1,531

30-Year Interest Rate Swap

Goldman Sachs International

Put

2.75%

Pay

3-month LIBOR

5/02/18

USD

31,963

1,156,224

Total

$

3,409,603

Exchange-Traded Options Written

Description	Put/ Call	Expiration Date	Strike Price			Contracts	Value
Wynn Resorts Ltd.	Put	9/15/17		USD	125.00	108	$	(53,190	)

OTC Barrier Options Written

Description

Put/ Call

Type of Option

Counterparty

Expiration Date

Strike Price

Barrier Price

Contracts

Value

Euro STOXX 50 Index

Put

Down-and-In

Deutsche Bank AG

09/21/18

EUR

2,586.07

EUR

2,165.83

3,336

$

(222,763

)

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

OTC Options Written

Description	Put/ Call		Counterparty	Expiration Date	Strike Price			Notional Amount (000)			Contracts		Value
TOPIX Index		Call	Société Générale	8/10/17		JPY	1,700.00			—		3,360,766	$	(51,743	)
GBP Currency		Call	JPMorgan Chase Bank N.A.	8/21/17		USD	1.34		GBP	133,522		—		(425,723	)
USD Currency		Call	Deutsche Bank AG	8/24/17		ZAR	13.95		USD	33,829		—		(283,062	)
TOPIX Index		Call	UBS AG	9/08/17		JPY	1,750.00			—		2,259,159		(30,884	)
ETFS Gold Trust1		Call	Morgan Stanley & Co. International PLC	9/15/17		USD	140.00			—		339,528		(50,929	)
SPDR Gold Trust ETF1		Call	JPMorgan Chase Bank N.A.	10/20/17		USD	146.00			—		236,235		(28,016	)
USD Currency		Call	BNP Paribas S.A.	10/27/17		BRL	3.55		USD	67,998		—		(1,006,209	)
SPDR Gold Trust ETF1		Call	JPMorgan Chase Bank N.A.	11/17/17		USD	137.00			—		290,645		(121,792	)
SPDR Gold Trust ETF1		Call	Morgan Stanley & Co. International PLC	12/15/17		USD	137.00			—		274,048		(134,284	)
TOPIX Index		Put	Goldman Sachs International	7/14/17		JPY	1,475.00			—		1,661,629		(11,764	)
EUR Currency		Put	UBS AG	9/08/17		USD	1.07		EUR	67,569		—		(19,638	)
SPDR Gold Trust ETF1		Put	Morgan Stanley & Co. International PLC	9/29/17		USD	105.00			—		382,741		(52,956	)
SPDR Gold Trust ETF1		Put	JPMorgan Chase Bank N.A.	10/20/17		USD	105.00			—		236,235		(52,898	)
USD Currency		Put	BNP Paribas S.A.	10/27/17		BRL	3.00		USD	33,999		—		(33,869	)
SPDR Gold Trust ETF1		Put	JPMorgan Chase Bank N.A.	11/17/17		USD	103.00			—		290,645		(81,724	)
BP PLC		Put	UBS AG	1/18/19		USD	25.00			—		911,223		(947,672	)
Chevron Corp.		Put	UBS AG	1/18/19		USD	80.00			—		288,940		(982,396	)
ConocoPhillips Co.		Put	UBS AG	1/18/19		USD	35.00			—		471,334		(1,135,913	)
Exxon Mobil Corp.		Put	UBS AG	1/18/19		USD	60.00			—		196,444		(359,493	)
Occidental Petroleum Corp.		Put	UBS AG	1/18/19		USD	45.00			—		422,166		(924,544	)
Royal Dutch Shell PLC — ADR, Class A		Put	UBS AG	1/18/19		USD	40.00			—		520,137		(936,247	)
Schlumberger Ltd.		Put	UBS AG	1/18/19		USD	60.00			—		284,352		(1,464,413	)
Suncor Energy, Inc.		Put	UBS AG	1/18/19		USD	25.00			—		613,513		(1,386,539	)
TOTAL SA — ADR		Put	UBS AG	1/18/19		USD	40.00			—		626,551		(1,566,379	)
Total													$	(12,089,087	)

¹  All or a portion of the security is held by a wholly-owned subsidiary. See Note 1 of the Notes to Consolidated Financial Statements for details on the wholly-owned subsidiary.

OTC Interest Rate Swaptions Written

Description

Counterparty

Put/ Call

Exercise Rate

Pay/Receive Exercise Rate

Floating Rate Index

Expiration Date

Notional Amount (000)

Value

10-Year Interest Rate Swap

Bank of America N.A.

Call

1.81%

Pay

3-month LIBOR

9/05/17

USD

136,511

$

(97,379

)

10-Year Interest Rate Swap

Bank of America N.A.

Call

1.85%

Pay

3-month LIBOR

10/16/17

USD

136,853

(274,972

)

10-Year Interest Rate Swap

Bank of America N.A.

Put

2.51%

Receive

3-month LIBOR

9/05/17

USD

136,511

(395,758

)

5-Year Interest Rate Swap

Goldman Sachs International

Put

0.76%

Receive

6-month EURIBOR

10/03/17

EUR

270,541

(118,371

)

10-Year Interest Rate Swap

Bank of America N.A.

Put

2.42%

Receive

3-month LIBOR

10/16/17

USD

136,853

(1,157,006

)

5-Year Forward/5-Year Interest Rate Swap

Goldman Sachs International

Put

2.70%

Receive

3-month LIBOR

11/02/17

USD

163,843

(1,082,035

)

5-Year Interest Rate Swap

Goldman Sachs International

Put

2.50%

Receive

3-month LIBOR

5/02/18

USD

146,213

(736,317

)

Total

$

(3,861,838

)

See Notes to Consolidated Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Centrally Cleared Credit Default Swaps — Buy Protection
Index	Pay Fixed Rate		Expiration Date		Notional Amount (000)		Unrealized Appreciation (Depreciation)
CDX.NA.HY.27.V2		5.00%		12/20/21		USD     4,479		$(50,669	)
CDX.NA.HY.28.V1		5.00%		6/20/22		USD     4,451		9,642
Total								$(41,027	)

Centrally Cleared Interest Rate Swaps

Fixed Rate	Floating Rate	Effective Date	Expiration Date	Notional Amount (000)		Unrealized Appreciation (Depreciation)
0.42%1	6-month EURIBOR	3/07/182	3/07/23	EUR	119,219		$     252,691
2.40%3	3-month LIBOR	3/07/182	3/07/23	USD	134,710		1,959,313
0.37%1	6-month EURIBOR	N/A	8/15/26	EUR	45,313		1,876,816
3.03%1	3-month LIBOR	4/19/222	4/19/27	USD	180,442		(3,218,263	)
Total							$     870,557

¹  The Fund pays the fixed rate and receives the floating rate.

²  Forward swap.

³  The Fund pays the floating rate and receives the fixed rate.

OTC Currency Swaps
			Notional Amount (000)
Fund Pays	Fund Receives		Notional Delivered			Notional Received			Counterparty		Expiration Date1		Value		Premiums Paid (Received)		Unrealized Appreciation
										Bank of
0.10% JPY		1.84%		JPY	2,434,450		USD	21,624		America N.A.		3/15/2018		$212,953		—		$   212,953
										Bank of
0.10% JPY		1.96%		JPY	3,652,350		USD	32,208		America N.A.		3/15/2018		134,166		—		134,166
										Bank of
0.10% JPY		2.01%		JPY	7,006,100		USD	67,725		America N.A.		10/15/2018		6,039,497		—		6,039,497
Total														$6,386,616		—		$6,386,616

¹  At expiration date, the notional amount delivered will be exchanged for the notional amount received.    

OTC Total Return Swaps
Reference Entity	Fixed Amount	Counterparty	Expiration Date	Contract Amount	Value		Premiums Paid (Received)		Unrealized Appreciation (Depreciation)
SGX Nikkei Stock Average Dividend Point Index Future December 2017	JPY 594,918,0001	BNP Paribas S.A.	4/02/18	JPY  180	$	559,964		—		$559,964
SGX Nikkei Stock Average Dividend Point Index Future December 2017	JPY 600,750,0001	BNP Paribas S.A.	4/02/18	JPY  180		508,113		—		508,113
Euro STOXX 50 Index Dividend Future December 2018	EUR 2,765,2901	BNP Paribas S.A.	12/21/18	EUR  253		372,764		—		372,764
Euro STOXX 50 Index Dividend Future December 2018	EUR 2,892,8001	BNP Paribas S.A.	12/21/18	EUR  256		269,000		—		269,000

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Reference Entity	Fixed Amount	Counterparty	Expiration Date	Contract Amount	Value		Premiums Paid (Received)		Unrealized Appreciation (Depreciation)
Euro STOXX 50 Index Dividend Future December 2018	EUR 4,607,0851	BNP Paribas S.A.	12/21/18	EUR  406	$	404,590		—		$   404,590
S&P 500 Annual Dividend Index Future December 2018	USD 7,094,3131	BNP Paribas S.A.	12/21/18	USD  607		827,038		—		827,038
SGX Nikkei Stock Average Dividend Point Index Future December 2018	JPY 309,375,0001	BNP Paribas S.A.	4/01/19	JPY  90		437,297		—		437,297
SGX Nikkei Stock Average Dividend Point Index Future December 2018	JPY 316,800,0001	BNP Paribas S.A.	4/01/19	JPY  90		371,283		—		371,283
SGX Nikkei Stock Average Dividend Point Index Future December 2018	JPY 618,839,0001	BNP Paribas S.A.	4/01/19	JPY  181		909,224		—		909,224
Euro STOXX 50 Index Dividend Future December 2019	EUR 1,688,4001	BNP Paribas S.A.	12/20/19	EUR  168		368,413		—		368,413
Euro STOXX 50 Index Dividend Future December 2019	EUR 2,621,2801	BNP Paribas S.A.	12/20/19	EUR  254		493,181		—		493,181
Euro STOXX 50 Index Dividend Future December 2019	EUR 3,305,2501	BNP Paribas S.A.	12/20/19	EUR  325		668,159		—		668,159
Euro STOXX 50 Index Dividend Future December 2019	EUR 3,589,0501	BNP Paribas S.A.	12/20/19	EUR  355		754,163		—		754,163
SGX Nikkei Stock Average Dividend Point Index Future December 2019	JPY 314,640,0001	BNP Paribas S.A.	4/01/20	JPY  90		579,329		—		579,329
SGX Nikkei Stock Average Dividend Point Index Future December 2019	JPY 418,800,0001	BNP Paribas S.A.	4/01/20	JPY  120		778,840		—		778,840
SGX Nikkei Stock Average Dividend Point Index Future December 2019	JPY 510,000,0001	BNP Paribas S.A.	4/01/20	JPY  150		1,093,576		—		1,093,576
Euro STOXX 50 Index Dividend Future December 2020	EUR 1,810,4401	BNP Paribas S.A.	12/18/20	EUR  188		416,566		—		416,566
Euro STOXX 50 Index Dividend Future December 2020	EUR 2,800,7801	BNP Paribas S.A.	12/18/20	EUR  262		263,335		—		263,335
Euro STOXX 50 Index Dividend Future December 2020	EUR 2,916,6901	BNP Paribas S.A.	12/18/20	EUR  301		642,883		—		642,883

See Notes to Consolidated Financial Statements.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Reference Entity

Fixed Amount

Counterparty

Expiration Date

Contract Amount

Value

Premiums Paid (Received)

Unrealized Appreciation (Depreciation)

Euro STOXX 50 Index Dividend Future December 2020

EUR 721,5001

BNP Paribas S.A.

12/18/20

EUR  75

$

168,753

—

$168,753

Euro STOXX 50 Index Dividend Future December 2020

EUR 836,9401

BNP Paribas S.A.

12/18/20

EUR  87

193,766

—

193,766

Euro STOXX 50 Index Dividend Future December 2020

EUR 962,0001

BNP Paribas S.A.

12/18/20

EUR  100

213,582

—

213,582

Euro STOXX 50 Index Dividend Future December 2020

EUR 964,0001

BNP Paribas S.A.

12/18/20

EUR  100

220,435

—

220,435

S&P 500 Annual Dividend Index Future December 2020

USD 2,914,4811

Goldman Sachs International

12/18/20

USD  243

420,694

—

420,694

SGX Nikkei Stock Average Dividend Point Index Future December 2020

JPY 104,085,0001

BNP Paribas S.A.

4/01/21

JPY  27

98,182

—

98,182

SGX Nikkei Stock Average Dividend Point Index Future December 2020

JPY 143,310,0001

BNP Paribas S.A.

4/01/21

JPY  34

14,812

—

14,812

SGX Nikkei Stock Average Dividend Point Index Future December 2020

JPY 191,375,0001

BNP Paribas S.A.

4/01/21

JPY  50

194,043

—

194,043

SGX Nikkei Stock Average Dividend Point Index Future December 2020

JPY 384,120,0001

BNP Paribas S.A.

4/01/21

JPY  99

337,995

—

337,995

SGX Nikkei Stock Average Dividend Point Index Future December 2020

JPY 89,240,0001

BNP Paribas S.A.

4/01/21

JPY  23

78,524

—

78,524

Euro STOXX 50 Index Dividend Future December 2021

EUR 1,349,3001

BNP Paribas S.A.

12/17/21

EUR  131

121,194

—

121,194

Euro STOXX 50 Index Dividend Future December 2021

EUR 1,409,7601

BNP Paribas S.A.

12/17/21

EUR  132

69,352

—

69,352

Euro STOXX 50 Index Dividend Future December 2021

EUR 1,524,1501

BNP Paribas S.A.

12/17/21

EUR  135

(23,129

)

—

(23,129

)

S&P 500 Annual Dividend Index Future December 2021

USD 3,726,2131

BNP Paribas S.A.

12/17/21

USD  307

614,000

—

614,000

SGX Nikkei Stock Average Dividend Point Index Future December 2021

JPY 144,840,0001

BNP Paribas S.A.

4/01/22

JPY  34

12,998

—

12,998

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Reference Entity

Fixed Amount

Counterparty

Expiration Date

Contract Amount

Value

Premiums Paid (Received)

Unrealized Appreciation (Depreciation)

SGX Nikkei Stock Average Dividend Point Index Future December 2021

JPY 198,750,0001

BNP Paribas S.A.

4/01/22

JPY  50

$     145,810

—

$     145,810

SGX Nikkei Stock Average Dividend Point Index Future December 2021

JPY 199,250,0001

BNP Paribas S.A.

4/01/22

JPY  50

141,365

—

141,365

SGX Nikkei Stock Average Dividend Point Index Future December 2021

JPY 389,070,0001

BNP Paribas S.A.

4/01/22

JPY  99

328,313

—

328,313

Euro STOXX 50 Index Dividend Future December 2022

EUR 1,495,8001

BNP Paribas S.A.

12/16/22

EUR  135

(35,464

)

—

(35,464

)

Euro STOXX 50 Index Dividend Future December 2022

EUR 1,481,0401

BNP Paribas S.A.

12/16/22

EUR  136

(6,213

)

—

(6,213

)

SGX Nikkei Stock Average Dividend Point Index Future December 2022

JPY 143,820,0001

BNP Paribas S.A.

4/03/23

JPY  34

41,414

—

41,414

Total

$14,068,144

—

$14,068,144

¹  The Fund receives the total return of the reference entity and pays the fixed amount. Net payment made at termination.    

      Transactions in Options Written for the Six Months Ended June 30, 2017

	Calls
				Notional (000)
	Contracts			EUR			GBP			NZD			USD			Premiums Received
Outstanding options, beginning of period		3,339,060			122,642			—			46,234			293,343			$   9,053,823
Options written		11,627,952			—			133,522			—			3,690,506			16,081,879
Options exercised		(275,679	)		—			—			—			—			(1,768,478	)
Options expired		(2,351,699	)		—			—			(46,234	)		(329,913	)		(5,932,517	)
Options closed		(5,579,253	)		(122,642	)		—			—			(3,278,745	)		(12,516,201	)
Outstanding options, end of period		6,760,381			—			133,522			—			375,191			$   4,918,506
				Puts
							Notional (000)
				Contracts			EUR			NZD			USD			Premiums Received
Outstanding options, beginning of period					959,644			279,061			46,234			1,273,598			$ 14,975,923
Options written					9,735,651			605,487			—			1,922,493			28,185,037
Options exercised					—			—			—			(32,447	)		(433,168	)
Options expired					(228,972	)		(109,768	)		(46,234	)		(331,732	)		(8,226,746	)
Options closed					(3,556,969	)		(436,670	)		—			(2,214,493	)		(19,394,777	)
Outstanding options, end of period					6,909,354			338,110			—			617,419			$ 15,106,269

As of period end, the value of portfolio securities subject to covered call options written was $122,250,292.

See Notes to Consolidated Financial Statements.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

      Derivative Financial Instruments Categorized by Risk Exposure

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

Assets — Derivative Financial Instruments		Commodity Contracts	Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts	Total
Futures contracts	Net unrealized appreciation1	—		—	$	552,579		—		—	—	$	552,579
Forward foreign currency exchange contracts	Unrealized appreciation on forward foreign currency exchange contracts	—		—		—	$	1,869,508		—	—		1,869,508
Options purchased	Investments at value — unaffiliated2	—		—		24,871,768		14,017,012	$	3,409,603	—		42,298,383
Swaps — centrally cleared	Net unrealized appreciation1	—		$  9,642		—		—		4,088,820	—		4,098,462
Swaps — OTC	Unrealized appreciation on OTC swaps	—		—		14,132,950		—		6,386,616	—		20,519,566
Total		—		$  9,642	$	39,557,297	$	15,886,520	$	13,885,039	—	$	69,338,498
Liabilities — Derivative Financial Instruments
Futures contracts	Net unrealized depreciation1	—		—	$	485,486		—		—	—	$	485,486
Forward foreign currency exchange contracts	Unrealized depreciation on forward foreign currency exchange contracts	—		—		—	$	5,331,223		—	—		5,331,223
Options written	Options written at value	—		—		10,596,539		1,768,501	$	3,861,838	—		16,226,878
Swaps — centrally cleared	Net unrealized depreciation1	—		$50,669		—		—		3,218,263	—		3,268,932
Swaps — OTC	Unrealized depreciation on OTC swaps	—		—		64,806		—		—	—		64,806
Total		—		$50,669	$	11,146,831	$	7,099,724	$	7,080,101	—	$	25,377,325

¹  Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Consolidated Schedule of Investments. Only current day’s variation margin is reported within the Consolidated Statement of Assets and Liabilities.

²  Includes options purchased at value as reported in the Consolidated Schedule of Investments.

For the six months ended June 30, 2017, the effect of derivative financial instruments in the Consolidated Statement of Operations was as follows:

Net Realized Gain (Loss) from:	Commodity Contracts	Credit Contracts			Equity Contracts			Foreign Currency Exchange Contracts			Interest Rate Contracts			Other Contracts	Total
Futures contracts	—		—		$	(22,853,858	)		—			—		—	$	(22,853,858	)
Forward foreign currency exchange contracts	—		—			—		$	29,573,114			—		—		29,573,114
Options purchased1	—		—			23,058,233			(5,486,122	)	$	2,018,707		—		19,590,818
Options written	—		—			3,442,769			13,510,908			(4,363,836	)	—		12,589,841
Swaps	—	$	2,525,894			1,906,086			—			(2,461,094	)	—		1,970,886
Total	—	$	2,525,894		$	5,553,230		$	37,597,900		$	(4,806,223	)	—	$	40,870,801
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts	—		—		$	565,779			—			—		—	$	565,779
Forward foreign currency exchange contracts	—		—			—		$	(72,798,225	)		—		—		(72,798,225	)
Options purchased2	—		—			(63,564,456	)		(2,570,801	)	$	(8,080,344	)	—		(74,215,601	)
Options written	—		—			(839,101	)		3,092,282			9,539,132		—		11,792,313
Swaps	—	$	(1,943,218	)		5,767,929			—			6,952,123		—		10,776,834
Total	—	$	(1,943,218	)	$	(58,069,849	)	$	(72,276,744	)	$	8,410,911		—	$	(123,878,900	)

¹  Options purchased are included in net realized gain (loss) from investments.

²  Options purchased are included in net change in unrealized appreciation (depreciation) on investments.

      Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts — long	$	17,481,211
Average notional value of contracts — short	$	169,047,668
Forward foreign currency exchange contracts:
Average amounts purchased — in USD	$	357,998,220
Average amounts sold — in USD	$	124,486,222
Options:
Average value of option contracts purchased	$	59,570,333
Average value of option contracts written	$	14,008,513
Average notional value of swaption contracts purchased	$	1,298,021,233
Average notional value of swaption contracts written	$	1,560,974,509
Credit default swaps:
Average notional value — buy protection	$	8,359,500

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

Interest rate swaps:
Average notional value — pays fixed rate	$	397,097,470
Average notional value — receives fixed rate	$	436,517,500
Currency swaps:
Average notional value — pays	$	121,557,000
Average notional value — receives	$	117,005,810
Total return swaps:
Average notional value	$	116,936,985

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

      Derivative Financial Instruments — Offsetting as of Period End

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

	Assets			Liabilities
Derivative Financial Instruments:
Futures contracts	$	297,960		$	62,538
Forward foreign currency exchange contracts		1,869,508			5,331,223
Options		42,298,383	1		16,226,878
Swaps — centrally cleared		62,616			—
Swaps — OTC2		20,519,566			64,806
Total derivative assets and liabilities in the Consolidated Statement of Assets and Liabilities	$	65,048,033		$	21,685,445
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		(424,026	)		(115,728	)
Total derivative assets and liabilities subject to an MNA	$	64,624,007		$	21,569,717

¹  Includes options purchased at value which is included in Investments at value — unaffiliated in the Consolidated Statement of Assets and Liabilities and reported in the Consolidated Schedule of Investments.

²  Includes unrealized appreciation (depreciation) on OTC swaps in the Consolidated Statement of Assets and Liabilities.

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

Counterparty	Derivative Assets Subject to an MNA  by Counterparty		Derivatives Available for Offset1				Non-cash Collateral Received		Cash Collateral Received2				Net Amount of Derivative Assets3,4
Bank of America N.A.		$  7,542,149		$	(1,925,115	)		—		$	(5,414,000	)	$203,034
Barclays Bank PLC		2,711,275			—			—			(2,580,000	)	131,275
BNP Paribas S.A.		17,070,675			(1,104,884	)		—			(15,965,791	)	—
Citibank N.A.		464,973			(464,973	)		—			—		—
Deutsche Bank AG		1,398,949			(794,953	)		—			(330,000	)	273,996
Goldman Sachs International		16,122,809			(2,909,793	)		—			(13,213,016	)	—
JPMorgan Chase Bank N.A.		3,004,324			(2,369,553	)		—			(634,771	)	—
Morgan Stanley & Co. International PLC		2,269,729			(238,169	)		—			(2,031,560	)	—
Société Générale		994,123			(51,743	)		—			(942,380	)	—
UBS AG		13,045,001			(11,218,885	)		—			(1,826,116	)	—
Total		$64,624,007		$	(21,078,068	)		—		$	(42,937,634	)	$608,305
Counterparty	Derivative Liabilities Subject to an MNA by Counterparty		Derivatives Available for Offset1				Non-cash Collateral Pledged		Cash Collateral Pledged				Net Amount of Derivative Liabilities4
Bank of America N.A.		$  1,925,115		$	(1,925,115	)		—			—		—
BNP Paribas S.A.		1,104,884			(1,104,884	)		—			—		—
Citibank N.A.		956,622			(464,973	)		—			—		$491,649
Deutsche Bank AG		794,953			(794,953	)		—			—		—
Goldman Sachs International		2,909,793			(2,909,793	)		—			—		—
JPMorgan Chase Bank N.A.		2,369,553			(2,369,553	)		—			—		—
Morgan Stanley & Co. International PLC		238,169			(238,169	)		—			—		—
Société Générale		51,743			(51,743	)		—			—		—
UBS AG		11,218,885			(11,218,885	)		—			—		—
Total		$21,569,717		$	(21,078,068	)		—			—		$491,649    ��

¹  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

²  Excess of collateral received from the individual counterparty is not shown for financial reporting purposes.

³  Net amount represents the net amount receivable from the counterparty in the event of default.

⁴  Net amount may also include forward foreign currency exchange contracts and currency options that are not required to be collateralized.

See Notes to Consolidated Financial Statements.

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

      Fair Value Hierarchy as of Period End

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

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

	Level 1				Level 2			Level 3			Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Belgium			—			$	55,178,316			—		$	55,178,316
Brazil		$	8,911,191				—			—			8,911,191
Canada			31,210,680				—			—			31,210,680
China			45,646,327				12,495,988			—			58,142,315
Czech Republic			—				2,968,075			—			2,968,075
Finland			—				35,103,901			—			35,103,901
France			858,205				294,853,559			—			295,711,764
Germany			—				176,505,800			—			176,505,800
Hong Kong			2,735,930				63,659,442			—			66,395,372
India			—				104,031,909		$	6,050,031			110,081,940
Indonesia			9,716,460				—			—			9,716,460
Ireland			4,343,159				—			—			4,343,159
Italy			27,538,337				68,117,326			—			95,655,663
Japan			—				884,510,260			—			884,510,260
Netherlands			—				119,530,602			—			119,530,602
Portugal			—				6,913,162			—			6,913,162
Singapore			—				28,442,433			—			28,442,433
South Korea			3,326,889				52,608,267			—			55,935,156
Spain			—				36,386,930			—			36,386,930
Sweden			—				60,153,930			—			60,153,930
Switzerland			—				74,515,414			—			74,515,414
Taiwan			—				39,293,401			—			39,293,401
Thailand			4,029,673				12,413,793			—			16,443,466
United Arab Emirates			—				26,779,444			—			26,779,444
United Kingdom			128,776,737				257,741,618			—			386,518,355
United States			2,693,704,430				3,248,435			962,987			2,697,915,852
Corporate Bonds			—				544,155,694			9,544,217			553,699,911
Floating Rate Loan Interests			—				48,967,524			—			48,967,524
Foreign Agency Obligations			—				45,547,980			—			45,547,980
Foreign Government Obligations			—				1,132,894,748			—			1,132,894,748
Investment Companies			391,556,727				—			—			391,556,727
Non-Agency Mortgage-Backed Securities			—				—			8,644,400			8,644,400
Preferred Securities			87,499,916				138,948,695			134,907,250			361,355,861
U.S. Treasury Obligations			—				1,419,984,009			—			1,419,984,009
Warrants			159,768				25,769			—			185,537
Short Term Investments:
Money Market Funds			11,307,431				—			—			11,307,431
Time Deposits			—				4,837,080			—			4,837,080
U.S. Treasury Obligations			—				1,232,197,606			—			1,232,197,606
Options Purchased:
Equity contracts			63,450				24,808,318			—			24,871,768
Foreign currency exchange contracts			—				14,017,012			—			14,017,012
Interest rate contracts			—				3,409,603			—			3,409,603
Liabilities:
Investments Sold Short			(85,750,914	)			—			—			(85,750,914	)
Subtotal		$	3,365,634,396			$	7,025,246,043		$	160,108,885		$	10,550,989,324
Investments Valued at NAV1													269,222,956
Total Investments												$	10,820,212,280

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 23

Consolidated Schedule of Investments (continued) BlackRock Global Allocation V.I. Fund

¹  As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

Derivative Financial Instruments1
Assets:
Credit contracts		—		$	9,642		—	$	9,642
Equity contracts	$	552,579			14,132,950		—		14,685,529
Foreign currency exchange contracts		—			1,869,508		—		1,869,508
Interest rate contracts		—			10,475,436		—		10,475,436
Liabilities:
Credit contracts		—			(50,669	)	—		(50,669	)
Equity contracts		(538,676	)		(10,608,155	)	—		(11,146,831	)
Foreign currency exchange contracts		—			(7,099,724	)	—		(7,099,724	)
Interest rate contracts		—			(7,080,101	)	—		(7,080,101	)
Total	$	13,903		$	1,648,887		—	$	1,662,790

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

During the six months ended June 30, 2017, there were no transfers between Level 1 and Level 2.

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

	Common Stocks			Corporate Bonds			Floating Rate Loan Interests			Non-Agency Mortgage-Backed Securities		Preferred Securities		Rights			Total
Assets:
Opening Balance, as of December 31, 2016	$	1,126,894		$	24,183,817		$	16,176,802			—	$	119,783,830		$  3		$	161,271,346
Transfers into Level 3		—			—			—			$7,811,817		—		—			7,811,817
Transfers out of Level 3		—			—			(3,485,372	)		—		—		—			(3,485,372	)
Accrued discounts/premiums		—			(8,486	)		1,367			54,577		—		—			47,458
Net realized gain (loss)		(5,538,430	)		(2,977,084	)		60,674			—		—		—			(8,454,840	)
Net change in unrealized appreciation
(depreciation)1,2		8,053,900			(2,067,215	)		29,690			778,006		15,123,420		—			21,917,801
Purchases		6,127,570			2,657,632			—			—		—		—			8,785,202
Sales		(2,756,916	)		(12,244,447	)		(12,783,161	)		—		—		(3	)		(27,784,527	)
Closing Balance, as of June 30, 2017	$	7,013,018		$	9,544,217			—			$8,644,400	$	134,907,250		—		$	160,108,885
Net change in unrealized appreciation (depreciation) on investments still held at June 30, 20172	$	430,604		$	(1,873,160	)		—			$   778,006	$	15,123,420		—		$	14,458,870

¹  Included in the related net change in unrealized appreciation (depreciation) in the Consolidated Statement of Operations.

²  Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at June 30, 2017 is generally due to investments no longer held or categorized as Level 3 at period end.

See Notes to Consolidated Financial Statements.

24 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (concluded) BlackRock Global Allocation V.I. Fund

The following table summarizes the valuation approaches used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (“Global Valuation Committee”) to determine the value of certain of the Fund’s Level 3 investments as of period end. The table does not include Level 3 investments with values based upon unadjusted third party pricing information in the amount of $14,760,627.

	Value		Valuation Approach	Unobservable Inputs	Range of Unobservable Inputs Utilized		Weighted Average of Unobservable Inputs
Assets:
Common Stocks3	$	962,987	Market	Revenue Growth Rate1		25.00%		—
				Revenue Multiple1		6.75x		—
				Priced to Last Financing Round1		—
				Time to Exit1		1 year		—
				Volatility1		33.00%		—
Corporate Bonds		9,478,021	Income	Discount Rate2		17.50%		—
			Market	Estimated Recovery Value1		—
				Volatility1		36.30%		—
				Yield2		11.25%		—
Preferred Stocks3,4		134,907,250	Market	Discount Rate2		20.00%		—
				Revenue Growth Rate1		83% - 131%		101.92	%
				Revenue Growth Rate1		25.00%		—
				Revenue Multiple1		6.75x - 19.50x		9.81x
				Scenario Probability1		1.00% - 79.00%		—
				Time to Exit2		1 year		—
				Volatility1		33.00% - 61.00%		44.35	%
Total	$	145,348,258

¹  Increase in unobservable input may result in a significant increase to value, while a decrease in unobservable input may result in a significant decrease to value.

²  Decrease in unobservable input may result in a significant increase to value, while an increase in unobservable input may result in a significant decrease to value.

³  For the six months ended June 30, 2017, the valuation technique changed for certain investments in common stocks and preferred stocks with a total value of $9,588,195 from a hybrid model using Probability-Weighted Expected Return Model (“PWERM”) and Option Pricing Model (“OPM”) to using only OPM. The change was due to consideration of liquidation preferences and exit strategy.

⁴  For the six months ended June 30, 2017, the valuation technique changed for certain investments in preferred stocks with a total value of $24,739,854 from a hybrid model using PWERM and OPM to using only PWERM. The change was due to consideration of liquidation preferences and exit strategy.

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 25

Consolidated Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Global Allocation V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $262,149,931)(cost — $9,975,492,001)		$	10,600,382,245
Investments at value — affiliated (cost — $309,566,028)			305,580,949
Cash held for investments sold short			75,168,961
Cash pledged:
Futures contracts			6,928,000
Centrally cleared swaps			5,136,960
Foreign currency at value — (cost — $2,476,566)			2,670,517
Receivables:
Investments sold			84,146,213
Securities lending income — affiliated			344,294
Capital shares sold			1,552,266
Dividends — affiliated			4,957
Dividends — unaffiliated			10,378,014
Interest — unaffiliated			25,021,684
From the Manager			1,918,703
Swaps			61,077
Variation margin on futures contracts			297,960
Variation margin on centrally cleared swaps			62,616
Unrealized appreciation on:
Forward foreign currency exchange contracts			1,869,508
OTC swaps			20,519,566
Prepaid expenses			31,639
Total assets			11,142,076,129
Liabilities
Investments sold short at value (proceeds — $77,521,799)			85,750,914
Bank overdraft			3,781,696
Cash received as collateral for OTC derivatives			52,542,796
Cash collateral on securities loaned at value			269,177,928
Options written at value (premiums received — $20,024,775)			16,226,878
Payables:
Investments purchased			55,802,129
Capital shares redeemed			3,282,953
Deferred foreign capital gain tax			1,485,767
Distribution fees			1,737,058
Investment advisory fees			5,498,195
Officer’s and Directors’ fees			43,487
Other accrued expenses			6,329,517
Other affiliates			89,787
Variation margin on futures contracts			62,538
Unrealized depreciation on:
Forward foreign currency exchange contracts			5,331,223
OTC swaps			64,806
Total liabilities			507,207,672
Net Assets		$	10,634,868,457
Net Assets Consist of
Paid-in capital		$	9,929,911,241
Undistributed net investment income			14,865,394
Undistributed net realized gain			54,756,588
Net unrealized appreciation (depreciation)			635,335,234
Net Assets		$	10,634,868,457
Net Asset Value
Class I — Based on net assets of $2,197,628,610 and 131,501,833 shares outstanding, 400 million shares authorized, $0.10 par value		$	16.71
Class II — Based on net assets of $245,840,519 and 14,768,718 shares outstanding, 200 million shares authorized, $0.10 par value		$	16.65
Class III — Based on net assets of $8,191,399,328 and 569,076,711 shares outstanding, 1.5 billion shares authorized, $0.10 par value		$	14.39

See Notes to Consolidated Financial Statements.

26 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Global Allocation V.I. Fund
Investment Income
Dividends — unaffiliated	$	79,006,561
Interest — unaffiliated		44,321,328
Securities lending income — affiliated — net		1,200,333
Dividends — affiliated		111,376
Foreign taxes withheld		(5,233,599	)
Total investment income		119,405,999
Expenses
Investment advisory		33,035,951
Distribution — class specific		10,352,192
Transfer agent		2,573
Transfer agent — class specific		9,192,674
Custodian		672,826
Accounting services		309,404
Officer and Directors		84,592
Miscellaneous		730,136
Total expenses excluding dividend expense and broker fees and expenses on short sales		54,380,348
Dividend expense — unaffiliated		1,445,362
Total expenses		55,825,710
Less:
Fees waived by the Manager		(171,566	)
Transfer agent fees reimbursed — class specific		(5,544,771	)
Total expenses after fees waived and reimbursed		50,109,373
Net investment income		69,296,626
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated		281,080,834
Investments — affiliated		394,563
Futures contracts		(22,853,858	)
Foreign currency transactions		735,372
Forward foreign currency exchange contracts		29,573,114
Options written		12,589,841
Short sales — unaffiliated		(600,717	)
Swaps		1,970,886
		302,890,035
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated (net of $(1,097,063) foreign capital gain tax)		462,482,980
Investments — affiliated		1,433,411
Futures contracts		565,779
Foreign currency translations		881,586
Forward foreign currency exchange contracts		(72,798,225	)
Options written		11,792,313
Short sales — unaffiliated		(5,178,666	)
Swaps		10,776,834
		409,956,012
Net realized and unrealized gain		712,846,047
Net Increase in Net Assets Resulting from Operations	$	782,142,673

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 27

Consolidated Statements of Changes in Net Assets BlackRock Global Allocation V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	69,296,626		$	136,433,324
Net realized gain (loss)		302,890,035			(175,975,483	)
Net change in unrealized appreciation (depreciation)		409,956,012			445,816,308
Net increase in net assets resulting from operations		782,142,673			406,274,149
Distributions to Shareholders1
From net investment income:
Class I		—			(26,933,124	)
Class II		—			(2,573,765	)
Class III		—			(99,994,504	)
Decrease in net assets resulting from distributions to shareholders		—			(129,501,393	)
Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(623,128,429	)		(921,542,124	)
Net Assets
Total increase (decrease) in net assets		159,014,244			(644,769,368	)
Beginning of period		10,475,854,213			11,120,623,581
End of period	$	10,634,868,457		$	10,475,854,213
Undistributed (distributions in excess of) net investment income, end of period	$	14,865,394		$	(54,431,232	)

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.    

See Notes to Consolidated Financial Statements.

28 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Financial Highlights BlackRock Global Allocation V.I. Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	15.51		$	15.09		$	16.26		$	17.61		$	16.10		$	14.87
Net investment income1		0.12			0.22			0.22			0.29			0.22			0.26
Net realized and unrealized gain (loss)		1.08			0.40			(0.35	)		0.12			2.14			1.27
Net increase (decrease) from investment operations		1.20			0.62			(0.13	)		0.41			2.36			1.53
Distributions:2
From net investment income		—			(0.20	)		(0.19	)		(0.39	)		(0.20	)		(0.25	)
From net realized gain		—			—			(0.84	)		(1.37	)		(0.65	)		(0.05	)
From return of capital		—			—			(0.01	)		—			—			—
Total distributions		—			(0.20	)		(1.04	)		(1.76	)		(0.85	)		(0.30	)
Net asset value, end of period	$	16.71		$	15.51		$	15.09		$	16.26		$	17.61		$	16.10
Total Return3
Based on net asset value		7.74	%4		4.11	%		(0.89	)%		2.30	%		14.76	%		10.28	%
Ratios to Average Net Assets
Total expenses		0.76	%5,6		0.74	%		0.75	%		0.74	%		0.72	%		0.74	%
Total expenses after fees waived and/or reimbursed		0.75	%5,6		0.74	%		0.73	%		0.72	%		0.72	%		0.74	%
Total expenses after fees waived and/or reimbursed and excluding dividend expense, interest expense and broker fees and expenses on short sales		0.73	%5,6		0.73	%		0.73	%		0.72	%		0.72	%		0.74	%
Net investment income		1.52	%5,6		1.47	%		1.32	%		1.64	%		1.26	%		1.66	%
Supplemental Data
Net assets, end of period (000)	$	2,197,629		$	2,107,145		$	1,994,371		$	1,708,903		$	2,426,154		$	1,868,059
Portfolio turnover rate		61	%		135	%		90	%7		72	%		53	%		49	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

⁶  Annualized.

⁷  Includes mortgage dollar roll transactions. Excluding these transactions the portfolio turnover would have been 88%.

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 29

Consolidated Financial Highlights (continued) BlackRock Global Allocation V.I. Fund

	Class II
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	15.46		$	15.04		$	16.21		$	17.56		$	16.07		$	14.85
Net investment income1		0.11			0.20			0.19			0.25			0.19			0.23
Net realized and unrealized gain (loss)		1.08			0.40			(0.35	)		0.14			2.14			1.28
Net increase (decrease) from investment operations		1.19			0.60			(0.16	)		0.39			2.33			1.51
Distributions:2
From net investment income		—			(0.18	)		(0.16	)		(0.37	)		(0.19	)		(0.24	)
From net realized gain		—			—			(0.84	)		(1.37	)		(0.65	)		(0.05	)
From return of capital		—			—			(0.01	)		—			—			—
Total distributions		—			(0.18	)		(1.01	)		(1.74	)		(0.84	)		(0.29	)
Net asset value, end of period	$	16.65		$	15.46		$	15.04		$	16.21		$	17.56		$	16.07
Total Return3
Based on net asset value		7.70	%4		3.96	%		(1.05	)%		2.16	%		14.55	%		10.14	%
Ratios to Average Net Assets
Total expenses		1.03	%5,6		1.02	%		1.02	%		1.01	%		1.00	%		0.98	%
Total expenses after fees waived and/or reimbursed		0.91	%5,6		0.89	%		0.88	%		0.88	%		0.87	%		0.90	%
Total expenses after fees waived and/or reimbursed and excluding dividend expense, interest expense and broker fees and expenses on short sales		0.88	%5,6		0.88	%		0.88	%		0.87	%		0.87	%		0.90	%
Net investment income		1.37	%5,6		1.33	%		1.17	%		1.39	%		1.07	%		1.43	%
Supplemental Data
Net assets, end of period (000)	$	245,841		$	229,492		$	256,964		$	260,312		$	216,395		$	80,236
Portfolio turnover rate		61	%		135	%		90	%7		72	%		53	%		49	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

⁶  Annualized.

⁷  Includes mortgage dollar roll transactions. Excluding these transactions the portfolio turnover would have been 88%.

See Notes to Consolidated Financial Statements.

30 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Financial Highlights (concluded) BlackRock Global Allocation V.I. Fund

	Class III
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	13.37		$	13.04		$	14.19		$	15.58		$	14.34		$	13.28
Net investment income1		0.09			0.16			0.15			0.21			0.16			0.20
Net realized and unrealized gain (loss)		0.93			0.34			(0.30	)		0.12			1.89			1.12
Net increase (decrease) from investment operations		1.02			0.50			(0.15	)		0.33			2.05			1.32
Distributions:2
From net investment income		—			(0.17	)		(0.15	)		(0.35	)		(0.16	)		(0.21	)
From net realized gain		—			—			(0.84	)		(1.37	)		(0.65	)		(0.05	)
From return of capital		—			—			(0.01	)		—			—			—
Total distributions		—			(0.17	)		(1.00	)		(1.72	)		(0.81	)		(0.26	)
Net asset value, end of period	$	14.39		$	13.37		$	13.04		$	14.19		$	15.58		$	14.34
Total Return3
Based on net asset value		7.63	%4		3.81	%		(1.14	)%		2.08	%		14.42	%		9.97	%
Ratios to Average Net Assets
Total expenses		1.14	%5,6		1.12	%		1.12	%		1.11	%		1.11	%		1.07	%
Total expenses after fees waived and/or reimbursed		1.01	%5,6		0.99	%		0.98	%		0.98	%		0.97	%		0.99	%
Total expenses after fees waived and/or reimbursed and excluding dividend expense, interest expense and broker fees and expenses on short sales		0.98	%5,6		0.98	%		0.98	%		0.97	%		0.97	%		0.99	%
Net investment income		1.26	%5,6		1.22	%		1.07	%		1.32	%		1.02	%		1.41	%
Supplemental Data
Net assets, end of period (000)	$	8,191,399		$	8,139,218		$	8,869,288		$	9,780,007		$	10,014,301		$	8,702,140
Portfolio turnover rate		61	%		135	%		90	%7		72	%		53	%		49	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

⁶  Annualized.

⁷  Includes mortgage dollar roll transactions. Excluding these transactions the portfolio turnover would have been 88%.

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 31

Notes to Consolidated Financial Statements (Unaudited) BlackRock Global Allocation V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 consolidated financial statements presented are for BlackRock Global Allocation V.I. Fund (the “Fund”). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

Basis of Consolidation: The accompanying consolidated financial statements of the Fund include the accounts of BlackRock Cayman Global Allocation V.I. Fund I, Ltd. (the “Subsidiary”), which is a wholly-owned subsidiary of the Fund and primarily invests in commodity-related instruments. The Subsidiary enables the Fund to hold these commodity-related instruments while allowing its investors to satisfy regulated investment company tax requirements. The Fund may invest up to 25% of its total assets in the Subsidiary. The net assets of the Subsidiary as of period end were $420,920,346, which is 4.0% of the Fund’s consolidated net assets. Intercompany accounts and transactions, if any, have been eliminated. The Subsidiary is subject to the same investment policies and restrictions that apply to the Fund, except that the Subsidiary may invest without limitation in commodity-related instruments.

2. Significant Accounting Policies:

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

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

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

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

Segregation and Collateralization: In cases where the Fund enters into certain investments (e.g., futures contracts, forward foreign currency exchange contracts, options written, swaps and short sales) that would be treated as “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments.

32 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Net income and realized gains from investments held by the Subsidiary are treated as ordinary income for tax purposes. If a net loss is realized by the Subsidiary in any taxable year, the loss will generally not be available to offset the Fund’s ordinary income and/or capital gains for that year.

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

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 33

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

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

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

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

34 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

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

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

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

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

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

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

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

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

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

As of June 30, 2017, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 35

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

4. Securities and Other Investments:

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

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

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

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

Multiple Class Pass-Through Securities: Multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities, may be issued by Ginnie Mae, U.S. Government agencies or instrumentalities or by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs are debt obligations of a legal entity that are collateralized by a pool of residential or commercial mortgage loans or Mortgage Assets. The payments on these are used to make payments on the CMOs or multiple pass-through securities. Multiple class pass-through securities represent direct ownership interests in the Mortgage Assets. Classes of CMOs include interest only (“IOs”), principal only (“POs”), planned amortization classes and targeted amortization classes. IOs and POs are stripped mortgage-backed securities representing interests in a pool of mortgages, the cash flow from which has been separated into interest and principal components. IOs receive the interest portion of the cash flow while POs receive the principal portion. IOs and POs can be extremely volatile in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise since this increases the rate at which the principal is returned and the yield to maturity on the PO. When payments on mortgages underlying a PO are slower than anticipated, the life of the PO is lengthened and the yield to maturity is reduced. If the underlying Mortgage Assets experience greater than anticipated prepayments of principal, the Fund’s initial investment in the IOs may not fully recoup.

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

36 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

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

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

Warrants: Warrants entitle the Fund to purchase a specified 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 of the warrants, if any. If the price of the underlying stock does not rise above the strike price before the warrant expires, the warrant generally expires without any value and the Fund will lose any amount it paid for the warrant. Thus, investments in warrants may involve more risk than investments in common stock. Warrants may trade in the same markets as their underlying stock; however, the price of the warrant does not necessarily move with the price of the underlying stock.

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

When the Fund purchases a floating rate loan interest, it may receive a facility fee and when it sells a floating rate loan interest, it may pay a facility fee. On an ongoing basis, 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. 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”) or assignments (“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 has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the Participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing Participations, 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. The Fund may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, the Fund assumes 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 a general creditor of the lender and may not benefit from any offset between the lender and the borrower. Assignments typically result in the Fund having a direct contractual relationship with the borrower, and the Fund may enforce compliance by the borrower with the terms of the loan agreement.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 37

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

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

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

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

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

Short Sale Transactions: In short sale transactions, 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 from a broker/counterparty and deliver the security to the purchaser. To close out a short position, the Fund delivers the same security to the broker and records a liability to reflect the obligation to return the security to the broker. The amount of the liability is subsequently marked-to-market to reflect the market value of the short sale. The Fund maintains a segregated account of securities or deposits cash with the broker-dealer as collateral for the short sales. Cash deposited with the broker is recorded as an asset in the Consolidated Statement of Assets and Liabilities. Securities segregated as collateral are denoted in the Consolidated Schedule of Investments. The Fund may pay a financing fee for the difference between the market value of the short position and the cash collateral deposited with the broker which would be recorded as interest expense. The Fund is required to repay the counterparty any dividends received on the security sold short, which, if applicable, is shown as dividend expense in the Consolidated Statement of Operations. The Fund may pay a fee on the assets borrowed from the counterparty, which, if applicable, is shown as broker fees and expenses on short sales in the Consolidated Statement of Operations. 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 an unlimited loss since there is an unlimited potential for the market price of the security sold short to increase. A gain is limited to the price at which the Fund sold the security short. A realized gain or loss is recognized upon the termination of a short sale if the market price is either less than or greater than the proceeds originally received. There is no assurance that the Fund will be able to close out a short position at a particular time or at an acceptable price.

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities, but does not receive interest

38 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common or preferred stocks in the Fund’s Consolidated Schedule of Investments, and the value of any related collateral are shown separately in the Consolidated Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Consolidated Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value1		Cash Collateral Received2			Net Amount
Barclays Capital, Inc.		$    1,088,849		$    (1,088,849	)	—
Citigroup Global Markets, Inc.		53,234,223		(53,234,223	)	—
Credit Suisse Securities (USA) LLC		3,219,355		(3,219,355	)	—
Deutsche Bank Securities Inc.		19,561,036		(19,561,036	)	—
Goldman Sachs & Co.		36,006,504		(36,006,504	)	—
Jefferies LLC		310,992		(310,992	)	—
JP Morgan Securities LLC		60,918,008		(60,918,008	)	—
Morgan Stanley & Co. LLC		37,626,509		(37,626,509	)	—
SG Americas Securities LLC		152,141		(152,141	)	—
State Street Bank & Trust Co.		49,730,800		(49,730,800	)	—
UBS Securities LLC		301,514		(301,514	)	—
Total		$262,149,931		$(262,149,931	)	—

¹  Securities loaned with a value of $261,242 have been sold and are pending settlement as of June 30, 2017.

²  Collateral with a value of $269,177,928 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Derivative Financial Instruments:

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

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

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Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

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

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

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

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

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

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

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

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

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

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

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

40 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

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

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

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

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

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

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

• Total return swaps — Total return swaps are entered into to obtain exposure to a security or market without owning such security or investing directly in such market or to exchange the risk/return of one market (e.g., fixed-income) with another market (e.g., equity or commodity prices) (equity risk, commodity price risk and/or interest rate risk).

Total return swaps are agreements in which there is an exchange of cash flows whereby one party commits to make payments based on the total return (distributions plus capital gains/losses) of an underlying instrument in exchange for fixed or floating rate interest payments. If the total return

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 41

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

of the instrument or index underlying the transaction exceeds or falls short of the offsetting fixed or floating interest rate obligation, the Fund receives payment from or makes a payment to the counterparty.

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

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

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

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

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

Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the 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.

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

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

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

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

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

42 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $6 Billion	0.65%
$6 Billion - $8 Billion	0.61%
$8 Billion - $10 Billion	0.59%
$10 Billion - $15 Billion	0.57%
Greater than $15 Billion	0.55%

The Manager provides investment management and other services to the Subsidiary. The Manager does not receive separate compensation from the Subsidiary for providing investment management or administrative services. However, the Fund pays the Manager based on the Fund’s net assets, which includes the assets of the Subsidiary.

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

	Class II	Class III
Distribution Fee	0.15%	0.25%

For the six months ended June 30, 2017, the following table shows the class specific distribution fees borne directly by each share class of the Fund:

Class II	Class III	Total
$176,104	$10,176,088	$	10,352,192

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class II		Class III		Total
$747,343	$	223,567	$	8,221,764	$	9,192,674

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. This amount is included in fees waived by the Manager in the Consolidated Statement of Operations. For the six months ended June 30, 2017, the amount waived was $1,980.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the non-interested directors of the Fund or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Consolidated Statement of Operations. For the six months ended June 30, 2017, the Fund waived $169,586 in investment advisory fees pursuant to these arrangements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 43

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

For the six months ended June 30, 2017, the Fund reimbursed the Manager $59,555 for certain accounting services, which is included in accounting services in the Consolidated Statement of Operations.

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

Class I	0.07	%
Class II	0.07	%
Class III	0.07	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund.

The following table shows the class specific expense reimbursements shown as Transfer agent fees reimbursed — class specific in the Consolidated Statement of Operations.

	Class I		Class II		Class III		Total
Transfer agent fees reimbursed	$	32,042	$	141,093	$	5,371,636	$	5,544,771

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

Class I	1.25	%
Class II	1.40	%
Class III	1.50	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived and/or reimbursed by the Manager.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 80% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 85% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Consolidated Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $299,631 for securities lending agent services.

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

44 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the six months ended June 30, 2017, the purchase and sale transactions and any net realized gains (losses) with affiliated funds in compliance with Rule 17a-7 under the 1940 Act were as follows:

Purchases	Sales		Net Realized Gain (Loss)
$2,254,868		—		—

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, including paydowns and excluding short-term securities, were as follows:

	Purchases		Sales
Non-U.S. Government Securities	$	2,126,135,213	$	3,009,663,422
U.S. Government Securities	$	3,439,344,487	$	2,770,321,193

8. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of December 31, 2016, the Fund had a capital loss carryforward, with no expiration date, available to offset futures realized capital gains of $174,593,093.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

Tax cost	$	10,330,420,962
Gross unrealized appreciation	$	896,629,489
Gross unrealized depreciation		(321,087,257	)
Net unrealized appreciation	$	575,542,232

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Consolidated Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 45

Notes to Consolidated Financial Statements (continued) BlackRock Global Allocation V.I. Fund

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

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

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

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

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

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

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

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

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

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

46 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (concluded) BlackRock Global Allocation V.I. Fund

The Fund invests a significant portion of its assets in securities of issuers located in Europe or with significant exposure to European issuers or countries. The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in Europe and may affect the value and liquidity of certain of the Fund’s investments.

The United Kingdom voted on June 23, 2016 to withdraw from the European Union, which may introduce significant new uncertainties and instability in the financial markets across Europe.

11. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		4,137,060		$	67,265,503			16,192,343		$	244,305,933
Shares issued in reinvestment of distributions		—			—			1,521,201			23,578,615
Shares redeemed		(8,521,688	)		(137,763,770	)		(14,033,328	)		(214,313,552	)
Net increase (decrease)		(4,384,628	)	$	(70,498,267	)		3,680,216		$	53,570,996
Class II
Shares sold		785,191		$	12,855,547			789,548		$	11,986,829
Shares issued in reinvestment of distributions		—			—			166,479			2,573,765
Shares redeemed		(863,181	)		(13,889,732	)		(3,198,273	)		(48,293,049	)
Net decrease		(77,990	)	$	(1,034,185	)		(2,242,246	)	$	(33,732,455	)
Class III
Shares sold		4,825,812		$	67,825,258			13,153,930		$	171,434,340
Shares issued in reinvestment of distributions		—			—			7,479,020			99,994,504
Shares redeemed		(44,378,310	)		(619,421,235	)		(92,373,623	)		(1,212,809,509	)
Net decrease		(39,552,498	)	$	(551,595,977	)		(71,740,673	)	$	(941,380,665	)
Total Net Decrease		(44,015,116	)	$	(623,128,429	)		(70,302,703	)	$	(921,542,124	)

12. 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 in the following amounts per share on July 21, 2017 to shareholders of record on July 19, 2017:

	Net Investment Income
Class I		$	0.060368
Class II		$	0.060368
Class III		$	0.060368

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 47

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Global Opportunities V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock Global Opportunities V.I. Fund

      Investment Objective

BlackRock Global Opportunities V.I. Fund’s (the “Fund”) investment objective is to seek long-term growth of capital.

On March 27, 2017, the Board of Directors of BlackRock Variable Series Funds, Inc. (the “Company”) approved a proposal to close the Fund to new investors and thereafter to liquidate the Fund. Effective May 30, 2017, the Fund no longer accepts purchase orders from new investors. The liquidation is expected to occur on or about October 31, 2017.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund outperformed its benchmark, the MSCI All Country World Index.

What factors influenced performance?

• Positive stock selection in the information technology (“IT”) sector drove relative gains for the period. Highlights included the Fund’s position in Alibaba Group Holding Ltd., the Chinese e-commerce conglomerate, after the company reported strong financial results driven by its data monetization strategy. Positive stock selection within the financials sector also contributed to performance, in particular the Fund’s overweight position in Federal Bank Ltd., an Indian retail bank, which benefited from an earnings report that exceeded forecasts.

• Conversely, stock selection within the industrials and consumer discretionary sectors detracted from returns. Within industrials, the Fund’s position in Acuity Brands, Inc., a manufacturer of energy-efficient lighting solutions, led detractors due to a weak earnings report. The company’s management has continued to cite the negative impact of macroeconomic

uncertainty stemming from the U.S. election result on its business. Unfavorable stock selection in the consumer discretionary sector was driven by the Fund’s position in Jasper Infotech Private Ltd., a private Indian e-commerce company, as the company’s valuation was negatively impacted by a more competitive business environment and challenged funding terms.

Describe recent portfolio activity.

• The most significant additions to the portfolio were made within the IT and financials sectors. The additions were funded by reductions to the consumer discretionary and materials sectors. These sector decisions resulted in additional exposure to emerging markets, with reduced exposure to North America, Europe and the Pacific Basin.

Describe portfolio positioning at period end.

• The Fund’s largest active positions were in the IT, materials and financials sectors, and its largest underweights were in the consumer staples and industrials sectors. Regionally, the Fund was most overweight the emerging markets, with underweights to North America and the Pacific Basin.

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

      Portfolio Information

Geographic Allocation	Percent of Net Assets
United States		50	%
China		9
United Kingdom		5
Japan		5
India		4
Italy		3
France		3
Switzerland		2
South Korea		2
Taiwan		2
Other1		13
Short-Term Securities		8
Liabilities in Excess of Other Assets		(6	)

¹ Includes holdings within countries that are 1% or less of net assets. Please refer to the Schedule of Investments for such countries.

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock Global Opportunities 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. The returns for Class III Shares prior to June 23, 2008, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares, as adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

²  Under normal conditions, the Fund will invest at least 75% of its total assets in global equity securities of any market capitalization, selected for their above-average return potential. The returns prior to October 1, 2011 are the returns of the Fund when it followed different investment strategies.

³  A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The index consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes.

      Performance Summary for the Period Ended June 30, 2017

				Average Annual Total Returns
	6-Month Total  Returns5			1 Year5			5 Years5			10 Years5
Class I4		13.69	%		19.94	%		10.31	%		3.49	%
Class III4		13.56			19.63			10.04			3.24	6
MSCI All Country World Index		11.48			18.78			10.54			3.71

⁴  Average annual and cumulative total returns are based on changes in net asset value (“NAV”) for the periods shown, and assume reinvestment of all distributions at NAV on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns. The returns prior to October 1, 2011 are the returns of the Fund when it followed different investment strategies.

⁵  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

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, as adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

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

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

      Expense Example

	Actual						Hypothetical8
	Beginning Account Value January 1, 2017		Ending Account Value June 30, 2017		Expenses Paid During the Period7		Beginning Account Value January 1, 2017		Ending Account Value June 30, 2017		Expenses Paid During the Period7		Annualized Expense Ratio
Class I		$1,000.00		$1,136.90		$5.14		$1,000.00		$1,019.98		$4.86		0.97	%
Class III		$1,000.00		$1,135.60		$6.46		$1,000.00		$1,018.74		$6.11		1.22	%

⁷  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).

⁸  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock Global Opportunities V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction

or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Global Opportunities V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Australia — 0.0%
Ensogo Ltd. (a)(b)		18,821	$	—
Belgium — 1.0%
Anheuser-Busch InBev SA		3,796		419,263
Brazil — 0.4%
Embraer SA — ADR		8,700		158,601
Canada — 1.0%
Encana Corp.		15,280		134,442
Potash Corp. of Saskatchewan, Inc.		18,330		298,779
				433,221
China — 8.9%
AIA Group Ltd.		47,489		347,447
Alibaba Group Holding Ltd. — ADR (a)(c)		8,191		1,154,112
Anhui Conch Cement Co. Ltd., H Shares (c)		87,000		302,355
Baidu, Inc. — ADR (a)		2,550		456,093
China Construction Bank Corp., H Shares		302,000		234,849
Ping An Insurance Group Co. of China Ltd., H Shares		110,000		724,614
Weibo Corp. — ADR (a)		3,230		214,698
Weichai Power Co. Ltd., H Shares		332,000		290,133
				3,724,301
France — 2.5%
AXA SA		13,850		379,260
Iliad SA		1,540		363,946
Renault SA		3,380		305,807
				1,049,013
Germany — 1.5%
KION Group AG		3,620		276,904
thyssenKrupp AG		11,800		336,300
				613,204
Hong Kong — 1.3%
Melco Resorts & Entertainment Ltd. — ADR		25,050		562,373
India — 3.5%
Bharti Infratel Ltd.		51,353		297,476
Delta Corp. Ltd.		32,597		78,143
Dish TV India Ltd. (a)		85,834		106,277
Federal Bank Ltd.		102,160		178,112
HDFC Bank Ltd.		11,199		288,112
ICICI Bank Ltd.		98,450		443,187
Srei Infrastructure Finance Ltd.		46,423		83,156
				1,474,463
Indonesia — 1.1%
Bank Negara Indonesia Persero Tbk PT		497,700		244,718
Matahari Department Store Tbk PT		205,489		218,532
				463,250

Common Stocks	Shares		Value
Ireland — 0.9%
Medtronic PLC		4,153	$	368,579
Italy — 3.1%
Azimut Holding SpA		16,750		336,975
Eni SpA		17,025		255,850
UniCredit SpA (a)		36,900		691,185
				1,284,010
Japan — 4.8%
Alps Electric Co. Ltd.		6,718		195,147
FANUC Corp.		1,364		263,996
Nintendo Co. Ltd.		1,037		347,179
Nippon Yusen KK (a)		90,000		168,254
SMC Corp.		1,100		336,262
SoftBank Group Corp.		3,635		295,490
Sumitomo Mitsui Financial Group, Inc.		10,381		405,321
				2,011,649
Mexico — 0.7%
Fomento Economico Mexicano SAB de CV — ADR		2,899		285,088
Netherlands — 1.2%
Euronext NV (d)		4,430		230,072
Koninklijke Philips NV (c)		7,488		266,563
				496,635
New Zealand — 0.4%
Xero Ltd. (a)		8,934		165,006
Norway — 0.9%
Statoil ASA		22,322		370,146
Peru — 1.1%
Credicorp Ltd.		2,550		457,445
Portugal — 0.9%
Galp Energia SGPS SA		25,116		380,603
South Africa — 1.2%
Naspers Ltd., N Shares		2,656		523,054
South Korea — 2.1%
Amorepacific Corp.		750		199,190
LG Chem Ltd.		1,510		384,255
Samsung SDI Co. Ltd.		1,890		283,733
				867,178
Spain — 0.9%
Cellnex Telecom SAU (d)		17,906		370,055
Switzerland — 2.2%
Nestle SA, Registered Shares		5,701		497,228
UBS Group AG, Registered Shares (a)		23,815		404,995
				902,223

Portfolio Abbreviations
ADR	American Depositary Receipts	GBP	British Pound	RUB	Russian Ruble
AUD	Australian Dollar	NOK	Norwegian Krone	SEK	Swedish Krona
CAD	Canadian Dollar	NZD	New Zealand Dollar	SGD	Singapore Dollar
CHF	Swiss Franc	PCL	Public Company Limited	USD	U.S. Dollar
DKK	Danish Krone	REIT	Real Estate Investment Trust	ZAR	South African Rand
EUR	Euro

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock Global Opportunities V.I. Fund

Common Stocks	Shares		Value
Taiwan — 2.0%
Catcher Technology Co. Ltd.		40,000	$	476,737
Taiwan Semiconductor Manufacturing Co. Ltd.		55,577		379,714
				856,451
Thailand — 0.4%
True Corp. PCL (a)		1,025,700		187,026
United Kingdom — 4.9%
AstraZeneca PLC		2,990		200,282
Babcock International Group PLC		17,900		205,269
CNH Industrial NV		31,980		362,678
GlaxoSmithKline PLC		9,630		204,997
Imperial Brands PLC		7,593		341,209
Metro Bank PLC (a)(c)		4,759		222,438
Unilever PLC		9,722		526,136
				2,063,009
United States — 47.6%
Adobe Systems, Inc. (a)		3,324		470,147
Allergan PLC		850		206,627
Alphabet, Inc., Class C (a)		1,570		1,426,706
Amazon.com, Inc. (a)		582		563,376
American International Group, Inc.		9,150		572,058
Amgen, Inc.		1,290		222,177
Apple Inc.		6,066		873,625
Assured Guaranty Ltd.		5,083		212,164
Biogen, Inc. (a)		590		160,102
Boston Scientific Corp. (a)		12,220		338,738
Calpine Corp. (a)(c)		18,290		247,464
Celgene Corp. (a)		3,430		445,454
Centene Corp. (a)		3,300		263,604
Cigna Corp.		1,470		246,063
Comcast Corp., Class A		5,152		200,516
Concho Resources, Inc. (a)		2,264		275,144
Crown Holdings, Inc. (a)		4,143		247,171
DaVita, Inc. (a)		4,530		293,363
Delphi Automotive PLC		3,725		326,496
Dover Corp.		2,700		216,594
Duke Energy Corp.		3,670		306,775
E*TRADE Financial Corp. (a)		8,650		328,959
Eastman Chemical Co.		3,424		287,582
Eli Lilly & Co.		3,830		315,209
EOG Resources, Inc.		4,328		391,771
Facebook, Inc., Class A (a)		3,400		513,332
Humana, Inc.		1,510		363,336
Intercontinental Exchange, Inc.		3,220		212,262
Johnson Controls International PLC		10,163		440,668
Kellogg Co.		4,100		284,786
Kennedy-Wilson Holdings, Inc. (c)		10,885		207,359
Lam Research Corp.		1,740		246,088
Lowe’s Cos., Inc.		3,412		264,532
Mastercard, Inc., Class A		4,470		542,881
Merck & Co., Inc.		4,591		294,237
Mondelez International, Inc., Class A		5,752		248,429
Mosaic Co.		14,984		342,085
Newell Brands, Inc. (c)		7,220		387,136
PayPal Holdings, Inc. (a)		9,610		515,769
Pfizer, Inc.		11,970		402,072
Pioneer Natural Resources Co.		1,658		264,584
Platform Specialty Products Corp. (a)(c)		15,913		201,777
PPL Corp.		5,339		206,406
RSP Permian, Inc. (a)(c)		4,610		148,765
salesforce.com, Inc. (a)		4,740		410,484
ServiceMaster Global Holdings, Inc. (a)		6,722		263,435
Skyworks Solutions, Inc.		2,060		197,657
Snap, Inc., Class A (a)(c)		7,235		128,566
Starbucks Corp.		5,264		306,944

Common Stocks	Shares		Value
United States (continued)
Strategic Growth Bancorp (Acquired 3/10/14, cost $247,382) (a)(b)(e)		5,449	$	190,497
Summit Materials, Inc., Class A (a)		8,650		249,725
SVB Financial Group (a)		1,510		265,443
Union Pacific Corp.		2,391		260,404
UnitedHealth Group, Inc.		1,393		258,290
VEREIT, Inc.		23,090		187,953
Walt Disney Co.		3,365		357,531
Weatherford International PLC (a)(c)		38,700		149,769
Wells Fargo & Co.		10,990		608,956
WestRock Co.		3,960		224,374
Wynn Resorts Ltd. (c)		2,350		315,182
				19,899,599
Total Common Stocks — 96.5%				40,385,445
Preferred Stocks
India — 0.1%
Jasper Infotech Private Ltd., Series F (Acquired 5/07/14, cost $85,441) (a)(b)(e)		12		41,653
Jasper Infotech Private Ltd., Series G (Acquired 10/29/14, cost $33,723) (a)(b)(e)		4		16,972
				58,625
United States — 1.9%
Palantir Technologies, Inc., Series I (Acquired 2/07/14, cost $138,814) (a)(b)(e)		22,645		181,386
Uber Technologies, Inc., Series D (Acquired 6/10/14, cost $172,691) (a)(b)(e)		11,132		599,792
				781,178
Total Preferred Stocks — 2.0%				839,803
Total Long-Term Investments (Cost — $34,249,453) — 98.5%				41,225,248
Short-Term Securities
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (f)(g)		584,570		584,570
SL Liquidity Series, LLC, Money Market Series, 1.27% (f)(g)(h)		2,721,875		2,722,148
Total Short-Term Securities (Cost — $3,306,980) — 7.9%				3,306,718
Total Investments (Cost — $37,556,433) — 106.4%				44,531,966
Liabilities in Excess of Other Assets — (6.4)%				(2,684,652	)
Net Assets — 100.0%			$	41,847,314

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Global Opportunities V.I. Fund

      Notes to Schedule of Investments

(a) Non-income producing security.

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

(c) Security, or a portion of the security, is on loan.

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

(e) Restricted security as to resale, excluding 144A securities. As of period end, the Fund held restricted securities with a current value of $1,030,300 and an original cost of $678,051, which was 2.5% of its net assets.

(f) During the period ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity			Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Gain		Change  in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		705,384		(120,814	)		584,570	$	584,570	$	2,893			—		—
SL Liquidity Series, LLC, Money Market Series		1,399,283		1,322,592			2,721,875		2,722,148		8,858	1		$4		$(179)
								$	3,306,718	$	11,751			$4		$(179)

¹  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(g) Current yield as of period end.

(h) Security was purchased with the cash collateral from loaned securities.

      Derivative Financial Instruments Outstanding as of Period End

Forward Foreign Currency Exchange Contracts

Currency Purchased		Currency Sold		Counterparty	Settlement       Date		Unrealized Appreciation (Depreciation)
AUD	1,272,800	USD	956,538	HSBC Bank PLC		10/31/17		$  20,200
CAD	977,000	USD	727,617	HSBC Bank PLC		10/31/17		27,112
CHF	326,200	USD	339,716	HSBC Bank PLC		10/31/17		3,283
DKK	113,700	USD	17,255	HSBC Bank PLC		10/31/17		335
DKK	1,537,300	USD	233,295	HSBC Bank PLC		10/31/17		4,527
GBP	11,000	USD	14,071	Goldman Sachs International		10/31/17		310
GBP	574,700	USD	735,142	Goldman Sachs International		10/31/17		16,240
SEK	3,354,100	USD	387,801	Bank of America N.A.		10/31/17		13,233
SEK	178,200	USD	20,603	HSBC Bank PLC		10/31/17		703
SGD	240,800	USD	174,235	HSBC Bank PLC		10/31/17		1,010
USD	181,952	ZAR	2,397,500	Bank of America N.A.		10/31/17		2,464
USD	48,470	ZAR	639,100	Goldman Sachs International		10/31/17		624
								90,041
RUB	9,230,900	USD	157,451	JPMorgan Chase Bank N.A.		10/31/17		(4,868	)
USD	411,353	EUR	364,615	Goldman Sachs International		10/31/17		(7,907	)
USD	25,931	EUR	22,985	Goldman Sachs International		10/31/17		(499	)
USD	301,918	NOK	2,558,200	Bank of America N.A.		10/31/17		(5,244	)
USD	128,921	NZD	179,185	Bank of America N.A.		10/31/17		(2,083	)
USD	7,205	NZD	10,015	Standard Chartered Bank		10/31/17		(117	)
								(20,718	)
Net Unrealized Appreciation								$  69,323

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Schedule of Investments (continued) BlackRock Global Opportunities V.I. Fund

      Transactions in Options Written for the Period Ended June 30, 2017

	Calls									Puts
				Notional (000)
		Contracts		GBP			Premiums Received			Contracts	Premiums Received
Outstanding options, beginning of period			9		—			$   2,311		22		$  1,403
Options written			32		7			15,173		5		1,936
Options exercised			(8)		—			(2,154	)	—		—
Options expired			(15)		(7	)		(10,669	)	(22)		(1,403	)
Options closed			(18)		—			(4,661	)	(5)		(1,936	)
Outstanding options, end of period			—		—			—		—		—

      Derivative Financial Instruments Categorized by Risk Exposure

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

Assets - Derivative Financial Instruments		Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Forward foreign currency exchange contracts	Unrealized appreciation on forward foreign currency exchange contracts		—		—		—		$90,041		—		—	$	90,041
Liabilities - Derivative Financial Instruments
Forward foreign currency exchange contracts	Unrealized depreciation on forward foreign currency exchange contracts		—		—		—		$20,718		—		—	$	20,718

For the six months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts			Interest Rate Contracts		Other Contracts		Total
Net Realized Gain (Loss) from:
Forward foreign currency exchange contracts		—		—		—		$ (19,045	)		—		—	$	(19,045	)
Options written		—		—		$15,170		—			—				15,170
		—		—		$15,170		$ (19,045	)		—			$	(3,875	)
Net Change in Unrealized Appreciation (Depreciation) on:
Forward foreign currency exchange contracts		—		—		—		$133,027			—		—	$	133,027
Options written		—		—		$       58		—			—				58
Total		—		—		$       58		$133,027			—		—	$	133,085

      Average Quarterly Balances of Outstanding Derivative Financial Instruments

Forward foreign currency exchange contracts:
Average amounts purchased — in USD	$	3,308,365
Average amounts sold — in USD	$	4,568,191
Options:
Average value of option contracts written	$	3,692

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

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Global Opportunities V.I. Fund

      Derivative Financial Instruments – Offsetting as of Period End

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

	Assets		Liabilities
Derivative Financial Instruments:
Forward foreign currency exchange contracts		$90,041		$20,718
Total derivative assets and liabilities in the Statement of Assets and Liabilities		90,041		20,718
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		—		—
Total derivative assets and liabilities subject to an MNA		$90,041		$20,718

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

Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivatives Available for Offset1			Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets2
Bank of America N.A.		$15,697		$  (7,327	)		—		—		$  8,370
Goldman Sachs International		17,174		(8,406	)		—		—		8,768
HSBC Bank PLC		57,170		—			—		—		57,170
Total		$90,041		$(15,733	)		—		—		$74,308
Counterparty	Derivative Liabilities Subject to an MNA by Counterparty		Derivatives Available for Offset1			Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities3
Bank of America N.A.		$ 7,327		$  (7,327	)		—		—		—
Goldman Sachs International		8,406		(8,406	)		—		—		—
JPMorgan Chase Bank N.A.		4,868		—			—		—		$4,868
Standard Chartered Bank		117		—			—		—		117
Total		$20,718		$(15,733	)		—		—		$4,985

¹  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

²  Net amount represents the net amount receivable from the counterparty in the event of default.

³  Net amount represents the net amount payable due to the counterparty in the event of default.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Schedule of Investments (continued) BlackRock Global Opportunities V.I. Fund

      Fair Value Hierarchy as of Period End

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

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

	Level 1		Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Australia		—		—			—		—
Belgium		—	$	419,263			—	$	419,263
Brazil	$	158,601		—			—		158,601
Canada		433,221		—			—		433,221
China		1,824,903		1,899,398			—		3,724,301
France		—		1,049,013			—		1,049,013
Germany		—		613,204			—		613,204
Hong Kong		562,373		—			—		562,373
India		—		1,474,463			—		1,474,463
Indonesia		—		463,250			—		463,250
Ireland		368,579		—			—		368,579
Italy		—		1,284,010			—		1,284,010
Japan		—		2,011,649			—		2,011,649
Mexico		285,088		—			—		285,088
Netherlands		—		496,635			—		496,635
New Zealand		—		165,006			—		165,006
Norway		—		370,146			—		370,146
Peru		457,445		—			—		457,445
Portugal		—		380,603			—		380,603
South Africa		—		523,054			—		523,054
South Korea		—		867,178			—		867,178
Spain		—		370,055			—		370,055
Switzerland		—		902,223			—		902,223
Taiwan		—		856,451			—		856,451
Thailand		—		187,026			—		187,026
United Kingdom		—		2,063,009			—		2,063,009
United States		19,709,102		—		$	190,497		19,899,599
Preferred Stocks:
India		—		—			58,625		58,625
United States		—		—			781,178		781,178
Short-Term Securities		584,570		—			—		584,570
Subtotal	$	24,383,882	$	16,395,636		$	1,030,300	$	41,809,818
Investments Valued at NAV1									2,722,148
Total Investments								$	44,531,966
1      As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.
Derivative Financial Instruments2
Assets:
Foreign currency exchange contracts		—	$	90,041			—	$	90,041
Liabilities:
Foreign currency exchange contracts		—		(20,718	)		—		(20,718	)
Total		—	$	69,323			—	$	69,323

²  Derivative financial instruments are forward foreign currency exchange contracts. Forward foreign currency exchange contracts are valued at the unrealized appreciation (depreciation) on the instrument.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock Global Opportunities V.I. Fund

Transfers between Level 1 and Level 2 were as follows:
	Transfers into Level 11		Transfers out of Level 12			Transfers into Level 22		Transfers out of Level 21
Assets:
Long-Term Investments:
Belgium		—	$	(235,022	)	$	235,022		—
Thailand		—		(729,903	)		729,903		—
Total		—	$	(964,925	)	$	964,925		—

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

	Common Stocks			Preferred Stocks			Total
Assets:
Opening balance, as of December 31, 2016		$200,290			$1,123,247			$1,323,537
Transfers into Level 3		—			—			—
Transfers out of Level 3		—			—			—
Accrued discounts/premiums		—			—			—
Net realized gain (loss)		—			—			—
Net change in unrealized appreciation (depreciation)1,2		(9,793	)		(283,444	)		(293,237	)
Purchases		—			—			—
Sales		—			—			—
Closing Balance, as of June 30, 2017		$190,497			$   839,803			$1,030,300
Net change in unrealized appreciation (depreciation) on investments still held at June 30, 20172		$   (9,793	)		$  (283,444	)		$  (293,237	)

¹  Included in the related net change in unrealized appreciation (depreciation) in the Statement of Operations.

²  Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at June 30, 2017 is generally due to investments no longer held or categorized as Level 3 at year end.

The following table summarizes the valuation approaches used and unobservable inputs utilized by the BlackRock Global Valuation Methodologies Committee (“Global Valuation Committee”) to determine the value of certain of the Fund’s Level 3 investments as of period end.

	Value		Valuation Approach	Unobservable Inputs		Range of Unobservable Inputs Utilized		Weighted Average of Unobservable Inputs
Assets:
Common Stocks		$  190,497	Market		Tangible Book Value Multiple1		1.75x		—
					Illiquidity Discount2		1.46%		—
Preferred Stocks3		839,803	Market		Revenue Growth Rate1		131.00%		—
					Revenue Multiple1		8.25x - 10.75x		8.83x
					Time to Exit2		1 year		—
					Volatility1		29.00%		—
Total		$1,030,300

¹  Increase in unobservable input may result in a significant increase to value, while a decrease in unobservable input may result in a significant decrease to value.

²  Decrease in unobservable input may result in a significant increase to value, while an increase in unobservable input may result in a significant decrease to value.

³  For the six months ended June 30, 2017, the valuation technique for investments classified as preferred stocks with a total value of $58,625 changed to an Option Pricing Model (“OPM”). The investments were previously valued utilizing Probability-Weighted Expected Return Model (“PWERM”). The change was due to consideration of liquidation preferences and exit strategy.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Global Opportunities V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $2,639,748) (cost — $34,249,453)	$	41,225,248
Investments at value — affiliated (cost — $3,306,980)		3,306,718
Cash		16,260
Foreign currency at value (cost — $6,481)		6,301
Receivables:
Securities lending income — affiliated		3,284
Capital shares sold		2,965
Dividends — affiliated		604
Dividends — unaffiliated		85,439
From the Manager		16,978
Unrealized appreciation on forward foreign currency exchange contracts		90,041
Prepaid expenses		104
Total assets		44,753,942
Liabilities
Cash collateral on securities loaned at value		2,722,252
Payables:
Capital shares redeemed		24,204
Distribution fees		865
Investment advisory fees		14,774
Deferred foreign capital gain tax		15,339
Officer’s and Directors’ fees		28
Other accrued expenses		108,109
Other affiliates		339
Unrealized depreciation on forward foreign currency exchange contracts		20,718
Total liabilities		2,906,628
Net Assets	$	41,847,314
Net Assets Consist of
Paid-in capital	$	33,627,537
Undistributed net investment income		199,621
Accumulated net realized gain		991,012
Net unrealized appreciation (depreciation)		7,029,144
Net Assets	$	41,847,314
Net Asset Value
Class I — Based on net assets of $37,713,293 and 2,045,425 shares outstanding, 100 million shares authorized, $0.10 par value	$	18.44
Class III — Based on net assets of $4,134,021 and 225,451 shares outstanding, 100 million shares authorized, $0.10 par value	$	18.34

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Global Opportunities V.I. Fund
Investment Income
Dividends — unaffiliated	$	414,685
Dividends — affiliated		2,893
Securities lending — affiliated — net		8,858
Foreign taxes withheld		(25,931	)
Total investment income		400,505
Expenses
Investment advisory		154,558
Professional		48,171
Transfer agent		2,480
Transfer agent — class specific		41,854
Printing		13,692
Officer and Directors		9,658
Accounting services		7,749
Custodian		7,024
Distribution — class specific		5,380
Miscellaneous		11,330
Total expenses		301,896
Less:
Fees waived and/or reimbursed by the Manager		(54,692	)
Transfer agent fees reimbursed — class specific		(41,854	)
Total expenses after fees waived and reimbursed		205,350
Net investment income		195,155
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated		1,004,701
Investments — affiliated		4
Forward foreign currency exchange contracts		(19,045	)
Foreign currency transactions		217
Options written		15,170
		1,001,047
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated1		3,985,254
Investments — affiliated		(179	)
Forward foreign currency exchange contracts		133,027
Foreign currency translations		1,674
Options written		58
		4,119,834
Net realized and unrealized gain		5,120,881
Net Increase in Net Assets Resulting from Operations	$	5,316,036

¹ Net of $15,339 foreign capital gain tax.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Statements of Changes in Net Assets BlackRock Global Opportunities V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	195,155		$	447,233
Net realized gain		1,001,047			618,110
Net change in unrealized appreciation (depreciation)		4,119,834			266,548
Net increase in net assets resulting from operations		5,316,036			1,331,891
Distributions to Shareholders1
From net investment income:
Class I		—			(628,394	)
Class III		—			(62,238	)
From net realized gain:
Class I		—			(135,347	)
Class III		—			(15,821	)
Decrease in net assets resulting from distributions to shareholders		—			(841,800	)
Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(3,090,558	)		(3,367,104	)
Net Assets
Total increase (decrease) in net assets		2,225,478			(2,877,013	)
Beginning of period		39,621,836			42,498,849
End of period	$	41,847,314		$	39,621,836
Undistributed net investment income, end of period	$	199,621		$	4,466

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock Global Opportunities V.I. Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	16.22		$	16.00		$	16.35		$	17.98		$	13.89		$	12.26
Net investment income1		0.08			0.18			0.12			0.14			0.07			0.18
Net realized and unrealized gain (loss)		2.14			0.40			(0.07	)		(0.81	)		4.08			1.60
Net increase (decrease) from investment operations		2.22			0.58			0.05			(0.67	)		4.15			1.78
Distributions:2
From net investment income		—			(0.30	)		(0.17	)		(0.20	)		(0.06	)		(0.15	)
From net realized gain		—			(0.06	)		(0.23	)		(0.76	)		—			—
Total distributions		—			(0.36	)		(0.40	)		(0.96	)		(0.06	)		(0.15	)
Net asset value, end of period	$	18.44		$	16.22		$	16.00		$	16.35		$	17.98		$	13.89
Total Return3
Based on net asset value		13.69	%4		3.59	%5		0.28	%		(3.74	)%		29.87	%6		14.53	%
Ratios to Average Net Assets
Total expenses		1.44	%7		1.42	%		1.35	%		1.33	%		1.33	%		1.19	%
Total expenses after fees waived and reimbursed		0.97	%7		0.97	%		1.03	%		1.12	%		1.14	%		1.06	%
Net investment income		0.97	%7		1.14	%		0.72	%		0.82	%		0.44	%		1.36	%
Supplemental Data
Net assets, end of period (000)	$	37,713		$	35,524		$	38,686		$	44,136		$	52,175		$	43,102
Portfolio turnover rate		25	%		65	%		69	%		87	%		135	%		139	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is 3.27%.

⁶  Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is 29.72%.

⁷  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Financial Highlights (concluded) BlackRock Global Opportunities V.I. Fund

	Class III
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	16.15		$	15.93		$	16.29		$	17.93		$	13.86		$	12.23
Net investment income1		0.06			0.14			0.08			0.06			0.03			0.14
Net realized and unrealized gain (loss)		2.13			0.40			(0.08	)		(0.77	)		4.06			1.60
Net increase (decrease) from investment operations		2.19			0.54			—			(0.71	)		4.09			1.74
Distributions:2
From net investment income		—			(0.26	)		(0.13	)		(0.17	)		(0.02	)		(0.11	)
From net realized gain		—			(0.06	)		(0.23	)		(0.76	)		—			—
Total distributions		—			(0.32	)		(0.36	)		(0.93	)		(0.02	)		(0.11	)
Net asset value, end of period	$	18.34		$	16.15		$	15.93		$	16.29		$	17.93		$	13.86
Total Return3
Based on net asset value		13.56	%4		3.36	%5		0.02	%		(4.00	)%		29.51	%6		14.28	%
Ratios to Average Net Assets
Total expenses		1.69	%7		1.68	%		1.63	%		1.57	%		1.58	%		1.43	%
Total expenses after fees waived and reimbursed		1.22	%7		1.22	%		1.27	%		1.39	%		1.39	%		1.31	%
Net investment income		0.73	%7		0.89	%		0.45	%		0.32	%		0.16	%		1.09	%
Supplemental Data
Net assets, end of period (000)	$	4,134		$	4,098		$	3,813		$	2,972		$	1,404		$	1,051
Portfolio turnover rate		25	%		65	%		69	%		87	%		135	%		139	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is 3.04%.

⁶  Includes the litigation settlement amount. Excluding this amount, the Fund’s total return is 29.37%.

⁷  Annualized.

See Notes to Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (Unaudited) BlackRock Global Opportunities V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Global Opportunities V.I. Fund (the “Fund”). The Fund is classified as diversified. 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 also bear certain expenses related to the distribution of such shares.

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

2. Significant Accounting Policies:

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

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

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

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

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

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

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (continued) BlackRock Global Opportunities V.I. Fund

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

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

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

• Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that the prior day’s price no longer reflects the fair value of the option. OTC options 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.

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

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Global Opportunities V.I. Fund

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

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

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

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

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

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

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

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

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Notes to Financial Statements (continued) BlackRock Global Opportunities V.I. Fund

and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

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

4. Securities and Other Investments:

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.

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities, but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1		Net Amount
Citigroup Global Markets, Inc.		$   610,654		$  (610,654)		—
Credit Suisse Securities (USA) LLC		263,894		(263,894)		—
Deutsche Bank Securities		355,747		(355,747)		—
Goldman Sachs & Co.		751,315		(751,315)		—
Morgan Stanley		208,520		(208,520)		—
State Street Bank & Trust Co.		449,618		(449,618)		—
Total		$2,639,748		$(2,639,748)		—

¹  Cash collateral with a value of $2,722,252 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Global Opportunities V.I. Fund

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Derivative Financial Instruments:

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

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

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

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

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

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

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

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

Notes to Financial Statements (continued) BlackRock Global Opportunities V.I. Fund

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

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

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

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.75%
$1 Billion - $3 Billion	0.71%
$3 Billion - $5 Billion	0.68%
$5 Billion - $10 Billion	0.65%
Greater than $10 Billion	0.64%

With respect to the Fund, the Manager entered into a separate 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.

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

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III is $5,380.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Global Opportunities V.I. Fund

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class III	Total
$37,365	$4,489		$41,854

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $345.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, there were no fees waived by the Manager.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $224 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Manager has contractually agreed to reimburse all transfer agent fees for Class I and Class III. These amounts are shown as transfer agent fees reimbursed — class specific in the Statement of Operations. Class specific expense waivers and/or reimbursements are as follows:

	Class I	Class III	Total
Transfer agent fees reimbursed	$37,365	$4,489	$41,854

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors, or by a vote of a majority of the outstanding voting securities of the Fund.

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

Class I	0.97%
Class III	1.22%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018 unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the six months ended June 30, 2017, the amount waived and/or reimbursed was $54,347.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 80% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 23

Notes to Financial Statements (continued) BlackRock Global Opportunities V.I. Fund

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 85% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $2,212 for securities lending agent services.

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

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $9,912,753 and $12,684,117, respectively.

8. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

Tax cost	$37,626,508
Gross unrealized appreciation	$  7,928,837
Gross unrealized depreciation	(1,023,379	)
Net unrealized appreciation	$  6,905,458

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

24 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Global Opportunities V.I. Fund

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

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

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

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

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

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

Concentration Risk: 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. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be less liquid, more volatile, and less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the Schedule of Investments.

11. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		93,640		$	1,623,073			89,720		$	1,430,156
Shares issued in reinvestment of distributions		—			—			47,029			763,742
Shares redeemed		(238,531	)		(4,195,246	)		(364,840	)		(5,759,871	)
Net decrease		(144,891	)	$	(2,572,173	)		(228,091	)	$	(3,565,973	)

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 25

Notes to Financial Statements (concluded) BlackRock Global Opportunities V.I. Fund

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class III
Shares sold		50,813		$	889,179			95,967		$	1,502,836
Shares issued in reinvestment of distributions		—			—			4,827			78,060
Shares redeemed		(79,108	)		(1,407,564	)		(86,426	)		(1,382,027	)
Net increase (decrease)		(28,295	)	$	(518,385	)		14,368		$	198,869
Total Net Decrease		(173,186	)	$	(3,090,558	)		(213,723	)	$	(3,367,104	)

12. 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.

26 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Government Money Market V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Money Market Overview BlackRock Government Money Market V.I. Fund

      For the Six-Month Period Ended June 30, 2017

On the heels of a 0.25% rate hike at end of 2016, remarks from members of the Federal Open Market Committee (“FOMC”) during the first quarter of 2017 generally indicated an openness to the further removal of monetary accommodation. Indeed, after clearly telegraphing its intentions in the weeks immediately preceding the March 15, 2017 meeting, the FOMC delivered a 0.25% increase in the federal funds target range to 0.75% — 1.00%. The strength of the U.S. labor market and continued progress toward the FOMC’s inflation target of 2% were cited as factors contributing to the decision to continue along the path toward the normalization of interest rates. Specifically, the FOMC’s preferred measure of inflation — the core PCE index — increased 1.8% on an annual basis in February, while broader measures of inflation came in above 2% during the quarter.

More recently, while there has been moderate weakness in inflation, the FOMC stated that it believes this to be transitory and delivered a third consecutive quarterly 0.25% interest rate increase at the June 14, 2017 FOMC meeting. During this meeting, the FOMC also gave an update on its balance sheet normalization strategy, confirming that it would likely kick off “this year.” The amounts of Treasury and agency mortgage-backed securities that will not be reinvested will be relatively small at the outset. Similarly, the pace at which such securities will “roll off” of the balance sheet will be measured. While the FOMC appears committed to interest rate and balance sheet normalization, market participants appear less convinced about the outlook set forth by policy makers. Specifically, futures contracts for federal funds are priced in for less than two 0.25% rate hikes by the end of 2018, as compared with four increases stated in the FOMC’s Summary of Economic Projections.

During the first half of 2017, the credit curve inside of a year remained extremely tight with issuers being reluctant to increase issuance and demand in the short term credit markets continuing to exceed supply. Floating rate note issuance remained strong as demand has outpaced supply with investors preferring floating rate notes over fixed rate investments with the FOMC continuing to tighten monetary policy. The gradual removal of monetary accommodation translated into higher yields for taxable and municipal money market funds during the second quarter. On an average net yield basis, institutional prime money market funds are out-yielding institutional government money market funds by 28 basis points (0.28%) according to iMoneyNet as of June month-end.

We anticipate an additional 0.25% interest rate hike during the balance of 2017, along with the initiation of balance sheet “tapering;” however, the sequencing of such events is unclear. In our view, the path for interest rate hikes remains subject to inflation moving toward the FOMC’s 2% target later this year and financial conditions remaining accommodative. We also believe that the gradual pace of balance sheet normalization activity as laid out by the FOMC will not be disruptive to markets.

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

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Fund Summary as of June 30, 2017 BlackRock Government Money Market V.I. Fund

      Investment Objective

BlackRock Government Money Market V.I. Fund’s (the “Fund”) investment objective is to seek to preserve capital, maintain liquidity, and achieve the highest possible current income consistent with the foregoing.

Current-Seven-Day Yields
	7-Day     SEC Yields	7-Day Yields
Class I	0.72%		0.72	%

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

Portfolio Composition
	Percent of   Net Assets
U.S. Government Sponsored Agency Obligations	57%
Repurchase Agreements	36
U.S. Treasury Obligations	8
Liabilities in Excess of Other Assets	(1)
Total	100%

      Disclosure of Expenses

Shareholders of the Fund may incur the following charges: (a) transactional expenses, and (b) operating expenses, including investment advisory fees, service and distribution fees, and other fund expenses. The expense example shown below (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

      Expense Example

	Actual			Hypothetical2
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period1	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period1	Annualized Expense Ratio
Class I	$1,000.00	$1,002.30	$1.49	$1,000.00	$1,023.31	$1.51	0.30%

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 prorating the number of days in the most recent fiscal half year divided by 365.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Government Money Market V.I. Fund
	(Percentages shown are based on Net Assets)

U.S. Government Sponsored Agency Obligations	Par   (000)		Value
Fannie Mae:
0.88%, 08/28/17	$	775		$   774,950
1.00%, 09/27/17		500		500,033
Fannie Mae Variable Rate Notes: (a)
1.23%, 07/20/17		2,500		2,499,994
1.18%, 08/16/17		2,000		1,999,976
1.09%, 10/05/17		1,500		1,499,941
Federal Farm Credit Bank Discount Notes: (b)
0.76%, 11/03/17		360		359,065
0.90%, 11/28/17		3,000		2,988,900
0.82%, 12/15/17		1,345		1,339,945
Federal Farm Credit Bank Variable Rate Notes: (a)
1.23%, 09/22/17		2,000		1,999,978
1.28%, 11/20/17		1,000		999,981
1.07%, 01/23/18		575		575,003
1.26%, 04/04/18		1,000		999,924
Federal Home Loan Bank:
0.84%, 09/08/17		2,310		2,309,530
0.88%, 03/19/18		1,000		998,389
Federal Home Loan Bank Discount Notes: (b)
0.85%, 07/14/17		1,255		1,254,676
0.63%, 07/19/17		3,000		2,998,153
0.95%, 07/26/17		560		559,661
0.97%, 07/28/17		870		869,413
0.64%, 08/01/17		1,920		1,919,010
0.94%, 08/09/17		4,770		4,764,383
0.68%, 08/22/17		960		959,093
0.68%, 08/25/17		910		909,096
0.90%, 08/28/17		1,010		1,008,594
0.70%, 08/30/17		2,000		1,997,761
0.89%, 09/06/17		1,220		1,218,039
0.92%, 09/20/17		1,500		1,496,981
1.05%, 09/20/17		1,600		1,596,331
1.05%, 09/25/17		2,000		1,995,100
1.04%, 09/27/17		1,500		1,496,277
1.04%, 11/08/17		2,500		2,490,764
1.00%, 12/04/17		500		497,861
1.00%, 12/05/17		2,000		1,991,389
1.14%, 12/29/17		1,000		994,332
Federal Home Loan Bank Variable Rate Notes: (a)
1.14%, 07/06/17		1,970		1,970,000
1.14%, 07/07/17		3,500		3,500,000

U.S. Government Sponsored Agency Obligations	Par   (000)		Value
1.15%, 08/22/17	$	800		$       799,997
1.12%, 08/25/17		1,260		1,260,000
1.26%, 10/16/17		1,300		1,300,000
1.09%, 10/27/17		1,670		1,670,000
1.09%, 10/27/17		1,000		999,977
1.06%, 04/17/18		1,400		1,400,000
1.07%, 04/17/18		2,500		2,500,000
0.83%, 05/09/18		1,000		1,000,000
1.06%, 06/08/18		500		500,000
1.11%, 10/03/18		1,000		1,000,000
1.11%, 06/20/19		550		550,000
1.11%, 06/20/19		450		450,000
Freddie Mac:
0.75%, 07/14/17		500		500,018
1.00%, 09/29/17		1,070		1,070,694
Freddie Mac Discount Notes: (b)
0.80%, 08/02/17		1,330		1,329,113
0.83%, 08/03/17		2,535		2,533,188
Total U.S. Government Sponsored Agency Obligations — 57.3%				75,195,510
U.S. Treasury Obligations
U.S. Treasury Bills, 0.91%, 9/28/17 (b)		1,419		1,415,896
U.S. Treasury Notes:
0.88%, 10/15/17		1,600		1,600,618
1.17%, 10/31/17 (a)		1,274		1,273,474
0.75%, 2/28/18		1,955		1,952,953
1.14%, 1/31/19 (a)		3,775		3,775,000
Total U.S. Treasury Obligations — 7.6%				10,017,941
Total Repurchase Agreements — 35.7%			46,800,000
Total Investments (Cost — $132,013,451*) — 100.6%				132,013,451
Liabilities in Excess of Other Assets — (0.6)%				(790,397	)
Net Assets — 100.0%				$131,223,054

      Notes to Schedule of Investments

* Cost for U.S. federal income tax purposes.

(a) Variable rate security. Rate as of period end.

(b) Rates are discount rates or a range of discount rates at the time of purchase.

See Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Government Money Market V.I. Fund

      Repurchase Agreements

Repurchase Agreements													Collateral
Counterparty	Coupon Rate	Purchase Date		Maturity Date		Par (000)			at Value (000)		Proceeds including Interest		Position	Original Par		Position received, at Value
Bank of Montreal	1.07%		6/30/17		7/03/17	$	4,000		$	4,000		$4,000,357	U.S. government sponsored agency obligations and U.S. Treasury obligations, 0.13% to 6.13% due from 9/30/21 to 3/01/47	$	4,184,051	$	4,109,997
BNP Paribas Securities Corp.
	1.10%		6/30/17		7/03/17		6,300			6,300		6,300,578	U.S. Treasury obligations, 0.00% to 3.63% due from 5/15/21 to 11/15/45		5,462,206		6,426,088
	1.08%(a)		6/15/17		7/14/17		1,500			1,500		1,501,305	U.S. Treasury obligations, 0.00% to 6.13% due from 7/13/17 to 8/15/46		1,716,475		1,530,053
Total BNP Paribas Securities Corp.								��	$	7,800						$	7,956,141
Goldman Sachs & Co.	1.12%		6/29/17		7/06/17		2,000			2,000		2,000,436	U.S. government sponsored agency obligation, 4.50% due at 4/20/47		1,857,340		2,040,000
J.P. Morgan Securities LLC
	1.12%		6/30/17		7/03/17		9,000			9,000		9,000,840	U.S. Treasury obligations, 0.88% to 1.63% due from 7/15/18 to 8/15/22		9,218,700		9,181,107
	1.39%(a)		6/30/17		8/04/17		3,500			3,500		3,504,730	U.S. government sponsored agency obligations, 4.50% to 6.50% due from 8/01/34 to 5/25/39		412,486,286		4,001,759
Total J.P. Morgan Securities LLC										$ 12,500						$	13,182,866
Merrill Lynch, Pierce, Fenner & Smith Inc.	1.16%		6/29/17		7/06/17		2,000			2,000		2,000,451	U.S. government sponsored agency obligation, 4.00% due at 7/25/53		2,023,870		2,140,001
Mizuho Securities USA, Inc.	1.16%		6/30/17		7/03/17		4,000			4,000		4,000,387	U.S. government sponsored agency obligations, 0.00% to 1.39% due from 1/14/19 to 8/20/19		4,062,000		4,080,852

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (concluded) BlackRock Government Money Market V.I. Fund

Repurchase Agreements																Collateral
Counterparty	Coupon Rate		Purchase Date		Maturity Date		Par (000)			at Value (000)			Proceeds including Interest			Position	Original Par			Position received, at Value
RBC Capital Markets, LLC		1.07%		6/30/17		7/03/17		$	8,000		$	8,000		$	8,000,713	U.S. government sponsored agency obligations, 3.00% to 5.44% due from 1/25/29 to 6/01/47		$	221,227,065		$	8,502,510
Societe Generale		1.10%		6/30/17		7/03/17			4,000			4,000			4,000,367	U.S. Treasury obligation, 3.75% due at 11/15/43			3,442,200			4,080,100
Wells Fargo Securities LLC
		1.06%		6/28/17		7/05/17			1,500			1,500			1,500,309	U.S. government sponsored agency obligation, 4.00% due at 3/01/47			1,487,788			1,545,001
		1.10%		6/30/17		7/07/17			1,000			1,000			1,000,214	U.S. government sponsored agency obligation, 3.50% due at 6/01/32			990,556			1,030,001
Total Wells Fargo Securities LLC											$	2,500									$	2,575,002
Total											$	46,800									$	48,667,469

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

      Fair Value Hierarchy as of Period End

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

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Short-Term Securities1		—	$	132,013,451		—	$	132,013,451
1   See above Schedule of Investments for values in each security type.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Government Money Market V.I. Fund
Assets
Investments at value — unaffiliated (cost — $85,213,451)	$	85,213,451
Repurchase agreements at value (cost — $46,800,000)		46,800,000
Cash		205,611
Receivables:
Capital shares sold		13,894
Interest — unaffiliated		57,494
From the Manager		25,082
Prepaid expenses		423
Total assets		132,315,955
Liabilities
Payables:
Investments purchased		1,000,000
Capital shares redeemed		22,625
Investment advisory fees		18,929
Officer’s and Directors’ fees		608
Other accrued expenses		49,430
Other affiliates		1,309
Total liabilities		1,092,901
Net Assets	$	131,223,054
Net Assets Consist of
Paid-in capital	$	131,222,708
Accumulated net realized gain		346
Net Assets	$	131,223,054
Net Asset Value
Class I — Based on net assets of $131,223,054 and 131,226,848 shares outstanding, 3.3 billion shares authorized, $0.10 par value	$	1.00

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Government Money Market V.I. Fund
Investment Income
Interest — unaffiliated	$	563,754
Expenses
Investment advisory		371,544
Transfer agent		2,480
Transfer agent — Class I		77,794
Professional		30,236
Printing		19,262
Custodian		15,215
Officer and Directors		10,473
Accounting services		2,585
Miscellaneous		3,707
Total expenses		533,296
Less:
Fees waived by the Manager		(232,504	)
Transfer agent fees reimbursed		(77,789	)
Total expenses after fees waived and/or reimbursed		223,003
Net investment income		340,751
Realized Gain
Net realized gain from investments		197
Net Increase in Net Assets Resulting from Operations	$	340,948

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statements of Changes in Net Assets BlackRock Government Money Market V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	340,751		$	198,934
Net realized gain		197			279
Net increase in net assets resulting from operations		340,948			199,213
Distributions to Shareholders1
From net investment income		(340,751	)		(198,934	)
From net realized gain		—			(1,077	)
Decrease in net assets resulting from distributions to shareholders		(340,751	)		(200,011	)
Capital Share Transactions
Net proceeds from sales of shares		45,336,008			85,450,151
Reinvestment of distributions		343,842			202,247
Cost of shares redeemed		(65,979,839	)		(86,246,950	)
Net decrease in net assets derived from capital share transactions		(20,299,989	)		(594,552	)
Net Assets
Total decrease in net assets		(20,299,792	)		(595,350	)
Beginning of period		151,522,846			152,118,196
End of period	$	131,223,054		$	151,522,846

¹ Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Financial Highlights BlackRock Government Money Market V.I. Fund

	Class I
	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,
				2016				2015				2014				2013				2012
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		0.0023				0.0013				0.0000	1			0.0000	1			0.0000	1			0.0000	1
Net realized gain		0.0000	1			0.0000	1			0.0001				0.0001				0.0000	1			0.0000	1
Net increase from investment operations		0.0023				0.0013				0.0001				0.0001				0.0000				0.0000
Distributions:2
From net investment income		(0.0023	)			(0.0013	)			(0.0000	)3			(0.0000	)3			(0.0000	)3			(0.0000	)3
From net realized gains		—				(0.0000	)3			(0.0001	)			(0.0001	)			(0.0000	)3			(0.0000	)3
Total distributions		(0.0023	)			(0.0013	)			(0.0001	)			(0.0001	)			(0.0000	)			(0.0000	)
Net asset value, end of period		$     1.00			$	1.00			$	1.00			$	1.00			$	1.00			$	1.00
Total Return4
Based on net asset value		0.23	%5			0.13	%			0.01	%			0.01	%			0.00	%			0.00	%
Ratios to Average Net Assets
Total expenses		0.72	%6			0.62	%			0.61	%			0.61	%			0.63	%			0.61	%
Total expenses after fees waived and/or reimbursed		0.30	%6			0.30	%			0.18	%			0.17	%			0.20	%			0.25	%
Net investment income		0.46	%6			0.13	%			0.00	%			0.00	%			0.00	%			0.00	%
Supplemental Data
Net assets, end of period (000)		$131,223			$	151,523			$	152,118			$	228,241			$	179,570			$	198,888

¹  Amount is less than $0.00005 per share.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Amount is greater than $(0.00005) per share.

⁴  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Annualized.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (Unaudited) BlackRock Government Money Market V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Government Money Market Fund V.I. Fund (the “Fund”). The Fund is classified as diversified.

The Fund operates as a “government money market fund” under Rule 2a-7 under the 1940 Act. The Fund is not subject to liquidity fees or temporary suspensions of redemptions due to declines in the Fund’s weekly liquid assets.

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

2. Significant Accounting Policies:

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

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the “trade dates”). Realized gains and losses on investment transactions are determined on the identified cost basis. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on an accrual basis.

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

Recent Accounting Standards: In November 2016, the Financial Accounting Standards Board issued Accounting Standards Update “Restricted Cash” which will require entities to include the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the beginning and ending cash balances in the Statement of Cash Flows. The guidance will be applied retrospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Management is evaluating the impact, if any, of this guidance on the Fund’s presentation in the Statement of Cash Flows.

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

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

Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods.

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

Investment Valuation Policies: U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund’s investments are valued under the amortized cost method which approximates current market value in accordance with Rule 2a-7 under the 1940 Act. Under this method, investments are valued at cost when purchased and, thereafter, a constant proportionate accretion of discounts and amortization of premiums are recorded until the maturity of the security. The Fund seeks to maintain its net asset value (“NAV”) per share at $1.00, although there is no assurance that it will be able to do so on a continuing basis.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Notes to Financial Statements (continued)   BlackRock Government Money Market V.I. Fund

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

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

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

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

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety.

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

4. Securities and Other Investments:

Repurchase Agreements: Repurchase agreements are commitments to purchase 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 upon repurchase amount. Pursuant to the custodial undertaking associated with a tri-party repurchase arrangement, an unaffiliated third party custodian maintains accounts to hold collateral for a fund and its counterparties. Typically, a fund and counterparty are not permitted to sell, re-pledge or use the collateral absent a default by the counterparty or a fund, respectively.

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.

Repurchase agreements are entered into by the Fund under Master Repurchase Agreements (each, an “MRA”). The MRA permits the Fund, under certain circumstances including an event of default (such as bankruptcy or insolvency), to offset payables and/or receivables with collateral held by and/or posted to the counterparty. As a result, one single net payment is created. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of the MRA counterparty’s bankruptcy or insolvency. Based on the terms of the MRA, the Fund receives securities as collateral with a market value in excess of the repurchase price at maturity. Upon a bankruptcy or insolvency of the MRA counterparty, the Fund would recognize a liability with respect to such excess collateral. The liability reflects the Fund’s obligation under bankruptcy law to return the excess to the counterparty.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets.

Average Daily Net Assets	Investment Advisory Fees
First $1 Billion	0.500%
$1 Billion - $2 Billion	0.450%
$2 Billion - $3 Billion	0.400%
$3 Billion - $4 Billion	0.375%
$4 Billion - $7 Billion	0.350%

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Government Money Market V.I. Fund

Average Daily Net Assets	Investment Advisory Fees
$7 Billion - $10 Billion		0.325	%
$10 Billion - $15 Billion		0.300	%
Greater than $15 Billion		0.290	%

Distribution Fees: The Company, on behalf of the Fund, entered into a Distribution Agreement with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

Expense Limitations, Waivers and Reimbursements: The Manager voluntarily agreed to waive a portion of the investment advisory fees to enable the Fund to maintain minimum levels of daily net investment income. The Manager may discontinue this waiver and/or reimbursement at any time without notice. For the six months ended June 30, 2017, there were no fees waived and/or reimbursed by the Manager. However, the Manager does not waive its investment advisory fees by the amount of investment advisory fees paid in connection with the Fund’s investments in other affiliated investment companies, if any.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $875 for certain accounting services, which is included in accounting services in the Statement of Operations.

With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business (“expense limitation”), to 0.30% of average daily net assets of Class I. The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors who are not “interested persons” of the Fund, as defined in the 1940 (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, the Manager waived $232,504 and reimbursed $77,789, which is shown as fees waived by the Manager and Transfer agent fees reimbursed, respectively, in the Statement of Operations.

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

6. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

7. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

Counterparty Credit Risk: Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Financial Statements (concluded) BlackRock Government Money Market V.I. Fund

of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.

8. Capital Share Transactions:

The number of shares sold, reinvested and redeemed corresponds to the net proceeds from the sale of shares, reinvestment of all distributions and cost of shares redeemed, respectively, since shares are sold and redeemed at $1.00 per share.

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.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶  BlackRock High Yield V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock High Yield V.I. Fund

      Investment Objective

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

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund underperformed its benchmark, the Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index.

What factors influenced performance?

• High yield bonds delivered a strong gain in the first half of the year, as an improvement in global growth supported credit conditions and boosted investor sentiment. The Fund, while producing a positive return, finished short of its benchmark. Security selection in the electric utilities sector, where the Fund was hurt by being underweight in Dynegy, Inc., was the largest detractor from performance. Selection in retail, where the Fund was overweight in Rite Aid Corp., and the automotive industry, where it was underweight in ZF North America, Inc., also detracted. The largest contributions came from security selection in the gaming, technology and wireless sectors, led by overweight positions in Amaya, Inc., BMC Software, Inc. and Sprint Corp., respectively.

Describe recent portfolio activity.

• The Fund increased its exposure to the technology, healthcare and cable & satellite sectors. In technology, the investment adviser was particularly focused on software companies.

• The Fund reduced exposure to the midstream energy, retailers, and media & entertainment sectors. Although the Fund began the year with an overweight position in energy, it moved to an underweight by the end of the first quarter. The Fund remained underweight at the close of the period, particularly within the oil field services subsector, but it retained positions in certain higher-quality issuers.

Describe portfolio positioning at period end.

• The Fund’s general investment themes and core positions reflected the investment adviser’s views regarding issuer cash flows, firm or industry catalysts, and idiosyncratic factors. The portfolio’s leading issuer overweights included Next Luxembourg SCSp, Freeport-McMoRan, Inc. and Clear Channel Worldwide Holdings, Inc.

• Relative to the Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index, the Fund was underweight in BB rated credits (which are more interest-rate sensitive), overweight in single B issuers and moderately overweight in bonds rated CCC and below. The Fund remained underweight in the distressed part of the spectrum, focusing instead on select CCC-rated issues with improving credit positions and/or attractive yields.

• In addition to bonds, the investment adviser sought opportunities in equity and equity-like instruments, such as preferred stocks and convertible bonds, to enhance the Fund’s total return profile. The Fund implements a strategy to mitigate risk on a tactical basis when market conditions warrant.

• The Fund maintained a strategic allocation to bank loans, which have little duration risk and, as senior secured instruments, help offset the portfolio’s underweight in BB-rated bonds. (Duration is a measure of interest rate sensitivity.) The Fund had a slightly short duration relative to the benchmark, but this is not a core aspect of its strategy.

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

      Portfolio Information

Credit Quality Allocations1	Percent of Total Investments2
BBB/Baa		5	%
BB/Ba		38
B		43
CCC/Caa		11
N/R		3

¹ For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either Standard & Poor’s or Moody’s Investors Service if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

² Total investments exclude short-term securities.

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock High Yield 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. The returns for Class III Shares prior to February 15, 2012, the recommencement of Class III Shares, are based upon performance of the Fund’s Class I Shares, as adjusted to reflect the distribution and/or service (12b-1) fees applicable to Class III Shares.

²  The Fund invests primarily in non-investment grade bonds with maturities of ten years or less. The Fund’s total returns prior to October 1, 2011 are the returns of the Fund that followed different investment objectives and investment strategies under the name “BlackRock High Income V.I. Fund”.

³  An unmanaged index comprised of issues that meet the following criteria: at least $150 million par value outstanding; maximum credit rating of Ba1; at least one year to maturity; and no issuer represents more than 2% of the index.

    Performance Summary for the Period Ended June 30, 2017

										Average Annual Total Returns
	Standardized 30-Day Yields5			Unsubsidized 30-Day Yields5			6-Month Total Returns6			1 Year6			5 Years6			10 Years6
Class I4		5.05	%		4.95	%		4.69	%		11.70	%		6.72	%		6.84	%
Class III4		4.81			4.70			4.42			11.28			6.44			6.56	7
Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index		—			—			4.92			12.69			6.90			7.76

⁴  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend/payable date. Insurance-related fees and expenses are not reflected in these returns. The Fund’s total returns prior to October 1, 2011 are the returns of the Fund that followed different investment objectives and investment strategies under the name “BlackRock High Income V.I. Fund”.

⁵  The standardized 30-day yield includes the effects of any waivers and/or reimbursements. The unsubsidized 30-day yield excludes the effects of any waivers and/or reimbursements.

⁶  For a portion of the period, the Fund’s investment adviser waived a portion of its fees. Without such waiver, the Fund’s performance would have been lower.

⁷  The returns for Class III Shares prior to February 15, 2012, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares, as adjusted to reflect the distribution and/or service (12b-1) fees applicable to Class III Shares.

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

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

    Expense Example

	Actual			Hypothetical9
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period8	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period8	Annualized Expense Ratio
Class I	$1,000.00	$1,046.90	$3.35	$1,000.00	$1,021.52	$3.31	0.66%
Class III	$1,000.00	$1,044.20	$4.56	$1,000.00	$1,020.33	$4.51	0.90%

⁸  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).

⁹  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock High Yield V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the

transaction or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock High Yield V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks		Shares			Value
Chemicals — 0.0%
Advanced Emissions Solutions, Inc.			1,644		$	15,059
Consumer Finance — 0.0%
Ally Financial, Inc.			—	(a)		10
Diversified Telecommunication Services — 0.0%
Broadview Networks Holdings, Inc. (b)			13,812			92,540
Hotels, Restaurants & Leisure — 0.2%
Amaya, Inc. (b)			30,619			547,307
Amaya, Inc. (b)			9,024			161,302
						708,609
Media — 0.1%
Altice USA, Inc., Class A (b)			8,631			278,781
Metals & Mining — 0.0%
Teck Resources Ltd., Class B			8,400			145,572
Wireless Telecommunication Services — 0.2%
T-Mobile U.S., Inc. (b)			11,157			676,337
Total Common Stocks — 0.5%						1,916,908
Corporate Bonds		Par (000)
Aerospace & Defense — 2.2%
Arconic, Inc.:
6.15%, 8/15/20	USD		535			575,794
5.13%, 10/01/24			1,022			1,060,325
5.90%, 2/01/27			129			138,836
5.95%, 2/01/37			128			128,960
Bombardier, Inc.:
8.75%, 12/01/21 (c)			1,172			1,300,920
6.00%, 10/15/22 (c)			695			695,000
6.13%, 1/15/23 (c)			122			122,305
7.50%, 3/15/25 (c)			399			413,963
Engility Corp., 8.88%, 9/01/24			287			311,754
KLX, Inc., 5.88%, 12/01/22 (c)			1,084			1,138,200
Kratos Defense & Security Solutions, Inc., 7.00%, 5/15/19			111			112,943
TransDigm, Inc.:
6.00%, 7/15/22			866			891,980
6.50%, 7/15/24			1,237			1,277,203
6.50%, 5/15/25			180			183,150
6.38%, 6/15/26			127			128,905
						8,480,238
Air Freight & Logistics — 0.3%
CEVA Group PLC, 7.00%, 3/01/21 (c)			80			74,400
XPO Logistics, Inc.:
6.50%, 6/15/22 (c)			691			725,550
6.13%, 9/01/23 (c)			469			488,346
						1,288,296

Corporate Bonds		Par (000)		Value
Airlines — 0.2%
Air Medical Group Holdings, Inc., 6.38%, 5/15/23 (c)	USD		147	$	139,283
American Airlines Group, Inc., 5.50%, 10/01/19 (c)			30		31,593
Continental Airlines Pass-Through Trust, Series 2012-3, Class C, 6.13%, 4/29/18			365		374,125
Virgin Australia Pass-Through Trust, Series 2013-1C, 7.13%, 10/23/18 (c)			153		156,404
					701,405
Auto Components — 0.8%
Goodyear Tire & Rubber Co., 5.00%, 5/31/26			68		70,380
Icahn Enterprises LP/Icahn Enterprises Finance Corp.:
4.88%, 3/15/19			475		479,750
5.88%, 2/01/22			685		701,269
6.25%, 2/01/22			319		332,557
6.75%, 2/01/24			671		699,585
IHO Verwaltungs GmbH:
4.13%, 9/15/21 (c)(d)			201		204,769
4.50%, 9/15/23 (c)(d)			215		218,225
4.75%, 9/15/26 (c)(d)			300		303,375
ZF North America Capital, Inc., 4.75%, 4/29/25 (c)			150		158,250
					3,168,160
Automobiles — 0.0%
Jaguar Land Rover Automotive PLC, 5.63%, 2/01/23 (c)			150		156,000
Banks — 0.4%
Banco Espirito Santo SA:
2.63%, 5/08/17 (b)(e)	EUR		100		34,264
4.75%, 1/15/18 (b)(e)			100		34,264
4.00%, 1/21/19 (b)(e)			100		34,264
CIT Group, Inc., 5.00%, 8/01/23	USD		1,256		1,353,340
					1,456,132
Building Products — 0.6%
CPG Merger Sub LLC, 8.00%, 10/01/21 (c)			640		667,200
Masonite International Corp., 5.63%, 3/15/23 (c)			351		366,795
Ply Gem Industries, Inc., 6.50%, 2/01/22			284		297,467
Standard Industries, Inc.:
5.50%, 2/15/23 (c)			10		10,550
5.38%, 11/15/24 (c)			205		216,019
6.00%, 10/15/25 (c)			352		376,640
USG Corp.:
5.50%, 3/01/25 (c)			55		58,437
4.88%, 6/01/27 (c)			239		245,871
					2,238,979
Capital Markets — 0.0%
LPL Holdings, Inc., 5.75%, 9/15/25 (c)			70		72,800

Portfolio Abbreviations
AKA	Also Known As	FKA	Formerly Known As	REIT	Real Estate Investment Trust
CAD	Canadian Dollar	GBP	British Pound	S&P	Standard & Poor’s
DAC	Designated Activity Company	OTC	Over-the-counter	USD	U.S. Dollar
EUR	Euro	PIK	Payment-in-kind

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Corporate Bonds		Par (000)		Value
Chemicals — 2.3%
Axalta Coating Systems LLC, 4.88%, 8/15/24 (c)	USD		253	$	261,223
Blue Cube Spinco, Inc.:
9.75%, 10/15/23			239		289,190
10.00%, 10/15/25			175		215,687
CF Industries, Inc.:
7.13%, 5/01/20			150		165,750
5.15%, 3/15/34			105		97,125
4.95%, 6/01/43			114		97,755
Chemours Co.:
6.63%, 5/15/23			280		296,100
7.00%, 5/15/25			108		117,720
5.38%, 5/15/27			293		302,490
Hexion, Inc., 10.38%, 2/01/22 (c)			222		219,780
Huntsman International LLC:
4.88%, 11/15/20			341		358,903
5.13%, 11/15/22			410		438,700
Koppers, Inc., 6.00%, 2/15/25 (c)			278		295,375
Momentive Performance Materials, Inc.:
3.88%, 10/24/21			1,330		1,320,025
Escrow, 8.88%, 10/15/20 (b)(e)(f)			334		—	(g)
Platform Specialty Products Corp.:
10.38%, 5/01/21 (c)			52		57,525
6.50%, 2/01/22 (c)			2,788		2,878,610
PQ Corp., 6.75%, 11/15/22 (c)			439		471,925
Tronox Finance LLC:
6.38%, 8/15/20			257		257,643
7.50%, 3/15/22 (c)			79		81,370
WR Grace & Co-Conn, 5.13%, 10/01/21 (c)			381		408,623
					8,631,519
Commercial Services & Supplies — 2.4%
ACCO Brands Corp., 5.25%, 12/15/24 (c)			108		112,185
Acosta, Inc., 7.75%, 10/01/22 (c)			317		240,127
ADT Corp.:
3.50%, 7/15/22			208		201,178
4.13%, 6/15/23			1,354		1,342,153
4.88%, 7/15/32 (c)			480		420,000
Advanced Disposal Services, Inc., 5.63%, 11/15/24 (c)			257		264,710
Ceridian HCM Holding, Inc., 11.00%, 3/15/21 (c)			398		420,387
Covanta Holding Corp., 5.88%, 7/01/25			262		254,140
GW Honos Security Corp., 8.75%, 5/15/25 (c)			108		112,995
KAR Auction Services, Inc., 5.13%, 6/01/25 (c)			497		506,319
Mobile Mini, Inc., 5.88%, 7/01/24			735		762,563
Prime Security Services Borrower LLC/Prime Finance, Inc., 9.25%, 5/15/23 (c)			2,489		2,704,697
Ritchie Bros. Auctioneers, Inc., 5.38%, 1/15/25 (c)			174		181,395
Tempo Acquisition LLC/Tempo Acquisition Finance Corp., 6.75%, 6/01/25 (c)			233		238,243
Tervita Escrow Corp., 7.63%, 12/01/21 (c)			460		463,450
WaveDivision Escrow LLC/WaveDivision Escrow Corp., 8.13%, 9/01/20 (c)			794		822,425
					9,046,967
Communications Equipment — 1.1%
CommScope Technologies LLC:
6.00%, 6/15/25 (c)			2		2,135
5.00%, 3/15/27 (c)			1,385		1,381,537
CommScope, Inc., 5.00%, 6/15/21 (c)			165		168,713
Hughes Satellite Systems Corp.:
7.63%, 6/15/21			162		184,073
5.25%, 8/01/26			614		641,630
6.63%, 8/01/26			312		335,400

Corporate Bonds		Par (000)		Value
Communications Equipment (continued)
Nokia OYJ:
3.38%, 6/12/22	USD		133	$	134,011
4.38%, 6/12/27			187		190,390
6.63%, 5/15/39			373		429,416
Riverbed Technology, Inc., 8.88%, 3/01/23 (c)			638		648,367
					4,115,672
Construction & Engineering — 0.3%
AECOM, 5.13%, 3/15/27			119		119,446
Brand Energy & Infrastructure Services, Inc., 8.50%, 7/15/25 (c)			741		766,935
Tutor Perini Corp., 6.88%, 5/01/25 (c)			173		182,083
					1,068,464
Construction Materials — 0.1%
New Enterprise Stone & Lime Co., Inc., 10.13%, 4/01/22 (c)			200		216,750
Consumer Finance — 1.5%
Ally Financial, Inc.:
5.13%, 9/30/24			912		962,087
4.63%, 3/30/25			25		25,605
8.00%, 11/01/31			1,750		2,143,750
DFC Finance Corp., 12.00% (12.00% Cash or 11.00% PIK), 6/16/20 (c)(d)			228		139,215
Navient Corp.:
6.63%, 7/26/21			397		427,271
6.50%, 6/15/22			39		41,340
5.50%, 1/25/23			825		838,406
7.25%, 9/25/23			94		101,285
6.13%, 3/25/24			41		42,230
5.88%, 10/25/24			122		124,172
6.75%, 6/25/25			208		214,371
5.63%, 8/01/33			100		83,530
OneMain Financial Holdings LLC:
6.75%, 12/15/19 (c)			181		190,050
7.25%, 12/15/21 (c)			167		175,893
Springleaf Finance Corp., 6.13%, 5/15/22			90		94,950
					5,604,155
Containers & Packaging — 2.7%
Ardagh Packaging Finance PLC/Ardagh Holdings USA, Inc.:
6.00%, 6/30/21 (c)			730		755,550
4.25%, 9/15/22 (c)			296		303,844
4.63%, 5/15/23 (c)			374		383,197
7.25%, 5/15/24 (c)			1,622		1,774,063
6.00%, 2/15/25 (c)			767		805,350
4.75%, 7/15/27 (c)			100		130,050
Ball Corp., 5.00%, 3/15/22			279		297,833
BWAY Holding Co., 5.50%, 4/15/24 (c)			690		704,663
Flex Acquisition Co., Inc., 6.88%, 1/15/25 (c)			34		35,360
Reynolds Group Issuer, Inc.:
5.75%, 10/15/20			463		473,806
6.88%, 2/15/21			142		145,845
4.66%, 7/15/21 (c)(h)			661		671,741
5.13%, 7/15/23 (c)			1,122		1,165,477
7.00%, 7/15/24 (c)			1,066		1,143,514
Sealed Air Corp.:
4.88%, 12/01/22 (c)			574		611,310
6.88%, 7/15/33 (c)			31		35,650
Signode Industrial Group Lux SA/Signode Industrial Group U.S., Inc., 6.38%, 5/01/22 (c)			689		720,005
					10,157,258

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Corporate Bonds		Par (000)		Value
Distributors — 0.1%
American Tire Distributors, Inc., 10.25%, 3/01/22 (c)	USD		337	$	348,795
Diversified Consumer Services — 0.2%
Laureate Education, Inc., 8.25%, 5/01/25 (c)			319		342,127
Service Corp. International:
4.50%, 11/15/20			240		244,500
5.38%, 1/15/22			166		170,980
Sotheby’s, 5.25%, 10/01/22 (c)			166		169,735
					927,342
Diversified Financial Services — 2.9%
Alpha 3 BV/Alpha U.S. Bidco, Inc., 6.25%, 2/01/25 (c)			1,100		1,131,625
Alpine Finance Merger Sub LLC, 6.88%, 8/01/25 (c)			211		214,693
Altice Financing SA, 7.50%, 5/15/26 (c)			1,655		1,837,050
Altice U.S. Finance I Corp.:
5.38%, 7/15/23 (c)			1,131		1,176,947
5.50%, 5/15/26 (c)			454		476,700
ASP AMC Merger Sub, Inc., 8.00%, 5/15/25 (c)			118		111,805
Eagle Holding Co. II LLC, 7.63% (7.63% Cash or 8.38% PIK), 5/15/22 (c)(d)			324		333,315
Exela Intermediate LLC/Exela Finance, Inc., 10.00%, 7/15/23 (c)			320		316,000
FBM Finance, Inc., 8.25%, 8/15/21 (c)			355		380,294
Jefferies Finance LLC/JFIN Co-Issuer Corp.:
7.38%, 4/01/20 (c)			200		205,000
6.88%, 4/15/22 (c)			451		449,873
Nielsen Co. Luxembourg S.à r.l., 5.00%, 2/01/25 (c)			869		890,725
Veritas U.S., Inc./Veritas Bermuda Ltd.:
7.50%, 2/01/23 (c)			600		645,000
10.50%, 2/01/24 (c)			811		886,017
Virgin Media Finance PLC, 5.75%, 1/15/25 (c)			1,280		1,328,000
Virgin Media Secured Finance PLC:
5.25%, 1/15/26 (c)			530		551,629
5.50%, 8/15/26 (c)			200		209,500
					11,144,173
Diversified Telecommunication Services — 4.8%
CenturyLink, Inc.:
5.63%, 4/01/25			255		254,574
Series P, 7.60%, 9/15/39			21		19,530
Series S, 6.45%, 6/15/21			1,197		1,292,760
Series T, 5.80%, 3/15/22			71		73,840
Series U, 7.65%, 3/15/42			160		148,600
Series W, 6.75%, 12/01/23			374		402,753
Series Y, 7.50%, 4/01/24			18		19,710
Cincinnati Bell, Inc., 7.00%, 7/15/24 (c)			948		990,850
Columbus Cable Barbados Ltd., 7.38%, 3/30/21 (c)			370		392,663
Consolidated Communications, Inc., 6.50%, 10/01/22			133		132,335
Frontier Communications Corp.:
8.13%, 10/01/18			163		172,169
7.13%, 3/15/19			349		363,833
6.25%, 9/15/21			246		219,555
7.13%, 1/15/23			127		105,727
7.63%, 4/15/24			527		434,116
6.88%, 1/15/25			1,119		881,213
Intelsat Jackson Holdings SA:
7.25%, 4/01/19			478		478,119
7.25%, 10/15/20			451		426,195
5.50%, 8/01/23			443		366,583
9.75%, 7/15/25 (c)			490		489,387
Level 3 Financing, Inc.:
5.38%, 8/15/22			513		528,390

Corporate Bonds		Par (000)		Value
Diversified Telecommunication Services (continued)
5.63%, 2/01/23	USD		245	$	254,800
5.13%, 5/01/23			96		99,659
5.38%, 1/15/24			761		794,294
5.38%, 5/01/25			422		444,155
5.25%, 3/15/26			596		618,416
Qwest Corp., 6.75%, 12/01/21			160		176,762
SBA Communications Corp., 4.88%, 9/01/24 (c)			315		320,513
Telecom Italia Capital SA:
6.38%, 11/15/33			78		84,240
6.00%, 9/30/34			1,442		1,524,713
7.20%, 7/18/36			140		162,313
Telesat Canada/Telesat LLC, 8.88%, 11/15/24 (c)			522		585,945
Wind Acquisition Finance SA:
6.50%, 4/30/20 (c)			200		207,000
7.38%, 4/23/21 (c)			1,005		1,045,200
Xplornet Communications, Inc., 9.63% (9.63% Cash or 10.63% PIK), 6/01/22 (c)(d)			110		114,400
Zayo Group LLC/Zayo Capital, Inc.:
6.00%, 4/01/23			1,843		1,939,757
5.75%, 1/15/27 (c)			920		962,550
Ziggo Bond Finance BV, 5.88%, 1/15/25 (c)			600		616,500
					18,144,119
Electrical Equipment — 0.7%
GrafTech International Ltd., 6.38%, 11/15/20			103		91,413
Sensata Technologies BV:
5.63%, 11/01/24 (c)			202		216,645
5.00%, 10/01/25 (c)			1,016		1,062,533
Sensata Technologies UK Financing Co. PLC, 6.25%, 2/15/26 (c)			500		545,000
Vertiv Group Corp., 9.25%, 10/15/24 (c)			854		922,320
					2,837,911
Electronic Equipment, Instruments & Components — 0.5%
Anixter, Inc., 5.63%, 5/01/19			55		57,887
CDW LLC/CDW Finance Corp.:
5.00%, 9/01/23			454		472,727
5.50%, 12/01/24			1,077		1,164,840
5.00%, 9/01/25			132		136,950
					1,832,404
Energy Equipment & Services — 1.5%
Ensco PLC:
4.50%, 10/01/24			183		140,910
5.20%, 3/15/25			45		36,563
Noble Holding International Ltd.:
4.63%, 3/01/21			12		9,810
7.75%, 1/15/24			328		259,530
Noble Holding U.S. LLC/Noble Drilling Services 6 LLC/Noble Drilling Holding LLC, 7.50%, 3/15/19			130		130,325
Parker Drilling Co., 7.50%, 8/01/20			247		213,655
Pioneer Energy Services Corp., 6.13%, 3/15/22			570		441,750
Precision Drilling Corp.:
6.63%, 11/15/20			39		37,990
6.50%, 12/15/21			65		63,619
7.75%, 12/15/23 (c)			110		109,450
5.25%, 11/15/24			168		146,580
Rowan Cos., Inc.:
4.88%, 6/01/22			90		83,475
7.38%, 6/15/25			765		713,363
SESI LLC:
6.38%, 5/01/19			105		103,687
7.13%, 12/15/21			110		104,775

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Corporate Bonds		Par (000)		Value
Energy Equipment & Services (continued)
Transocean, Inc.:
6.00%, 3/15/18	USD		101	$	103,273
5.80%, 10/15/22			334		309,785
9.00%, 7/15/23 (c)			867		899,513
6.80%, 3/15/38			175		127,750
Weatherford International LLC, 6.80%, 6/15/37			107		91,485
Weatherford International Ltd.:
7.75%, 6/15/21			399		400,995
8.25%, 6/15/23			520		520,000
9.88%, 2/15/24 (c)			76		79,420
6.50%, 8/01/36			218		185,300
7.00%, 3/15/38			183		156,465
5.95%, 4/15/42			140		109,200
					5,578,668
Equity Real Estate Investment Trusts (REITs) — 1.5%
CyrusOne LP/CyrusOne Finance Corp.:
5.00%, 3/15/24 (c)			395		406,850
5.38%, 3/15/27 (c)			25		26,031
Equinix, Inc.:
5.38%, 4/01/23			70		72,713
5.88%, 1/15/26			635		692,347
ESH Hospitality, Inc., 5.25%, 5/01/25 (c)			142		147,147
GEO Group, Inc.:
5.88%, 1/15/22			70		72,800
5.13%, 4/01/23			278		279,390
5.88%, 10/15/24			220		227,150
6.00%, 4/15/26			208		215,800
GLP Capital LP/GLP Financing II, Inc., 5.38%, 4/15/26			93		101,583
Iron Mountain, Inc., 6.00%, 8/15/23			70		74,375
iStar, Inc., 6.00%, 4/01/22			113		115,825
MGM Growth Properties Operating Partnership LP/MGP Finance Co-Issuer, Inc.:
5.63%, 5/01/24			1,227		1,337,430
4.50%, 9/01/26			852		857,325
Uniti Group, Inc./CSL Capital LLC:
6.00%, 4/15/23 (c)			40		41,625
8.25%, 10/15/23			800		824,000
7.13%, 12/15/24 (c)			134		133,038
Uniti Group, Inc./Uniti Fiber Holdings, Inc./CSL Capital LLC, 7.13%, 12/15/24 (c)			188		186,355
					5,811,784
Food & Staples Retailing — 0.2%
Albertsons Cos. LLC/Safeway, Inc./New Albertson’s, Inc./Albertson’s LLC:
6.63%, 6/15/24 (c)			163		161,777
5.75%, 3/15/25 (c)			152		141,360
Rite Aid Corp.:
6.75%, 6/15/21			145		148,915
6.13%, 4/01/23 (c)			206		202,266
7.70%, 2/15/27			269		271,690
					926,008
Food Products — 0.8%
B&G Foods, Inc., 5.25%, 4/01/25			968		987,360
Chobani LLC/Chobani Finance Corp., Inc., 7.50%, 4/15/25 (c)			369		389,756
FAGE International SA/FAGE USA Dairy Industry, Inc., 5.63%, 8/15/26 (c)			200		205,960
JBS USA LUX SA/JBS USA Finance, Inc.:
5.88%, 7/15/24 (c)			322		301,875
5.75%, 6/15/25 (c)			471		442,740
Post Holdings, Inc.:
5.50%, 3/01/25 (c)			92		94,875

Corporate Bonds		Par (000)		Value
Food Products (continued)
5.00%, 8/15/26 (c)	USD		560	$	558,600
TreeHouse Foods, Inc., 6.00%, 2/15/24 (c)			21		22,365
WhiteWave Foods Co., 5.38%, 10/01/22			143		161,302
					3,164,833
Health Care Equipment & Supplies — 0.6%
Alere, Inc.:
6.50%, 6/15/20			318		322,770
6.38%, 7/01/23 (c)			98		105,227
DJO Finco, Inc./DJO Finance LLC/DJO Finance Corp., 8.13%, 6/15/21 (c)			988		918,840
Hologic, Inc., 5.25%, 7/15/22 (c)			588		617,400
Teleflex, Inc., 4.88%, 6/01/26			273		279,143
					2,243,380
Health Care Providers & Services — 6.7%
Acadia Healthcare Co., Inc.:
5.13%, 7/01/22			37		38,203
5.63%, 2/15/23			1,045		1,080,922
6.50%, 3/01/24			57		60,847
Centene Corp.:
5.63%, 2/15/21			330		344,025
4.75%, 5/15/22			448		467,600
6.13%, 2/15/24			73		78,926
4.75%, 1/15/25			450		462,375
CHS/Community Health Systems, Inc.:
8.00%, 11/15/19			396		397,980
7.13%, 7/15/20			573		557,959
5.13%, 8/01/21			202		204,525
6.88%, 2/01/22			108		94,365
6.25%, 3/31/23			1,117		1,153,135
DaVita, Inc., 5.13%, 7/15/24			701		711,515
Envision Healthcare Corp.:
5.13%, 7/01/22 (c)			584		599,330
5.63%, 7/15/22			1,259		1,304,639
6.25%, 12/01/24 (c)			838		894,565
Fresenius Medical Care U.S. Finance II, Inc., 5.88%, 1/31/22 (c)			160		177,200
Fresenius U.S. Finance II, Inc., 4.50%, 1/15/23 (c)			127		133,350
HCA, Inc.:
6.50%, 2/15/20			294		320,827
7.50%, 2/15/22			289		332,711
5.88%, 3/15/22			380		421,325
4.75%, 5/01/23			130		137,475
5.00%, 3/15/24			1,533		1,623,064
5.38%, 2/01/25			1,132		1,194,034
5.25%, 4/15/25			575		618,125
5.88%, 2/15/26			430		464,400
5.25%, 6/15/26			779		840,151
4.50%, 2/15/27			297		305,539
5.50%, 6/15/47			1,203		1,245,105
Series 1, 5.88%, 5/01/23			921		1,002,739
HealthSouth Corp.:
5.13%, 3/15/23			300		309,000
5.75%, 11/01/24			445		456,681
5.75%, 9/15/25			75		78,937
IASIS Healthcare LLC/IASIS Capital Corp., 8.38%, 5/15/19			444		446,220
MEDNAX, Inc., 5.25%, 12/01/23 (c)			346		356,380
Molina Healthcare, Inc., 4.88%, 6/15/25 (c)			134		135,005
MPH Acquisition Holdings LLC, 7.13%, 6/01/24 (c)			807		860,464
RegionalCare Hospital Partners Holdings, Inc., 8.25%, 5/01/23 (c)			581		623,123

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Corporate Bonds		Par (000)		Value
Health Care Providers & Services (continued)
Surgery Center Holdings, Inc.:
8.88%, 4/15/21 (c)	USD		71	$	76,946
6.75%, 7/01/25 (c)			351		355,387
Team Health Holdings, Inc., 6.38%, 2/01/25 (c)			1,005		974,850
Tenet Healthcare Corp.:
6.25%, 11/01/18			69		72,795
6.75%, 2/01/20			85		88,400
6.00%, 10/01/20			172		184,255
7.50%, 1/01/22 (c)			184		199,603
8.13%, 4/01/22			1,186		1,258,643
6.75%, 6/15/23			640		640,000
4.63%, 7/15/24 (c)			103		103,129
THC Escrow Corp. III:
4.63%, 7/15/24 (c)			129		129,348
5.13%, 5/01/25 (c)			199		199,746
7.00%, 8/01/25 (c)			512		510,080
Vizient, Inc., 10.38%, 3/01/24 (c)			95		109,250
WellCare Health Plans, Inc., 5.25%, 4/01/25			106		111,035
					25,546,233
Health Care Technology — 0.1%
Change Healthcare Holdings LLC/Change Healthcare Finance, Inc., 5.75%, 3/01/25 (c)			218		222,360
Hotels, Restaurants & Leisure — 3.9%
Aramark Services, Inc.:
5.13%, 1/15/24			797		837,846
5.00%, 4/01/25 (c)			430		454,187
BC ULC/New Red Finance, Inc.:
6.00%, 4/01/22 (c)			692		717,085
4.25%, 5/15/24 (c)			1,028		1,021,513
Caesars Entertainment Resort Properties LLC, 8.00%, 10/01/20			1,206		1,242,180
Eldorado Resorts, Inc., 6.00%, 4/01/25 (c)			103		109,180
Hilton Domestic Operating Co., Inc., 4.25%, 9/01/24 (c)			113		114,554
Jacobs Entertainment, Inc., 7.88%, 2/01/24 (c)			106		115,010
KFC Holding Co./Pizza Hut Holdings LLC/Taco Bell of America LLC:
5.00%, 6/01/24 (c)			35		36,487
5.25%, 6/01/26 (c)			67		70,517
4.75%, 6/01/27 (c)			191		195,059
Melco Resorts Finance Ltd., 4.88%, 6/06/25 (c)			265		265,189
MGM Resorts International:
5.25%, 3/31/20			150		158,813
6.75%, 10/01/20			502		556,166
6.63%, 12/15/21			1,769		1,985,703
7.75%, 3/15/22			390		457,763
4.63%, 9/01/26			174		175,740
Scientific Games International, Inc.:
7.00%, 1/01/22 (c)			1,696		1,806,240
10.00%, 12/01/22			1,327		1,454,724
Six Flags Entertainment Corp.:
4.88%, 7/31/24 (c)			1,391		1,399,513
5.50%, 4/15/27 (c)			351		361,530
Station Casinos LLC, 7.50%, 3/01/21			557		579,280
Sterling Entertainment Enterprises LLC, 9.75%, 12/25/19 (c)(f)			475		470,250
Yum! Brands, Inc., 3.88%, 11/01/23			97		95,787
					14,680,316
Household Durables — 1.5%
Allegion U.S. Holding Co., Inc., 5.75%, 10/01/21			109		113,087
AV Homes, Inc., 6.63%, 5/15/22 (c)			124		127,875

Corporate Bonds		Par (000)		Value
Household Durables (continued)
Brookfield Residential Properties, Inc., 6.50%, 12/15/20 (c)	USD		20	$	20,650
CalAtlantic Group, Inc.:
6.63%, 5/01/20			255		282,413
8.38%, 1/15/21			453		535,673
5.38%, 10/01/22			20		21,550
5.25%, 6/01/26			170		176,375
Lennar Corp.:
4.75%, 4/01/21			51		54,060
4.13%, 1/15/22			494		510,673
4.75%, 11/15/22			720		765,000
4.88%, 12/15/23			450		478,406
Mattamy Group Corp., 6.88%, 12/15/23 (c)			118		120,507
Meritage Homes Corp.:
7.15%, 4/15/20			70		77,350
5.13%, 6/06/27 (c)			320		320,400
PulteGroup, Inc.:
5.50%, 3/01/26			369		392,985
6.38%, 5/15/33			193		201,685
6.00%, 2/15/35			244		244,610
Tempur Sealy International, Inc., 5.50%, 6/15/26			607		616,864
TRI Pointe Group, Inc.:
4.38%, 6/15/19			165		168,993
4.88%, 7/01/21			115		121,037
5.88%, 6/15/24			170		179,350
5.25%, 6/01/27			226		226,565
William Lyon Homes, Inc., 5.88%, 1/31/25			76		78,280
					5,834,388
Household Products — 0.1%
Spectrum Brands, Inc., 6.63%, 11/15/22			460		481,850
Independent Power and Renewable Electricity Producers — 1.2%
AES Corp.:
4.88%, 5/15/23			408		415,650
5.50%, 3/15/24			171		178,054
Calpine Corp.:
6.00%, 1/15/22 (c)			76		78,565
5.88%, 1/15/24 (c)			196		201,880
5.75%, 1/15/25			450		421,875
Dynegy, Inc.:
6.75%, 11/01/19			555		572,344
7.38%, 11/01/22			465		459,187
7.63%, 11/01/24			93		90,210
NRG Energy, Inc.:
7.88%, 5/15/21			35		36,137
6.25%, 7/15/22			335		343,794
6.63%, 3/15/23			40		41,100
6.25%, 5/01/24			341		344,410
6.63%, 1/15/27			668		668,835
NRG Yield Operating LLC, 5.38%, 8/15/24			95		99,631
Pattern Energy Group, Inc., 5.88%, 2/01/24 (c)			166		174,715
Talen Energy Supply LLC, 6.50%, 6/01/25			108		76,140
TerraForm Power Operating LLC, 6.38%, 2/01/23 (c)(i)			234		243,360
					4,445,887
Insurance — 1.4%
Alliant Holdings Intermediate LLC, 8.25%, 8/01/23 (c)			1,473		1,565,063
HUB International Ltd., 7.88%, 10/01/21 (c)			800		834,000
KIRS Midco 3 PLC, 8.63%, 7/15/23 (c)			546		552,825
Radian Group, Inc., 5.25%, 6/15/20			271		287,937
Solera LLC/Solera Finance, Inc., 10.50%, 3/01/24 (c)			1,530		1,757,587

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Corporate Bonds		Par (000)		Value
Insurance (continued)
USIS Merger Sub, Inc., 6.88%, 5/01/25 (c)	USD		145	$	147,537
					5,144,949
Internet & Direct Marketing Retail — 0.3%
Netflix, Inc.:
5.50%, 2/15/22			446		484,325
4.38%, 11/15/26 (c)			672		670,320
					1,154,645
Internet Software & Services — 0.1%
Genesys Telecommunications Laboratories, Inc./Greeneden Lux 3 S.à r.l./Greeneden U.S. Holdings II LLC, 10.00%, 11/30/24 (c)			215		241,606
GTT Communications, Inc., 7.88%, 12/31/24 (c)			136		145,520
IAC/InterActiveCorp., 4.88%, 11/30/18			91		91,819
					478,945
IT Services — 2.2%
Alliance Data Systems Corp.:
5.88%, 11/01/21 (c)			490		507,150
5.38%, 8/01/22 (c)			700		707,000
APX Group, Inc.:
6.38%, 12/01/19			184		189,060
8.75%, 12/01/20			596		615,370
7.88%, 12/01/22			375		406,875
Booz Allen Hamilton, Inc., 5.13%, 5/01/25 (c)			526		516,795
First Data Corp.:
7.00%, 12/01/23 (c)			1,420		1,515,850
5.75%, 1/15/24 (c)			2,348		2,438,985
Gartner, Inc., 5.13%, 4/01/25 (c)			206		216,384
Sabre GLBL, Inc.:
5.38%, 4/15/23 (c)			65		67,763
5.25%, 11/15/23 (c)			278		288,425
WEX, Inc., 4.75%, 2/01/23 (c)			700		703,500
					8,173,157
Life Sciences Tools & Services — 0.9%
inVentiv Group Holdings, Inc./inVentiv Health, Inc./inVentiv Health Clinical, Inc., 7.50%, 10/01/24 (c)			641		695,485
Jaguar Holding Co. II/Pharmaceutical Product Development LLC, 6.38%, 8/01/23 (c)			1,593		1,678,624
Ortho-Clinical Diagnostics, Inc./Ortho-Clinical Diagnostics SA, 6.63%, 5/15/22 (c)			1,022		976,010
Sterigenics-Nordion Holdings LLC, 6.50%, 5/15/23 (c)			70		72,100
					3,422,219
Machinery — 1.1%
Accudyne Industries Borrower/Accudyne Industries LLC, 7.75%, 12/15/20 (c)			1,060		1,060,000
Allison Transmission, Inc., 5.00%, 10/01/24 (c)			16		16,400
EnPro Industries, Inc., 5.88%, 9/15/22 (c)			130		135,525
Gates Global LLC/Gates Global Co., 6.00%, 7/15/22 (c)			1,212		1,215,030
Grinding Media, Inc./MC Grinding Media
Canada, Inc., 7.38%, 12/15/23 (c)			200		217,500
Mercer International, Inc., 6.50%, 2/01/24 (c)			136		142,010
Navistar International Corp., 8.25%, 11/01/21			189		190,890
SPX FLOW, Inc.:
5.63%, 8/15/24 (c)			332		341,960
5.88%, 8/15/26 (c)			134		138,355
Terex Corp., 5.63%, 2/01/25 (c)			754		775,677
					4,233,347
Media — 8.7%
Altice Luxembourg SA, 7.75%, 5/15/22 (c)			705		748,181

Corporate Bonds		Par (000)		Value
Media (continued)
AMC Networks, Inc., 5.00%, 4/01/24	USD		1,107	$	1,133,291
Cablevision Systems Corp.:
8.63%, 9/15/17			41		41,512
7.75%, 4/15/18			492		510,450
8.00%, 4/15/20			125		139,219
CBS Radio, Inc., 7.25%, 11/01/24 (c)			93		95,790
CCO Holdings LLC/CCO Holdings Capital Corp.:
5.13%, 5/01/23 (c)			1,076		1,129,800
5.13%, 5/01/27 (c)			3,043		3,111,467
Cequel Communications Holdings I LLC/Cequel Capital Corp.:
6.38%, 9/15/20 (c)			120		122,400
5.13%, 12/15/21 (c)			692		704,754
5.13%, 12/15/21 (c)			457		464,997
7.75%, 7/15/25 (c)			984		1,087,320
Charter Communications Operating LLC/Charter Communications Operating Capital, 4.91%, 7/23/25			10		10,803
Clear Channel International BV, 8.75%, 12/15/20 (c)			926		981,560
Clear Channel Worldwide Holdings, Inc.:
Series A, 6.50%, 11/15/22			913		931,260
Series B, 7.63%, 3/15/20			1,014		1,008,930
Series B, 6.50%, 11/15/22			2,216		2,277,383
CSC Holdings LLC:
10.13%, 1/15/23 (c)			2,610		3,027,600
5.25%, 6/01/24			469		478,427
6.63%, 10/15/25 (c)			396		435,640
10.88%, 10/15/25 (c)			1,520		1,829,700
DISH DBS Corp.:
5.88%, 7/15/22			1,337		1,437,275
5.00%, 3/15/23			237		242,925
5.88%, 11/15/24			321		342,497
7.75%, 7/01/26			1,110		1,315,350
DISH Network Corp., 3.38%, 8/15/26 (c)(j)			497		602,613
iHeartCommunications, Inc.:
9.00%, 12/15/19			229		179,765
9.00%, 3/01/21			321		240,750
9.00%, 9/15/22			345		255,300
10.63%, 3/15/23			890		671,950
Lions Gate Entertainment Corp., 5.88%, 11/01/24 (c)			92		96,830
McGraw-Hill Global Education Holdings LLC/McGraw-Hill Global Education Finance, 7.88%, 5/15/24 (c)			95		91,913
MDC Partners, Inc., 6.50%, 5/01/24 (c)			450		448,875
Midcontinent Communications/Midcontinent Finance Corp.:
6.25%, 8/01/21 (c)			125		129,125
6.88%, 8/15/23 (c)			132		142,230
Nexstar Broadcasting, Inc., 5.63%, 8/01/24 (c)			136		137,700
Outfront Media Capital LLC/Outfront Media Capital Corp., 5.88%, 3/15/25			240		251,400
SFR Group SA:
6.00%, 5/15/22 (c)			865		905,006
7.38%, 5/01/26 (c)			2,154		2,337,090
Sirius XM Radio, Inc., 4.63%, 5/15/23 (c)			320		329,200
TEGNA, Inc., 5.50%, 9/15/24 (c)			83		85,490
Townsquare Media, Inc., 6.50%, 4/01/23 (c)			262		263,310
Tribune Media Co., 5.88%, 7/15/22			347		363,483
Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH, 5.00%, 1/15/25 (c)			555		581,363
Univision Communications, Inc., 5.13%, 5/15/23 (c)			758		765,337
Urban One, Inc., 7.38%, 4/15/22 (c)			60		62,100

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Corporate Bonds		Par (000)		Value
Media (continued)
Videotron Ltd./Videotron Ltee, 5.13%, 4/15/27 (c)	USD		283	$	290,783
					32,840,144
Metals & Mining — 5.8%
Anglo American Capital PLC:
3.63%, 5/14/20 (c)			200		203,250
4.45%, 9/27/20 (c)			206		214,732
4.13%, 4/15/21 (c)			200		205,500
4.88%, 5/14/25 (c)			481		500,240
ArcelorMittal:
7.50%, 10/15/39			64		71,760
7.25%, 3/01/41			588		648,270
Cliffs Natural Resources, Inc., 8.25%, 3/31/20 (c)			218		237,620
Constellium NV:
8.00%, 1/15/23 (c)			722		743,660
6.63%, 3/01/25 (c)			1,099		1,052,293
First Quantum Minerals Ltd.:
7.00%, 2/15/21 (c)			1,058		1,084,450
7.25%, 5/15/22 (c)			187		191,207
7.50%, 4/01/25 (c)			229		223,847
FMG Resources August 2006 Property Ltd., 9.75%, 3/01/22 (c)			160		182,200
Freeport-McMoRan, Inc.:
2.30%, 11/14/17			224		223,440
2.38%, 3/15/18			2,328		2,316,360
3.10%, 3/15/20			1,077		1,054,114
4.00%, 11/14/21			215		210,163
3.55%, 3/01/22			794		744,121
3.88%, 3/15/23			1,708		1,588,440
4.55%, 11/14/24			67		63,147
5.40%, 11/14/34			130		116,675
5.45%, 3/15/43			1,732		1,493,504
Joseph T. Ryerson & Son, Inc., 11.00%, 5/15/22 (c)			177		200,231
Kaiser Aluminum Corp., 5.88%, 5/15/24			81		85,253
Kinross Gold Corp.:
4.50%, 7/15/27 (c)			154		153,615
6.88%, 9/01/41			80		85,400
Novelis Corp.:
6.25%, 8/15/24 (c)			1,447		1,519,350
5.88%, 9/30/26 (c)			884		910,520
Steel Dynamics, Inc.:
5.13%, 10/01/21			445		457,006
6.38%, 8/15/22			260		269,425
5.25%, 4/15/23			673		699,079
5.50%, 10/01/24			57		60,563
5.00%, 12/15/26			15		15,394
SunCoke Energy Partners LP/SunCoke Energy Partners Finance Corp., 7.50%, 6/15/25 (c)			280		276,500
Teck Resources Ltd.:
4.50%, 1/15/21			106		110,505
4.75%, 1/15/22			77		79,695
3.75%, 2/01/23			813		791,659
8.50%, 6/01/24 (c)			671		775,005
6.13%, 10/01/35			98		102,165
6.00%, 8/15/40			783		786,915
5.20%, 3/01/42			608		565,440
5.40%, 2/01/43			362		340,168
United States Steel Corp., 8.38%, 7/01/21 (c)			483		531,300
					22,184,181
Mortgage Real Estate Investment Trusts (REITs) — 0.1%
Starwood Property Trust, Inc., 5.00%, 12/15/21 (c)			267		277,680

Corporate Bonds		Par (000)		Value
Multiline Retail — 0.3%
Dollar Tree, Inc.:
5.25%, 3/01/20	USD		24	$	24,660
5.75%, 3/01/23			1,103		1,163,996
JC Penney Corp., Inc.:
8.13%, 10/01/19			52		56,810
6.38%, 10/15/36			61		43,844
7.40%, 4/01/37			66		49,995
					1,339,305
Oil, Gas & Consumable Fuels — 9.2%
Alta Mesa Holdings LP/Alta Mesa Finance Services Corp., 7.88%, 12/15/24 (c)			129		129,967
Antero Midstream Partners LP/Antero Midstream Finance Corp., 5.38%, 9/15/24 (c)			60		61,350
Antero Resources Corp.:
5.13%, 12/01/22			115		115,251
5.63%, 6/01/23			645		653,063
Ascent Resources Utica Holdings LLC/ARU Finance Corp., 10.00%, 4/01/22 (c)			339		339,000
California Resources Corp., 8.00%, 12/15/22 (c)			185		117,013
Callon Petroleum Co.:
6.13%, 10/01/24 (c)			298		303,215
6.13%, 10/01/24			185		188,237
Carrizo Oil & Gas, Inc.:
6.25%, 4/15/23			144		138,600
8.25%, 7/15/25			109		111,453
Cheniere Corpus Christi Holdings LLC:
7.00%, 6/30/24			733		815,463
5.88%, 3/31/25			704		750,640
5.13%, 6/30/27 (c)			762		781,050
Chesapeake Energy Corp.:
6.88%, 11/15/20			226		226,000
8.00%, 12/15/22 (c)			74		78,255
8.00%, 1/15/25 (c)			149		147,510
8.00%, 6/15/27 (c)			92		90,390
CONSOL Energy, Inc.:
5.88%, 4/15/22			3,413		3,353,273
8.00%, 4/01/23			29		30,450
Continental Resources, Inc.:
3.80%, 6/01/24			243		222,496
4.90%, 6/01/44			307		256,345
Covey Park Energy LLC/Covey Park Finance Corp., 7.50%, 5/15/25 (c)			237		237,000
Crestwood Midstream Partners LP/Crestwood Midstream Finance Corp., 6.25%, 4/01/23			200		203,000
CrownRock LP/CrownRock Finance, Inc.:
7.13%, 4/15/21 (c)			320		328,800
7.75%, 2/15/23 (c)			305		321,775
DCP Midstream Operating LP:
4.75%, 9/30/21 (c)			150		153,000
6.45%, 11/03/36 (c)			198		208,890
6.75%, 9/15/37 (c)			262		281,650
Denbury Resources, Inc.:
9.00%, 5/15/21 (c)			477		454,343
5.50%, 5/01/22			529		296,240
4.63%, 7/15/23			86		45,580
Diamondback Energy, Inc., 5.38%, 5/31/25 (c)			242		245,630
Eclipse Resources Corp., 8.88%, 7/15/23			85		84,575
Energy Transfer Equity LP:
7.50%, 10/15/20			126		140,805
5.88%, 1/15/24			478		506,680
5.50%, 6/01/27			660		683,100
EP Energy LLC/Everest Acquisition Finance, Inc.:
9.38%, 5/01/20			430		339,163
8.00%, 11/29/24 (c)			231		230,423

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Corporate Bonds		Par (000)		Value
Oil, Gas & Consumable Fuels (continued)
Extraction Oil & Gas, Inc./Extraction Finance Corp., 7.88%, 7/15/21 (c)	USD		532	$	546,630
Genesis Energy LP/Genesis Energy Finance Corp., 5.75%, 2/15/21			57		56,857
Great Western Petroleum LLC/Great Western Finance Corp., 9.00%, 9/30/21 (c)			346		341,675
Gulfport Energy Corp.:
6.63%, 5/01/23			144		144,360
6.00%, 10/15/24 (c)			91		88,497
Halcon Resources Corp., 6.75%, 2/15/25 (c)			932		838,800
Matador Resources Co., 6.88%, 4/15/23			939		974,213
MEG Energy Corp.:
6.38%, 1/30/23 (c)			247		190,807
7.00%, 3/31/24 (c)			577		448,617
6.50%, 1/15/25 (c)			924		840,840
Murphy Oil Corp.:
4.70%, 12/01/22			127		122,619
6.13%, 12/01/42			81		76,343
Newfield Exploration Co., 5.63%, 7/01/24			698		727,665
NGL Energy Partners LP/NGL Energy Finance Corp.:
5.13%, 7/15/19			165		163,763
6.88%, 10/15/21			224		222,320
7.50%, 11/01/23 (c)			318		313,627
NGPL PipeCo LLC:
7.12%, 12/15/17 (c)			571		581,706
7.77%, 12/15/37 (c)			689		819,910
Oasis Petroleum, Inc.:
6.50%, 11/01/21			176		170,720
6.88%, 3/15/22			250		242,500
6.88%, 1/15/23			65		62,887
ONEOK, Inc.:
7.50%, 9/01/23			350		417,375
6.00%, 6/15/35			40		43,052
Parsley Energy LLC/Parsley Finance Corp.:
6.25%, 6/01/24 (c)			74		77,700
5.38%, 1/15/25 (c)			506		509,795
5.25%, 8/15/25 (c)			94		93,765
PBF Holding Co. LLC/PBF Finance Corp., 7.25%, 6/15/25 (c)			263		253,466
Peabody Energy Corp.:
6.00%, 3/31/22 (c)			42		41,685
6.38%, 3/31/25 (c)			125		123,125
QEP Resources, Inc., 5.38%, 10/01/22			190		182,875
Range Resources Corp.:
5.88%, 7/01/22 (c)			374		379,610
5.00%, 8/15/22 (c)			37		36,353
5.00%, 3/15/23 (c)			160		156,400
4.88%, 5/15/25			122		115,900
Resolute Energy Corp.:
8.50%, 5/01/20			271		269,645
8.50%, 5/01/20 (c)			220		218,900
Rockies Express Pipeline LLC:
5.63%, 4/15/20 (c)			575		610,937
6.88%, 4/15/40 (c)			524		571,160
RSP Permian, Inc.:
6.63%, 10/01/22			469		486,587
5.25%, 1/15/25 (c)			177		177,221
Sanchez Energy Corp.:
7.75%, 6/15/21			228		206,340
6.13%, 1/15/23			1,547		1,237,600
Seven Generations Energy Ltd.:
8.25%, 5/15/20 (c)			135		140,737
6.88%, 6/30/23 (c)			880		917,400
SM Energy Co.:
6.50%, 11/15/21			75		72,937

Corporate Bonds		Par (000)		Value
Oil, Gas & Consumable Fuels (continued)
6.13%, 11/15/22	USD		321	$	304,950
6.50%, 1/01/23			15		14,287
5.00%, 1/15/24			336		297,360
5.63%, 6/01/25			101		91,153
6.75%, 9/15/26			119		113,607
Southern Star Central Corp., 5.13%, 7/15/22 (c)			47		47,823
Southwestern Energy Co., 5.80%, 1/23/20			1,195		1,220,394
Tallgrass Energy Partners LP/Tallgrass Energy Finance Corp., 5.50%, 9/15/24 (c)			230		232,875
Targa Resources Partners LP/Targa Resources Partners Finance Corp.:
5.25%, 5/01/23			15		15,375
5.13%, 2/01/25 (c)			107		110,210
5.38%, 2/01/27 (c)			12		12,420
Tesoro Logistics LP/Tesoro Logistics Finance Corp.:
6.13%, 10/15/21			41		42,640
6.25%, 10/15/22			432		459,000
Trinidad Drilling Ltd., 6.63%, 2/15/25 (c)			469		445,550
Whiting Petroleum Corp.:
5.00%, 3/15/19			692		687,675
5.75%, 3/15/21			24		22,560
Williams Cos., Inc.:
4.55%, 6/24/24			107		109,943
5.75%, 6/24/44			1,014		1,046,955
WPX Energy, Inc.:
7.50%, 8/01/20			70		73,500
6.00%, 1/15/22			232		229,680
8.25%, 8/01/23			89		96,565
5.25%, 9/15/24			275		261,250
					34,921,368
Paper & Forest Products — 0.0%
Norbord, Inc., 6.25%, 4/15/23 (c)			117		124,897
PH Glatfelter Co., 5.38%, 10/15/20			34		34,765
					159,662
Personal Products — 0.2%
Nature’s Bounty Co., 7.63%, 5/15/21 (c)			624		663,000
Pharmaceuticals — 1.8%
Endo DAC/Endo Finance LLC/Endo Finco, Inc.:
6.00%, 7/15/23 (c)			290		243,745
5.88%, 10/15/24 (c)			205		211,150
Endo Finance LLC/Endo Finco, Inc., 7.25%, 1/15/22 (c)			211		202,033
Mallinckrodt International Finance SA/Mallinckrodt CB LLC:
4.88%, 4/15/20 (c)			125		121,719
5.75%, 8/01/22 (c)			975		916,500
5.63%, 10/15/23 (c)			133		121,363
5.50%, 4/15/25 (c)			43		37,625
Prestige Brands, Inc., 6.38%, 3/01/24 (c)			434		463,837
Valeant Pharmaceuticals International, Inc.:
6.75%, 8/15/18 (c)			138		138,345
7.00%, 10/01/20 (c)			269		264,629
6.38%, 10/15/20 (c)			428		414,625
7.50%, 7/15/21 (c)			655		634,531
6.75%, 8/15/21 (c)			400		380,000
5.63%, 12/01/21 (c)			240		216,600
6.50%, 3/15/22 (c)			378		396,427
7.25%, 7/15/22 (c)			55		51,700
5.50%, 3/01/23 (c)			48		40,739
5.88%, 5/15/23 (c)			669		573,667
7.00%, 3/15/24 (c)			594		624,443

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Corporate Bonds		Par (000)		Value
Pharmaceuticals (continued)
6.13%, 4/15/25 (c)	USD		920	$	778,550
					6,832,228
Real Estate Management & Development — 0.6%
Howard Hughes Corp., 5.38%, 3/15/25 (c)			213		217,793
Realogy Group LLC/Realogy Co-Issuer Corp.:
4.50%, 4/15/19 (c)			127		131,127
5.25%, 12/01/21 (c)			95		99,560
4.88%, 6/01/23 (c)			1,967		1,981,753
					2,430,233
Road & Rail — 0.5%
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.:
5.13%, 6/01/22 (c)			381		377,190
5.25%, 3/15/25 (c)			256		240,960
Florida East Coast Holdings Corp., 6.75%, 5/01/19 (c)			305		312,747
Hertz Corp.:
7.63%, 6/01/22 (c)			354		353,150
5.50%, 10/15/24 (c)			48		39,360
Park Aerospace Holdings Ltd., 5.25%, 8/15/22 (c)			290		303,143
Watco Cos. LLC/Watco Finance Corp., 6.38%, 4/01/23 (c)			99		103,207
					1,729,757
Semiconductors & Semiconductor Equipment — 0.7%
Advanced Micro Devices, Inc., 7.50%, 8/15/22			83		92,130
Micron Technology, Inc.:
5.25%, 8/01/23 (c)			334		346,859
7.50%, 9/15/23			90		100,620
5.50%, 2/01/25			11		11,605
Series G, 3.00%, 11/15/43 (j)			307		345,375
Microsemi Corp., 9.13%, 4/15/23 (c)			21		24,045
NXP BV/NXP Funding LLC:
4.13%, 6/15/20 (c)			245		257,328
4.63%, 6/15/22 (c)			430		462,250
3.88%, 9/01/22 (c)			200		208,250
4.63%, 6/01/23 (c)			567		611,651
Versum Materials, Inc., 5.50%, 9/30/24 (c)			128		134,560
					2,594,673
Software — 2.8%
BMC Software Finance, Inc., 8.13%, 7/15/21 (c)			2,104		2,178,313
CDK Global, Inc., 4.88%, 6/01/27 (c)			343		352,433
Infinity Acquisition LLC/Infinity Acquisition Finance Corp., 7.25%, 8/01/22 (c)			46		44,275
Infor Software Parent LLC/Infor Software Parent, Inc., 7.13% (7.13% Cash or 7.88% PIK), 5/01/21 (c)(d)			372		383,160
Infor U.S., Inc., 6.50%, 5/15/22			1,897		1,963,395
Informatica LLC, 7.13%, 7/15/23 (c)			361		367,433
Nuance Communications, Inc.:
5.38%, 8/15/20 (c)			33		33,536
6.00%, 7/01/24			140		149,100
5.63%, 12/15/26 (c)			292		311,710
PTC, Inc., 6.00%, 5/15/24			111		120,157
Rackspace Hosting, Inc., 8.63%, 11/15/24 (c)			649		691,185
RP Crown Parent LLC, 7.38%, 10/15/24 (c)			374		388,960
Sophia LP/Sophia Finance, Inc., 9.00%, 9/30/23 (c)			290		301,600
SS&C Technologies Holdings, Inc., 5.88%, 7/15/23			1,405		1,496,620
Symantec Corp., 5.00%, 4/15/25 (c)			230		240,709

Corporate Bonds		Par (000)		Value
Software (continued)
TIBCO Software, Inc., 11.38%, 12/01/21 (c)	USD		1,297	$	1,429,943
					10,452,529
Specialty Retail — 0.4%
Asbury Automotive Group, Inc., 6.00%, 12/15/24			349		355,107
Group 1 Automotive, Inc., 5.00%, 6/01/22			80		81,200
L Brands, Inc., 6.88%, 11/01/35			444		428,460
Neiman Marcus Group Ltd. LLC, 8.00%, 10/15/21 (c)			257		141,993
Penske Automotive Group, Inc., 5.50%, 5/15/26			256		254,720
PetSmart, Inc., 5.88%, 6/01/25 (c)			165		159,019
					1,420,499
Technology Hardware, Storage & Peripherals — 0.6%
Dell International LLC/EMC Corp., 7.13%, 6/15/24 (c)			791		869,511
Radiate Holdco LLC/Radiate Finance, Inc., 6.63%, 2/15/25 (c)			447		447,000
Western Digital Corp.:
7.38%, 4/01/23 (c)			494		542,783
10.50%, 4/01/24			236		278,404
					2,137,698
Textiles, Apparel & Luxury Goods — 0.0%
Hanesbrands, Inc., 4.63%, 5/15/24 (c)			55		55,825
Springs Industries, Inc., 6.25%, 6/01/21			53		54,789
					110,614
Thrifts & Mortgage Finance — 0.2%
Ladder Capital Finance Holdings LLLP/Ladder Capital Finance Corp., 5.25%, 3/15/22 (c)			438		450,045
MGIC Investment Corp., 5.75%, 8/15/23			175		188,563
					638,608
Trading Companies & Distributors — 2.3%
Aircastle Ltd.:
6.25%, 12/01/19			125		136,094
7.63%, 4/15/20			12		13,560
5.50%, 2/15/22			362		394,580
4.13%, 5/01/24			445		453,622
American Builders & Contractors Supply Co., Inc., 5.75%, 12/15/23 (c)			363		383,873
Beacon Roofing Supply, Inc., 6.38%, 10/01/23			169		181,675
BlueLine Rental Finance Corp./BlueLine Rental LLC, 9.25%, 3/15/24 (c)			1,446		1,503,840
HD Supply, Inc.:
5.25%, 12/15/21 (c)			952		999,005
5.75%, 4/15/24 (c)			1,853		1,968,813
Herc Rentals, Inc.:
7.50%, 6/01/22 (c)			927		977,985
7.75%, 6/01/24 (c)			165		174,075
United Rentals North America, Inc.:
7.63%, 4/15/22			6		6,270
6.13%, 6/15/23			51		53,104
5.75%, 11/15/24			430		450,425
5.50%, 7/15/25			553		579,267
5.88%, 9/15/26			448		477,120
					8,753,308
Wireless Telecommunication Services — 3.2%
Digicel Ltd., 6.00%, 4/15/21 (c)			1,015		973,131
Sprint Capital Corp.:
6.90%, 5/01/19			375		400,294
6.88%, 11/15/28			1,175		1,306,095
8.75%, 3/15/32			277		349,020

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Corporate Bonds		Par (000)		Value
Wireless Telecommunication Services (continued)
Sprint Communications, Inc.:
9.00%, 11/15/18 (c)	USD		813	$	882,357
7.00%, 3/01/20 (c)			168		184,434
Sprint Corp.:
7.25%, 9/15/21			622		691,197
7.88%, 9/15/23			1,328		1,527,200
7.13%, 6/15/24			3,099		3,447,576
T-Mobile USA, Inc.:
6.13%, 1/15/22			38		39,936
4.00%, 4/15/22			239		248,727
6.00%, 3/01/23			365		386,327
6.63%, 4/01/23			150		158,730
6.38%, 3/01/25			68		73,525
5.13%, 4/15/25			998		1,047,900
5.38%, 4/15/27			146		156,585
Trilogy International Partners LLC/Trilogy International Finance, Inc., 8.88%, 5/01/22 (c)			129		134,321
					12,007,355
Total Corporate Bonds — 85.6%					324,673,350
Floating Rate Loan Interests (h)
Aerospace & Defense — 0.1%
Sequa Mezzanine Holdings LLC:
Initial Loan (Second Lien), 10.17%, 4/28/22 (f)			75		76,313
Initial Term Loan (First Lien), 6.67%, 11/28/21			213		214,065
					290,378
Air Freight & Logistics — 0.1%
Ceva Group PLC (FKA Louis No.1 PLC/TNT Logistics), Pre-Funded L/C Loan, 1.05% - 5.45%, 3/19/21 (f)			119		110,526
Ceva Intercompany B.V., Dutch BV Term Loan, 6.67%, 3/19/21			122		112,970
Ceva Logistics Canada ULC (FKA TNT Canada ULC), Canadian Term Loan, 6.67%, 3/19/21			18		17,072
Ceva Logistics U.S. Holdings, Inc. (FKA Louis U.S. Holdco, Inc.), U.S. Term Loan, 6.67%, 3/19/21			173		160,892
					401,460
Chemicals — 0.1%
Ascend Performance Materials Operations LLC, Term B Loan, 6.80%, 8/12/22 (f)			526		528,832
Commercial Services & Supplies — 0.1%
GW Honos Security Corp. (Garda World Security Corp.), Term B Loan, 5.23%, 5/24/24			231		232,593
Tempo Acquisition LLC, Initial Term Loan, 4.06%, 5/01/24			281		281,483
					514,076
Construction & Engineering — 0.4%
Brand Energy & Infrastructure Services, Inc. (FKA FR Brand Acquisition Corp.), Term Loan, 5.46% - 5.50%, 6/21/24			1,390		1,386,956
Containers & Packaging — 0.0%
Signode Industrial Group Lux SA (Signode Industrial Group U.S., Inc.), Initial Term B Loan, 3.98% - 4.05%, 5/01/21			147		147,003

Floating Rate Loan Interests (h)		Par (000)		Value
Diversified Consumer Services — 0.1%
Ascend Learning (Alpine Finance), Term B Loan, 4.25%, 7/15/24 (f)	USD		77	$	77,000
Laureate Education, Inc., Series 2024 Term Loan, 5.73%, 4/26/24			150		150,232
					227,232
Diversified Financial Services — 0.4%
Veritas U.S., Inc.:
Initial Dollar Term B-1 Loan, 5.63%, 1/27/23			335		335,348
New Dollar Term B Loan, 4.50%, 1/27/23			1,234		1,235,283
					1,570,631
Diversified Telecommunication Services — 1.8%
Centurylink, Inc., Initial Term B Loan, 1.38% -2.75%, 1/31/25			2,043		2,018,941
Consolidated Communications, Inc., 2016 Incremental Term Loan, 3.00%, 10/05/23			370		370,833
Digicel International Finance Ltd., Initial Term B Loan (First Lien), 4.94%, 5/27/24			513		516,047
Intelsat Jackson Holdings SA, Tranche B-2 Term Loan, 4.00%, 6/30/19			1,465		1,451,619
Ligado Networks LLC (FKA New LightSquared LLC), Junior Loan, 13.72%, 12/07/20			494		346,386
New LightSquared LLC, Loan, 9.97%, 6/15/20			2,059		1,995,736
					6,699,562
Electrical Equipment — 0.1%
Vertiv Group Corp. (FKA Cortes NP Acquisition Corp.), Term B Loan, 4.00% - 5.23%, 11/30/23			379		379,950
Energy Equipment & Services — 0.1%
Weatherford International Ltd., Loan, 3.53%, 7/13/20			281		271,461
Food & Staples Retailing — 0.0%
BJ’s Wholesale Club, Inc., Tranche B Term Loan (First Lien), 4.97%, 2/03/24			175		169,367
Food Products — 0.0%
Chobani LLC (Chobani Idaho LLC), Closing Date Term Loan (First Lien), 5.48%, 10/10/23			70		70,218
Health Care Equipment & Supplies — 0.3%
DJO Finance LLC, Initial Term Loan, 4.48%, 6/08/20			408		403,157
Immucor, Inc. (FKA IVD Acquisition Corp.):
Term B-2 Loan, 5.00%, 8/17/18			704		703,246
Term Loan, 5.00%, 6/25/21			38		38,636
Ortho-Clinical Diagnostics Holdings Luxembourg S.à r.l., Initial Term Loan, 4.78%, 6/30/21			40		39,640
					1,184,679
Health Care Providers & Services — 0.1%
Iasis Healthcare LLC, Term B-3 Loan, 4.00%, 2/17/21			82		82,102
Surgery Center Holdings, Inc., Initial Term Loan (First Lien), 4.98%, 11/03/20			73		73,458
Surgery Partners LLC, Term Loan B, 3.25%, 6/20/24			170		170,532
Team Health Holdings, Inc., Initial Term Loan, 2.75% - 3.98%, 2/06/24			57		56,342
					382,434
Hotels, Restaurants & Leisure — 0.8%
Caesars Entertainment Operating Co., Inc. (FKA Harrah’s Operating Co., Inc.), Term B-7 Loan, 0.00% - 9.25%, 1/28/18			532		664,810
Caesars Entertainment Resort Properties LLC, Term B Loan, 4.54%, 10/11/20			2,114		2,124,431

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Floating Rate Loan Interests (h)		Par (000)		Value
Hotels, Restaurants & Leisure (continued)
Four Seasons Holdings, Inc., Term Loan (First Lien) 2013, 3.73%, 11/30/23	USD		44	$	44,035
					2,833,276
Insurance — 0.1%
Alliant Holdings Intermediate LLC, Initial Term Loan, 4.42%, 8/12/22			127		127,140
USI, Inc. (FKA Compass Investors, Inc.), Initial Term Loan, 4.18%, 5/16/24			105		104,213
					231,353
Life Sciences Tools & Services — 0.0%
InVentiv Group Holdings, Inc., Initial Term Loan, 4.95%, 11/09/23			128		128,515
Machinery — 0.4%
Accudyne Industries Borrower SCA/Accudyne Industries LLC (FKA Silver II U.S. Holdings LLC), Refinancing Term Loan, 4.23%, 12/13/19			1,142		1,132,046
Gates Global LLC, Initial B-1 Dollar Term Loan, 4.55%, 4/01/24			197		196,923
					1,328,969
Media — 0.2%
CSC Holdings LLC (FKA CSC Holdings, Inc. (Cablevision)), March 2017 Refinancing Term Loan, 3.46%, 7/17/25			67		66,248
iHeartCommunications, Inc. (FKA Clear Channel Communications, Inc.), Tranche D Term Loan, 7.98%, 1/30/19			851		692,909
					759,157
Oil, Gas & Consumable Fuels — 0.7%
California Resources Corp.:
Loan, 10.38% - 11.53%, 12/31/21			91		96,290
Term Loan, 4.23%, 9/24/19			324		309,204
Chesapeake Energy Corp., Class A Loan, 8.69%, 8/23/21			2,107		2,225,824
CITGO Holding, Inc., Term Loan, 9.80%, 5/12/18			130		131,527
					2,762,845
Pharmaceuticals — 0.0%
Alpha 3 BV (AKA Atotech), Initial Term B-1 Loan, 4.30%, 1/31/24			145		145,181
Professional Services — 0.0%
Greenrock Finance, Inc., Term Loan B (USD), 3.50%, 6/05/24			64		64,578
Software — 0.5%
BMC Software Finance, Inc., Initial B-1 U.S. Term
Loan, 4.00% - 5.23%, 9/10/22			493		493,500
Cypress Intermediate Holdings III, Inc. (FKA Jaguar Holding, Inc.):
Initial Term Loan (First Lien), 4.23%, 4/29/24			132		131,890
Initial Term Loan (Second Lien), 7.98%, 4/28/25			40		40,950
Information Resources, Inc. (FKA Symphonyiri Group, Inc.), Initial Term Loan (First Lien), 5.47%, 1/18/24			86		85,999
Kronos, Inc., Initial Term Loan (Second Lien), 9.42%, 11/01/24			569		590,098
Misys Ltd.:
Dollar Term Loan (First Lien), 4.74%, 6/13/24			415		414,846
Dollar Term Loan (Second Lien), 8.46%, 6/13/25			91		92,560

Floating Rate Loan Interests (h)		Par (000)		Value
Software (continued)
Project Alpha Intermediate Holding, Inc., Term Loan, 4.67%, 4/26/24	USD		203	$	201,477
					2,051,320
Specialty Retail — 0.1%
Neiman Marcus Group, Inc., Other Term Loan,, 4.34%, 10/25/20			338		252,554
Total Floating Rate Loan Interests — 6.5%					24,781,987
Foreign Agency Obligations
Canada — 0.2%
NOVA Chemicals Corp.:
4.88%, 6/01/24 (c)			338		336,733
5.25%, 6/01/27 (c)			546		543,270
					880,003
Mexico — 0.0%
Petroleos Mexicanos, 5.38%, 3/13/22 (c)			44		46,321
Total Foreign Agency Obligations — 0.2%					926,324
Preferred Securities
Capital Trusts (h)(k)
Banks — 2.0%
Bank of America Corp.:
Series AA, 6.10%			608		660,501
Series X, 6.25%			558		606,825
Series Z, 6.50%			201		223,498
CIT Group, Inc., Series A, 5.80%			595		620,287
Citigroup, Inc.:
5.95%			302		321,253
Series N, 5.80%			330		344,025
Series O, 5.88%			315		330,816
Series R, 6.13%			175		188,125
HSBC Holdings PLC, 6.00%			465		480,810
JPMorgan Chase & Co.:
Series Q, 5.15%			190		195,605
Series U, 6.13%			99		107,044
Series V, 5.00%			640		654,400
Series X, 6.10%			1,021		1,107,785
U.S. Bancorp, Series J, 5.30%			469		499,485
Wells Fargo & Co.:
Series S, 5.90%			580		621,180
Series U, 5.88%			440		484,867
					7,446,506
Capital Markets — 0.1%
Goldman Sachs Group, Inc., Series L, 5.70%			143		148,827
Morgan Stanley, Series H, 5.45%			162		167,751
					316,578
Total Capital Trusts — 2.1%					7,763,084
Preferred Stocks		Shares
Capital Markets — 0.2%
Morgan Stanley, Series K, 5.85% (h)(k)			30,063		821,321

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Preferred Stocks	Shares		Value
Hotels, Restaurants & Leisure — 0.4%
Amaya, Inc. (b)(f)(j)(k)		1,516	$	1,519,400
Total Preferred Stocks — 0.6%				2,340,721
Trust Preferreds
Consumer Finance — 0.2%
GMAC Capital Trust I, Series 2, 6.97%, 2/15/40 (h)		32,966		863,709
Total Preferred Securities — 2.9%				10,967,514
Total Long-Term Investments (Cost — $355,424,241) — 95.7%				363,266,083

Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (l)(m)		7,645,713	$	7,645,713
Total Short-Term Securities (Cost — $7,645,713) — 2.0%				7,645,713
Total Investments — 97.7% (Cost — $363,069,954)				370,911,796
Other Assets Less Liabilities — 2.3%				8,591,961
Net Assets — 100.0%			$	379,503,757

      Notes to Schedule of Investments

(a) Amount is less than 500.

(b) Non-income producing security.

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

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

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

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

(g) Amount is less than $500.

(h) Variable rate security. Rate as of period end.

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

(j) Convertible security.

(k) Perpetual security with no stated maturity date.

(l) During the six months ended June 30, 2017, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity			Shares Held at June 30, 2017		Value at June 30, 2017		Income		Net Realized Gain (Loss)		Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		13,620,548		(5,974,835	)		7,645,713		$7,645,713		$30,698		—		—

(m) Current yield as of period end.

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

      Derivative Financial Instruments Outstanding as of Period  End

Futures Contracts
Contracts Short	Issue			Expiration		Notional Value		Unrealized Appreciation
(12)		U.S. Treasury Notes	(10 Year)		September 2017		USD            1,506,375		$6,221

Forward Foreign Currency Exchange Contracts
Currency Purchased		Currency Sold			Counterparty	Settlement Date	Unrealized Depreciation
USD	1,534,617		CAD	2,065,000	Standard Chartered Bank	7/06/17		$(57,960)
USD	87,762		EUR	78,000	Deutsche Bank AG	7/06/17		(1,355	)
USD	129,379		GBP	100,000	Goldman Sachs International	7/06/17		(893	)
USD	1,590,886		CAD	2,065,000	Westpac Banking Corp.	8/03/17		(2,562	)

See Notes to Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Depreciation
USD	89,164		EUR	78,000	Deutsche Bank AG		8/03/17		$       (92	)
USD	129,819		GBP	100,000	Barclays Bank PLC		8/03/17		(576	)
Net Unrealized Depreciation									$(63,438	)

Centrally Cleared Credit Default Swaps — Sell Protection

Issuer/Index	Receive Fixed Rate		Expiration Date		Credit Rating1		Notional Amount (000)2		Unrealized Appreciation (Depreciation)
Chesapeake Energy Corp.		5.00%		12/20/21		CCC	USD	245		$(8,216	)
CDX.NA.HY.28.V1		5.00%		6/20/22		B+	USD	1,030		4,778
Total										$(3,438	)

¹  Using S&P’s rating of the issuer or the underlying securities of the index, as applicable.

²  The maximum potential amount the Fund may pay should a negative credit event take place as defined under the terms of the agreement.

OTC Credit Default Swaps — Sell Protection

Issuer	Receive Fixed Rate			Counterparty		Expiration Date		Credit Rating1		Notional Amount (000)2			Value			Premiums Paid (Received)			Unrealized Appreciation (Depreciation)
Avis Budget Group, Inc.		5.00	%		Barclays Bank PLC		6/20/22		BB-		USD	83		$      478			$   1,794			$(1,316	)
Hertz Global Holdings, Inc.		5.00	%		Barclays Bank PLC		6/20/22		B		USD	70		(12,372	)		(7,032	)		(5,340	)
Hertz Global Holdings, Inc.		5.00	%		Goldman Sachs International		6/20/22		B		USD	91		(5,624	)		(5,864	)		240
Total														$(17,518	)		$(11,102	)		$(6,416	)

¹  Using S&P’s rating of the issuer or the underlying securities of the index, as applicable.

²  The maximum potential amount the Fund may pay should a negative credit event take place as defined under the terms of the agreement.

      Derivative Financial Instruments Categorized by Risk Exposure

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

Assets — Derivative Financial Instruments		Commodity     Contracts	Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts	Total
Futures contracts	Net unrealized appreciation1	—		—		—		—		$6,221	—		$  6,221
Swaps — centrally cleared	Net unrealized appreciation1	—		$  4,778		—		—		—	—		4,778
	Unrealized appreciation on OTC swaps;
Swaps — OTC	Swap premiums paid	—		2,034		—		—		—	—		2,034
Total		—		$  6,812		—		—		$6,221	—		$13,033
Liabilities — Derivative Financial Instruments
Forward foreign currency exchange contracts	Unrealized depreciation on forward foreign currency exchange contracts	—		—		—		$63,438		—	—		$63,438
Swaps — centrally cleared	Net unrealized depreciation1	—		$  8,216		—		—		—	—		8,216
Swaps — OTC	Unrealized depreciation on OTC swaps; Swap premiums received	—		19,552		—		—		—	—		19,552
Total		—		$27,768		—		$63,438		—	—		$91,206

¹  Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Schedule of Investments (continued) BlackRock High Yield V.I. Fund

For the six months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

Net Realized Gain (Loss) from:	Commodity Contracts	Credit Contracts			Equity Contracts			Foreign Currency Exchange Contracts			Interest Rate Contracts			Other Contracts	Total
Futures contracts	—		—			$(220,544	)		—			$(6,562	)	—		$(227,106	)
Forward foreign currency exchange contracts	—		—			—			$   1,150			—		—		1,150
Swaps	—		$ 493,406			—			—			—		—		493,406
Total	—		$ 493,406			$(220,544	)		$   1,150			$(6,562	)	—		$ 267,450
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts	—		—			$    (7,974	)		—			$ 6,221		—		$    (1,753	)
Forward foreign currency exchange contracts	—		—			—			$(62,502	)		—		—		(62,502	)
Swaps	—		$(274,312	)		—			—			—		—		(274,312	)
Total	—		$(274,312	)		$    (7,974	)		$(62,502	)		$ 6,221		—		$(338,567	)

    Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts — short	$3,975,178
Forward foreign currency exchange contracts:
Average amounts purchased — in USD	$3,418,263
Credit default swaps:
Average notional value — sell protection	$1,361,000

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

    Derivative Financial Instruments — Offsetting as of Period End

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

	Assets			Liabilities
Derivative Financial Instruments:
Futures contracts	$	3,375			—
Forward foreign currency exchange contracts		—			$63,438
Swaps — centrally cleared		2,158			—
Swaps — OTC1		2,034			19,552
Total derivative assets and liabilities in the Statement of Assets and Liabilities	$	7,567			$82,990
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		(5,533	)		—
Total derivative assets and liabilities subject to an MNA	$	2,034			$82,990

¹  Includes unrealized appreciation (depreciation) on OTC swaps and swap premiums paid/received in the Statement of Assets and Liabilities.

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

Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivatives Available for Offset1			Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets
Barclays Bank PLC		$1,794		$(1,794	)		—		—		—
Goldman Sachs International		240		(240	)		—		—		—
Total		$2,034		$(2,034	)		—		—		—
Counterparty	Derivative Liabilities Subject to an MNA by Counterparty		Derivatives Available for Offset1			Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities2
Barclays Bank PLC		$14,264		$(1,794	)		—		—		$12,470
Deutsche Bank AG		1,447		—			—		—		1,447
Goldman Sachs International		6,757		(240	)		—		—		6,517
Standard Chartered Bank		57,960		—			—		—		57,960
Westpac Banking Corp		2,562		—			—		—		2,562
Total		$82,990		$(2,034	)		—		—		$80,956

¹  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

²  Net amount represents the net amount payable due to the counterparty in the event of default.

See Notes to Financial Statements.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock High Yield V.I. Fund

    Fair Value Hierarchy as of Period End

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

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

	Level 1		Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks1	$	1,755,606	$	161,302			—	$	1,916,908
Corporate Bonds		—		324,203,100		$	470,250		324,673,350
Floating Rate Loan Interests		—		23,989,316			792,671		24,781,987
Foreign Agency Obligations		—		926,324			—		926,324
Preferred Securities		1,685,030		7,763,084			1,519,400		10,967,514
Short-Term Securities		7,645,713		—			—		7,645,713
Total	$	11,086,349	$	357,043,126		$	2,782,321	$	370,911,796
Derivative Financial Instruments2
Assets:
Credit contracts		—	$	5,018			—	$	5,018
Interest rate contracts	$	6,221		—			—		6,221
Liabilities:
Credit contracts		—		(14,872	)		—		(14,872	)
Foreign currency exchange contracts		—		(63,438	)		—		(63,438	)
Total	$	6,221	$	(73,292	)		—	$	(67,071	)

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

²  Derivative financial instruments are swaps, futures contracts and forward foreign currency exchange contracts. Swaps, futures contracts and forward foreign currency exchange contracts are valued at the unrealized appreciation (depreciation) on the instrument.

During the six months ended June 30, 2017, there were no transfers between Level 1 and Level 2.

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

	Common Stocks			Corporate Bonds			Floating Rate Loan Interests			Other Interests			Preferred Securities		Total
Assets:
Opening Balance, as of December 31, 2016	$	1,200		$	571,167		$	933,953		$	451,771		$	1,209,842	$	3,167,933
Transfers into Level 3		—			—			628,256			—			—		628,256
Transfers out of Level 3		—			—			(156,859	)		—			—		(156,859	)
Accrued discounts/premiums		—			2			1,728			—			—		1,730
Net realized gain (loss)		1,583			287			25,985			312,411			—		340,266
Net change in unrealized appreciation (depreciation)1,2		—			13			(17,389	)		(327,069	)		309,558		(34,887	)
Purchases		—			—			150,865			—			—		150,865
Sales		(2,783	)		(101,219	)		(773,868	)		(437,113	)		—		(1,314,983	)
Closing Balance, as of June 30, 2017		—		$	470,250		$	792,671			—		$	1,519,400	$	2,782,321
Net change in unrealized appreciation (depreciation) on investments still held at June 30, 20172		—			—		$	15,099			—		$	309,558	$	324,657

¹  Included in the related net change in unrealized appreciation (depreciation) in the Statement of Operations.

²  Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at June 30, 2017 is generally due to investments no longer held or categorized as Level 3 at period end.

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

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock High Yield V.I. Fund
Assets
Investments at value — unaffiliated (cost — $355,424,241)	$	363,266,083
Investments at value — affiliated (cost — $7,645,713)		7,645,713
Cash		118,531
Cash pledged:
Futures contracts		16,000
Centrally cleared swaps		276,600
Receivables:
Investments sold		3,867,849
Capital shares sold		6,799,936
Dividends — affiliated		7,267
Dividends — unaffiliated		11,403
Interest — unaffiliated		5,442,823
From the Manager		68,368
Variation margin on futures contracts		3,375
Variation margin on centrally cleared swaps		2,158
Swap premiums paid		1,794
Unrealized appreciation on OTC swaps		240
Prepaid expenses		853
Total assets		387,528,993
Liabilities
Payables:
Investments purchased		5,811,427
Capital shares redeemed		195,681
Distribution fees		43,269
Income dividends		1,524,396
Investment advisory fees		154,263
Officer’s and Directors’ fees		685
Other accrued expenses		210,039
Other affiliates		2,486
Swap premiums received		12,896
Unrealized depreciation on:
Forward foreign currency exchange contracts		63,438
OTC swaps		6,656
Total liabilities		8,025,236
Net Assets	$	379,503,757
Net Assets Consist of
Paid-in capital	$	391,307,906
Distributions in excess of net investment income		(859,443	)
Accumulated net realized loss		(18,722,440	)
Net unrealized appreciation (depreciation)		7,777,734
Net Assets	$	379,503,757
Net Asset Value
Class I — Based on net assets of $158,903,343 and 21,535,446 shares outstanding, 200 million shares authorized, $0.10 par value	$	7.38
Class III — Based on net assets of $220,600,414 and 29,917,325 shares outstanding, 100 million shares authorized, $0.10 par value	$	7.37

See Notes to Financial Statements.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock High Yield V.I. Fund
Investment Income
Dividends — affiliated	$	30,698
Dividends — unaffiliated		81,568
Interest — unaffiliated		10,583,325
Foreign taxes withheld		(97	)
Total investment income		10,695,494
Expenses
Investment advisory		900,168
Transfer agent		2,530
Transfer agent — class specific		296,339
Distribution — class specific		254,076
Professional		39,125
Accounting services		37,552
Printing		37,495
Custodian		28,776
Officer and Directors		11,901
Miscellaneous		20,913
Total expenses		1,628,875
Less:
Fees waived by the Manager		(3,899	)
Transfer agent fees reimbursed — class specific		(198,811	)
Total expenses after fees waived and reimbursed		1,426,165
Net investment income		9,269,329
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments		4,528,172
Futures contracts		(227,106	)
Forward foreign currency exchange contracts		1,150
Foreign currency transactions		886
Swaps		493,406
		4,796,508
Net change in unrealized appreciation (depreciation) on:
Investments		1,953,155
Futures contracts		(1,753	)
Forward foreign currency exchange contracts		(62,502	)
Foreign currency translations		5,269
Swaps		(274,312	)
		1,619,857
Net realized and unrealized gain		6,416,365
Net Increase in Net Assets Resulting from Operations	$	15,685,694

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

Statements of Changes in Net Assets BlackRock High Yield V.I. Fund

Increase in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	9,269,329		$	14,558,815
Net realized gain (loss)		4,796,508			(4,596,317	)
Net change in unrealized appreciation (depreciation)		1,619,857			24,405,937
Net increase in net assets resulting from operations		15,685,694			34,368,435
Distributions to Shareholders1
From net investment income:
Class I		(4,192,958	)		(7,326,634	)
Class III		(5,240,414	)		(7,724,511	)
Decrease in net assets resulting from distributions to shareholders		(9,433,372	)		(15,051,145	)
Capital Share Transactions
Net increase in net assets derived from capital share transactions		30,266,969			100,786,505
Net Assets
Total increase in net assets		36,519,291			120,103,795
Beginning of period		342,984,466			222,880,671
End of period	$	379,503,757		$	342,984,466
Distributions in excess of net investment income, end of period	$	(859,443	)	$	(695,400	)

¹ Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock High Yield V.I. Fund

	Class I
	Six Months Ended   June 30,   2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	7.24		$	6.77		$	7.44		$	7.67		$	7.44		$	6.87
Net investment income1		0.19			0.37			0.36			0.40			0.43			0.48
Net realized and unrealized gain (loss)		0.15			0.48			(0.61	)		(0.18	)		0.24			0.56
Net increase (decrease) from investment operations		0.34			0.85			(0.25	)		0.22			0.67			1.04
Distributions from net investment income2		(0.20	)		(0.38	)		(0.42	)		(0.45	)		(0.44	)		(0.47	)
Net asset value, end of period	$	7.38		$	7.24		$	6.77		$	7.44		$	7.67		$	7.44
Total Return3
Based on net asset value		4.69	%4		12.92	%		(3.60	)%		2.89	%		9.33	%		15.65	%
Ratios to Average Net Assets
Total expenses5		0.77	%6		0.80	%		0.84	%		0.87	%		0.85	%		0.86	%
Total expenses after fees waived and/or reimbursed5		0.66	%6		0.68	%		0.70	%		0.73	%		0.73	%		0.77	%
Net investment income5		5.31	%6		5.29	%		4.86	%		5.23	%		5.65	%		6.65	%
Supplemental Data
Net assets, end of period (000)	$	158,903		$	152,835		$	127,742		$	139,729		$	150,691		$	142,392
Portfolio turnover rate		44	%		89	%		73	%		87	%		101	%		88	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months     Ended June 30, 2017 (Unaudited)			Year Ended December 31,
				2016			2015			2014		2013		2012
Investments in underlying funds		0.01	%		0.01	%		0.01	%		—		—		—

⁶  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 23

Financial Highlights (concluded) BlackRock High Yield V.I. Fund

	Class III
	Six Months Ended June 30, 2017			Year Ended December 31,												Period February 15, 20121 to December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	7.24		$	6.76		$	7.43		$	7.67		$	7.44		$	7.12
Net investment income2		0.18			0.36			0.34			0.38			0.40			0.38
Net realized and unrealized gain (loss)		0.14			0.48			(0.61	)		(0.18	)		0.25			0.34
Net increase (decrease) from investment operations		0.32			0.84			(0.27	)		0.20			0.65			0.72
Distributions from net investment income3		(0.19	)		(0.36	)		(0.40	)		(0.44	)		(0.42	)		(0.40	)
Net asset value, end of period	$	7.37		$	7.24		$	6.76		$	7.43		$	7.67		$	7.44
Total Return4
Based on net asset value		4.42	%5		12.82	%		(3.85	)%		2.51	%		9.07	%		10.39	%5
Ratios to Average Net Assets
Total expenses6		1.01	%7		1.00	%		1.06	%		1.07	%		1.07	%		1.29	%7
Total expenses after fees waived and/or reimbursed6		0.90	%7		0.92	%		0.94	%		0.98	%		0.96	%		1.19	%7
Net investment income6		5.07	%7		5.05	%		4.63	%		4.86	%		5.23	%		6.74	%7
Supplemental Data
Net assets, end of period (000)	$	220,600		$	190,149		$	95,139		$	51,524		$	18,567		$	14,824
Portfolio turnover rate		44	%		89	%		73	%		87	%		101	%		88	%

¹  Recommencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,										Period February 15, 20121 to December 31, 2012
				2016			2015			2014		2013
Investments in underlying funds		0.01	%		0.01	%		0.01	%		—		—		—

⁷  Annualized.

See Notes to Financial Statements.

24 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (Unaudited) BlackRock High Yield V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock High Yield V.I. Fund (the “Fund”). The Fund is classified as diversified. 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. Class III Shares were redeemed on December 31, 2007, and recommenced on February 15, 2012.

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

2. Significant Accounting Policies:

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

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

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

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

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

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

Recent Accounting Standards: In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of purchased callable debt securities that have explicit, non-contingent call features and are callable at fixed prices will be

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 25

Notes to Financial Statements (continued) BlackRock High Yield V.I. Fund

amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the Fund.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

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

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

26 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock High Yield V.I. Fund

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

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

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

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

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

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 27

Notes to Financial Statements (continued) BlackRock High Yield V.I. Fund

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

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

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

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

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

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

4. Securities and Other Investments:

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

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

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

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

Capital Securities and Trust Preferred Securities: Capital securities, including trust preferred securities, are typically issued by corporations, generally in the form of interest-bearing notes with preferred securities characteristics. In the case of trust preferred securities, an affiliated business trust of a corporation issues these securities, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The securities can be structured with either a fixed or adjustable coupon that can have either a perpetual or stated maturity date. For trust preferred securities,

28 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock High Yield V.I. Fund

the issuing bank or corporation pays interest to the trust, which is then distributed to holders of these securities as a dividend. Dividends can be deferred without creating an event of default or acceleration, although maturity cannot take place unless all cumulative payment obligations have been met. The deferral of payments does not affect the purchase or sale of these securities in the open market. These securities generally are rated below that of the issuing company’s senior debt securities and are freely callable at the issuer’s option.

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

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

When the Fund purchases a floating rate loan interest, it may receive a facility fee and when it sells a floating rate loan interest, it may pay a facility fee. On an ongoing basis, 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. 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”) or assignments (“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 has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the Participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing Participations, 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. The Fund may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, the Fund assumes 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 a general creditor of the lender and may not benefit from any offset between the lender and the borrower. Assignments typically result in the Fund having a direct contractual relationship with the borrower, and the Fund may enforce compliance by the borrower with the terms of the loan agreement.

5. Derivative Financial Instruments:

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

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

Futures contracts are agreements between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 29

Notes to Financial Statements (continued) BlackRock High Yield V.I. Fund

settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Fund are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract.

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

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

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

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

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

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

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

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

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

30 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock High Yield V.I. Fund

buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising the index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.

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

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

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

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

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

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

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

Average Daily Net Assets	Investment Advisory Fee
Up to $250 Million	0.55%
Over $250 Million up to $500 Million	0.50%
Over $500 Million up to $750 Million	0.45%
Over $750 Million	0.40%

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 31

Notes to Financial Statements (continued) BlackRock High Yield V.I. Fund

For the six months ended June 30, 2017, the aggregate average daily net assets of the Fund and the Company’s BlackRock Total Return V.I. Fund were approximately $718,803,862.

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

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III is $254,076.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class III	Total
$134,114	$162,225	$296,339

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $3,899.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived by the Manager.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $1,662 for certain accounting services, which is included in accounting services in the Statement of Operations.

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

Class I	0.06	%
Class III	0.05	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

These amounts are shown as transfer agent fees reimbursed — class specific in the Statement of Operations. Class specific expense waivers and/or reimbursements are as follows:

	Class I		Class III		Total
Transfer agent fees reimbursed	$	87,359	$	111,452	$	198,811

With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses

32 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock High Yield V.I. Fund

not incurred in the ordinary course of the Fund’s business (“expense limitation”). The expense limitation as a percentage of average daily net assets are as follows:

Class I	1.25	%
Class III	1.50	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

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

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, including paydowns and excluding short-term securities, were $183,024,685 and $154,647,196, respectively.

8. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of December 31, 2016, the Fund had capital loss carryforward available to offset future realized capital gains through the indicated expiration dates as follows:

Expires December 31,
No expiration date1	$	10,835,468
2017		11,211,061
Total	$	22,046,529

¹  Must be utilized prior to losses subject to expiration.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:    

Tax cost	$	364,108,830
Gross unrealized appreciation	$	10,004,563
Gross unrealized depreciation		(3,201,597	)
Net unrealized appreciation	$	6,802,966

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 33

Notes to Financial Statements (continued) BlackRock High Yield V.I. Fund

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

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

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

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

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

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

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

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

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

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

34 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (concluded) BlackRock High Yield V.I. Fund

11. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		1,492,198		$	10,958,162			4,252,978		$	30,397,964
Shares issued in reinvestment of distributions		572,475			4,204,448			1,033,368			7,206,037
Shares redeemed		(1,628,289	)		(11,950,826	)		(3,064,338	)		(21,335,572	)
Net increase		436,384		$	3,211,784			2,222,008		$	16,268,429
Class III
Shares sold		11,898,928		$	87,410,358			38,213,690		$	266,471,599
Shares issued in reinvestment of distributions		700,993			5,147,169			1,051,175			7,357,157
Shares redeemed		(8,953,579	)		(65,502,342	)		(27,060,956	)		(189,310,680	)
Net increase		3,646,342		$	27,055,185			12,203,909		$	84,518,076
Total Net Increase		4,082,726		$	30,266,969			14,425,917		$	100,786,505

12. 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.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 35

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock International V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock International V.I. Fund

      Investment Objective

BlackRock International V.I. Fund’s (the “Fund”) investment objective is long-term capital growth.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund outperformed its benchmark, the MSCI All Country World (ACWI) ex-USA Index.

What factors influenced performance?

• From a sector perspective, positive stock selection in financials was the primary contributor to the Fund’s performance for the period. An overweight allocation to information technology (“IT”) and an underweight allocation to energy also contributed to performance. The most significant individual contributors included Japanese IT cybersecurity solutions provider Trend Micro Inc., which benefited from favorable business trends. Latin American e-commerce company MercadoLibre, Inc. performed well after announcing stronger-than-expected growth in revenue and earnings, and Dutch brewer Heineken N.V. was also a significant contributor.

• Negative stock selection in telecommunication services (“telecom”) detracted the most from performance for the period, while stock selection in health care and the Fund’s cash balance also detracted. The main individual detractors included U.K. telecom company BT Group PLC, which issued a profit warning following a sharp downturn in public-sector contracts and accounting irregularities in its Italian operations. U.K. home improvement retailer Kingfisher PLC also underperformed after receiving numerous downgrades from stock analysts. U.S. energy services provider Diamond Offshore Drilling, Inc. was also a significant detractor.

Describe recent portfolio activity.

• The largest change to the Fund’s positioning in the period was a significant increase in exposure to consumer staples, moving from underweight the sector to meaningfully overweight through new positions in U.K. tobacco company Imperial Brands PLC, health and home products manufacturer Reckitt Benckiser Group PLC, and wine and spirits producer Diageo PLC. The Fund also increased its underweight to industrials through the sale of its position in Japanese machinery components producer THK Co., Ltd. and a trimming of its position in Japanese staffing firm Recruit Holdings Co. Ltd. The Fund’s modest overweight exposure to healthcare was shifted to a modest underweight following the Fund’s sales of positions in pharmaceutical companies AstraZeneca plc and Teva Pharmaceutical Industries Ltd.

Describe portfolio positioning at period end.

• The Fund’s largest sector overweights were to consumer staples, financials and consumer discretionary. The largest underweight exposures were to industrials, materials and real estate. On a regional basis, the largest overweight exposures were to the United Kingdom and the Netherlands, while the largest underweight allocations were to Canada and Germany.

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

      Portfolio Information

Geographic Allocation	Percent of Net Assets
United Kingdom	19%
Japan	17
Netherlands	10
China	8
United States	6
Spain	5
Switzerland	5
India	5
France	4
Brazil	3
Italy	3
Indonesia	3
Norway	2
Denmark	2
Russia	2
Portugal	2
Short-Term Securities	4

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock International 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 invests primarily in stocks of companies located outside the U.S. The Fund’s total returns prior to October 1, 2011 are the returns of the Fund when it followed different investment strategies under the name “BlackRock International Value V.I. Fund.”

³  A free float-adjusted market capitalization index designed to measure the combined equity market performance of developed and emerging market countries, excluding the United States.

    Performance Summary for the Period Ended June 30, 2017

				Average Annual Total Returns
	6-Month Total Returns5			1 Year5			5 Years5			10 Years5
Class I4		16.60	%		23.95	%		8.03	%		0.43	%
MSCI ACWI ex-USA Index		14.10			20.45			7.22			1.13

⁴  Average annual and cumulative total returns are based on changes in net asset value (“NAV”) for the periods shown, and assume reinvestment of all distributions at NAV on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns. The Fund’s total returns prior to October 1, 2011 are the returns of the Fund when it followed different investment strategies under the name “BlackRock International Value V.I. Fund.”

⁵  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

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

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

    Expense Example

		Actual			Hypothetical7
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period6	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period6	Annualized Expense Ratio
Class I	$1,000.00	$1,166.00	$5.96	$1,000.00	$1,019.29	$5.56	1.11%

⁶  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).

⁷  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock International V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transac-

tion or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock International V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Brazil — 3.4%
Vale SA — ADR		400,143	$	3,501,251
China — 8.2%
AIA Group Ltd.		513,600		3,757,683
Bank of China Ltd., H Shares		9,594,000		4,704,580
				8,462,263
Denmark — 1.9%
Nets A/S (a)		100,218		1,993,477
France — 3.5%
Engie SA		241,388		3,643,457
India — 4.5%
Axis Bank Ltd.		273,558		2,187,590
ICICI Bank Ltd.		534,337		2,405,394
				4,592,984
Indonesia — 2.7%
Bank Mandiri Perseo Tbk PT		2,945,500		2,823,323
Italy — 3.3%
Intesa Sanpaolo SpA		1,054,227		3,353,305
Japan — 16.9%
Olympus Corp.		127,200		4,660,406
Omron Corp.		72,600		3,160,234
Recruit Holdings Co. Ltd.		85,500		1,471,445
Sony Corp.		145,500		5,549,915
Trend Micro, Inc.		48,900		2,527,300
				17,369,300
Netherlands — 10.4%
ASML Holding NV		15,407		2,008,350
Heineken NV		45,459		4,420,200
Koninklijke Philips NV		120,137		4,276,728
				10,705,278
Norway — 1.9%
Statoil ASA		120,343		1,995,544
Portugal — 1.8%
Banco Comercial Portugues SA (a)		6,833,971		1,839,007
Russia — 1.8%
Sberbank of Russia — ADR		180,170		1,871,966
Spain — 5.4%
Banco Bilbao Vizcaya Argentaria SA		485,776		4,046,498
CaixaBank SA		309,819		1,481,055
				5,527,553
Switzerland — 4.8%
Cie Financiere Richemont SA, Registered Shares		59,873		4,954,422

Common Stocks	Shares		Value
United Kingdom — 19.5%
BT Group PLC		1,147,825	$	4,413,688
Diageo PLC		69,622		2,057,463
Imperial Brands PLC		104,622		4,701,438
Kingfisher PLC		953,347		3,734,199
Reckitt Benckiser Group PLC		36,162		3,665,872
TechnipFMC PLC (a)		54,231		1,475,083
				20,047,743
United States — 5.9%
Alexion Pharmaceuticals, Inc. (a)		15,741		1,915,207
Estee Lauder Cos., Inc., Class A		15,803		1,516,772
Mastercard, Inc., Class A		22,059		2,679,066
				6,111,045
Total Long-Term Investments (Cost — $89,913,764) — 95.9%				98,791,918
Short-Term Securities
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (b)(c)		4,175,065		4,175,065

Time Deposits	Par  (000)
Japan — 0.0%
Sumitomo, (0.26)%, 7/03/17		2,684		23,860
United Kingdom — 0.1%
Citibank, 0.05%, 7/03/17		24		31,040
Total Time Deposits — 0.1%				54,900
Total Short-Term Securities (Cost — $4,229,965) — 4.1%				4,229,965
Total Investments (Cost — $94,143,729) — 100.0%				103,021,883
Other Assets in Excess of Liabilities — 0.0%				773
Net Assets — 100.0%			$	103,022,656

Portfolio Abbreviations
ADR	American Depositary Receipts	GBP	British Pound
AUD	Australian Dollar

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock International V.I. Fund

      Notes to Schedule of Investments

(a) Non-income producing security.

(b) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity			Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Loss			Change  in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		4,486,922		(311,857	)		4,175,065		$4,175,065		$  9,385			—			—
SL Liquidity Series, LLC, Money Market Series		167,612		(167,612	)		—		—		11,826	1		$(453	)		$1
									$4,175,065		$21,211			$(453	)		$1

¹  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(c) Current yield as of period end.

      Derivative Financial Instruments Outstanding as of Period End

      Forward Foreign Currency Exchange Contracts

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation
AUD	5,531,784	GBP	3,245,000	BNP Paribas S.A.		9/28/17		$8,384

      Derivative Financial Instruments Categorized by Risk Exposure

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

Assets — Derivative Financial Instruments		Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Forward foreign currency exchange contracts	Unrealized appreciation on forward foreign currency exchange contracts		—		—		—		$8,384		—		—		$8,384

      For the six months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Net Change in Unrealized Appreciation (Depreciation) on:
Forward foreign currency exchange contracts		—		—		—		$8,384		—		—		$8,384

      Average Quarterly Balances of Outstanding Derivative Financial Instruments

Forward foreign currency exchange contracts:
Average amounts purchased — in USD	$1,052,559
Average amounts sold — in USD	$1,052,559

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

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock International V.I. Fund

      Derivative Financial Instruments — Offsetting as of Period End

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

	Assets		Liabilities
Derivative Financial Instruments:
Forward foreign currency exchange contracts	$	8,384		—
Total derivative assets and liabilities in the Statement of Assets and Liabilities		8,384		—
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		—		—
Total derivative assets and liabilities subject to an MNA	$	8,384		—

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

Counterparty	Derivative Assets Subject to an  MNA by Counterparty	Derivatives Available for Offset	Non-cash Collateral Received	Cash Collateral Received	Net Amount of Derivative Assets1
BNP Paribas S.A.	$8,384	—	—	—	$8,384

¹  Net amount represents the net amount receivable from the counterparty in the event of default.

      Fair Value Hierarchy as of Period End

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

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

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Brazil	$	3,501,251		—		—	$	3,501,251
China		—	$	8,462,263		—		8,462,263
Denmark		1,993,477		—		—		1,993,477
France		—		3,643,457		—		3,643,457
India		—		4,592,984		—		4,592,984
Indonesia		—		2,823,323		—		2,823,323
Italy		—		3,353,305		—		3,353,305
Japan		—		17,369,300		—		17,369,300
Netherlands		—		10,705,278		—		10,705,278
Norway		—		1,995,544		—		1,995,544
Portugal		—		1,839,007		—		1,839,007
Russia		1,871,966		—		—		1,871,966
Spain		—		5,527,553		—		5,527,553
Switzerland		—		4,954,422		—		4,954,422
United Kingdom		1,475,083		18,572,660		—		20,047,743
United States		6,111,045		—		—		6,111,045
Short-Term Securities		4,175,065		54,900		—		4,229,965
Total Investments	$	19,127,887	$	83,893,996		—	$	103,021,883
Derivative Financial Instruments1
Assets:
Foreign Currency Exchange Contracts		—	$	8,384		—	$	8,384

¹  Derivative financial instruments are forward foreign currency exchange contracts. Forward foreign currency exchange contracts are valued at the unrealized appreciation (depreciation) on the instrument.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock International V.I. Fund
Assets
Investments at value — unaffiliated (cost — $89,968,664)	$	98,846,818
Investments at value — affiliated (cost — $4,175,065)		4,175,065
Foreign currency at value (cost — $109,931)		112,397
Receivables:
Investments sold		327,316
Securities lending income — affiliated		3,129
Capital shares sold		144
Dividends — affiliated		2,488
Dividends — unaffiliated		142,818
From the Manager		18,492
Unrealized appreciation on forward foreign currency exchange contracts		8,384
Prepaid expenses		260
Total assets		103,637,311
Liabilities
Payables:
Capital shares redeemed		291,281
Investment advisory fees		63,372
Transfer agent fees		50,662
Deferred foreign capital gain tax		138,189
Officer’s and Directors’ fees		336
Other accrued expenses		69,991
Other affiliates		824
Total liabilities		614,655
Net Assets	$	103,022,656
Net Assets Consist of
Paid-in capital	$	119,040,469
Undistributed net investment income		734,698
Accumulated net realized loss		(25,571,896	)
Net unrealized appreciation (depreciation)		8,819,385
Net Assets	$	103,022,656
Net Asset Value
Class I — Based on net assets of $103,022,656 and 9,222,408 shares outstanding, 100 million shares authorized, $0.10 par value	$	11.17

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock International V.I. Fund
Investment Income
Dividends — unaffiliated	$	1,404,060
Dividends — affiliated		9,385
Securities lending — affiliated — net		11,826
Foreign taxes withheld		(139,506	)
Total investment income		1,285,765
Expenses
Investment advisory		368,274
Transfer agent		94,627
Professional		71,409
Custodian		18,776
Printing		18,190
Accounting services		15,154
Officer and Directors		10,067
Miscellaneous		6,126
Total expenses		602,623
Less:
Fees waived by the Manager		(2,174	)
Transfer agent fees reimbursed		(53,692	)
Total expenses after fees waived and reimbursed		546,757
Net investment income		739,008
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated1		4,626,787
Investments — affiliated		(453	)
Foreign currency transactions		(3,616	)
		4,622,718
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated2		9,698,844
Investments — affiliated		1
Forward foreign currency exchange contracts		8,384
Foreign currency translations		3,066
		9,710,295
Net realized and unrealized gain		14,333,013
Net Increase in Net Assets Resulting from Operations	$	15,072,021

¹  Net of $35,232 realized tax deferral.

²  Net of $68,341 foreign capital gain tax.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Statements of Changes in Net Assets BlackRock International V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	739,008		$	1,553,479
Net realized gain (loss)		4,622,718			(3,236,168	)
Net change in unrealized appreciation (depreciation)		9,710,295			1,738,672
Net increase in net assets resulting from operations		15,072,021			55,983
Distributions to Shareholders1
From net investment income		—			(1,638,966	)
From return of capital		—			(9,671	)
Decrease in net assets resulting from distributions to shareholders		—			(1,648,637	)
Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(8,250,071	)		(10,148,958	)
Net Assets
Total increase (decrease) in net assets		6,821,950			(11,741,612	)
Beginning of period		96,200,706			107,942,318
End of period	$	103,022,656		$	96,200,706
Undistributed (distributions in excess of) net investment income, end of period	$	734,698		$	(4,310	)

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock International V.I. Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	9.58		$	9.71		$	10.10		$	10.87		$	9.04		$	8.00
Net investment income1		0.08			0.15			0.14			0.13			0.19			0.16
Net realized and unrealized gain (loss)		1.51			(0.11	)		(0.42	)		(0.69	)		1.86			1.04
Net increase (decrease) from investment operations		1.59			0.04			(0.28	)		(0.56	)		2.05			1.20
Distributions:2
From net investment income		—			(0.17	)		(0.11	)		(0.21	)		(0.22	)		(0.16	)
From return of capital		—			(0.00	)3		—			—			—			—
Total distributions		—			(0.17	)		(0.11	)		(0.21	)		(0.22	)		(0.16	)
Net asset value, end of period	$	11.17		$	9.58		$	9.71		$	10.10		$	10.87		$	9.04
Total Return4
Based on net asset value		16.60	%5		0.39	%		(2.76	)%		(5.19	)%		22.75	%		15.08	%
Ratios to Average Net Assets
Total expenses		1.23	%6,7		1.15	%		1.09	%		1.11	%		1.08	%		1.05	%
Total expenses after fees waived and reimbursed		1.11	%6,7		1.04	%		0.98	%		0.99	%		0.97	%		0.96	%
Net investment income		1.51	%6,7		1.57	%		1.35	%		1.21	%		1.92	%		1.84	%
Supplemental Data
Net assets, end of period (000)	$	103,023		$	96,201		$	107,942		$	125,144		$	150,314		$	133,308
Portfolio turnover rate		56	%		82	%		112	%		129	%		121	%		106	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Amount is greater than $(0.005) per share.

⁴  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Annualized.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds of 0.01%.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Notes to Financial Statements (Unaudited) BlackRock International V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock International V.I. Fund (the “Fund”). The Fund is classified as diversified.

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

2. Significant Accounting Policies:

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

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the “trade dates”). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend date. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund is informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest.

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

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

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

Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. Portions of return of capital distributions under U.S. GAAP may be taxed at ordinary income rates. The character of distributions is determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP. The portion of distributions that exceeds a Trust’s current and accumulated earnings and profits, as measured on a tax basis, constitute a non-taxable return of capital. Realized net capital gains can be offset by capital losses carried forward from prior years. However, certain Funds have capital loss carryforwards from pre-2012 tax years that offset realized net capital gains but do not offset current earnings and profits. Consequently, if distributions in any tax year are less than the Fund’s current earnings and profits but greater than net investment income and net realized capital gains (taxable income), distributions in excess of taxable income are not treated as non-taxable return of capital, but rather may be taxable to shareholders at ordinary income rates. Under certain circumstances, taxable excess distributions could be significant.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock International V.I. Fund

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

Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods.

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act

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

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

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Financial Statements (continued) BlackRock International V.I. Fund

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

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

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

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

4. Securities and Other Investments:

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock International V.I. Fund

5. Derivative Financial Instruments:

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

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

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

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

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

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

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

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

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (continued) BlackRock International V.I. Fund

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.75%
$1 Billion - $3 Billion	0.71%
$3 Billion - $5 Billion	0.68%
$5 Billion - $10 Billion	0.65%
Greater than $10 Billion	0.64%

With respect to the Fund, 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.

Distribution Fees: The Company, on behalf of the Fund, entered into a Distribution Agreement and a Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the relevant share class of the Fund. For the six months ended June 30, 2017, the Fund had no distribution fees.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $1,068.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, there were no fees waived by the Manager.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $542 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Manager contractually agreed to reimburse transfer agent fees in order to limit such expenses at 0.08% of average daily net assets. The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors, or by a vote of a majority of the outstanding voting securities of the Fund. These amounts are shown as transfer agent fees reimbursed in the Statement of Operations.

With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business (“expense limitation”). The expense limitation as a percentage of average daily net assets is 1.25% for Class I.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock International V.I. Fund

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, the amount waived was $1,106.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 80% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 85% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $2,956 for securities lending agent services.

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

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

During the period ended June 30, 2017, the Fund did not participate in the Interfund Lending Program.

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

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $53,089,582 and $60,262,187, respectively.

8. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (continued) BlackRock International V.I. Fund

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of December 31, 2016, the Fund had a capital loss carryforward available to offset future realized capital gains through the indicated expiration dates as follows:

Expires December 31,
No expiration date1	$  4,913,390
2017	25,133,494
Total	$30,046,884

¹  Must be utilized prior to losses subject to expiration.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

Tax cost	$	94,290,626
Gross unrealized appreciation	$	12,173,901
Gross unrealized depreciation		(3,442,644	)
Net unrealized appreciation	$	8,731,257

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

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

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

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (concluded) BlackRock International V.I. Fund

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

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

Concentration Risk: As of period end, the Fund invested a significant portion of its assets in securities in the financials sector. Changes in economic conditions affecting such sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

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. Foreign issuers may not be subject to the same uniform accounting, auditing and financial reporting standards and practices as used in the United States. Foreign securities markets may also be less liquid, more volatile, and less subject to governmental supervision not typically associated with investing in U.S. securities. Investment percentages in specific countries are presented in the Schedule of Investments.

The Fund invests a significant portion of its assets in securities of issuers located in Europe or with significant exposure to European issuers or countries. The European financial markets have recently experienced volatility and adverse trends due to concerns about economic downturns in, or rising government debt levels of, several European countries. These events may spread to other countries in Europe and may affect the value and liquidity of certain of the Fund’s investments.

The United Kingdom voted on June 23, 2016 to withdraw from the European Union, which may introduce significant new uncertainties and instability in the financial markets across Europe.

As of period end, the Fund’s investments had the following industry classifications:

Industry	Percent of Long-Term Investments
Banks	25%
Beverages	7%
Household Durables	6%
Textiles, Apparel & Luxury Goods	5%
Tobacco	5%
IT Services	5%
Health Care Equipment & Supplies	5%
Other1	42%

¹  All other industries held were each less than 5% of long-term investments.

11. Capital Share Transactions:

Transactions in capital shares were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		313,960		$	3,329,809			153,174		$	1,431,855
Shares issued in reinvestment of distributions		—			—			173,208			1,648,637
Shares redeemed		(1,132,699	)		(11,579,880	)		(1,405,110	)		(13,229,450	)
Net decrease		(818,739	)	$	(8,250,071	)		(1,078,728	)	$	(10,148,958	)

12. 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.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock iShares^® Alternative Strategies V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock iShares^® Alternative Strategies V.I.  Fund

      Investment Objective

BlackRock iShares^® Alternative Strategies V.I. Fund’s (the “Fund”) investment objective is to seek to achieve long-term growth of capital and risk adjusted returns.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund underperformed its blended benchmark, the 60% MSCI All Country World Index / 40% Bloomberg Barclays U.S. Aggregate Bond Index.

What factors influenced performance?

• The largest detractor to Fund performance was exposure to the iShares Commodities Select Strategy ETF.

• The largest contributor to Fund performance was exposure to the iShares Edge MSCI Minimum Volatility Global ETF. This was followed by exposure to the iShares U.S. Preferred Stock ETF.

Describe recent portfolio activity.

• In the reporting period, the Fund reduced exposure to the iShares Commodities Select Strategy ETF, iShares Edge MSCI Minimum Volatility Global ETF, iShares U.S. Preferred Stock ETF and the iShares J.P. Morgan USD Emerging Markets Bond ETF. The Fund added to the iShares Gold Trust and the iShares U.S. Real Estate ETF.

Describe portfolio positioning at period end.

• At period end, the Fund was underweight U.S. investments relative to international developed and emerging market equities. The Fund’s top holdings included minimum volatility global equities, preferred stock and U.S. real estate. In addition, the Fund maintained exposure to U.S. dollar-denominated emerging market debt, broad commodities and precious metals.

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

      Portfolio Information

Portfolio Composition	Percent of Affiliated Investment Companies
Equity Funds	53%
Fixed Income Funds	32
Commodity Funds	15

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock iShares^® Alternative Strategies 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 invests in a portfolio of underlying exchange-traded funds that seek to track alternative indices.

³  A customized weighted index comprised of 60% MSCI All Country World Index and 40% Bloomberg Barclays U.S. Aggregate Bond Index.

⁴  A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI All Country World Index consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes.

⁵  A widely recognized unmanaged market-weighted index, comprised of investment-grade corporate bonds rated BBB or better, mortgages and U.S. Treasury and U.S. Government agency issues with at least one year to maturity.

⁶  Commencement of operations.

Performance Summary for the Period Ended June 30, 2017
		Average Annual Total Returns
	6-Month Total Returns8	1 Year8			Since Inception8,9
Class I7	7.39%		3.38	%	5.09%
Class III7	7.21		3.13		4.84
60% MSCI All Country World Index / 40% Bloomberg Barclays U.S. Aggregate Bond Index	7.72		10.80		4.75
MSCI All Country World Index	11.48		18.78		5.88
Bloomberg Barclays U.S. Aggregate Bond Index	2.27		(0.31	)	2.73

⁷  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.

⁸  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

⁹  The Fund commenced operations on April 30, 2014.

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

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

Expense Example
	Actual			Hypothetical11
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period10	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period10	Annualized Expense Ratio
Class I	$1,000.00	$1,073.90	$3.34	$1,000.00	$1,021.57	$3.26	0.65%
Class III	$1,000.00	$1,072.10	$4.62	$1,000.00	$1,020.33	$4.51	0.90%

¹⁰  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).

¹¹  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half-year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock iShares^® Alternative Strategies V.I.  Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments	BlackRock iShares® Alternative Strategies V.I.  Fund
June 30, 2017 (Unaudited)	(Percentages shown are based on Net Assets)

Affiliated Investment Companies (a)	Shares		Value
Commodity Funds — 15.0%
iShares Commodities Select Strategy ETF		57,163	$	1,862,942
iShares Gold Trust (b)(c)		95,001		1,134,312
iShares Silver Trust (b)(c)		43,795		688,019
				3,685,273
Equity Funds — 52.7%
iShares Edge MSCI Minimum Volatility Global ETF		77,273		6,112,294
iShares Global Infrastructure ETF		77,300		3,398,881
iShares U.S. Real Estate ETF		42,614		3,399,319
				12,910,494
Fixed Income Funds — 32.3%
iShares J.P. Morgan USD Emerging Markets Bond ETF		17,171		1,963,676

Affiliated Investment Companies (a)	Shares		Value
Fixed Income Funds (continued)
iShares U.S. Preferred Stock ETF		152,027	$	5,954,898
				7,918,574
Short-Term Securities — 0.3%
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (d)		84,555		84,555
Total Affiliated Investment Companies (Cost — $23,414,468) — 100.3%				24,598,896
Liabilities in Excess of Other Assets — (0.3)%				(85,080	)
Net Assets — 100.0%			$	24,513,816

      Notes to Consolidated Schedule of Investments

(a) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Shares Purchased		Shares Sold			Shares Held at June 30, 2017		Value at June 30, 2017			Income			Net Realized Gain (Loss)				Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		139,845		—		(55,290	)1		84,555		$	84,555		$	231			—				—
iShares Commodities Select Strategy ETF		20,963		36,200		—			57,163			1,862,942			8,827			—			$	(109,526	)
iShares Edge MSCI Minimum Volatility Global ETF		77,765		8,873		(9,365	)		77,273			6,112,294			64,771		$	(1,784	)			488,287
iShares Edge MSCI USA Momentum Factor ETF		9,528		241		(9,769	)		—			—			—			13,673				2,128
iShares Global Infrastructure ETF		—		80,500		(3,200	)		77,300			3,398,881			55,850			2,440				310,949
iShares Gold Trust		86,001		39,300		(30,300	)		95,001			1,134,312			—			(19,033	)			68,646
iShares J.P. Morgan USD Emerging Markets Bond ETF		39,361		1,310		(23,500	)		17,171			1,963,676			39,842			36,074				76,468
iShares Silver Trust		37,235		6,960		(400	)		43,795			688,019			—			(851	)			17,445
iShares U.S. Preferred Stock ETF		170,216		15,100		(33,289	)		152,027			5,954,898			154,902			(33,679	)			359,206
iShares U.S. Real Estate ETF		28,544		15,070		(1,000	)		42,614			3,399,319			50,358			(2,047	)			85,761
SL Liquidity Series, LLC, Money Market Series		99,233		—		(99,233	)1		—			—			7,4472			397				7
Total											$	24,598,896		$	382,228		$	(4,810	)		$	1,299,371

¹  Represents net shares sold.

²  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(b) Non-income producing security.

(c) All or a portion of the security is held by a wholly-owned subsidiary. See Note 1 of the Notes to Financial Statements for details on the wholly-owned subsidiary.

(d) Current yield as of period end.

Portfolio Abbreviations
ETF	Exchange-Traded Fund

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Consolidated Schedule of Investments (concluded) BlackRock iShares^® Alternative Strategies V.I.  Fund

      Fair Value Hierarchy as of Period End

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

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1	Level 2	Level 3	Total
Assets:
Investments:
Affiliated Investment Companies	$24,598,896	—	—	$24,598,896

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Consolidated Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock iShares® Alternative Strategies V.I. Fund
Assets
Investments at value — affiliated (cost — $23,414,468)	$	24,598,896
Cash		15,957
Receivables:
Securities lending income — affiliated		3,555
Capital shares sold		28,166
Dividends — affiliated		36
From the Manager		9,867
Prepaid expenses		583
Total assets		24,657,060
Liabilities
Payables:
Investments purchased		48,447
Capital shares redeemed		20,196
Distribution fees		1,910
Investment advisory fees		5,029
Other accrued expenses		4,796
Other affiliates		164
Printing fees		21,319
Professional fees		32,234
Transfer agent fees		9,149
Total liabilities		143,244
Net Assets	$	24,513,816
Net Assets Consist of
Paid-in capital	$	23,514,757
Undistributed net investment income		301,266
Accumulated net realized loss		(486,635	)
Net unrealized appreciation (depreciation)		1,184,428
Net Assets	$	24,513,816
Net Asset Value
Class I — Based on net assets of $14,791,254 and 1,357,340 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.90
Class III — Based on net assets of $9,722,562 and 896,374 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.85

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Consolidated Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock iShares® Alternative Strategies V.I. Fund
Investment Income
Dividends — affiliated	$	374,781
Securities lending — affiliated — net		7,447
Total investment income		382,228
Expenses
Professional		32,723
Investment advisory		28,832
Transfer agent		2,480
Transfer agent — class specific		25,523
Distribution — class specific		10,703
Printing		5,566
Accounting services		4,750
Officer and Directors		3,467
Custodian		2,505
Miscellaneous		2,608
Total expenses		119,157
Less:
Fees waived by the Manager		(8,308	)
Transfer agent fees reimbursed — class specific		(25,110	)
Total expenses after fees waived and reimbursed		85,739
Net investment income		296,489
Realized and Unrealized Gain (Loss)
Net realized loss on investments — affiliated		(4,810	)
Net change in unrealized appreciation (depreciation) on investments — affiliated		1,299,371
Net realized and unrealized gain		1,294,561
Net Increase in Net Assets Resulting from Operations	$	1,591,050

See Notes to Consolidated Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Statements of Changes in Net Assets BlackRock iShares^® Alternative Strategies V.I.  Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	296,489		$	574,680
Net realized loss		(4,810	)		(272,382	)
Net change in unrealized appreciation (depreciation)		1,299,371			342,360
Net increase in net assets resulting from operations		1,591,050			644,658
Distributions to Shareholders1
From net investment income:
Class I		—			(374,610	)
Class III		—			(197,011	)
From return of capital:
Class I		—			(1,529	)
Class III		—			(853	)
Decrease in net assets resulting from distributions to shareholders		—			(574,003	)
Capital Share Transactions
Net increase in net assets derived from capital share transactions		1,437,271			9,547,597
Net Assets
Total increase in net assets		3,028,321			9,618,252
Beginning of period		21,485,495			11,867,243
End of period	$	24,513,816		$	21,485,495
Undistributed net investment income, end of period	$	301,266		$	4,777

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Consolidated Financial Highlights BlackRock iShares^® Alternative Strategies V.I.  Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,						Period April 30, 20141 to December  31,
	(Unaudited)			2016			2015			2014
Per Share Operating Performance
Net asset value, beginning of period	$	10.15		$	9.79		$	10.20		$	10.00
Net investment income2		0.14			0.35			0.37			0.31
Net realized and unrealized gain (loss)		0.61			0.30			(0.47	)		0.03
Net increase (decrease) from investment operations		0.75			0.65			(0.10	)		0.34
Distributions:3
From net investment income		—			(0.29	)		(0.30	)		(0.13	)
From net realized capital gains		—			—			—			(0.01	)
From return of capital		—			(0.00	)4		(0.01	)		(0.00	)4
Total distributions		—			(0.29	)		(0.31	)		(0.14	)
Net asset value, end of period	$	10.90		$	10.15		$	9.79		$	10.20
Total Return5
Based on net asset value		7.39	%6		6.59	%		(1.02	)%		3.32	%6
Ratios to Average Net Assets7
Total expenses		0.94	%8		1.10	%		2.15	%		8.81	%8,9
Total expenses after fees waived and reimbursed		0.65	%8		0.65	%		0.71	%		0.75	%8
Net investment income		2.62	%8		3.30	%		3.59	%		4.36	%8
Supplemental Data
Net assets, end of period (000)	$	14,791		$	13,800		$	9,707		$	5,116
Portfolio turnover rate		26	%		47	%		37	%		34	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016			Year Ended December 31, 2015			Period April 30, 20141 to December 31, 2014
Investments in underlying funds		0.38	%		0.34	%		0.37	%		0.41	%

⁸  Annualized.

⁹  Organization and/or offering costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses for Class I and Class III would have been 9.60% and 9.03%, respectively.

See Notes to Consolidated Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Financial Highlights (concluded) BlackRock iShares^® Alternative Strategies V.I.  Fund

	Class III
	Six Months Ended June 30, 2017			Year Ended December 31,						Period April 30, 20141 to December  31,
	(Unaudited)			2016			2015			2014
Per Share Operating Performance
Net asset value, beginning of period	$	10.12		$	9.77		$	10.20		$	10.00
Net investment income2		0.13			0.36			0.39			0.36
Net realized and unrealized gain (loss)		0.60			0.26			(0.52	)		(0.03	)
Net increase (decrease) from investment operations		0.73			0.62			(0.13	)		0.33
Distributions:3
From net investment income		—			(0.27	)		(0.29	)		(0.12	)
From net realized capital gains		—			—			—			(0.01	)
From return of capital		—			(0.00	)4		(0.01	)		(0.00	)4
Total distributions		—			(0.27	)		(0.30	)		(0.13	)
Net asset value, end of period	$	10.85		$	10.12		$	9.77		$	10.20
Total Return5
Based on net asset value		7.21	%6		6.33	%		(1.24	)%		3.26	%6
Ratios to Average Net Assets7
Total expenses		1.20	%8		1.29	%		2.26	%		8.54	%8,9
Total expenses after fees waived and reimbursed		0.90	%8		0.90	%		0.94	%		1.00	%8
Net investment income		2.48	%8		3.38	%		3.81	%		5.05	%8
Supplemental Data
Net assets, end of period (000)	$	9,723		$	7,685		$	2,160		$	334
Portfolio turnover rate		26	%		47	%		37	%		34	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016			Year Ended December 31, 2015			Period April 30, 20141 to December 31, 2014
Investments in underlying funds		0.38	%		0.34	%		0.37	%		0.41	%

⁸  Annualized.

⁹  Organization and/or offering costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses for Class I and Class III would have been 9.60% and 9.03%, respectively.

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Notes to Consolidated Financial Statements (Unaudited) BlackRock iShares^® Alternative Strategies V.I.  Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 consolidated financial statements presented are for BlackRock iShares^® Alternative Strategies V.I. Fund (the “Fund”). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

Basis of Consolidation: The accompanying consolidated financial statements of the Fund include the accounts of iShares^® Alternative Strategies V.I. Fund (Cayman) (the “Subsidiary”), which is a wholly-owned subsidiary of the Fund and primarily invests in commodity-related instruments. The Subsidiary enables the Fund to hold these commodity-related instruments and satisfy regulated investment company tax requirements. The Fund may invest up to 25% of its total assets in the Subsidiary. The net assets of the Subsidiary as of June 30, 2017 were $1,838,288, which is 7.5% of the Fund’s consolidated net assets. Intercompany accounts and transactions, if any, have been eliminated. The Subsidiary is subject to the same investment policies and restrictions that apply to the iShares^® Alternative Strategies V.I. Fund, except that the Subsidiary may invest without limitation in commodity-related instruments.

2. Significant Accounting Policies:

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

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

Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The portion of distributions, if any, that exceeds the Fund’s current and accumulated earnings and profits, as measured on a tax basis, constitute a non-taxable return of capital. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Net income and realized gains from investments held by the Subsidiary are treated as ordinary income for tax purposes. If a net loss is realized by the Subsidiary in any taxable year, the loss will generally not be available to offset the Fund’s ordinary income and/or capital gains for that year.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock iShares^® Alternative Strategies V.I.  Fund

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Consolidated Financial Statements (continued) BlackRock iShares^® Alternative Strategies V.I.  Fund

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

4. Securities and Other Investments:

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as affiliated investment companies in the Fund’s Consolidated Schedule of Investments, and the value of any related collateral are shown separately in the Consolidated Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Consolidated Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.250%
$1 Billion - $3 Billion	0.240%
$3 Billion - $5 Billion	0.225%
$5 Billion - $10 Billion	0.220%
Greater than $10 Billion	0.210%

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock iShares^® Alternative Strategies V.I.  Fund

The Manager provides investment management and other services to the Subsidiary. The Manager does not receive separate compensation from the Subsidiary for providing investment management or administrative services. However, the Fund pays the Manager based on the Fund’s net assets which includes the assets of the Subsidiary.

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

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III is $10,703.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class III	Total
$15,577	$9,946	$25,523

Expense Limitations, Waivers, Reimbursements and Recoupments: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Consolidated Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $30.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $110 for certain accounting services, which is included in accounting services in the Consolidated Statement of Operations.

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

Class I	0.65	%
Class III	0.90	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, the Manager waived and/or reimbursed $8,278, which is included in fees waived and/or reimbursed by the Manager in the Consolidated Statement of Operations.

The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed — class specific in the Consolidated Statement of Operations.

	Class I	Class III	Total
Transfer Agent Fees Reimbursed	$15,326	$9,784	$25,110

With respect to the contractual expense caps, if during the Fund’s fiscal year the operating expenses of a share class, that at any time during the prior two fiscal years received a waiver and/or reimbursement from the Manager, are less than the expense cap for that share class, the Manager is entitled to be reimbursed by such share class up to the lesser of the following expenses:

(a) The amount of fees waived and/or expenses reimbursed during those prior two fiscal years under the agreement.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Consolidated Financial Statements (continued) BlackRock iShares^® Alternative Strategies V.I.  Fund

(b) The amount by which the expense cap for that share class exceeds the operating expenses of the share class for the current fiscal year, provided that:

• The Fund, of which the share class is a part, has more than $50 million in assets for the fiscal year; and

• The Manager or an affiliate continues to serve as the Fund’s investment adviser or administrator.

In the event the expense cap for a share class is changed subsequent to a fiscal year in which the Manager becomes entitled to reimbursement for fees waived and/or reimbursed, the amount available to reimburse the Manager shall be calculated by reference to the expense cap for that share class in effect at the time the Manager became entitled to receive such reimbursement, rather than the subsequently changed expense cap for that share class.

On June 30, 2017, the Fund level and class specific waivers and/or reimbursements subject to possible future recoupment under the expense limitation agreement are as follows:

	Expires December 31,
	2017		2018		2019
Fund Level	$	116,781	$	46,338	$	8,278
Class I	$	17,186	$	22,342	$	15,326
Class III	$	1,013	$	6,323	$	9,784

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 80% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 85% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Consolidated Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $1,859 for securities lending agent services.

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

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

During the period ended June 30, 2017, the Fund did not participate in the Interfund Lending Program.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock iShares^® Alternative Strategies V.I.  Fund

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

6. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $7,709,555 and $5,959,092, respectively.

7. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for the period ended December 31, 2014 and each of the two years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of December 31, 2016, the Fund had a capital loss carryforward, with no expiration date, available to offset future realized capital gains of $202,204.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	23,689,312
Gross unrealized appreciation	$	955,240
Gross unrealized depreciation		(45,656	)
Net unrealized depreciation	$	909,584

8. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Consolidated Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

9. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Consolidated Financial Statements (concluded) BlackRock iShares^® Alternative Strategies V.I.  Fund

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

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

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		134,994		$	1,427,527			601,734		$	6,360,317
Shares issued in reinvestment of distributions		—			—			37,058			376,139
Shares redeemed		(136,749	)		(1,455,102	)		(270,838	)		(2,840,041	)
Net increase (decrease)		(1,755	)	$	(27,575	)		367,954		$	3,896,415
Class III
Shares sold		234,296		$	2,489,505			773,886		$	8,159,220
Shares issued in reinvestment of distributions		—			—			19,552			197,864
Shares redeemed		(97,437	)		(1,024,659	)		(255,008	)		(2,705,902	)
Net increase		136,859		$	1,464,846			538,430		$	5,651,182
Total Net Increase		135,104		$	1,437,271			906,384		$	9,547,597

11. 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.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

JUNE 30, 2017            

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock iShares^® Dynamic Allocation V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock iShares^® Dynamic  Allocation V.I. Fund

      Investment Objective

BlackRock iShares^® Dynamic Allocation V.I. Fund’s (the “Fund”) investment objective is to seek to provide total return.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-months period ended June 3, 2017, the Fund underperformed its blended benchmark (60% MSCI All Country World Index / 40% Bloomberg Barclays U.S. Aggregate Bond Index).

What factors influenced performance?

• The largest detractor from Fund performance was exposure to the iShares Commodities Select Strategy ETF.

• The largest contributor to Fund performance was exposure to the iShares MSCI EAFE ETF. This was followed by exposure to the iShares Core S&P 500 ETF.

Describe recent portfolio activity.

• During the six-month period, the Fund increased exposure to international developed and emerging markets equities, while reducing U.S. equity exposure to neutral. In addition, the Fund reduced exposure to Treasury Inflation-Protected Securities and agency mortgage-backed securities, in favor of investment grade corporate credit, high yield and U.S. Treasuries.

Describe portfolio positioning at period end.

• At period end, the Fund was underweight U.S. investments relative to international developed and emerging market equities. The Fund’s top holdings included exposure to international developed market and emerging market equities. Within equities, the Fund maintained exposure to U.S. large-, mid- and small-cap, and minimum volatility and preferred stocks. Within fixed income, the Fund maintained exposure to U.S. credit and Treasuries, agency bonds and high yield. Additionally, the Fund ended the period with exposure to U.S. real estate, broad commodities and precious metals.

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

      Portfolio Information

Portfolio Composition	Percent of Affiliated Investment Companies
Equity Funds	46%
Short-Term Securities	30
Fixed Income Funds	23
Commodity Funds	1

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock iShares^® Dynamic Allocation  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 invests in a portfolio of underlying exchange-traded funds that seek to track equity, fixed income and alternative indices.

³  A customized weighted index comprised of 60% MSCI All Country World Index and 40% Bloomberg Barclays U.S. Aggregate Bond Index.

⁴  A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI All Country World Index consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes.

⁵  A widely recognized unmanaged market-weighted index, comprised of investment-grade corporate bonds rated BBB or better, mortgages and U.S. Treasury and U.S. Government agency issues with at least one year to maturity.

⁶  Commencement of operations.

      Performance Summary for the Period Ended June 30, 2017

				Average Annual Total Returns
	6-Month Total Returns8			1 Year8			Since Inception8,9
Class I7		7.21	%		9.42	%		3.39	%
Class III7		7.12			9.21			3.15
60% MSCI All Country World Index / 40% Bloomberg Barclays U.S. Aggregate Bond Index		7.72			10.80			4.75
MSCI All Country World Index		11.48			18.78			5.88
Bloomberg Barclays U.S. Aggregate Bond Index		2.27			(0.31	)		2.73

⁷  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.

⁸  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

⁹  The Fund commenced operations on April 30, 2014.

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

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

      Expense Example

	Actual			Hypothetical11
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period10	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period10	Annualized Expense Ratio
Class I	$1,000.00	$1,072.10	$2.72	$1,000.00	$1,022.17	$2.66	0.53%
Class III	$1,000.00	$1,071.20	$4.01	$1,000.00	$1,020.93	$3.91	0.78%

¹⁰  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).

¹¹  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock iShares^® Dynamic Allocation  V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments June 30, 2017 (Unaudited)	BlackRock iShares® Dynamic  Allocation V.I. Fund
	(Percentages shown are based on Net Assets)

Affiliated Investment Companies (a)	Shares		Value
Commodity Funds — 1.4%
iShares Commodities Select Strategy ETF		4,861	$	158,420
iShares Gold Trust (b)(c)		9,409		112,343
iShares Silver Trust (b)(c)		4,315		67,789
				338,552
Equity Funds — 65.5%
iShares Core MSCI Emerging Markets ETF (d)		40,500		2,026,620
iShares Core S&P 500 ETF		13,254		3,226,156
iShares Core S&P Mid-Cap ETF		9,589		1,668,006
iShares Core S&P Small-Cap ETF (d)		17,996		1,261,700
iShares Edge MSCI Minimum Volatility Global ETF		7,397		585,103
iShares Edge MSCI Minimum Volatility USA ETF (d)		17,650		863,615
iShares Global Infrastructure ETF		7,337		322,608
iShares MSCI Canada ETF		20,775		555,939
iShares MSCI EAFE ETF (d)		68,973		4,497,040
iShares MSCI EAFE Small-Cap ETF		13,000		751,920
iShares U.S. Real Estate ETF (d)		4,000		319,080
				16,077,787
Fixed Income Funds — 33.3%
iShares 1-3 Year Treasury Bond ETF		20,900		1,765,841
iShares Agency Bond ETF		8,729		992,487

Affiliated Investment Companies (a)	Shares		Value
Fixed Income Funds (continued)
iShares CMBS ETF		290	$	14,906
iShares iBoxx $ High Yield Corporate Bond ETF (d)		11,798		1,042,825
iShares iBoxx $ Investment Grade Corporate Bond ETF		14,040		1,691,960
iShares J.P. Morgan USD Emerging Markets Bond ETF (d)		1,970		225,289
iShares U.S. Credit Bond ETF (d)		16,407		1,832,334
iShares U.S. Preferred Stock ETF (d)		15,313		599,810
				8,165,452
Short-Term Securities — 43.5%
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (e)		74,017		74,017
SL Liquidity Series, LLC, Money Market Series, 1.27% (e)(f)		10,617,624		10,618,686
				10,692,703
Total Affiliated Investment Companies     (Cost — $33,596,242) — 143.7%			35,274,494
Liabilities in Excess of Other Assets — (43.7)%				(10,725,510	)
Net Assets — 100.0%			$	24,548,984

Portfolio Abbreviation
ETF	Exchange-Traded Fund

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Consolidated Schedule of Investments (continued) BlackRock iShares^® Dynamic  Allocation V.I. Fund

Notes to Consolidated Schedule of Investments

(a) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Shares Purchased			Shares Sold			Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Gain (Loss)			Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		64,554		9,463	1		—			74,017		$       74,017	$	348			—			—
iShares 10+ Year Credit Bond ETF		1,867		—			(1,867	)		—		—		—			$        (212	)		$       1,094
iShares 1-3 Year Treasury Bond ETF		4,800		16,300			(200	)		20,900		1,765,841		4,832			(90	)		(993	)
iShares Agency Bond ETF		9,129		600			(1,000	)		8,729		992,487		5,966			(1,865	)		11,261
iShares CMBS ETF		1,490		—			(1,200	)		290		14,906		524			(639	)		1,345
iShares Commodities Select Strategy ETF		2,800		2,061			—			4,861		158,420		808			—			(6,123	)
iShares Core MSCI Emerging Markets ETF		—		41,200			(700	)		40,500		2,026,620		14,436			802			139,219
iShares Core S&P 500 ETF		10,569		3,215			(530	)		13,254		3,226,156		27,069			2,291			214,796
iShares Core S&P Mid-Cap ETF		6,644		6,880			(3,935	)		9,589		1,668,006		12,219			5,338			68,787
iShares Core S&P Small-Cap ETF		6,328		11,958			(290	)		17,996		1,261,700		7,495			2,943			21,886
iShares Core S&P U.S. Value ETF		—		28,712			(28,712	)		—		—		6,270			11,105			—
iShares Edge MSCI Minimum Volatility Emerging Markets ETF		3,300		—			(3,300	)		—		—		—			(8,623	)		14,309
iShares Edge MSCI Minimum Volatility Global ETF		14,267		200			(7,070	)		7,397		585,103		6,205			(5,202	)		59,019
iShares Edge MSCI Minimum Volatility USA ETF		—		17,750			(100	)		17,650		863,615		5,919			5			35,120
iShares Edge MSCI USA Momentum Factor ETF		5,100		—			(5,100	)		—		—		—			6,865			1,306
iShares Global Infrastructure ETF		—		7,337			—			7,337		322,608		5,325			—			28,068
iShares Gold Trust		15,184		4,675			(10,450	)		9,409		112,343		—			(6,876	)		15,674
iShares iBoxx $ High Yield Corporate Bond ETF		5,548		6,350			(100	)		11,798		1,042,825		16,421			(22	)		15,796
iShares iBoxx $ Investment Grade Corporate Bond ETF		7,540		7,800			(1,300	)		14,040		1,691,960		15,869			(1,343	)		35,811
iShares J.P. Morgan USD Emerging Markets Bond ETF		7,270		—			(5,300	)		1,970		225,289		4,394			(1,349	)		18,900
iShares MBS ETF		9,464		200			(9,664	)		—		—		4,162			(13,782	)		19,396
iShares MSCI Canada ETF		7,625		13,150			—			20,775		555,939		4,343			—			3,611
iShares MSCI EAFE ETF		35,923		35,750			(2,700	)		68,973		4,497,040		72,730			1,623			396,126
iShares MSCI EAFE Small-Cap ETF		—		13,000			—			13,000		751,920		10,001			—			47,954
iShares Russell 1000 ETF		17,587		300			(17,887	)		—		—		5,045			297,156			(237,361	)
iShares Silver Trust		6,506		1,004			(3,195	)		4,315		67,789		—			(2,087	)		7,179
iShares TIPS Bond ETF		1,894		1,630			(3,524	)		—		—		547			7,091			(1,427	)
iShares U.S. Credit Bond ETF		16,517		1,790			(1,900	)		16,407		1,832,334		21,387			(4,909	)		43,959
iShares U.S. Preferred Stock ETF		30,613		300			(15,600	)		15,313		599,810		15,174			(25,604	)		67,298
iShares U.S. Real Estate ETF		5,100		900			(2,000	)		4,000		319,080		4,958			(5,715	)		16,976
iShares U.S. Treasury Bond ETF		35,580		1,600			(37,180	)		—		—		—			3,476			892
SL Liquidity Series, LLC, Money Market Series		5,525,311		5,092,313	1		—			10,617,624		10,618,686		13,078	2		(5	)		(306	)
Total											$	35,274,494	$	285,525			$  260,372			$1,039,572

¹  Represents net shares sold.

²  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(b) Non-income producing security.

(c) All or a portion of the security is held by a wholly-owned subsidiary. See Note 1 of the Notes to Financial Statements for details on the wholly-owned subsidiary.

(d) Security, or a portion of the security, is on loan.

(e) Current yield as of period end.

(f) Security was purchased with the cash collateral from loaned securities.

See Notes to Consolidated Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Schedule of Investments (concluded) BlackRock iShares^® Dynamic  Allocation V.I. Fund

Fair Value Hierarchy as of Period End

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

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Affiliated Investment Companies	$	24,655,808		—		—	$	24,655,808
Investments Valued at NAV1								10,618,686
Total Investments							$	35,274,494

¹ As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Consolidated Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock iShares® Dynamic Allocation V.I.  Fund
Assets
Investments at value — affiliated (including securities loaned at value of $10,406,097) (cost — $33,596,242)	$	35,274,494
Cash		1,524
Receivables:
Securities lending income — affiliated		3,165
Capital shares sold		171
Dividends — affiliated		80
From the Manager		9,589
Prepaid expenses		578
Total assets		35,289,601
Liabilities
Cash collateral on securities loaned at value		10,618,716
Payables:
Investments purchased		30,990
Capital shares redeemed		24,611
Distribution fees		503
Investment advisory fees		2,171
Other affiliates		161
Other accrued expenses		34,585
Professional fees		28,880
Total liabilities		10,740,617
Net Assets	$	24,548,984
Net Assets Consist of
Paid-in capital	$	23,340,960
Undistributed net investment income		231,688
Accumulated net realized loss		(701,916	)
Net unrealized appreciation (depreciation)		1,678,252
Net Assets	$	24,548,984
Net Asset Value
Class I — Based on net assets of $21,970,752 and 2,080,091 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.56
Class III — Based on net assets of $2,578,232 and 244,875 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.53

See Notes to Consolidated Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock iShares® Dynamic Allocation V.I.  Fund
Investment Income
Dividends — affiliated	$	272,447
Securities lending — affiliated — net		13,078
Total investment income		285,525
Expenses
Professional		30,733
Transfer agent		2,480
Transfer agent — class specific		23,535
Investment advisory		16,570
Printing		10,627
Accounting services		4,609
Officer and Directors		3,456
Distribution — class specific		2,690
Custodian		2,285
Miscellaneous		2,989
Total expenses		99,974
Less:
Fees waived by the Manager		(13,694	)
Transfer agent fees reimbursed — class specific		(23,525	)
Expenses reimbursed by the Manager		(1,442	)
Total expenses after fees waived and reimbursed		61,313
Net investment income		224,212
Realized and Unrealized Gain
Net realized gain on investments — affiliated		260,372
Net change in unrealized appreciation (depreciation) on investments — affiliated		1,039,572
Net realized and unrealized gain		1,299,944
Net Increase in Net Assets Resulting from Operations	$	1,524,156

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Consolidated Statements of Changes in Net Assets BlackRock iShares^® Dynamic  Allocation V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)		Year Ended December 31, 2016
Operations
Net investment income	$	224,212	$	413,686
Net realized gain (loss)		260,372		(270,823	)
Net change in unrealized appreciation (depreciation)		1,039,572		1,069,860
Net increase (decrease) in net assets resulting from operations		1,524,156		1,212,723
Distributions to Shareholders1
From net investment income:
Class I		—		(374,605	)
Class III		—		(33,466	)
From return of capital:
Class I		—		(9,940	)
Class III		—		(992	)
Decrease in net assets resulting from distributions to shareholders		—		(419,003	)
Capital Share Transactions
Net increase in net assets derived from capital share transactions		3,086,188		3,334,801
Net Assets
Total increase in net assets		4,610,344		4,128,521
Beginning of period		19,938,640		15,810,119
End of period	$	24,548,984	$	19,938,640
Undistributed net investment income, end of period	$	231,688	$	7,476

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Consolidated Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Consolidated Financial Highlights BlackRock iShares^® Dynamic  Allocation V.I. Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,						Period April 30, 20141 to December 31,
	(Unaudited)			2016			2015			2014
Per Share Operating Performance
Net asset value, beginning of period	$	9.85		$	9.45		$	10.02		$	10.00
Net investment income2		0.10			0.22			0.24			0.20
Net realized and unrealized gain (loss)		0.61			0.39			(0.63	)		(0.07	)
Net increase (decrease) from investment operations		0.71			0.61			(0.39	)		0.13
Distributions:3
From net investment income		—			(0.20	)		(0.17	)		(0.10	)
From net realized capital gains		—			—			—			(0.01	)
From return of capital		—			(0.01	)		(0.01	)		—
Total distributions		—			(0.21	)		(0.18	)		(0.11	)
Net asset value, end of period	$	10.56		$	9.85		$	9.45		$	10.02
Total Return4
Based on net asset value		7.21	%5		6.49	%		(3.88	)%		1.27	%5
Ratios to Average Net Assets6
Total expenses		0.88	%7		0.83	%		1.90	%		6.47	%7,8
Total expenses after fees waived and reimbursed		0.53	%7		0.53	%		0.64	%		0.75	%7
Net investment income		2.04	%7		2.27	%		2.41	%		2.85	%7
Supplemental Data
Net assets, end of period (000)	$	21,971		$	18,135		$	14,636		$	6,092
Portfolio turnover rate		47	%		54	%		54	%		25	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended June 30,  2017 (Unaudited)			Year Ended December 31, 2016			Year Ended December 31, 2015			Period April 30, 20141 to December 31, 2014
Investments in underlying funds		0.20	%		0.23	%		0.29	%		0.27	%

⁷  Annualized.

⁸  Organization and/or offering costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses for Class I and Class III would have been 7.00% and 9.13%, respectively.

See Notes to Consolidated Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Consolidated Financial Highlights (concluded) BlackRock iShares^® Dynamic  Allocation V.I. Fund

	Class III
	Six Months Ended June 30, 2017			Year Ended December 31,						Period April 30, 20141 to December 31,
	(Unaudited)			2016			2015			2014
Per Share Operating Performance
Net asset value, beginning of period	$	9.83		$	9.44		$	10.01		$	10.00
Net investment income2		0.10			0.21			0.26			0.17
Net realized and unrealized gain (loss)		0.60			0.37			(0.66	)		(0.06	)
Net increase (decrease) from investment operations		0.70			0.58			(0.40	)		0.11
Distributions:3
From net investment income		—			(0.18	)		(0.16	)		(0.09	)
From net realized capital gains		—			—			—			(0.01	)
From return of capital		—			(0.01	)		(0.01	)		—
Total distributions		—			(0.19	)		(0.17	)		(0.10	)
Net asset value, end of period	$	10.53		$	9.83		$	9.44		$	10.01
Total Return4
Based on net asset value		7.12	%5		6.16	%		(3.99	)%		1.05	%5
Ratios to Average Net Assets6
Total expenses		1.17	%7		1.02	%		1.87	%		8.32	%7,8
Total expenses after fees waived and reimbursed		0.78	%7		0.78	%		0.86	%		1.00	%7
Net investment income		1.91	%7		2.08	%		2.56	%		2.54	%7
Supplemental Data
Net assets, end of period (000)	$	2,578		$	1,804		$	1,174		$	20
Portfolio turnover rate		47	%		54	%		54	%		25	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended June 30,  2017 (Unaudited)			Year Ended December 31, 2016			Year Ended December 31, 2015			Period April 30, 20141 to December 31, 2014
Investments in underlying funds		0.20	%		0.23	%		0.29	%		0.27	%

⁷  Annualized.

⁸  Organization and/or offering costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses for Class I and Class III would have been 7.00% and 9.13%, respectively.

See Notes to Consolidated Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (Unaudited) BlackRock iShares^® Dynamic  Allocation V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 consolidated financial statements presented are for BlackRock iShares^® Dynamic Allocation V.I. Fund (the “Fund”). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

Basis of Consolidation: The accompanying consolidated financial statements of the Fund include the accounts of iShares^® Dynamic Allocation V.I. Fund (Cayman) (the “Subsidiary”), which is a wholly-owned subsidiary of the Fund and primarily invests in commodity-related instruments. The Subsidiary enables the Fund to hold these commodity-related instruments and satisfy regulated investment company tax requirements. The Fund may invest up to 25% of its total assets in the Subsidiary. The net assets of the Subsidiary as of June 30, 2017 were $180,764, which is 0.74% of the Fund’s consolidated net assets. Intercompany accounts and transactions, if any, have been eliminated. The Subsidiary is subject to the same investment policies and restrictions that apply to the iShares^® Dynamic Allocation V.I. Fund, except that the Subsidiary may invest without limitation in commodity-related instruments.

2. Significant Accounting Policies:

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

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

Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The portion of distributions, if any, that exceeds the Fund’s current and accumulated earnings and profits, as measured on a tax basis, constitute a non-taxable return of capital. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Net income and realized gains from investments held by the Subsidiary are treated as ordinary income for tax purposes. If a net loss is realized by the Subsidiary in any taxable year, the loss will generally not be available to offset the Fund’s ordinary income and/or capital gains for that year.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Consolidated Financial Statements (continued) BlackRock iShares^® Dynamic  Allocation V.I. Fund

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

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

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

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock iShares^® Dynamic  Allocation V.I. Fund

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

As of June 30, 2017, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

4. Securities and Other Investments:

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as affiliated investment companies in the Fund’s Consolidated Schedule of Investments, and the value of any related collateral are shown separately in the Consolidated Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Consolidated Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1		Net Amount
Deutsche Bank Securities, Inc.		$  1,073,112	$	(1,073,112)	—
JP Morgan Securities LLC		9,332,985		(9,332,985)	—
Total		$10,406,097	$	(10,406,097)	—

¹ Cash collateral with a value of $10,618,716 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Consolidated Financial Statements (continued) BlackRock iShares^® Dynamic  Allocation V.I. Fund

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.150%
$1 Billion - $3 Billion	0.140%
$3 Billion - $5 Billion	0.135%
Greater than $5 Billion	0.130%

The Manager provides investment management and other services to the Subsidiary. The Manager does not receive separate compensation from the Subsidiary for providing investment management or administrative services. However, the Fund pays the Manager based on the Fund’s net assets which includes the assets of the Subsidiary.

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

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III is $2,690.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class III	Total
$20,848	$2,687	$23,535

Expense Limitations, Waivers, Reimbursements and Recoupments: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $44.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $108 for certain accounting services, which is included in accounting services in the Consolidated Statement of Operations.

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

Class I	0.53	%
Class III	0.78	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (continued) BlackRock iShares^® Dynamic  Allocation V.I. Fund

by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, the Manager waived and/or reimbursed $13,650 and $1,442, respectively, which is included in fees waived and/or reimbursed by the Manager in the Consolidated Statement of Operations.

The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed - class specific in the Consolidated Statement of Operations.

	Class I	Class III	Total
Transfer Agent Fees Reimbursed	$20,840	$2,685	$23,525

With respect to the contractual expense caps, if during the Fund’s fiscal year the operating expenses of a share class, that at any time during the prior two fiscal years received a waiver and/or reimbursement from the Manager, are less than the expense cap for that share class, the Manager is entitled to be reimbursed by such share class up to the lesser of the following expenses:

(a) The amount of fees waived and/or expenses reimbursed during those prior two fiscal years under the agreement.

(b) The amount by which the expense cap for that share class exceeds the operating expenses of the share class for the current fiscal year, provided that:

• The Fund, of which the share class is a part, has more than $50 million in assets for the fiscal year; and

• The Manager or an affiliate continues to serve as the Fund’s investment adviser or administrator.

In the event the expense cap for a share class is changed subsequent to a fiscal year in which the Manager becomes entitled to reimbursement for fees waived and/or reimbursed, the amount available to reimburse the Manager shall be calculated by reference to the expense cap for that share class in effect at the time the Manager became entitled to receive such reimbursement, rather than the subsequently changed expense cap for that share class.

On June 30, 2017, the Fund level and class specific waivers and/or reimbursements subject to possible future recoupment under the expense limitation agreement are as follows:

	Expires December 31,
	2017		2018		2019
Fund Level	$	122,310	$	21,999	$	15,092
Class I	$	21,925	$	29,259	$	20,840
Class III	$	265	$	2,053	$	2,685

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 80% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 85% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Consolidated Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $3,269 for securities lending agent services.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Consolidated Financial Statements (continued) BlackRock iShares^® Dynamic  Allocation V.I. Fund

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

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

During the period ended June 30, 2017, the Fund did not participate in the Interfund Lending Program.

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

6. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $13,683,774 and $10,384,941, respectively.

7. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for the period ended December 31, 2014 and each of the two years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of December 31, 2016, the Fund had a capital loss carryforward, with no expiration date, available to offset future realized capital gains of $754,844.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	33,744,777
Gross unrealized appreciation	$	1,534,857
Gross unrealized depreciation		(5,140	)
Net unrealized appreciation	$	1,529,717

8. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Consolidated Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Consolidated Financial Statements (concluded)

9. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

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

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

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		361,134			$	3,715,112		523,146			$	4,986,995
Shares issued in reinvestment of distributions		—				—		39,040				384,545
Shares redeemed		(122,486	)			(1,259,514)		(269,060	)			(2,597,902)
Net increase		238,648			$	2,455,598		293,126			$	2,773,638
Class III
Shares sold		80,336			$	824,507		83,719			$	801,538
Shares issued in reinvestment of distributions		—				—		3,505				34,458
Shares redeemed		(18,968	)			(193,917)		(28,150	)			(274,833)
Net increase		61,368			$	630,590		59,074			$	561,163
Total Net Increase		300,016			$	3,086,188		352,200			$	3,334,801

11. 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.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock iShares^® Dynamic Fixed Income V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

      Investment Objective

BlackRock iShares^® Dynamic Fixed Income V.I. Fund’s (the “Fund”) investment objective is to seek to provide total return.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund outperformed its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index.

What factors influenced performance?

• The largest contributor to Fund performance was exposure to the iShares U.S. Credit Bond ETF. This was followed by exposure to the iShares iBoxx $ Investment Grade Corporate Bond ETF.

• There were no significant detractors from returns during the six-month period.

Describe recent portfolio activity.

• During the reporting period, the Fund reduced exposure to Treasury Inflation-Protected Securities and agency mortgage-backed securities in favor of investment grade corporate credit, high yield and U.S. Treasuries.

Describe portfolio positioning at period end.

• At period end, the Fund maintained an overweight to credit. The Fund’s top holdings included U.S. credit and Treasuries. The Fund maintained exposure to investment grade credit, high yield and agency bonds.

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

      Portfolio Information

Portfolio Composition	Percent of Affiliated Investment Companies
Fixed Income Funds	71%
Short-Term Securities	29

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock iShares^® Dynamic Fixed  Income 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 invests in a portfolio of underlying exchange-traded funds that seek to track fixed income indices.

³  A widely recognized unmanaged market-weighted index, comprised of investment-grade corporate bonds rated BBB or better, mortgages and U.S. Treasury and U.S. Government agency issues with at least one year to maturity.

⁴  Commencement of operations.

Performance Summary for the Period Ended June 30, 2017
				Average Annual Total Returns
	6-Month Total Returns6			1 Year6			Since Inception6,7
Class I5		2.63	%		0.55	%		1.95	%
Class III5		2.44			0.26			1.66
Bloomberg Barclays U.S. Aggregate Bond Index		2.27			(0.31	)		2.73

⁵  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.

⁶  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

⁷  The Fund commenced operations on April 30, 2014.

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

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

Expense Example
	Actual			Hypothetical9
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period8	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period8	Annualized Expense Ratio
Class I	$1,000.00	$1,026.30	$2.51	$1,000.00	$1,022.32	$2.51	0.50%
Class III	$1,000.00	$1,024.40	$3.76	$1,000.00	$1,021.08	$3.76	0.75%

⁸  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).

⁹  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock iShares® Dynamic  Fixed Income V.I. Fund
	(Percentages shown are based on Net Assets)

Affiliated Investment Companies (a)	Shares		Value
Fixed Income Funds — 99.9%
iShares 1-3 Year Treasury Bond ETF (b)		50,986	$	4,307,807
iShares Agency Bond ETF		23,545		2,677,067
iShares iBoxx $ High Yield Corporate Bond ETF (b)		29,078		2,570,204
iShares iBoxx $ Investment Grade Corporate Bond ETF		32,666		3,936,580
iShares U.S. Credit Bond ETF (b)		42,167		4,709,211
				18,200,869

Affiliated Investment Companies (a)	Shares		Value
Short-Term Securities — 41.7%
SL Liquidity Series, LLC, Money Market Series, 1.27% (c)(d)		7,597,307	$	7,598,066
Total Affiliated Investment Companies     (Cost — $25,511,154) — 141.6%				25,798,935
Liabilities in Excess of Other Assets — (41.6)%				(7,585,125	)
Net Assets — 100.0%			$	18,213,810

      Notes to Schedule of Investments

(a) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Shares Purchased			Shares Sold			Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Gain (Loss)			Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		50,671		—			(50,671	)1		—		—		$      289			—			—
iShares 1-3 Year Treasury Bond ETF		11,043		44,543			(4,600	)		50,986		$4,307,807		12,368			$(1,725	)		$  (1,175	)
iShares 10+ Year Credit Bond ETF		2,644		—			(2,644	)		—		—		—			(299	)		1,549
iShares Agency Bond ETF		20,567		3,378			(400	)		23,545		2,677,067		15,267			(1,116	)		25,026
iShares CMBS ETF		3,017		—			(3,017	)		—		—		990			(1,356	)		2,751
iShares iBoxx $ High Yield Corporate Bond ETF		12,948		18,520			(2,390	)		29,078		2,570,204		42,475			(46	)		41,620
iShares iBoxx $ Investment Grade Corporate Bond ETF		17,126		20,610			(5,070	)		32,666		3,936,580		38,346			(16,888	)		98,174
iShares MBS ETF		21,583		—			(21,583	)		—		—		10,214			(37,655	)		51,711
iShares TIPS Bond ETF		4,125		—			(4,125	)		—		—		1,417			14,081			(171	)
iShares U.S. Credit Bond ETF		36,344		7,023			(1,200	)		42,167		4,709,211		55,905			(5,060	)		106,816
iShares U.S. Treasury Bond ETF		80,879		—			(80,879	)		—		—		—			(14,746	)		24,286
SL Liquidity Series, LLC, Money Market Series		3,328,792		4,268,515	2		—			7,597,307		7,598,066		14,495	3		489			(616	)
Total												$25,798,935		$191,766			$(64,321	)		$349,971

¹ Represents net shares sold.

² Represents net shares purchased.

³ Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(b) Security, or a portion of the security, is on loan.

(c) Security was purchased with the cash collateral from loaned securities.

(d) Current yield as of period end.

Portfolio Abbreviation
ETF	Exchange-Traded Fund

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (concluded) BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

      Fair Value Hierarchy as of Period End

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

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Affiliated Investment Companies	$	18,200,869		—		—	$	18,200,869
Investments Valued at NAV1								7,598,066
Total Investments							$	25,798,935

¹ As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefor have been excluded from the fair value hierarchy.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock iShares® Dynamic Fixed Income V.I. Fund
Assets
Investments at value — affiliated (including securities loaned at value of $7,437,426)(cost — $25,511,154)	$	25,798,935
Receivables:
Investments sold		61,895
Securities lending income — affiliated		5,002
Capital shares sold		45,843
Dividends — affiliated		58
From the Manager		6,636
Prepaid expenses		372
Total assets		25,918,741
Liabilities
Bank overdraft		27,041
Cash collateral on securities loaned at value		7,598,133
Payables:
Capital shares redeemed		33,565
Distribution fees		663
Other accrued expenses		25,960
Other affiliates		123
Professional fees		19,446
Total liabilities		7,704,931
Net Assets	$	18,213,810
Net Assets Consist of
Paid-in capital	$	18,095,609
Undistributed net investment income		151,957
Accumulated net realized loss		(321,537	)
Net unrealized appreciation (depreciation)		287,781
Net Assets	$	18,213,810
Net Asset Value
Class I — Based on net assets of $14,904,141 and 1,469,022 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.15
Class III — Based on net assets of $3,309,669 and 327,974 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.09

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock iShares® Dynamic Fixed Income V.I. Fund
Investment Income
Dividends — affiliated	$	177,271
Securities lending — affiliated — net		14,495
Total investment income		191,766
Expenses
Professional		25,923
Transfer agent		2,480
Transfer agent — class specific		14,019
Investment advisory		12,620
Printing		9,915
Accounting services		4,154
Distribution — class specific		3,858
Officer and Directors		3,431
Custodian		2,459
Miscellaneous		2,593
Total expenses		81,452
Less:
Fees waived by the Manager		(12,620	)
Transfer agent fees reimbursed — class specific		(14,007	)
Expenses reimbursed by the Manager		(8,826	)
Total expenses after fees waived and reimbursed		45,999
Net investment income		145,767
Realized and Unrealized Gain (Loss)
Net realized loss on investments — affiliated		(64,321	)
Net change in unrealized appreciation (depreciation) on investments — affiliated		349,971
Net realized and unrealized gain		285,650
Net Increase in Net Assets Resulting from Operations	$	431,417

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statements of Changes in Net Assets BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	145,767		$	284,384
Net realized loss		(64,321	)		(37,207	)
Net change in unrealized appreciation (depreciation)		349,971			48,035
Net increase in net assets resulting from operations		431,417			295,212
Distributions to Shareholders1
From net investment income:
Class I		—			(227,289	)
Class III		—			(53,934	)
From return of capital:
Class I		—			(4,176	)
Class III		—			(1,103	)
Decrease in net assets resulting from distributions to shareholders		—			(286,502	)
Capital Share Transactions
Net increase in net assets derived from capital share transactions		2,368,254			5,913,447
Net Assets
Total increase in net assets		2,799,671			5,922,157
Beginning of period		15,414,139			9,491,982
End of period	$	18,213,810		$	15,414,139
Undistributed net investment income, end of period	$	151,957		$	6,190

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Financial Highlights BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

	Class I
	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,						Period April 30, 20141 to December 31, 2014
				2016			2015
Per Share Operating Performance
Net asset value, beginning of period	$	9.89		$	9.74		$	10.05		$	10.00
Net investment income2		0.09			0.22			0.24			0.12
Net realized and unrealized gain (loss)		0.17			0.12			(0.36	)		0.01
Net increase (decrease) from investment operations		0.26			0.34			(0.12	)		0.13
Distributions:3
From net investment income		—			(0.19	)		(0.19	)		(0.08	)
From net realized capital gains		—			—			—			(0.00	)4
From return of capital		—			(0.00	)4		(0.00	)4		(0.00	)4
Total distributions		—			(0.19	)		(0.19	)		(0.08	)
Net asset value, end of period	$	10.15		$	9.89		$	9.74		$	10.05
Total Return5
Based on net asset value		2.63	%6		3.50	%		(1.20	)%		1.30	%6
Ratios to Average Net Assets7
Total expenses		0.92	%8		1.00	%		1.91	%		7.16	%8,9
Total expenses after fees waived and reimbursed		0.50	%8		0.50	%		0.63	%		0.75	%8
Net investment income		1.78	%8		2.19	%		2.33	%		1.83	%8
Supplemental Data
Net assets, end of period (000)	$	14,904		$	12,208		$	8,346		$	3,624
Portfolio turnover rate		44	%		38	%		58	%		61	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵ Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended     June 30, 2017     (Unaudited)	Year Ended     December 31,     2016	Year Ended     December 31,     2015	Period April 30,  20141 to December 31, 2014
Investments in underlying funds	0.19%	0.20%	0.26%	0.25%

⁸  Annualized.

⁹  Organization and/or offering costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses for Class I and Class III would have been 7.71% and 8.93%, respectively.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

	Class III
	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,						Period April 30, 20141 to December 31, 2014
				2016			2015
Per Share Operating Performance
Net asset value, beginning of period	$	9.85		$	9.70		$	10.03		$	10.00
Net investment income2		0.07			0.20			0.27			0.14
Net realized and unrealized gain (loss)		0.17			0.12			(0.42	)		(0.04	)
Net increase (decrease) from investment operations		0.24			0.32			(0.15	)		0.10
Distributions:3
From net investment income		—			(0.17	)		(0.18	)		(0.07	)
From net realized capital gains		—			—			—			(0.00	)4
From return of capital		—			(0.00	)4		(0.00	)4		(0.00	)4
Total distributions		—			(0.17	)		(0.18	)		(0.07	)
Net asset value, end of period	$	10.09		$	9.85		$	9.70		$	10.03
Total Return5
Based on net asset value		2.44	%6		3.32	%		(1.47	)%		1.03	%6
Ratios to Average Net Assets7
Total expenses		1.20	%8		1.15	%		2.06	%		8.57	%8,9
Total expenses after fees waived and reimbursed		0.75	%8		0.75	%		0.84	%		1.00	%8
Net investment income		1.50	%8		2.00	%		2.71	%		1.98	%8
Supplemental Data
Net assets, end of period (000)	$	3,310		$	3,206		$	1,146		$	78
Portfolio turnover rate		44	%		38	%		58	%		61	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵ Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended     June 30 2017     (Unaudited)	Year Ended     December 31,     2016	Year Ended     December 31,     2015	Period April 30,  20141 to December 31, 2014
Investments in underlying funds	0.19%	0.20%	0.26%	0.25%

⁸  Annualized.

⁹  Organization and/or offering costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses for Class I and Class III would have been 7.71% and 8.93%, respectively.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30,2017 11

Notes to Financial Statements (Unaudited) BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock iShares^® Dynamic Fixed Income V.I. Fund (the “Fund”). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

2. Significant Accounting Policies:

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

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

Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The portion of distributions, if any, that exceeds the Fund’s current and accumulated earnings and profits, as measured on a tax basis, constitute a non-taxable return of capital. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

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

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

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

As of June 30, 2017, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

4. Securities and Other Investments:

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Financial Statements (continued) BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as affiliated investment companies in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Jefferies LLC	$	5,834	$	(5,834	)	—
JP Morgan Securities LLC		4,992,559		(4,992,559	)	—
UBS Securities LLC		2,439,033		(2,439,033	)	—
Total	$	7,437,426	$	(7,437,426	)	—

¹  Cash collateral with a value of $7,598,133 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.150%
$1 Billion - $3 Billion	0.140%
$3 Billion - $5 Billion	0.135%
Greater than $5 Billion	0.130%

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

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

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III is $3,858.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class III	Total
$10,992	$3,027	$14,019

Expense Limitations, Waivers, Reimbursements and Recoupments: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $38.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $83 for certain accounting services, which is included in accounting services in the Statement of Operations.

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

Class I	0.50	%
Class III	0.75	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, the Manager waived and/or reimbursed $12,582 and $8,826, respectively, which is included in fees waived and/or reimbursed by the Manager in the Statement of Operations.

The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed — class specific in the Statement of Operations.

	Class I	Class III	Total
Transfer Agent Fees Reimbursed	$10,983	$3,024	$14,007

With respect to the contractual expense caps, if during the Fund’s fiscal year the operating expenses of a share class, that at any time during the prior two fiscal years received a waiver and/or reimbursement from the Manager, are less than the expense cap for that share class, the Manager is entitled to be reimbursed by such share class up to the lesser of the following expenses:

(a) The amount of fees waived and/or expenses reimbursed during those prior two fiscal years under the agreement.

(b) The amount by which the expense cap for that share class exceeds the operating expenses of the share class for the current fiscal year, provided that:

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (continued) BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

• The Fund, of which the share class is a part, has more than $50 million in assets for the fiscal year; and

• The Manager or an affiliate continues to serve as the Fund’s investment adviser or administrator.

In the event the expense cap for a share class is changed subsequent to a fiscal year in which the Manager becomes entitled to reimbursement for fees waived and/or reimbursed, the amount available to reimburse the Manager shall be calculated by reference to the expense cap for that share class in effect at the time the Manager became entitled to receive such reimbursement, rather than the subsequently changed expense cap for that share class.

On June 30, 2017, the Fund level and class specific waivers and/or reimbursements subject to possible future recoupment under the expense limitation agreement are as follows:

	Expires December 31,
	2017		2018		2019
Fund Level	$	80,571	$	46,758	$	21,408
Class I	$	9,548	$	15,057	$	10,983
Class III	$	282	$	1,390	$	3,024

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 80% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 85% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $3,623 for securities lending agent services.

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

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

During the period ended June 30, 2017, the Fund did not participate in the Interfund Lending Program.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

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

6. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $9,893,256 and $7,411,493, respectively.

7. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for the period ended December 31, 2014 and for each of the two years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of December 31, 2016, the Fund had a capital loss carryforward, with no expiration date, available to offset future realized capital gains of $176,562.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	25,625,526
Gross unrealized appreciation	$	179,408
Gross unrealized depreciation		(5,999	)
Net unrealized depreciation	$	173,409

8. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

9. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments and may experience difficulty in selling those investments in

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (concluded) BlackRock iShares^® Dynamic  Fixed Income V.I. Fund

a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.

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

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

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		380,468		$	3,796,558			699,521		$	7,089,699
Shares issued in reinvestment of distributions		—			—			23,404			231,465
Shares redeemed		(145,565	)		(1,454,426	)		(346,095	)		(3,495,708	)
Net increase		234,903		$	2,342,132			376,830		$	3,825,456
Class III
Shares sold		90,083		$	897,088			250,040		$	2,520,285
Shares issued in reinvestment of distributions		—			—			5,587			55,037
Shares redeemed		(87,588	)		(870,966	)		(48,249	)		(487,331	)
Net increase		2,495		$	26,122			207,378		$	2,087,991
Total Net Increase		237,398		$	2,368,254			584,208		$	5,913,447

11. 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.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

		JUNE 30, 2017
SEMI-ANNUAL REPORT (UNAUDITED)		BLACKROCK®
	BlackRock Variable Series Funds, Inc.
	▶   BlackRock iShares® Equity Appreciation V.I. Fund
	Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock iShares^® Equity Appreciation V.I.  Fund

      Investment Objective

BlackRock iShares^® Equity Appreciation V.I. Fund’s (the “Fund”) investment objective is to seek to provide growth of capital.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund underperformed its benchmark, the MSCI All Country World Index.

What factors influenced performance?

• There were no significant detractors from performance during period, as all of the underlying Funds performed well relative to their respective benchmarks.

• The largest contributor to Fund performance was exposure to the iShares MSCI EAFE ETF. This was followed by exposure to the iShares Core S&P 500 ETF.

Describe recent portfolio activity.

• During the period, the Fund increased exposure to international developed and emerging markets equities, while reducing U.S. equity exposure to a neutral weight.

Describe portfolio positioning at period end.

• At period end, the Fund was underweight in U.S. equities relative to international developed and emerging market equities. The Fund’s top holdings included exposure to international developed markets. The Fund maintained exposure to emerging markets and U.S. large-, mid- and small-cap stocks.

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

      Portfolio Information

Portfolio Composition	Percent of     Affiliated Investment Companies
Equity Funds	69%
Short-Term Securities	31

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock iShares^® Equity  Appreciation 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 invests in a portfolio of underlying exchange-traded funds that seek to track equity indices.

³ This unmanaged index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI All Country World Index consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes.

⁴  Commencement of operations.

      Performance Summary for the Period Ended June 30, 2017

				Average Annual Total Returns
	6-Month Total  Returns6			1 Year6			Since Inception6,7
Class I5		9.89	%		18.18	%		3.85	%
Class III5		9.71			17.83			3.59
MSCI All Country World Index		11.48			18.78			5.88

⁵ Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.

⁶  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

⁷  The Fund commenced operations on April 30, 2014.

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

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

      Expense Example

	Actual			Hypothetical9
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period8	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period8	Annualized Expense Ratio
Class I	$1,000.00	$1,098.90	$2.34	$1,000.00	$1,022.56	$2.26	0.45%
Class III	$1,000.00	$1,097.10	$3.64	$1,000.00	$1,021.32	$3.51	0.70%

⁸ 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).

⁹ Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half-year divided by 365. See “Disclosure of Expenses” on the following page for further information on how expenses were calculated.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock iShares^® Equity  Appreciation V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock iShares® Equity  Appreciation V.I. Fund
	(Percentages shown are based on Net Assets)

Affiliated Investment Companies (a)	Shares		Value
Equity Funds — 100.1%
iShares Core MSCI Emerging Markets ETF (b)		47,508	$	2,377,300
iShares Core S&P 500 ETF		15,505		3,774,072
iShares Core S&P Mid-Cap ETF		11,159		1,941,108
iShares Core S&P Small-Cap ETF (b)		21,467		1,505,051
iShares Edge MSCI Minimum Volatility USA ETF (b)		20,934		1,024,301
iShares MSCI Canada ETF		24,957		667,849
iShares MSCI EAFE ETF		81,447		5,310,345
iShares MSCI EAFE Small-Cap ETF (b)		15,100		873,384
				17,473,410

Affiliated Investment Companies (a)	Shares		Value
Short-Term Securities — 44.1%
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (c)		68,717	$	68,717
SL Liquidity Series, LLC, Money Market Series, 1.27% (c)(d)		7,636,050		7,636,814
				7,705,531
Total Affiliated Investment Companies (Cost — $23,528,039) — 144.2%				25,178,941
Liabilities in Excess of Other Assets — (44.2)%				(7,715,619	)
Net Assets — 100.0%			$	17,463,322

      Notes to Schedule of Investments

(a) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Shares Purchased			Shares Sold			Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Gain (Loss)			Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		167,372		—			(98,655	)1		68,717		$      68,717		$      339			—			—
iShares Core MSCI Emerging Markets ETF		13,608		35,100			(1,200	)		47,508		2,377,300		16,856			$      789			$ 191,049
iShares Core S&P 500 ETF		12,333		4,172			(1,000	)		15,505		3,774,072		31,504			(653	)		242,998
iShares Core S&P Mid-Cap ETF		8,825		6,994			(4,660	)		11,159		1,941,108		14,079			(3,308	)		85,470
iShares Core S&P Small-Cap ETF		8,312		14,035			(880	)		21,467		1,505,051		8,736			(471	)		27,244
iShares Core S&P U.S. Value ETF		—		34,518			(34,518	)		—		—		7,178			10,326			—
iShares Edge MSCI Minimum Volatility Emerging Markets ETF		5,315		—			(5,315	)		—		—		—			(11,204	)		20,361
iShares Edge MSCI Minimum Volatility USA ETF		—		21,334			(400	)		20,934		1,024,301		7,122			(5	)		41,033
iShares Edge MSCI USA Momentum Factor ETF		4,774		—			(4,774	)		—		—		—			6,422			1,226
iShares MSCI Canada ETF		11,257		14,400		��	(700	)		24,957		667,849		5,264			17			8,640
iShares MSCI EAFE ETF		51,124		35,423			(5,100	)		81,447		5,310,345		83,862			(4,127	)		470,739
iShares MSCI EAFE Small-Cap ETF		—		15,200			(100	)		15,100		873,384		11,564			227			54,759
iShares Russell 1000 ETF		24,511		1,386			(25,897	)		—		—		5,884			343,147			(271,256	)
SL Liquidity Series, LLC, Money Market Series		4,742,241		2,893,809	2		—			7,636,050		7,636,814		6,074	3		484			(151	)
Total												$25,178,941		$198,462			$341,644			$ 872,112

¹  Represents net shares sold.

²  Represents net shares purchased.

³  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(b) Security, or a portion of the security, is on loan.

(c) Current yield as of period end.

(d) Security was purchased with the cash collateral from loaned securities.

      Portfolio Abbreviation

  ETF Exchange-Traded Fund

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (concluded) BlackRock iShares^® Equity  Appreciation V.I. Fund

      Fair Value Hierarchy as of Period End

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

The following table summarizes the Fund’s investments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Affiliated Investment Companies	$	17,542,127		—		—	$	17,542,127
Investments Valued at NAV1								7,636,814
Total Investments							$	25,178,941

¹  As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock iShares®  Equity AppreciationV.I.Fund
Assets
Investments at value — affiliated (including securities loaned at value of $7,485,698)(cost — $23,528,039)	$	25,178,941
Receivables:
Securities lending income — affiliated		988
Capital shares sold		313
Dividends — affiliated		119
From the Manager		9,799
Prepaid expenses		361
Total assets		25,190,521
Liabilities
Cash collateral on securities loaned at value		7,636,849
Payables:
Investments purchased		37,409
Capital shares redeemed		5,345
Distribution fees		350
Other accrued expenses		47,157
Other affiliates		89
Total liabilities		7,727,199
Net Assets	$	17,463,322
Net Assets Consist of
Paid-in capital	$	16,181,226
Undistributed net investment income		167,161
Accumulated net realized loss		(535,967	)
Net unrealized appreciation (depreciation)		1,650,902
Net Assets	$	17,463,322
Net Asset Value
Class I — Based on net assets of $15,703,989 and 1,456,379 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.78
Class III — Based on net assets of $1,759,333 and 163,888 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.73

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock iShares® Equity Appreciation V.I.  Fund
Investment Income
Dividends — affiliated	$	192,388
Securities lending — affiliated — net		6,074
Total investment income		198,462
Expenses
Professional		27,112
Transfer agent		2,480
Transfer agent — class specific		16,447
Printing		9,370
Investment advisory		11,272
Accounting services		3,837
Officer and Directors		3,407
Distribution — class specific		2,161
Custodian		1,130
Miscellaneous		2,600
Total expenses		79,816
Less:
Fees waived by the Manager		(11,272	)
Transfer agent fees reimbursed — class specific		(16,436	)
Expenses reimbursed by the Manager		(16,056	)
Total expenses after fees waived and reimbursed		36,052
Net investment income		162,410
Realized and Unrealized Gain
Net realized gain on investments — affiliated		341,644
Net change in unrealized appreciation (depreciation) on investments — affiliated		872,112
Net realized and unrealized gain		1,213,756
Net Increase in Net Assets Resulting from Operations	$	1,376,166

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statements of Changes in Net Assets BlackRock iShares^® Equity  Appreciation V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)		Year Ended December 31, 2016
Operations
Net investment income	$	162,410	$	202,833
Net realized gain (loss)		341,644		(209,490	)
Net change in unrealized appreciation (depreciation)		872,112		979,801
Net increase in net assets resulting from operations		1,376,166		973,144
Distributions to Shareholders1
From net investment income:
Class I		—		(176,891	)
Class III		—		(21,981	)
Return of capital:
Class I		—		(3,409	)
Class III		—		(470	)
Decrease in net assets resulting from distributions to shareholders		—		(202,751	)
Capital Share Transactions
Net increase in net assets derived from capital share transactions		3,234,047		4,632,288
Net Assets
Total increase in net assets		4,610,213		5,402,681
Beginning of period		12,853,109		7,450,428
End of period	$	17,463,322	$	12,853,109
Undistributed net investment income, end of period	$	167,161	$	4,751
1    Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Financial Highlights BlackRock iShares^® Equity  Appreciation V.I. Fund

	Class I
	Six Months Ended     June 30, 2017			Year Ended December 31,						Period April 30,  20141
	(Unaudited)			2016			2015			to December 31, 2014
Per Share Operating Performance
Net asset value, beginning of period		$                        9.81			$                                 9.12			$                                 9.93			$                                   10.00
Net investment income2		0.11			0.19			0.20			0.21
Net realized and unrealized gain (loss)		0.86			0.66			(0.84	)		(0.17	)
Net increase (decrease) from investment operations		0.97			0.85			(0.64	)		0.04
Distributions:3
From net investment income		—			(0.16	)		(0.16	)		(0.11	)
Return of capital		—			(0.00	)4		(0.01	)		—
Total distributions		—			(0.16	)		(0.17	)		(0.11	)
Net asset value, end of period		$                      10.78			$                                 9.81			$                                 9.12			$                                    9.93
Total Return5
Based on net asset value		9.89	%6		9.31	%		(6.50	)%		0.37	%6
Ratios to Average Net Assets7
Total expenses		1.03	%8		1.29	%		2.08	%		7.84	%8,9
Total expenses after fees waived and reimbursed		0.45	%8		0.45	%		0.62	%		0.75	%8
Net investment income		2.22	%8		2.06	%		1.98	%		3.04	%8
Supplemental Data
Net assets, end of period (000)		$                    15,704			$                             11,305			$                               6,948			$                                  3,749
Portfolio turnover rate		47	%		59	%		76	%		16	%

¹  Commencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended June 30, 2017 (Unaudited)	Year Ended December 31, 2016	Year Ended December 31, 2015	Period April 30, 20141 to December 31, 2014
Investments in underlying funds	0.17%	0.20%	0.30%	0.27%

⁸  Annualized.

⁹  Organization and/or offering costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses for Class I and Class III would have been 8.47% and 11.83%, respectively.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights (concluded) BlackRock iShares^® Equity  Appreciation V.I. Fund

	Class III
	Six Months Ended     June 30, 2017			Year Ended December 31,						Period April 30,  20141
	(Unaudited)			2016			2015			to December 31, 2014
Per Share Operating Performance
Net asset value, beginning of period		$                        9.78			$                                 9.10			$                                 9.92			$                               10.00
Net investment income2		0.09			0.19			0.25			0.21
Net realized and unrealized gain (loss)		0.86			0.63			(0.91	)		(0.19	)
Net increase (decrease) from investment operations		0.95			0.82			(0.66	)		0.02
Distributions:3
From net investment income		—			(0.14	)		(0.15	)		(0.10	)
Return of capital		—			(0.00	)4		(0.01	)		—
Total distributions		—			(0.14	)		(0.16	)		(0.10	)
Net asset value, end of period		$                      10.73			$                                 9.78			$                                 9.10			$                                9.92
Total Return5
Based on net asset value		9.71	%6		9.05	%		(6.70	)%		0.16	%6
Ratios to Average Net Assets7
Total expenses		1.31	%8		1.44	%		2.18	%		10.67	%8,9
Total expenses after fees waived and reimbursed		0.70	%8		0.70	%		0.81	%		1.00	%8
Net investment income		1.74	%8		2.06	%		2.58	%		3.01	%8
Supplemental Data
Net assets, end of period (000)		$                      1,759			$                              1,548			$                                 502			$                                  22
Portfolio turnover rate		47	%		59	%		76	%		16	%

¹ Commencement of operations.

²  Based on average shares outstanding.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Amount is greater than $(0.005) per share.

⁵  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷ Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended June 30, 2017 (Unaudited)	Year Ended December 31, 2016	Year Ended December 31, 2015	Period April 30, 20141 to December  31, 2014
Investments in underlying funds	0.17%	0.20%	0.30%	0.27%

⁸  Annualized.

⁹  Organization and/or offering costs were not annualized in the calculation of the expense ratios. If these expenses were annualized, the total expenses for Class I and Class III would have been 8.47% and 11.83%, respectively.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Notes to Financial Statements (Unaudited) BlackRock iShares^® Equity  Appreciation V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock iShares^® Equity Appreciation V.I. Fund (the “Fund”). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

2. Significant Accounting Policies:

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

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

Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The portion of distributions, if any, that exceeds a fund’s current and accumulated earnings and profits, as measured on a tax basis, constitute a non-taxable return of capital. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

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

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock iShares^® Equity  Appreciation V.I. Fund

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

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

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

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

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

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

As of June 30, 2017, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

4. Securities and Other Investments:

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Financial Statements (continued) BlackRock iShares^® Equity  Appreciation V.I. Fund

to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as affiliated investment companies in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net Amount
Deutsche Bank Securities, Inc.		$1,004,337	$	(1,004,337	)	—
JP Morgan Securities LLC		6,481,361		(6,481,361	)	—
Total		$7,485,698	$	(7,485,698	)	—

¹ Cash collateral with a value of $7,636,849 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion		0.150	%
$1 Billion - $3 Billion		0.140	%
$3 Billion - $5 Billion		0.135	%
Greater than $5 Billion		0.130	%

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock iShares^® Equity  Appreciation V.I. Fund

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

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III is $2,161.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class III	Total
$14,391	$2,056	$16,447

Expense Limitations, Waivers, Reimbursements and Recoupments: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $40.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $60 for certain accounting services, which is included in accounting services in the Statement of Operations.

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

Class I	0.45	%
Class III	0.70	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, the Manager waived and/or reimbursed $11,232 and $16,056, respectively, which is included in fees waived and/or reimbursed by the Manager in the Statement of Operations.

The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed — class specific in the Statement of Operations.

	Class I		Class III		Total
Transfer Agent Fees Reimbursed	$	14,382	$	2,054	$	16,436

With respect to the contractual expense caps, if during the Fund’s fiscal year the operating expenses of a share class, that at any time during the prior two fiscal years received a waiver and/or reimbursement from the Manager, are less than the expense cap for that share class, the Manager is entitled to be reimbursed by such share class up to the lesser of the following expenses:

(a) The amount of fees waived and/or expenses reimbursed during those prior two fiscal years under the agreement.

(b) The amount by which the expense cap for that share class exceeds the operating expenses of the share class for the current fiscal year, provided that:

• The Fund, of which the share class is a part, has more than $50 million in assets for the fiscal year; and

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (continued) BlackRock iShares^® Equity  Appreciation V.I. Fund

• The Manager or an affiliate continues to serve as the Fund’s investment adviser or administrator.

In the event the expense cap for a share class is changed subsequent to a fiscal year in which the Manager becomes entitled to reimbursement for fees waived and/or reimbursed, the amount available to reimburse the Manager shall be calculated by reference to the expense cap for that share class in effect at the time the Manager became entitled to receive such reimbursement, rather than the subsequently changed expense cap for that share class.

On June 30, 2017, the Fund level and class specific waivers and/or reimbursements subject to possible future recoupment under the expense limitation agreement are as follows:

	Expires December 31,
	2017		2018		2019
Fund Level	$	79,049	$	65,572	$	27,288
Class I	$	12,427	$	15,434	$	14,382
Class III	$	168	$	759	$	2,054

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 80% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 85% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $1,493 for securities lending agent services.

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

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

During the period ended June 30, 2017, the Fund did not participate in the Interfund Lending Program.

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

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock iShares^® Equity  Appreciation V.I. Fund

6. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $10,538,142 and $7,151,319, respectively.

7. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for the period ended December 31, 2014 and for each of the two years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of December 31, 2016, the Fund had a capital loss carryforward, with no expiration date, available to offset future realized capital gains of $673,664.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	23,727,235
Gross unrealized appreciation	$	1,451,888
Gross unrealized depreciation		(182	)
Net unrealized appreciation	$	1,451,706

8. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

9. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (concluded) BlackRock iShares^® Equity  Appreciation V.I. Fund

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

10. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		400,456		$	4,172,557			491,275		$	4,630,793
Shares issued in reinvestment of distributions		—			—			18,379			180,300
Shares redeemed		(96,058	)		(992,912	)		(119,440	)		(1,139,978	)
Net increase		304,398		$	3,179,645			390,214		$	3,671,115
Class III
Shares sold		31,320		$	318,654			119,182		$	1,115,318
Shares issued in reinvestment of distributions		—			—			2,295			22,451
Shares redeemed		(25,662	)		(264,252	)		(18,438	)		(176,596	)
Net increase		5,658		$	54,402			103,039		$	961,173
Total Net Increase		310,056		$	3,234,047			493,253		$	4,632,288

11. 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.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Large Cap Focus Growth V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock Large Cap Focus Growth V.I. Fund

      Investment Objective

BlackRock Large Cap Focus Growth V.I. Fund’s (the “Fund”) investment objective is to seek long-term capital growth.

On March 27, 2017, the Fund’s Board approved a proposal to change the name of BlackRock Large Cap Growth V.I. Fund to BlackRock Large Cap Focus Growth V.I. Fund. The Board also approved certain changes to the Fund’s investment strategies. These changes were effective on June 12, 2017.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund outperformed its benchmark, the Russell 1000^® Growth Index.

What factors influenced performance?

• In sector terms, information technology (“IT”) was the prime contributor to relative performance due to strength in semiconductors, IT services and hardware. Positioning within industrials and consumer staples also proved advantageous, as did an underweight to telecommunication services. The main detractors from performance were financials and health care. Banks and capital markets were a drag in financials, while biotechnology weakness and an underweight to equipment & supplies weighed in health care.

• On a stock-specific basis, IT holdings Activision Blizzard Inc. and Lam Research Corp. were the top individual contributors. Activision outperformed amid consistently strong earnings results, allaying investor worries earlier in the period about weak Call of Duty sales. Investor excitement continued to grow around the company’s new content like Overwatch and Destiny 2, and the secular shifts in the industry such as the movement to digital monetization and eSports. Lam performed very well on the back of strong execution and growing demand for its products, driven by the build-out of 3D NAND capacity, for which the company is a key supplier. The valuation remained reasonable, reflecting ongoing concerns that this may be the peak of the cycle, resulting in strong stock performance while the fundamentals continued to improve.

• Additional contributions came from positions in biotechnology firm Alexion Pharmaceuticals, Inc. and LED leader Acuity Brands, Inc., as well as avoidance of Verizon Communications, Inc.

• Conversely, Gilead Sciences, Inc. and Urban Outfitters, Inc. were top detractors in the reporting period. Gilead underperformed due to significant uncertainty in its HCV (Hepatitis C) business following several years of exceptional revenue growth. Earlier in the reporting period, the company reset expectations for its HCV franchise by guiding to a much faster erosion of HCV revenue in 2017. While lower guidance was expected, the magnitude was a surprise and led to share weakness. Urban Outfitters underperformed as same-store sales and gross margin trends continued to fall short of expectations, reflecting deteriorating mall traffic trends, a highly promotional apparel retail environment, and company-specific execution issues.

• Positions in Biogen, Inc. and Walgreens Boots Alliance, Inc. also weighed on returns, as did an underweight to Amazon.com, Inc., which gained about 30% for the first half of the year.

Describe recent portfolio activity.

• During the six-month period, the Fund’s exposure to the IT sector substantially increased, particularly within internet software & services and software. Exposure to consumer discretionary (internet & direct marketing retail) and financials (banks, diversified financial services) increased as well. The largest reductions were in consumer staples and materials, largely with respect to tobacco, food & staples retailing and containers & packaging. Health care exposure also declined.

Describe portfolio positioning at period end.

• Relative to the Russell 1000^® Growth Index, the Fund ended the period with its largest sector overweight in IT, followed by consumer discretionary and financials. The most notable underweight was industrials, followed by materials and consumer staples.

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

      Portfolio Information as of June 30, 2017

Sector Allocation	Percent of Net Assets
Information Technology		42	%
Consumer Discretionary		23
Health Care		16
Industrials		7
Financials		7
Consumer Staples		4
Real Estate		1
Short-Term Securities		4
Liabilities in Excess of Other Assets		(4	)

For Fund compliance purposes, the Fund’s sector classifications refer to 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 the investment adviser. These definitions may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock Large Cap Focus Growth 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  Under normal circumstances, at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in large cap equity securities and derivatives that have similar economic characteristics to such securities. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name BlackRock Large Cap Growth V.I. Fund.

³  An unmanaged index that measures the performance of the large cap growth segment of the U.S. equity universe and consists of those Russell 1000^® securities with higher price-to-book ratios and higher forecasted growth values.

      Performance Summary for the Period Ended June 30, 2017

				Average Annual Total Returns
	6-Month Total Returns5			1 Year5			5 Years5			10 Years5
Class I4		14.68	%		25.01	%		15.08	%		7.25	%
Class III4		14.50			24.71			14.78			6.98
Russell 1000® Growth Index		13.99			20.42			15.30			8.91

⁴  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns. The Fund’s total returns prior to June 12, 2017 are the returns of the Fund when it followed different investment strategies under the name BlackRock Large Cap Growth V.I. Fund.

⁵  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

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

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

Expense Example
	Actual									Hypothetical7
	Beginning Account Value January 1, 2017			Ending Account Value June 30, 2017			Expenses Paid During the Period6			Beginning Account Value January 1, 2017			Ending Account Value June 30, 2017			Expenses Paid During the Period6			Annualized Expense Ratio
Class I		$	1,000.00		$	1,146.80		$	4.47		$	1,000.00		$	1,020.63		$	4.21		0.84	%
Class III		$	1,000.00		$	1,145.00		$	5.80		$	1,000.00		$	1,019.39		$	5.46		1.09	%

⁶  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).

⁷  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock Large Cap Focus Growth V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction

or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Large Cap Focus Growth V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Airlines — 1.5%
Southwest Airlines Co.		34,402	$	2,137,740
Banks — 4.8%
Bank of America Corp.		66,417		1,611,276
First Republic Bank		19,600		1,961,960
SVB Financial Group (a)		9,454		1,661,919
U.S. Bancorp		30,137		1,564,713
				6,799,868
Beverages — 4.4%
Constellation Brands, Inc., Class A		21,400		4,145,822
Dr. Pepper Snapple Group, Inc.		23,099		2,104,550
				6,250,372
Biotechnology — 7.0%
Alexion Pharmaceuticals, Inc. (a)		40,389		4,914,130
Celgene Corp. (a)		24,806		3,221,555
Vertex Pharmaceuticals, Inc. (a)		14,256		1,837,171
				9,972,856
Building Products — 0.8%
JELD-WEN Holding, Inc. (a)		36,763		1,193,327
Diversified Financial Services — 1.8%
Berkshire Hathaway, Inc., Class B (a)		15,217		2,577,303
Electrical Equipment — 2.3%
Acuity Brands, Inc. (b)		16,247		3,302,690
Equity Real Estate Investment Trusts (REITs) — 0.9%
Equinix, Inc.		2,949		1,265,593
Health Care Equipment & Supplies — 1.2%
Boston Scientific Corp. (a)		64,125		1,777,545
Health Care Providers & Services — 6.4%
Centene Corp. (a)		18,423		1,471,629
UnitedHealth Group, Inc.		34,079		6,318,928
Universal Health Services, Inc., Class B		10,283		1,255,349
				9,045,906
Hotels, Restaurants & Leisure — 1.9%
Domino’s Pizza, Inc.		12,718		2,690,238
Internet & Direct Marketing Retail — 14.3%
Amazon.com, Inc. (a)		12,544		12,142,592
Netflix, Inc. (a)		25,146		3,757,064
Priceline Group, Inc. (a)		2,418		4,522,917
				20,422,573
Internet Software & Services — 15.4%
Alibaba Group Holding Ltd. — ADR (a)(b)		16,224		2,285,962
Alphabet, Inc., Class A (a)		5,367		4,989,593
Alphabet, Inc., Class C (a)		5,275		4,793,551
Facebook, Inc., Class A (a)		32,839		4,958,032
Tencent Holdings Ltd.		135,346		4,855,532
				21,882,670
IT Services — 5.0%
Global Payments, Inc.		24,087		2,175,538
Visa, Inc., Class A		52,722		4,944,269
				7,119,807

Common Stocks	Shares		Value
Media — 1.9%
Comcast Corp., Class A		70,509	$	2,744,210
Pharmaceuticals — 1.5%
Zoetis, Inc.		33,212		2,071,765
Professional Services — 2.2%
Equifax, Inc.		22,680		3,116,686
Semiconductors & Semiconductor Equipment — 5.2%
ASML Holding NV		14,094		1,836,589
Broadcom Ltd.		7,302		1,701,731
NVIDIA Corp.		14,056		2,031,935
Teradyne, Inc.		59,298		1,780,719
				7,350,974
Software — 13.3%
Activision Blizzard, Inc.		30,908		1,779,374
Adobe Systems, Inc. (a)		12,931		1,828,961
Autodesk, Inc. (a)		28,445		2,867,825
Microsoft Corp.		127,539		8,791,263
Snap, Inc., Class A (a)(b)		47,472		843,577
Zendesk, Inc. (a)		102,859		2,857,423
				18,968,423
Specialty Retail — 3.8%
Home Depot, Inc.		20,781		3,187,805
Ulta Beauty, Inc. (a)		7,623		2,190,393
				5,378,198
Technology Hardware, Storage & Peripherals — 3.1%
Apple Inc.		30,380		4,375,328
Textiles, Apparel & Luxury Goods — 1.1%
NIKE, Inc., Class B		27,130		1,600,670
Total Long-Term Investments (Cost — $118,529,992) — 99.8%				142,044,742
Short-Term Securities
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (c)(d)		246,947		246,947
SL Liquidity Series, LLC, Money Market Series, 1.27% (c)(d)(e)		5,950,732		5,951,327
Total Short-Term Securities (Cost — $6,198,869) — 4.4%				6,198,274
Total Investments (Cost — $124,728,861) — 104.2%				148,243,016
Liabilities in Excess of Other Assets — (4.2)%				(5,951,972	)
Net Assets — 100.0%			$	142,291,044

Portfolio Abbreviations
ADR	American Depositary Receipts

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock Large Cap Focus Growth V.I. Fund

      Notes to Schedule of Investments

(a) Non-income producing security.

(b) Security, or a portion of the security, is on loan.

(c) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity		Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Loss		Change  in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund,
Institutional Class		4,472,371		(4,225,424)		246,947		$   246,947		$12,949			—		—
SL Liquidity Series, LLC, Money Market
Series		1,044,082		4,906,650		5,950,732		5,951,327		13,597	1		$(404)		$(579)
Total								$6,198,274		$26,546			$(404)		$(579)

¹  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(d) Current yield as of period end.

(e) Security was purchased with the cash collateral from loaned securities.

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

      Derivative Financial Instruments Categorized by Risk Exposure

For the six-months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Total
Net Realized Gain from:
Futures contracts		—		—	$	117,271		—		—	$	117,271
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts		—		—	$	19,346		—		—	$	19,346

      Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts — long	$	1,061,640

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

      Fair Value Hierarchy as of Period End

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

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

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Common Stocks:
Airlines	$	2,137,740		—		—	$	2,137,740
Banks		6,799,868		—		—		6,799,868
Beverages		6,250,372		—		—		6,250,372
Biotechnology		9,972,856		—		—		9,972,856
Building Products		1,193,327		—		—		1,193,327
Diversified Financial Services		2,577,303		—		—		2,577,303
Electrical Equipment		3,302,690		—		—		3,302,690
Equity Real Estate Investment Trusts (REITs)		1,265,593		—		—		1,265,593
Health Care Equipment & Supplies		1,777,545		—		—		1,777,545

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock Large Cap Focus Growth V.I. Fund

	Level 1		Level 2		Level 3		Total
Health Care Providers & Services	$	9,045,906		—		—	$	9,045,906
Hotels, Restaurants & Leisure		2,690,238		—		—		2,690,238
Internet & Direct Marketing Retail		20,422,573		—		—		20,422,573
Internet Software & Services		17,027,138	$	4,855,532		—		21,882,670
IT Services		7,119,807		—		—		7,119,807
Media		2,744,210		—		—		2,744,210
Pharmaceuticals		2,071,765		—		—		2,071,765
Professional Services		3,116,686		—		—		3,116,686
Semiconductors & Semiconductor Equipment		7,350,974		—		—		7,350,974
Software		18,968,423		—		—		18,968,423
Specialty Retail		5,378,198		—		—		5,378,198
Technology Hardware, Storage & Peripherals		4,375,328		—		—		4,375,328
Textiles, Apparel & Luxury Goods		1,600,670		—		—		1,600,670
Short-Term Securities		246,947		—		—		246,947
Subtotal	$	137,436,157	$	4,855,532		—	$	142,291,689
Investments Valued at NAV1								5,951,327
Total Investments							$	148,243,016

¹  As of June 30, 2017, certain investments of the Fund were fair valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Large Cap Focus Growth V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $5,900,604) (cost — $118,529,992)	$	142,044,742
Investments at value — affiliated (cost — $6,198,869)		6,198,274
Receivables:
Investments sold		425,777
Securities lending income — affiliated		11,414
Capital shares sold		13,469
Dividends — affiliated		2,454
Dividends — unaffiliated		72,083
From the Manager		31,268
Prepaid expenses		319
Total assets		148,799,800
Liabilities
Cash collateral on securities loaned at value		5,950,808
Payables:
Investments purchased		217,687
Capital shares redeemed		135,997
Distribution fees		9,755
Investment advisory fees		76,788
Officer’s and Directors’ fees		285
Other accrued expenses		40,455
Other affiliates		1,046
Transfer agent fees		75,935
Total liabilities		6,508,756
Net Assets	$	142,291,044
Net Assets Consist of
Paid-in capital	$	97,495,253
Undistributed net investment income		306,810
Accumulated net realized gain		20,974,826
Net unrealized appreciation (depreciation)		23,514,155
Net Assets	$	142,291,044
Net Asset Value
Class I — Based on net assets of $94,732,023 and 6,188,673 shares outstanding, 100 million shares authorized, $0.10 par value	$	15.31
Class III — Based on net assets of $47,559,021 and 3,136,382 shares outstanding, 100 million shares authorized, $0.10 par value	$	15.16

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Large Cap Focus Growth V.I. Fund
Investment Income
Dividends — unaffiliated	$	894,529
Securities lending income — affiliated — net		13,597
Dividends — affiliated		12,949
Foreign taxes withheld		(2,440	)
Total investment income		918,635
Expenses
Investment advisory		442,462
Transfer agent		2,480
Transfer agent — class specific		138,903
Distribution — class specific		55,109
Professional		32,262
Accounting services		16,070
Printing		15,261
Officer and Directors		10,304
Custodian		3,237
Miscellaneous		4,373
Total expenses		720,461
Less:
Fees waived by the Manager		(1,617	)
Transfer agent fees reimbursed — class specific		(90,592	)
Total expenses after fees waived and/or reimbursed		628,252
Net investment income		290,383
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated		19,523,106
Investments — affiliated		(404	)
Foreign currency transactions		48
Futures contracts		117,271
		19,640,021
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		(1,551,062	)
Investments — affiliated		(579	)
Futures contracts		19,346
		(1,532,295	)
Total realized and unrealized gain		18,107,726
Net Increase in Net Assets Resulting from Operations	$	18,398,109

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Statements of Changes in Net Assets BlackRock Large Cap Focus Growth V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	290,383		$	764,185
Net realized gain		19,640,021			12,038,187
Net change in unrealized appreciation (depreciation)		(1,532,295	)		(3,672,031	)
Net increase in net assets resulting from operations		18,398,109			9,130,341
Distributions to Shareholders1
From net investment income:
Class I		—			(578,884	)
Class III		—			(173,673	)
From net realized gain:
Class I		—			(7,321,271	)
Class III		—			(3,320,713	)
Decrease in net assets resulting from distributions to shareholders		—			(11,394,541	)
Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(2,799,454	)		(7,345,802	)
Net Assets
Total increase (decrease) in net assets		15,598,655			(9,610,002	)
Beginning of period		126,692,389			136,302,391
End of period	$	142,291,044		$	126,692,389
Undistributed net investment income, end of period	$	306,810		$	16,427

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock Large Cap Focus Growth V.I. Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	13.35		$	13.59		$	14.08		$	14.22		$	11.54		$	10.99
Net investment income1		0.04			0.09			0.08			0.09			0.09			0.17
Net realized and unrealized gain		1.92			0.99			0.31			1.92			3.82			1.48
Net increase from investment operations		1.96			1.08			0.39			2.01			3.91			1.65
Distributions:2
From net investment income		—			(0.10	)		(0.09	)		(0.08	)		(0.10	)		(0.18	)
From net realized gain		—			(1.22	)		(0.79	)		(2.07	)		(1.13	)		(0.92	)
Total distributions		—			(1.32	)		(0.88	)		(2.15	)		(1.23	)		(1.10	)
Net asset value, end of period	$	15.31		$	13.35		$	13.59		$	14.08		$	14.22		$	11.54
Total Return3
Based on net asset value		14.68	%4		7.89	%		2.73	%		14.16	%		33.92	%		15.22	%
Ratios to Average Net Assets
Total expenses		0.98	%5,6		0.96	%5		0.95	%		0.96	%		0.97	%		0.91	%
Total expenses after fees waived and/or reimbursed		0.84	%5,6		0.84	%5		0.82	%		0.83	%		0.84	%		0.82	%
Net investment income		0.51	%5,6		0.68	%5		0.59	%		0.57	%		0.70	%		1.38	%
Supplemental Data
Net assets, end of period (000)	$	94,732		$	87,346		$	98,485		$	108,329		$	107,378		$	91,778
Portfolio turnover rate		74	%		37	%		35	%		51	%		36	%		102	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

⁶  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Financial Highlights (concluded) BlackRock Large Cap Focus Growth V.I. Fund

	Class III
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	13.24		$	13.50		$	13.99		$	14.14		$	11.49		$	10.96
Net investment income1		0.02			0.06			0.05			0.05			0.06			0.14
Net realized and unrealized gain		1.90			0.96			0.30			1.92			3.79			1.46
Net increase from investment operations		1.92			1.02			0.35			1.97			3.85			1.60
Distributions:2
From net investment income		—			(0.06	)		(0.05	)		(0.05	)		(0.07	)		(0.15	)
From net realized gain		—			(1.22	)		(0.79	)		(2.07	)		(1.13	)		(0.92	)
Total distributions		—			(1.28	)		(0.84	)		(2.12	)		(1.20	)		(1.07	)
Net asset value, end of period	$	15.16		$	13.24		$	13.50		$	13.99		$	14.14		$	11.49
Total Return3
Based on net asset value		14.50	%4		7.54	%		2.51	%		13.96	%		33.58	%		14.82	%
Ratios to Average Net Assets
Total expenses		1.23	%5,6		1.22	%5		1.21	%		1.22	%		1.22	%		1.16	%
Total expenses after fees waived and/or reimbursed		1.09	%5,6		1.09	%5		1.07	%		1.09	%		1.09	%		1.08	%
Net investment income		0.26	%5,6		0.42	%5		0.35	%		0.32	%		0.45	%		1.16	%
Supplemental Data
Net assets, end of period (000)	$	47,559		$	39,346		$	37,818		$	32,090		$	20,864		$	11,528
Portfolio turnover rate		74	%		37	%		35	%		51	%		36	%		102	%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Ratios do not include expenses incurred indirectly as a result of investments in underlying funds of approximately 0.01%.

⁶  Annualized.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (Unaudited) BlackRock Large Cap Focus Growth V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Large Cap Focus Growth V.I. Fund (the “Fund”) (formerly known as BlackRock Large Cap Growth V.I. Fund). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

2. Significant Accounting Policies:

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

Foreign Currency: The Fund’s books and records are maintained in U.S. dollars. Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

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

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

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

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

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Financial Statements (continued) BlackRock Large Cap Focus Growth V.I. Fund

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

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

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

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

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

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

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

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

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Large Cap Focus Growth V.I. Fund

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

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

As of June 30, 2017, certain investments of the Fund were valued using NAV as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

4. Securities and Other Investments:

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (continued) BlackRock Large Cap Focus Growth V.I. Fund

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value		Cash Collateral Received1			Net  Amount2
Barclays Capital, Inc.		$       1,546		$       (1,546	)	—
Deutsche Bank Securities, Inc.		1,052,787		(1,048,542	)	$  4,245
Goldman Sachs & Co.		427,760		(427,760	)	—
JP Morgan Securities LLC.		105,112		(105,112	)	—
Mizuho Securities USA, Inc.		1,690,800		(1,690,800	)	—
State Street Bank and Trust Co.		2,216,768		(2,207,829	)	8,939
UBS Securities LLC.		405,831		(405,831	)	—
Total		$5,900,604		$(5,887,420	)	$13,184

¹  Cash collateral with a value of $5,950,808 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

²  The market value of the loaned securities is determined as of June 30, 2017. Additional collateral is delivered to the Fund on the next business day in accordance with the MSLA. The net amount would be subject to the borrower default indemnity in the event of default by the counterparty.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Derivative Financial Instruments:

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

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

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

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

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Large Cap Focus Growth V.I. Fund

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.65%
$1 Billion - $3 Billion	0.61%
$3 Billion - $5 Billion	0.59%
$5 Billion - $10 Billion	0.57%
Greater than $10 Billion	0.55%

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

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III were $55,109.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class III	Total
$93,149	$45,754	$138,903

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $1,617.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. Effective June 12, 2017, the contractual waiver was extended through April 30, 2019. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, there were no fees waived.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $693 for certain accounting services, which is included in accounting services in the Statement of Operations.

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

Class I	0.07	%
Class III	0.07	%

The Manager has agreed not to reduce or discontinue this contractual reimbursement through April 30, 2019 unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (continued) BlackRock Large Cap Focus Growth V.I. Fund

The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed — class specific in the Statement of Operations:

	Class I	Class III	Total
Transfer agent fees reimbursed	$60,453	$30,139	$90,592

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

Class I	1.25	%
Class III	1.50	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2019, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived and/or reimbursed by the Manager.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 71.5% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 75% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $5,355 for securities lending agent services.

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

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

During the period ended June 30, 2017, the Fund did not participate in the Interfund Lending Program.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Large Cap Focus Growth V.I. Fund

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

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the six months ended June 30, 2017, the purchase and sale transactions and any net realized gains (losses) with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:

Purchases	Sales	Net Realized Gain
$12,147,796	$12,312,319	$2,728,365

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $99,530,918 and $97,619,118, respectively.

8. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$124,749,664
Gross unrealized appreciation	$	24,287,657
Gross unrealized depreciation		(794,305	)
Net unrealized appreciation	$	23,493,352

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Notes to Financial Statements (continued) BlackRock Large Cap Focus Growth V.I. Fund

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

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

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

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

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

Concentration Risk: As of period end, the Fund invested a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting such sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

11. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017					Year Ended December 31, 2016
	Shares			Amount		Shares		Amount
Class l
Shares sold		151,044			$2,209,874		218,881		$2,963,754
Shares issued in reinvestment of distributions.		—			—		586,592		7,900,155
Shares redeemed		(506,665	)		(7,384,017)		(1,505,534)		(20,544,211)
Net decrease		(355,621	)		$(5,174,143)		(700,061)		$(9,680,302)

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (concluded) BlackRock Large Cap Focus Growth V.I. Fund

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class lll
Shares sold		422,443			$ 6,112,827			529,948			$ 6,982,045
Shares issued in reinvestment of distributions		—			—			261,607			3,494,386
Shares redeemed		(258,282	)		(3,738,138	)		(621,016	)		(8,141,931	)
Net increase		164,161			$ 2,374,689			170,539			$ 2,334,500
Total Net Decrease		(191,460	)		$(2,799,454	)		(529,522	)		$(7,345,802	)

12. 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 and a long-term capital gain distribution in the following amounts per share on July 21, 2017 to shareholders of record on July 19, 2017:

	Net Investment Income	Long-Term Capital Gain
Class I	$0.000736		$0.144987
Class III	$0.000736		$0.144987

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Managed Volatility V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock Managed Volatility V.I. Fund

          Investment Objective

BlackRock Managed Volatility V.I. Fund’s (the “Fund”) investment objective is to seek a level of current income and degree of stability of principal not normally available from an investment solely in equity securities, as well as the opportunity for capital appreciation greater than is normally available from an investment solely in debt securities.

         Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund underperformed its blended benchmark (50% MSCI All Country World Index/50% Citi World Government Bond Index (hedged into USD) and outperformed its performance benchmark, the BofA Merrill Lynch 3-Month U.S. Treasury Bill Index.

What factors influenced performance?

• The Fund’s tilt toward equities relative to bonds benefited performance as growth dynamics improved and the shift toward monetary policy normalization continued. Gains were concentrated in Europe, most notably France and Italy, as the region’s economy remained resilient and political uncertainty faded following the French election in early May. Additionally, Japanese stocks boosted performance on the back of improving economic activity. On the fixed income side of the portfolio, an allocation to Canadian bonds supported returns amid disappointing inflation data. Currency exposures added value as a long position in the euro benefited from the European Central Bank’s more upbeat tone in response to the improved outlook.

• Exposure to European bonds weighed on performance as concerns over the French election and hawkish central bank communications led to volatility. Within equities, a short position in the United States early in the year dampened returns as domestic stocks advanced, supported by positive economic momentum and easing financial conditions.

Describe recent portfolio activity.

• The Fund increased exposure to stocks given diminishing political risks and expectations for continued resilience in global growth. Within equities, the Fund favored Europe and Japan relative to the U.S. market. The

Fund added to Japanese stocks as the Japanese economy saw growth reaccelerate following a weak start to 2017. Additionally, the Fund became more constructive on fixed income as the period progressed. Given ongoing improvement in European economic data, the Fund maintained an overweight in the euro, yet took profits and reduced the magnitude of this position toward the end of the period.

• Derivatives, specifically futures contracts, were used by the investment adviser as a means to manage risk and/or take outright views on interest rates, credit risk and/or foreign exchange positions in the Fund. During the period, the Fund’s use of derivatives had a negative impact on performance.

• The Fund held a relatively high allocation to cash as a means of reducing overall portfolio volatility and in conjunction with less directional positioning with respect to both equities and fixed income. The cash position did not have a material impact on performance.

Describe portfolio positioning at period end.

• The Fund ended the period positioned with a constructive view on both stocks and bonds. The Fund maintained a tilt toward equities, largely expressed through holdings in Japan and Europe. An overweight to Japan was based on a strengthening consumer and the prospect of tighter global monetary policy leading to yen weakness. Within Europe, Germany and France remained large allocations given the region’s accelerating growth. Within fixed income, the Fund favored Australian bonds given ongoing weakness in wages and the domestic economy. In terms of currencies, the Fund retained a long position in the euro on the view that the European Central Bank is moving toward a less accommodative policy stance.

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

          Portfolio Information

Portfolio Composition	Percent of Total Investments1
Investment Companies		99	%
Non-Agency Mortgage-Backed Securities		1

¹  Total investments exclude short-term securities.

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock Managed Volatility 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 uses an asset allocation strategy, investing varying percentages of its portfolio in three major categories: stocks, bonds and money market investments. The Fund’s total returns prior to January 22, 2013 are the returns of the Fund when it followed different investment strategies under the name BlackRock Balanced Capital V.I. Fund.

³  A free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI All Country World Index consists of 46 country indexes comprising of 23 developed and 23 emerging market country indexes.

⁴  A market capitalization weighted bond index consisting of government bond markets of 23 countries, including the United States.

⁵  A customized weighted index comprised of the returns of 50% MSCI ACWI/50% Citigroup WGBI (hedged into USD).

⁶  An unmanaged index that tracks 3-month U.S. Treasury securities. Effective June 2, 2014, the BofA Merrill Lynch 3-Month U.S. Treasury Bill Index was added to the performance benchmarks against which the Fund measures its performance.

      Performance Summary for the Period Ended June 30, 2017

				Average Annual Total Returns
	6-Month Total  Returns8			1 Year8			5 Years8			10 Years8
Class I7		2.50	%		4.73	%		4.63	%		2.16	%
50% MSCI ACWI/50% Citigroup WGBI (hedged into USD)		6.03			7.96			7.01			4.44
MSCI ACWI		11.48			18.78			10.54			3.71
Citigroup WGBI (hedged into USD)		0.80			(2.00	)		3.31			4.31
BofA Merrill Lynch 3-Month U.S. Treasury Bill Index		0.31			0.49			0.17			0.58

⁷  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns. The Fund’s total returns prior to January 22, 2013 are the returns of the Fund when it followed different investment strategies under the name BlackRock Balanced Capital V.I. Fund.

⁸  For a portion of the period, the Fund’s investment adviser 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. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

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

Expense Example
	Actual			Hypothetical10
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period9	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period9	Annualized Expense Ratio
Class I	$1,000.00	$1,025.00	$4.02	$1,000.00	$1,020.83	$4.01	0.80%

⁹  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). The fees and expenses of the underlying funds in which the Fund invests are not included in the Fund’s annualized expense ratio.

¹⁰  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock Managed Volatility V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

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

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

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

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transac-

tion or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Managed Volatility V.I. Fund
	(Percentages shown are based on Net Assets)

Asset-Backed Securities (a)	Par  (000)		Value
Countrywide Asset-Backed Certificates, Series 2004-5, Class A, 2.12%, 10/25/34 (a)	$	7	$	6,811
Morgan Stanley ABS Capital I, Inc. Trust, Series 2005-HE1, Class A2MZ, 1.82%, 12/25/34 (a)		8		7,321
Structured Asset Investment Loan Trust, Series 2004-8, Class M4, 2.72%, 9/25/34 (a)		10		8,984
Structured Asset Securities Corp. Mortgage Pass-Through Certificates, Series 2004-23XS, Class 2A1, 1.52%, 1/25/35 (a)		8		7,596
Total Asset-Backed Securities — 0.2%				30,712
Investment Companies	Shares
iShares 1-3 Year Credit Bond ETF (b)		15,923		1,676,851
iShares 3-7 Year Treasury Bond ETF (b)(c)		6,491		802,093
iShares Core U.S. Aggregate Bond ETF (b)		17,278		1,892,114
iShares MSCI EAFE ETF (b)		21,263		1,386,347
SPDR Bloomberg Barclays International Treasury Bond ETF (d)		136,622		3,774,866
Total Investment Companies — 62.3%				9,532,271
Non-Agency Mortgage-Backed Securities	Par (000)
Collateralized Mortgage Obligations — 0.2%
Countrywide Alternative Loan Trust, Series 2007-22, Class 2A16, 6.50%, 9/25/37	$	25		17,440
Credit Suisse Mortgage Capital Certificates:
Series 2011-2R, Class 2A1, 3.27%, 7/27/36 (a)(e)		3		3,136
Series 2011-5R, Class 2A1, 3.24%, 8/27/46 (a)(e)		17		16,757
Impac Secured Assets CMN Owner Trust, Series 2004-3, Class 1A4, 1.82%, 11/25/34 (a)		2		2,191
Total Non-Agency Mortgage-Backed Securities — 0.2%				39,524

Other Interests (f)	Beneficial Interest (000)		Value
Capital Markets — 0.0%
Lehman Brothers Holdings, Inc. (d)(g)(h)		$25		—
Total Long-Term Investments (Cost — $9,956,792) — 62.7%			$	9,602,507
Short-Term Securities	Shares
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (b)(i)		3,890,126		3,890,126
SL Liquidity Series, LLC, Money Market Series, 1.27% (b)(i)(j)		12,142		12,143
Total Short-Term Securities (Cost — $3,902,270) — 25.5%				3,902,269
Total Investments (Cost — $13,859,062) — 88.2%				13,504,776
Other Assets Less Liabilities — 11.8%				1,802,067
Net Assets — 100.0%			$	15,306,843

Portfolio Abbreviations
AUD	Australian Dollar	EUR	Euro	MSCI	Morgan Stanley Capital International
CAD	Canadian Dollar	GBP	British Pound	SPDR	Standard & Poor’s Depositary Receipts
CHF	Swiss Franc	HKD	Hong Kong Dollar	TWD	Taiwan New Dollar
DKK	Danish Krone	JPY	Japanese Yen	USD	U.S. Dollar
ETF	Exchange Traded Fund	KRW	South Korean Won

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock Managed Volatility V.I. Fund

      Notes to Schedule of Investments

(a) Variable rate security. Rate as of period end.

(b) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Shares Purchased		Shares Sold			Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Loss			Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		5,383,858		—		1,493,732	1		3,890,126		$3,890,126		$13,010			—			—
SL Liquidity Series, LLC, Money Market Series		3,789,314		—		3,777,172	1		12,142		12,143		708	2		$(302	)		$       378
iShares 1-3 Year Credit Bond ETF		15,923		—		—			15,923		1,676,851		11,060			—			5,892
iShares 3-7 Year Treasury Bond ETF		6,491		—		—			6,491		802,093		4,661			—			6,881
iShares Core U.S. Aggregate Bond ETF		17,278		—		—			17,278		1,892,114		19,524			—			25,053
iShares MSCI EAFE ETF		21,263		—		—			21,263		1,386,347		22,576			—			158,834
Total											$9,659,674		$71,539			$(302	)		$197,038

¹  Represents net shares sold.

²  Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(c) Security, or a portion of the security, is on loan.

(d) Non-income producing security.

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

(f) Other interests represent beneficial interests in liquidation trusts and other reorganization or private entities. (g) Issuer filed for bankruptcy and/or is in default.

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

(i) Current yield as of period end.

(j) Security was purchased with the cash collateral from loaned securities.

      Derivative Financial Instruments Outstanding as of Period End

Futures Contracts
Contracts Long (Short)	Issue		Expiration		Notional Value		Unrealized Appreciation (Depreciation)
5		CAC 40 10 Euro Index		July 2017	USD	292,191		$  (8,576	)
52		Australian Government Bonds (3 Year)		September 2017	USD	12,211,081		(26,849	)
1		DAX Index		September 2017	USD	351,783		(11,881	)
(18)		Euro STOXX 50 Index		September 2017	USD	705,370		22,671
(17)		Euro-Bobl		September 2017	USD	2,557,165		26,781
(2)		Euro-Buxl		September 2017	USD	373,529		7,308
9		Nikkei 225 Index		September 2017	USD	1,601,956		(2,225	)
(12)		S&P 500 E-Mini Index		September 2017	USD	1,452,540		3,238
10		S&P 500 E-Mini Index		September 2017	USD	1,210,450		(2,743	)
(11)		U.S. Treasury Notes (10 Year)		September 2017	USD	1,380,844		3,662
(17)		U.S. Treasury Notes (5 Year)		September 2017	USD	2,003,211		3,959
Total								$ 15,345

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Managed Volatility V.I. Fund

Forward Foreign Currency Exchange Contracts

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
EUR	415,000	USD	465,132	Credit Suisse International		9/20/17		$ 10,953
USD	45,279	HKD	352,493	Royal Bank of Scotland PLC		9/20/17		28
USD	2,154,830	JPY	237,320,000	Deutsche Bank AG		9/20/17		37,104
USD	298,024	JPY	32,831,000	Royal Bank of Scotland PLC		9/20/17		5,057
								53,142
USD	227,208	AUD	300,000	Deutsche Bank AG		9/20/17		(3,130	)
USD	297,596	CAD	395,000	Bank of America N.A.		9/20/17		(7,400	)
USD	75,311	CAD	100,000	Deutsche Bank AG		9/20/17		(1,903	)
USD	130,027	CHF	126,000	Deutsche Bank AG		9/20/17		(2,080	)
USD	46,404	DKK	307,846	Royal Bank of Scotland PLC		9/20/17		(1,104	)
USD	2,520,070	EUR	2,249,000	Deutsche Bank AG		9/20/17		(59,967	)
USD	639,928	GBP	500,000	Deutsche Bank AG		9/20/17		(12,975	)
								(88,559	)
Net Unrealized Depreciation								$(35,417	)

OTC Total Return Swaps

Reference Entity	Fixed Amount		Counterparty		Expiration Date		Contract Amount			Value			Premiums Paid (Received)		Unrealized Appreciation (Depreciation)
Taiwan Capitalization Weighted Stock Index		TWD 6,225,9521		Bank of America N.A.		7/19/17		TWD	3		$2,457			—		$2,457
KOSPI 200 Index		KRW 234,190,6501		Bank of America N.A.		9/14/17		KRW	3		(423	)		—		(423	)
Total											$2,034			—		$2,034

¹ The Fund pays the total return of the reference entity and receives the fixed amount. Net payment made at termination.

      Derivative Financial Instruments Categorized by Risk Exposure

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

Assets — Derivative Financial Instruments		Commodity Contracts	Credit Contracts	Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts	Total
Futures contracts	Net unrealized appreciation1	—	—		$25,909		—		$41,710	—		$  67,619
Forward foreign currency exchange contracts	Unrealized appreciation on forward foreign currency exchange contracts	—	—		—		$53,142		—	—		53,142
Swaps — OTC	Unrealized appreciation on OTC swaps	—	—		2,457		—		—	—		2,457
Total		—	—		$28,366		$53,142		$41,710	—		$123,218
Liabilities — Derivative Financial Instruments
Futures contracts	Net unrealized depreciation1	—	—		$25,425		—		$26,849	—		$  52,274
Forward foreign currency exchange contracts	Unrealized depreciation on forward foreign currency exchange contracts	—	—		—		$88,559		—	—		88,559
Swaps — OTC	Unrealized depreciation on OTC swaps	—	—		423		—		—	—		423
Total		—	—		$25,848		$88,559		$26,849	—		$141,256

¹ Includes cumulative appreciation (depreciation) on futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Schedule of Investments (continued) BlackRock Managed Volatility V.I. Fund

For the six months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

Net Realized Gain (Loss) from:	Commodity Contracts	Credit Contracts	Equity Contracts		Foreign Currency Exchange Contracts			Interest Rate Contracts			Other Contracts	Total
Futures contracts	—	—		$63,685		$(141,767	)		$(37,329	)	—		$(115,411	)
Forward foreign currency exchange contracts	—	—		—		29,641			—		—		29,641
Total	—	—		$63,685		$(112,126	)		$(37,329	)	—		$  (85,770	)
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts	—	—		$23,403		$  (87,072	)		$ 32,440		—		$(31,229	)
Forward foreign currency exchange contracts	—	—		—		(36,215	)		—		—		(36,215	)
Swaps	—	—		2,034		—			—		—		2,034
Total	—	—		$25,437		$(123,287	)		$ 32,440		—		$(65,410	)

      Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts - long	$11,681,235
Average notional value of contracts - short	$10,351,081
Forward foreign currency exchange contracts:
Average amounts purchased - in USD	$  3,307,307
Average amounts sold - in USD	$     277,367
Total return swaps:
Average notional value	$     203,659

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

      Derivative Financial Instruments — Offsetting as of Period End

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

	Assets			Liabilities
Derivative Financial Instruments:
Futures contracts		$ 10,548			$  27,501
Forward foreign currency exchange contracts		53,142			88,559
Swaps - OTC1		2,457			423
Total derivative assets and liabilities in the Statement of Assets and Liabilities		$ 66,147			$116,483
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		(10,548	)		(27,501	)
Total derivative assets and liabilities subject to an MNA		$ 55,599			88,982

¹ Includes unrealized appreciation (depreciation) on OTC swaps and swap premiums paid/received in the Statements of Assets and Liabilities.

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

Counterparty	Derivative Assets Subject to an MNA  by Counterparty		Derivatives Available for Offset			Non-cash Collateral Received	Cash Collateral Received	Net Amount of Derivative Assets1
Bank of America N.A.	$	2,457	$	(2,457	)	—	—		—
Credit Suisse International		10,953		—		—	—	$	10,953
Deutsche Bank AG		37,104		(37,104	)	—	—		—
Royal Bank of Scotland PLC		5,085		(1,104	)	—	—		3,981
Total	$	55,599	$	(40,665	)	—	—	$	14,934
Counterparty	Derivative Liabilities Subject to an MNA  by Counterparty		Derivatives Available for Offset1			Non-cash Collateral Pledged	Cash Collateral Pledged	Net Amount of Derivative Liabilities2
Bank of America N.A.	$	7,823	$	(2,457	)	—	—	$	5,366
Deutsche Bank AG		80,055		(37,104	)	—	—		42,951
Royal Bank of Scotland PLC		1,104		(1,104	)	—	—		—
Total	$	88,982	$	(40,665	)	—	—	$	48,317

¹ Net amount represents the net amount receivable from the counterparty in the event of default.

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock Managed Volatility V.I. Fund

      Fair Value Hierarchy as of Period End

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

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

	Level 1			Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities		—		$	30,712			—	$	30,712
Investment Companies	$	9,532,271			—			—		9,532,271
Non-Agency Mortgage-Backed Securities		—			39,524			—		39,524
Other Interests		—			—			—		—
Short-Term Securities		3,890,126			—			—		3,890,126
Subtotal	$	13,422,397		$	70,236			—	$	13,492,633
Investments Valued at NAV1										12,143
Total Investments									$	13,504,776
	Level 1			Level 2			Level 3		Total
Derivative Financial Instruments2
Assets:
Equity contracts	$	25,909		$	2,457			—	$	28,366
Foreign currency exchange contracts		—			53,142			—		53,142
Interest rate contracts		41,710			—			—		41,710
Liabilities:
Equity contracts		(25,425	)		(423	)		—		(25,848	)
Foreign currency exchange contracts		—			(88,559	)		—		(88,559	)
Interest rate contracts		(26,849	)		—			—		(26,849	)
Total	$	15,345		$	(33,383	)		—	$	(18,038	)

¹ As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

² Derivative financial instruments are swaps, futures contracts and forward foreign currency exchange contracts, which are valued at the unrealized appreciation (depreciation) on the instrument.

During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Managed Volatility V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $11,863) (cost — $4,181,975)	$	3,845,102
Investments at value — affiliated (cost — $9,677,087)		9,659,674
Cash pledged for futures contracts		339,750
Foreign currency at value (cost — $1,557,665)		1,578,889
Receivables:
Securities lending income — affiliated		443
Dividends — affiliated		2,952
Interest — unaffiliated		198
From custodian		40,184
From the Manager		5,011
Variation margin on futures contracts		10,548
Unrealized appreciation on foreign currency exchange contracts		53,142
Unrealized appreciation on OTC swaps		2,457
Prepaid expenses		42
Other assets		159
Total assets		15,538,551
Liabilities
Cash collateral on securities loaned at value		12,144
Payables:
Capital shares redeemed		3,389
Investment advisory fees		1,755
Other accrued expenses		7,694
Other affiliates		137
Printing fees		13,596
Professional fees		76,510
Variation margin on futures contracts		27,501
Unrealized depreciation on foreign currency exchange contracts		88,559
Unrealized depreciation on OTC swaps		423
Total liabilities		231,708
Net Assets	$	15,306,843
Net Assets Consist of
Paid-in capital	$	15,709,029
Accumulated net investment loss		(21,351	)
Accumulated net realized loss		(29,894	)
Net unrealized appreciation (depreciation)		(350,941	)
Net Assets	$	15,306,843
Net Asset Value
Class I — Based on net assets of $15,306,843 and 1,132,294 shares outstanding, 100 million shares authorized, $0.10 par value	$	13.52

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Managed Volatility V.I. Fund
Investment Income
Dividends — affiliated	$	70,831
Securities lending — affiliated — net		708
Interest — unaffiliated		212
Total investment income		71,751
Expenses
Investment advisory		42,488
Professional		35,145
Transfer agent		2,480
Transfer agent — class specific		14,830
Printing		11,682
Accounting services		4,153
Officer and Directors		3,413
Custodian		1,180
Miscellaneous		3,013
Total expenses		118,384
Less:
Fees waived by the Manager		(41,725	)
Transfer agent fees reimbursed — class specific		(14,830	)
Total expenses after fees waived and/or reimbursed		61,829
Net investment income		9,922
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated		5,880
Investments — affiliated		(302	)
Futures contracts		(115,411	)
Forward foreign currency exchange contracts		29,641
Foreign currency transactions		2,572
		(77,620	)
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		226,066
Investments — affiliated		197,038
Futures contracts		(31,229	)
Swaps		2,034
Forward foreign currency exchange contracts		(36,215	)
Foreign currency translations		92,352
		450,046
Net realized and unrealized gain		372,426
Net Increase in Net Assets Resulting from Operations	$	382,348

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Statements of Changes in Net Assets BlackRock Managed Volatility V.I. Fund

Decrease in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	9,922		$	29,723
Net realized gain (loss)		(77,620	)		58,388
Net change in unrealized appreciation (depreciation)		450,046			172,795
Net increase in net assets resulting from operations		382,348			260,906
Distributions to Shareholders1
From net investment income		—			(135,000	)
Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(970,491	)		(2,410,537	)
Net Assets
Total decrease in net assets		(588,143	)		(2,284,631	)
Beginning of period		15,894,986			18,179,617
End of period	$	15,306,843		$	15,894,986
Accumulated (distributions in excess of) net investment income (loss), end of period	$	(21,351	)	$	(31,273	)

¹ Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock Managed Volatility V.I. Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period		$  13.19		$	13.08		$	13.70		$	14.41		$	13.28		$	12.26
Net investment income (loss)1		0.01			0.02	2		(0.06	)		0.04			0.07			0.20
Net realized and unrealized gain (loss)		0.32			0.20			(0.01	)		0.29			1.60			1.01
Net increase (decrease) from investment operations		0.33			0.22			(0.07	)		0.33			1.67			1.21
Distributions from:3
Net investment income		—			(0.11	)		—			—			(0.13	)		(0.19	)
Net realized gain		—			—			(0.55	)		(1.04	)		(0.41	)		—
Total distributions		—			(0.11	)		(0.55	)		(1.04	)		(0.54	)		(0.19	)
Net asset value, end of period		$  13.52		$	13.19		$	13.08		$	13.70		$	14.41		$	13.28
Total Return4
Based on net asset value		2.50	%5		1.71	%6		(0.57	)%		2.28	%		12.62	%		9.88	%
Ratios to Average Net Assets
Total expenses7		1.53	%8		1.39	%		1.47	%		1.60	%		1.78	%		1.36	%
Total expenses after fees waived and/or reimbursed7		0.80	%8		0.94	%		1.00	%		1.07	%		1.23	%		1.22	%
Total expenses after fees waived and/or reimbursed and excluding interest expense7		0.80	%8		0.94	%		1.00	%		1.07	%		1.23	%		1.22	%
Net investment income (loss)7		0.13	%8		0.18	%2		(0.46	)%		0.25	%		0.47	%		1.49	%
Supplemental Data
Net assets, end of period (000)		$15,307		$	15,895		$	18,180		$	21,283		$	24,092		$	25,975
Portfolio turnover rate		0	%		1	%		13	%		64	%		241	%9		502	%9

¹  Based on average shares outstanding.

²  Net investment income per share and the ratio of net investment income to average net assets includes $0.02 per share and 0.19%, respectively, resulting from a one time payment from a third party administrator.

³  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁴  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁵  Aggregate total return.

⁶  Includes reimbursement of out of pocket expenses from a third party administrator. Excluding this amount, the Fund’s total return is 1.48%.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Investments in underlying funds		0.23	%		0.25	%		0.23	%		0.23	%		0.22	%		—

⁸  Annualized.

⁹  Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:

	Six Months Ended June 30,			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Portfolio turnover rate (excluding MDRs)		0	%		1	%		13	%		64	%		229	%		400%

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Notes to Financial Statements (Unaudited) BlackRock Managed Volatility V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Managed Volatility V.I. Fund (the “Fund”). The Fund is classified as diversified.

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

2. Significant Accounting Policies:

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

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

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

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

Defensive Positions: Investment policies may vary for temporary defensive purposes during periods in which the investment adviser believes that conditions in the securities markets or other economic, financial or political conditions warrant. Under such conditions, the Fund may invest up to 100% of its total assets in U.S. Government securities, certificates of deposit, repurchase agreements that involve purchases of debt securities, bankers’ acceptances and other bank obligations, commercial paper, money market funds and/or other debt securities, or may hold its assets in cash. The investment adviser applies this defensive position as applicable and is consistent with the Fund’s investment policies.

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

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

Recent Accounting Standards: In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of purchased callable debt securities that have explicit, non-contingent call features and are callable at fixed prices will be

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Managed Volatility V.I. Fund

amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the Fund.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

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

Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods.

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

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

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

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

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Fund’s net assets.

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

• Investments in open-end U.S. mutual funds are valued at Net Asset Value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

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

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

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Notes to Financial Statements (continued) BlackRock Managed Volatility V.I. Fund

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

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

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

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

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

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

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

4. Securities and Other Investments:

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

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

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Managed Volatility V.I. Fund

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

Multiple Class Pass-Through Securities: Multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities may be issued by Ginnie Mae, U.S. Government agencies or instrumentalities or by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs are debt obligations of a legal entity that are collateralized by, a pool of residential or commercial mortgage loans or Mortgage Assets. The payments on these are used to make payments on the CMOs or multiple pass-through securities. Multiple class pass-through securities represent direct ownership interests in the Mortgage Assets. Classes of CMOs include interest only (“IOs”), principal only (“POs”), planned amortization classes and targeted amortization classes. IOs and POs are stripped mortgage-backed securities representing interests in a pool of mortgages, the cash flow from which has been separated into interest and principal components. IOs receive the interest portion of the cash flow while POs receive the principal portion. IOs and POs can be extremely volatile in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise since this increases the rate at which the principal is returned and the yield to maturity on the PO. When payments on mortgages underlying a PO are slower than anticipated, the life of the PO is lengthened and the yield to maturity is reduced. If the underlying Mortgage Assets experience greater than anticipated prepayments of principal, the Fund’s initial investment in the IOs may not fully recoup.

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as investment companies in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value-unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Notes to Financial Statements (continued) BlackRock Managed Volatility V.I. Fund

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value	Cash Collateral Received1	Net Amount
Deutsche Bank Securities, Inc	$11,863	$(11,863)	—

¹  Cash collateral with a value of $12,144 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Derivative Financial Instruments:

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

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

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

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

Forward Foreign Currency Exchange Contracts: The Fund enters into forward foreign currency exchange contracts to gain or reduce exposure, to foreign currencies (foreign currency exchange rate risk).

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

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

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Managed Volatility V.I. Fund

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

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

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.55%
$1 Billion - $3 Billion	0.52%
$3 Billion - $5 Billion	0.50%
$5 Billion - $10 Billion	0.48%
Greater than $10 Billion	0.47%

With respect to the Fund, the Manager entered into sub-advisory agreements with BlackRock International Limited (“BIL”), BlackRock Asset Management North Asia Limited (“BNA”) and BlackRock (Singapore) Limited (“BSL”), each an affiliate of the Manager. The Manager pays BIL, BNA and BSL, for services they provide, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

Distribution Fees: The Company, on behalf of the Fund, entered into a Distribution Agreement and a Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing distribution fees. The fees are accrued daily and paid monthly at annual rates based upon the average daily net assets of the relevant share class of the Fund. For the six months ended June 30, 2017, the Fund had no distribution fees.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

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

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $1,615.

The Manager contractually agreed to waive the management fee on assets estimated to be attributed to the Fund’s investments in other equity and fixed-income mutual funds managed by the Manager or its affiliates, if any. In addition, the Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated exchange-traded funds. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, the Fund waived $15,496 in investment advisory fees pursuant to these arrangements.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $91 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Manager has contractually agreed to reimburse all transfer agent fees for Class I Shares.

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Notes to Financial Statements (continued) BlackRock Managed Volatility V.I. Fund

With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business (“expense limitation”). The expense limitation as a percentage of average daily net assets is 1.00% for Class I.

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018 unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, the amount waived was $24,614.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 80% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 85% of securities lending income, and this amount retained can never be less than 70% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $177 for securities lending agent services.

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

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, including paydowns and excluding short-term securities, were $0 and $11,387, respectively.

8. Income Tax Information:

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

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Managed Volatility V.I. Fund

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

Tax cost	$	13,857,582
Gross unrealized appreciation	$	11,313
Gross unrealized depreciation		(364,119	)
Net unrealized depreciation	$	(352,806	)

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

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

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

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

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

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

With exchange-traded futures, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

Notes to Financial Statements (concluded) BlackRock Managed Volatility V.I. Fund

with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Fund.

11. Capital Share Transactions:

Transactions in capital shares were as follows:

	Six Months Ended June 30, 2017				Year Ended December 31, 2016
	Shares		Amount		Shares		Amount
Class I
Shares sold		11,495	$	152,888		30,752	$	402,215
Shares issued in reinvestment of distributions		—		—		10,251		135,000
Shares redeemed		(84,308)		(1,123,379)		(226,177)		(2,947,752)
Net decrease		(72,813)	$	(970,491)		(185,174)	$	(2,410,537)

12. 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, 2017

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock S&P 500 Index V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock S&P 500 Index V.I. Fund

      Investment Objective

BlackRock S&P 500 Index V.I. Fund’s (the “Fund”) investment objective is to seek investment results that, before expenses, correspond to the aggregate price and yield performance of the Standard and Poor’s (“S&P”) 500^® Index.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund’s Class I and Class II Shares returned 9.15% and 9.06%, respectively, while the benchmark, the S&P 500^® Index returned 9.34%.

• Returns for the Fund’s respective share classes differ from the benchmark index based on individual share-class expenses.

Describe the market environment.

• The reflation trade in the United States continued to gain steam in the first quarter of the year. Macro data highlighted continued economic growth and a strengthening labor market, which supported the Fed’s decision to increase the federal funds rate by 25 basis points (0.25%) in March, marking the second rate hike in the past six months. The Fed’s summary of economic projections indicated that they will maintain a gradual pace of tightening should current economic trends continue.

• Expectations of the new administration’s policies also boosted market sentiment, sending several U.S. equity indices to record highs. The inauguration of President Trump in late January stoked risk-on appetite, as pledges of tax relief and increased fiscal spending were supportive of cyclical stocks. However, the final weeks of the quarter saw some profit taking as investor optimism waned after the failed attempt to repeal the Affordable Care Act called into question whether the new administration will be able to push through further reforms in 2017. Despite these setbacks, U.S. equities finished the quarter strong and the 10-year Treasury yield added 31 basis points in the quarter.

• The index hit an all-time high in June amid a strong overall quarter, but appreciated at a slower rate than in the first quarter as political risk and high valuation metrics influenced investor sentiment.

• The health care sector contributed the most to the S&P 500^®’s return. The sector benefited from positive investor sentiment on industry prospects following the House passing the Republican’s healthcare reform bill, as well as a leaked draft of an executive order relaxing drug price regulations being made public. The financial sector was the second largest contributor to return during the quarter, benefiting from positive stress test results, the Fed June rate hike, and the House passage of the Financial Choice Act, intended to roll back some provisions of the Dodd-Frank Act. The technology sector also performed strongly. Facebook, Apple, Amazon, Netflix, Google and semiconductor companies performed strongly throughout most of the quarter before some late-quarter profit taking and valuation concerns.

• Subtracting the most from the overall index return in the second quarter was the telecommunication sector. Telecommunication stocks weighed on the index, as the industry faced industry pressures, which weighed on earnings releases and sell-side forecasts. Energy was also a detractor. Surging U.S. production levels and swelling inventories overshadowed efforts made by the Organization of Petroleum Exporting Countries (“OPEC”) to stabilize crude oil. OPEC’s agreement in late May to extend the duration of their crude output cut was unable to support the market — the price of a barrel of West Texas Intermediate crude oil fell 8.9% in the quarter, which weighed particularly heavily on upstream energy companies.

• Political risk was a headwind to U.S. equities. President Trump’s firing of FBI Director James Comey on May 9 and the subsequent developments regarding the investigation of pre-election correspondence between Trump administration members and Russian officials was an enduring source of negative market sentiment. The largest single day fall of the S&P 500^® in the quarter came in the wake of the House Oversight Committee’s request for all documents from the meetings between President Trump and FBI Director Comey on May 17.

• Although the Fed continued their monetary policy normalization, the yield on the 10-year U.S. Treasury compressed by nine basis points to 2.31% in the quarter. The Fed increased the federal funds rate by 25 basis points at the June meeting, to between 1% and 1.25%, citing strength in the labor market and business spending, despite relatively weak inflation trends throughout the quarter.

• The strongest returns in the S&P 500^® Index as of June 30 came from health care (+7.10%). Increases were seen across most sectors, with notable results in industrials (+4.73%), financials (+4.25%) and information technology (+4.14%). In contrast, negative results came from telecommunication services (-7.05%) and energy (-6.36%).

Describe recent portfolio activity.

• During the period, as changes were made to the composition of the S&P 500^® Index, the Fund purchased and sold securities to maintain its objective of replicating the risks and return of the benchmark index.

Describe portfolio positioning at period end.

• The Fund remains positioned to match the risk characteristics of its benchmark index, 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, 2017

BlackRock S&P 500 Index 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  Under normal circumstances, the Fund invests at least 80% of its assets in the common stocks represented in the S&P 500^® Index and in derivative instruments linked to the S&P 500^® Index.

³  An unmanaged index that covers 500 leading companies and captures approximately 80% coverage of available market capitalization.

      Performance Summary for the Period Ended June 30, 2017

				Average Annual Total Returns
	6-Month Total Returns5			1 Year5			5 Years5			10 Years5
Class I4		9.15	%		17.55	%		14.24	%		6.85	%
Class II4		9.06			17.42			14.06			6.70
S&P 500® Index		9.34			17.90			14.63			7.18

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

⁵  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

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

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Expense Example
	Actual			Hypothetical7
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period6	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period6	Annualized Expense Ratio
Class I	$1,000.00	$1,091.50	$1.61	$1,000.00	$1,023.26	$1.56	0.31%
Class II	$1,000.00	$1,090.60	$2.38	$1,000.00	$1,022.51	$2.31	0.46%

⁶  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).

⁷  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

See “Disclosure of Expenses” on the following page for further information on how expenses were calculated.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

BlackRock S&P 500 Index V.I. Fund

      Portfolio Information

Sector Allocation	Percent of Net Assets
Information Technology	22%
Financials	14
Health Care	14
Consumer Discretionary	12
Industrials	10
Consumer Staples	9
Energy	6
Utilities	3
Materials	3
Real Estate	3
Telecommunication Services	2
Short-Term Securities	6
Liabilities in Excess of Other Assets	(4)

For Fund compliance purposes, the Fund’s sector classifications refer to one or more of the sector sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions 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, 2017

Disclosure of Expenses BlackRock S&P 500 Index V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

The expense example provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.”

The expense example also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.

The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, if any. Therefore, the hypothetical example is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the

transaction or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock S&P 500 Index V.I. Fund
	(Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 2.3%
Arconic, Inc.		4,313	$	97,689
Boeing Co.		5,684		1,124,011
General Dynamics Corp.		2,876		569,736
L3 Technologies, Inc.		782		130,657
Lockheed Martin Corp.		2,531		702,631
Northrop Grumman Corp.		1,771		454,633
Raytheon Co.		2,977		480,726
Rockwell Collins, Inc.		1,635		171,806
Textron, Inc.		2,719		128,065
TransDigm Group, Inc. (a)(b)		502		134,973
United Technologies Corp.		7,567		924,006
				4,918,933
Air Freight & Logistics — 0.7%
C.H. Robinson Worldwide, Inc. (b)		1,388		95,328
Expeditors International of Washington, Inc.		1,847		104,319
FedEx Corp.		2,449		532,241
United Parcel Service, Inc., Class B		6,929		766,278
				1,498,166
Airlines — 0.6%
Alaska Air Group, Inc.		1,242		111,482
American Airlines Group, Inc.		4,973		250,241
Delta Air Lines, Inc.		7,360		395,526
Southwest Airlines Co.		6,105		379,365
United Continental Holdings, Inc. (a)		2,874		216,269
				1,352,883
Auto Components — 0.2%
BorgWarner, Inc. (b)		2,019		85,525
Delphi Automotive PLC		2,738		239,986
Goodyear Tire & Rubber Co.		2,543		88,903
				414,414
Automobiles — 0.5%
Ford Motor Co.		39,126		437,820
General Motors Co.		13,763		480,742
Harley-Davidson, Inc. (b)		1,789		96,642
				1,015,204
Banks — 6.4%
Bank of America Corp. (b)		100,775		2,444,800
BB&T Corp.		8,118		368,638
Citigroup, Inc.		27,795		1,858,930
Citizens Financial Group, Inc.		5,098		181,897
Comerica, Inc.		1,725		126,339
Fifth Third Bancorp		7,530		195,479
Huntington Bancshares, Inc.		10,834		146,476
JPMorgan Chase & Co.		35,867		3,278,244
KeyCorp		10,811		202,598
M&T Bank Corp.		1,575		255,071
People’s United Financial, Inc. (b)		3,016		53,263
PNC Financial Services Group, Inc. (c)		4,925		614,985
Regions Financial Corp.		12,109		177,276
SunTrust Banks, Inc.		4,953		280,934
U.S. Bancorp		16,137		837,833
Wells Fargo & Co.		45,369		2,513,896
Zions Bancorporation		2,007		88,127
				13,624,786
Beverages — 2.0%
Brown-Forman Corp., Class B (b)		1,829		88,889
Coca-Cola Co.		38,944		1,746,638
Constellation Brands, Inc., Class A		1,753		339,609
Dr. Pepper Snapple Group, Inc.		1,847		168,280
Molson Coors Brewing Co., Class B		1,824		157,484
Monster Beverage Corp. (a)		4,068		202,098

Common Stocks	Shares		Value
Beverages (continued)
PepsiCo, Inc.		14,408	$	1,663,980
				4,366,978
Biotechnology — 2.9%
AbbVie, Inc.		16,075		1,165,598
Alexion Pharmaceuticals, Inc. (a)		2,238		272,297
Amgen, Inc.		7,429		1,279,497
Biogen, Inc. (a)		2,157		585,324
Celgene Corp. (a)		7,832		1,017,142
Gilead Sciences, Inc.		13,224		935,995
Incyte Corp. (a)		1,716		216,062
Regeneron Pharmaceuticals, Inc. (a)		757		371,793
Vertex Pharmaceuticals, Inc. (a)		2,488		320,629
				6,164,337
Building Products — 0.3%
Allegion PLC (b)		993		80,552
Fortune Brands Home & Security, Inc.		1,531		99,882
Johnson Controls International PLC		9,459		410,142
Masco Corp.		3,257		124,450
				715,026
Capital Markets — 2.9%
Affiliated Managers Group, Inc.		562		93,213
Ameriprise Financial, Inc.		1,565		199,209
Bank of New York Mellon Corp.		10,462		533,771
BlackRock, Inc. (c)		1,224		517,030
CBOE Holdings, Inc. (b)		917		83,814
Charles Schwab Corp.		12,217		524,842
CME Group, Inc.		3,416		427,820
E*TRADE Financial Corp. (a)		2,741		104,240
Franklin Resources, Inc.		3,524		157,840
Goldman Sachs Group, Inc.		3,696		820,142
Intercontinental Exchange, Inc.		5,940		391,565
Invesco Ltd.		4,056		142,731
Moody’s Corp.		1,675		203,814
Morgan Stanley		14,497		645,986
Nasdaq, Inc.		1,169		83,572
Northern Trust Corp.		2,182		212,112
Raymond James Financial, Inc.		1,276		102,361
S&P Global, Inc.		2,633		384,392
State Street Corp.		3,571		320,426
T. Rowe Price Group, Inc.		2,456		182,260
				6,131,140
Chemicals — 2.1%
Air Products & Chemicals, Inc.		2,171		310,583
Albemarle Corp. (b)		1,121		118,310
CF Industries Holdings, Inc. (b)		2,227		62,267
Dow Chemical Co.		11,346		715,592
E.I. du Pont de Nemours & Co.		8,761		707,100
Eastman Chemical Co.		1,489		125,061
Ecolab, Inc.		2,651		351,920
FMC Corp.		1,384		101,101
International Flavors & Fragrances, Inc.		802		108,270
LyondellBasell Industries NV, Class A		3,350		282,707
Monsanto Co.		4,409		521,849
Mosaic Co.		3,474		79,311
PPG Industries, Inc.		2,612		287,216
Praxair, Inc.		2,833		375,514
Sherwin-Williams Co.		804		282,172
				4,428,973
Commercial Services & Supplies — 0.3%
Cintas Corp. (a)		857		108,016
Republic Services, Inc.		2,336		148,873

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock S&P 500 Index V.I. Fund

Common Stocks	Shares		Value
Commercial Services & Supplies (continued)
Stericycle, Inc. (a)		832	$	63,498
Waste Management, Inc.		4,096		300,442
				620,829
Communications Equipment — 1.0%
Cisco Systems, Inc.		50,425		1,578,303
F5 Networks, Inc. (a)		660		83,860
Harris Corp.		1,248		136,132
Juniper Networks, Inc.		3,838		107,003
Motorola Solutions, Inc.		1,670		144,856
				2,050,154
Construction & Engineering — 0.1%
Fluor Corp.		1,425		65,237
Jacobs Engineering Group, Inc.		1,200		65,268
Quanta Services, Inc. (a)		1,515		49,874
				180,379
Construction Materials — 0.1%
Martin Marietta Materials, Inc.		649		144,454
Vulcan Materials Co.		1,345		170,385
				314,839
Consumer Finance — 0.7%
American Express Co.		7,651		644,520
Capital One Financial Corp.		4,849		400,624
Discover Financial Services		3,900		242,541
Navient Corp.		2,895		48,202
Synchrony Financial		7,768		231,642
				1,567,529
Containers & Packaging — 0.3%
Avery Dennison Corp.		856		75,645
Ball Corp. (b)		3,474		146,638
International Paper Co.		4,152		235,045
Sealed Air Corp.		1,979		88,580
WestRock Co.		2,568		145,503
				691,411
Distributors — 0.1%
Genuine Parts Co.		1,468		136,172
LKQ Corp. (a)		3,046		100,366
				236,538
Diversified Consumer Services — 0.0%
H&R Block, Inc. (b)		2,021		62,469
Diversified Financial Services — 1.6%
Berkshire Hathaway, Inc., Class B (a)		19,172		3,247,162
Leucadia National Corp.		3,252		85,072
				3,332,234
Diversified Telecommunication Services — 2.1%
AT&T Inc.		62,052		2,341,222
CenturyLink, Inc. (b)		5,540		132,295
Level 3 Communications, Inc. (a)		2,918		173,037
Verizon Communications, Inc.		41,178		1,839,009
				4,485,563
Electric Utilities — 1.9%
Alliant Energy Corp.		2,268		91,106
American Electric Power Co., Inc.		4,954		344,154
Duke Energy Corp.		7,041		588,557
Edison International		3,302		258,183
Entergy Corp.		1,800		138,186
Eversource Energy		3,201		194,333
Exelon Corp.		9,267		334,261

Common Stocks	Shares		Value
Electric Utilities (continued)
FirstEnergy Corp.		4,337	$	126,467
NextEra Energy, Inc.		4,731		662,955
PG&E Corp.		5,106		338,885
Pinnacle West Capital Corp.		1,133		96,486
PPL Corp.		6,848		264,744
Southern Co.		9,981		477,890
Xcel Energy, Inc.		5,129		235,319
				4,151,526
Electrical Equipment — 0.6%
Acuity Brands, Inc. (b)		435		88,427
AMETEK, Inc.		2,305		139,614
Eaton Corp PLC		4,556		354,593
Emerson Electric Co.		6,388		380,853
Rockwell Automation, Inc.		1,323		214,273
				1,177,760
Electronic Equipment, Instruments & Components — 0.4%
Amphenol Corp., Class A		3,103		229,063
Corning, Inc.		9,382		281,929
FLIR Systems, Inc.		1,378		47,761
TE Connectivity Ltd		3,565		280,494
				839,247
Energy Equipment & Services — 0.9%
Baker Hughes, Inc.		4,314		235,156
Halliburton Co.		8,749		373,670
Helmerich & Payne, Inc. (b)		1,085		58,959
National Oilwell Varco, Inc. (b)		3,830		126,160
Schlumberger Ltd.		14,059		925,645
TechnipFMC PLC (a)		4,723		128,466
Transocean Ltd.		3,823		31,463
				1,879,519
Equity Real Estate Investment Trusts (REITs) — 2.8%
Alexandria Real Estate Equities, Inc.		900		108,423
American Tower Corp.		4,327		572,549
Apartment Investment & Management Co., Class A		1,610		69,182
AvalonBay Communities, Inc.		1,393		267,693
Boston Properties, Inc.		1,562		192,157
Crown Castle International Corp.		3,696		370,265
Digital Realty Trust, Inc. (b)		1,638		185,012
Equinix, Inc.		783		336,032
Equity Residential		3,721		244,953
Essex Property Trust, Inc.		667		171,599
Extra Space Storage, Inc. (b)		1,285		100,230
Federal Realty Investment Trust		737		93,149
GGP, Inc. (b)		5,754		135,564
HCP, Inc.		4,689		149,860
Host Hotels & Resorts, Inc.		7,324		133,809
Iron Mountain, Inc.		2,399		82,430
Kimco Realty Corp. (b)		4,211		77,272
Macerich Co. (b)		1,209		70,195
Mid-America Apartment Communities, Inc.		1,137		119,817
Prologis, Inc.		5,263		308,622
Public Storage		1,495		311,752
Realty Income Corp.		2,709		149,483
Regency Centers Corp.		1,467		91,893
Simon Property Group, Inc.		3,161		511,323
SL Green Realty Corp. (b)		1,006		106,435
UDR, Inc.		2,600		101,322
Ventas, Inc.		3,522		244,709
Vornado Realty Trust		1,745		163,855
Welltower, Inc.		3,590		268,711

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Schedule of Investments (continued) BlackRock S&P 500 Index V.I. Fund

Common Stocks	Shares		Value
Equity Real Estate Investment Trusts (REITs) (continued)
Weyerhaeuser Co.		7,467	$	250,145
				5,988,441
Food & Staples Retailing — 1.9%
Costco Wholesale Corp.		4,411		705,451
CVS Health Corp.		10,340		831,956
Kroger Co.		9,309		217,086
Sysco Corp.		5,038		253,563
Walgreens Boots Alliance, Inc.		8,585		672,291
Wal-Mart Stores, Inc.		14,958		1,132,021
Whole Foods Market, Inc.		3,270		137,700
				3,950,068
Food Products — 1.3%
Archer-Daniels-Midland Co.		5,774		238,928
Campbell Soup Co		1,948		101,588
Conagra Brands, Inc.		4,180		149,477
General Mills, Inc. (b)		5,858		324,533
Hershey Co.		1,445		155,150
Hormel Foods Corp. (b)		2,655		90,562
JM Smucker Co.		1,179		139,511
Kellogg Co.		2,529		175,664
Kraft Heinz Co.		5,976		511,785
McCormick & Co, Inc., Non-Voting Shares		1,163		113,404
Mondelez International, Inc., Class A		15,393		664,824
Tyson Foods, Inc., Class A		2,914		182,504
				2,847,930
Health Care Equipment & Supplies — 2.8%
Abbott Laboratories		17,516		851,453
Align Technology, Inc. (a)		762		114,391
Baxter International, Inc.		4,910		297,251
Becton Dickinson and Co.		2,273		443,485
Boston Scientific Corp. (a)		13,644		378,212
Cooper Cos, Inc.		488		116,837
CR Bard, Inc.		726		229,496
Danaher Corp.		6,139		518,070
DENTSPLY SIRONA, Inc.		2,341		151,790
Edwards Lifesciences Corp. (a)		2,128		251,615
Hologic, Inc. (a)		2,782		126,247
IDEXX Laboratories, Inc. (a)		901		145,439
Intuitive Surgical, Inc. (a)		374		349,828
Medtronic PLC		13,852		1,229,365
Stryker Corp.		3,124		433,549
Varian Medical Systems, Inc. (a)		919		94,832
Zimmer Biomet Holdings, Inc.		2,023		259,753
				5,991,613
Health Care Providers & Services — 2.8%
Aetna, Inc.		3,343		507,568
AmerisourceBergen Corp.		1,673		158,149
Anthem, Inc.		2,637		496,099
Cardinal Health, Inc.		3,194		248,876
Centene Corp. (a)		1,733		138,432
Cigna Corp.		2,580		431,866
DaVita, Inc. (a)		1,559		100,961
Envision Healthcare Corp. (a)		1,175		73,637
Express Scripts Holding Co. (a)		5,992		382,529
HCA Healthcare, Inc. (a)		2,960		258,112
Henry Schein, Inc. (a)		800		146,416
Humana, Inc.		1,461		351,546
Laboratory Corp. of America Holdings (a)		1,026		158,148
McKesson Corp.		2,131		350,635
Patterson Cos., Inc. (b)		887		41,645
Quest Diagnostics, Inc.		1,435		159,515
UnitedHealth Group, Inc.		9,726		1,803,395

Common Stocks	Shares		Value
Health Care Providers & Services (continued)
Universal Health Services, Inc., Class B		917	$	111,947
				5,919,476
Health Care Technology — 0.1%
Cerner Corp. (a)		2,967		197,216
Hotels, Restaurants & Leisure — 1.8%
Carnival Corp.		4,230		277,361
Chipotle Mexican Grill, Inc. (a)		293		121,917
Darden Restaurants, Inc.		1,266		114,497
Hilton Worldwide Holdings, Inc. (b)		2,069		127,968
Marriott International, Inc., Class A		3,182		319,186
McDonald’s Corp.		8,275		1,267,399
Royal Caribbean Cruises Ltd.		1,715		187,329
Starbucks Corp.		14,714		857,973
Wyndham Worldwide Corp.		1,071		107,539
Wynn Resorts Ltd. (b)		792		106,223
Yum! Brands, Inc.		3,410		251,522
				3,738,914
Household Durables — 0.5%
DR Horton, Inc.		3,396		117,400
Garmin Ltd.		1,146		58,480
Leggett & Platt, Inc. (b)		1,408		73,962
Lennar Corp., Class A		1,991		106,160
Mohawk Industries, Inc. (a)		639		154,440
Newell Brands, Inc.		4,833		259,145
PulteGroup, Inc. (b)		2,920		71,628
Whirlpool Corp.		756		144,865
				986,080
Household Products — 1.7%
Church & Dwight Co., Inc.		2,526		131,049
Clorox Co.		1,286		171,347
Colgate-Palmolive Co.		8,895		659,386
Kimberly-Clark Corp.		3,597		464,409
Procter & Gamble Co.		25,814		2,249,690
				3,675,881
Independent Power and Renewable Electricity Producers — 0.1%
AES Corp.		6,698		74,415
NRG Energy, Inc.		3,283		56,533
				130,948
Industrial Conglomerates — 2.3%
3M Co.		6,032		1,255,802
General Electric Co.		87,941		2,375,286
Honeywell International, Inc.		7,654		1,020,202
Roper Technologies, Inc.		999		231,298
				4,882,588
Insurance — 2.7%
Aflac, Inc.		4,097		318,255
Allstate Corp.		3,766		333,065
American International Group, Inc.		8,864		554,177
Aon PLC		2,689		357,503
Arthur J. Gallagher & Co.		1,761		100,817
Assurant, Inc.		584		60,555
Chubb Ltd.		4,662		677,762
Cincinnati Financial Corp.		1,502		108,820
Everest Re Group Ltd.		415		105,655
Hartford Financial Services Group, Inc.		3,795		199,503
Lincoln National Corp.		2,334		157,732
Loews Corp.		2,709		126,808
Marsh & McLennan Cos., Inc.		5,186		404,301
MetLife, Inc.		10,908		599,286
Principal Financial Group, Inc.		2,644		169,401

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock S&P 500 Index V.I. Fund

Common Stocks	Shares		Value
Insurance (continued)
Progressive Corp.		5,816	$	256,427
Prudential Financial, Inc.		4,358		471,274
Torchmark Corp.		1,136		86,904
Travelers Cos., Inc.		2,855		361,243
Unum Group (a)		2,348		109,487
Willis Towers Watson PLC		1,300		189,098
XL Group Ltd. (b)		2,756		120,713
				5,868,786
Internet & Direct Marketing Retail — 2.7%
Amazon.com, Inc. (a)		4,005		3,876,840
Expedia, Inc.		1,208		179,932
Netflix, Inc. (a)		4,337		647,991
Priceline Group, Inc. (a)		498		931,519
TripAdvisor, Inc. (a)(b)		1,081		41,294
				5,677,576
Internet Software & Services — 4.5%
Akamai Technologies, Inc. (a)		1,784		88,861
Alphabet, Inc.:
Class A (a)		3,005		2,793,688
Class C (a)		3,012		2,737,095
eBay, Inc. (a)		10,226		357,092
Facebook, Inc., Class A (a)		23,864		3,602,987
VeriSign, Inc. (a)(b)		901		83,757
				9,663,480
IT Services — 3.8%
Accenture PLC, Class A (b)		6,253		773,371
Alliance Data Systems Corp.		564		144,773
Automatic Data Processing, Inc.		4,558		467,013
Cognizant Technology Solutions Corp., Class A (a)		5,964		396,010
CSRA, Inc. (b)		1,428		45,339
DXC Technology Co.		2,859		219,342
Fidelity National Information Services, Inc.		3,284		280,454
Fiserv, Inc. (a)		2,144		262,297
Gartner, Inc. (a)		907		112,024
Global Payments, Inc.		1,533		138,461
International Business Machines Corp.		8,681		1,335,398
Mastercard, Inc., Class A		9,509		1,154,868
Paychex, Inc.		3,170		180,500
PayPal Holdings, Inc. (a)		11,247		603,626
Total System Services, Inc.		1,629		94,889
Visa, Inc., Class A (b)		18,639		1,747,965
Western Union Co.		4,890		93,155
Xerox Corp.		2,132		61,252
				8,110,737
Leisure Products — 0.1%
Hasbro, Inc.		1,131		126,118
Mattel, Inc. (b)		3,313		71,329
				197,447
Life Sciences Tools & Services — 0.7%
Agilent Technologies, Inc.		3,257		193,173
Illumina, Inc. (a)		1,461		253,513
Mettler-Toledo International, Inc. (a)		267		157,140
PerkinElmer, Inc.		1,100		74,954
Thermo Fisher Scientific, Inc.		3,947		688,633
Waters Corp. (a)		789		145,050
				1,512,463
Machinery — 1.5%
Caterpillar, Inc.		5,947		639,065
Cummins, Inc.		1,588		257,605

Common Stocks	Shares		Value
Machinery (continued)
Deere & Co.		2,953	$	364,961
Dover Corp.		1,562		125,304
Flowserve Corp. (b)		1,299		60,313
Fortive Corp.		2,980		188,783
Illinois Tool Works, Inc.		3,139		449,662
Ingersoll-Rand PLC		2,588		236,517
PACCAR, Inc.		3,548		234,310
Parker-Hannifin Corp.		1,321		211,122
Pentair PLC		1,671		111,188
Snap-on, Inc.		565		89,270
Stanley Black & Decker, Inc.		1,526		214,754
Xylem, Inc. (b)		1,720		95,340
				3,278,194
Media — 3.0%
CBS Corp., Class B, Non-Voting Shares		3,765		240,132
Charter Communications, Inc., Class A (a)		2,172		731,638
Comcast Corp., Class A		47,768		1,859,131
Discovery Communications, Inc.:
Class A (a)(b)		1,376		35,542
Class C (a)		2,248		56,672
DISH Network Corp., Class A (a)		2,277		142,905
Interpublic Group of Cos., Inc.		4,080		100,368
News Corp.:
Class A		3,904		53,485
Class B		1,142		16,159
Omnicom Group, Inc. (b)		2,363		195,893
Scripps Networks Interactive, Inc., Class A (b)		973		66,466
Time Warner, Inc.		7,801		783,298
Twenty-First Century Fox, Inc.:
Class A		10,666		302,274
Class B		4,884		136,117
Viacom, Inc., Class B		3,396		114,004
Walt Disney Co.		14,682		1,559,963
				6,394,047
Metals & Mining — 0.2%
Freeport-McMoRan, Inc. (a)		13,357		160,418
Newmont Mining Corp.		5,343		173,060
Nucor Corp.		3,193		184,779
				518,257
Multiline Retail — 0.4%
Dollar General Corp.		2,542		183,253
Dollar Tree, Inc. (a)		2,328		162,774
Kohl’s Corp. (b)		1,697		65,623
Macy’s, Inc.		3,055		70,998
Nordstrom, Inc.		1,166		55,770
Target Corp.		5,572		291,360
				829,778
Multi-Utilities — 1.0%
Ameren Corp.		2,470		135,035
CenterPoint Energy, Inc.		4,322		118,336
CMS Energy Corp.		2,819		130,379
Consolidated Edison, Inc.		3,094		250,057
Dominion Resources, Inc.		6,334		485,374
DTE Energy Co.		1,827		193,278
NiSource, Inc.		3,292		83,485
Public Service Enterprise Group, Inc.		5,040		216,770
SCANA Corp.		1,457		97,634
Sempra Energy		2,505		282,439
WEC Energy Group, Inc. (b)		3,190		195,802
				2,188,589

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Schedule of Investments (continued) BlackRock S&P 500 Index V.I. Fund

Common Stocks	Shares		Value
Oil, Gas & Consumable Fuels — 5.1%
Anadarko Petroleum Corp.		5,616	$	254,629
Apache Corp.		3,804		182,326
Cabot Oil & Gas Corp.		4,833		121,212
Chesapeake Energy Corp. (a)(b)		7,587		37,707
Chevron Corp.		19,122		1,994,998
Cimarex Energy Co.		952		89,498
Concho Resources, Inc. (a)		1,493		181,444
ConocoPhillips		12,413		545,675
Devon Energy Corp.		5,280		168,802
EOG Resources, Inc.		5,834		528,094
EQT Corp.		1,727		101,185
Exxon Mobil Corp.		42,778		3,453,468
Hess Corp. (b)		2,681		117,615
Kinder Morgan, Inc.		19,248		368,792
Marathon Oil Corp.		8,660		102,621
Marathon Petroleum Corp.		5,317		278,239
Murphy Oil Corp. (b)		1,682		43,110
Newfield Exploration Co. (a)		1,999		56,892
Noble Energy, Inc.		4,348		123,048
Occidental Petroleum Corp.		7,664		458,844
ONEOK, Inc. (b)		3,833		199,929
Phillips 66 (b)		4,456		368,467
Pioneer Natural Resources Co.		1,723		274,956
Range Resources Corp. (b)		1,884		43,652
Tesoro Corp.		1,523		142,553
Valero Energy Corp.		4,561		307,685
Williams Cos., Inc.		8,343		252,626
				10,798,067
Personal Products — 0.1%
Coty, Inc., Class A (b)		4,728		88,697
Estee Lauder Cos., Inc., Class A		2,228		213,843
				302,540
Pharmaceuticals — 5.0%
Allergan PLC		3,371		819,456
Bristol-Myers Squibb Co.		16,682		929,521
Eli Lilly & Co.		9,775		804,483
Johnson & Johnson		27,197		3,597,891
Mallinckrodt PLC (a)		1,080		48,395
Merck & Co., Inc.		27,737		1,777,664
Mylan NV (a)		4,610		178,960
Perrigo Co. PLC		1,453		109,731
Pfizer, Inc.		60,234		2,023,260
Zoetis, Inc.		4,961		309,467
				10,598,828
Professional Services — 0.3%
Equifax, Inc.		1,205		165,591
IHS Markit Ltd.		3,196		140,752
Nielsen Holdings PLC		3,370		130,284
Robert Half International, Inc.		1,308		62,692
Verisk Analytics, Inc. (a)		1,559		131,533
				630,852
Real Estate Management & Development — 0.1%
CBRE Group, Inc., Class A (a)		2,996		109,054
Road & Rail — 0.9%
CSX Corp.		9,335		509,318
JB Hunt Transport Services, Inc.		900		82,242
Kansas City Southern		1,097		114,801
Norfolk Southern Corp.		2,962		360,475
Union Pacific Corp.		8,152		887,834
				1,954,670

Common Stocks	Shares		Value
Semiconductors & Semiconductor Equipment — 3.3%
Advanced Micro Devices, Inc. (a)		7,722	$	96,371
Analog Devices, Inc.		3,630		282,414
Applied Materials, Inc.		10,884		449,618
Broadcom Ltd.		4,035		940,357
Intel Corp.		47,561		1,604,708
KLA-Tencor Corp.		1,558		142,573
Lam Research Corp.		1,623		229,541
Microchip Technology, Inc. (b)		2,316		178,749
Micron Technology, Inc. (a)		10,475		312,783
NVIDIA Corp.		6,007		868,372
Qorvo, Inc. (a)		1,303		82,506
QUALCOMM, Inc.		14,842		819,575
Skyworks Solutions, Inc.		1,899		182,209
Texas Instruments, Inc.		10,061		773,993
Xilinx, Inc. (b)		2,500		160,800
				7,124,569
Software — 4.8%
Activision Blizzard, Inc.		6,948		399,996
Adobe Systems, Inc. (a)		4,998		706,917
ANSYS, Inc. (a)		863		105,010
Autodesk, Inc. (a)		1,957		197,305
CA, Inc.		3,150		108,581
Citrix Systems, Inc. (a)		1,568		124,781
Electronic Arts, Inc. (a)		3,102		327,943
Intuit, Inc.		2,457		326,314
Microsoft Corp.		77,941		5,372,473
Oracle Corp.		30,320		1,520,245
Red Hat, Inc. (a)		1,798		172,159
salesforce.com, Inc. (a)		6,751		584,637
Symantec Corp.		6,191		174,896
Synopsys, Inc. (a)		1,521		110,927
				10,232,184
Specialty Retail — 2.2%
Advance Auto Parts, Inc.		722		84,178
AutoNation, Inc. (a)(b)		633		26,687
AutoZone, Inc. (a)		293		167,145
Bed Bath & Beyond, Inc. (b)		1,515		46,056
Best Buy Co., Inc. (b)		2,741		157,142
CarMax, Inc. (a)		1,914		120,697
Foot Locker, Inc.		1,346		66,331
Gap, Inc. (b)		2,167		47,652
Home Depot, Inc.		12,106		1,857,060
L Brands, Inc. (b)		2,409		129,821
Lowe’s Cos., Inc.		8,663		671,642
O’Reilly Automotive, Inc. (a)		933		204,084
Ross Stores, Inc.		4,012		231,613
Signet Jewelers Ltd. (b)		690		43,636
Staples, Inc.		6,626		66,724
Tiffany & Co. (b)		1,081		101,473
TJX Cos., Inc.		6,494		468,672
Tractor Supply Co. (b)		1,310		71,015
Ulta Beauty, Inc. (a)		588		168,956
				4,730,584
Technology Hardware, Storage & Peripherals — 4.0%
Apple Inc.		52,641		7,581,357
Hewlett Packard Enterprise Co.		16,789		278,529
HP, Inc.		17,072		298,419
NetApp, Inc.		2,747		110,017
Seagate Technology PLC		2,977		115,359
Western Digital Corp.		2,905		257,383
				8,641,064

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock S&P 500 Index V.I. Fund

Common Stocks	Shares		Value
Textiles, Apparel & Luxury Goods — 0.7%
Coach, Inc.		2,713	$	128,433
Hanesbrands, Inc. (b)		3,834		88,795
Michael Kors Holdings Ltd. (a)		1,585		57,456
NIKE, Inc., Class B		13,402		790,718
PVH Corp.		789		90,341
Ralph Lauren Corp.		531		39,188
Under Armour, Inc.:
Class A (a)(b)		1,793		39,016
Class C (a)(b)		1,805		36,389
VF Corp. (b)		3,234		186,278
				1,456,614
Tobacco — 1.8%
Altria Group, Inc.		19,596		1,459,314
Philip Morris International, Inc.		15,678		1,841,381
Reynolds American, Inc.		8,333		541,978
				3,842,673
Trading Companies & Distributors — 0.2%
Fastenal Co. (b)		2,928		127,456
United Rentals, Inc. (a)		855		96,367
W.W. Grainger, Inc. (b)		572		103,263
				327,086
Water Utilities — 0.1%
American Water Works Co., Inc.		1,797		140,076
Total Long-Term Investments (Cost — $69,931,875) — 98.3%				209,658,207

Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, T-Fund, Institutional Class, 0.84% (c)(d)		3,599,962	$	3,599,962
SL Liquidity Series, LLC, Money Market Series, 1.27% (c)(d)(e)		8,833,046		8,833,929
Total Short-Term Securities (Cost — $ 12,434,213) — 5.8%				12,433,891
Total Investments (Cost — $ 82,366,088) — 104.1%				222,092,098
Liabilities in Excess of Other Assets — (4.1)%				(8,686,522	)
Net Assets — 100.0%			$	213,405,576

      Notes to Schedule of Investments

(a) Non-income producing security.

(b) Security, or a portion of the security, is on loan.

(c) During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Shares Purchased			Shares Sold		Shares Held at June 30, 2017		Value at June 30, 2017		Income			Net Realized Loss			Change in Unrealized Appreciation (Depreciation)
BlackRock, Inc.		1,224		—			—		1,224	$	517,030	$	6,120			—			$51,249
BlackRock Liquidity Funds, T-Fund, Institutional Class		3,269,017		330,945	1		—		3,599,962		3,599,962		9,031			—			—
SL Liquidity Series, LLC, Money Market Series		4,528,572		4,304,474	1		—		8,833,046		8,833,929		8,383	2		$(340	)		(548	)
PNC Financial Services Group, Inc.		4,925		—			—		4,925		614,985		5,418			—			38,956
Total										$	13,565,906	$	28,952			$(340	)		$89,657

¹ Represents net shares purchased.

² Represents securities lending income earned from the reinvestment of cash collateral from loaned securities, net of fees and collateral investment expenses, and other payments to and from borrowers of securities.

(d) Current yield as of period end.

(e) Security was purchased with the cash collateral from loaned securities.

• For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Schedule of Investments (continued) BlackRock S&P 500 Index V.I. Fund

      Derivative Financial Instruments Outstanding as of Period End

Futures Contracts
Contracts Long	Issue		Expiration		Notional Value		Unrealized Depreciation
32		S&P 500 E-Mini Index		September 2017		$3,873,440		$(18,642)

      Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statement of Assets and Liabilities were as follows:

			Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Liabilities - Derivative Financial Instruments
Futures contracts	Net unrealized depreciation	1		—		—		$18,642		—		—		—	$	18,642

¹  Includes cumulative appreciation (depreciation) on futures contracts, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

For the six months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Net Realized Gain from:
Futures contracts		—		—		$256,193		—		—		—	$	256,193
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts		—		—		$(11,515)		—		—		—	$	(11,515	)

      Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts - long	$	4,001,020

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock S&P 500 Index V.I. Fund

      Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value investments and derivative financial instruments. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1			Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments1		$	209,658,207		—		—		$	209,658,207
Short-Term Securities			3,599,962		—		—			3,599,962
Subtotal		$	213,258,169		—		—		$	213,258,169
Investments Valued at NAV2										8,833,929
Total Investments									$	222,092,098
1    See above Schedule of Investments for values in each industry. 2    As of June 30, 2017, certain of the Fund’s investments were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.
	Level 1			Level 2		Level 3		Total
Derivative Financial Instruments1
Liabilities:
Equity contracts			$    (18,642)		—		—			$    (18,642)
1     Derivative financial instruments are futures contracts, which are valued at the unrealized appreciation (depreciation) on the instrument.
During the six months ended June 30, 2017, there were no transfers between levels.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock S&P 500 Index V.I. Fund
Assets
Investments at value — unaffiliated (including securities loaned at value of $8,659,836) (cost — $69,494,407)	$	208,526,192
Investments at value — affiliated (cost — $12,871,681)		13,565,906
Cash pledged for futures contracts		138,000
Receivables:
Securities lending income — affiliated		1,960
Capital shares sold		43,088
Dividends — affiliated		1,963
Dividends — unaffiliated		209,237
From the Manager		18,367
Variation margin on futures contracts		1,262
Prepaid expenses		10,491
Total assets		222,516,466
Liabilities
Cash collateral on securities loaned at value		8,834,135
Payables:
Investments purchased		89,877
Capital shares redeemed		43,310
Distribution fees		334
Investment advisory fees		34,968
Officer’s and Directors’ fees		482
Other accrued expenses		106,204
Other affiliates		1,580
Total liabilities		9,110,890
Net Assets	$	213,405,576
Net Assets Consist of
Paid-in capital	$	75,537,442
Undistributed net investment income		1,664,453
Accumulated net realized loss		(3,503,687	)
Net unrealized appreciation (depreciation)		139,707,368
Net Assets	$	213,405,576
Net Asset Value
Class I — Based on net assets of $210,690,685 and 9,698,099 shares outstanding, 100 million shares authorized, $0.10 par value	$	21.72
Class II — Based on net assets of $2,714,891 and 126,013 shares outstanding, 100 million shares authorized, $0.10 par value	$	21.54

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock S&P 500 Index V.I. Fund
Investment Income
Dividends — affiliated	$	20,569
Dividends — unaffiliated		1,946,561
Securities lending — affiliated — net		8,383
Total investment income		1,975,513
Expenses
Investment advisory		308,814
Transfer agent		2,480
Transfer agent — class specific		53,966
Professional		33,196
Accounting services		23,360
Printing		16,359
Custodian		11,876
Officer and Directors		10,810
Distribution — class specific		1,932
Miscellaneous		13,729
Total expenses		476,522
Less:
Fees waived by the Manager		(104,047	)
Transfer agent fees reimbursed — class specific		(53,966	)
Total expenses after fees waived and reimbursed		318,509
Net investment income		1,657,004
Realized and Unrealized Gain (Loss)
Net realized gain from:
Investments — unaffiliated		1,294,116
Investments — affiliated		(340	)
Futures contracts		256,193
		1,549,969
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		14,695,567
Investments — affiliated		89,657
Futures contracts		(11,515	)
		14,773,709
Net realized and unrealized gain		16,323,678
Net Increase in Net Assets Resulting from Operations	$	17,980,682

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Statements of Changes in Net Assets BlackRock S&P 500 Index V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	1,657,004		$	3,478,726
Net realized gain		1,549,969			8,754,845
Net change in unrealized appreciation (depreciation)		14,773,709			8,499,712
Net increase in net assets resulting from operations		17,980,682			20,733,283
Distributions to Shareholders1
From net investment income:
Class I		—			(3,462,212	)
Class II		—			(37,791	)
From net realized gain:
Class I		—			(9,370,529	)
Class II		—			(114,078	)
Decrease in net assets resulting from distributions to shareholders		—			(12,984,610	)
Capital Share Transactions
Net increase (decrease) in net assets derived from capital share transactions		(2,134,049	)		981,987
Net Assets
Total increase in net assets		15,846,633			8,730,660
Beginning of period		197,558,943			188,828,283
End of period	$	213,405,576		$	197,558,943
Undistributed net investment income, end of period	$	1,664,453		$	7,449

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock S&P 500 Index V.I. Fund

	Class I
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	19.90		$	19.08		$	20.63		$	19.43		$	15.43		$	13.92
Net investment income1		0.17			0.37			0.37			0.35			0.30			0.29
Net realized and unrealized gain (loss)		1.65			1.85			(0.14	)		2.25			4.61			1.87
Net increase from investment operations		1.82			2.22			0.23			2.60			4.91			2.16
Distributions:2
From net investment income		—			(0.38	)		(0.42	)		(0.36	)		(0.31	)		(0.30)
From net realized gain		—			(1.02	)		(1.36	)		(1.04	)		(0.60	)		(0.35)
Total distributions		—			(1.40	)		(1.78	)		(1.40	)		(0.91	)		(0.65)
Net asset value, end of period	$	21.72		$	19.90		$	19.08		$	20.63		$	19.43		$	15.43
Total Return3
Based on net asset value		9.15	%4		11.60	%		1.05	%		13.30	%		31.87	%		15.60%
Ratios to Average Net Assets
Total expenses		0.46	%5		0.46	%		0.46	%		0.46	%		0.46	%		0.46%
Total expenses after fees waived and reimbursed		0.31	%5		0.31	%		0.31	%		0.34	%		0.41	%		0.43%
Net investment income		1.61	%5		1.87	%		1.76	%		1.70	%		1.69	%		1.87%
Supplemental Data
Net assets, end of period (000)	$	210,691		$	195,261		$	187,048		$	204,029		$	199,825		$	158,160
Portfolio turnover rate		2	%		4	%		4	%		3	%		4	%		4%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Annualized.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Financial Highlights (concluded) BlackRock S&P 500 Index V.I. Fund

	Class II
	Six Months Ended June 30, 2017			Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	19.75		$	18.94		$	20.49		$	19.31		$	15.34		$	13.84
Net investment income1		0.15			0.33			0.33			0.32			0.27			0.26
Net realized and unrealized gain (loss)		1.64			1.85			(0.13	)		2.22			4.58			1.86
Net increase from investment operations		1.79			2.18			0.20			2.54			4.85			2.12
Distributions:2
From net investment income		—			(0.35	)		(0.39	)		(0.32	)		(0.28	)		(0.27)
From net realized gain		—			(1.02	)		(1.36	)		(1.04	)		(0.60	)		(0.35)
Total distributions		—			(1.37	)		(1.75	)		(1.36	)		(0.88	)		(0.62)
Net asset value, end of period	$	21.54		$	19.75		$	18.94		$	20.49		$	19.31		$	15.34
Total Return3
Based on net asset value		9.06	%4		11.47	%		0.89	%		13.11	%		31.67	%		15.44%
Ratios to Average Net Assets
Total expenses		0.59	%5		0.62	%		0.61	%		0.60	%		0.60	%		0.61%
Total expenses after fees waived and reimbursed		0.46	%5		0.46	%		0.46	%		0.48	%		0.56	%		0.58%
Net investment income		1.48	%5		1.71	%		1.61	%		1.55	%		1.54	%		1.72%
Supplemental Data
Net assets, end of period (000)	$	2,715		$	2,298		$	1,780		$	1,962		$	1,828		$	1,584
Portfolio turnover rate		2	%		4	%		4	%		3	%		4	%		4%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Annualized.

See Notes to Financial Statements.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (Unaudited) BlackRock S&P 500 Index V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock S&P 500 Index V.I. Fund (the “Fund”). The Fund is classified as diversified. 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 Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

2. Significant Accounting Policies:

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Investment Transactions and 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 date. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund is informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. 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 and accretion of premiums and discounts on debt securities, is recognized on the accrual basis.

Foreign Currency Translation: The Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

The Fund does not isolate the portion of the results of operations arising as a result of changes in the exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statement of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. The Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for federal income tax purposes.

Segregation and Collateralization: In cases where the Fund enters into certain investments (e.g., futures contracts) that would be treated as “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments. Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Distributions: Distributions paid by the Fund are recorded on the ex-dividend date. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

Indemnifications: In the normal course of business, the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Notes to Financial Statements (continued) BlackRock S&P 500 Index V.I. Fund

Other: Expenses directly related to the Fund or its classes are charged to the Fund or the applicable class. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses prorated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdraft, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

Investment Valuation Policies: The Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the NYSE (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of the Fund’s assets and liabilities:

• Equity investments traded on a recognized securities exchange are valued at the official closing price each day, if available. For equity investments traded on more than one exchange, the official closing price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid (long positions) or ask (short positions) price.

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• The Fund values its investment in SL Liquidity Series, LLC, Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the underlying fund’s net assets. 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 may follow the parameters of investments by a money market fund that is subject to Rule 2a-7 under the 1940 Act.

• Futures contracts traded on exchanges are valued at their last sale price.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include Market approach, Income approach and Cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis.

Fair Value Hierarchy: Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:

• Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

• Level 2 — Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

• Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock S&P 500 Index V.I. Fund

the price for Fair Valued Investments. Level 3 investments include equity or debt issued by privately-held companies or funds. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

As of June 30, 2017, certain investments of the Fund were valued using NAV per share as no quoted market value is available and therefore have been excluded from the fair value hierarchy.

4. Securities and Other Investments:

Securities Lending: The Fund may lend its securities to approved borrowers, such as brokers, dealers and other financial institutions. The borrower pledges and maintains with the Fund collateral consisting of cash, an irrevocable letter of credit issued by a bank, or securities issued or guaranteed by the U.S. Government. The initial collateral received by the Fund is required to have a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter, at a value equal to at least 100% of the current market value of the securities on loan. The market value of the loaned securities is determined at the close of each business day of the Fund and any additional required collateral is delivered to the Fund, or excess collateral returned by the Fund, on the next business day. During the term of the loan, the Fund is entitled to all distributions made on or in respect of the loaned securities but does not receive interest income on securities received as collateral. 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.

The market value of any securities on loan, all of which were classified as common stocks in the Fund’s Schedule of Investments, and the value of any related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value — unaffiliated, and collateral on securities loaned at value, respectively. As of period end, any securities on loan were collateralized by cash and/or U.S. Government obligations. Cash collateral invested by the securities lending agent, BlackRock Investment Management, LLC (“BIM”), if any, is disclosed in the Schedule of Investments.

Securities lending transactions are entered into by the Fund under Master Securities Lending Agreements (each, an “MSLA”), which provide the right, in the event of default (including bankruptcy or insolvency), for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Fund, as lender, would offset the market value of the collateral received against the market value of the securities loaned. When the value of the collateral is greater than that of the market value of the securities loaned, the lender is left with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, absent an event of default, the borrower can resell or re-pledge the loaned securities, and the Fund can reinvest cash collateral received in connection with loaned securities. Upon an event of default, the parties’ obligations to return the securities or collateral to the other party are extinguished, and the parties can resell or re-pledge the loaned securities or the collateral received in connection with the loaned securities in order to satisfy the defaulting party’s net payment obligation for all transactions under the MSLA. The defaulting party remains liable for any deficiency.

As of period end, the following table is a summary of the Fund’s securities lending agreements by counterparty which are subject to offset under an MSLA:

Counterparty	Securities Loaned at Value			Cash Collateral Received1				Net Amount
Citigroup Global Markets, Inc.		$	5,873,917		$	(5,873,917	)		—
Credit Suisse Securities (USA) LLC			34,272			(34,272	)		—
Deutsche Bank Securities, Inc.			449,985			(449,985	)		—
Goldman Sachs & Co.			36,992			(36,992	)		—
JP Morgan Securities LLC			1,073,524			(1,073,524	)		—
Morgan Stanley			1,191,146			(1,191,146	)		—
Total		$	8,659,836		$	(8,659,836	)		—

¹  Cash collateral with a value of $8,834,135 has been received in connection with securities lending agreements. Collateral received in excess of the value of securities loaned from the individual counterparty is not shown for financial reporting purposes in the table above.

The risks of securities lending include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate these risks, the Fund benefits from a borrower default indemnity provided by BIM. BIM’s indemnity allows for full replacement of

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

Notes to Financial Statements (continued) BlackRock S&P 500 Index V.I. Fund

the securities loaned if the collateral received does not cover the value on the securities loaned in the event of borrower default. The Fund could incur 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.

5. Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and/or to manage its exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedule of Investments. These contracts may be transacted on an exchange or over-the-counter (“OTC”).

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk), changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are agreements between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract.

Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statement of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

Investment Advisory: The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with the Manager, the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administrative services. The Manager is responsible for the management of the Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of the Fund.

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to 0.30% of the average daily value of the Fund’s net assets.

Distribution Fees: The Company, on behalf of the Fund, entered into a Distribution Agreement and a Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing distribution fees. The fees are accrued daily and paid monthly at an annual rate of 0.15% based upon the average daily net assets attributable to Class II.

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class II is $1,932.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

In addition, the Fund pays the transfer agent, which is not an affiliate, a fee for the issuance, transfer and redemption of shares and the opening and maintenance of shareholder accounts, which is included in transfer agent in the Statement of Operations.

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class II	Total
$53,514	$452		$53,966

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock S&P 500 Index V.I. Fund

Expense Limitations, Waivers and Reimbursements: BlackRock has contractually agreed to waive 0.10% if its management fee through April 30, 2018. The contractual agreement may be terminated upon 90 days notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, the amount waived was $102,938.

With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $1,109.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Consolidated Statement of Operations. For the six months ended June 30, 2017, there were no fees waived by the Manager.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $1,047 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Manager has contractually agreed to reimburse all transfer agent fees for Class I and Class II.

These amounts are shown as transfer agent fees reimbursed — class specific in the Statement of Operations. Class specific expense waivers and/or reimbursements are as follows:

	Class I	Class II	Total
Transfer agent fees reimbursed	$53,514	$452	$53,966

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business (“expense limitation”). The expense limitations as a percentage of average daily net assets are as follows:

Class I	1.25%
Class II	1.40%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

Securities Lending: The SEC has issued an exemptive order which permits BIM, an affiliate of the Manager, to serve as securities lending agent for the Fund, subject to applicable conditions. As securities lending agent, BIM bears all operational costs directly related to securities lending. The Fund is responsible for expenses in connection with the investment of cash collateral received for securities on loan (the “collateral investment expenses”). The cash collateral is invested in a private investment company managed by the Manager or its affiliates. However, BIM has agreed to cap the collateral investment expenses of the private investment company to an annual rate of 0.04%. The investment adviser to the private investment company will not charge any advisory fees with respect to shares purchased by the Fund. The private investment company in which the cash collateral has been invested may, under certain circumstances, impose a liquidity fee of up to 2% on the value redeemed or temporarily restrict redemptions for up to 10 business days during a 90 day period, in the event that the private investment company’s weekly liquid assets fall below certain thresholds.

Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of fees and other payments to and from borrowers of securities, and less the collateral investment expenses. The Fund retains a portion of securities lending income and remits a remaining portion to BIM as compensation for its services as securities lending agent.

Pursuant to a securities lending agreement, the Fund retains 71.5% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 23

Notes to Financial Statements (continued) BlackRock S&P 500 Index V.I. Fund

In addition, commencing the business day following the date that the aggregate securities lending income earned across the Equity-Bond Complex in a calendar year exceeds a specified threshold, the Fund, pursuant to the securities lending agreement, will retain for the remainder of that calendar year securities lending income as follows: 75% of securities lending income, and this amount retained can never be less than 65% of the total of securities lending income plus the collateral investment expenses.

The share of securities lending income earned by the Fund is shown as securities lending income — affiliated — net in the Statement of Operations. For the six months ended June 30, 2017, the Fund paid BIM $3,131 for securities lending agent services.

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Company’s Chief Compliance Officer, which is included in Officer and Directors in the Statement of Operations.

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the six months ended June 30, 2017, the purchase and sale transactions and any net realized gains (losses) with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:

Purchases	Sales	Net Realized Loss
$1,763,864	$554,218	$(293,684)

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, excluding short-term securities, were $3,347,214 and $3,264,849, respectively.

8. Income Tax Information:

It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	87,575,404
Gross unrealized appreciation	$	136,194,485
Gross unrealized depreciation		(1,677,791	)
Net unrealized appreciation	$	134,516,694

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund.

24 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock S&P 500 Index V.I. Fund

Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

On October 11, 2016, BlackRock implemented certain changes required by amendments to Rule 2a-7 under the 1940 Act, which governs the operations of U.S. money market funds. The Fund may be exposed to additional risks when reinvesting cash collateral in money market funds that do not seek to maintain a stable NAV per share of $1.00 and which may be subject to redemption gates or liquidity fees under certain circumstances.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments and may experience difficulty in selling those investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.

Counterparty Credit Risk: Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange-traded futures, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Fund.

11. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017						Year Ended December 31, 2016
	Shares			Amount			Shares			Amount
Class I
Shares sold		456,560		$	9,673,877			1,196,731		$	23,140,247
Shares issued in reinvestment of distributions		—			—			640,814			12,832,741
Shares redeemed		(570,139	)		(12,003,138	)		(1,829,715	)		(35,366,872	)
Net increase (decrease)		(113,579	)	$	(2,329,261	)		7,830		$	606,116
Class II
Shares sold		113,585		$	2,291,172			53,129		$	1,004,364
Shares issued in reinvestment of distributions		—			—			7,643			151,869
Shares redeemed		(103,948	)		(2,095,960	)		(38,371	)		(780,362	)
Net increase		9,637		$	195,212			22,401		$	375,871
Total Net Increase (Decrease)		(103,942	)	$	(2,134,049	)		30,231		$	981,987

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 25

Notes to Financial Statements (concluded) BlackRock S&P 500 Index V.I. Fund

12. 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.

26 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶   BlackRock Total Return V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock Total Return V.I. Fund

      Investment Objective

BlackRock Total Return V.I. Fund’s (the “Fund”) investment objective is to maximize total return, consistent with income generation and prudent investment management.

      Portfolio Management Commentary

How did the Fund perform?

• For the six-month period ended June 30, 2017, the Fund outperformed its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index.

What factors influenced performance?

• Positive contributions to performance for the period came from allocations to U.S. securitized assets including non-agency mortgage-backed securities (“MBS”), and collateralized loan obligations (“CLOs”). Security selection within commercial mortgage-backed securities (“CMBS”) also aided performance. Out-of-benchmark exposure to emerging market bonds, high yield corporates and municipal bonds contributed positively as well.

• The Fund’s U.S. absolute return and macro strategies modestly detracted from performance relative to the benchmark.

Describe recent portfolio activity.

• The Fund began 2017 positioned to benefit from reflation driven by firming global growth, with an underweight stance with respect to duration (and corresponding interest rate sensitivity) and an emphasis on carry-oriented (income) opportunities to be found lower in the capital structure. Within these overall themes, the Fund held an allocation to high yield credit and overweight exposure to securitized assets including

CMBS, asset-backed securities, CLO’s and non-agency MBS, as well as emerging markets. In addition, the Fund maintained exposure to Treasury inflation-protected securities to capture any benefit from rising market expectations for inflation.

• During the second quarter of 2017, the Fund reduced its duration underweight as volatility remained low, global growth started to plateau following a strong recovery, and inflation expectations declined. This shift was designed to increase the Fund’s income generation given the lack of any catalyst for rate volatility to increase substantially, and made with the view that the market should favor strategies designed to generate income given the large demand for fixed income assets and low supply.

Describe portfolio positioning at period end.

• The Fund ended the period positioned with a less pronounced underweight stance with respect to duration, as softening domestic economic activity and inflation data alongside strong fixed income demand kept rates subdued. Rich valuations in credit sectors led to the Fund to favor idiosyncratic stories within investment grade and high yield corporate bonds rather than broad exposure to those segments. The Fund ended the period with an increased overweight in emerging markets based on the view that synchronized developed market growth bodes well for the sector. Finally, the Fund continued to favor securitized assets for yield, as a strong technical backdrop should support segments such as non-agency MBS and CLOs.

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, 2017

BlackRock Total Return 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. The returns for Class III Shares prior to August 14, 2012, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares, as adjusted to reflect the distribution and/or service (12b-1) fees applicable to Class III Shares.

²  Under normal circumstances, the Fund invests at least 80%, and typically invests 90% or more, of its assets in fixed income securities, such as corporate bonds and notes, mortgage-backed securities, asset-backed securities, convertible securities, preferred securities and government obligations.

³  A widely recognized unmanaged market-weighted index, comprised of investment-grade corporate bonds rated BBB or better, mortgages and U.S. Treasury and U.S. Government agency issues with at least one year to maturity.

Performance Summary for the Period Ended June 30, 2017
										Average Annual Total Returns
	Standardized 30-Day  Yields5			Unsubsidized 30-Day  Yields5			6-Month Total Returns6			1 Year6			5 Years6			10  Years6
Class I4		2.41	%		2.21	%		2.49	%		0.35	%		3.03	%		4.18	%
Class III4		2.10			2.00			2.35			0.01			2.73	7		3.90	7
Bloomberg Barclays U.S. Aggregate Bond Index		—			—			2.27			(0.31	)		2.21			4.48

⁴  Average annual and cumulative total returns are based on changes in net asset value (“NAV”) for the periods shown, and assume reinvestment of all distributions at NAV on the ex-dividend/payable date. Insurance-related fees and expenses are not reflected in these returns.

⁵  The standardized 30-day yield includes the effects of any waivers and/or reimbursements. The unsubsidized 30-day yield excludes the effects of any waivers and/or reimbursements.

⁶  For a portion of the period, the Fund’s investment adviser waived a portion of its fees. Without such waiver, the Fund’s performance would have been lower.

⁷  The returns for Class III Shares prior to August 14, 2012, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares, as adjusted to reflect the distribution and/or service (12b-1) fees applicable to Class III Shares.

Past performance is not indicative of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Expense Example
	Actual				Hypothetical10
			Including Interest Expense and Fees	Excluding Interest Expense and Fees		Including Interest Expense and Fees		Excluding Interest Expense and Fees
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period8	Expenses Paid During the Period9	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period8	Ending Account Value June 30, 2017	Expenses Paid During the Period9
Class I	$1,000.00	$1,024.90	$3.26	$2.86	$1,000.00	$1,021.57	$3.26	$1,021.97	$2.86
Class III	$1,000.00	$1,023.50	$4.82	$4.42	$1,000.00	$1,020.03	$4.81	$1,020.43	$4.41

⁸  For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.65% for Class I and 0.96% for Class III), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).

⁹  For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.57% for Class I and 0.88% for Class III), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).

¹⁰  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

See “Disclosure of Expenses” on the following page for further information on how expenses were calculated.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

BlackRock Total Return V.I. Fund

      Portfolio Information as of June 30, 2017

Portfolio Composition	Percent of Total Investments1
U.S. Government Sponsored Agency Securities		36	%
Corporate Bonds		22
U.S. Treasury Obligations		19
Asset-Backed Securities		10
Non-Agency Mortgage-Backed Securities		5
Foreign Government Obligations		4
Taxable Municipal Bonds		3
Floating Rate Loan Interests		1

¹ Total investments exclude short-term securities and options purchased.

Credit Quality Allocations1	Percent of Total Investments2
AAA/Aaa3		62	%
AA/Aa		4
A		9
BBB/Baa		14
BB/Ba		2
B		1
CCC/Caa		2
CC/Ca		1
N/R		5

¹  For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either Standard & Poor’s or Moody’s Investors Service if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

²  Total investments exclude short-term securities and options purchased.

³  The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors, individual investments and/or issuers. Using this approach, the investment adviser has deemed unrated U.S. Government Sponsored Agency Securities and U.S. Treasury Obligations to be of similar credit quality as investments rated AAA/Aaa.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Disclosure of Expenses BlackRock Total Return V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

The expense example provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.”

The expense example also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.

The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, if any. Therefore, the hypothetical example is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

The Benefits and Risks of Leveraging

The Fund may utilize leverage to seek to enhance returns and net asset value (“NAV”). However, these objectives cannot be achieved in all interest rate environments.

The Fund may utilize leverage by entering into reverse repurchase agreements.

In general, the concept of leveraging is based on the premise that the financing cost of leverage, which is based on short-term interest rates, is normally lower than the income earned by the Fund on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of the Fund (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Fund’s shareholders benefit from the incremental net income.

The interest earned on securities purchased with the proceeds from leverage is distributed to the Fund’s shareholders, and the value of these portfolio holdings is reflected in the Fund’s per share NAV. However, in order to benefit shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other ongoing costs of leverage exceed the Fund’s return on assets purchased with leverage proceeds, income to shareholders is lower than if the Fund had not used leverage.

Furthermore, the value of the Fund’s portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can also influence the value of portfolio investments. As a result, changes in interest rates can influence the Fund’s NAV positively or negatively in addition to the impact on the Fund’s performance from leverage. Changes in the direction of interest rates are difficult to predict accurately, and there is no assurance that the Fund’s leveraging strategy will be successful.

The use of leverage also generally causes greater changes in the Fund’s NAV and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the NAV of the Fund’s shares than if the Fund were not leveraged. In addition, the Fund may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of the leverage instruments, which may cause the Fund to incur losses. The use of leverage may limit the Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. The Fund incurs expenses in connection with the use of leverage, all of which are borne by the Fund’s shareholders and may reduce income.

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction

or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 5

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock Total Return V.I. Fund
	(Percentages shown are based on Net Assets)

Asset-Backed Securities		Par (000)		Value
Accredited Mortgage Loan Trust, Series 2006-1, Class M2, 1.56%, 4/25/36 (a)	USD		190	$	98,732
ACE Securities Corp. Home Equity Loan Trust:
Series 2003-OP1, Class A2, 1.94%, 12/25/33 (a)			122		105,645
Series 2007-HE4, Class A2A, 1.35%, 5/25/37 (a)			108		34,689
Adams Mill CLO Ltd., Series 2014-1A, Class A2R, 0.00%, 7/15/26 (a)(b)			250		250,000
Ajax Mortgage Loan Trust:
Series 2016-B, Class A, 4.00%, 9/25/65 (b)(c)			99		99,323
Series 2016-C, Class A, 4.00%, 10/25/57 (b)(c)			92		91,349
AJAX Mortgage Loan Trust, Series 2017-A, Class A, 3.47%, 4/25/57 (b)(c)			380		379,236
Allegro CLO II Ltd., Series 2014-1A, Class A1R, 2.33%, 1/21/27 (a)(b)(d)			500		500,115
ALM V Ltd., Series 2012-5A, Class A2R, 3.31%, 10/18/27 (a)(b)			250		252,455
ALM XII Ltd., Series 2015-12A, Class A1R, 2.21%, 4/16/27 (a)(b)(d)			250		250,000
ALM XIV Ltd., Series 2014-14A, Class A1R, 2.32%, 7/28/26 (a)(b)			1,250		1,250,317
AMMC CLO 18 Ltd., Series 2016-18A, Class AL1, 2.77%, 5/26/28 (a)(b)			170		171,177
AMMC CLO 19 Ltd., Series 2016-19A, Class C, 3.96%, 10/15/28 (a)(b)			100		100,402
AMMC CLO IX Ltd., Series 2011-9A, Class B1R, 3.66%, 1/15/22 (a)(b)			290		292,041
AMMC CLO XII Ltd., Series 2013-12A, Class B, 3.08%, 5/10/25 (a)(b)			500		500,182
Anchorage Capital CLO 5 Ltd., Series 2014-5A, Class CR, 3.58%, 10/15/26 (a)(b)			250		250,546
Anchorage Capital CLO 6 Ltd., Series 2015-6A, Class AR, 0.00%, 7/15/30 (a)(b)(d)			250		250,000
Anchorage Capital CLO Ltd., Series 2013-1A, Class A2A, 2.91%, 7/13/25 (a)(b)			250		250,073
Apidos CLO XII, Series 2013-12A, Class A, 2.26%, 4/15/25 (a)(b)			500		500,542
Apidos CLO XV, Series 2013-15A, Class A1R, 2.26%, 10/20/25 (a)(b)(d)			500		500,065
Arbor Realty CLO Ltd., Series 2015-FL2A, Class A, 2.91%, 9/15/25 (a)(b)(d)			250		250,000
Arbor Realty Commercial Real Estate Notes Ltd., Series 2016-FL1A, Class A, 2.86%, 9/15/26 (a)(b)(d)			130		130,000
ARES XXVIII CLO Ltd., Series 2013-3A, Class B1R, 2.66%, 10/17/24 (a)(b)			250		249,998

Asset-Backed Securities		Par (000)		Value
ARES XXXIII CLO Ltd., Series 2015-1A, Class B2R, 4.02%, 12/05/25 (a)(b)	USD		250	$	253,241
Argent Mortgage Loan Trust, Series 2005-W1, Class A2, 1.70%, 5/25/35 (a)(d)			64		48,877
Atlas Senior Loan Fund IV Ltd., Series 2013-2A, Class A1L, 2.68%, 2/17/26 (a)(b)			250		249,977
Atlas Senior Loan Fund V Ltd.:
Series 2014-1A, Class AR, 2.59%, 7/16/26 (a)(b)			250		250,003
Series 2014-1A, Class BR, 3.16%, 7/16/26 (a)(b)			250		249,995
B2R Mortgage Trust:
Series 2015-1, Class A1, 2.52%, 5/15/48 (b)			84		83,352
Series 2015-2, Class A, 3.34%, 11/15/48 (b)			95		96,153
Babson CLO Ltd., Series 2013-IA, Class A, 2.26%, 4/20/25 (a)(b)			250		250,271
BankAmerica Manufactured Housing Contract Trust, Series 1998-2, Class B1, 7.93%, 12/10/25 (a)			300		235,898
Battalion CLO IV Ltd., Series 2013-4A, Class A1R, 2.29%, 10/22/25 (a)(b)			250		250,077
Bayview Financial Revolving Asset Trust:
Series 2004-B, Class A1, 2.22%, 5/28/39 (a)(b)			158		123,848
Series 2005-E, Class A1, 2.04%, 12/28/40 (a)(b)			105		92,701
BCMSC Trust:
Series 2000-A, Class A2, 7.58%, 6/15/30 (a)			40		16,915
Series 2000-A, Class A3, 7.83%, 6/15/30 (a)			37		16,233
Series 2000-A, Class A4, 8.29%, 6/15/30 (a)			63		29,516
Bear Stearns Asset-Backed Securities I Trust:
Series 2007-FS1, Class 1A3, 1.39%, 5/25/35 (a)			84		84,187
Series 2007-HE2, Class 23A, 1.36%, 3/25/37 (a)			65		61,142
Series 2007-HE3, Class 1A4, 1.57%, 4/25/37 (a)			208		134,264
Bear Stearns Asset-Backed Securities Trust, Series 2005-4, Class M2, 2.42%, 1/25/36 (a)			24		23,232
Benefit Street Partners CLO Ltd., Series 2012-IA, Class A2R, 3.41%, 10/15/25 (a)(b)			500		503,022

Portfolio Abbreviations
AUD	Australian Dollar	GBP	British Pound	NZD	New Zealand Dollar
BRL	Brazilian Real	GO	General Obligation	OTC	Over-the-counter
BZDIOVER	Overnight Brazil CETIP Interbank Rate	HUF	Hungarian Forint	RB	Revenue Bonds
CAD	Canadian Dollar	IDR	Indonesian Rupiah	RUB	Russian Ruble
CHF	Swiss Franc	JPY	Japanese Yen	SEK	Swedish Krona
CLO	Collateralized Loan Obligation	KRW	South Korean Won	TBA	To-be-announced
CLP	Chilean Peso	LIBOR	London Interbank Offered Rate	TRY	Turkish Lira
CNH	Chinese Yuan Offshore	MXN	Mexican Peso	TWD	Taiwan Dollar
CNY	Chinese Yuan	MXIBTIIE	Mexican Equilibrium Interbank Interest Rate	USD	U.S. Dollar
COP	Colombian Peso	MYR	Malaysian Ringgit	ZAR	South African Rand
EUR	Euro	NOK	Norwegian Krone

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Asset-Backed Securities		Par (000)		Value
BlueMountain CLO Ltd.:
Series 2013-2A, Class A, 2.35%, 1/22/25 (a)(b)	USD		250	$	250,134
Series 2013-3A, Class A, 2.57%, 10/29/25 (a)(b)			250		249,999
Series 2013-4A, Class AR, 2.17%, 4/15/25 (a)(b)			250		250,073
Bsprt Issuer Ltd., Series 2017-FL1, Class A, 2.43%, 6/15/27 (a)(d)			130		130,163
Canyon Capital CLO Ltd., Series 2006-1A, Class A1, 1.50%, 12/15/20 (a)(b)			188		187,312
Carlyle Global Market Strategies CLO Ltd.:
Series 2012-4A, Class AR, 2.61%, 1/20/29 (a)(b)			300		303,259
Series 2014-1A, Class CR, 3.91%, 4/17/25 (a)(b)			250		251,019
Carrington Mortgage Loan Trust:
Series 2005-FRE1, Class M1, 1.69%, 12/25/35 (a)			160		154,052
Series 2006-FRE2, Class A2, 1.34%, 10/25/36 (a)			84		54,240
Series 2006-FRE2, Class A3, 1.38%, 10/25/36 (a)			267		194,133
Series 2006-FRE2, Class A5, 1.30%, 10/25/36 (a)			28		18,178
Series 2006-NC2, Class A3, 1.37%, 6/25/36-6/25/37 (a)			790		752,190
Series 2006-NC5, Class A5, 1.28%, 1/25/37 (a)			83		72,744
Series 2007-RFC1, Class A4, 1.44%, 10/25/36 (a)			100		66,881
C-BASS Trust:
Series 2006-CB7, Class A4, 1.38%, 10/25/36 (a)			70		50,107
Series 2006-CB9, Class A2, 1.33%, 11/25/36 (a)			38		22,111
Series 2006-CB9, Class A4, 1.45%, 11/25/36 (a)			17		10,265
Series 2007-CB1, Class AF2, 3.77%, 1/25/37 (c)			267		132,950
Series 2007-CB5, Class A2, 1.39%, 4/25/37 (a)			67		50,061
CHLUPA Trust, Series 2013-VM, Class A, 3.33%, 8/15/20 (b)(d)			6		6,151
CIFC Funding Ltd.:
Series 2014-2A, Class A1LR, 2.39%, 5/24/26 (a)(b)(d)			500		500,020
Series 2014-3A, Class C1, 3.95%, 7/22/26 (a)(b)			250		249,994
Series 2014-4A, Class A1R, 2.54%, 10/17/26 (a)(b)			250		250,351
Series 2014-5A, Class A1R, 2.56%, 1/17/27 (a)(b)			890		892,932
Series 2015-2A, Class A, 2.61%, 4/15/27 (a)(b)			250		250,563
Citicorp Residential Mortgage Trust, Series 2007-2, Class M1, 5.30%, 6/25/37 (c)			100		96,869
Citigroup Mortgage Loan Trust:
Series 2006-NC1, Class A2D, 1.47%, 8/25/36 (a)			100		80,054
Series 2007-AHL2, Class A3B, 1.22%, 5/25/37 (a)			274		204,573
Series 2007-AHL2, Class A3C, 1.29%, 5/25/37 (a)			124		93,509
Colony American Homes, Series 2015-1A, Class A, 2.37%, 7/17/32 (a)(b)			97		97,368
Conseco Finance Corp., Series 2001-D, Class B1, 3.66%, 11/15/32 (a)			74		73,937

Asset-Backed Securities		Par (000)		Value
Conseco Finance Securitizations Corp.:
Series 2000-1, Class A5, 8.06%, 9/01/29 (a)	USD		58	$	32,882
Series 2000-4, Class A6, 8.31%, 5/01/32 (a)			154		84,867
Series 2000-5, Class A7, 8.20%, 5/01/31			155		109,737
Conseco Financial Corp.:
Series 1997-3, Class M1, 7.53%, 3/15/28 (a)			64		63,454
Series 1997-6, Class M1, 7.21%, 1/15/29 (a)			46		45,254
Series 1998-8, Class M1, 6.98%, 9/01/30 (a)			121		99,411
Series 1999-5, Class A5, 7.86%, 3/01/30 (a)			51		40,540
Series 1999-5, Class A6, 7.50%, 3/01/30 (a)			37		28,211
Countrywide Asset-Backed Certificates:
Series 2003-BC3, Class A2, 1.84%, 9/25/33 (a)			127		120,417
Series 2004-5, Class A, 2.12%, 10/25/34 (a)			143		137,932
Series 2006-11, Class 3AV2, 1.38%, 9/25/46 (a)			12		11,964
Series 2006-S10, Class A3, 1.54%, 10/25/36 (a)			60		54,798
Series 2006-SPS1, Class A, 1.44%, 12/25/25 (a)			3		3,566
Series 2007-S3, Class A3, 1.60%, 5/25/37 (a)			100		85,010
Credit-Based Asset Servicing & Securitization LLC:
Series 2006-CB2, Class AF4, 3.40%, 12/25/36 (c)			19		14,762
Series 2006-MH1, Class B1, 6.25%, 10/25/36 (b)(c)			100		103,256
Series 2006-SL1, Class A2, 5.56%, 9/25/36 (b)(c)			92		21,483
Series 2007-CB6, Class A4, 1.56%, 7/25/37 (a)(b)			68		45,280
Series 2007-RP1, Class A, 1.53%, 5/25/46 (a)(b)			49		40,580
CWABS Revolving Home Equity Loan Trust, Series 2004-U, Class 2A, 1.43%, 3/15/34 (a)			45		35,865
CWHEQ Home Equity Loan Trust:
Series 2006-S5, Class A4, 5.84%, 6/25/35			16		16,996
Series 2006-S5, Class A5, 6.16%, 6/25/35			18		17,700
Series 2007-S1, Class A3, 5.81%, 11/25/36 (a)			55		54,790
CWHEQ Revolving Home Equity Loan Resuritization Trust:
Series 2006-RES, Class 4Q1B, 1.29%, 12/15/33 (a)(b)(d)			30		25,810
Series 2006-RES, Class 5B1B, 1.18%, 5/15/35 (a)(b)(d)			19		16,152
CWHEQ Revolving Home Equity Loan Trust, Series 2005-B, Class 2A, 1.34%, 5/15/35 (a)			35		30,030
DCP Rights LLC, Series 2014-1A, Class A, 5.46%, 10/25/44 (b)			218		220,924
Dryden Senior Loan Fund, Series 2015-41A, Class A, 2.66%, 1/15/28 (a)(b)			250		250,928
Dryden XXV Senior Loan Fund, Series 2012-25A, Class AR, 2.36%, 1/15/25 (a)(b)			232		232,390
Finn Square CLO Ltd., Series 2012-1A, Class A2R, 2.86%, 12/24/23 (a)(b)			250		250,575

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Asset-Backed Securities		Par (000)		Value
First Franklin Mortgage Loan Trust:
Series 2004-FFH3, Class M3, 2.27%, 10/25/34 (a)	USD		33	$	28,079
Series 2006-FF16, Class 2A3, 1.36%, 12/25/36 (a)			859		525,248
Series 2006-FF17, Class A5, 1.37%, 12/25/36 (a)			727		606,899
Series 2006-FF5, Class 2A3, 1.38%, 4/25/36 (a)			41		37,136
Series 2006-FFH1, Class M2, 1.62%, 1/25/36 (a)			130		51,835
GE-WMC Asset-Backed Pass-Through Certificates:
Series 2005-2, Class A2C, 1.47%, 12/25/35 (a)			32		31,059
Series 2005-2, Class M1, 1.66%, 12/25/35 (a)			184		103,546
GE-WMC Mortgage Securities Trust, Series 2006-1, Class A2B, 1.17%, 8/25/36 (a)			757		480,482
GMACM Home Equity Loan Trust, Series 2006-HE4, Class A2, 1.20%, 12/25/36 (a)			116		113,562
GSAA Home Equity Trust, Series 2007-4, Class A3B, 1.57%, 3/25/37 (a)			120		16,922
GSAA Trust, Series 2007-2, Class AF3, 5.92%, 3/25/37 (a)			31		13,974
GSAMP Trust:
Series 2006-FM2, Class A2B, 1.34%, 9/25/36 (a)			87		39,554
Series 2007-H1, Class A1B, 1.42%, 1/25/47 (a)			33		21,420
GT Loan Financing I Ltd., Series 2013-1A, Class A, 2.44%, 10/28/24 (a)(b)			250		250,044
Highbridge Loan Management Ltd., Series 6A-2015, Class A, 2.62%, 5/05/27 (a)(b)			250		250,388
Home Equity Mortgage Loan Asset-Backed Trust, Series 2004-A, Class M2, 3.24%, 7/25/34 (a)			33		32,897
Home Equity Mortgage Trust, Series 2006-2, Class 1A1, 5.87%, 7/25/36 (c)			85		35,574
Home Loan Mortgage Loan Trust, Series 2005-1, Class A3, 1.88%, 4/15/36 (a)			34		30,754
Invitation Homes Trust:
Series 2014-SFR2, Class C, 3.41%, 9/17/31 (a)(b)			150		150,460
Series 2014-SFR3, Class A, 2.41%, 12/17/31 (a)(b)			19		18,717
Series 2014-SFR3, Class C, 3.71%, 12/17/31 (a)(b)			167		168,219
Series 2014-SFR3, Class D, 4.21%, 12/17/31 (a)(b)			20		19,693
Series 2015-SFR3, Class A, 2.51%, 8/17/32 (a)(b)			96		96,054
Series 2015-SFR3, Class E, 4.74%, 8/17/32 (a)(b)			100		101,470
JPMorgan Mortgage Acquisition Trust:
Series 2006-CW1, Class M1, 1.49%, 5/25/36 (a)			100		83,630
Series 2006-WF1, Class A3A, 5.83%, 7/25/36 (c)			293		165,546
Series 2006-WF1, Class A5, 6.41%, 7/25/36 (c)			64		36,341
Series 2006-WF1, Class A6, 6.00%, 7/25/36 (c)			59		33,125
LCM XVIII LP, Series 18A, Class B1, 3.46%, 4/20/27 (a)(b)			250		249,977

Asset-Backed Securities		Par (000)		Value
Lehman ABS Manufactured Housing Contract Trust:
Series 2001-B, Class M1, 6.63%, 4/15/40 (a)	USD		90	$	96,298
Series 2001-B, Class M2, 7.17%, 4/15/40 (a)			254		175,793
Lendmark Funding Trust, Series 2017-1A, Class A, 2.83%, 1/22/24 (b)			510		509,896
Litigation Fee Residual Funding LLC, Series 2015-1, Class A, 4.00%, 10/01/27 (b)(d)			110		108,719
Long Beach Mortgage Loan Trust:
Series 2006-10, Class 2A3, 1.38%, 11/25/36 (a)			99		48,286
Series 2006-10, Class 2A4, 1.44%, 11/25/36 (a)			74		36,555
Series 2006-2, Class 2A3, 1.41%, 3/25/46 (a)			844		420,879
Series 2006-2, Class 2A4, 1.51%, 3/25/46 (a)			256		130,022
Series 2006-3, Class 2A3, 1.40%, 5/25/46 (a)			402		183,063
Series 2006-4, Class 2A4, 1.48%, 5/25/36 (a)			491		232,129
Series 2006-9, Class 2A3, 1.38%, 10/25/36 (a)			120		51,578
Series 2006-9, Class 2A4, 1.45%, 10/25/36 (a)			141		61,265
Madison Avenue Manufactured Housing Contract Trust, Series 2002-A, Class B2, 4.47%, 3/25/32 (a)			40		41,220
Madison Park Funding XI Ltd., Series 2013-11A, Class A1B, 2.60%, 10/23/25 (a)(b)			250		250,295
Madison Park Funding XIV Ltd., Series 2014-14A, Class A2R, 2.28%, 7/20/26 (a)(b)			830		830,640
MASTR Asset-Backed Securities Trust, Series 2006-HE2, Class A3, 1.37%, 6/25/36 (a)			233		129,153
MASTR Specialized Loan Trust, Series 2006-3, Class A, 1.48%, 6/25/46 (a)(b)			22		20,709
Merrill Lynch Mortgage Investors Trust:
Series 2006-OPT1, Class M1, 1.48%, 8/25/37 (a)			51		14,430
Series 2006-RM3, Class A2B, 1.31%, 6/25/37 (a)			29		8,996
Morgan Stanley ABS Capital I, Inc. Trust:
Series 2005-HE1, Class A2MZ, 1.82%, 12/25/34 (a)			155		147,647
Series 2005-HE5, Class M4, 2.09%, 9/25/35 (a)			158		70,449
Morgan Stanley IXIS Real Estate Capital Trust, Series 2006-2, Class A2, 1.33%, 11/25/36 (a)			36		18,201
Mountain Hawk I CLO Ltd., Series 2013-1A, Class B1, 3.34%, 1/20/24 (a)(b)			250		250,244
MP CLO III Ltd., Series 2013-1A, Class A, 2.34%, 4/20/25 (a)(b)			250		250,035
Navient Private Education Loan Trust:
Series 2014-AA, Class A2B, 2.41%, 2/15/29 (a)(b)			580		588,537
Series 2014-CTA, Class B, 2.91%, 10/17/44 (a)(b)			200		191,762
Series 2016-AA, Class B, 3.50%, 12/16/58 (a)(b)			100		90,838
Neuberger Berman CLO XVI Ltd., Series 2014-16A, Class B2R, 3.33%, 4/15/26 (a)(b)			250		249,986
NextGear Floorplan Master Owner Trust, Series 2015-1A, Class B, 2.74%, 7/15/19 (a)(b)			100		100,005

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Asset-Backed Securities		Par (000)		Value
Northwoods Capital IX Ltd., Series 2012-9A, Class A, 2.58%, 1/18/24 (a)(b)	USD		217	$	216,851
Oakwood Mortgage Investors, Inc.:
Series 2001-D, Class A2, 5.26%, 1/15/19 (a)			27		20,639
Series 2001-D, Class A4, 6.93%, 9/15/31 (a)(d)			15		13,410
Series 2002-B, Class M1, 7.62%, 6/15/32 (a)			82		67,804
OCP CLO Ltd., Series 2017-13A, Class A1A, 0.00%, 7/15/30 (a)(b)			300		299,460
Octagon Investment Partners XIX Ltd., Series 2014-1A, Class AR, 2.26%, 4/15/26 (a)(b)			457		457,282
Octagon Investment Partners XVI Ltd., Series 2013-1A, Class A, 2.28%, 7/17/25 (a)(b)			510		510,630
Octagon Investment Partners XVII Ltd., Series 2013-1A, Class A2R, 2.84%, 10/25/25 (a)(b)			250		250,152
OFSI Fund VI Ltd., Series 2014-6A, Class A2, 3.06%, 3/20/25 (a)(b)			101		101,092
OHA Loan Funding Ltd., Series 2013-2A, Class A, 2.46%, 8/23/24 (a)(b)			225		225,043
OneMain Financial Issuance Trust:
Series 2014-1A, Class A, 2.43%, 6/18/24 (b)			22		22,154
Series 2014-1A, Class B, 3.24%, 6/18/24 (b)			350		350,351
Series 2014-2A, Class B, 3.02%, 9/18/24 (b)			100		100,398
Series 2014-2A, Class D, 5.31%, 9/18/24 (b)			200		201,553
Series 2016-2A, Class A, 4.10%, 3/20/28 (b)			200		204,020
Option One Mortgage Acceptance Corp. Asset-Backed Certificates, Series 2003-4, Class A2, 1.86%, 7/25/33 (a)			205		198,807
Option One Mortgage Loan Trust, Series 2007-CP1, Class 2A3, 1.43%, 3/25/37 (a)			90		58,983
Ownit Mortgage Loan Trust Series, Series 2006-2, Class A2C, 6.00%, 1/25/37 (c)			70		64,968
OZLM Funding II Ltd., Series 2012-2A, Class A1R, 2.61%, 10/30/27 (a)(b)			1,043		1,045,948
OZLM Funding III Ltd., Series 2013-3A, Class BR, 4.15%, 1/22/29 (a)(b)			320		323,879
OZLM Funding IV Ltd., Series 2013-4A, Class A1, 2.30%, 7/22/25 (a)(b)			390		390,198
OZLM Funding Ltd., Series 2012-1A, Class A2R, 3.50%, 7/22/27 (a)(b)			250		250,268
OZLM Funding V Ltd., Series 2013-5A, Class BR, 3.51%, 1/17/26 (a)(b)(d)			250		250,037
OZLM IX Ltd., Series 2014-9A, Class CR, 4.71%, 1/20/27 (a)(b)			250		250,291
Palmer Square CLO Ltd., Series 2013-1A, Class A2R, 2.68%, 5/15/25 (a)(b)			400		400,006
Preston Ridge Partners Mortgage LLC, Series 2017-1A, Class A1, 4.25%, 1/25/22 (b)(c)(d)			146		146,422
Pretium Mortgage Credit Partners I LLC:
Series 2017-NPL2, Class A1, 3.25%, 3/28/57 (b)(c)			469		469,277
Series 2017-NPL3, Class A1, 3.25%, 6/29/32 (b)(c)			380		380,000
Progress Residential Trust:
Series 2016-SFR1, Class A, 2.71%, 9/17/33 (a)(b)			199		202,480

Asset-Backed Securities		Par (000)		Value
Series 2016-SFR1, Class E, 5.06%, 9/17/33 (a)(b)	USD		100	$	104,362
Series 2016-SFR2, Class E, 4.72%, 1/17/34 (a)(b)			100		104,235
Race Point X CLO Ltd., Series 2016-10A, Class A, 2.76%, 7/25/28 (a)(b)			250		251,955
RASC Trust, Series 2003-KS5, Class AIIB, 1.80%, 7/25/33 (a)			72		68,203
RCO Mortgage LLC, Series 2015-NQM1, Class A, 4.52%, 11/25/45 (a)(b)			16		15,593
Rockford Tower CLO Ltd.:
Series 2017-1A, Class A, 2.74%, 4/15/29 (a)(b)(d)			250		249,975
Series 2017-1A, Class B, 3.17%, 4/15/29 (a)(b)(d)			250		248,725
SG Mortgage Securities Trust, Series 2006-OPT2, Class A3D, 1.43%, 10/25/36 (a)			100		66,049
SLM Private Credit Student Loan Trust:
Series 2004-B, Class A3, 1.58%, 3/15/24 (a)			419		409,107
Series 2006-C, Class A4, 1.42%, 3/15/23 (a)			3		2,820
SMB Private Education Loan Trust, Series 2015-B, Class B, 3.50%, 12/17/40 (b)			100		98,715
Sound Point CLO VIII Ltd., Series 2015-1A, Class B, 3.21%, 4/15/27 (a)(b)			270		270,064
Sound Point CLO XI Ltd., Series 2016-1A, Class A, 2.81%, 7/20/28 (a)(b)			250		252,607
Sound Point CLO XII Ltd., Series 2016-2A, Class A, 2.82%, 10/20/28 (a)(b)			250		252,764
Sound Point CLO XIV Ltd., Series 2016-3A, Class A, 2.68%, 1/23/29 (a)(b)			260		261,375
Sound Point CLO XV Ltd., Series 2017-1A, Class A, 2.50%, 1/23/29 (a)(b)			250		250,854
Soundview Home Loan Trust, Series 2004-WMC1, Class M2, 2.01%, 1/25/35 (a)			6		5,526
SpringCastle America Funding LLC, Series 2016-AA, Class A, 3.05%, 4/25/29 (b)			390		392,611
Stanwich Mortgage Loan Co. LLC:
Series 2016-NPL2, Class NOTE, 3.72%, 8/16/46 (b)(c)(d)			303		303,058
Series 2017-NPB1, Class A1, 3.60%, 5/17/22 (b)(c)(d)			650		650,000
Structured Asset Securities Corp. Mortgage Pass-Through Certificates, Series 2004-23XS, Class 2A1, 1.52%, 1/25/35 (a)			158		148,120
SWAY Residential Trust, Series 2014-1, Class A, 2.51%, 1/17/32 (a)(b)			4		3,995
Symphony CLO XII Ltd., Series 2013-12A, Class AR, 2.19%, 10/15/25 (a)(b)			255		254,802
THL Credit Wind River CLO Ltd., Series 2014-2A, Class A2, 2.61%, 7/15/26 (a)(b)			250		250,205
TICP CLO III Ltd., Series 2014-3A, Class AR, 2.34%, 1/20/27 (a)(b)(d)			250		250,133
Tricon American Homes Trust, Series 2015-SFR1, Class A, 2.42%, 5/17/32 (a)(b)			89		89,476
U.S. Residential Opportunity Fund II Trust:
Series 2016-1II, Class A, 3.47%, 7/27/36 (b)(c)			88		87,736
Series 2016-2II, Class A, 3.47%, 8/27/36 (b)(c)			201		199,828
Series 2016-3II, Class A, 3.60%, 10/27/36 (b)(c)			84		84,327
U.S. Residential Opportunity Fund III Trust:
Series 2016-1III, Class A, 3.47%, 7/27/36 (b)(c)			228		229,240

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Asset-Backed Securities		Par (000)			Value
Series 2016-2III, Class A, 3.47%, 8/27/36 (b)(c)	USD		524		$	520,985
Series 2016-3III, Class A, 3.60%, 10/27/36 (b)(c)			372			370,199
U.S. Residential Opportunity Fund IV Trust:				��
Series 2016-1IV, Class A, 3.47%, 7/27/36 (b)(c)			398			398,944
Series 2016-2IV, Class A, 3.47%, 8/27/36 (b)(c)			320			318,815
Series 2016-3IV, Class A, 3.60%, 10/27/36 (b)(c)			202			202,753
Velocity Commercial Capital Loan Trust, Series 2017-1, Class AFL, 2.47%, 5/25/47 (a)(b)			157			158,309
Venture XIX CLO Ltd., Series 2014-19A, Class AR, 2.53%, 1/15/27 (a)(b)(d)			250			250,469
Venture XVIII CLO Ltd., Series 2014-18A, Class A, 2.61%, 10/15/26 (a)(b)			315			314,997
Vibrant CLO III Ltd., Series 2015-3A, Class A1R, 2.64%, 4/20/26 (a)(b)			250			250,474
VOLT LIX LLC, Series 2017-NPL6, Class A1, 3.25%, 5/25/47 (b)(c)			418			418,568
VOLT LX LLC, Series 2017-NPL7, Class A1, 3.25%, 4/25/59 (b)(c)			360			359,679
VOLT LXI LLC, Series 2017-NPL8, Class A1, 3.13%, 6/25/47 (b)(c)(d)			190			190,000
Voya CLO Ltd., Series 2014-3A, Class A1, 2.58%, 7/25/26 (a)(b)			250			250,339
Voya Investment Management CLO Ltd., Series 2013-2A, Class A1, 2.31%, 4/25/25 (a)(b)			250			250,111
Wachovia Asset Securitization Issuance II LLC Trust, Series 2007-HE2A, Class A, 1.35%, 7/25/37 (a)(b)			118			108,962
Washington Mutual Asset-Backed Certificates, Series 2006-HE4, Class 2A2, 1.40%, 9/25/36 (a)			177			84,008
Washington Mutual Asset-Backed Certificates Trust:
Series 2006-HE5, Class 1A, 1.37%, 10/25/36 (a)			81			66,653
Series 2007-HE2, Class 2A2, 1.24%, 2/25/37 (a)			223			91,675
Wellfleet CLO Ltd., Series 2017-1A, Class A1, 2.43%, 4/20/29 (a)(b)(d)			250			250,088
WVUE, Series 2015-1A, Class A, 4.50%, 9/25/20 (b)(c)(d)			47			47,883
Total Asset-Backed Securities — 12.1%						45,434,556
Corporate Bonds
Aerospace & Defense — 0.3%
BAE Systems Holdings, Inc.:
2.85%, 12/15/20 (b)			39			39,532
4.75%, 10/07/44 (b)			8			8,667
Huntington Ingalls Industries, Inc., 5.00%, 12/15/21 (b)			35			36,225
Lockheed Martin Corp.:
3.55%, 1/15/26			44			45,593
3.60%, 3/01/35			139			137,149
4.50%, 5/15/36			18			19,631
4.07%, 12/15/42			94			96,080
4.70%, 5/15/46			50			56,182
Northrop Grumman Corp., 3.85%, 4/15/45			100			99,167

Corporate Bonds		Par (000)		Value
Aerospace & Defense (continued)
United Technologies Corp.:
1.78%, 5/04/18 (c)	USD		284	$	284,364
4.15%, 5/15/45			98		101,467
4.05%, 5/04/47			265		271,441
					1,195,498
Air Freight & Logistics — 0.2%
FedEx Corp.:
4.90%, 1/15/34			185		205,922
3.90%, 2/01/35			117		116,132
4.10%, 2/01/45			88		86,333
4.75%, 11/15/45			164		177,098
4.55%, 4/01/46			94		98,740
4.40%, 1/15/47			136		139,883
					824,108
Airlines — 0.3%
American Airlines Group, Inc., 4.63%, 3/01/20 (b)			69		71,365
American Airlines Pass-Through Trust, Series 2015-1, Class A, 3.38%, 5/01/27			242		243,463
Delta Air Lines, Inc., 2.88%, 3/13/20			871		882,389
Turkish Airlines Pass-Through Trust, Series 2015-1, Class A, 4.20%, 3/15/27 (b)			37		35,817
United Airlines Pass-Through Trust, Series 2014-1, Class B, 4.75%, 10/11/23			15		16,054
					1,249,088
Auto Components — 0.1%
Delphi Automotive PLC:
4.25%, 1/15/26			115		121,811
4.40%, 10/01/46			111		110,681
					232,492
Automobiles — 0.2%
Ford Motor Credit Co. LLC, 3.81%, 1/09/24			741		750,280
Banks — 6.9%
Bank of America Corp.:
2.25%, 4/21/20			290		290,118
3.30%, 1/11/23			202		205,979
3.88%, 8/01/25			460		475,875
3.50%, 4/19/26			376		377,281
3.25%, 10/21/27			174		168,142
4.88%, 4/01/44			22		24,631
4.44%, 1/20/48 (a)			420		444,226
Barclays PLC:
4.84%, 5/09/28			385		393,582
4.95%, 1/10/47			200		213,428
BB&T Corp.:
2.45%, 1/15/20			96		97,072
2.75%, 4/01/22			1,500		1,522,159
BNP Paribas SA:
2.95%, 5/23/22 (b)			565		570,626
3.80%, 1/10/24 (b)			200		208,284
BPCE SA, 3.00%, 5/22/22 (b)			330		332,870
Citigroup, Inc.:
1.80%, 2/05/18			142		142,108
2.50%, 9/26/18			191		192,295
2.50%, 7/29/19			453		457,068
2.90%, 12/08/21			2,040		2,060,671
3.50%, 5/15/23			114		115,662
3.88%, 3/26/25			135		135,834
4.13%, 7/25/28			637		646,634
4.75%, 5/18/46			460		482,860
Citizens Bank N.A.:
2.25%, 3/02/20			544		543,491
2.65%, 5/26/22			555		553,507

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Corporate Bonds		Par  (000)		Value
Banks (continued)
Fifth Third Bank, 2.25%, 6/14/21	USD		216	$	215,369
HSBC Holdings PLC:
2.65%, 1/05/22			928		925,860
4.04%, 3/13/28 (a)			324		335,592
ING Groep NV, 3.95%, 3/29/27			288		299,475
Intesa Sanpaolo SpA, 5.02%, 6/26/24 (b)			1,041		1,055,737
JPMorgan Chase & Co.:
2.20%, 10/22/19			71		71,227
2.75%, 6/23/20			42		42,702
2.55%, 10/29/20			205		206,720
2.97%, 1/15/23			1,140		1,153,560
3.88%, 9/10/24			261		269,285
3.90%, 7/15/25			196		204,403
4.25%, 10/01/27			95		99,095
3.78%, 2/01/28 (a)			390		398,821
Lloyds Banking Group PLC, 3.75%, 1/11/27			214		214,848
Mitsubishi UFJ Financial Group, Inc., 3.00%, 2/22/22			455		461,758
Mizuho Financial Group, Inc., 2.95%, 2/28/22			1,338		1,349,520
Royal Bank of Scotland Group PLC:
2.65%, 5/15/23 (a)			1,365		1,376,057
3.50%, 5/15/23 (a)			495		498,210
3.88%, 9/12/23			752		767,874
Santander UK Group Holdings PLC, 2.88%, 8/05/21			635		636,460
Sumitomo Mitsui Trust Bank Ltd., 2.05%, 3/06/19 (b)			1,634		1,633,989
U.S. Bancorp:
2.95%, 7/15/22			190		193,262
3.10%, 4/27/26			70		69,187
3.15%, 4/27/27			160		160,267
UniCredit SpA, 5.86%, 6/19/32 (a)(b)			403		413,765
Washington Mutual Bank:
0.00%, 5/01/09 (a)(e)(f)			500		111,563
0.00%, 11/06/09 (e)(f)			300		66,937
5.55%, 6/16/10 (e)(f)			250		55,781
Wells Fargo & Co.:
2.60%, 7/22/20			77		78,086
2.55%, 12/07/20			95		96,089
2.10%, 7/26/21			630		621,551
3.58%, 5/22/28 (a)			580		586,166
4.90%, 11/17/45			51		55,609
4.75%, 12/07/46			360		384,363
					25,763,591
Beverages — 0.5%
Anheuser-Busch InBev Finance, Inc.:
2.65%, 2/01/21			516		522,919
3.30%, 2/01/23			185		190,500
4.70%, 2/01/36			75		82,548
4.90%, 2/01/46			920		1,038,350
Anheuser-Busch InBev Worldwide, Inc., 3.75%, 7/15/42			35		33,875
					1,868,192
Biotechnology — 0.6%
AbbVie, Inc.:
2.50%, 5/14/20			439		444,089
2.90%, 11/06/22			106		106,997
4.50%, 5/14/35			294		310,063
Amgen, Inc.:
2.13%, 5/01/20			107		107,160
4.40%, 5/01/45			222		228,027
Gilead Sciences, Inc.:
2.35%, 2/01/20			20		20,191
2.50%, 9/01/23			117		115,267
4.60%, 9/01/35			27		28,950

Corporate Bonds		Par  (000)		Value
Biotechnology (continued)
4.00%, 9/01/36	USD		550	$	546,912
4.50%, 2/01/45			105		108,847
4.15%, 3/01/47			48		48,224
					2,064,727
Building Products — 0.1%
CRH America Finance, Inc., 3.40%, 5/09/27 (b)			210		210,012
Johnson Controls International PLC, 5.13%, 9/14/45			180		206,985
					416,997
Capital Markets — 2.1%
Bank of New York Mellon Corp., 2.05%, 5/03/21			946		937,341
Credit Suisse AG, 3.00%, 10/29/21			259		263,932
Credit Suisse Group AG, 4.28%, 1/09/28 (b)			250		258,420
Credit Suisse Group Funding Guernsey Ltd., 2.75%, 3/26/20			250		251,966
Goldman Sachs Group, Inc.:
2.63%, 1/31/19			263		265,658
2.00%, 4/25/19			68		67,970
2.60%, 4/23/20			138		139,281
2.75%, 9/15/20			65		65,783
2.63%, 4/25/21			143		143,284
2.35%, 11/15/21			498		491,299
3.50%, 1/23/25			73		73,793
3.75%, 5/22/25			452		462,844
Jefferies Group LLC, 6.50%, 1/20/43			30		33,903
Moody’s Corp.:
2.75%, 12/15/21			230		231,931
3.25%, 1/15/28 (b)			315		310,159
Morgan Stanley:
2.80%, 6/16/20			239		242,475
2.63%, 11/17/21			1,273		1,271,124
2.75%, 5/19/22			1,560		1,559,663
3.75%, 2/25/23			193		200,684
3.70%, 10/23/24			126		129,308
Northern Trust Corp., 3.38%, 5/08/32 (a)			195		194,916
State Street Corp., 2.65%, 5/19/26			103		99,829
UBS Group Funding Switzerland AG, 4.13%, 9/24/25 (b)			200		209,647
					7,905,210
Chemicals — 0.1%
Agrium, Inc., 4.13%, 3/15/35 (g)			46		45,777
Dow Chemical Co.:
4.38%, 11/15/42			23		23,756
4.63%, 10/01/44			103		109,630
E.I. du Pont de Nemours & Co., 2.20%, 5/01/20			105		105,570
Eastman Chemical Co., 4.80%, 9/01/42			59		63,334
Monsanto Co., 3.60%, 7/15/42			107		93,069
Sherwin-Williams Co.:
4.00%, 12/15/42			20		19,194
4.50%, 6/01/47			75		78,587
					538,917
Commercial Services & Supplies — 0.4%
Aviation Capital Group Corp., 2.88%, 9/17/18 (b)			160		161,540
Cia Latinoamericana de Infraestructura & Servicios SA, 9.50%, 7/20/23 (b)			4		4,147
Pitney Bowes, Inc., 3.88%, 5/15/22			1,075		1,074,726
Waste Management, Inc., 3.90%, 3/01/35			56		57,811
					1,298,224
Communications Equipment — 0.0%
Harris Corp., 2.70%, 4/27/20			28		28,290

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Corporate Bonds		Par  (000)		Value
Communications Equipment (continued)
Juniper Networks, Inc., 3.30%, 6/15/20	USD		63	$	64,516
					92,806
Construction Materials — 0.1%
LafargeHolcim Finance U.S. LLC, 4.75%, 9/22/46 (b)			240		249,652
Consumer Finance — 1.0%
American Express Credit Corp.:
2.25%, 8/15/19			177		178,525
3.30%, 5/03/27			100		99,917
Capital One Financial Corp.:
4.75%, 7/15/21			5		5,395
3.75%, 3/09/27			330		328,802
Discover Financial Services, 4.10%, 2/09/27			104		104,180
General Motors Financial Co., Inc.:
2.63%, 7/10/17			480		480,048
4.75%, 8/15/17			230		230,784
3.10%, 1/15/19			41		41,560
3.70%, 11/24/20			117		121,056
3.20%, 7/06/21			600		606,744
3.15%, 6/30/22			1,300		1,302,012
4.00%, 1/15/25			151		151,642
Synchrony Financial:
2.60%, 1/15/19			94		94,502
2.70%, 2/03/20			48		48,243
4.50%, 7/23/25			105		107,977
					3,901,387
Containers & Packaging — 0.1%
Reynolds Group Issuer, Inc., 5.75%, 10/15/20			210		214,901
Diversified Consumer Services — 0.0%
Wesleyan University, 4.78%, 7/01/2116			79		77,271
Diversified Financial Services — 1.3%
AerCap Ireland Capital DAC/AerCap Global Aviation Trust:
4.63%, 10/30/20			462		491,000
3.50%, 5/26/22			531		544,935
BHP Billiton Finance USA Ltd., 5.00%, 9/30/43			180		208,294
BP Capital Markets PLC, 3.22%, 4/14/24			470		474,642
Enel Finance International NV:
2.88%, 5/25/22 (b)			420		420,583
3.63%, 5/25/27 (b)			440		435,751
Glencore Funding LLC, 4.00%, 3/27/27 (b)			440		432,915
Hyundai Capital America, 2.55%, 4/03/20 (b)			786		784,033
Shell International Finance BV:
4.13%, 5/11/35			291		302,981
3.63%, 8/21/42			44		41,161
UBS Group Funding Switzerland AG, 4.25%, 3/23/28 (b)			500		522,365
Woodside Finance Ltd., 3.65%, 3/05/25 (b)			16		15,942
					4,674,602
Diversified Telecommunication Services — 1.2%
AT&T Inc.:
3.80%, 3/01/24			243		248,493
5.25%, 3/01/37			254		270,606
6.38%, 3/01/41			43		50,215
4.30%, 12/15/42			104		96,578
4.75%, 5/15/46			177		173,567
Orange SA, 5.50%, 2/06/44			55		65,660
Telefonica Emisiones SAU:
4.10%, 3/08/27			341		352,303
5.21%, 3/08/47			150		161,960
Verizon Communications, Inc.:
1.72%, 5/22/20 (a)			2,640		2,641,980

Corporate Bonds		Par  (000)		Value
Diversified Telecommunication Services (continued)
4.86%, 8/21/46	USD		555	$	555,094
					4,616,456
Electric Utilities — 0.4%
Baltimore Gas & Electric Co., 3.50%, 8/15/46			77		73,412
Emera U.S. Finance LP:
2.15%, 6/15/19			147		146,863
2.70%, 6/15/21			222		222,340
Exelon Corp.:
2.85%, 6/15/20			161		163,565
2.45%, 4/15/21			38		37,896
4.95%, 6/15/35			48		52,549
Great Plains Energy, Inc., 3.90%, 4/01/27			398		402,627
Southern California Edison Co., 1.25%, 11/01/17			47		46,972
Southern Co. Gas Capital Corp., 4.40%, 5/30/47			200		203,986
Trans-Allegheny Interstate Line Co., 3.85%, 6/01/25 (b)			250		259,254
					1,609,464
Electronic Equipment, Instruments & Components — 0.0%
Amphenol Corp., 3.20%, 4/01/24			114		115,162
Energy Equipment & Services — 0.1%
Halliburton Co., 3.80%, 11/15/25			190		194,717
Nabors Industries, Inc., 5.50%, 1/15/23 (b)			91		86,223
Schlumberger Holdings Corp., 3.00%, 12/21/20 (b)			164		166,984
					447,924
Equity Real Estate Investment Trusts (REITs) — 0.1%
American Tower Corp.:
3.30%, 2/15/21			81		83,116
3.45%, 9/15/21			77		79,406
4.40%, 2/15/26			16		16,770
Crown Castle International Corp.:
3.40%, 2/15/21			48		49,289
2.25%, 9/01/21			197		193,809
					422,390
Food & Staples Retailing — 0.1%
Walgreens Boots Alliance, Inc.:
4.80%, 11/18/44			387		411,828
4.65%, 6/01/46			8		8,374
					420,202
Food Products — 0.1%
Arcor SAIC, 6.00%, 7/06/23 (b)			28		29,750
Post Holdings, Inc., 6.00%, 12/15/22 (b)			213		225,780
					255,530
Health Care Equipment & Supplies — 0.5%
Abbott Laboratories:
2.80%, 9/15/20			75		76,172
3.88%, 9/15/25			25		25,713
Becton Dickinson and Co.:
2.13%, 6/06/19			600		600,911
2.68%, 12/15/19			114		115,396
2.89%, 6/06/22			425		426,329
4.69%, 12/15/44			30		30,896
Boston Scientific Corp., 2.65%, 10/01/18			82		82,753
Medtronic Global Holdings SCA, 3.35%, 4/01/27			410		417,982
Medtronic, Inc., 4.38%, 3/15/35			24		26,214
Stryker Corp., 4.63%, 3/15/46			69		75,382
					1,877,748

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Corporate Bonds		Par  (000)		Value
Health Care Providers & Services — 0.6%
Aetna, Inc.:
4.50%, 5/15/42	USD		88	$	95,049
4.13%, 11/15/42			32		32,581
4.75%, 3/15/44			60		67,449
Anthem, Inc.:
1.88%, 1/15/18			276		276,229
2.30%, 7/15/18			457		459,572
Series A, 3.70%, 8/15/21			161		167,937
Baylor Scott & White Holdings, 4.19%, 11/15/45			40		40,896
Catholic Health Initiatives, 4.35%, 11/01/42			30		27,077
Cigna Corp., 3.25%, 4/15/25			281		282,096
HCA, Inc., 3.75%, 3/15/19			210		214,200
Kaiser Foundation Hospitals, 4.15%, 5/01/47			148		153,350
Laboratory Corp. of America Holdings, 2.63%, 2/01/20			63		63,519
New York & Presbyterian Hospital, 3.56%, 8/01/36			40		38,822
Ochsner Clinic Foundation, 5.90%, 5/15/45			35		43,481
RWJ Barnabas Health, Inc., 3.95%, 7/01/46			29		28,534
Southern Baptist Hospital of Florida, Inc., 4.86%, 7/15/45			35		38,940
SSM Health Care Corp., 3.82%, 6/01/27			130		133,218
UnitedHealth Group, Inc.:
2.70%, 7/15/20			46		46,968
4.63%, 7/15/35			16		17,983
4.20%, 1/15/47			123		129,752
					2,357,653
Hotels, Restaurants & Leisure — 0.1%
Caesars Growth Properties Holdings LLC/Caesars Growth Properties Finance, Inc., 9.38%, 5/01/22			190		206,150
McDonald’s Corp.:
4.70%, 12/09/35			55		60,703
4.88%, 12/09/45			27		30,101
4.45%, 3/01/47			160		168,302
					465,256
Household Durables — 0.0%
Newell Brands, Inc., 2.88%, 12/01/19			164		166,815
Independent Power and Renewable Electricity Producers — 0.1%
Genneia SA, 8.75%, 1/20/22 (b)			25		26,583
Stoneway Capital Corp., 10.00%, 3/01/27 (b)			150		158,298
					184,881
Industrial Conglomerates — 0.1%
Eaton Corp., 2.75%, 11/02/22			118		118,643
General Electric Co., 4.50%, 3/11/44			305		338,841
					457,484
Insurance — 0.4%
Allstate Corp., 4.20%, 12/15/46			134		139,697
American International Group, Inc.:
3.75%, 7/10/25			72		73,338
3.88%, 1/15/35			89		86,282
4.50%, 7/16/44			107		108,806
Aon PLC, 4.75%, 5/15/45			200		216,400
Marsh & McLennan Cos., Inc.:
3.75%, 3/14/26			18		18,741
4.35%, 1/30/47			53		56,641
Principal Financial Group, Inc., 4.30%, 11/15/46			300		312,079
Travelers Cos., Inc.:
4.60%, 8/01/43			120		133,844
4.00%, 5/30/47			170		173,905

Corporate Bonds		Par  (000)		Value
Insurance (continued)
Willis North America, Inc., 3.60%, 5/15/24	USD		26	$	26,262
					1,345,995
IT Services — 0.2%
DXC Technology Co., 2.88%, 3/27/20 (b)			124		125,559
Fidelity National Information Services, Inc.:
3.63%, 10/15/20			12		12,571
4.50%, 8/15/46			398		408,275
Total System Services, Inc., 4.80%, 4/01/26			235		255,808
Visa, Inc., 4.15%, 12/14/35			53		57,423
					859,636
Machinery — 0.0%
Ingersoll-Rand Luxembourg Finance SA, 4.65%, 11/01/44			16		17,255
Media — 1.5%
21st Century Fox America, Inc.:
4.75%, 9/15/44			37		38,951
4.95%, 10/15/45			12		12,990
CBS Corp., 2.30%, 8/15/19			96		96,627
Charter Communications Operating LLC/Charter Communications Operating Capital:
4.46%, 7/23/22			405		431,514
4.91%, 7/23/25			79		85,345
3.75%, 2/15/28 (b)			860		847,309
6.38%, 10/23/35			99		117,350
6.48%, 10/23/45			790		948,168
5.38%, 5/01/47 (b)			290		306,804
Comcast Corp.:
3.38%, 8/15/25			279		286,229
4.25%, 1/15/33			35		37,302
4.40%, 8/15/35			196		210,688
3.20%, 7/15/36			333		311,660
4.75%, 3/01/44			310		344,961
4.60%, 8/15/45			45		49,072
3.40%, 7/15/46			65		59,189
CSC Holdings LLC, 7.63%, 7/15/18			190		200,450
Discovery Communications LLC, 3.80%, 3/13/24			151		152,684
Interpublic Group of Cos., Inc., 4.00%, 3/15/22			62		65,016
NBCUniversal Media LLC, 4.45%, 1/15/43			76		80,686
Time Warner Cable LLC:
5.00%, 2/01/20			58		61,874
4.13%, 2/15/21			160		167,313
4.00%, 9/01/21			22		22,997
5.50%, 9/01/41			63		67,704
4.50%, 9/15/42			9		8,563
Time Warner, Inc.:
2.10%, 6/01/19			260		260,107
3.60%, 7/15/25			50		49,886
4.85%, 7/15/45			156		160,631
Viacom, Inc.:
2.75%, 12/15/19			9		9,102
4.50%, 3/01/21			69		73,285
					5,564,457
Metals & Mining — 0.3%
Barrick Gold Corp., 5.25%, 4/01/42			190		216,182
Newmont Mining Corp.:
3.50%, 3/15/22			250		258,528
4.88%, 3/15/42			175		184,911
Nucor Corp., 5.20%, 8/01/43			40		46,935
Rio Tinto Finance USA PLC, 4.13%, 8/21/42			110		113,510
Steel Dynamics, Inc., 5.13%, 10/01/21			96		98,590
					918,656

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Corporate Bonds		Par  (000)		Value
Multi-Utilities — 0.3%
Dominion Energy Gas Holdings LLC, 4.60%, 12/15/44	USD		97	$	101,357
NiSource Finance Corp., 3.49%, 5/15/27			210		211,445
Pacific Gas & Electric Co.:
4.75%, 2/15/44			51		58,043
4.30%, 3/15/45			103		110,325
Virginia Electric & Power Co.:
3.50%, 3/15/27			291		299,220
4.45%, 2/15/44			44		48,070
4.20%, 5/15/45			143		150,127
					978,587
Oil, Gas & Consumable Fuels — 2.1%
Anadarko Petroleum Corp.:
7.95%, 6/15/39			40		50,354
4.50%, 7/15/44			99		90,724
Apache Corp., 4.25%, 1/15/44			118		110,527
Canadian Natural Resources Ltd.:
2.95%, 1/15/23			300		297,609
3.85%, 6/01/27			395		391,800
Cenovus Energy, Inc., 4.25%, 4/15/27 (b)			440		419,156
Devon Energy Corp.:
3.25%, 5/15/22			217		215,664
5.85%, 12/15/25			293		332,960
5.60%, 7/15/41			191		198,369
Enbridge, Inc.:
2.90%, 7/15/22			205		204,590
3.70%, 7/15/27			165		164,878
Endeavor Energy Resources LP/EER Finance, Inc., 7.00%, 8/15/21 (b)			210		217,350
Energy Transfer LP, 6.13%, 12/15/45			231		250,030
Enterprise Products Operating LLC:
5.10%, 2/15/45			38		41,728
4.90%, 5/15/46			177		190,333
EOG Resources, Inc.:
2.45%, 4/01/20			343		344,060
4.15%, 1/15/26			85		89,308
Exxon Mobil Corp.:
1.82%, 3/15/19			529		531,087
4.11%, 3/01/46			118		124,478
Halcon Resources Corp., 12.00%, 2/15/22 (b)			70		79,100
Hess Corp., 4.30%, 4/01/27			470		459,088
Kinder Morgan Energy Partners LP, 3.50%, 3/01/21			674		690,160
Kinder Morgan, Inc.:
3.05%, 12/01/19			33		33,573
5.05%, 2/15/46			120		120,504
MPLX LP, 5.20%, 3/01/47			68		70,032
NGPL PipeCo LLC, 7.12%, 12/15/17 (b)			205		208,844
Noble Energy, Inc., 5.05%, 11/15/44			70		71,891
Petro-Canada, 6.80%, 5/15/38 (g)			90		117,292
Pioneer Natural Resources Co., 4.45%, 1/15/26			50		52,573
Plains All American Pipeline LP/PAA Finance Corp., 4.65%, 10/15/25			110		112,749
Resolute Energy Corp., 8.50%, 5/01/20			210		208,950
Sabine Pass Liquefaction LLC:
5.63%, 4/15/23			119		132,281
4.20%, 3/15/28 (b)			151		152,557
Spectra Energy Partners LP, 4.50%, 3/15/45			230		226,677
Sunoco Logistics Partners Operations LP:
3.90%, 7/15/26			34		33,361
5.35%, 5/15/45			50		49,008
Tesoro Logistics LP/Tesoro Logistics Finance Corp., 5.50%, 10/15/19			210		221,550
TransCanada PipeLines Ltd.:
1.88%, 1/12/18			48		48,064

Corporate Bonds		Par  (000)		Value
Oil, Gas & Consumable Fuels (continued)
2.50%, 8/01/22	USD		44	$	43,946
Western Refining Logistics LP/WNRL Finance Corp., 7.50%, 2/15/23			210		226,275
Williams Partners LP, 4.00%, 9/15/25			270		274,970
					7,898,450
Paper & Forest Products — 0.0%
Georgia-Pacific LLC, 7.38%, 12/01/25			97		123,419
Pharmaceuticals — 0.8%
Allergan Funding SCS:
2.35%, 3/12/18			354		355,478
3.00%, 3/12/20			740		755,702
3.80%, 3/15/25			770		796,449
4.55%, 3/15/35			166		177,176
4.75%, 3/15/45			131		141,410
Mylan NV, 5.25%, 6/15/46			77		84,230
Pfizer, Inc., 4.00%, 12/15/36			248		262,001
Teva Pharmaceutical Finance Co. BV, 3.65%, 11/10/21			47		48,534
Teva Pharmaceutical Finance Netherlands III BV, 2.80%, 7/21/23			224		217,872
					2,838,852
Road & Rail — 0.3%
Burlington Northern Santa Fe LLC:
4.15%, 4/01/45			80		83,626
4.70%, 9/01/45			35		39,418
4.13%, 6/15/47			120		126,188
CSX Corp., 4.25%, 11/01/66			124		122,234
Norfolk Southern Corp., 6.00%, 5/23/2111			85		102,344
Penske Truck Leasing Co. LP/PTL Finance Corp., 3.40%, 11/15/26 (b)			273		268,269
Union Pacific Corp.:
3.38%, 2/01/35			27		26,702
3.88%, 2/01/55			134		129,343
Union Pacific Railroad Co. Pass-Through Trust, Series 2014-1, 3.23%, 5/14/26			102		103,591
					1,001,715
Semiconductors & Semiconductor Equipment — 1.4%
Analog Devices, Inc.:
3.90%, 12/15/25			20		20,789
3.50%, 12/05/26			450		453,504
5.30%, 12/15/45			20		22,908
Applied Materials, Inc.:
3.30%, 4/01/27			218		221,543
4.35%, 4/01/47			129		136,921
Broadcom Corp./Broadcom Cayman Finance Ltd.:
2.38%, 1/15/20 (b)			1,073		1,074,559
3.00%, 1/15/22 (b)			1,604		1,618,337
3.63%, 1/15/24 (b)			1,031		1,054,711
Lam Research Corp.:
2.75%, 3/15/20			121		122,540
2.80%, 6/15/21			116		117,670
QUALCOMM, Inc.:
2.60%, 1/30/23			290		288,942
4.80%, 5/20/45			78		85,607
Xilinx, Inc., 2.95%, 6/01/24			125		125,337
					5,343,368
Software — 0.7%
Autodesk, Inc., 3.50%, 6/15/27			425		417,940
Microsoft Corp.:
3.50%, 2/12/35			231		232,906
3.45%, 8/08/36			266		266,166
3.70%, 8/08/46			638		631,325

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Corporate Bonds		Par  (000)		Value
Software (continued)
4.25%, 2/06/47	USD		630	$	682,072
Oracle Corp.:
3.25%, 5/15/30			151		151,733
3.90%, 5/15/35			91		93,773
4.00%, 7/15/46			183		184,811
4.38%, 5/15/55			94		98,712
					2,759,438
Technology Hardware, Storage & Peripherals — 1.0%
Apple Inc.:
3.00%, 2/09/24			276		280,186
2.85%, 5/11/24			1,040		1,045,039
3.45%, 2/09/45			39		36,647
4.65%, 2/23/46			899		1,007,708
Dell International LLC/EMC Corp.:
5.45%, 6/15/23 (b)			331		359,191
8.35%, 7/15/46 (b)			240		309,740
Hewlett Packard Enterprise Co.:
2.85%, 10/05/18			470		474,021
3.60%, 10/15/20			228		235,091
HP, Inc., 3.75%, 12/01/20			16		16,747
					3,764,370
Tobacco — 0.0%
Reynolds American, Inc.:
2.30%, 6/12/18			60		60,261
3.25%, 6/12/20			25		25,738
					85,999
Trading Companies & Distributors — 0.4%
Air Lease Corp.:
2.63%, 7/01/22			415		411,323
3.00%, 9/15/23			628		624,387
3.63%, 4/01/27			205		205,019
GATX Corp.:
2.60%, 3/30/20			59		59,611
3.85%, 3/30/27			86		86,551
					1,386,891
Wireless Telecommunication Services — 0.2%
Rogers Communications, Inc., 5.00%, 3/15/44			22		24,884
Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC/Sprint Spectrum Co. III LLC, 3.36%, 9/20/21 (b)			561		565,909
Vodafone Group PLC, 4.38%, 2/19/43			100		98,750
					689,543
Total Corporate Bonds — 27.3%					102,291,539
Floating Rate Loan Interests(a)
Capital Markets — 0.7%
LSTAR Securities Financing Vehicle:
3.50%, 5/10/25 (d)			1,243		1,232,111
2.00%, 6/16/25			1,260		1,247,652
					2,479,763
Total Floating Rate Loan Interests — 0.7%					2,479,763

Foreign Agency Obligations		Par  (000)		Value
Argentina — 0.0%
Petrobras Argentina SA, 7.38%, 7/21/23 (b)	USD		53	$	55,901
YPF SA:
8.88%, 12/19/18 (b)			69		73,927
8.50%, 3/23/21 (b)			12		13,347
					143,175
Brazil — 0.2%
Petrobras Global Finance BV:
5.75%, 1/20/20			25		25,943
4.88%, 3/17/20			25		25,503
5.38%, 1/27/21			284		288,743
8.38%, 5/23/21			374		418,648
6.13%, 1/17/22			26		26,819
8.75%, 5/23/26			4		4,600
7.38%, 1/17/27			27		28,566
					818,822
Mexico — 0.1%
Petroleos Mexicanos:
4.63%, 9/21/23			20		20,240
6.50%, 3/13/27 (b)			264		283,602
					303,842
Total Foreign Agency Obligations — 0.3%					1,265,839
Foreign Government Obligations
Argentina — 0.4%
Republic of Argentina:
6.25%, 4/22/19			841		880,947
5.63%, 1/26/22			353		361,472
7.82%, 12/31/33	EUR		100		121,415
7.13%, 6/28/2117	USD		97		88,027
					1,451,861
Colombia — 0.2%
Republic of Colombia, 4.00%, 2/26/24			815		845,970
Hungary — 0.1%
Republic of Hungary, 5.38%, 3/25/24			280		315,200
Indonesia — 0.2%
Republic of Indonesia:
8.38%, 3/15/24	IDR		958,000		78,036
8.38%, 9/15/26			5,178,000		428,538
7.00%, 5/15/27			2,630,000		199,803
9.00%, 3/15/29			319,000		27,258
					733,635
Lebanon — 0.0%
Lebanese Republic, 6.85%, 3/23/27	USD		177		178,199
Mexico — 1.5%
United Mexican States:
Series M, 4.75%, 6/14/18	MXN		2,300		124,197
Series M, 5.00%, 12/11/19			74,200		3,939,862
4.15%, 3/28/27	USD		1,614		1,671,297
					5,735,356
Panama — 0.1%
Republic of Panama, 3.75%, 3/16/25			280		288,400
Peru — 0.0%
Republic of Peru, 7.35%, 7/21/25			100		130,600

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Foreign Government Obligations		Par (000)		Value
Philippines — 0.2%
Republic of the Philippines, 5.50%, 3/30/26	USD		520	$	624,666
Russia — 0.9%
Russian Federation:
7.50%, 8/18/21	RUB		71,142		1,191,229
7.40%, 12/07/22			17,135		285,597
7.75%, 9/16/26			22,709		385,447
8.15%, 2/03/27			51,421		907,137
7.05%, 1/19/28			30,112		486,336
					3,255,746
South Africa — 0.2%
Republic of South Africa:
5.50%, 3/09/20	USD		171		181,239
6.25%, 3/31/36	ZAR		11,256		607,376
					788,615
Turkey — 0.6%
Republic of Turkey:
10.50%, 1/15/20	TRY		1,035		293,752
7.00%, 6/05/20	USD		239		261,330
9.20%, 9/22/21	TRY		1,375		373,797
11.00%, 3/02/22			2,842		823,089
8.80%, 9/27/23			680		180,076
7.38%, 2/05/25	USD		208		240,870
6.00%, 3/25/27			200		212,952
					2,385,866
Uruguay — 0.1%
Republic of Uruguay, 4.38%, 10/27/27			270		286,875
Total Foreign Government Obligations — 4.5%					17,020,989
Non-Agency Mortgage-Backed Securities
Collateralized Mortgage Obligations — 1.8%
Ajax Mortgage Loan Trust:
Series 2015-C, Class A, 3.88%, 3/25/57 (b)(c)			214		209,824
Series 2016-A, Class A, 4.25%, 8/25/64 (b)(c)			124		124,703
American Home Mortgage Assets Trust:
Series 2006-3, Class 2A11, 1.67%, 10/25/46 (a)			84		70,974
Series 2006-4, Class 1A12, 1.43%, 10/25/46 (a)			104		77,628
Series 2006-5, Class A1, 1.65%, 11/25/46 (a)			147		77,778
Series 2007-1, Class A1, 1.43%, 2/25/47 (a)			80		52,242
Angel Oak Mortgage Trust I LLC, Series 2016-1, Class A1, 3.50%, 7/25/46 (b)(c)			73		73,463
Angel Oak Mortgage Trust LLC, Series 2015-1, Class A, 4.50%, 11/25/45 (b)(c)			25		24,889
APS Resecuritization Trust:
Series 2016-3, Class 3A, 3.84%, 9/27/46 (a)(b)(d)			297		300,294
Series 2016-3, Class 4A, 3.59%, 4/27/47 (a)(b)(d)			85		85,564
Banc of America Funding Trust, Series 2016-R2, Class 1A1, 4.70%, 5/01/33 (a)(b)(d)			106		107,556
Bear Stearns ALT-A Trust II, Series 2007-1, Class 1A1, 3.31%, 9/25/47 (a)			121		86,811

Non-Agency Mortgage-Backed Securities		Par (000)		Value
Collateralized Mortgage Obligations (continued)
Bear Stearns Mortgage Funding Trust:
Series 2007-AR2, Class A1, 1.19%, 3/25/37 (a)	USD		215	$	181,631
Series 2007-AR3, Class 1A1, 1.16%, 3/25/37 (a)			23		20,967
Series 2007-AR4, Class 1A1, 1.22%, 9/25/47 (a)			95		84,269
Series 2007-AR4, Class 2A1, 1.23%, 6/25/37 (a)			31		26,003
COLT LLC, Series 2015-1, Class A1V, 4.02%, 12/26/45 (a)(b)			26		25,920
Countrywide Alternative Loan Trust:
Series 2005-72, Class A3, 1.52%, 1/25/36 (a)			109		96,227
Series 2005-76, Class 2A1, 1.73%, 2/25/36 (a)			36		32,358
Series 2006-15CB, Class A1, 6.50%, 6/25/36			14		10,677
Series 2006-OA14, Class 1A1, 2.46%, 11/25/46 (a)			129		120,287
Series 2006-OA16, Class A4C, 1.56%, 10/25/46 (a)			166		83,608
Series 2006-OA6, Class 1A2, 1.43%, 7/25/46 (a)			54		50,589
Series 2006-OA8, Class 1A1, 1.41%, 7/25/46 (a)			20		17,261
Series 2006-OC7, Class 2A3, 1.27%, 7/25/46 (a)			90		67,150
Series 2007-OA2, Class 1A1, 1.57%, 3/25/47 (a)			408		314,868
Series 2007-OA3, Class 1A1, 1.36%, 4/25/47 (a)			32		28,387
Countrywide Home Loan Mortgage Pass-Through Trust, Series 2006-OA4, Class A1, 1.69%, 4/25/46 (a)			174		90,115
Credit Suisse Mortgage Capital Certificates:
Series 2013-5R, Class 1A6, 1.24%, 2/27/36 (a)(b)			45		40,377
Series 2014-11R, Class 16A1, 3.17%, 9/27/47 (a)(b)			76		75,717
Series 2015-6R, Class 5A1, 1.17%, 3/27/36 (a)(b)			26		24,300
Series 2015-6R, Class 5A2, 1.17%, 3/27/36 (a)(b)(d)			60		32,370
Deephaven Residential Mortgage Trust, Series 2016-1A, Class A1, 4.00%, 7/25/46 (b)(d)			125		126,540
Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-RMP1, Class A2, 1.17%, 12/25/36 (a)			160		138,701
Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB3, Class A8, 6.36%, 7/25/36 (a)			20		16,363
GreenPoint Mortgage Funding Trust, Series 2006-AR2, Class 4A1, 2.73%, 3/25/36 (a)			34		30,085
GSMPS Mortgage Loan Trust:
Series 2005-RP1, Class 1AF, 1.57%, 1/25/35 (a)(b)			63		55,628
Series 2005-RP2, Class 1AF, 1.57%, 3/25/35 (a)(b)			76		67,553
Series 2006-RP1, Class 1AF1, 1.37%, 1/25/36 (a)(b)			57		48,601
Impac Secured Assets CMN Owner Trust, Series 2004-3, Class 1A4, 1.82%, 11/25/34 (a)			55		54,328

See Notes to Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Non-Agency Mortgage-Backed Securities		Par (000)		Value
Collateralized Mortgage Obligations (continued)
JPMorgan Mortgage Trust, Series 2017-2, Class A6, 3.00%, 5/25/47 (a)(b)(d)	USD		338	$	341,174
Lehman XS Trust, Series 2007-20N, Class A1, 2.37%, 12/25/37 (a)			46		43,693
LSTAR Securities Investment Ltd.:
Series 2016-3, Class A, 3.05%, 9/01/21 (a)(b)			336		332,894
Series 2017-2, Class A1, 3.05%, 2/01/22 (a)(b)(d)			417		417,749
Series 2017-3, Class A1, 3.05%, 4/01/19 (a)(b)(d)			475		472,031
LSTAR Securities Investment Trust, Series 2016-5, Class A1, 3.05%, 11/01/21 (a)(b)(d)			594		597,671
MASTR Resecuritization Trust, Series 2008-3, Class A1, 1.43%, 8/25/37 (a)(b)(d)			43		29,627
Morgan Stanley Resecuritization Trust, Series 2014-R8, Class 3B1, 1.41%, 6/26/47 (a)(b)(d)			87		81,405
Mortgage Loan Resecuritization Trust, Series 2009-RS1, Class A85, 1.33%, 4/16/36 (a)(b)			507		430,376
Nomura Resecuritization Trust, Series 2014-3R, Class 3A9, 1.51%, 11/26/35 (a)(b)			100		90,776
RALI Trust:
Series 2006-QO6, Class A2, 1.45%, 6/25/46 (a)			59		26,414
Series 2007-QH1, Class A1, 1.38%, 2/25/37 (a)			99		83,915
Series 2007-QH6, Class A1, 1.41%, 7/25/37 (a)			56		50,207
Series 2007-QH9, Class A1, 2.09%, 11/25/37 (a)			56		45,823
RBSSP Resecuritization Trust, Series 2013-2, Class 1A2, 1.22%, 12/26/36 (a)(b)			256		241,930
Reperforming Loan REMIC Trust, Series 2005-R3, Class AF, 1.62%, 9/25/35 (a)(b)			9		8,015
Structured Asset Mortgage Investments II Trust:
Series 2006-AR4, Class 3A1, 1.21%, 6/25/36 (a)			123		110,059
Series 2006-AR5, Class 2A1, 1.43%, 5/25/46 (a)			82		63,905
Structured Asset Securities Corp. Mortgage Loan Trust, Series 2006-RF4, Class 2A1, 6.00%, 10/25/36 (b)			53		46,278
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR15, Class 2A, 2.08%, 11/25/46 (a)			29		27,873
Washington Mutual Mortgage Pass-Through Certificates, Series 2006-4, Class 3A1, 6.50%, 5/25/36 (c)			63		52,834
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR16, Class CRB1, 3.28%, 10/25/35 (a)			37		29,272
					6,876,527
Commercial Mortgage-Backed Securities — 3.8%
245 Park Avenue Trust, Series 2017-245P, Class E, 3.78%, 6/05/37 (a)(b)			600		562,816
AOA Mortgage Trust, Series 2015-1177, Class C, 3.11%, 12/13/21 (a)(b)			100		100,200
Banc of America Commercial Mortgage Trust:
Series 2007-1, Class AMFX, 5.48%, 1/15/49 (a)			16		16,408
Series 2007-5, Class AM, 5.77%, 2/10/51 (a)			85		85,944

Non-Agency Mortgage-Backed Securities		Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
Banc of America Merrill Lynch Commercial Mortgage Securities Trust:
Series 2013-DSNY, Class A, 2.04%, 9/15/26 (a)(b)	USD		440	$	441,042
Series 2013-DSNY, Class E, 3.59%, 9/15/26 (a)(b)			100		99,985
Series 2013-DSNY, Class F, 4.49%, 9/15/26 (a)(b)			104		103,776
Series 2015-200P, Class F, 3.72%, 4/14/33 (a)(b)			300		281,574
Series 2016-ISQ, Class E, 3.73%, 8/14/34 (a)(b)(d)			200		183,000
Barclays Commercial Mortgage Trust, Series 2015-SRCH, Class A1, 3.31%, 8/10/35 (b)			100		102,433
Bayview Commercial Asset Trust:
Series 2005-2A, Class A1, 1.53%, 8/25/35 (a)(b)			76		69,457
Series 2005-4A, Class A1, 1.52%, 1/25/36 (a)(b)			69		63,844
Series 2005-4A, Class M1, 1.67%, 1/25/36 (a)(b)			51		46,923
Series 2006-1A, Class A2, 1.58%, 4/25/36 (a)(b)			19		16,969
Series 2006-3A, Class A2, 1.52%, 10/25/36 (a)(b)			27		24,729
Series 2007-2A, Class A1, 1.29%, 7/25/37 (a)(b)			48		45,143
Series 2007-4A, Class A1, 1.67%, 9/25/37 (a)(b)			258		226,215
Series 2007-5A, Class A3, 2.22%, 10/25/37 (a)(b)			77		74,369
BHMS Mortgage Trust, Series 2014-ATLS, Class AFL, 2.49%, 7/05/33 (a)(b)			581		581,400
BLCP Hotel Trust, Series 2014-CLRN, Class B, 2.51%, 8/15/19 (a)(b)			100		100,094
BWAY Mortgage Trust:
Series 2013-1515, Class A2, 3.45%, 3/10/33 (b)			150		153,888
Series 2013-1515, Class C, 3.45%, 3/10/33 (b)			105		104,688
Series 2013-1515, Class F, 4.06%, 3/10/33 (a)(b)			100		97,302
BXHTL Mortgage Trust:
Series 2015-JWRZ, Class A, 2.39%, 5/15/29 (a)(b)			100		100,125
Series 2015-JWRZ, Class GL2, 4.85%, 5/15/29 (a)(b)			100		100,845
BXP Trust:
Series 2017-GM, Class A, 3.38%, 6/13/39 (b)(d)			110		113,291
Series 2017-GM, Class D, 3.42%, 6/13/39 (a)(b)(d)			310		300,396
Series 2017-GM, Class E, 3.42%, 6/13/39 (a)(b)(d)			80		75,300
CCRESG Commercial Mortgage Trust, Series 2016-HEAT, Class D, 5.67%, 4/10/29 (a)(b)			20		20,315
CDGJ Commercial Mortgage Trust, Series 2014-BXCH, Class A, 2.56%, 12/15/27 (a)(b)			330		330,329
CGGS Commercial Mortgage Trust, Series 2016-RNDA, Class AFX, 2.76%, 2/10/33 (b)			102		101,826
Chicago Skyscraper Trust:
Series 2017-SKY, Class D, 3.66%, 2/15/30 (a)(b)			100		101,252
Series 2017-SKY, Class E, 4.46%, 2/15/30 (a)(b)			130		131,627

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Non-Agency Mortgage-Backed Securities		Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
Citigroup Commercial Mortgage Trust:
Series 2014-GC21, Class C, 4.78%, 5/10/47 (a)	USD		41	$	41,999
Series 2016-C1, Class C, 5.12%, 5/10/49 (a)			40		40,522
Series 2016-GC37, Class C, 5.09%, 4/10/49 (a)			20		20,567
Series 2016-P3, Class C, 5.00%, 4/15/49 (a)			10		10,546
Series 2017-P7, Class A4, 3.71%, 4/14/50			90		93,949
Citigroup/Deutsche Bank Commercial Mortgage Trust:
Series 2007-CD5, Class AMA, 6.51%, 11/15/44 (a)			127		128,062
Series 2017-CD3, Class A4, 3.63%, 2/10/50			30		31,229
Citigroup/Deutsche Bank Mortgage Trust, Series 2006-CD3, Class AM, 5.65%, 10/15/48			31		31,962
CLNS Trust, Series 2017-IKPR, Class E, 4.50%, 6/11/32 (a)(b)			125		125,467
COBALT CMBS Commercial Mortgage Trust, Series 2007-C3, Class AM, 6.06%, 5/15/46 (a)			9		8,676
Commercial Mortgage Pass-Through Certificates:
Series 2005-C6, Class F, 5.83%, 6/10/44 (a)(b)			100		103,638
Series 2007-C9, Class AJFL, 1.68%, 12/10/49 (a)(b)			172		171,892
Series 2014-CR14, Class A4, 4.24%, 2/10/47 (a)			30		32,236
Series 2014-CR16, Class A4, 4.05%, 4/10/47			177		188,550
Series 2014-CR17, Class A5, 3.98%, 5/10/47			169		179,326
Series 2014-CR19, Class A5, 3.80%, 8/10/24			50		52,503
Series 2014-TWC, Class E, 4.38%, 2/13/32 (a)(b)			150		150,811
Series 2015-CR23, Class CMD, 3.81%, 5/10/48 (a)(b)			100		97,857
Series 2015-LC19, Class D, 2.87%, 2/10/48 (b)			60		48,321
Series 2015-LC21, Class C, 4.46%, 7/10/48 (a)			150		143,133
Series 2016-667M, Class D, 3.28%, 10/10/36 (a)(b)			100		90,489
Series 2007-GG11, Class AM, 5.87%, 12/10/49 (a)			130		130,350
Core Industrial Trust, Series 2015-TEXW, Class A, 3.08%, 2/10/34 (b)			100		102,592
Cosmopolitan Hotel Trust, Series 2016-CSMO, Class A, 2.56%, 11/15/33 (a)(b)			180		181,352
Countrywide Commercial Mortgage Trust, Series 2007-MF1, Class A, 6.48%, 11/12/43 (a)(b)			10		9,806
Credit Suisse Commercial Mortgage Trust, Series 2008-C1, Class A3, 6.52%, 2/15/41 (a)			438		438,413
Credit Suisse First Boston Mortgage Securities Corp., Series 2004-C4, Class F, 5.23%, 10/15/39 (a)(b)			330		341,063
Credit Suisse Mortgage Capital Certificates:
Series 17-1, Class A, 4.50%, 3/25/21 (b)			822		822,705
Series 2015-DEAL, Class D, 4.26%, 4/15/29 (a)(b)			100		100,499
Series 2015-GLPB, Class A, 3.64%, 11/15/34 (b)			100		104,960

Non-Agency Mortgage-Backed Securities		Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
CSAIL Commercial Mortgage Trust, Series 2017-C8, Class A4, 3.39%, 6/15/50 (d)	USD		50	$	51,018
Deutsche Bank JPMorgan Mortgage Trust, Series 2016-C3, Class D, 3.64%, 9/10/49 (a)(b)			89		71,574
Eleven Madison Trust Mortgage Trust, Series 2015-11MD, Class A, 3.55%, 9/10/35 (a)(b)			100		103,780
FREMF Mortgage Trust:
Series 2017-K64, Class B, 4.12%, 3/25/27 (a)(b)			60		60,394
Series 2017-K725, Class B, 3.88%, 2/25/24 (a)(b)			170		169,943
GAHR Commercial Mortgage Trust:
Series 2015-NRF, Class AFL1, 2.29%, 12/15/34 (a)(b)			18		18,332
Series 2015-NRF, Class EFX, 3.49%, 12/15/34 (a)(b)			210		209,378
Series 2015-NRF, Class FFX, 3.49%, 12/15/34 (a)(b)			260		257,132
GS Mortgage Securities Corp. II:
Series 2013-KING, Class D, 3.55%, 12/10/19 (a)(b)			124		124,915
Series 2013-KING, Class E, 3.55%, 12/10/27 (a)(b)			360		358,246
GS Mortgage Securities Trust:
Series 2014-GC22, Class D, 4.80%, 6/10/47 (a)(b)			110		93,151
Series 2015-GC32, Class C, 4.56%, 7/10/25 (a)			30		29,767
Series 2015-GC32, Class D, 3.35%, 7/10/48			190		150,552
HMH Trust, Series 2017-NSS, Class A, 3.06%, 6/05/22 (b)(d)			110		111,109
IMT Trust, Series 2017-APTS, Class AFX, 3.48%, 6/15/34 (a)			100		102,994
JPMBB Commercial Mortgage Securities Trust:
Series 2015-C28, Class B, 3.99%, 3/15/25			80		78,307
Series 2015-C33, Class D1, 4.27%, 12/15/48 (a)(b)			100		94,439
JPMorgan Chase Commercial Mortgage Securities Corp., Series 2017-JP5, Class D, 4.80%, 3/15/50 (a)(b)			100		97,287
JPMorgan Chase Commercial Mortgage Securities Trust:
Series 2014-C21, Class A5, 3.77%, 6/15/24			50		52,557
Series 2014-C22, Class D, 4.71%, 9/15/47 (a)(b)			200		165,864
Series 2014-FL6, Class A, 2.56%, 11/15/31 (a)(b)			4		4,027
Series 2015-JP1, Class C, 4.90%, 1/15/49 (a)			140		146,642
Series 2015-JP1, Class D, 4.40%, 1/15/49 (a)			50		46,022
Series 2015-SGP, Class A, 2.86%, 7/15/36 (a)(b)			261		262,545
Series 2015-UES, Class E, 3.74%, 9/05/32 (a)(b)			100		99,335
Series 2016-ATRM, Class D, 5.35%, 10/05/28 (b)			100		101,287
Series 2016-NINE, Class A, 2.85%, 10/06/38 (a)(b)			150		147,080
Series 2016-WPT, Class A, 2.61%, 10/15/33 (a)(b)			100		100,375
JPMorgan Commercial Mortgage-Backed Securities Trust, Series 2009-RR1, Class A4B, 5.83%, 3/18/51 (a)(b)			19		18,853

See Notes to Financial Statements.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Non-Agency Mortgage-Backed Securities		Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
Lehman Brothers Small Balance Commercial Mortgage Trust, Series 2007-1A, Class 1A, 1.47%, 3/25/37 (a)(b)	USD		76	$	70,170
Lone Star Portfolio Trust, Series 2015-LSP, Class A1A2, 2.96%, 9/15/28 (a)(b)			50		50,261
Merrill Lynch Mortgage Trust, Series 2005-MKB2, Class F, 6.53%, 9/12/42 (a)(b)			100		108,588
Morgan Stanley Bank of America Merrill Lynch Trust:
Series 2014-C16, Class A5, 3.89%, 6/15/47			90		95,204
Series 2015-C26, Class D, 3.06%, 10/15/48 (b)			110		86,264
Morgan Stanley Capital I Trust:
Series 2007-IQ15, Class AM, 6.13%, 6/11/49 (a)			83		82,785
Series 2017-H1, Class A5, 3.53%, 6/15/50			100		102,934
Series 2017-H1, Class C, 4.28%, 6/15/50 (a)(d)			100		101,107
Series 2017-H1, Class D, 2.55%, 6/15/50 (b)			140		106,232
Series 2017-PRME, Class D, 4.56%, 2/15/34 (a)(b)			30		30,067
Morgan Stanley Re-REMIC Trust, Series 2012-XA, Class A, 2.00%, 7/27/49 (b)			8		7,582
Olympic Tower Mortgage Trust, Series 2017-OT, Class E, 4.08%, 5/10/39 (a)(b)			190		181,334
Resource Capital Corp. Ltd.:
Series 2017-CRE5, Class A, 1.89%, 7/15/34 (a)(b)			100		100,000
Series 2017-CRE5, Class B, 3.09%, 7/15/34 (a)(b)(d)			40		40,000
STRIPs Ltd., Series 2012-1A, Class B, 0.50%, 12/25/44 (b)(d)			59		57,887
Velocity Commercial Capital Loan Trust:
Series 2015-1, Class AFL, 3.65%, 6/25/45 (a)(b)(d)			66		66,593
Series 2016-2, Class AFL, 3.02%, 10/25/46 (a)			107		107,968
Series 2016-2, Class M4, 7.23%, 10/25/46 (a)(d)			100		104,205
Wachovia Bank Commercial Mortgage Trust, Series 2006-C28, Class AJ, 5.63%, 10/15/48 (a)			6		5,780
Waldorf Astoria Boca Raton Trust, Series 2016-BOCA, Class A, 2.51%, 6/15/29 (a)(b)			120		120,372
Wells Fargo Commercial Mortgage Trust:
Series 2015-C27, Class C, 3.89%, 2/15/48			30		27,833
Series 2015-C31, Class D, 3.85%, 11/15/48			10		7,606
Series 2015-NXS2, Class A5, 3.77%, 6/15/25 (a)			110		115,245
Series 2017-C38, Class A5, 3.45%, 7/15/50			42		42,969
WF-RBS Commercial Mortgage Trust, Series 2014-C21, Class A5, 3.68%, 7/15/24			60		62,558
					14,189,429
Interest Only Commercial Mortgage-Backed Securities — 0.4%
Banc of America Commercial Mortgage Trust, Series 2017-BNK3, Class XB, 0.78%, 2/15/50 (a)			1,000		52,520

Non-Agency Mortgage-Backed Securities		Par (000)		Value
Interest Only Commercial Mortgage-Backed Securities (continued)
Barclays Commercial Mortgage Trust, Series 2015-SRCH, Class XA, 1.12%, 8/10/35 (a)(b)	USD		1,030	$	73,697
BB-UBS Trust, Series 2012-SHOW, Class XA, 0.73%, 11/05/36 (a)(b)			3,475		139,359
CFCRE Commercial Mortgage Trust:
Series 2016-C4, Class XA, 1.92%, 5/10/58 (a)			181		20,535
Series 2016-C4, Class XB, 0.89%, 5/10/58 (a)			170		9,365
Citigroup Commercial Mortgage Trust, Series 2016-P3, Class XA, 1.87%, 4/15/49 (a)			997		107,723
Citigroup/Deutsche Bank Mortgage Trust, Series 2017-CD3, Class XA, 1.20%, 2/10/50 (a)			499		38,730
Commercial Mortgage Pass-Through Certificates:
Series 2015-3BP, Class XA, 0.17%, 2/10/35 (a)(b)			1,916		13,125
Series 2015-CR23, Class XA, 1.13%, 5/10/48 (a)			609		31,367
Series 2015-CR25, Class XA, 1.11%, 8/10/48 (a)			986		57,649
Series 2016-DC2, Class XA, 1.22%, 2/10/49 (a)			327		21,961
GS Mortgage Securities Trust, Series 2017-GS5, Class XA, 0.97%, 3/10/50 (a)			999		65,756
JPMBB Commercial Mortgage Securities Trust:
Series 2014-C23, Class XA, 0.98%, 9/15/47 (a)			1,693		56,390
Series 2016-C1, Class XA, 1.55%, 3/15/49 (a)			994		82,776
JPMDB Commercial Mortgage Securities Trust, Series 2016-C4, Class XC, 0.75%, 12/15/49 (a)(b)(d)			1,800		91,260
JPMorgan Chase Commercial Mortgage Securities Trust:
Series 2014-C22, Class XA, 1.09%, 9/15/47 (a)			1,301		65,539
Series 2016-JP3, Class XC, 0.75%, 8/15/49 (a)(b)			900		39,564
Morgan Stanley Bank of America Merrill Lynch Trust:
Series 2014-C19, Class XF, 1.34%, 12/15/47 (a)(b)(d)			130		8,250
Series 2015-C22, Class XA, 1.30%, 4/15/48 (a)			39		2,441
Series 2015-C26, Class XD, 1.50%, 10/15/48 (a)(b)			120		11,419
Series 2016-C28, Class XA, 1.44%, 1/15/49 (a)			994		80,040
Series 2016-C29, Class XB, 1.12%, 5/15/49 (a)			1,020		76,598
Series 2016-C31, Class XA, 1.61%, 11/15/49 (a)			994		95,212
Morgan Stanley Capital I Trust:
Series 2016-UBS9, Class XD, 1.70%, 3/15/49 (a)(b)			1,000		105,780
Series 2017-H1, Class XD, 2.20%, 6/15/50 (a)(b)			110		17,697
One Market Plaza Trust:
Series 2017-1MKT, Class XCP, 0.22%, 2/10/32 (a)(b)			1,880		11,844
Series 2017-1MKT, Class XNCP, 0.00%, 2/10/32 (a)(b)			376		—

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Non-Agency Mortgage-Backed Securities	Par  (000)		Value
Interest Only Commercial Mortgage-Backed Securities (continued)
Wells Fargo Commercial Mortgage Trust:
Series 2016-BNK1, Class XD, 1.41%, 8/15/49 (a)(b)	USD	1,000	$	88,880
Series 2016-C33, 1.97%, 3/15/59 (a)		396		42,921
				1,508,398
Total Non-Agency Mortgage-Backed Securities — 6.0%				22,574,354
Other Interests (h)	Beneficial Interest (000)
Capital Markets — 0.0%
Lehman Brothers Holdings Capital Trust VII (d)(e)(f)		185		—
Lehman Brothers Holdings, Inc. (d)(e)(f)		1,025		—
Total Other Interests — 0.0%				—
Preferred Securities	Par  (000)
Capital Trusts
Banks — 0.2%
HSBC Holdings PLC, 6.00% (a)(i)		380		392,920
Macquarie Bank Ltd., 6.13% (a)(b)(i)		201		205,523
				598,443
Capital Markets — 0.1%
Bank of New York Mellon Corp., 4.63% (a)(i)		270		272,322
State Street Corp., 2.25%, 6/15/37 (a)		40		36,825
				309,147
Media — 0.0%
NBCUniversal Enterprise, Inc., 5.25% (b)(i)		200		212,572
Multi-Utilities — 0.1%
Dominion Energy, Inc., 2.58%, 7/01/20		245		246,266
Total Capital Trusts — 0.4%				1,366,428
Trust Preferreds	Shares
Banks — 0.1%
Citigroup Capital XIII, 7.54%, 10/30/40 (a)		13,971		362,967
Total Preferred Securities — 0.5%				1,729,395
Taxable Municipal Bonds	Par  (000)
American Municipal Power, Inc. RB, 6.45%, 2/15/44	USD	30		39,217
Arizona Health Facilities Authority RB, 1.58%, 1/01/37 (a)		35		30,775
Bay Area Toll Authority RB:
6.92%, 4/01/40		90		126,371
7.04%, 4/01/50		190		290,729
Board of Water Commissioners City & County of Denver RB, 5.00%, 9/15/47		130		154,220
Brooklyn Arena Local Development Corp. RB, 5.00%, 7/15/42		70		78,394
Buckeye Tobacco Settlement Financing Authority RB, 5.88%, 6/01/47		150		146,079

Taxable Municipal Bonds		Par (000)		Value
California Health Facilities Financing Authority RB, 5.00%, 8/15/33	USD		40	$	47,042
California Housing Finance Agency RB, 3.66%, 2/01/29			80		80,331
California Infrastructure & Economic Development Bank RB, 5.00%, 10/01/35-10/01/36			60		72,246
California State Public Works Board RB, 8.36%, 10/01/34			35		52,468
Central Texas Regional Mobility Authority RB, 5.00%, 1/01/45-1/01/46			60		67,640
Chesapeake Bay Bridge & Tunnel District RB, 5.00%, 7/01/51			25		27,936
Chesapeake Bay Bridge & Tunnel District RB AGM, 5.00%, 7/01/41			30		34,499
Chino Valley Unified School District GO, 5.25%, 8/01/47			90		107,942
City of Atlanta, GA Water & Wastewater Revenue RB, 5.00%, 11/01/37			50		59,317
City of Aurora, CO Water Revenue RB, 5.00%, 8/01/46			60		69,947
City of Houston, TX Combined Utility System Revenue RB, 5.00%, 11/15/35			40		46,887
City of Riverside, CA Electric Revenue RB, 7.61%, 10/01/40			50		73,753
City Public Service Board of San Antonio, TX RB, 5.81%, 2/01/41			90		115,007
Clark County School District GO, 5.00%, 6/15/27-6/15/28			20		23,875
Colorado Health Facilities Authority RB, 5.25%, 2/01/31			25		26,393
Commonwealth Financing Authority RB, 4.14%, 6/01/38			75		77,645
Commonwealth of Massachusetts GO, 5.00%, 7/01/28			20		25,256
Commonwealth of Puerto Rico GO, 8.00%, 7/01/35 (e)(f)			1,180		715,375
Connecticut State Health & Educational Facility Authority RB, 5.00%, 7/01/45			150		167,086
Contra Costa Community College District GO, 6.50%, 8/01/34			10		12,909
County of Clark Department of Aviation RB, 5.00%, 7/01/21			60		67,854
County of Clark, NV RB, 5.00%, 7/01/28			40		50,027
County of Guilford, NC GO, 5.00%, 5/01/25-5/01/28			90		112,940
County of Miami-Dade, FL Aviation Revenue RB:
2.50%, 10/01/24			80		77,466
5.00%, 10/01/38			10		11,288
County of Miami-Dade, FL GO, 5.00%, 7/01/35			30		35,064
County of Orange, FL Tourist Development Tax Revenue RB, 5.00%, 10/01/28			50		62,847
Dallas Area Rapid Transit RB, 5.00%, 12/01/41-12/01/46			150		171,597
District of Columbia GO, 5.00%, 6/01/34-6/01/36			210		249,569
District of Columbia RB, 5.59%, 12/01/34			95		117,469
District of Columbia Water & Sewer Authority RB, 5.00%, 10/01/52			90		103,761
Dutchess County Local Development Corp. RB, 5.00%, 7/01/46			100		111,826
Eastern Municipal Water District Financing Authority RB, 5.00%, 7/01/47			60		70,701
Geisinger Authority RB, 5.00%, 2/15/45			70		80,115
Golden State Tobacco Securitization Corp. RB:
5.13%, 6/01/47			140		139,462
5.75%, 6/01/47			25		25,181
Grant County Public Utility District No. 2 RB, 4.58%, 1/01/40			15		15,523

See Notes to Financial Statements.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Taxable Municipal Bonds		Par  (000)		Value
Great Lakes Water Authority Water Supply System Revenue RB, 5.25%, 7/01/33	USD		20	$	24,158
Health & Educational Facilities Authority of the State of Missouri RB:
5.00%, 11/15/29			25		29,292
3.65%, 8/15/57			100		98,792
Horry County School District, SC GO, 5.00%, 3/01/25			25		30,607
Kentucky Economic Development Finance Authority RB, 5.25%, 6/01/50			30		32,778
Lone Star College System GO, 5.00%, 8/15/42			90		105,195
Los Angeles Community College District GO, 6.60%, 8/01/42			145		208,958
Los Angeles County Metropolitan Transportation
Authority RB, 5.00%, 7/01/38			30		35,694
Los Angeles Department of Water & Power RB, 6.60%, 7/01/50			30		44,208
Los Angeles Department of Water RB, 5.00%, 7/01/44			200		234,848
Los Angeles Unified School District GO:
5.00%, 7/01/26			60		75,185
6.76%, 7/01/34			150		206,460
Massachusetts Clean Water Trust RB, 5.00%, 2/01/27-2/01/28			50		61,497
Massachusetts Development Finance Agency RB, 5.00%, 7/01/47			50		56,236
Metropolitan Government Nashville & Davidson County Health & Educational Facilities Board RB, 5.00%, 7/01/46			60		67,391
Metropolitan Transportation Authority RB:
5.00%, 11/15/35-11/15/47			190		222,988
6.67%, 11/15/39			55		75,132
6.69%, 11/15/40			30		41,005
5.25%, 11/15/57			130		152,556
Metropolitan Washington Airports Authority Dulles Toll Road Revenue RB, 7.46%, 10/01/46			30		43,739
Metropolitan Washington Airports Authority Dulles Toll Road Revenue RB AGC, 0.00%, 10/01/39 (j)			30		12,413
Miami-Dade County Educational Facilities Authority RB, 5.07%, 4/01/50			30		33,172
Michigan Finance Authority RB, 5.00%, 11/15/41			30		33,620
Mississippi Hospital Equipment & Facilities Authority RB, 5.00%, 9/01/46			60		66,458
Municipal Electric Authority of Georgia RB:
5.00%, 1/01/20			60		64,847
6.64%, 4/01/57			40		49,104
New Caney Independent School District GO PSF, 5.00%, 2/15/47			60		70,068
New Jersey State Turnpike Authority RB, 7.41%, 1/01/40			60		90,121
New Jersey Transportation Trust Fund Authority RB, 5.00%, 6/15/29			30		32,223
New York City Transitional Finance Authority Building Aid Revenue RB, 5.00%, 7/15/40			30		34,513
New York City Transitional Finance Authority Future Tax Secured Revenue RB:
2.28%, 5/01/26			45		42,034
3.05%, 5/01/27			160		158,254
5.00%, 8/01/31-2/01/43			250		291,594
New York City Water & Sewer System RB:
5.75%, 6/15/41			35		46,265
6.01%, 6/15/42			25		34,047
5.38%, 6/15/43			200		225,624
5.50%, 6/15/43			240		271,930
5.88%, 6/15/44			40		54,106
5.00%, 6/15/47			270		313,937

Taxable Municipal Bonds		Par (000)		Value
New York Convention Center Development Corp. RB, 5.00%, 11/15/40-11/15/46	USD		120	$	138,739
New York State Dormitory Authority RB:
5.00%, 2/15/27-3/15/32			220		267,288
5.39%, 3/15/40			30		37,271
New York State Environmental Facilities Corp. RB, 5.00%, 6/15/46			120		141,546
New York State Urban Development Corp. RB:
2.86%, 3/15/24			190		191,896
5.00%, 3/15/25-3/15/27			40		49,548
New York Transportation Development Corp. RB:
5.00%, 7/01/46			60		65,081
5.25%, 1/01/50			250		273,585
Northwest Independent School District GO PSF, 5.00%, 2/15/42			80		92,604
Ohio Water Development Authority Water Pollution Control Loan Fund RB, 5.00%, 12/01/31			30		36,523
Orange County Local Transportation Authority RB, 6.91%, 2/15/41			75		103,730
Oregon School Boards Association GO AMBAC, 4.76%, 6/30/28			160		176,886
Oregon State Lottery RB, 5.00%, 4/01/30-4/01/37			170		203,376
Oxnard School District GO BAM, 5.00%, 8/01/45			40		46,351
Pennsylvania State University RB, 5.00%, 9/01/42			70		82,256
Port Authority of New York & New Jersey RB:
4.96%, 8/01/46			80		94,974
4.46%, 10/01/62			115		125,294
4.81%, 10/15/65			60		69,232
Port of Seattle, WA GO, 5.00%, 1/01/33-1/01/42			180		212,872
Regents of the University of California Medical Center Pooled Revenue RB, 6.58%, 5/15/49			75		101,888
Royal Oak Hospital Finance Authority RB, 5.00%, 9/01/39			40		44,368
Salt Lake City Corp. Airport Revenue RB, 5.00%, 7/01/47			125		143,739
Salt River Project Agricultural Improvement & Power District RB, 5.00%, 12/01/36			40		46,612
San Diego County Regional Transportation Commission RB, 5.00%, 4/01/48			120		139,655
San Diego Public Facilities Financing Authority Sewer Revenue RB, 5.00%, 5/15/39			50		58,375
San Francisco Bay Area Rapid Transit District GO, 5.00%, 8/01/36-8/01/47			110		131,759
San Francisco City & County Airport Comm-San Francisco International Airport RB, 5.00%, 5/01/41			60		68,105
South Carolina Public Service Authority RB:
2.39%, 12/01/23			92		86,837
5.00%, 12/01/49-12/01/50			120		130,165
State of California GO:
5.00%, 8/01/26-9/01/27			165		205,156
7.50%, 4/01/34			60		87,132
7.55%, 4/01/39			265		404,385
7.30%, 10/01/39			25		36,558
7.35%, 11/01/39			40		58,704
7.60%, 11/01/40			40		62,288
State of Georgia GO, 5.00%, 7/01/26-2/01/33			430		527,047
State of Illinois GO, 5.10%, 6/01/33			220		205,894
State of Kansas Department of Transportation RB, 5.00%, 9/01/35			30		35,340
State of Maryland GO, 5.00%, 3/15/28-3/15/29			120		149,598
State of Ohio GO, 5.00%, 5/01/27-5/01/37			490		576,715

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Taxable Municipal Bonds		Par (000)		Value
State of Oregon GO, 5.00%, 8/01/42	USD		135	$	159,894
State of Texas GO, 5.00%, 8/01/42			50		59,124
State of Washington GO, 5.00%, 7/01/28-8/01/30			95		114,859
State of Wisconsin GO, 5.00%, 5/01/24-11/01/27			170		209,455
State of Wisconsin RB, 3.15%, 5/01/27			165		165,746
Sumter Landing Community Development District RB, 4.17%, 10/01/47			100		101,939
Texas A&M University RB:
2.76%, 5/15/26			175		173,987
2.84%, 5/15/27			75		74,717
Texas Water Development Board RB, 5.00%, 10/15/40-10/15/45			100		115,614
Tobacco Settlement Financing Corp. RB, 5.00%, 6/01/41			60		58,800
University of California RB:
3.06%, 7/01/25			100		100,717
4.86%, 5/15/2112			20		20,655
University of Houston RB, 5.00%, 2/15/33-2/15/36			220		256,246
University of Massachusetts Building Authority RB, 5.00%, 11/01/31			40		47,316
University of New Mexico RB, 5.00%, 6/01/47			60		69,448
University of Virginia RB, 5.00%, 4/01/44-4/01/46			150		178,156
Weld County School District No. RE-4 GO, 5.25%, 12/01/41			50		59,533
West Virginia Hospital Finance Authority RB, 5.00%, 6/01/19-6/01/24			165		186,406
Wisconsin Health & Educational Facilities Authority RB, 5.00%, 12/15/44			30		32,910
Total Taxable Municipal Bonds — 4.2%					15,937,972
U.S. Government Sponsored Agency Securities
Collateralized Mortgage Obligations — 0.8%
Fannie Mae:
Series 2013-C01, Class M2, 6.27%, 10/25/23 (a)			220		258,537
Series 2016-C02, Class 1M2, 7.02%, 9/25/28 (a)			20		23,405
Series 2016-C04, Class 1M2, 5.27%, 1/25/29 (a)			350		386,160
Series 2017-C01, Class 1B1, 6.77%, 7/25/29 (a)			62		70,019
Series 2017-C01, Class 1M2, 4.57%, 7/25/29 (a)			140		147,847
Series 2017-C02, Class 2M2, 4.67%, 9/25/29 (a)			127		134,752
Series 2017-C04, Class 2M2, 3.89%, 11/25/29 (a)			270		273,795
Freddie Mac:
Series 2016-DNA4, Class M3, 4.82%, 3/25/29 (a)			250		270,713
Series 2016-HQA3, Class M3, 4.87%, 3/25/29 (a)			250		270,568
Series 2017-DNA1, Class M2, 4.27%, 7/25/29 (a)			250		260,789
Series 2017-DNA2, Class M2, 4.47%, 10/25/29 (a)			250		264,025
Series 2017-HQA1, Class M2, 4.77%, 8/25/29 (a)			260		274,843
Series 2017-HQA2, Class M2, 3.81%, 12/25/29 (a)			270		270,505
					2,905,958

U.S. Government Sponsored Agency Securities			Par (000)		Value
Commercial Mortgage-Backed Securities — 0.2%
Fannie Mae, Series 2017-M7, Class A2, 2.96%, 2/25/27 (a)(d)		USD		117	$	118,408
Freddie Mac:
Series K034, Class A2, 3.53%, 7/25/23 (a)				40		42,417
Series K059, Class A2, 3.12%, 9/25/26 (a)				190		194,230
Series K060, Class A2, 3.30%, 10/25/26				270		279,660
Series K061, Class A2, 3.35%, 11/25/26				110		114,354
Series K063, Class A2, 3.43%, 1/25/27 (a)				50		52,487
Series KPLB, Class A, 2.77%, 5/25/25				90		90,451
						892,007
Interest Only Commercial Mortgage-Backed Securities — 0.1%
Fannie Mae:
Series 2013-M5, Class X2, 2.25%, 1/25/22 (a)				500		31,292
Series 2014-M13, Class X2, 1.29%, 8/25/24 (a)				3,654		32,638
Freddie Mac:
Series K056, Class X1, 1.40%, 5/25/26 (a)				317		28,606
Series K064, Class X1, 0.75%, 3/25/27 (a)				1,700		84,075
Series K721, Class X1, 0.46%, 8/25/22 (a)				358		5,299
Ginnie Mae:
Series 2012-120, Class IO, 0.79%, 2/16/53 (a)				774		37,461
Series 2013-191, Class IO, 0.79%, 11/16/53 (a)				114		4,549
Series 2014-112, Class IO, 1.18%, 1/16/48 (a)				652		37,345
Series 2014-172, Class IO, 0.84%, 1/16/49 (a)	��			624		30,808
Series 2016-110, Class IO, 1.05%, 5/16/58 (a)				201		15,538
Series 2016-113, Class IO, 1.19%, 2/16/58 (a)				277		24,531
Series 2016-119, Class IO, 1.13%, 10/16/52 (a)				337		27,314
Series 2016-125, Class IO, 1.07%, 12/16/57 (a)				305		24,010
Series 2016-152, Class IO, 0.98%, 8/15/58 (a)				1,126		91,866
Series 2016-87, Class IO, 1.01%, 8/16/58 (a)				276		20,981
						496,313
Mortgage-Backed Securities — 44.9%
Fannie Mae Mortgage-Backed Securities:
2.50%, 5/01/26-7/01/32 (k)				3,378		3,400,110
2.69%, 4/01/25				40		40,186
3.00%, 4/01/29-7/01/47 (k)				41,189		41,322,319
3.50%, 7/01/26-7/01/47 (k)				17,611		18,162,188
4.00%, 2/01/25-7/01/47 (k)				7,974		8,450,200
4.50%, 2/01/25-7/01/47 (k)				3,415		3,679,746
5.00%, 2/01/35-7/01/47 (k)				2,497		2,732,073
5.50%, 2/01/35-7/01/47 (k)				1,519		1,690,785
6.00%, 4/01/35-7/01/47 (k)				1,087		1,227,296
6.50%, 5/01/40				210		235,452
Freddie Mac Mortgage-Backed Securities:
2.50%, 2/01/24-7/01/32 (k)				2,337		2,351,533
3.00%, 1/01/30-7/01/47 (k)				33,662		33,682,936
3.50%, 9/01/30-7/01/47 (k)				9,394		9,681,423
4.00%, 7/01/32-7/01/47 (k)				7,590		7,984,171
4.50%, 2/01/39-7/01/47 (k)				2,467		2,645,972

See Notes to Financial Statements.

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

U.S. Government Sponsored Agency Securities		Par (000)		Value
Mortgage-Backed Securities (continued)
5.00%, 10/01/41-11/01/41	USD		262	$	286,330
5.50%, 2/01/35-6/01/41			310		345,184
Ginnie Mae Mortgage-Backed Securities:
3.00%, 7/15/47 (k)			8,815		8,904,030
3.50%, 12/20/41-7/15/47 (k)			11,047		11,454,670
4.00%, 7/20/39-7/15/47 (k)			6,734		7,096,247
4.50%, 12/20/39-7/15/47 (k)			2,414		2,587,343
5.00%, 12/15/38-7/20/44			281		308,420
					168,268,614
Total U.S. Government Sponsored Agency Securities — 46.0%					172,562,892
U.S. Treasury Obligations
U.S. Treasury Bonds:
2.88%, 11/15/46 (l)			3,231		3,248,796
3.00%, 2/15/47 (l)			3,088		3,185,463
3.00%, 5/15/47 (l)			6,017		6,209,731
U.S. Treasury Notes:
1.25%, 3/31/19-5/31/19 (l)			16,061		16,023,513
1.63%, 3/15/20			12,442		12,481,366
1.50%, 4/15/20-5/15/20 (l)			20,859		20,840,742
1.88%, 3/31/22-4/30/22 (l)			14,073		14,075,747
1.75%, 5/31/22 (l)			4,728		4,700,299
2.00%, 11/15/26			3,336		3,252,860
2.25%, 2/15/27			3,250		3,234,894
2.38%, 5/15/27 (l)			3,889		3,913,207
Total U.S. Treasury Obligations — 24.3%					91,166,618
Total Long-Term Investments (Cost — $470,286,432) — 125.9%					472,463,917
Short-Term Securities
Borrowed Bond Agreements — 0.2%(m)
Barclays Bank PLC, 0.14%, Open (Purchased on 6/09/17 to be repurchased at GBP 475,836, collateralized by United Kingdom Gilt Inflation Linked Bonds, 0.13% due at 3/22/26, par and fair value of GBP 378,000 and $607,477, respectively)			476		619,709
Total Short-Term Securities (Cost — $606,239) — 0.2%					619,709
Options Purchased
(Cost — $153,807) — 0.0%					71,192
Total Investments Before Borrowed Bonds, Investments Sold Short, TBA Sale Commitments and Options Written (Cost — $471,046,478) — 126.1%					473,154,818

Borrowed Bonds		Par (000)		Value
Foreign Government Obligations — (0.2)%
United Kingdom — (0.2)%
United Kingdom Gilt Inflation Linked Bonds, 0.13%, 3/22/26	GBP		378	$	(607,477	)
Total Borrowed Bonds (Proceeds — $568,503) — (0.2)%					(607,477	)
TBA Sale Commitments (k)
Mortgage-Backed Securities — (18.3)%
Fannie Mae Mortgage-Backed Securities:
2.50%, 7/01/32	USD		389		(391,162	)
3.00%, 7/01/32-7/01/47			28,909		(28,875,277	)
3.50%, 7/01/32-7/01/47			5,168		(5,312,658	)
4.00%, 7/01/32			71		(73,441	)
4.50%, 7/01/47			292		(313,031	)
6.00%, 7/01/47			172		(193,575	)
Freddie Mac Mortgage-Backed Securities:
3.00%, 7/01/47			25,073		(25,005,204	)
3.50%, 7/01/47			1,752		(1,799,859	)
4.00%, 7/01/47			3,041		(3,198,193	)
4.50%, 7/01/47			908		(972,705	)
Ginnie Mae Mortgage-Backed Securities:
3.50%, 7/15/47			214		(221,451	)
4.00%, 7/15/47			1,854		(1,949,597	)
4.50%, 7/15/47			228		(243,185	)
Total TBA Sale Commitments (Proceeds — $68,854,202) — (18.3)%					(68,549,338	)
Options Written
(Premiums Received — $61,613) — (0.0)%					(21,242	)
Total Investments Net of Borrowed Bonds, Investments Sold Short, TBA Sale Commitments and Options Written — 107.6%					403,976,761
Liabilities in Excess of Other Assets — (7.6)%					(28,693,327	)
Net Assets — 100.0%				$	375,283,434

      Notes to Schedule of Investments

(a) Variable rate security. Rate as of period end.

(b) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(c) Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.

(d) Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(e) Issuer filed for bankruptcy and/or is in default.

(f) Non-income producing security.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 23

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

(g) Issuer is a U.S. branch of a foreign domiciled bank.

(h) Other interests represent beneficial interests in liquidation trusts and other reorganization or private entities.

(i) Perpetual security with no stated maturity date.

(j) Zero-coupon bond.

(k) Represents or includes a TBA transaction. Unsettled TBA transactions as of June 30, 2017 were as follows:

Counterparty	Value			Unrealized Appreciation (Depreciation)
Barclays Capital, Inc.		$(3,043,565	)		$  11,842
Citigroup Global Markets, Inc.		$(6,396,649	)		$  32,342
Credit Suisse Securities (USA) LLC		$   (940,168	)		$  30,812
Daiwa Capital Markets America, Inc.		$    909,070			$   (6,117	)
Deutsche Bank Securities, Inc.		$(1,654,298	)		$    6,445
Goldman Sachs & Co.		$ 4,720,359			$ (32,463	)
J.P. Morgan Securities LLC		$ 4,414,049			$   (8,976	)
Merrill Lynch, Pierce, Fenner & Smith, Inc.		$   (843,801	)		$  15,620
Mizuho Securities USA, Inc.		$   (861,158	)		$    3,976
Morgan Stanley & Co. LLC		$(5,860,429	)		$  19,506
Nomura Securities International, Inc.		$      42,979			$       424
RBC Capital Markets, LLC		$ 2,829,472			$ (19,148	)
Wells Fargo Securities, LLC		$(2,848,118	)		$  17,844

(l) All or a portion of the security has been pledged as collateral in connection with outstanding reverse repurchase agreements.

(m) Certain agreements have no stated maturity and can be terminated by either party at any time.

   • During the six months ended June 30, 2017, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity			Shares Held at June 30, 2017		Value at June 30, 2017		Income		Net Realized Gain (Loss)		Change  in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		3,798,256		(3,798,256	)		—		—	$	15,122		—		—

• For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

Reverse Repurchase Agreements
Counterparty	Interest Rate			Trade Date		Maturity Date		Face Value		Face Value Including Accrued Interest		Type of Non-Cash Underlying Collateral		Remaining Contractual Maturity of  the Agreements
BNP Paribas Securities Corp.		1.03	%		6/30/17		7/03/17	$	3,937,208	$	3,937,320		U.S. Treasury Obligations		Overnight
Credit Suisse Securities (USA) LLC		1.48	%		6/30/17		7/03/17		8,361,439		8,361,782		U.S. Treasury Obligations		Overnight
Deutsche Bank Securities, Inc.		1.45	%		6/30/17		7/03/17		3,275,426		3,275,558		U.S. Treasury Obligations		Overnight
Deutsche Bank Securities, Inc.		1.45	%		6/30/17		7/03/17		6,257,680		6,257,932		U.S. Treasury Obligations		Overnight
J.P. Morgan Securities LLC		0.50	%		6/30/17		7/03/17		4,015,974		4,016,030		U.S. Treasury Obligations		Overnight
J.P. Morgan Securities LLC		1.38	%		6/30/17		7/03/17		1,005,000		1,005,039		U.S. Treasury Obligations		Overnight
Merrill Lynch, Pierce, Fenner & Smith, Inc.		1.18	%		6/30/17		7/03/17		4,716,180		4,716,335		U.S. Treasury Obligations		Overnight
Merrill Lynch, Pierce, Fenner & Smith, Inc.		1.30	%		6/30/17		7/03/17		3,234,680		3,234,797		U.S. Treasury Obligations		Overnight
Total								$	34,803,587	$	34,804,793

      Derivative Financial Instruments Outstanding as of Period End

Futures Contracts
Contracts Long (Short)	Issue	Expiration	Notional Value			Unrealized Appreciation (Depreciation)
(51)	Euro-Bobl	September 2017		USD	7,671,494		$  22,709
(7)	Euro-Bund	September 2017		USD	1,294,161		10,649
4	Long Gilt British	September 2017		USD	654,198		(11,205	)
50	U.S. Treasury Bonds (30 Year)	September 2017		USD	7,684,375		67,268
(194)	U.S. Treasury Notes (10 Year)	September 2017		USD	24,353,063		100,769
46	U.S. Treasury Notes (2 Year)	September 2017		USD	9,941,031		(10,531	)

See Notes to Financial Statements.

24 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Contracts Long (Short)	Issue	Expiration	Notional Value		Unrealized Appreciation (Depreciation)
41	U.S. Treasury Notes (5 Year)	September 2017	USD	4,831,273		$ (14,813	)
9	U.S. Ultra Treasury Bonds	September 2017	USD	1,492,875		9,009
(24)	Euro Dollar	March 2019	USD	5,888,700		(21,058	)
Total						$152,797

Forward Foreign Currency Exchange Contracts
Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
BRL	362,544	USD	109,200	BNP Paribas S.A.		7/03/17		$    158
USD	91,000	BRL	300,118	Barclays Bank PLC		7/03/17		472
USD	91,000	BRL	300,664	Citibank N.A.		7/03/17		307
USD	92,000	RUB	5,376,480	BNP Paribas S.A.		7/03/17		894
CNH	11,995,378	USD	1,766,000	HSBC Bank PLC		7/05/17		2,752
EUR	631,495	USD	720,000	Morgan Stanley & Co. International PLC		7/05/17		1,466
GBP	555,040	USD	720,000	Morgan Stanley & Co. International PLC		7/05/17		3,039
HUF	42,943,016	USD	158,242	Deutsche Bank AG		7/05/17		600
HUF	1,174,029	USD	4,328	JPMorgan Chase Bank N.A.		7/05/17		15
HUF	4,297,415	USD	15,824	Morgan Stanley & Co. International PLC		7/05/17		72
HUF	147,089,486	USD	541,606	Morgan Stanley & Co. International PLC		7/05/17		2,462
JPY	81,268,836	USD	720,000	BNP Paribas S.A.		7/05/17		2,716
SEK	6,126,577	USD	720,000	Deutsche Bank AG		7/05/17		7,438
TRY	2,571,264	USD	720,000	BNP Paribas S.A.		7/05/17		9,728
TRY	494,459	USD	140,000	HSBC Bank PLC		7/05/17		328
USD	720,000	JPY	79,503,840	Royal Bank of Scotland PLC		7/05/17		12,980
USD	22,000	TRY	77,405	Barclays Bank PLC		7/05/17		32
USD	110,000	TRY	386,921	Citibank N.A.		7/05/17		191
USD	720,000	ZAR	9,373,292	BNP Paribas S.A.		7/05/17		4,196
ZAR	9,550,404	USD	720,000	BNP Paribas S.A.		7/05/17		9,329
CLP	89,930,750	USD	134,000	Credit Suisse International		7/06/17		1,450
RUB	8,786,368	USD	147,200	JPMorgan Chase Bank N.A.		7/06/17		1,589
USD	720,000	BRL	2,372,040	BNP Paribas S.A.		7/06/17		4,990
USD	134,000	COP	389,772,500	Credit Suisse International		7/06/17		6,222
USD	245,000	COP	744,800,000	Barclays Bank PLC		7/07/17		873
USD	475,000	COP	1,438,854,325	BNP Paribas S.A.		7/07/17		3,379
CLP	87,998,400	USD	129,600	BNP Paribas S.A.		7/10/17		2,924
EUR	140,000	USD	159,348	Deutsche Bank AG		7/10/17		643
EUR	140,000	USD	158,031	Goldman Sachs International		7/10/17		1,960
RUB	5,024,146	USD	85,000	JPMorgan Chase Bank N.A.		7/10/17		5
RUB	4,877,400	USD	82,500	JPMorgan Chase Bank N.A.		7/10/17		22
TRY	286,495	USD	80,813	Deutsche Bank AG		7/10/17		376
TRY	287,869	USD	81,187	Goldman Sachs International		7/10/17		392
USD	168,303	RUB	9,877,691	Credit Suisse International		7/10/17		1,179
USD	166,697	RUB	9,780,375	Deutsche Bank AG		7/10/17		1,220
JPY	17,111,324	USD	152,000	Goldman Sachs International		7/11/17		211
TRY	641,251	USD	181,352	Goldman Sachs International		7/14/17		160
MYR	288,435	USD	67,000	BNP Paribas S.A.		7/17/17		142
MYR	152,040	USD	35,000	JPMorgan Chase Bank N.A.		7/17/17		392
MYR	286,520	USD	65,000	JPMorgan Chase Bank N.A.		7/17/17		1,696

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 25

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
TRY	957,285	USD	270,000	BNP Paribas S.A.		7/21/17		$    416
TRY	416,391	USD	117,000	Citibank N.A.		7/21/17		623
USD	33,582	MXN	607,176	BNP Paribas S.A.		7/21/17		249
USD	84,418	MXN	1,526,209	JPMorgan Chase Bank N.A.		7/21/17		632
USD	4,000	ZAR	52,041	Citibank N.A.		7/21/17		38
USD	117,000	ZAR	1,506,114	Citibank N.A.		7/21/17		2,328
RUB	8,842,304	USD	147,200	BNP Paribas S.A.		7/24/17		1,949
RUB	8,781,952	USD	147,200	Deutsche Bank AG		7/24/17		931
TRY	288,341	USD	81,000	Deutsche Bank AG		8/04/17		113
USD	118,000	COP	346,212,000	BNP Paribas S.A.		8/09/17		5,064
IDR	942,550,000	USD	70,000	Bank of America N.A.		8/15/17		336
IDR	920,346,566	USD	68,361	Citibank N.A.		8/15/17		318
IDR	1,315,007,789	USD	97,661	Citibank N.A.		8/15/17		469
IDR	683,736,234	USD	50,798	JPMorgan Chase Bank N.A.		8/15/17		225
IDR	1,025,992,240	USD	76,180	JPMorgan Chase Bank N.A.		8/15/17		383
MYR	722,192	USD	167,000	Morgan Stanley & Co. International PLC		8/17/17		891
USD	120,000	COP	358,560,000	Barclays Bank PLC		8/22/17		3,214
USD	118,000	COP	358,189,000	Credit Suisse International		8/22/17		1,335
EUR	50,900	USD	57,553	JPMorgan Chase Bank N.A.		9/07/17		797
USD	334,020	RUB	19,384,043	BNP Paribas S.A.		9/15/17		10,692
USD	334,011	RUB	19,353,421	BNP Paribas S.A.		9/15/17		11,194
USD	831,978	RUB	48,411,562	Deutsche Bank AG		9/15/17		24,468
USD	840,670	RUB	48,740,814	Deutsche Bank AG		9/15/17		27,668
USD	120,443	RUB	7,150,460	HSBC Bank PLC		9/15/17		1,172
USD	754,785	RUB	43,771,463	JPMorgan Chase Bank N.A.		9/15/17		24,672
AUD	60,000	NZD	62,737	Bank of America N.A.		9/20/17		165
AUD	2,079,000	USD	1,571,761	Citibank N.A.		9/20/17		24,479
AUD	177,000	USD	133,863	Credit Suisse International		9/20/17		2,036
AUD	70,000	USD	52,790	Deutsche Bank AG		9/20/17		955
CAD	53,114	USD	40,000	UBS AG		9/20/17		1,012
EUR	60,000	USD	67,046	BNP Paribas S.A.		9/20/17		1,785
EUR	40,000	USD	44,881	Deutsche Bank AG		9/20/17		1,006
EUR	1,165,000	USD	1,329,028	Goldman Sachs International		9/20/17		7,452
EUR	1,150,000	USD	1,301,897	Goldman Sachs International		9/20/17		17,375
JPY	1,681,942	USD	15,000	BNP Paribas S.A.		9/20/17		9
JPY	2,242,590	USD	20,000	BNP Paribas S.A.		9/20/17		12
KRW	45,752,000	USD	40,000	JPMorgan Chase Bank N.A.		9/20/17		38
NOK	264,958	CHF	30,000	Morgan Stanley & Co. International PLC		9/20/17		334
NOK	351,412	CHF	40,000	UBS AG		9/20/17		222
NOK	337,966	USD	40,000	Morgan Stanley & Co. International PLC		9/20/17		547
NZD	63,016	AUD	60,000	Goldman Sachs International		9/20/17		40
NZD	50,000	USD	36,388	Deutsche Bank AG		9/20/17		196
SEK	779,801	EUR	80,000	HSBC Bank PLC		9/20/17		1,227
TRY	108,306	USD	30,000	BNP Paribas S.A.		9/20/17		64
USD	35,000	JPY	3,918,453	BNP Paribas S.A.		9/20/17		34
USD	35,000	JPY	3,877,261	Goldman Sachs International		9/20/17		401
USD	242,523	MXN	4,408,530	Deutsche Bank AG		9/20/17		2,782
USD	237,716	MXN	4,306,121	Deutsche Bank AG		9/20/17		3,545
USD	970,091	MXN	17,636,288	Goldman Sachs International		9/20/17		11,011

See Notes to Financial Statements.

26 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	237,716	MXN	4,309,809	Royal Bank of Scotland PLC		9/20/17		$    3,344
USD	316,955	MXN	5,753,622	Royal Bank of Scotland PLC		9/20/17		4,067
USD	301,529	TRY	1,085,158	Citibank N.A.		9/20/17		308
USD	206,984	ZAR	2,728,770	Bank of America N.A.		9/20/17		1,306
USD	30,000	ZAR	394,170	Citibank N.A.		9/20/17		290
USD	209,010	ZAR	2,749,402	Citibank N.A.		9/20/17		1,777
USD	209,656	ZAR	2,758,370	JPMorgan Chase Bank N.A.		9/20/17		1,747
ZAR	398,904	USD	30,000	BNP Paribas S.A.		9/20/17		67
USD	558,095	TRY	2,023,372	BNP Paribas S.A.		10/23/17		1,429
TRY	4,810,628	USD	1,242,815	BNP Paribas S.A.		6/25/18		31
								300,270
BRL	238,711	USD	72,800	Deutsche Bank AG		7/03/17		(795	)
MXN	604,415	USD	33,429	Barclays Bank PLC		7/03/17		(143	)
MXN	604,345	USD	33,429	Deutsche Bank AG		7/03/17		(147	)
MXN	906,454	USD	50,143	Morgan Stanley & Co. International PLC		7/03/17		(223	)
RUB	5,313,000	USD	92,000	Deutsche Bank AG		7/03/17		(1,970	)
RUB	41,217,480	USD	720,000	BNP Paribas S.A.		7/05/17		(21,867	)
USD	1,766,000	CNH	11,995,378	Citibank N.A.		7/05/17		(2,460	)
USD	720,000	EUR	639,148	Deutsche Bank AG		7/05/17		(10,209	)
USD	720,000	GBP	557,142	Deutsche Bank AG		7/05/17		(5,778	)
USD	720,000	HUF	197,161,200	BNP Paribas S.A.		7/05/17		(9,278	)
USD	415,000	RUB	24,602,030	Deutsche Bank AG		7/05/17		(1,704	)
USD	305,000	RUB	18,063,107	JPMorgan Chase Bank N.A.		7/05/17		(949	)
USD	720,000	SEK	6,234,048	Royal Bank of Scotland PLC		7/05/17		(20,198	)
USD	720,000	TRY	2,542,733	BNP Paribas S.A.		7/05/17		(1,631	)
BRL	2,351,880	USD	720,000	Goldman Sachs International		7/06/17		(11,067	)
COP	204,680,000	USD	70,000	Royal Bank of Scotland PLC		7/06/17		(2,900	)
COP	187,072,000	USD	64,000	UBS AG		7/06/17		(2,673	)
USD	134,000	CLP	89,057,740	Royal Bank of Scotland PLC		7/06/17		(135	)
USD	147,200	RUB	8,840,832	Goldman Sachs International		7/06/17		(2,511	)
COP	851,440,000	USD	290,000	JPMorgan Chase Bank N.A.		7/07/17		(10,919	)
COP	1,262,480,000	USD	430,000	UBS AG		7/07/17		(16,190	)
RUB	4,933,168	USD	83,750	Barclays Bank PLC		7/10/17		(284	)
RUB	4,935,388	USD	83,750	Barclays Bank PLC		7/10/17		(247	)
USD	129,600	CLP	86,514,480	Deutsche Bank AG		7/10/17		(689	)
USD	157,124	EUR	140,000	Citibank N.A.		7/10/17		(2,867	)
USD	81,000	TRY	289,692	Citibank N.A.		7/10/17		(1,095	)
USD	81,000	TRY	286,335	Deutsche Bank AG		7/10/17		(144	)
USD	179,029	TRY	641,251	Bank of America N.A.		7/14/17		(2,483	)
USD	158,088	EUR	140,000	Goldman Sachs International		7/17/17		(1,966	)
USD	116,404	GBP	91,000	JPMorgan Chase Bank N.A.		7/17/17		(2,189	)
USD	167,000	MYR	720,605	Morgan Stanley & Co. International PLC		7/17/17		(742	)
MXN	2,131,295	USD	118,000	Barclays Bank PLC		7/21/17		(995	)
ZAR	1,088,979	USD	83,703	Barclays Bank PLC		7/21/17		(791	)
ZAR	52,052	USD	4,000	Barclays Bank PLC		7/21/17		(37	)
ZAR	433,397	USD	33,297	BNP Paribas S.A.		7/21/17		(299	)
IDR	1,787,560,000	USD	134,000	BNP Paribas S.A.		7/24/17		(260	)
IDR	4,202,100,000	USD	315,000	JPMorgan Chase Bank N.A.		7/24/17		(610	)
MXN	2,153,519	USD	119,000	Morgan Stanley & Co. International PLC		7/27/17		(899	)

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 27

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
CLP	15,473,698	USD	23,333	Bank of America N.A.		7/28/17		$    (42	)
CLP	44,202,336	USD	66,667	BNP Paribas S.A.		7/28/17		(134	)
CLP	46,431,000	USD	70,000	BNP Paribas S.A.		7/28/17		(112	)
CLP	6,632,000	USD	10,000	Goldman Sachs International		7/28/17		(18	)
RUB	11,152,160	USD	188,000	Deutsche Bank AG		7/28/17		(53	)
TRY	289,093	USD	81,889	BNP Paribas S.A.		7/28/17		(391	)
TRY	153,064	USD	43,332	BNP Paribas S.A.		7/28/17		(182	)
TRY	289,174	USD	81,889	Goldman Sachs International		7/28/17		(368	)
TRY	698,086	USD	197,000	HSBC Bank PLC		7/28/17		(203	)
TRY	322,445	USD	91,000	HSBC Bank PLC		7/28/17		(100	)
TRY	289,043	USD	81,889	JPMorgan Chase Bank N.A.		7/28/17		(405	)
BRL	603,747	USD	181,681	Barclays Bank PLC		8/02/17		(802	)
BRL	360,000	USD	108,559	BNP Paribas S.A.		8/02/17		(705	)
BRL	46,207	USD	14,085	Goldman Sachs International		8/02/17		(242	)
USD	109,200	BRL	364,935	BNP Paribas S.A.		8/02/17		(133	)
USD	302,545	BRL	1,009,954	BNP Paribas S.A.		8/02/17		(33	)
COP	359,192,000	USD	118,000	Barclays Bank PLC		8/09/17		(830	)
USD	28,125	EUR	25,779	Bank of America N.A.		8/11/17		(1,386	)
USD	89,786	EUR	79,914	Citibank N.A.		8/11/17		(1,697	)
USD	179,922	TRY	641,251	Goldman Sachs International		8/11/17		(79	)
USD	363,000	IDR	4,944,640,800	BNP Paribas S.A.		8/15/17		(5,988	)
USD	28,648	IDR	384,745,000	Barclays Bank PLC		8/16/17		(60	)
USD	27,700	IDR	372,015,000	Barclays Bank PLC		8/16/17		(58	)
USD	9,455	IDR	126,975,000	Barclays Bank PLC		8/16/17		(20	)
USD	31,496	IDR	422,365,000	BNP Paribas S.A.		8/16/17		(18	)
USD	30,455	IDR	408,395,000	BNP Paribas S.A.		8/16/17		(18	)
USD	10,394	IDR	139,390,000	BNP Paribas S.A.		8/16/17		(6	)
USD	34,085	IDR	458,030,000	Deutsche Bank AG		8/16/17		(91	)
USD	32,957	IDR	442,880,000	Deutsche Bank AG		8/16/17		(88	)
USD	32,064	IDR	430,625,000	Deutsche Bank AG		8/16/17		(67	)
USD	31,004	IDR	416,380,000	Deutsche Bank AG		8/16/17		(64	)
USD	11,249	IDR	151,160,000	Deutsche Bank AG		8/16/17		(30	)
USD	34,319	IDR	460,290,000	Deutsche Bank AG		8/16/17		(25	)
USD	34,011	IDR	456,155,000	Deutsche Bank AG		8/16/17		(25	)
USD	33,184	IDR	445,065,000	Deutsche Bank AG		8/16/17		(24	)
USD	32,886	IDR	441,070,000	Deutsche Bank AG		8/16/17		(24	)
USD	10,582	IDR	142,115,000	Deutsche Bank AG		8/16/17		(22	)
USD	11,326	IDR	151,910,000	Deutsche Bank AG		8/16/17		(8	)
USD	11,225	IDR	150,545,000	Deutsche Bank AG		8/16/17		(8	)
USD	19,092	IDR	256,500,446	Goldman Sachs International		8/16/17		(47	)
USD	18,460	IDR	248,013,624	Goldman Sachs International		8/16/17		(45	)
USD	6,301	IDR	84,651,877	Goldman Sachs International		8/16/17		(15	)
USD	31,831	IDR	427,495,000	JPMorgan Chase Bank N.A.		8/16/17		(66	)
USD	30,778	IDR	413,355,000	JPMorgan Chase Bank N.A.		8/16/17		(64	)
USD	10,505	IDR	141,085,000	JPMorgan Chase Bank N.A.		8/16/17		(22	)
USD	34,221	IDR	459,140,000	UBS AG		8/16/17		(38	)
USD	33,089	IDR	443,955,000	UBS AG		8/16/17		(37	)
USD	34,921	IDR	468,320,000	UBS AG		8/16/17		(23	)
USD	33,766	IDR	452,830,000	UBS AG		8/16/17		(22	)

See Notes to Financial Statements.

28 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	11,294	IDR	151,525,000	UBS AG		8/16/17		$       (13	)
USD	11,524	IDR	154,555,000	UBS AG		8/16/17		(8	)
USD	919,802	TRY	3,291,191	BNP Paribas S.A.		8/21/17		(1,204	)
COP	366,260,400	USD	120,000	UBS AG		8/22/17		(706	)
USD	124,769	MXN	2,365,050	JPMorgan Chase Bank N.A.		8/23/17		(4,399	)
USD	57,552	EUR	50,900	BNP Paribas S.A.		9/07/17		(798	)
USD	90,308	RUB	5,513,775	Credit Suisse International		9/15/17		(1,662	)
USD	29,739	RUB	1,792,212	Credit Suisse International		9/15/17		(155	)
CHF	40,000	NOK	350,777	Citibank N.A.		9/20/17		(145	)
EUR	40,000	SEK	387,884	HSBC Bank PLC		9/20/17		(373	)
EUR	40,000	SEK	389,887	Morgan Stanley & Co. International PLC		9/20/17		(612	)
JPY	3,895,018	USD	35,000	Barclays Bank PLC		9/20/17		(243	)
KRW	33,900,900	USD	30,000	Deutsche Bank AG		9/20/17		(333	)
MXN	934,240	GBP	40,000	Deutsche Bank AG		9/20/17		(1,427	)
MXN	710,211	GBP	30,000	JPMorgan Chase Bank N.A.		9/20/17		(552	)
MXN	728,736	USD	40,000	Deutsche Bank AG		9/20/17		(371	)
NOK	440,000	SEK	448,514	JPMorgan Chase Bank N.A.		9/20/17		(703	)
TRY	123,900	EUR	30,000	JPMorgan Chase Bank N.A.		9/20/17		(23	)
USD	852,531	AUD	1,128,000	Goldman Sachs International		9/20/17		(13,539	)
USD	854,630	AUD	1,129,000	Goldman Sachs International		9/20/17		(12,207	)
USD	53,187	AUD	70,000	Goldman Sachs International		9/20/17		(559	)
USD	30,000	CAD	38,879	Citibank N.A.		9/20/17		(20	)
USD	35,000	CAD	46,198	HSBC Bank PLC		9/20/17		(671	)
USD	35,000	CAD	45,955	HSBC Bank PLC		9/20/17		(484	)
USD	15,000	CAD	19,764	JPMorgan Chase Bank N.A.		9/20/17		(260	)
USD	2,605,093	EUR	2,315,000	Barclays Bank PLC		9/20/17		(50,659	)
USD	56,255	EUR	50,000	Citibank N.A.		9/20/17		(1,105	)
USD	56,502	EUR	50,000	Citibank N.A.		9/20/17		(857	)
USD	45,262	EUR	40,000	JPMorgan Chase Bank N.A.		9/20/17		(626	)
USD	51,096	GBP	40,000	JPMorgan Chase Bank N.A.		9/20/17		(1,136	)
USD	38,574	GBP	30,000	Morgan Stanley & Co. International PLC		9/20/17		(600	)
USD	30,000	NOK	250,594	Bank of America N.A.		9/20/17		(65	)
USD	40,000	NOK	337,071	Deutsche Bank AG		9/20/17		(440	)
USD	32,821	NZD	45,000	BNP Paribas S.A.		9/20/17		(104	)
USD	18,284	NZD	25,000	BNP Paribas S.A.		9/20/17		(8	)
USD	21,698	NZD	30,000	Standard Chartered Bank		9/20/17		(253	)
USD	278,373	TRY	1,003,798	Bank of America N.A.		9/20/17		(264	)
USD	1,321,783	TRY	4,810,628	BNP Paribas S.A.		10/23/17		(1,707	)
TRY	2,023,372	USD	524,910	BNP Paribas S.A.		6/25/18		(2,164	)
								(256,737	)
Net Unrealized Appreciation							$	43,533

OTC Barrier Options Purchased

Description

Put/ Call

Type of Option

Counterparty

Expiration Date

Strike Price

Barrier Price

Notional Amount (000)

Value

USD Currency

Put

Down-and-Out

BNP Paribas S.A.

7/03/17

TRY

3.50

USD

3.35

USD

220

$172

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 29

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Exchange-Traded Options Purchased
Description	Put/ Call		Expiration Date		Strike Price		Contracts	Value
Euro Dollar 90-Day		Put	10/13/17	USD		98.00	334		$35,488

      OTC Options Purchased

Description	Put/ Call		Counterparty	Expiration Date	Strike Price		Notional Amount (000)			Value
USD Currency1		Call	Barclays Bank PLC	7/03/17	MXN	19.00		USD	109		—
USD Currency1		Call	Morgan Stanley & Co. International PLC	7/03/17	MXN	20.00		USD	273		—
USD Currency1		Call	Morgan Stanley & Co. International PLC	7/03/17	MXN	21.50		USD	85		—
USD Currency		Call	Barclays Bank PLC	7/07/17	JPY	111.00		USD	152	$	2,026
USD Currency		Call	Deutsche Bank AG	8/07/17	RUB	58.00		USD	118		3,895
USD Currency		Call	HSBC Bank PLC	9/01/17	TWD	30.50		USD	273		2,197
USD Currency		Put	Citibank N.A.	7/03/17	CNH	6.79		USD	7,144		19,654
EUR Currency		Put	JPMorgan Chase Bank N.A.	7/06/17	MXN	20.80		EUR	145		1,713
USD Currency		Put	Citibank N.A.	7/06/17	BRL	3.18		USD	182		1
AUD Currency		Put	Barclays Bank PLC	7/27/17	USD	0.75		AUD	217		235
AUD Currency		Put	JPMorgan Chase Bank N.A.	7/27/17	USD	0.72		AUD	217		8
EUR Currency		Put	BNP Paribas S.A.	8/25/17	USD	1.12		EUR	168		613
USD Currency		Put	Citibank N.A.	8/25/17	TRY	3.52		USD	362		3,433
EUR Currency		Put	JPMorgan Chase Bank N.A.	8/29/17	MXN	20.50		EUR	146		1,757

Total $35,532

¹  Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.    

      Exchange-Traded Options Written

Description	Put/ Call		Expiration Date	Strike Price			Contracts	Value
Euro Dollar 90-Day		Put	10/13/17		USD	97.50	167		$(2,088)
Euro Dollar 90-Day		Put	10/13/17		USD	97.63	334		(6,263)

Total $(8,351) 

      OTC Options Written

Description

Put/ Call

Counterparty

Expiration Date

Strike Price

Notional Amount (000)

Value

USD Currency1

Call

Goldman Sachs International

7/03/17

MXN

22.60

USD

170

—

Morgan Stanley & Co.

USD Currency1

Call

International PLC

7/03/17

MXN

19.00

USD

109

—

USD Currency

Call

Citibank N.A.

7/06/17

BRL

3.31

USD

182

$(1,024)

USD Currency

Call

Deutsche Bank AG

7/17/17

ZAR

14.00

USD

91

(91

)

See Notes to Financial Statements.

30 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Description	Put/ Call	Counterparty	Expiration Date	Strike Price		Notional Amount (000)			Value
USD Currency	Call	Citibank N.A.	7/27/17	TRY	3.65		USD	362		$  (1,339	)
TRY Currency	Call	BNP Paribas S.A.	7/28/17	ZAR	3.68		TRY	432		(2,144	)
USD Currency	Call	Barclays Bank PLC	8/10/17	BRL	3.40		USD	109		(1,149	)
EUR Currency	Call	JPMorgan Chase Bank N.A.	8/29/17	MXN	21.50		EUR	146		(1,498	)
USD Currency	Put	Citibank N.A.	7/03/17	CNH	6.75		USD	7,144		(2,704	)
USD Currency	Put	Deutsche Bank AG	7/17/17	ZAR	13.00		USD	91		(747	)
AUD Currency	Put	Barclays Bank PLC	7/27/17	USD	0.72		AUD	217		(8	)
USD Currency	Put	Barclays Bank PLC	8/10/17	BRL	3.30		USD	109		(1,331	)
USD Currency	Put	HSBC Bank PLC	9/01/17	TWD	30.00		USD	273		(856	)

Total $(12,891)

¹  Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.    

      Centrally Cleared Credit Default Swaps — Sell Protection

Index

Receive Fixed Rate

Expiration Date

Credit Rating1

Notional Amount (000)2

Unrealized Appreciation (Depreciation)

CDX.NA.HY.28.V1

5.00%

6/20/22

B+

USD

3,510

$17,838

CDX.NA.IG.28.V1

1.00%

6/20/22

BBB+

USD

1,837

(716

)

Total

$17,122

¹ Using S&P’s rating of the issuer or the underlying securities of the index, as applicable.    

² The maximum potential amount the Fund may pay should a negative credit event take place as defined under the terms of the agreement.    

      Centrally Cleared Interest Rate Swaps

Fixed Rate	Floating Rate	Effective Date	Expiration Date		Notional Amount (000)			Unrealized Appreciation (Depreciation)
7.36%1	28-day MXIBTIIE	N/A		1/28/19		MXN	25,421	$	(8,180	)
7.32%2	28-day MXIBTIIE	N/A		2/20/20		MXN	24,364		18,500
7.16%2	28-day MXIBTIIE	N/A		4/29/20		MXN	24,200		14,344
7.45%2	28-day MXIBTIIE	N/A		3/07/22		MXN	8,319		12,723
7.48%2	28-day MXIBTIIE	N/A		3/07/22		MXN	4,159		6,417
7.47%2	28-day MXIBTIIE	N/A		3/07/22		MXN	4,159		6,324
7.16%2	28-day MXIBTIIE	N/A		6/01/22		MXN	9,969		8,287
6.32%2	28-day MXIBTIIE	N/A		7/17/25		MXN	1,733		(4,438	)
2.13%2	3-month LIBOR	N/A		8/25/25		USD	60		178
2.27%1	3-month LIBOR	N/A		9/11/25		USD	91		(1,213	)
3.46%2	UK RPI All Items Monthly	N/A		10/15/26		GBP	742		4,919
3.43%2	UK RPI All Items Monthly	N/A		10/15/26		GBP	711		1,309
3.45%2	UK RPI All Items Monthly	N/A		10/15/26		GBP	722		3,345
7.41%2	28-day MXIBTIIE	N/A		5/25/27		MXN	5,716		5,321
7.38%2	28-day MXIBTIIE	N/A		5/25/27		MXN	930		725
7.82%2	28-day MXIBTIIE	N/A		3/04/37		MXN	2,016		2,833
7.92%2	28-day MXIBTIIE	N/A		5/01/37		MXN	2,625		5,220
7.95%2	28-day MXIBTIIE	N/A		5/01/37		MXN	2,415		5,221
Total									$81,835

¹ The Fund pays the fixed rate and receives the floating rate.    

² The Fund pays the floating rate and receives the fixed rate.    

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 31

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

OTC Credit Default Swaps — Buy Protection
Issuer/Index	Pay Fixed Rate			Counterparty		Expiration Date		Notional Amount (000)			Value			Premiums Paid (Received)			Unrealized Appreciation (Depreciation)
United Mexican States		1.00	%		JPMorgan Chase Bank N.A.		6/20/20		USD	135		$  (1,514	)		$     706			$  (2,220	)
United Mexican States		1.00	%		Bank of America N.A.		9/20/20		USD	135		(1,341	)		1,094			(2,435	)
Loews Corp.		1.00	%		Barclays Bank PLC		12/20/20		USD	120		(3,588	)		(2,935	)		(653	)
					Morgan Stanley & Co.
Valero Energy Corp.		1.00	%		International PLC		12/20/20		USD	130		(2,445	)		2,226			(4,671	)
Russian Federation		1.00	%		Bank of America N.A.		12/20/21		USD	15		333			793			(460	)
Republic of Argentina		5.00	%		Barclays Bank PLC		6/20/22		USD	195		(15,158	)		(8,913	)		(6,245	)
Republic of Argentina		5.00	%		Barclays Bank PLC		6/20/22		USD	64		(4,978	)		(4,736	)		(242	)
Republic of Argentina		5.00	%		Barclays Bank PLC		6/20/22		USD	33		(2,567	)		(2,649	)		82
Republic of Argentina		5.00	%		Barclays Bank PLC		6/20/22		USD	32		(2,490	)		(2,613	)		123
Republic of Argentina		5.00	%		Barclays Bank PLC		6/20/22		USD	32		(2,490	)		(2,613	)		123
Republic of South Africa		1.00	%		Bank of America N.A.		6/20/22		USD	150		6,444			7,318			(874	)
Republic of South Africa		1.00	%		Barclays Bank PLC		6/20/22		USD	29		1,246			1,399			(153	)
Republic of South Africa		1.00	%		Citibank N.A.		6/20/22		USD	370		15,897			18,052			(2,155	)
					Goldman Sachs
Republic of South Africa		1.00	%		International		6/20/22		USD	92		3,953			4,479			(526	)
Republic of South Africa		1.00	%		HSBC Bank PLC		6/20/22		USD	130		5,586			6,218			(632	)
Republic of the Philippines		1.00	%		JPMorgan Chase Bank N.A.		6/20/22		USD	670		(7,593	)		(1,654	)		(5,939	)
CMBX.NA.9.AAA		0.50	%		Credit Suisse International		9/17/58		USD	150		2,043			1,847			196
CMBX.NA.9.AAA		0.50	%		Deutsche Bank AG		9/17/58		USD	120		1,634			1,499			135
					Morgan Stanley & Co.
CMBX.NA.9.AAA		0.50	%		International PLC		9/17/58		USD	240		3,268			3,555			(287	)
					Morgan Stanley & Co.
CMBX.NA.9.AAA		0.50	%		International PLC		9/17/58		USD	100		1,361			1,231			130
					Morgan Stanley & Co.
CMBX.NA.9.AAA		0.50	%		International PLC		9/17/58		USD	90		1,225			1,108			117
CMBX.NA.6.AAA		0.50	%		Deutsche Bank AG		5/11/63		USD	228		(388	)		75			(463	)
CMBX.NA.6.AAA		0.50	%		Deutsche Bank AG		5/11/63		USD	198		(338	)		(148	)		(190	)
CMBX.NA.6.AAA		0.50	%		Deutsche Bank AG		5/11/63		USD	139		(236	)		28			(264	)
CMBX.NA.6.BBB-		3.00	%		Deutsche Bank AG		5/11/63		USD	70		8,144			6,430			1,714
CMBX.NA.6.BBB-		3.00	%		J.P. Morgan Securities LLC		5/11/63		USD	30		3,490			1,957			1,533
CMBX.NA.6.BBB-		3.00	%		J.P. Morgan Securities LLC		5/11/63		USD	30		3,490			1,957			1,533
CMBX.NA.6.BBB-		3.00	%		J.P. Morgan Securities LLC		5/11/63		USD	30		3,490			3,015			475
					Morgan Stanley & Co.
CMBX.NA.6.BBB-		3.00	%		International PLC		5/11/63		USD	30		3,491			1,799			1,692
Total												$ 19,969			$40,525			$(20,556	)

      OTC Credit Default Swaps — Sell Protection

Issuer/Index	Receive Fixed Rate	Counterparty	Expiration Date		Credit Rating1	Notional Amount (000)2		Value			Premiums Received			Unrealized Appreciation (Depreciation)
Transocean Ltd.	1.00%	Goldman Sachs International		6/20/19	BB-	USD	95		$(1,763	)		$(1,171	)		$   (592	)
Transocean Ltd.	1.00%	Goldman Sachs International		6/20/19	BB-	USD	15		(279	)		(185	)		(94	)
United Mexican States	1.00%	Bank of America N.A.		6/20/20	BBB+	USD	135		1,514			(818	)		2,332
		JPMorgan Chase Bank
United Mexican States	1.00%	N.A.		9/20/20	BBB+	USD	135		1,341			(953	)		2,294
CMBX.NA.3.AM	0.50%	Credit Suisse International		12/13/49	BBB+	USD	42		(200	)		(3,688	)		3,488
CMBX.NA.4.AM	0.50%	Deutsche Bank AG		2/17/51	BBB-	USD	41		(241	)		(5,497	)		5,256
		Goldman Sachs
CMBX.NA.8.A	2.00%	International		10/17/57	Not Rated	USD	60		(3,017	)		(6,118	)		3,101
		Goldman Sachs
CMBX.NA.8.A	2.00%	International		10/17/57	Not Rated	USD	60		(3,017	)		(3,418	)		401
CMBX.NA.9.A	2.00%	Credit Suisse International		9/17/58	Not Rated	USD	60		(2,221	)		(1,957	)		(264	)
CMBX.NA.9.A	2.00%	Credit Suisse International		9/17/58	Not Rated	USD	50		(1,851	)		(2,598	)		747

See Notes to Financial Statements.

32 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Issuer/Index	Receive Fixed Rate		Counterparty		Expiration Date		Credit Rating1		Notional Amount (000)2			Value			Premiums Received			Unrealized Appreciation (Depreciation)
CMBX.NA.9.A		2.00%		Deutsche Bank AG		9/17/58		Not Rated		USD	60		$  (2,220	)		$    (3,101	)		$    881
CMBX.NA.9.A		2.00%		Deutsche Bank AG		9/17/58		Not Rated		USD	60		(2,221	)		(2,992	)		771
CMBX.NA.9.A		2.00%		J.P. Morgan Securities LLC		9/17/58		Not Rated		USD	170		(6,292	)		(8,827	)		2,535
CMBX.NA.9.A		2.00%		J.P. Morgan Securities LLC		9/17/58		Not Rated		USD	6		(217	)		(724	)		507
				Morgan Stanley & Co.
CMBX.NA.9.A		2.00%		International PLC		9/17/58		Not Rated		USD	90		(3,331	)		(2,070	)		(1,261	)
				Morgan Stanley & Co.
CMBX.NA.9.A		2.00%		International PLC		9/17/58		Not Rated		USD	60		(2,220	)		(3,266	)		1,046
				Morgan Stanley & Co.
CMBX.NA.9.A		2.00%		International PLC		9/17/58		Not Rated		USD	60		(2,221	)		(3,081	)		860
				Morgan Stanley & Co.
CMBX.NA.9.A		2.00%		International PLC		9/17/58		Not Rated		USD	30		(1,110	)		(1,474	)		364
CMBX.NA.9.BBB-		3.00%		Credit Suisse International		9/17/58		Not Rated		USD	90		(10,593	)		(9,516	)		(1,077	)
				Morgan Stanley & Co.
CMBX.NA.9.BBB-		3.00%		International PLC		9/17/58		Not Rated		USD	140		(16,479	)		(17,959	)		1,480
				Morgan Stanley & Co.
CMBX.NA.9.BBB-		3.00%		International PLC		9/17/58		Not Rated		USD	90		(10,593	)		(9,699	)		(894	)
				Morgan Stanley & Co.
CMBX.NA.9.BBB-		3.00%		International PLC		9/17/58		Not Rated		USD	30		(3,531	)		(3,315	)		(216	)
CMBX.NA.10.A		2.00%		Deutsche Bank AG		11/17/59		A-		USD	120		(3,657	)		(5,472	)		1,815
CMBX.NA.10.A		2.00%		Deutsche Bank AG		11/17/59		A-		USD	60		(1,829	)		(2,782	)		953
CMBX.NA.10.BBB-		3.00%		J.P. Morgan Securities LLC		11/17/59		BBB-		USD	10		(1,076	)		(895	)		(181	)
CMBX.NA.6.BBB-		3.00%		Credit Suisse International		5/11/63		BBB-		USD	30		(3,490	)		(2,442	)		(1,048	)
Total													$(80,814	)		$(104,018	)		$23,204

¹ Using S&P’s rating of the issuer or the underlying securities of the index, as applicable.    

² The maximum potential amount the Fund may pay should a negative credit event take place as defined under the terms of the agreement.    

      OTC Interest Rate Swaps

Fixed Rate	Floating Rate	Counterparty	Expiration Date		Notional Amount (000)		Value			Premiums Paid (Received)			Unrealized Appreciation (Depreciation)
13.13%1	1-day BZDIOVER	Bank of America N.A.		7/03/17	BRL	1,345		$  (1,633	)		—			$  (1,633	)
13.11%1	1-day BZDIOVER	Citibank N.A.		7/03/17	BRL	1,614		(1,883	)		—			(1,883	)
12.85%1	1-day BZDIOVER	JPMorgan Chase Bank N.A.		7/03/17	BRL	226		(173	)		—			(173	)
9.50%1	1-day BZDIOVER	Bank of America N.A.		10/02/17	BRL	4,390		(122	)		—			(122	)
	3-month KRW
	Certificate of
1.92%2	Deposit	Deutsche Bank AG		11/10/17	KRW	205,250		467			$ 99			368
	3-month KRW
	Certificate of
1.69%1	Deposit	Deutsche Bank AG		11/10/17	KRW	205,250		(257	)		—			(257	)
9.99%1	1-day BZDIOVER	Citibank N.A.		1/02/18	BRL	3,321		(3,473	)		—			(3,473	)
8.98%1	1-day BZDIOVER	Citibank N.A.		1/02/18	BRL	1,077		507			—			507
9.98%1	1-day BZDIOVER	JPMorgan Chase Bank N.A.		1/02/18	BRL	3,322		(2,279	)		—			(2,279	)
4.55%1	28-day MXIBTIIE	Barclays Bank PLC		3/21/18	MXN	826		965			12			953
4.85%1	28-day MXIBTIIE	Bank of America N.A.		11/01/18	MXN	716		1,165			2			1,163
7.07%2	28-day MXIBTIIE	Citibank N.A.		11/21/18	MXN	8,086		188			—			188
7.06%2	28-day MXIBTIIE	JPMorgan Chase Bank N.A.		11/21/18	MXN	9,703		320			—			320
6.98%2	28-day MXIBTIIE	Citibank N.A.		11/28/18	MXN	13,800		(548	)		(19	)		(529	)
6.98%2	28-day MXIBTIIE	JPMorgan Chase Bank N.A.		11/28/18	MXN	7,828		(311	)		(11	)		(300	)
9.25%2	1-day BZDIOVER	Citibank N.A.		1/02/19	BRL	2,921		2,751			—			2,751
9.28%2	1-day BZDIOVER	JPMorgan Chase Bank N.A.		1/02/19	BRL	2,773		2,879			—			2,879
9.73%2	1-day BZDIOVER	JPMorgan Chase Bank N.A.		1/02/20	BRL	1,992		2,043			—			2,043
3.27%1	3-month LIBOR	Deutsche Bank AG		5/16/21	USD	470		(26,519	)		—			(26,519	)
	7-day China Fixing
3.78%2	Repo Rates	Bank of America N.A.		6/02/22	CNY	935		192			(8	)		200
5.73%1	28-day MXIBTIIE	Bank of America N.A.		1/03/25	MXN	672		2,839			9			2,830

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 33

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

Fixed Rate	Floating Rate		Counterparty		Expiration Date		Notional Amount (000)			Value			Premiums Paid (Received)			Unrealized Appreciation (Depreciation)
6.43%2		28-day MXIBTIIE		Bank of America N.A.		6/06/25		MXN	541		$  (1,159	)		$  (9	)		$  (1,150	)
6.33%2		28-day MXIBTIIE		Citibank N.A.		6/09/25		MXN	271		(667	)		(1	)		(666	)
6.33%2		28-day MXIBTIIE		Citibank N.A.		7/17/25		MXN	864		(2,180	)		(4	)		(2,176	)
6.31%1		28-day MXIBTIIE		Deutsche Bank AG		8/11/25		MXN	3,395		8,912			17			8,895
6.27%2		28-day MXIBTIIE		Bank of America N.A.		12/05/25		MXN	122		(353	)		(2	)		(351	)
Total											$(18,329	)		$85			$(18,414	)

¹ The Fund pays the fixed rate and receives the floating rate.

² The Fund pays the floating rate and receives the fixed rate.

      Transactions in Options Written for the Six Months Ended June 30, 2017

	Calls																				Puts
				Notional (000)																			Notional (000)
	Contracts			AUD			EUR			MXN			TRY		USD			Premiums Received			Contracts		AUD			EUR			MXN			USD			Premiums Received
Outstanding options, beginning of period		—			—			5,147			—			—		389			$   40,193			—		—			—			—			1,210			$     6,311
Options written		214			432			10,563			12,686			432		4,365			207,266			501		433			15,132			4,535			16,210			225,920
Options exercised		—			—			—			—			—		—			—			—		—			—			—			—			—
Options expired		(214	)		(432	)		(11,071	)		—			—		(2,421	)		(128,264	)		—		(216	)		(2,772	)		(2,360	)		(8,133	)		(30,642	)
Options closed		—			—			(4,493	)		(12,686	)		—		(1,310	)		(99,940	)		—		—			(12,360	)		(2,175	)		(1,670	)		(159,231	)
Outstanding options, end of period		—			—			146			—			432		1,023			$   19,255			501		217			—			—			7,617			$   42,358

      Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statement of Assets and Liabilities were as follows:

Assets - Derivative Financial Instruments		Commodity Contracts	Credit Contracts		Equity Contracts	Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Futures contracts	Net unrealized appreciation1	—		—	—		—		$210,404		—		$210,404
Forward foreign currency exchange contracts	Unrealized appreciation on forward foreign currency exchange contracts	—		—	—		$300,270		—		—		300,270
Options purchased	Investments at value — unaffiliated2	—		—	—		35,704		35,488		—		71,192
Swaps - centrally cleared	Net unrealized appreciation1	—		$  17,838	—		—		86,093		$9,573		113,504
	Unrealized appreciation on OTC swaps;
Swaps - OTC	Swap premiums paid	—		103,470	—		—		23,236		—		126,706
Total		—		$121,308	—		$335,974		$355,221		$9,573		$822,076
Liabilities - Derivative Financial Instruments
Futures contracts	Net unrealized depreciation1	—		—	—		—		$57,607		—		$  57,607
Forward foreign currency exchange contracts	Unrealized depreciation on forward foreign currency exchange contracts	—		—	—		$256,737		—		—		256,737
Options written	Options written at value	—		—	—		12,891		8,351		—		21,242
Swaps - centrally cleared	Net unrealized depreciation1	—		$       716	—		—		13,831		—		14,547
	Unrealized depreciation on OTC swaps;
Swaps - OTC	Swap premiums received	—		164,315	—		—		41,565		—		205,880
Total		—		$165,031	—		$269,628		$121,354		—		$556,013

¹  Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

²  Includes options purchased at value as reported in the Schedule of Investments.

See Notes to Financial Statements.

34 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

For the six months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

Net Realized Gain (Loss) from:	Commodity Contracts	Credit Contracts		Equity Contracts	Foreign Currency Exchange Contracts			Interest Rate Contracts			Other Contracts		Total
Futures contracts	—		—	—		—			$1,126,919			—		$1,126,919
Forward foreign currency exchange contracts	—		—	—		$  (44,744)			—			—		(44,744	)
Options purchased1	—		—	—		(226,901	)		(172,559	)		—		(399,460	)
Options written	—		—	—		99,258			54,087			—		153,345
Swaps	—		$  68,643	—		(80,894	)		5,354			—		(6,897	)
Total	—		$  68,643	—		$(253,281)			$1,013,801			—		$829,163
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts	—		—	—		—			$   213,281			—		$   213,281
Forward foreign currency exchange contracts	—		—	—		$  (69,834)			—			—		(69,834	)
Options purchased2	—		—	—		(47,760	)		(56,866	)		—		(104,626	)
Options written	—		—	—		(4,275	)		13,855			—		9,580
Swaps	—		$(92,382)	—		—			151,380			$26,644		85,642
Total	—		$(92,382)	—		$(121,869)			$   321,650			$26,644		$   134,043

¹  Options purchased are included in net realized gain (loss) from investments.

²  Options purchased are included in net change in unrealized appreciation (depreciation) on investments.

      Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts - long	$	37,880,394
Average notional value of contracts - short	$	25,325,590
Forward foreign currency exchange contracts:
Average amounts purchased - in USD	$	10,538,343
Average amounts sold - in USD	$	8,890,567
Options:
Average value of option contracts purchased	$	114,277
Average value of option contracts written	$	20,222
Credit default swaps:
Average notional value - buy protection	$	8,988,830
Average notional value - sell protection	$	5,740,000
Interest rate swaps:
Average notional value - pays fixed rate	$	9,459,886
Average notional value - receives fixed rate	$	13,503,901
Total return swaps:
Average notional value	$	5,654,057

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

      Derivative Financial Instruments — Offsetting as of Period End

The Fund’s derivative assets and liabilities (by type) were as follows:

	Assets			Liabilities
Derivative Financial Instruments:
Futures contracts	$	54,212		$	43,094
Forward foreign currency exchange contracts		300,270			256,737
Options		71,192	1		21,242
Swaps - centrally cleared		—			16,690
Swaps - OTC2		126,706			205,880
Total derivative assets and liabilities in the Statements of Assets and Liabilities	$	552,380		$	543,643
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		(89,700	)		(68,135	)
Total derivative assets and liabilities subject to an MNA	$	462,680		$	475,508

¹  Includes options purchased at value which is included in Investments at value — unaffiliated in the Statement of Assets and Liabilities and reported in the Schedule of Investments.

²  Includes unrealized appreciation (depreciation) on OTC swaps and swap premiums paid/received in the Statement of Assets and Liabilities.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 35

Schedule of Investments (continued) BlackRock Total Return V.I. Fund

The following tables present the Fund’s derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:

Counterparty	Derivative Assets Subject to an MNA  by Counterparty		Derivatives Available for Offset1			Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets2
Bank of America N.A.		$  17,548		$  (12,102	)		—		—		$    5,446
Barclays Bank PLC		9,544		(9,544	)		—		—		—
BNP Paribas S.A.		72,236		(49,184	)		—		—		23,052
Citibank N.A.		75,714		(26,219	)		—		—		49,495
Credit Suisse International		18,500		(18,500	)		—		—		—
Deutsche Bank AG		104,772		(73,059	)		—		—		31,713
Goldman Sachs International		46,983		(46,983	)		—		—		—
HSBC Bank PLC		13,894		(3,319	)		—		—		10,575
J.P. Morgan Securities LLC		13,512		(10,627	)		—		—		2,885
JPMorgan Chase Bank N.A.		43,933		(37,950	)		—		—		5,983
Morgan Stanley & Co. International PLC		24,419		(24,419	)		—		—		—
Royal Bank of Scotland PLC		20,391		(20,391	)		—		—		—
UBS AG		1,234		(1,234	)		—		—		—
Total		$462,680		$(333,531	)		—		—		$129,149
Counterparty	Derivative Liabilities     Subject to an MNA by     Counterparty		Derivatives Available for Offset1			Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities3
Bank of America N.A.		$  12,102		$  (12,102	)		—		—		—
Barclays Bank PLC		89,409		(9,544	)		—		—		$  79,865
BNP Paribas S.A.		49,184		(49,184	)		—		—		—
Citibank N.A.		26,219		(26,219	)		—		—		—
Credit Suisse International		24,407		(18,500	)		—		—		5,907
Deutsche Bank AG		73,059		(73,059	)		—		—		—
Goldman Sachs International		54,767		(46,983	)		—		—		7,784
HSBC Bank PLC		3,319		(3,319	)		—		—		—
J.P. Morgan Securities LLC		10,627		(10,627	)		—		—		—
JPMorgan Chase Bank N.A.		37,950		(37,950	)		—		—		—
Morgan Stanley & Co. International PLC		51,269		(24,419	)		—		—		26,850
Royal Bank of Scotland PLC		23,233		(20,391	)		—		—		2,842
Standard Chartered Bank		253		—			—		—		253
UBS AG		19,710		(1,234	)		—		—		18,476
Total		$475,508		$(333,531	)		—		—		$141,977

¹  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

²  Net amount represents the net amount receivable from the counterparty in the event of default.

³  Net amount represents the net amount payable due to the counterparty in the event of default.

See Notes to Financial Statements.

36 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued)   BlackRock Total Return V.I. Fund

      Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1			Level 2				Level 3			Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities			—		$	39,868,284			$	5,566,272		$	45,434,556
Corporate Bonds			—			102,291,539				—			102,291,539
Floating Rate Loan Interests			—			1,247,652				1,232,111			2,479,763
Foreign Agency Obligations			—			1,265,839				—			1,265,839
Foreign Government Obligations			—			17,020,989				—			17,020,989
Non-Agency Mortgage-Backed Securities			—			18,678,957				3,895,397			22,574,354
Preferred Securities		$	362,967			1,366,428				—			1,729,395
Taxable Municipal Bonds			—			15,937,972				—			15,937,972
U.S. Government Sponsored Agency Securities			—			172,444,484				118,408			172,562,892
U.S. Treasury Obligations			—			91,166,618				—			91,166,618
Short-Term Securities:
Borrowed Bond Agreements			—			619,709				—			619,709
Options Purchased:
Foreign currency exchange contracts			—			35,704				—			35,704
Interest rate contracts			35,488			—				—			35,488
Liabilities:
Investments:
Borrowed Bonds			—			(607,477	)			—			(607,477	)
TBA Sale Commitments			—			(68,549,338	)			—			(68,549,338	)
Total		$	398,455		$	392,787,360			$	10,812,188		$	403,998,003

	Level 1	Level 2	Level 3	Total
Derivative Financial Instruments1
Assets:
Credit contracts	—	$              54,522	—	$              54,522
Foreign currency exchange contracts	—	300,270	—	300,270
Interest rate contracts	$            210,404	109,190	—	319,594
Other contracts	—	9,573	—	9,573
Liabilities:
Credit contracts	—	(34,752)	—	(34,752)
Foreign currency exchange contracts	—	(269,628)	—	(269,628)
Interest rate contracts	(65,958)	(55,342)	—	(121,300)
Total	$            144,446	$            113,833	—	$            258,279

¹ Derivative financial instruments are swaps, futures contracts, forward foreign currency exchange contracts and options written. Swaps, futures contracts and forward foreign currency exchange contracts are valued at the unrealized appreciation (depreciation) on the instrument and options written are shown at value.

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount or face value, including accrued interest for financial statement purposes.

As of period end, reverse repurchase agreements of $34,804,793 are categorized as Level 2 within the disclosure hierarchy.

During the six months ended June 30, 2017, there were no transfers between Level 1 and Level 2.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 37

Schedule of Investments (concluded) BlackRock Total Return V.I. Fund

A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

	Asset-Backed Securities			Floating Rate Loan Interests			Non-Agency Mortgage- Backed Securities			Options Purchased			Options Written			U.S. Government Sponsored Agency Securities			Total
Assets:
Opening Balance, as of December 31, 2016	$	9,595,248			—		$	2,403,512		$	1			—			—		$	11,998,761
Transfers into Level 3		54,089			—			951,403			—			—			—			1,005,492
Transfers out of Level 31		(8,200,299	)		—			(63,842	)		—			—			—			(8,264,141	)
Other2		324,433			—			(324,433	)		—			—			—			—
Accrued discounts/premiums		895		$	200			8,942			—			—		$	(1	)		10,036
Net realized gain (loss)		6,135			—			16,724			—			—			150			23,009
Net change in unrealized appreciation (depreciation)3,4		(10,185	)		(1,311	)		21,276			(4,758	)	$	8,214			(309	)		12,927
Purchases		4,399,954			1,233,222			2,099,149			4,757			(8,214	)		179,313			7,908,181
Sales		(603,998	)		—			(1,217,334	)		—			—			(60,745	)		(1,882,077	)
Closing Balance, as of June 30, 2017	$	5,566,272		$	1,232,111		$	3,895,397			—			—		$	118,408		$	10,812,188
Net change in unrealized appreciation (depreciation) on investments still held at June 30, 20174	$	(6,405	)	$	(1,311	)	$	28,676			—			—		$	(309	)	$	20,651

¹ As of December 31, 2016, the Fund used significant unobservable inputs in determining the value of certain investments. As of June 30, 2017, the Fund used observable inputs in determining the value of the same investments. As a result, investments at beginning of period value were transferred from Level 3 to Level 2 in the disclosure hierarchy.

² Certain Level 3 investments were re-classified between Asset-Backed Securities and Non-Agency Mortgage-Backed Securities.

³ Included in the related net change in unrealized appreciation (depreciation) in the Statement of Operations.

⁴ Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at June 30, 2017 is generally due to investments no longer held or categorized as Level 3 at period end.

The Fund’s investments that are categorized as Level 3 were valued utilizing third party pricing information without adjustment. Such valuations are based on unobservable inputs. A significant change in third party information could result in a significantly lower or higher value of such Level 3 investments.

See Notes to Financial Statements.

38 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock Total ReturnV.I. Fund
Assets
Investments at value — unaffiliated (cost — $471,046,478)	$	473,154,818
Cash		1,330,118
Cash pledged:
Futures contracts		167,050
Centrally cleared swaps		485,960
Foreign currency at value (cost — $701,925)		706,440
Receivables:
Investments sold		1,177,523
Swaps		2,282
TBA sale commitments		68,854,202
Capital shares sold		1,063,152
Dividends — affiliated		2,403
Interest		2,183,781
From the Manager		92,437
Variation margin on futures contracts		54,212	��
Swap premiums paid		66,925
Unrealized appreciation on:
Forward foreign currency exchange contracts		300,270
OTC swaps		59,781
Prepaid expenses		867
Other assets		25,979
Total assets		549,728,200
Liabilities
Borrowed bonds at value (proceeds — $568,503)		607,477
Options written at value (premiums received — $61,613)		21,242
TBA sale commitments at value (proceeds — $68,854,202)		68,549,338
Reverse repurchase agreements		34,804,793
Payables:
Investments purchased		68,929,315
Capital shares redeemed		2,646
Distribution fees		42,570
Income dividends		720,847
Interest expense		172
Investment advisory fees		137,913
Officer’s and Directors’ fees		710
Other accrued expenses payable		102,742
Other affiliates		2,600
Variation margin on futures contracts		43,094
Variation margin on centrally cleared swaps		16,690
Swap premiums received		130,333
Unrealized depreciation on:
Forward foreign currency exchange contracts		256,737
OTC swaps		75,547
Total liabilities		174,444,766
Net Assets	$	375,283,434
Net Assets Consist of
Paid-in capital	$	398,761,796
Distributions in excess of net investment income		(211,619	)
Accumulated net realized loss		(26,003,973	)
Net unrealized appreciation (depreciation)		2,737,230
Net Assets	$	375,283,434
Net Asset Value
Class I — Based on net assets of $155,299,895 and 13,003,582 shares outstanding, 600 million shares authorized, $0.10 par value	$	11.94
Class III — Based on net assets of $219,983,539 and 18,640,046 shares outstanding, 100 million shares authorized, $0.10 par value	$	11.80

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 39

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock Total Return V.I. Fund
Investment Income
Interest	$	5,164,824
Dividends — unaffiliated		14,759
Dividends — affiliated		15,122
Foreign taxes withheld		(1,090	)
Total investment income		5,193,615
Expenses
Investment advisory		801,145
Transfer agent		2,480
Transfer agent — class specific		330,128
Distribution — class specific		248,196
Custodian		49,352
Professional		36,458
Accounting services		37,843
Printing		43,209
Officer and Directors		11,917
Miscellaneous		30,803
Total expenses excluding interest expense		1,591,531
Interest expense		144,673
Total expenses		1,736,204
Less:
Fees waived by the Manager		(2,046	)
Transfer agent fees reimbursed — class specific		(273,524	)
Total expenses after fees waived and reimbursed		1,460,634
Net investment income		3,732,981
Realized and Unrealized Gain (Loss)
Net realized gain (loss) from:
Investments — unaffiliated1		(1,146,209	)
Borrowed bonds		(188,811	)
Forward foreign currency exchange contracts		(44,744	)
Foreign currency transactions		72,599
Futures contracts		1,126,919
Options written		153,345
Swaps		(6,897	)
		(33,798	)
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		4,686,241
Borrowed bonds		(83,129	)
Forward foreign currency exchange contracts		(69,834	)
Foreign currency translations		24,211
Futures contracts		213,281
Options written		9,580
Swaps		85,642
		4,865,992
Net realized and unrealized gain		4,832,194
Net Increase in Net Assets Resulting from Operations	$	8,565,175
1 Net of $678 realized tax deferral.

See Notes to Financial Statements.

40 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statements of Changes in Net Assets BlackRock Total Return V.I. Fund

Increase (Decrease) in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	3,732,981		$	5,122,678
Net realized loss		(33,798	)		(111,898	)
Net change in unrealized appreciation (depreciation)		4,865,992			53,330
Net increase in net assets resulting from operations		8,565,175			5,064,110
Distributions to Shareholders1
From net investment income:
Class I		(1,882,162	)		(3,223,271	)
Class III		(2,097,287	)		(2,293,347	)
Decrease in net assets resulting from distributions to shareholders		(3,979,449	)		(5,516,618	)
Capital Share Transactions
Net increase in net assets derived from capital share transactions		38,099,009			110,161,750
Net Assets
Total increase in net assets		42,684,735			109,709,242
Beginning of period		332,598,699			222,889,457
End of period	$	375,283,434		$	332,598,699
Undistributed (distributions in excess of) net investment income, end of period	$	(211,619	)	$	34,849

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 41

Financial Highlights BlackRock Total Return V.I. Fund

	Class I
	Six Months Ended June 30, 2017
				Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	11.79		$	11.71		$	11.93		$	11.51		$	12.01		$	11.49
Net investment income1		0.13			0.23			0.22			0.32			0.32			0.38
Net realized and unrealized gain (loss)		0.16			0.09			(0.19	)		0.44			(0.45	)		0.55
Net increase (decrease) from investment operations		0.29			0.32			0.03			0.76			(0.13	)		0.93
Distributions from net investment income2		(0.14	)		(0.24	)		(0.25	)		(0.34	)		(0.37	)		(0.41)
Net asset value, end of period	$	11.94		$	11.79		$	11.71		$	11.93		$	11.51		$	12.01
Total Return3
Based on net asset value		2.49	%4		2.76	%		0.26	%		6.66	%		(1.14	)%		8.25%
Ratios to Average Net Assets
Total expenses5		0.86	%6		0.82	%		0.92	%		0.88	%		0.87	%		0.80%
Total expenses after fees reimbursed and paid indirectly5		0.65	%6		0.62	%		0.74	%		0.69	%		0.67	%		0.67%
Total expenses after fees reimbursed and paid indirectly and excluding interest expense5		0.57	%6		0.59	%		0.69	%		0.66	%		0.65	%		0.64%
Net investment income5		2.28	%6		1.92	%		1.89	%		2.68	%		2.75	%		3.24%
Supplemental Data
Net assets, end of period (000)	$	155,300		$	157,445		$	154,046		$	130,765		$	135,943		$	162,921
Portfolio turnover rate7		352	%		590	%		900	%		772	%		724	%		953%

¹  Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended June 30, 2017
			Year Ended December 31,
	(Unaudited)		2016			2015			2014		2013		2012
Investments in underlying funds		—		0.01	%		0.01	%		—		—		—

⁶  Annualized.

⁷  Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:

	Six Months Ended June 30, 2017
				Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Portfolio turnover rate (excluding MDRs)		232	%		396	%		625	%		560	%		498	%		729	%

See Notes to Financial Statements.

42 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights (concluded) BlackRock Total Return V.I. Fund

	Class III
	Six Months Ended June 30, 2017															Period August 14, 20121 to December 31,			Period April 25, 20121 to June 19,
				Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012			20122
Per Share Operating Performance
Net asset value, beginning of period	$	11.65		$	11.57		$	11.79		$	11.38		$	11.86		$	11.71		$	11.65
Net investment income3		0.11			0.19			0.18			0.27			0.28			0.13			0.05
Net realized and unrealized gain (loss)		0.16			0.10			(0.19	)		0.44			(0.42	)		0.16			0.07
Net increase (decrease) from investment operations		0.27			0.29			(0.01	)		0.71			(0.14	)		0.29			0.12
Distributions from net investment income4		(0.12	)		(0.21	)		(0.21	)		(0.30	)		(0.34	)		(0.14	)		(0.06)
Net asset value, end of period	$	11.80		$	11.65		$	11.57		$	11.79		$	11.38		$	11.86		$	11.71
Total Return5
Based on net asset value		2.35	%6		2.46	%		(0.08	)%		6.28	%		(1.30	)%		2.50	%6		1.00%6
Ratios to Average Net Assets
Total expenses7		1.08	%8		1.01	%		1.06	%		1.11	%		1.06	%		0.95	%8		1.09%8
Total expenses after fees reimbursed and paid indirectly7		0.96	%8		0.93	%		1.04	%		1.01	%		0.96	%		0.95	%8		0.98%8
Total expenses after fees reimbursed and paid indirectly and excluding interest expense7		0.88	%8		0.89	%		0.98	%		0.98	%		0.94	%		0.91	%8		0.95%8
Net investment income7		1.97	%8		1.61	%		1.54	%		2.31	%		2.45	%		2.83	%8		3.22%8
Supplemental Data
Net assets, end of period (000)	$	219,984		$	175,153		$	68,844		$	7,300		$	2,750		$	344			—2
Portfolio turnover rate9		352	%		590	%		900	%		772	%		724	%		953	%		953%

¹  Recommencement of operations.

²  There were no Class III Shares outstanding as of June 19, 2012.

³  Based on average shares outstanding.

⁴  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁵  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Six Months Ended June 30, 2017
			Year Ended December 31,
	(Unaudited)		2016			2015			2014		2013		2012
Investments in underlying funds		—		0.01	%		0.01	%		—		—		—

⁸  Annualized.    

⁹  Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:    

	Six Months Ended June 30, 2017
				Year Ended December 31,
	(Unaudited)			2016			2015			2014			2013			2012
Portfolio turnover rate (excluding MDRs)		232	%		396	%		625	%		560	%		498	%		729	%*

* The portfolio turnover is from period August 14, 2012 to December 31, 2012 and period April 25, 2012 to June 19, 2012.    

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 43

Notes to Financial Statements (Unaudited) BlackRock Total Return V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock Total Return V.I. Fund (the “Fund”). The Fund is classified as diversified. 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. Class III Shares recommenced on April 25, 2012, were redeemed on June 19, 2012 and recommenced on August 14, 2012.

The Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

2. Significant Accounting Policies:

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the “trade dates”). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend date. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund is informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on an accrual basis. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Foreign Currency Translation: The Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

The Fund does not isolate the portion of the results of operations arising as a result of changes in the exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statement of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. The Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Segregation and Collateralization: In cases where the Fund enters into certain investments (e.g., dollar rolls, TBA sale commitments, futures contracts, forward foreign currency exchange contracts, options written and swaps), or certain borrowings (e.g., reverse repurchase agreements) that would be treated as “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments or borrowings. Doing so allows the investment or borrowing to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Distributions: Distributions from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Recent Accounting Standards: In November 2016, the Financial Accounting Standards Board issued Accounting Standards Update “Restricted Cash” which will require entities to include the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the beginning and ending cash balances in the Statement of Cash Flows. The guidance will be applied retrospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Management is evaluating the impact, if any, of this guidance on the Fund’s presentation in the Statement of Cash Flows.

44 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of purchased callable debt securities that have explicit, non-contingent call features and are callable at fixed prices will be amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after Decem-ber 15, 2018. Management is currently evaluating the impact of this guidance to the Fund.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

Indemnifications: In the normal course of business, the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or the applicable class. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses prorated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

Investment Valuation Policies: The Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the NYSE (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of the Fund’s assets and liabilities:

• Equity investments traded on a recognized securities exchange are valued at the official closing price each day, if available. For equity investments traded on more than one exchange, the official closing price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid (long positions) or ask (short positions) price.

• Fixed-income securities for which market quotations are readily available are generally valued using the last available bid prices or current market quotations provided by independent dealers or third party pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more independent brokers or dealers as obtained from a third party pricing service. Pricing services generally value fixed-income securities assuming orderly transactions of an institutional round lot size, but a fund may hold or transact in such securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. The pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions to derive values, including transaction data (e.g., recent representative bids and offers), credit quality information, perceived market movements, news, and other relevant information. Certain fixed-income securities, including asset-backed and mortgage related securities may be valued based on valuation models that consider the estimated cash flows of each tranche of the entity, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. The amortized cost method of valuation may be used with respect to debt obligations with sixty days or less remaining to maturity unless the Manager determines such method does not represent fair value.

• Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Fund’s net assets. Each business day, the Fund uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded and over-the-counter (“OTC”) options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of trading on the NYSE, which follows the close of the local markets.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 45

Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

• Municipal investments (including commitments to purchase such investments on a “when-issued” basis) are valued on the basis of prices provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments.

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• Futures contracts traded on exchanges are valued at their last sale price.

• Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of trading on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

• Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that the prior day’s price no longer reflects the fair value of the option. OTC options and options on swaps (“swaptions”) are valued by an independent pricing service using a mathematical model, which incorporates a number of market data factors, such as the trades and prices of the underlying instruments.

• Swap agreements are valued utilizing quotes received daily by the Fund’s pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments.

• To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee will include Market approach, Income approach and Cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement.

The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Fund’s pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis. As a result of the inherent uncertainty in valuation of these investments, the fair values may differ from the values that would have been used had an active market existed.

For investments in equity or debt issued by privately-held companies or funds (“Private Company” or collectively, the “Private Companies”) and other Fair Valued Investments, the fair valuation approaches that are used by third party pricing services utilize one or a combination of, but not limited to, the following inputs.

	Standard Inputs Generally Considered By Third Party Pricing Services
Market approach	(i)	recent market transactions, including subsequent rounds of financing, in the underlying investment or comparable issuers;
	(ii)	recapitalizations and other transactions across the capital structure; and
	(iii)	market multiples of comparable issuers.
Income approach	(i)	future cash flows discounted to present and adjusted as appropriate for liquidity, credit, and/or market risks;
	(ii)	quoted prices for similar investments or assets in active markets; and
	(iii)	other risk factors, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates.

46 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

Cost approach	(i)	audited or unaudited financial statements, investor communications and financial or operational metrics issued by the Private Company;
	(ii)	changes in the valuation of relevant indices or publicly traded companies comparable to the Private Company;
	(iii)	relevant news and other public sources; and
	(iv)	known secondary market transactions in the Private Company’s interests and merger or acquisition activity in companies comparable to the Private Company.

Investments in series of preferred stock issued by Private Companies are typically valued utilizing Market approach in determining the enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Valuation techniques such as an option pricing model (“OPM”), a probability weighted expected return model (“PWERM”) or a hybrid of those techniques are used in allocating enterprise value of the company, as deemed appropriate under the circumstances. The use of OPM and PWERM techniques involve a determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.

The Private Companies are not subject to the public company disclosure, timing, and reporting standards as other investments held by the Fund. Typically, the most recently available information by a Private Company is as of a date that is earlier than the date the Fund is calculating its NAV. This factor may result in a difference between the value of the investment and the price the Fund could receive upon the sale of the investment.

Fair Value Hierarchy: Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:

• Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

• Level 2 — Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

• Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by Private Companies. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

4. Securities and Other Investments:

Asset-Backed and Mortgage-Backed Securities: Asset-backed securities are generally issued as pass-through certificates or as debt instruments. Asset-backed securities issued as pass-through certificates represent undivided fractional ownership interests in an underlying pool of assets. Asset-backed securities issued as debt instruments, which are also known as collateralized obligations, are typically issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. The yield characteristics of certain asset-backed securities may differ from traditional debt securities. One such major difference is that all or a principal part of the obligations may be prepaid at any time because the underlying assets (i.e., loans) may be prepaid at any time. As a result, a decrease in interest rates in the market may result in increases in the level of prepayments as borrowers, particularly mortgagors, refinance and repay their loans. An increased prepayment rate with respect to an asset-backed security will have the effect of shortening the maturity of the security. In addition, a fund may subsequently have to reinvest the proceeds at lower interest rates. If a fund has purchased such an asset-backed security at a premium, a faster than anticipated prepayment rate could result in a loss of principal to the extent of the premium paid.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 47

Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

For mortgage pass-through securities (the “Mortgage Assets”) there are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by Ginnie Mae are guaranteed as to the timely payment of principal and interest by Ginnie Mae and such guarantee is backed by the full faith and credit of the United States. However, mortgage-related securities issued by Freddie Mac and Fannie Mae, including Freddie Mac and Fannie Mae guaranteed mortgage pass-through certificates, which are solely the obligations of Freddie Mac and Fannie Mae, are not backed by or entitled to the full faith and credit of the United States, but are supported by the right of the issuer to borrow from the U.S. Treasury.

Non-agency mortgage-backed securities are securities issued by non-governmental issuers and have no direct or indirect government guarantees of payment and are subject to various risks. Non-agency mortgage loans are obligations of the borrowers thereunder only and are not typically insured or guaranteed by any other person or entity. The ability of a borrower to repay a loan is dependent upon the income or assets of the borrower. A number of factors, including a general economic downturn, acts of God, terrorism, social unrest and civil disturbances, may impair a borrower’s ability to repay its loans.

Collateralized Debt Obligations: Collateralized debt obligations (“CDOs”), including collateralized bond obligations (“CBOs”) and collateralized loan obligations (“CLOs”), are types of asset-backed securities. A CDO is an entity that is backed by a diversified pool of debt securities (CBOs) or syndicated bank loans (CLOs). The cash flows of the CDO can be split into multiple segments, called “tranches,” which will vary in risk profile and yield. The riskiest segment is the subordinated or “equity” tranche. This tranche bears the greatest risk of defaults from the underlying assets in the CDO and serves to protect the other, more senior, tranches from default in all but the most severe circumstances. Since it is shielded from defaults by the more junior tranches, a “senior” tranche will typically have higher credit ratings and lower yields than their underlying securities, and often receive investment grade ratings from one or more of the nationally recognized rating agencies. Despite the protection from the more junior tranches, senior tranches can experience substantial losses due to actual defaults, increased sensitivity to future defaults and the disappearance of one or more protecting tranches as a result of changes in the credit profile of the underlying pool of assets.

Inflation-Indexed Bonds: Inflation-indexed bonds (other than municipal inflation-indexed and certain corporate inflation-indexed bonds) are fixed-income securities whose principal value is periodically adjusted according to the rate of inflation. If the index measuring inflation rises or falls, the principal value of inflation-indexed bonds (other than municipal inflation-indexed and certain corporate inflation-indexed bonds) will be adjusted upward or downward, and consequently the interest payable on these securities (calculated with respect to a larger or smaller principal amount) will be increased or reduced, respectively. Any upward or downward adjustment in the principal amount of an inflation-indexed bond will be included as interest income in the Statement of Operations, even though investors do not receive their principal until maturity. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal. With regard to municipal inflation-indexed bonds and certain corporate inflation-indexed bonds, the inflation adjustment is typically reflected in the semi-annual coupon payment. As a result, the principal value of municipal inflation-indexed bonds and such corporate inflation-indexed bonds does not adjust according to the rate of inflation.

Multiple Class Pass-Through Securities: Multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities, may be issued by Ginnie Mae, U.S. Government agencies or instrumentalities or by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs are debt obligations of a legal entity that are collateralized by a pool of residential or commercial mortgage loans or Mortgage Assets. The payments on these are used to make payments on the CMOs or multiple pass-through securities. Multiple class pass-through securities represent direct ownership interests in the Mortgage Assets. Classes of CMOs include interest only (“IOs”), principal only (“POs”), planned amortization classes and targeted amortization classes. IOs and POs are stripped mortgage-backed securities representing interests in a pool of mortgages, the cash flow from which has been separated into interest and principal components. IOs receive the interest portion of the cash flow while POs receive the principal portion. IOs and POs can be extremely volatile in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise since this increases the rate at which the principal is returned and the yield to maturity on the PO. When payments on mortgages underlying a PO are slower than anticipated, the life of the PO is lengthened and the yield to maturity is reduced. If the underlying Mortgage Assets experience greater than anticipated prepayments of principal, the Fund’s initial investment in the IOs may not fully recoup.

Stripped Mortgage-Backed Securities: Stripped mortgage-backed securities are typically issued by the U.S. Government, its agencies and instrumentalities. Stripped mortgage-backed securities are usually structured with two classes that receive different proportions of the interest (IOs) and principal (POs) distributions on a pool of Mortgage Assets. Stripped mortgage-backed securities may be privately issued.

Zero-Coupon Bonds: Zero-coupon bonds are normally issued at a significant discount from face value and do not provide for periodic interest payments. These bonds may experience greater volatility in market value than other debt obligations of similar maturity which provide for regular interest payments.

48 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

Capital Securities and Trust Preferred Securities: Capital securities, including trust preferred securities, are typically issued by corporations, generally in the form of interest-bearing notes with preferred securities characteristics. In the case of trust preferred securities, an affiliated business trust of a corporation issues these securities, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The securities can be structured with either a fixed or adjustable coupon that can have either a perpetual or stated maturity date. For trust preferred securities, the issuing bank or corporation pays interest to the trust, which is then distributed to holders of these securities as a dividend. Dividends can be deferred without creating an event of default or acceleration, although maturity cannot take place unless all cumulative payment obligations have been met. The deferral of payments does not affect the purchase or sale of these securities in the open market. These securities generally are rated below that of the issuing company’s senior debt securities and are freely callable at the issuer’s option.

Preferred Stocks: Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well), but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

Floating Rate Loan Interests: Floating rate loan interests are typically issued to companies (the “borrower”) by banks, other financial institutions, or privately and publicly offered corporations (the “lender”). Floating rate loan interests are generally non-investment grade, often involve borrowers whose financial condition is troubled or uncertain and companies that are highly leveraged or in bankruptcy proceedings. In addition, transactions in floating rate loan interests may settle on a delayed basis, which may result in proceeds from the sale not being readily available for the Fund to make additional investments or meet its redemption obligations. Floating rate loan interests may include fully funded term loans or revolving lines of credit. Floating rate loan interests are typically senior in the corporate capital structure of the borrower. Floating rate loan interests generally pay interest at rates that are periodically determined by reference to a base lending rate plus a premium. Since the rates reset only periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause some fluctuations in the NAV of the Fund to the extent that it invests in floating rate loan interest. The base lending rates are generally the lending rate offered by one or more European banks, such as the London Interbank Offered Rate (“LIBOR”), the prime rate offered by one or more U.S. banks or the certificate of deposit rate. Floating rate loan interests may involve foreign borrowers, and investments may be denominated in foreign currencies. These investments are treated as investments in debt securities for purposes of the Fund’s investment policies.

When the Fund purchases a floating rate loan interest, it may receive a facility fee and when it sells a floating rate loan interest, it may pay a facility fee. On an ongoing basis, 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. 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”) or assignments (“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 has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the Participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing Participations, 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. The Fund may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, the Fund assumes 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 a general creditor of the lender and may not benefit from any offset between the lender and the borrower. Assignments typically result in the Fund having a direct contractual relationship with the borrower, and the Fund may enforce compliance by the borrower with the terms of the loan agreement.

Forward Commitments and When-Issued Delayed Delivery Securities: The Fund may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. The Fund may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, the Fund may be required to pay more at settlement than the security is worth. In addition, the Fund is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, the Fund assumes the rights and risks of ownership of the security, including the

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 49

Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

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.

TBA Commitments: TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed upon future settlement date. The specific securities to be delivered are not identified at the trade date. However, delivered securities must meet specified terms, including issuer, rate and mortgage terms. When entering into TBA commitments, a fund may take possession of or deliver the underlying mortgage-backed securities but can extend the settlement or roll the transaction. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

In order to better define contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, TBA commitments may be entered into by the Fund under Master Securities Forward Transaction Agreements (each, an “MSFTA”). An MSFTA typically contains, among other things, collateral posting terms and netting provisions in the event of default and/or termination event. The collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of the collateral currently pledged by the Fund and the counterparty. Cash collateral that has been pledged to cover the obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral for TBA commitments or cash received as collateral for TBA commitments, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Typically, the Fund is permitted to sell, re-pledge or use the collateral it receives; however, the counterparty is not permitted to do so. To the extent amounts due to the Fund is not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance.

Mortgage Dollar Roll Transactions: The Fund may sell TBA mortgage-backed securities and simultaneously contract to repurchase substantially similar (i.e., same type, coupon and maturity) securities on a specific future date at an agreed upon price. During the period between the sale and repurchase, the Fund is not entitled to receive interest and principal payments on the securities sold. Mortgage dollar roll transactions are treated as purchases and sales and realizes gains and losses on these transactions. Mortgage dollar rolls involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon repurchase price of those securities.

Borrowed Bond Agreements: Repurchase agreements may be referred to as borrowed bond agreements when entered into in connection with short sales of bonds. In a borrowed bond agreement, the Fund borrows a bond from a counterparty in exchange for cash collateral. The agreement contains a commitment that the security and the cash will be returned to the counterparty and the Fund at a mutually agreed upon date. Certain agreements have no stated maturity and can be terminated by either party at any time. Earnings on cash collateral and compensation to the lender of the bond are based on agreed upon rates between the Fund and the counterparty. The value of the underlying cash collateral approximates the market value and accrued interest of the borrowed bond. To the extent that a borrowed bond transaction exceeds one business day, the value of the cash collateral in the possession of the counterparty is monitored on a daily basis to ensure the adequacy of the collateral. As the market value of the borrowed bond changes, the cash collateral is periodically increased or decreased with a frequency and in amounts prescribed in the borrowed bond agreement. The Fund may also experience delays in gaining access to the collateral.

Reverse Repurchase Agreements: Reverse repurchase agreements are agreements with qualified third party broker dealers in which 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. The Fund receives cash from the sale to use for other investment purposes. During the term of the reverse repurchase agreement, the Fund continues to receive the principal and interest payments on the securities sold. Certain agreements have no stated maturity and can be terminated by either party at any time. Interest on the value of the reverse repurchase agreements issued and outstanding is based upon competitive market rates determined at the time of issuance. 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. If the Fund suffers a loss on its investment of the transaction proceeds from a reverse repurchase agreement, the Fund would still be required to pay the full repurchase price. Further, the Fund remains subject to the risk that the market value of the securities repurchased declines below the repurchase price. In such cases, the Fund would be required to return a portion of the cash received from the transaction or provide additional securities to the counterparty.

Cash received in exchange for securities delivered plus accrued interest due to the counterparty is recorded as a liability in the Statement of Assets and Liabilities at face value including accrued interest. Due to the short-term nature of the reverse repurchase agreements, face value approximates fair value. Interest payments made by the Fund to the counterparties are recorded as a component of interest expense in the Statement of Operations. In periods of increased demand for the security, the Fund may receive a fee for the use of the security by the counterparty, which may result in interest income to the Fund.

For the six months ended June 30, 2017, the average amount of reverse repurchase agreements outstanding and the daily weighted average interest rate for the Fund were $9,899,554 and 0.73%, respectively.

50 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

Borrowed bond agreements and reverse repurchase transactions are entered into by the Fund under Master Repurchase Agreements (each, an “MRA”), which permit the Fund, under certain circumstances, including an event of default (such as bankruptcy or insolvency), to offset payables and/or receivables under the MRA with collateral held and/or posted to the counterparty and create one single net payment due to or from the Fund. With borrowed bond agreements and reverse repurchase transactions, typically the Fund and counterparty under an MRA are permitted to sell, re-pledge, or use the collateral associated with the transaction. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of the MRA counterparty’s bankruptcy or insolvency. Pursuant to the terms of the MRA, the Fund receives or posts securities as collateral with a market value in excess of the repurchase price to be paid or received by the Fund upon the maturity of the transaction. Upon a bankruptcy or insolvency of the MRA counterparty, the Fund is considered an unsecured creditor with respect to excess collateral and, as such, the return of excess collateral may be delayed.

As of period end, the following table is a summary of the Fund’s open borrowed bond and reverse repurchase agreements by counterparty which are subject to offset under an MRA on a net basis:

Counterparty	Borrowed Bond Agreements1		Reverse Repurchase Agreements				Borrowed Bonds at Value Including Accrued Interest2				Net Amount before Collateral				Fair Value of Non-cash Collateral Pledged Including Accrued Interest			Net Collateral Pledged			Net Exposure Due (to)/from Counterparty3
Barclays Bank PLC		$619,709			—			$	(607,652	)		$	12,057				—			—		$	12,057
BNP Paribas Securities Corp.		—		$	(3,937,320	)			—				(3,937,320	)		$	3,924,991		$	3,924,991			(12,329	)
Credit Suisse Securities (USA) LLC		—			(8,361,782	)			—				(8,361,782	)			8,357,522		$	8,357,522			(4,260	)
Deutsche Bank Securities, Inc.		—			(9,533,490	)			—				(9,533,490	)			9,493,412			9,493,412			(40,078	)
J.P. Morgan Securities LLC		—			(5,021,069	)			—				(5,021,069	)			5,018,451			5,018,451			(2,618	)
Merrill Lynch, Pierce, Fenner & Smith, Inc.		—			(7,951,132	)			—				(7,951,132	)			7,927,538			7,927,538			(23,594	)
Total		$619,709		$	(34,804,793	)		$	(607,652	)		$	(34,792,736	)		$	34,721,914		$	34,721,914		$	(70,822	)

¹ Included in Investments at value — unaffiliated in the Statement of Assets and Liabilities.

² Includes accrued interest on borrowed bonds in the amount of $172 which is shown as interest expense payable in the Statement of Assets and Liabilities.

³ Net exposure represents the net receivable (payable) that would be due from/to the counterparty in the event of default.

In the event the counterparty of securities under an MRA files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds from the agreement may be restricted while the counterparty, or its trustee or receiver, determines whether or not to enforce the Fund’s obligation to repurchase the securities.

Short Sale Transactions: In short sale transactions, 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 (borrowed bond) and deliver the fixed-income security to the counterparty to which it sold the security short. An amount equal to the proceeds received by 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 interest on the security sold short, which, if applicable, is shown as interest expense in the Statement of Operations. 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 an unlimited loss since there is an unlimited potential for the market price of the security sold short to increase. A gain is limited to the price at which the Fund sold the security short. A realized gain or loss is recognized upon the termination of a short sale if the market price is either less than or greater than the proceeds originally received. There is no assurance that the Fund will be able to close out a short position at a particular time or at an acceptable price.

5. Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and/or to manage its exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedule of Investments. These contracts may be transacted on an exchange or OTC.

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk), changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are agreements between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Fund is required to deposit initial

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Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract.

Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statement of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.

Forward Foreign Currency Exchange Contracts: Forward foreign currency exchange contracts are entered into to gain or reduce exposure, to foreign currencies (foreign currency exchange rate risk).

A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a specified date. These contracts help to manage the overall exposure to the currencies in which some of the investments held by the Fund are denominated and in some cases, may be used to obtain exposure to a particular market.

The contract is marked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. When a contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the value at the time it was opened and the value at the time it was closed. Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies.

Options: The Fund purchases and writes call and put options to increase or decrease its exposure to the risks of underlying instruments, including equity risk, interest rate risk and/or commodity price risk and/or, in the case of options written, to generate gains from options premiums.

A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised) the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period.

Premiums paid on options purchased and premiums received on options written, as well as the daily fluctuation in market value, are included in investments at value — unaffiliated and options written at value, respectively, in the Statement of Assets and Liabilities. When an instrument is purchased or sold through the exercise of an option, the premium is offset against the cost or proceeds of the underlying instrument. When an option expires, a realized gain or loss is recorded in the Statement of Operations to the extent of the premiums received or paid. When an option is closed or sold, a gain or loss is recorded in the Statement of Operations to the extent the cost of the closing transaction exceeds the premiums received or paid. When the Fund writes a call option, such option is typically “covered,” meaning that it holds the underlying instrument subject to being called by the option counterparty. When the Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

• Swaptions — The Fund purchases and writes options on swaps (“swaptions”) primarily to preserve a return or spread on a particular investment or portion of the Fund’s holdings, as a duration management technique or to protect against an increase in the price of securities it anticipates purchasing at a later date. The purchaser and writer of a swaption is buying or granting the right to enter into a previously agreed upon interest rate or credit default swap agreement (interest rate risk and/or credit risk) at any time before the expiration of the option.

• Foreign currency options — The Fund purchases and writes foreign currency options, foreign currency futures and options on foreign currency futures to gain or reduce exposure to foreign currencies (foreign currency exchange rate risk). Foreign currency options give the purchaser the right to buy from or sell to the writer a foreign currency at any time before the expiration of the option.

• Barrier options — The Fund may purchase and write a variety of options with non-standard payout structures or other features (“barrier options”) that are generally traded OTC.

• The Fund may invest in various types of barrier options, including down-and-out options, down-and-in options, double no-touch options, one-touch options, up-and-out options and up-and-in options. Down-and-out options expire worthless to the purchaser if the price of the underlying instrument falls below a specific barrier price level prior to the expiration date. Down-and-in options expire worthless to the purchaser unless the price of the underlying instrument falls below a specific barrier price level prior to the expiration date. Double no-touch options provide the purchaser an

52 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

agreed-upon payout if the price of the underlying instrument does not reach or surpass predetermined barrier price levels prior to the option’s expiration date. One-touch options provide the purchaser an agreed-upon payout if the price of the underlying instrument reaches or surpasses predetermined barrier price levels prior to the expiration date. Up-and-out options expire worthless to the purchaser if the price of the underlying instrument increases beyond a predetermined barrier price level prior to the expiration date. Up-and-in options can only be exercised when the price of the underlying instrument increases beyond a predetermined barrier price level.

In purchasing and writing options, the Fund bears the risk of an unfavorable change in the value of the underlying instrument or the risk that it may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in the Fund purchasing or selling a security when it otherwise would not, or at a price different from the current market value.

Swaps: Swap contracts are entered into to manage exposure to issuers, markets and securities. Such contracts are agreements between the Fund and a counterparty to make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be entered into as a bilateral contract (“OTC swaps”) or centrally cleared (“centrally cleared swaps”).

For OTC swaps, any upfront premiums paid and any upfront fees received are shown as swap premiums paid and swap premiums received, respectively, in the Statement of Assets and Liabilities and amortized over the term of the contract. The daily fluctuation in market value is recorded as unrealized appreciation (depreciation) on OTC Swaps in the Statement of Assets and Liabilities. Payments received or paid are recorded in the Statement of Operations as realized gains or losses, respectively. When an OTC swap is terminated, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis in the contract, if any. Generally, the basis of the contract is the premium received or paid.

In a centrally cleared swap, immediately following execution of the swap contract, the swap contract is novated to a central counterparty (the “CCP”) and the Fund’s counterparty on the swap agreement becomes the CCP. The Fund is required to interface with the CCP through the broker. Upon entering into a centrally cleared swap, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on the size and risk profile of the particular swap. Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited is shown as cash pledged for centrally cleared swaps in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and shown as variation margin receivable (or payable) on centrally cleared swaps in the Statement of Assets and Liabilities. Payments received from (paid to) the counterparty, including at termination, are recorded as realized gains (losses) in the Statement of Operations.

• Credit default swaps — Credit default swaps are entered into to manage its exposure to the market or certain sectors of the market, to reduce their 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 may either buy or sell (write) credit default swaps on single-name issuers (corporate or sovereign), a combination or basket of single-name issuers or traded indexes. Credit default swaps are agreements in which the protection buyer pays fixed periodic payments to the seller in consideration for a promise from the protection seller to make a specific payment should a negative credit event take place with respect to the referenced entity (e.g., bankruptcy, failure to pay, obligation acceleration, repudiation, moratorium or restructuring). As a buyer, if an underlying credit event occurs, the Fund will either (i) receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising the index, or (ii) receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index. As a seller (writer), if an underlying credit event occurs, the Fund will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising the index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.

• Total return swaps — Total return swaps are entered into to obtain exposure to a security or market without owning such security or investing directly in such market or to exchange the risk/return of one market (e.g., fixed-income) with another market (e.g., equity or commodity prices) (equity risk, commodity price risk and/or interest rate risk).

Total return swaps are agreements in which there is an exchange of cash flows whereby one party commits to make payments based on the total return (distributions plus capital gains/losses) of an underlying instrument in exchange for fixed or floating rate interest payments. If the total return of the instrument or index underlying the transaction exceeds or falls short of the offsetting fixed or floating interest rate obligation, the Fund receives payment from or makes a payment to the counterparty.

• Interest rate swaps — Interest rate swaps are entered into to gain or reduce exposure to interest rates or to manage duration, the yield curve or interest rate (interest rate risk).

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Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

Interest rate swaps are agreements in which one party pays a stream of interest payments, either fixed or floating, in exchange for another party’s stream of interest payments, either fixed or floating, on the same notional amount for a specified period of time. In more complex interest rate swaps, the notional principal amount may decline (or amortize) over time.

• Forward swaps — Contracts entered into forward interest rate swaps and forward total return swaps. In a forward swap, the Fund and the counterparty agree to make periodic net payments beginning on a specified date or a net payment at termination.

Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in interest rates and/or market values associated with these transactions.

Master Netting Arrangements: In order to define its contractual rights and to secure rights that will help it mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrict or prohibit the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties 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. The result would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Fund and the counterparty.

Cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a counterparty is subject to a certain minimum transfer amount threshold before a transfer is required, which is determined at the close of business of the Fund. Any additional required collateral is delivered to/pledged by the Fund on the next business day. Typically, the counterparty is not permitted to sell, re-pledge or use cash and non-cash collateral it receives. The Fund generally agrees not to use non-cash collateral that it receives but may, absent default or certain other circumstances defined in the underlying ISDA Master Agreement, be permitted to use cash collateral received. In such cases, interest may be paid pursuant to the collateral arrangement with the counterparty. To the extent amounts due to the Fund from its counterparties are not fully collateralized, it bears the risk of loss from counterparty non-performance. Likewise, to the extent the Fund has delivered collateral to a counterparty and stands ready to perform under the terms of its agreement with such counterparty, it bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral. Based on the terms of agreements, collateral may not be required for all derivative contracts.

For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statement of Assets and Liabilities.

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

Investment Advisory: The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with the Manager, the Fund’s investment adviser, an indirect, wholly-owned subsidiary of BlackRock, to provide investment advisory and administrative services. The Manager is responsible for the management of the Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of the Fund.

For such services, the Fund pays the Manager a monthly fee based on a percentage of the Fund’s and BlackRock High Yield V.I. Fund’s, a series of the Company, aggregate average daily net assets at the following annual rates:

54 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

Average Daily Net Assets	Investment Advisory Fee
Up to $250 Million	0.50%
Over $250 Million up to $500 Million	0.45%
Over $500 Million up to $750 Million	0.40%
Over $750 Million	0.35%

For the six months ended June 30, 2017, the aggregate average daily net assets of the Fund and the Company’s BlackRock High Yield V.I. Fund were approximately $718,803,862.

Distribution Fees: The Company, on behalf of the Fund, entered into a Distribution Agreement and a Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing distribution fees. The fees are accrued daily and paid monthly at an annual rate of 0.25% based upon the average daily net assets attributable to Class III.

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III is $248,196.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

In addition, the Fund pays the transfer agent, which is not an affiliate, a fee for issuance, transfer and redemption of shares and the opening and maintenance of shareholder accounts, which is included in transfer agent in the Statement of Operations.

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class III	Total
$161,092	$169,036		$330,128

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $2,046.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of the independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, there were no fees waived by the Manager.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $1,750 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Manager has contractually agreed to reimburse transfer agent fees in order to limit such expenses to a percentage of average daily net assets as follows:

Class I	0.00%
Class III	0.06%

The Manager has agreed not to reduce or discontinue this contractual reimbursement through April 30, 2018 unless approved by the Board, including a majority of Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

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Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

The following table shows the class specific expense reimbursements shown as transfer agent fees reimbursed — class specific in the Statement of Operations:

	Class I		Class III		Total
Transfer agent fees reimbursed		$161,092		$112,432		$273,524

With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business (“expense limitation”). The expense limitations as a percentage of average daily net assets are as follows:

Class I	1.25%
Class III	1.50%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018 unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Company’s Chief Compliance Officer, which is included in Officer and Directors in the Statement of Operations.

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the six months ended June 30, 2017, the purchase and sale transactions and any net realized gains (losses) with an affiliated fund in compliance with Rule 17a-7 under the 1940 Act were as follows:

Purchases	Sales	Net Realized Gain
$2,193,913	$128,198	$5,804

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, including paydowns and excluding short-term securities, were as follows:

	Purchases		Sales
Non-U.S. Government Securities	$	1,064,727,460	$	1,047,580,126
U.S. Government Securities	$	199,232,034	$	193,543,156

For the six months ended June 30, 2017, purchases and sales related to mortgage dollar rolls were $420,965,614 and $420,938,642, respectively.

8. Income Tax Information:

It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required.

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of December 31, 2016, the Fund had capital loss carryforwards available to offset future realized capital gains of $23,090,333, all of which is due to expire December 31, 2017.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:

Tax cost	$	471,786,272
Gross unrealized appreciation	$	3,406,403
Gross unrealized depreciation		(2,037,857	)
Net unrealized appreciation	$	1,368,546

56 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock Total Return V.I. Fund

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

10. Principal Risks:

Many municipalities insure repayment of their bonds, which may reduce the potential for loss due to credit risk. The market value of these bonds may fluctuate for other reasons, including market perception of the value of such insurance, and there is no guarantee that the insurer will meet its obligation.

Inventories of municipal bonds held by brokers and dealers may decrease, which would lessen their ability to make a market in these securities. Such a reduction in market making capacity could potentially decrease the Fund’s ability to buy or sell bonds. As a result, the Fund may sell a security at a lower price, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative impact on performance. If the Fund needed to sell large blocks of bonds, those sales could further reduce the bonds’ prices and impact performance.

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

The Fund may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force the Fund to reinvest in lower yielding securities. The Fund may also be exposed to reinvestment risk, which is the risk that income from the Fund’s portfolio will decline if the Fund invests the proceeds from matured, traded or called fixed-income securities at market interest rates that are below the Fund portfolio’s current earnings rate.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments and may experience difficulty in selling those investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.

The price the Fund could receive upon the sale of any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by the Fund, and the Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. The Fund’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.

Counterparty Credit Risk: Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.

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Notes to Financial Statements (concluded) BlackRock Total Return V.I. Fund

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

The Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain less the value of any collateral held by the Fund.

For OTC options purchased, the Fund bears the risk of loss in the amount of the premiums paid plus the positive change in market values net of any collateral held by the Fund should the counterparty fail to perform under the contracts. Options written by the Fund do not typically give rise to counterparty credit risk, as options written generally obligate the Fund, and not the counterparty, to perform. The Fund may be exposed to counterparty credit risk with respect to options written to the extent the Fund deposits collateral with its counterparty to a written option.

With exchange-traded options purchased and futures and centrally cleared swaps, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures and centrally cleared swaps with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Fund.

Concentration Risk: The Fund invests a significant portion of its assets in fixed-income securities and/or uses derivatives tied to the fixed-income markets. Changes in market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise. The Fund may be subject to a greater risk of rising interest rates due to the current period of historically low rates.

The Fund invests a significant portion of its assets in securities backed by commercial or residential mortgage loans or in issuers that hold mortgage and other asset-backed securities. Investment percentages in these securities are presented in the Schedule of Investments. Changes in economic conditions, including delinquencies and/or defaults on assets underlying these securities, can affect the value, income and/or liquidity of such positions.

11. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

	Six Months Ended June 30, 2017					Year Ended December 31, 2016
	Shares		Amount			Shares		Amount
Class I
Shares sold		457,304		$	5,410,735		2,078,444		$	25,204,731
Shares issued in reinvestment of distributions		155,585			1,842,739		267,271			3,203,436
Shares redeemed		(963,002)			(11,422,987)		(2,147,090)			(25,786,780)
Net increase (decrease)		(350,113)		$	(4,169,513)		198,625		$	2,621,387
Class III
Shares sold		3,773,206		$	44,220,084		9,823,253		$	116,352,187
Shares issued in reinvestment of distributions		167,693			1,963,640		178,754			2,121,457
Shares redeemed		(334,288)			(3,915,202)		(918,301)			(10,933,281)
Net increase		3,606,611		$	42,268,522		9,083,706		$	107,540,363
Total Net Increase		3,256,498		$	38,099,009		9,282,331		$	110,161,750

12. 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.

58 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

JUNE 30, 2017        

  SEMI-ANNUAL REPORT (UNAUDITED)   BLACKROCK^®

BlackRock Variable Series Funds, Inc.

▶  BlackRock U.S. Government Bond V.I. Fund

Not FDIC Insured ◾ May Lose Value ◾ No Bank Guarantee

Fund Summary as of June 30, 2017 BlackRock U.S. Government Bond V.I. Fund

                Investment Objective

BlackRock U.S. Government Bond V.I. Fund’s (the “Fund”) investment objective is to seek to maximize total return, consistent with income generation and prudent investment management.

                Portfolio Management Commentary

How did the Fund perform?

• For the 6-month period ended June 30, 2017, the Fund underperformed its benchmark, the Bloomberg Barclays U.S. Government/Mortgage Index.

What factors influenced performance?

• The most significant detractor from relative performance was the Fund’s stance with respect to U.S. interest rates. This included the Fund’s stance with respect to duration and corresponding interest rate sensitivity, as well as the Fund’s positioning along the Treasury yield curve. An underweight to U.S. agency securities constrained performance, as did positioning with respect to global interest rates and currency exposures.

• The principal positive contributors to performance were allocation-based strategies within securitized assets such as commercial mortgage-backed securities (“CMBS”) and collateralized loan obligations (“CLOs”). These segments benefited as the global search for yield and limited supply created a favorable technical backdrop and the fundamentals around the U.S. consumer, housing and commercial real estate continued to strengthen. Overweight positioning with respect to both 15-year and 30-year agency residential mortgage-backed securities (“MBS”) also added value. Allocations to high-quality, longer- duration agency collateralized mortgage obligations contributed to performance as well. Finally, the Fund’s allocation to Treasury inflation-protected securities added to performance.

Describe recent portfolio activity.

• During the six-month period, the Fund increased its exposure to U.S. Treasuries, while paring back holdings of agency MBS. The Fund also slightly reduced exposure to CMBS.

Describe portfolio positioning at period end.

• The Fund closed the period with underweight exposure to U.S. duration, on the view that yields will continue to rise in the context of strong domestic economic growth and the Fed hiking cycle. This thesis was also expressed through a long position in Treasury inflation protected securities. Outside of the United States, the Fund held short positions in German interest rates and U.K. inflation forward contracts. The Fund maintained exposure to the agency MBS sector and continues to be positioned modestly overweight agency mortgages versus the benchmark. Overall, the Fund was positioned with the expectation that the Fed’s announced plan for trimming its balance sheet would not give rise to any sort of worst-case scenario for the agency MBS market.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

                Portfolio Information

Portfolio Composition	Percent of Total Investments1
U.S. Government Sponsored Agency Securities	55%
U.S. Treasury Obligations	37
Asset-Backed Securities	5
Non-Agency Mortgage-Backed Securities	2
Foreign Government Obligations	1

¹ Total investments exclude short-term securities and options purchased.

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

BlackRock U.S. Government Bond 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. The returns for Class III Shares prior to July 15, 2013, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution and/or service (12b-1) fees applicable to Class III Shares.

² The Fund invests, under normal circumstances, at least 80% of its assets in fixed-income securities that are issued or guaranteed by the U.S. Government and its agencies. The Fund’s total returns prior to October 1, 2011 are the returns of the Fund when it followed a different investment objective and different investment strategies under the name “BlackRock Government Income V.I. Fund”.

³  An index that measures debt issued by the U.S. Government, and its agencies, as well as mortgage-backed pass-through securities of Ginnie Mae, Fannie Mae and Freddie Mac.

⁴  An unmanaged index that includes the mortgage-backed pass-through securities of Ginnie Mae, Fannie Mae and Freddie Mac that meet certain maturity and liquidity criteria.

      Performance Summary for the Period Ended June 30, 2017

	Standardized 30-Day Yields6			Unsubsidized 30-Day Yields6			6-Month Total Returns7			Average Annual Total Returns
										1Year7			5 Years7			10 Years7
Class I5		1.73	%		1.43	%		1.46	%		(1.45	)%		1.27	%		3.39	%
Class III5		1.42			1.27			1.20			(1.79	)		0.99	8		3.11	8
Bloomberg Barclays U.S. Government/Mortgage Index		—			—			1.64			(1.30	)		1.59			4.10
Bloomberg Barclays U.S. Mortgage-Backed Securities Index		—			—			1.35			(0.06	)		2.00			4.31

⁵  Average annual and cumulative total 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/payable date. Insurance-related fees and expenses are not reflected in these returns. The Fund’s total returns prior to October 1, 2011 are the returns of the Fund when it followed a different investment objective and different investment strategies under the name “BlackRock Government Income V.I. Fund”.

⁶  The standardized 30-day yield includes the effects of any waivers and/or reimbursements. The unsubsidized 30-day yield excludes the effects of any waivers and/or reimbursements.

⁷  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

⁸  The returns for Class III Shares prior to July 15, 2013, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution and/or service (12b-1) fees applicable to Class III Shares. Past performance is not indicative of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

      Expense Example

	Actual				Hypothetical11
			Including Interest Expense and Fees	Excluding Interest Expense and Fees		Including Interest Expense and Fees		Excluding Interest Expense and Fees
	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the Period9	Expenses Paid During the Period10	Beginning Account Value January 1, 2017	Ending Account Value June 30, 2017	Expenses Paid During the  Period9	Ending Account Value June 30, 2017	Expenses Paid During the  Period10
Class I	$1,000.00	$1,014.60	$4.15	$3.65	$1,000.00	$1,020.68	$4.16	$1,021.17	$3.66
Class III	$1,000.00	$1,012.00	$5.64	$5.19	$1,000.00	$1,019.19	$5.66	$1,019.64	$5.21

⁹  For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.83% for Class I and 1.13% for Class III), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).

¹⁰  For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.73% for Class I and 1.04% for Class III), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).

¹¹  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.

See “Disclosure of Expenses” on the following page for further information on how expenses were calculated.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Expenses BlackRock U.S. Government Bond V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example shown on the previous page (which is based on a hypothetical investment of $1,000 invested on January 1, 2017 and held through June 30, 2017) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

The expense example provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.”

The expense example also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.

The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, if any. Therefore, the hypothetical examples are useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

The Benefits and Risks of Leveraging

The Fund may utilize leverage to seek to enhance returns and net asset value (“NAV”). However, these objectives cannot be achieved in all interest rate environments.

The Fund may utilize leverage by entering into reverse repurchase agreements.

In general, the concept of leveraging is based on the premise that the financing cost of leverage, which is based on short-term interest rates, is normally lower than the income earned by the Fund on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of the Fund (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Fund’s shareholders benefit from the incremental net income.

The interest earned on securities purchased with the proceeds from leverage is distributed to Fund’s shareholders, and the value of these portfolio holdings is reflected in the Fund’s per share NAV. However, in order to benefit shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other ongoing costs of leverage exceed the Fund’s return on assets purchased with leverage proceeds, income to shareholders is lower than if the Fund had not used leverage.

Furthermore, the value of the Fund’s portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can also influence the value of portfolio investments. As a result, changes in interest rates can influence the Fund’s NAV positively or negatively in addition to the impact on Fund’s performance from leverage. Changes in the direction of interest rates are difficult to predict accurately, and there is no assurance that the Fund’s leveraging strategy will be successful.

The use of leverage also generally causes greater changes in the Fund’s NAV and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the NAV of the Fund’s shares than if the Fund were not leveraged. In addition, the Fund may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of the leverage instruments, which may cause the Fund to incur losses. The use of leverage may limit the Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. The Fund incurs expenses in connection with the use of leverage, all of which are borne by the Fund’s shareholders and may reduce income.

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other asset without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the

instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments June 30, 2017 (Unaudited)	BlackRock U.S. Government Bond V.I. Fund
	(Percentages shown are based on Net Assets)

Asset-Backed Securities		Par  (000)		Value
Arbor Realty Commercial Real Estate Notes Ltd., Series 2016-FL1A, Class A, 2.86%, 9/15/26 (a)(b)(c)	USD		210	$	210,000
Bsprt Issuer Ltd., Series 2017-FL1, Class A, 2.43%, 6/15/27 (b)(c)			200		200,250
Cedar Funding III CLO Ltd., Series 2014-3A, Class A1, 2.70%, 5/20/26 (a)(b)			500		500,356
CIFC Funding Ltd.:
Series 2014-5A, Class A1R, 2.56%, 1/17/27 (a)(b)			400		401,318
Series 2015-3A, Class A, 2.58%, 10/19/27 (a)(b)			250		249,930
Dryden XXVIII Senior Loan Fund, Series 2013-28A, Class A1L, 2.28%, 8/15/25 (a)(b)			700		700,624
Oak Hill Credit Partners VIII Ltd., Series 2013-8A, Class A, 2.28%, 4/20/25 (a)(b)			500		500,054
OCP CLO Ltd., Series 2012-2A, Class A1R, 2.57%, 11/22/25 (a)(b)			556		558,134
Tricon American Homes Trust, Series 2015-SFR1, Class A, 2.42%, 5/17/32 (a)(b)			178		178,951
Venture XVIII CLO Ltd., Series 2014-18A, Class A, 2.61%, 10/15/26 (a)(b)			400		399,997
Washington Mill CLO Ltd., Series 2014-1A, Class A1R, 2.38%, 4/20/26 (a)(b)			500		499,751
Total Asset-Backed Securities — 6.3%					4,399,365
Corporate Bonds
Electric Utilities — 0.1%
Southern Co. Gas Capital Corp., 4.40%, 5/30/47			50		50,997
Foreign Government Obligations — 1.1%
Mexico — 1.1%
United Mexican States, Series M, 5.00%, 12/11/19	MXN		13,800		732,751

Non-Agency Mortgage-Backed Securities		Par  (000)		Value
Commercial Mortgage-Backed Securities — 1.9%
BHMS Mortgage Trust, Series 2014-ATLS, Class AFL, 2.49%, 7/05/33 (a)(b)	USD		700	$	700,000
Credit Suisse Mortgage Capital Certificates, Series 2016-MFF, Class A, 2.76%, 11/15/33 (a)(b)			100		100,312
GAHR Commercial Mortgage Trust, Series 2015-NRF, Class AFL1, 2.29%, 12/15/34 (a)(b)			183		183,318
LMREC, Inc., Series 2016-CRE2, Class A, 2.71%, 11/24/31 (a)(b)			100		100,750
RAIT Trust, Series 2017-FL7, Class A, 2.10%, 6/15/37 (a)(b)			250		250,000
					1,334,380
Interest Only Commercial Mortgage-Backed Securities — 1.1%
CFCRE Commercial Mortgage Trust, Series 2016-C4, Class XA, 1.92%, 5/10/58 (b)			853		96,902
Commercial Mortgage Pass-Through Certificates, Series 2015-CR24, Class XA, 1.01%, 8/10/48 (b)			1,176		62,591
Core Industrial Trust:
Series 2015-CALW, Class XA, 0.94%, 2/10/34 (a)(b)			3,895		129,372
Series 2015-TEXW, Class XA, 0.90%, 2/10/34 (a)(b)			3,300		104,719
Series 2015-WEST, Class XA, 1.08%, 2/10/37 (a)(b)			1,600		96,108
FREMF Mortgage Trust, Series 2015-K718, Class X2A, 0.10%, 2/25/22 (a)(b)			22,825		84,882
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2016-C29, Class XA, 1.81%, 5/15/49 (b)			991		104,512
Wells Fargo Commercial Mortgage Trust, Series 2015-NXS4, Class XA, 1.09%, 12/15/48 (b)			1,485		86,951
					766,037
Total Non-Agency Mortgage-Backed Securities — 3.0%					2,100,417

Portfolio Abbreviations
AUD	Australian Dollar	HUF	Hungarian Forint	OTC	Over-the-counter
BRL	Brazilian Real	IDR	Indonesia Rupiah	RUB	Russian Rouble
CLP	Chilean Peso	JPY	Japanese Yen	SEK	Swedish Krona
CNY	Chinese Yuan	LIBOR	London Interbank Offered Rate	TBA	To-be-announced
COP	Colombian Peso	MXIBTIIE	Mexico Interbank TIIE 28 Day	TRY	Turkish Lira
EUR	Euro	MXN	Mexican Peso	USD	U.S. Dollar
GBP	British Pound	MYR	Malaysia Ringgit	ZAR	South African Rand

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC.  �� JUNE 30, 2017 5

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

U.S. Government Sponsored Agency Securities		Par  (000)		Value
Agency Obligations — 1.2%
Fannie Mae, Series 2011-8, Class ZA, 4.00%, 2/25/41	USD		258	$	271,505
Federal Home Loan Bank, 4.00%, 4/10/28			500		553,044
					824,549
Collateralized Mortgage Obligations — 0.4%
Ginnie Mae, Series 2014-107, Class WX, 6.80%, 7/20/39 (b)			221		254,843
Interest Only Commercial Mortgage-Backed Securities — 1.3%
Fannie Mae, Series 2016-M4, Class X2, 2.80%, 1/25/39 (b)			655		78,646
Freddie Mac:
Series K064, Class X1, 0.75%, 3/25/27 (b)			1,400		69,238
Series K718, Class X1, 0.77%, 1/25/22 (b)			330		8,307
Ginnie Mae:
Series 2002-83, Class IO, 0.00%, 10/16/42-11/16/43 (b)			3,132		193
Series 2003-17, Class IO, 0.00%, 3/16/43 (b)(c)			2,318		—
Series 2016-137, Class IO, 0.95%, 10/16/56 (b)			791		60,532
Series 2016-140, Class IO, 0.94%, 5/16/58 (b)			792		59,397
Series 2016-143, Class IO, 0.97%, 10/16/56 (b)			747		59,137
Series 2017-24, Class IO, 0.87%, 12/16/56 (b)			651		47,485
Series 2017-30, Class IO, 0.76%, 8/16/58 (b)			776		54,203
Series 2017-35, Class IO, 0.71%, 3/30/47 (b)			1,245		87,701
Series 2017-44, Class IO, 0.70%, 4/17/51 (b)			777		51,400
Series 2017-53, Class IO, 0.69%, 12/15/56 (b)			2,094		140,256
Series 2017-54, Class IO, 0.68%, 12/31/49 (b)			494		34,779
Series 2017-61, Class IO, 0.77%, 10/16/56 (b)			519		44,517
Series 2017-64, Class IO, 0.72%, 10/16/56 (b)			364		26,609
Series 2017-72, Class IO, 0.68%, 4/16/57 (b)			1,368		96,799
					919,199
Mortgage-Backed Securities — 74.8%
Fannie Mae Mortgage-Backed Securities:
2.50%, 4/01/30-7/01/32 (d)			2,819		2,835,494
3.00%, 4/01/29-7/01/47 (d)			11,478		11,560,058
3.50%, 7/01/26-7/01/47 (d)			6,316		6,524,344
4.00%, 1/01/26-7/01/47 (d)			3,424		3,631,741
4.50%, 5/01/24-7/01/47 (d)			2,251		2,420,628
5.00%, 9/01/35-8/01/41			357		391,397
5.50%, 5/01/34-12/01/39			327		365,583
6.00%, 4/01/35-7/01/47 (d)			551		625,806
6.50%, 5/01/40			75		83,672
Freddie Mac Mortgage-Backed Securities:
2.50%, 3/01/30-7/01/32 (d)			661		665,692
3.00%, 1/01/30-7/01/47 (d)			4,724		4,735,523
3.50%, 7/01/32-7/01/47 (d)			2,973		3,059,767
4.00%, 8/01/40-7/01/47 (d)			2,040		2,147,319
4.50%, 2/01/39-7/01/47 (d)			680		729,466
5.00%, 10/01/41-11/01/41			262		286,331
5.50%, 6/01/41			178		198,520
8.00%, 12/01/29-7/01/30			40		47,530

U.S. Government Sponsored Agency Securities		Par  (000)		Value
Mortgage-Backed Securities
Ginnie Mae Mortgage-Backed Securities:
3.00%, 7/15/47 (d)	USD		2,520	$	2,545,468
3.50%, 12/20/41-7/15/47 (d)			3,166		3,284,126
4.00%, 9/20/40-7/15/47 (d)			2,318		2,443,122
4.50%, 12/20/39-7/15/47 (d)			2,385		2,567,783
5.00%, 12/15/38-7/20/42			171		187,844
5.50%, 1/15/34			789		894,372
					52,231,586
Total U.S. Government Sponsored Agency Securities — 77.7%					54,230,177
U.S. Treasury Obligations
U.S. Treasury Bonds:
2.13%, 3/31/24			1,960		1,961,454
2.88%, 11/15/46			1,726		1,735,507
3.00%, 2/15/47 (e)			1,670		1,722,709
3.00%, 5/15/47 (e)			1,086		1,120,786
U.S. Treasury Notes:
1.25%, 3/31/19-5/31/19 (e)			7,081		7,064,474
1.63%, 3/15/20			3,549		3,560,229
1.50%, 4/15/20-5/15/20 (e)			5,950		5,944,793
1.88%, 3/31/22-4/30/22			5,734		5,735,118
1.75%, 5/31/22 (e)			1,927		1,915,710
2.00%, 4/30/24-11/15/26 (e)			4,256		4,206,848
2.25%, 2/15/27			927		922,691
2.38%, 5/15/27 (e)			414		416,620
Total U.S. Treasury Obligations — 52.0%					36,306,939
Total Long-Term Investments (Cost — $97,679,323) — 140.2%					97,820,646
Options Purchased
(Cost — $28,385) — 0.0%					18,438
Total Investments Before Options Written and TBA Sale Commitments
(Cost — $97,707,708) — 140.2%					97,839,084
Options Written
(Premiums Received — $ 5,213) — (0.0)%					(1,650	)

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

TBA Sale Commitments (d)		Par  (000)		Value
Mortgage-Backed Securities — (32.5)%
Fannie Mae Mortgage-Backed Securities:
2.50%, 7/01/32	USD		714	$	(716,448	)
3.00%, 7/01/32-7/01/47			8,865		(8,926,113	)
3.50%, 7/01/32-7/01/47			3,095		(3,187,673	)
4.00%, 7/01/32-7/01/47			1,200		(1,259,681	)
4.50%, 7/01/47			728		(780,432	)
5.00%, 7/01/47			66		(72,095	)
5.50%, 7/01/47			787		(871,848	)
6.00%, 7/01/47			320		(360,052	)
Freddie Mac Mortgage-Backed Securities:
3.00%, 7/01/47			2,339		(2,332,363	)
3.50%, 7/01/47			806		(828,018	)
4.00%, 7/01/47			866		(910,765	)
4.50%, 7/01/47			217		(232,464	)

TBA Sale Commitments (d)		Par  (000)		Value
Mortgage-Backed Securities (concluded)
Ginnie Mae Mortgage-Backed Securities:
3.00%, 7/15/47	USD		43	$	(43,433	)
3.50%, 7/15/47			150		(155,368	)
4.00%, 7/15/47			962		(1,011,603	)
4.50%, 7/15/47			949		(1,008,609	)
Total TBA Sale Commitments (Proceeds — $22,780,776) — (32.5)%					(22,696,965	)
Total Investments Net of Options Written and TBA Sale Commitments — 107.7%					75,140,469
Liabilities in Excess of Other Assets — (7.7)%					(5,351,105	)
Net Assets — 100.0%				$	69,789,364

      Notes to Schedule of Investments

(a) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

(b) Variable rate security. Rate as of period end.

(c) Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

(d) Represents or includes a TBA transaction. As of period end, unsettled TBA transactions were as follows:

Counterparty	Value			Unrealized Appreciation (Depreciation)
Barclays Capital, Inc.	$	(1,028,975	)		$  4,252
BNP Paribas Securities Corp.	$	(44,175	)		$       62
Citigroup Global Markets, Inc.	$	(619,746	)		$  3,405
Credit Suisse Securities (USA) LLC	$	(1,106,343	)		$10,676
Daiwa Capital Markets America, Inc.	$	303,023			$ (2,039	)
Deutsche Bank Securities, Inc.	$	(241,664	)		$  1,137
Goldman Sachs & Co.	$	(60,297	)		$ (3,350	)
J.P. Morgan Securities LLC	$	(586,557	)		$     779
Merrill Lynch, Pierce, Fenner & Smith, Inc.	$	317,834			$  2,376
Mizuho Securities USA LLC	$	(750	)		$      (16	)
Morgan Stanley & Co. LLC	$	(1,080,351	)		$  1,823
Nomura Securities International, Inc.	$	(13,184	)		$     119
RBC Capital Markets, LLC	$	726,783			$ (5,140	)
Wells Fargo Securities, LLC	$	(608,029	)		$  2,818

(e) All or a portion of the security has been pledged as collateral in connection with outstanding reverse repurchase agreements.

• During the six months ended June 30, 2017, investments in issuers considered to be affiliates of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at December 31, 2016		Net Activity			Shares Held at June 30, 2017		Value at June 30, 2017		Income		Net Realized Gain (Loss)		Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		701,543		(701,543	)		—		—		$1,721		—		—

• For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

Reverse Repurchase Agreements

Counterparty

Interest Rate

Trade Date

Maturity Date

Face Value

Face Value Including Accrued Interest

Type of Non-Cash Underlying Collateral

Remaining Contractual Maturity of  the Agreements

BNP Paribas S.A.

1.03%

6/30/17

7/03/17

$    419,175

$      419,187

U.S. Treasury Obligations

Overnight

Credit Suisse Securities (USA) LLC

1.48%

6/30/17

7/03/17

2,384,978

2,385,076

U.S. Treasury Obligations

Overnight

Deutsche Bank Securities, Inc.

1.45%

6/30/17

7/03/17

1,129,440

1,129,485

U.S. Treasury Obligations

Overnight

J.P. Morgan Securities LLC

0.50%

6/30/17

7/03/17

1,769,785

1,769,810

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

1.18%

6/30/17

7/03/17

1,922,183

1,922,245

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

1.35%

6/30/17

7/03/17

1,318,039

1,318,088

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

1.30%

6/30/17

7/03/17

1,749,325

1,749,388

U.S. Treasury Obligations

Overnight

Total

$10,692,925

$10,693,279

      Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

Contracts Long (Short)	Issue	Expiration	Notional Value			Unrealized Appreciation (Depreciation)
(5)	Euro-Bobl	September 2017		USD	752,107		$3,194
9	U.S. Treasury Bonds (30 Year)	September 2017		USD	1,383,188		11,713
(49)	U.S. Treasury Notes (10 Year)	September 2017		USD	6,151,031		27,434
5	U.S. Treasury Notes (2 Year)	September 2017		USD	1,080,547		(459	)
20	U.S. Treasury Notes (5 Year)	September 2017		USD	2,356,719		(6,262	)
(18)	Euro Dollar	June 2018		USD	4,426,425		1,877
(16)	Euro Dollar	March 2019		USD	3,925,800		(3,620	)
Total							$33,877

Forward Foreign Currency Exchange Contracts

Currency Purchased		Currency Sold		Counterparty	Settlement Date	Unrealized Appreciation (Depreciation)
USD	9,000	RUB	525,960	BNP Paribas S.A.	7/03/17		$    88
EUR	131,561	USD	150,000	Morgan Stanley & Co. International PLC	7/05/17		305
GBP	115,633	USD	150,000	Morgan Stanley & Co. International PLC	7/05/17		633
HUF	8,946,461	USD	32,967	Deutsche Bank AG	7/05/17		125
HUF	244,591	USD	902	JPMorgan Chase Bank N.A.	7/05/17		3
HUF	895,294	USD	3,297	Morgan Stanley & Co. International PLC	7/05/17		15
HUF	30,643,643	USD	112,835	Morgan Stanley & Co. International PLC	7/05/17		513
JPY	16,931,007	USD	150,000	BNP Paribas S.A.	7/05/17		566
SEK	1,276,370	USD	150,000	Deutsche Bank AG	7/05/17		1,550
TRY	535,680	USD	150,000	BNP Paribas S.A.	7/05/17		2,027
USD	150,000	JPY	16,563,300	Royal Bank of Scotland PLC	7/05/17		2,704
USD	150,000	ZAR	1,952,769	BNP Paribas S.A.	7/05/17		874
ZAR	1,989,668	USD	150,000	BNP Paribas S.A.	7/05/17		1,944

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
CLP	8,724,625	USD	13,000	Credit Suisse International		7/06/17		$141
RUB	859,536	USD	14,400	JPMorgan Chase Bank N.A.		7/06/17		155
USD	150,000	BRL	494,175	BNP Paribas S.A.		7/06/17		1,040
USD	13,000	COP	37,813,750	Credit Suisse International		7/06/17		604
USD	50,000	COP	152,000,000	Barclays Bank PLC		7/07/17		178
USD	100,000	COP	302,916,700	BNP Paribas S.A.		7/07/17		711
RUB	591,076	USD	10,000	JPMorgan Chase Bank N.A.		7/10/17		1
RUB	384,280	USD	6,500	JPMorgan Chase Bank N.A.		7/10/17		2
USD	16,579	RUB	973,026	Credit Suisse International		7/10/17		116
USD	16,421	RUB	963,440	Deutsche Bank AG		7/10/17		120
JPY	1,576,043	USD	14,000	Goldman Sachs International		7/11/17		19
MYR	34,440	USD	8,000	BNP Paribas S.A.		7/17/17		17
MYR	21,720	USD	5,000	JPMorgan Chase Bank N.A.		7/17/17		56
MYR	22,040	USD	5,000	JPMorgan Chase Bank N.A.		7/17/17		130
TRY	92,183	USD	26,000	BNP Paribas S.A.		7/21/17		40
TRY	39,148	USD	11,000	Citibank N.A.		7/21/17		59
USD	3,130	MXN	56,601	BNP Paribas S.A.		7/21/17		23
USD	7,870	MXN	142,274	JPMorgan Chase Bank N.A.		7/21/17		59
USD	11,000	ZAR	141,600	Citibank N.A.		7/21/17		219
RUB	865,008	USD	14,400	BNP Paribas S.A.		7/24/17		191
RUB	859,104	USD	14,400	Deutsche Bank AG		7/24/17		91
USD	11,000	COP	32,274,000	BNP Paribas S.A.		8/09/17		472
IDR	67,325,000	USD	5,000	Bank of America N.A.		8/15/17		24
IDR	97,374,513	USD	7,233	Citibank N.A.		8/15/17		34
IDR	139,130,479	USD	10,333	Citibank N.A.		8/15/17		50
IDR	72,340,770	USD	5,375	JPMorgan Chase Bank N.A.		8/15/17		24
IDR	108,552,080	USD	8,060	JPMorgan Chase Bank N.A.		8/15/17		41
MYR	77,841	USD	18,000	Morgan Stanley & Co. International PLC		8/17/17		96
USD	10,000	COP	29,880,000	Barclays Bank PLC		8/22/17		268
USD	11,000	COP	33,390,500	Credit Suisse International		8/22/17		124
EUR	10,600	USD	11,985	JPMorgan Chase Bank N.A.		9/07/17		166
AUD	391,000	USD	295,603	Citibank N.A.		9/20/17		4,600
AUD	33,000	USD	24,958	Credit Suisse International		9/20/17		380
EUR	240,000	USD	273,791	Goldman Sachs International		9/20/17		1,535
EUR	210,000	USD	237,738	Goldman Sachs International		9/20/17		3,173
USD	45,239	MXN	822,339	Deutsche Bank AG		9/20/17		519
USD	44,342	MXN	803,237	Deutsche Bank AG		9/20/17		661
USD	180,955	MXN	3,289,762	Goldman Sachs International		9/20/17		2,054
USD	44,342	MXN	803,924	Royal Bank of Scotland PLC		9/20/17		624
USD	59,123	MXN	1,073,244	Royal Bank of Scotland PLC		9/20/17		759
								30,923
MXN	56,825	USD	3,143	Barclays Bank PLC		7/03/17		(13	)
MXN	56,819	USD	3,143	Deutsche Bank AG		7/03/17		(14	)
MXN	85,222	USD	4,714	Morgan Stanley & Co. International PLC		7/03/17		(21	)
RUB	519,750	USD	9,000	Deutsche Bank AG		7/03/17		(193	)
RUB	8,586,975	USD	150,000	BNP Paribas S.A.		7/05/17		(4,556	)
USD	150,000	EUR	133,156	Deutsche Bank AG		7/05/17		(2,127	)
USD	150,000	GBP	116,071	Deutsche Bank AG		7/05/17		(1,204	)
USD	150,000	HUF	41,075,250	BNP Paribas S.A.		7/05/17		(1,933	)

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

Currency Purchased		Currency Sold			Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	85,000		RUB	5,038,970	Deutsche Bank AG		7/05/17		$   (349	)
USD	65,000		RUB	3,849,515	JPMorgan Chase Bank N.A.		7/05/17		(202	)
USD	150,000		SEK	1,298,760	Royal Bank of Scotland PLC		7/05/17		(4,208	)
USD	150,000		TRY	529,736	BNP Paribas S.A.		7/05/17		(340	)
BRL	489,975		USD	150,000	Goldman Sachs International		7/06/17		(2,306	)
COP	14,620,000		USD	5,000	Royal Bank of Scotland PLC		7/06/17		(207	)
COP	23,384,000		USD	8,000	UBS AG		7/06/17		(334	)
USD	13,000		CLP	8,639,930	Royal Bank of Scotland PLC		7/06/17		(13	)
USD	14,400		RUB	864,864	Goldman Sachs International		7/06/17		(246	)
COP	176,160,000		USD	60,000	JPMorgan Chase Bank N.A.		7/07/17		(2,259	)
COP	264,240,000		USD	90,000	UBS AG		7/07/17		(3,389	)
RUB	485,954		USD	8,250	Barclays Bank PLC		7/10/17		(28	)
RUB	486,173		USD	8,250	Barclays Bank PLC		7/10/17		(24	)
USD	18,000		MYR	77,670	Morgan Stanley & Co. International PLC		7/17/17		(80	)
MXN	198,680		USD	11,000	Barclays Bank PLC		7/21/17		(93	)
ZAR	102,383		USD	7,870	Barclays Bank PLC		7/21/17		(74	)
ZAR	40,747		USD	3,130	BNP Paribas S.A.		7/21/17		(28	)
IDR	186,760,000		USD	14,000	BNP Paribas S.A.		7/24/17		(27	)
IDR	400,200,000		USD	30,000	JPMorgan Chase Bank N.A.		7/24/17		(58	)
MXN	199,065		USD	11,000	Morgan Stanley & Co. International PLC		7/27/17		(83	)
CLP	1,702,109		USD	2,567	Bank of America N.A.		7/28/17		(5	)
CLP	4,862,254		USD	7,333	BNP Paribas S.A.		7/28/17		(15	)
CLP	3,316,500		USD	5,000	BNP Paribas S.A.		7/28/17		(8	)
CLP	729,520		USD	1,100	Goldman Sachs International		7/28/17		(2	)
RUB	1,067,760		USD	18,000	Deutsche Bank AG		7/28/17		(5	)
TRY	27,009		USD	7,651	BNP Paribas S.A.		7/28/17		(37	)
TRY	14,300		USD	4,048	BNP Paribas S.A.		7/28/17		(17	)
TRY	27,016		USD	7,651	Goldman Sachs International		7/28/17		(34	)
TRY	67,328		USD	19,000	HSBC Bank PLC		7/28/17		(20	)
TRY	27,004		USD	7,651	JPMorgan Chase Bank N.A.		7/28/17		(38	)
COP	33,484,000		USD	11,000	Barclays Bank PLC		8/09/17		(77	)
USD	36,000		IDR	490,377,600	BNP Paribas S.A.		8/15/17		(594	)
COP	30,521,700		USD	10,000	UBS AG		8/22/17		(59	)
USD	11,985		EUR	10,600	BNP Paribas S.A.		9/07/17		(166	)
USD	160,227		AUD	212,000	Goldman Sachs International		9/20/17		(2,544	)
USD	160,480		AUD	212,000	Goldman Sachs International		9/20/17		(2,291	)
USD	506,390		EUR	450,000	Barclays Bank PLC		9/20/17		(9,847	)
									(40,168	)
Net Unrealized Depreciation									$  (9,245	)

Exchange-Traded Options Purchased

Description	Put/ Call		Expiration Date		Strike Price			Contracts		Value
Euro Dollar 90-Day		Put		10/13/17		USD	98.00		66	$	7,013
Euro Dollar 90-Day		Put		10/13/17		USD	98.13		29		5,800
Euro Dollar 90-Day		Put		10/13/17		USD	97.75		29		5,075
Total										$	17,888

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

OTC Options Purchased

Description

Put/ Call

Counterparty

Expiration Date

Strike Price

Notional Amount (000)

Value

USD Currency

Call

Barclays Bank PLC

7/07/17

JPY

111.00

USD

14

$187

USD Currency

Call

Deutsche Bank AG

8/07/17

RUB

58.00

USD

11

363

Total

$550

Exchange-Traded Options Written

Description	Put/ Call		Expiration Date		Strike Price			Contracts		Value
Euro Dollar 90-Day		Put		10/13/17		USD	97.50		33	$	(412	)
Euro Dollar 90-Day		Put		10/13/17		USD	97.63		66		(1,238	)
Total										$	(1,650	)

Centrally Cleared Credit Default Swaps — Buy Protection

Index	Pay Fixed Rate	Expiration Date		Notional Amount (000)				Unrealized Depreciation
CDX.NA.IG.28.V1	1.00%		6/20/22		USD	399	��		$(1,480)

Centrally Cleared Interest Rate Swaps

Fixed Rate	Floating Rate	Effective Date		Expiration Date		Notional Amount (000)			Unrealized Appreciation (Depreciation)
7.36%1	28-day MXIBTIIE		N/A		1/28/19		MXN	2,947		$    (948)
7.32%2	28-day MXIBTIIE		N/A		2/20/20		MXN	2,559		1,969
7.16%2	28-day MXIBTIIE		N/A		4/29/20		MXN	2,380		1,333
1.37%1	3-month LIBOR		N/A		11/30/20		USD	1,120		15,169
7.45%2	28-day MXIBTIIE		N/A		3/07/22		MXN	863		1,311
7.48%2	28-day MXIBTIIE		N/A		3/07/22		MXN	431		675
7.47%2	28-day MXIBTIIE		N/A		3/07/22		MXN	431		665
7.16%2	28-day MXIBTIIE		N/A		6/01/22		MXN	1,017		845
2.13%2	3-month LIBOR		N/A		8/25/25		USD	15		42
3.45%2	UK RPI All Items Monthly		N/A		10/15/26		GBP	175		809
3.46%2	UK RPI All Items Monthly		N/A		10/15/26		GBP	180		1,189
3.43%2	UK RPI All Items Monthly		N/A		10/15/26		GBP	173		318
7.41%2	28-day MXIBTIIE		N/A		5/25/27		MXN	583		537
7.38%2	28-day MXIBTIIE		N/A		5/25/27		MXN	95		74
7.82%2	28-day MXIBTIIE		N/A		3/04/37		MXN	205		146
7.92%2	28-day MXIBTIIE		N/A		5/01/37		MXN	266		502
7.95%2	28-day MXIBTIIE		N/A		5/01/37		MXN	245		530
Total										$25,166

¹ The Fund pays the fixed rate and receives the floating rate.

² The Fund pays the floating rate and receives the fixed rate.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

OTC Credit Default Swaps — Buy Protection

Issuer

Pay Fixed Rate

Counterparty

Expiration Date

Notional Amount (000)

Value

Premiums Received

Unrealized Depreciation

Republic of the Philippines

1.00%

JPMorgan Chase Bank N.A.

6/20/22

USD

295

$(3,342)

$

(728)

$(2,614)

OTC Interest Rate Swaps

Fixed Rate	Floating Rate	Counterparty	Expiration Date		Notional Amount (000)			Value			Premiums Paid (Received)		Unrealized Appreciation (Depreciation)
13.13%1	1-day BZDIOVER	Bank of America N.A.		7/03/17		BRL	177	$	(214	)		—		$    (214)
13.11%1	1-day BZDIOVER	Citibank N.A.		7/03/17		BRL	212		(247	)		—		(247	)
12.85%1	1-day BZDIOVER	JPMorgan Chase Bank N.A.		7/03/17		BRL	27		(20	)		—		(20	)
9.50%1	1-day BZDIOVER	Bank of America N.A.		10/02/17		BRL	413		(11	)		—		(11	)
9.99%1	1-day BZDIOVER	Citibank N.A.		1/02/18		BRL	340		(355	)		—		(355	)
8.98%1	1-day BZDIOVER	Citibank N.A.		1/02/18		BRL	105		50			—		50
9.98%1	1-day BZDIOVER	JPMorgan Chase Bank N.A.		1/02/18		BRL	340		(233	)		—		(233	)
7.07%2	28-day MXIBTIIE	Citibank N.A.		11/21/18		MXN	938		17			—		17
7.06%2	28-day MXIBTIIE	JPMorgan Chase Bank N.A.		11/21/18		MXN	1,125		214			—		214
6.98%2	28-day MXIBTIIE	Citibank N.A.		11/28/18		MXN	1,600		(64	)		$(3)		(61	)
6.98%2	28-day MXIBTIIE	JPMorgan Chase Bank N.A.		11/28/18		MXN	908		(36	)		(2)		(34	)
9.25%2	1-day BZDIOVER	Citibank N.A.		1/02/19		BRL	288		271			—		271
9.28%2	1-day BZDIOVER	JPMorgan Chase Bank N.A.		1/02/19		BRL	273		284			—		284
9.73%2	1-day BZDIOVER	JPMorgan Chase Bank N.A.		1/02/20		BRL	203		208			—		208
3.78%2	7-day China Fixing Repo Rates	Bank of America N.A.		6/02/22		CNY	91		18			(1)		19
6.32%2	28-day MXIBTIIE	Goldman Sachs International		8/06/25		MXN	640		(1,646	)		(3)		(1,643	)
6.31%1	28-day MXIBTIIE	Deutsche Bank AG		8/11/25		MXN	810		2,126			4		2,122
Total								$	362			$(5)		$    367

¹ The Fund pays the fixed rate and receives the floating rate.

² The Fund pays the floating rate and receives the fixed rate.

      Transactions in Options Written for the Six Months Ended June 30, 2017

	Calls											Puts
			Notional (000)											Notional (000)
	Contracts		EUR			USD			Premiums Received			Contracts		EUR			USD			Premiums Received
Outstanding options, beginning of period		—		—			8,140		$	47,553			—		—			8,140		$	40,366
Options written		42		880			15,250			101,363			99		880			16,554			104,939
Options expired		(42)		—			—			(10,615	)		—		—			(1,304	)		(3,623	)
Options closed		—		(880	)		(23,390	)		(138,301	)		—		(880	)		(23,390	)		(136,469	)
Outstanding options, end of period		—		—			—			—			99		—			—		$	5,213

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

      Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statement of Assets and Liabilities were as follows:

Assets — Derivative Financial Instruments		Commodity Contracts	Credit Contracts		Equity Contracts	Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Futures contracts	Net unrealized appreciation1	—		—	—		—		$44,218		—	$	44,218
Forward foreign currency exchange contracts	Unrealized appreciation on forward foreign currency exchange contracts	—		—	—		$30,923		—		—		30,923
Options purchased	Investments at value — unaffiliated2	—		—	—		550		17,888		—		18,438
Swaps — centrally cleared	Net unrealized appreciation1	—		—	—		—		23,798		$2,316		26,114
Swaps — OTC	Unrealized appreciation on OTC swaps; Swap premiums paid	—		—	—		—		3,189		—		3,189
Total		—		—	—	$	31,473	$	89,093	$	2,316	$	122,882
Liabilities — Derivative Financial Instruments
Futures contracts	Net unrealized depreciation1	—		—	—		—		$10,341		—	$	10,341
Forward foreign currency exchange contracts	Unrealized depreciation on forward foreign currency exchange contracts	—		—	—		$40,168		—		—		40,168
Options written	Options written at value	—		—	—		—		1,650		—		1,650
Swaps — centrally cleared	Net unrealized depreciation1	—		$1,480	—		—		948		—		2,428
Swaps — OTC	Unrealized depreciation on OTC swaps; Swap premiums received	—		3,342	—		—		2,827		—		6,169
Total		—		$4,822	—		$40,168		$15,766		—	$	60,756

¹  Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

²  Includes options purchased at value as reported in the Schedule of Investments.

For the six months ended June 30, 2017, the effect of derivative financial instruments in the Statement of Operations was as follows:

Net Realized Gain (Loss) from:	Commodity Contracts	Credit Contracts		Equity Contracts	Foreign Currency Exchange Contracts			Interest Rate Contracts			Other Contracts		Total
Futures contracts	—		—	—		—		$	(181,924	)		—	$	(181,924	)
Forward foreign currency exchange contracts	—		—	—	$	27,888			—			—		27,888
Options purchased1	—		—	—		(27,905	)		(49,472	)		—		(77,377	)
Options written	—		—	—		(2,423	)		58,396			—		55,973
Swaps	—		$(10,232)	—		(11,235	)		(64,132	)		—		(85,599	)
Total	—		$(10,232)	—	$	(13,675	)	$	(237,132	)		—	$	(261,039	)
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts	—		—	—		—		$	131,711			—	$	131,711
Forward foreign currency exchange contracts	—		—	—	$	(14,774	)		—			—		(14,774	)
Options purchased2	—		—	—		(9,170	)		(10,212	)		—		(19,382	)
Options written	—		—	—		—			(5,284	)		—		(5,284	)
Swaps	—		$(1,588)	—		—			75,915			$6,456		80,783
Total	—		$(1,588)	—	$	(23,944	)	$	192,130			$6,456	$	173,054

¹  Options purchased are included in net realized gain (loss) from investments.

²  Options purchased are included in net change in unrealized appreciation (depreciation) on investments.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 13

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

Average Quarterly Balances of Outstanding Derivative Financial Instruments
Futures contracts:
Average notional value of contracts — long	$	3,618,794
Average notional value of contracts — short	$	19,796,546
Forward foreign currency exchange contracts:
Average amounts purchased — in USD	$	2,136,717
Average amounts sold — in USD	$	1,943,283
Options:
Average value of option contracts purchased	$	20,904
Average value of option contracts written	$	825
Average notional value of swaption contracts purchased	$	450,000
Average notional value of swaption contracts written	$	15,440,000
Credit default swaps:
Average notional value — buy protection	$	694,000
Interest rate swaps:
Average notional value — pays fixed rate	$	6,088,154
Average notional value — receives fixed rate	$	5,203,686
Total return swaps:
Average notional value	$	1,176,151

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.    

      Derivative Financial Instruments — Offsetting as of Period End

The Fund’s derivative assets and liabilities (by type) were as follows:

	Assets			Liabilities
Derivative Financial Instruments:
Futures contracts	$	13,812		$	8,463
Forward foreign currency exchange contracts		30,923			40,168
Options		18,438	1		1,650
Swaps — Centrally cleared		—			4,140
Swaps — OTC2		3,189			6,169
Total derivative assets and liabilities in the Statements of Assets and Liabilities	$	66,362		$	60,590
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		(31,700	)		(14,253	)
Total derivative assets and liabilities subject to an MNA	$	34,662		$	46,337

¹  Includes options purchased at value which is included in Investments at value — unaffiliated in the Statement of Assets and Liabilities and reported in the Schedule of Investments.

²  Includes unrealized appreciation (depreciation) on OTC swaps and swap premiums paid/received in the Statement of Assets and Liabilities.

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

The following tables present the Fund’s derivative assets and liabilities by counterparty net of amounts available for offset under MNA and net of the related collateral received and pledged by the Fund:

Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivatives Available for Offset1		Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets2
Bank of America N.A.		$       43		$      (43)		—		—		—
Barclays Bank PLC		633		(633)		—		—		—
BNP Paribas S.A.		7,993		(7,721)		—		—		$   272
Citibank N.A.		5,300		(666)		—		—		4,634
Credit Suisse International		1,365		—		—		—		1,365
Deutsche Bank AG		5,555		(3,892)		—		—		1,663
Goldman Sachs International		6,781		(6,781)		—		—		—
JPMorgan Chase Bank N.A.		1,343		(1,343)		—		—		—
MorganStanley & Co. International PLC		1,562		(184)		—		—		1,378
Royal Bank of Scotland PLC		4,087		(4,087)		—		—		—
Total		$34,662		$(25,350)		—		—		$9,312
Counterparty	Derivative Liabilities Subject to an MNA  by Counterparty		Derivatives Available for Offset1		Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities3
Bank of America N.A.		$    231		$      (43)		—		—		$     188
Barclays Bank PLC		10,156		(633)		—		—		9,523
BNP Paribas S.A.		7,721		(7,721)		—		—		—
Citibank N.A.		666		(666)		—		—		—
Deutsche Bank AG		3,892		(3,892)		—		—		—
Goldman Sachs International		9,069		(6,781)		—		—		2,288
HSBC Bank PLC		20		—		—		—		20
JPMorgan Chase Bank N.A.		6,188		(1,343)		—		—		4,845
Morgan Stanley & Co. International PLC		184		(184)		—		—		—
Royal Bank of Scotland PLC		4,428		(4,087)		—		—		341
UBS AG		3,782		—		—		—		3,782
Total		$46,337		$(25,350)		—		—		$20,987

¹  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

²  Net amount represents the net amount payable due to the counterparty in the event of default.

³  Net amount represents the net amount receivable from the counterparty in the event of default.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 15

Schedule of Investments (continued) BlackRock U.S. Government Bond V.I. Fund

      Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1			Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities		—		$	3,989,115		$	410,250	$	4,399,365
Corporate Bonds		—			50,997			—		50,997
Foreign Government Obligations		—			732,751			—		732,751
Non-Agency Mortgage-Backed Securities		—			2,100,417			—		2,100,417
U.S. Government Sponsored Agency Securities		—			54,230,177			—		54,230,177
U.S. Treasury Obligations		—			36,306,939			—		36,306,939
Short-Term Securities:
Options Purchased:
Foreign currency exchange contracts		—			550			—		550
Interest rate contracts	$	17,888			—			—		17,888
Liabilities:
Investments:
TBA Sale Commitments		—			(22,696,965)			—		(22,696,965)
Total	$	17,888		$	74,713,981		$	410,250	$	75,142,119
Derivative Financial Instruments1
Assets:
Foreign currency exchange contracts		—		$	30,923			—	$	30,923
Interest rate contracts	$	44,218			26,983			—		71,201
Other contracts		—			2,316			—		2,316
Liabilities:
Credit contracts		—			(4,094	)		—		(4,094	)
Foreign currency exchange contracts		—			(40,168	)		—		(40,168	)
Interest rate contracts		(11,991	)		(3,766	)		—		(15,757	)
Total	$	32,227		$	12,194			—	$	44,421

¹  Derivative financial instruments are swaps, futures contracts, forward foreign currency exchange contracts and options written. Swaps, futures contracts and forward foreign currency exchange contracts are valued at the unrealized appreciation (depreciation) on the instrument and options written are shown at value.

The Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount or face value, including accrued interest, for financial statement purposes. As of period end, reverse repurchase agreements of $10,693,279 are categorized as level 2 within the disclosure hierarchy.

During the six months ended June 30, 2017, there were no transfers between Level 1 and Level 2.

See Notes to Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Schedule of Investments (concluded) BlackRock U.S. Government Bond V.I. Fund

A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

	Asset-Backed Securities			Total
Assets:
Opening Balance, as of December 31, 2016	$	1,360,300		$	1,360,300
Transfers into Level 3		—			—
Transfers out of Level 3		(650,000	)		(650,000	)
Accrued discounts/premiums		8			8
Net realized gain (loss)		381			381
Net change in unrealized appreciation (depreciation)1,2		(439	)		(439	)
Purchases		200,000			200,000
Sales		(500,000)			(500,000)
Closing Balance, as of June 30, 2017	$	410,250		$	410,250
Net change in unrealized appreciation (depreciation) on investments still held at June 30, 20172	$	250		$	250

¹  Included in the related net change in unrealized appreciation (depreciation) in the Statement of Operations.

²  Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at June 30, 2017 is generally due to investments no longer held or categorized as Level 3 at period end.

The Fund’s investments that are categorized as Level 3 were valued utilizing third party pricing information without adjustment. Such valuations are based on unobservable inputs. A significant change in third party information could result in a significantly lower or higher value of such Level 3 investments.

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 17

Statement of Assets and Liabilities

June 30, 2017 (Unaudited)	BlackRock U.S. Government Bond V.I. Fund
Assets
Investments at value — unaffiliated (cost — $97,707,708)	$	97,839,084
Cash		871,701
Cash pledged:
Centrally cleared swaps		86,000
Futures contracts		28,710
Foreign currency at value (cost — $162,426)		162,718
Receivables:
Investments sold		335,988
TBA sale commitments		22,780,776
Capital shares sold		81,816
Dividends — affiliated		570
Interest — unaffiliated		295,870
From the Manager		24,232
Variation margin on futures contracts		13,812
Swap premiums paid		4
Unrealized appreciation on:
Forward foreign currency exchange contracts		30,923
OTC swaps		3,185
Prepaid expenses		206
Other assets		21,112
Total assets		122,576,707
Liabilities
Options written at value (premiums received — $5,213)		1,650
TBA sale commitments at value (proceeds — $22,780,776)		22,696,965
Reverse repurchase agreements		10,693,279
Payables:
Investments purchased		19,077,231
Capital shares redeemed		343
Distribution fees		279
Income dividends		116,123
Interest expense		356
Investment advisory fees		23,099
Officer’s and Directors’ fees		267
Other accrued expenses		118,100
Other affiliates		711
Variation margin on futures contracts		8,463
Variation margin on centrally cleared swaps		4,140
Swap premiums received		737
Unrealized depreciation on:
Forward foreign currency exchange contracts		40,168
OTC swaps		5,432
Total liabilities		52,787,343
Net Assets	$	69,789,364
Net Assets Consist of
Paid-in capital	$	73,655,036
Undistributed net investment income		112,221
Accumulated net realized loss		(4,264,298	)
Net unrealized appreciation (depreciation)		286,405
Net Assets	$	69,789,364
Net Asset Value
Class I — Based on net assets of $68,417,537 and 6,697,015 shares outstanding, 300 million shares authorized, $0.10 par value	$	10.22
Class III — Based on net assets of $1,371,827 and 134,396 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.21

See Notes to Financial Statements.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Statement of Operations

Six Months Ended June 30, 2017 (Unaudited)	BlackRock U.S. Government Bond V.I. Fund
Investment Income:
Interest — unaffiliated	$	915,524
Dividends — affiliated		1,721
Total investment income		917,245
Expenses:
Investment advisory		179,554
Transfer agent		2,480
Transfer agent — class specific		70,559
Professional		32,621
Custodian		34,213
Accounting Services		10,510
Officer and Directors		9,925
Printing		17,007
Distribution — class specific		2,846
Miscellaneous		13,726
Total expenses excluding interest expense		373,441
Interest expense		34,593
Total expenses		408,034
Less:
Fees waived by the Manager		(36,865	)
Transfer agent fees reimbursed — class specific		(69,880	)
Total expenses after fees waived and reimbursed		301,289
Net investment income		615,956
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments — unaffiliated		(1,094,569	)
Futures contracts		(181,924	)
Options written		55,973
Swaps		(85,599	)
Foreign currency transactions		(5,272	)
Forward foreign currency exchange contracts		27,888
Borrowed bonds		(1,142	)
		(1,284,645	)
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		1,479,531
Futures contracts		131,711
Options written		(5,284	)
Swaps		80,783
Foreign currency translations		2,792
Forward foreign currency exchange contracts		(14,774	)
Borrowed bonds		1,005
		1,675,764
Net realized and unrealized gain		391,119
Net Increase in Net Assets Resulting from Operations	$	1,007,075

See Notes to Financial Statements.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 19

Statements of Changes in Net Assets BlackRock U.S. Government Bond V.I. Fund

Decrease in Net Assets:	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31, 2016
Operations
Net investment income	$	615,956		$	1,191,810
Net realized gain		(1,284,645	)		1,294,260
Net change in unrealized appreciation (depreciation)		1,675,764			(1,045,699	)
Net increase in net assets resulting from operations		1,007,075			1,440,371
Distributions to Shareholders1
From net investment income:
Class I		(740,040	)		(1,449,685	)
Class III		(20,900	)		(67,977	)
Decrease in net assets resulting from distributions to shareholders		(760,940	)		(1,517,662	)
Capital Share Transactions
Net decrease in net assets derived from capital share transactions		(5,648,406	)		(9,641,543	)
Net Assets
Total decrease in net assets		(5,402,271	)		(9,718,834	)
Beginning of period		75,191,635			84,910,469
End of period	$	69,789,364		$	75,191,635
Undistributed net investment income, end of period	$	112,221		$	257,205

¹  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

See Notes to Financial Statements.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Financial Highlights BlackRock U.S. Government Bond V.I. Fund

	Class I
		Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,
				2016			2015			2014			2013			2012
Per Share Operating Performance
Net asset value, beginning of period	$	10.18		$	10.23		$	10.39		$	10.04		$	10.71		$	10.76
Net investment income1		0.09			0.15			0.15			0.19			0.13			0.23
Net realized and unrealized gain (loss)		0.06			(0.01	)		(0.10	)		0.39			(0.48	)		0.03
Net increase (decrease) from investment operations		0.15			0.14			0.05			0.58			(0.35	)		0.26
Distributions:2
From net investment income		(0.11	)		(0.19	)		(0.21	)		(0.23	)		(0.25	)		(0.27)
From net realized gain		—			—			—			—			(0.07	)		(0.04)
Total distributions		(0.11	)		(0.19	)		(0.21	)		(0.23	)		(0.32	)		(0.31)
Net asset value, end of period	$	10.22		$	10.18		$	10.23		$	10.39		$	10.04		$	10.71
Total Return3
Based on net asset value		1.46	%4		1.33	%		0.45	%		5.87	%		(3.25	)%		2.41%
Ratios to Average Net Assets
Total expenses		1.13	%5		1.02	%		0.96	%		0.89	%		0.90	%		0.83%
Total expenses after fees waived and/or reimbursed		0.83	%5		0.76	%		0.73	%		0.69	%		0.69	%		0.69%
Total expenses after fees waived and/or reimbursed and excluding interest expense		0.73	%5		0.70	%		0.70	%		0.66	%		0.68	%		0.68%
Net investment income		1.72	%5		1.43	%		1.41	%		1.88	%		1.24	%		2.13%
Supplemental Data
Net assets, end of period (000)	$	68,418		$	72,433		$	83,016		$	92,975		$	103,218		$	130,938
Portfolio turnover rate6		542	%		1,140	%		1,581	%		1,388	%		1,956	%		1,529%

¹ Based on average shares outstanding.

²  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

³  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁴  Aggregate total return.

⁵  Annualized.

⁶  Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover is as follows:

	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,
				2016			2015			2014			2013			2012
Portfolio turnover rate (excluding MDRs)		350	%		705	%		991	%		956	%		1,415	%		1,119	%

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 21

Financial Highlights (concluded) BlackRock U.S. Government Bond V.I. Fund

	Class III
	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,									Period July 15, 20131 to December 31, 2013			Period January 1, 2013 to July 9, 20132			Period May 9, 20121 to December 31, 2012
				2016			2015			2014
Per Share Operating Performance
Net asset value, beginning of period	$	10.18		$	10.22		$	10.39		$	10.04		$	10.19		$	10.71		$	10.77
Net investment income3		0.07			0.11			0.13			0.17			0.11			0.01			0.08
Net realized and unrealized gain (loss)		0.05			—			(0.12	)		0.38			(0.09	)		(0.38	)		0.05
Net increase (decrease) from investment operations		0.12			0.11			0.01			0.55			0.02			(0.37	)		0.13
Distributions:4
From net investment income		(0.09	)		(0.15	)		(0.18	)		(0.20	)		(0.10	)		(0.15	)		(0.15	)
From net realized gain		—			—			—			—			(0.07	)		—			(0.04	)
Total distributions		(0.09	)		(0.15	)		(0.18	)		(0.20	)		(0.17	)		(0.15	)		(0.19	)
Net asset value, end of period	$	10.21		$	10.18		$	10.22		$	10.39		$	10.04		$	10.19		$	10.71
Total Return5
Based on net asset value		1.20	%6		1.08	%		0.08	%		5.56	%		0.26	%6		(3.60	)%6		1.24	%6
Ratios to Average Net Assets
Total expenses		1.30	%7		1.27	%		1.11	%		1.09	%		0.86	%7		1.66	%7		1.14	%7
Total expenses after fees waived and/or reimbursed		1.13	%7		1.08	%		1.00	%		1.00	%		0.85	%7		0.85	%7		1.01	%7
Total expenses after fees waived and/or reimbursed and excluding interest expense		1.04	%7		1.01	%		0.97	%		0.98	%		0.84	%7		0.85	%7		0.99	%7
Net investment income		1.44	%7		1.09	%		1.27	%		1.63	%		2.30	%7		0.25	%7		1.20	%7
Supplemental Data
Net assets, end of period (000)	$	1,372		$	2,758		$	1,894		$	750		$	225			—	2	$	29
Portfolio turnover rate8		542	%		1,140	%		1,581	%		1,388	%		1,956	%		1,956	%		1,529	%

¹  Recommencement of operations.

²  There were no Class III Shares outstanding from July 9, 2013 to July 14, 2013. On July 15, 2013, operations recommenced.

³  Based on average shares outstanding.

⁴  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

⁵  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

⁶  Aggregate total return.

⁷  Annualized.

⁸  Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover is as follows:

	Six Months Ended June 30, 2017 (Unaudited)			Year Ended December 31,									Period July 15, 2013 to December 31, 2013			Period January 1, 2013 to July 9, 2013			Period May 9, 2012 to December 31, 2012
				2016			2015			2014
Portfolio turnover rate (excluding MDRs)		350	%		705	%		991	%		956	%		1,415	%		1,415	%		1,119%

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (Unaudited) BlackRock U.S. Government Bond V.I. Fund

1. Organization:

BlackRock Variable Series Funds, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 20 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 are for BlackRock U.S. Government Bond V.I. Fund (the “Fund”). The Fund is classified as diversified. Class I and Class III Shares have 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. Class III Shares recommenced on May 9, 2012, were redeemed on July 9, 2013 and recommenced on July 15, 2013.

The Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

2. Significant Accounting Policies:

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the “trade dates”). Realized gains and losses on investment transactions are determined on the identified cost basis. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on an accrual basis. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Foreign Currency Translation: The Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

The Fund does not isolate the portion of the results of operations arising as a result of changes in the exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statement of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. The Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Segregation and Collateralization: In cases where the Fund enters into certain investments (e.g., TBA commitments, futures contracts, forward foreign currency exchange contracts, options written and swaps), or certain borrowings (e.g., reverse repurchase transactions) that would be treated as “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments or borrowings. Doing so allows the investment or borrowing to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Distributions: Distributions from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP.

Recent Accounting Standards: In November 2016, the Financial Accounting Standards Board issued Accounting Standards Update “Restricted Cash” which will require entities to include the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the beginning and ending cash balances in the Statement of Cash Flows. The guidance will be applied retrospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Management is evaluating the impact, if any, of this guidance on the Fund’s presentation in the Statement of Cash Flows.

In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 23

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

purchased callable debt securities that have explicit, non-contingent call features and are callable at fixed prices will be amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the Fund.

SEC Reporting Modernization: The U.S. Securities and Exchange Commission (“SEC”) adopted new rules and forms and amended other rules to enhance the reporting and disclosure of information by registered investment companies. As part of these changes, the SEC amended Regulation S-X to standardize and enhance disclosures in investment company financial statements. The compliance date for implementing the new or amended rules is August 1, 2017.

Indemnifications: In the normal course of business, the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or the applicable class. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses prorated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.

The Fund has an arrangement with its custodian whereby credits are earned on uninvested cash balances, which could be used to reduce custody fees and/or overdraft charges. The Fund may incur charges on certain uninvested cash balances and overdrafts, subject to certain conditions.

3. Investment Valuation and Fair Value Measurements:

Investment Valuation Policies: The Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the NYSE (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board of Directors of the Company (the “Board”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of the Fund’s assets and liabilities:

• Fixed-income securities for which market quotations are readily available are generally valued using the last available bid prices or current market quotations provided by independent dealers or third party pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more independent brokers or dealers as obtained from a third party pricing service. Pricing services generally value fixed-income securities assuming orderly transactions of an institutional round lot size, but the Fund may hold or transact in such securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. The pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions to derive values, including transaction data (e.g., recent representative bids and offers), credit quality information, perceived market movements, news, and other relevant information. Certain fixed-income securities, including asset-backed and mortgage related securities may be valued based on valuation models that consider the estimated cash flows of each tranche of the entity, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. The amortized cost method of valuation may be used with respect to debt obligations with sixty days or less remaining to maturity unless the Manager determines such method does not represent fair value.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Fund’s net assets. Each business day, the Fund uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded over-the-counter (“OTC”) options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of trading on the NYSE, which follows the close of the local markets.

• Investments in open-end U.S. mutual funds are valued at net asset value (“NAV”) each business day.

• Futures contracts traded on exchanges are valued at their last sale price.

• Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of trading on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

• Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that the prior day’s price no longer reflects the fair value of the option.

24 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

OTC options and options on swaps (“swaptions”) are valued by an independent pricing service using a mathematical model, which incorporates a number of market data factors, such as the trades and prices of the underlying instruments.

• Swap agreements are valued utilizing quotes received daily by the Fund’s pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments.

• To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee include Market approach, Income approach and the Cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement.

The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Fund’s pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis. As a result of the inherent uncertainty in valuation of these investments, the fair values may differ from the values that would have been used had an active market existed.

For investments in equity or debt issued by privately-held companies or funds (“Private Company” or collectively, the “Private Companies”) and other Fair Valued Investments, the fair valuation approaches that are used by third party pricing services utilize one or a combination of, but not limited to, the following inputs.

	Standard Inputs Generally Considered By Third Party Pricing Services
Market approach	(i	)	recent market transactions, including subsequent rounds of financing, in the underlying investment or comparable issuers;
	(ii	)	recapitalizations and other transactions across the capital structure; and
	(iii	)	market multiples of comparable issuers.
Income approach	(i	)	future cash flows discounted to present and adjusted as appropriate for liquidity, credit and/or market risks;
	(ii	)	quoted prices for similar investments or assets in active markets; and
	(iii	)	other risk factors, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates.
Cost approach	(i	)	audited or unaudited financial statements, investor communications and financial or operational metrics issued by the Private Company;
	(ii	)	changes in the valuation of relevant indices or publicly traded companies comparable to the Private Company;
	(iii	)	relevant news and other public sources; and
	(iv	)	known secondary market transactions in the Private Company’s interests and merger or acquisition activity in companies comparable to the Private Company.

Investments in series of preferred stock issued by Private Companies are typically valued utilizing Market approach in determining the enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Valuation techniques such as an option pricing model (“OPM”), a probability weighted expected return model (“PWERM”) or a hybrid of those techniques are used in allocating enterprise value of the company, as deemed appropriate under the circumstances. The use of OPM and PWERM techniques involve a determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 25

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

The Private Companies are not subject to the public company disclosure, timing, and reporting standards as other investments held by the Fund. Typically, the most recently available information by a Private Company is as of a date that is earlier than the date the Fund is calculating its NAV. This factor may result in a difference between the value of the investment and the price the Fund could receive upon the sale of the investment.

Fair Value Hierarchy: Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:

• Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

• Level 2 — Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

• Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by Private Companies. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

4. Securities and Other Investments:

Asset-Backed and Mortgage-Backed Securities: Asset-backed securities are generally issued as pass-through certificates or as debt instruments. Asset-backed securities issued as pass-through certificates represent undivided fractional ownership interests in an underlying pool of assets. Asset-backed securities issued as debt instruments, which are also known as collateralized obligations, are typically issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. The yield characteristics of certain asset-backed securities may differ from traditional debt securities. One such major difference is that all or a principal part of the obligations may be prepaid at any time because the underlying assets (i.e., loans) may be prepaid at any time. As a result, a decrease in interest rates in the market may result in increases in the level of prepayments as borrowers, particularly mortgagors, refinance and repay their loans. An increased prepayment rate with respect to an asset-backed security will have the effect of shortening the maturity of the security. In addition, the Fund may subsequently have to reinvest the proceeds at lower interest rates. 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.

For mortgage pass-through securities (the “Mortgage Assets”) there are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by Ginnie Mae are guaranteed as to the timely payment of principal and interest by Ginnie Mae and such guarantee is backed by the full faith and credit of the United States. However, mortgage-related securities issued by Freddie Mac and Fannie Mae, including Freddie Mac and Fannie Mae guaranteed mortgage pass-through certificates, which are solely the obligations of Freddie Mac and Fannie Mae, are not backed by or entitled to the full faith and credit of the United States, but are supported by the right of the issuer to borrow from the U.S. Treasury.

Non-agency mortgage-backed securities are securities issued by non-governmental issuers and have no direct or indirect government guarantees of payment and are subject to various risks. Non-agency mortgage loans are obligations of the borrowers thereunder only and are not typically insured or guaranteed by any other person or entity. The ability of a borrower to repay a loan is dependent upon the income or assets of the borrower. A number of factors, including a general economic downturn, acts of God, terrorism, social unrest and civil disturbances, may impair a borrower’s ability to repay its loans.

Inflation-Indexed Bonds: Inflation-indexed bonds (other than municipal inflation-indexed and certain corporate inflation-indexed bonds) are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. If the index measuring inflation rises or falls, the

26 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

principal value of inflation-indexed bonds (other than municipal inflation-indexed and certain corporate inflation-indexed bonds) will be adjusted upward or downward, and consequently the interest payable on these securities (calculated with respect to a larger or smaller principal amount) will be increased or reduced, respectively. Any upward or downward adjustment in the principal amount of an inflation-indexed bond will be included as interest income in the Statement of Operations, even though investors do not receive their principal until maturity. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal. With regard to municipal inflation-indexed bonds and certain corporate inflation-indexed bonds, the inflation adjustment is typically reflected in the semi-annual coupon payment. As a result, the principal value of municipal inflation-indexed bonds and such corporate inflation-indexed bonds does not adjust according to the rate of inflation.

Multiple Class Pass-Through Securities: Multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities, may be issued by Ginnie Mae, U.S. Government agencies or instrumentalities or by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs are debt obligations of a legal entity that are collateralized by a pool of residential or commercial mortgage loans or Mortgage Assets. The payments on these are used to make payments on the CMOs or multiple pass-through securities. Multiple class pass-through securities represent direct ownership interests in the Mortgage Assets. Classes of CMOs include interest only (“IOs”), principal only (“POs”), planned amortization classes and targeted amortization classes. IOs and POs are stripped mortgage-backed securities representing interests in a pool of mortgages, the cash flow from which has been separated into interest and principal components. IOs receive the interest portion of the cash flow while POs receive the principal portion. IOs and POs can be extremely volatile in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise since this increases the rate at which the principal is returned and the yield to maturity on the PO. When payments on mortgages underlying a PO are slower than anticipated, the life of the PO is lengthened and the yield to maturity is reduced. If the underlying Mortgage Assets experience greater than anticipated prepayments of principal, the Fund’s initial investment in the IOs may not fully recoup.

Stripped Mortgage-Backed Securities: Stripped mortgage-backed securities are typically issued by the U.S. Government, its agencies and instrumentalities. Stripped mortgage-backed securities are usually structured with two classes that receive different proportions of the interest (IOs) and principal (POs) distributions on a pool of Mortgage Assets. Stripped mortgage-backed securities may be privately issued.

Zero-Coupon Bonds: Zero-coupon bonds are normally issued at a significant discount from face value and do not provide for periodic interest payments. These bonds may experience greater volatility in market value than other debt obligations of similar maturity which provide for regular interest payments.

TBA Commitments: TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed upon future settlement date. The specific securities to be delivered are not identified at the trade date. However, delivered securities must meet specified terms, including issuer, rate and mortgage terms. When entering into TBA commitments, the Fund may take possession of or deliver the underlying mortgage-backed securities but can extend the settlement or roll the transaction. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

In order to better define contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, TBA commitments may be entered into by the Fund under Master Securities Forward Transaction Agreements (each, an “MSFTA”). An MSFTA typically contains, among other things, collateral posting terms and netting provisions in the event of default and/or termination event. The collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of the collateral currently pledged by the Fund and the counterparty. Cash collateral that has been pledged to cover the obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral for TBA commitments or cash received as collateral for TBA commitments, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Typically, the Fund is permitted to sell, repledge or use the collateral it receives; however, the counterparty is not permitted to do so. To the extent amounts due to the Fund are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance.

Mortgage Dollar Roll Transactions: The Fund may sell TBA mortgage-backed securities and simultaneously contract to repurchase substantially similar (i.e., same type, coupon and maturity) securities on a specific future date at an agreed upon price. During the period between the sale and repurchase, the Fund is not entitled to receive interest and principal payments on the securities sold. Mortgage dollar roll transactions are treated as purchases and sales and realizes gains and losses on these transactions. Mortgage dollar rolls involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon repurchase price of those securities.

Borrowed Bond Agreements: Repurchase agreements may be referred to as borrowed bond agreements when entered into in connection with short sales of bonds. In a borrowed bond agreement, the Fund borrows a bond from a counterparty in exchange for cash collateral. The agreement contains a commitment that the security and the cash will be returned to the counterparty and the Fund at a mutually agreed upon date. Certain agreements have no stated maturity and can be terminated by either party at any time. Earnings on cash collateral and compensation to the lender of the bond are

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 27

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

based on agreed upon rates between the Fund and the counterparty. The value of the underlying cash collateral approximates the market value and accrued interest of the borrowed bond. To the extent that a borrowed bond transaction exceeds one business day, the value of the cash collateral in the possession of the counterparty is monitored on a daily basis to ensure the adequacy of the collateral. As the market value of the borrowed bond changes, the cash collateral is periodically increased or decreased with a frequency and in amounts prescribed in the borrowed bond agreement. The Fund may also experience delays in gaining access to the collateral.

Reverse Repurchase Agreements: Reverse repurchase agreements are agreements with qualified third party broker-dealers in which 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. The Fund receives cash from the sale to use for other investment purposes. During the term of the reverse repurchase agreement, the Fund continues to receive the principal and interest payments on the securities sold. Certain agreements have no stated maturity and can be terminated by either party at any time. Interest on the value of the reverse repurchase agreements issued and outstanding is based upon competitive market rates determined at the time of issuance. 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. If the Fund suffers a loss on its investment of the transaction proceeds from a reverse repurchase agreement, the Fund would still be required to pay the full repurchase price. Further, the Fund remains subject to the risk that the market value of the securities repurchased declines below the repurchase price. In such cases, the Fund would be required to return a portion of the cash received from the transaction or provide additional securities to the counterparty.

Cash received in exchange for securities delivered plus accrued interest due to the counterparty is recorded as a liability in the Statement of Assets and Liabilities at face value including accrued interest. Due to the short-term nature of the reverse repurchase agreements, face value approximates fair value. Interest payments made by the Fund to the counterparties are recorded as a component of interest expense in the Statement of Operations. In periods of increased demand for the security, the Fund may receive a fee for the use of the security by the counterparty, which may result in interest income to the Fund.

For the six months ended June 30, 2017 , the average amount of reverse repurchase agreements outstanding and the daily weighted average interest rate for the Fund were $11,113,425 and 0.58%, respectively.

Borrowed bond agreements and reverse repurchase transactions are entered into by the Fund under Master Repurchase Agreements (each, an “MRA”), which permit the Fund, under certain circumstances, including an event of default (such as bankruptcy or insolvency), to offset payables and/or receivables under the MRA with collateral held and/or posted to the counterparty and create one single net payment due to or from the Fund. With borrowed bond agreements and reverse repurchase transactions, typically the Fund and the counterparty under the MRA are permitted to sell, re-pledge, or use the collateral associated with the transaction. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of the MRA counterparty’s bankruptcy or insolvency. Pursuant to the terms of the MRA, the Fund receives or posts securities as collateral with a market value in excess of the repurchase price to be paid or received by the Fund upon the maturity of the transaction. Upon a bankruptcy or insolvency of the MRA counterparty, the Fund is considered an unsecured creditor with respect to excess collateral and, as such, the return of excess collateral may be delayed.

As of period end, the following table is a summary of the Fund’s reverse repurchase agreements by counterparty which are subject to offset under an MRA on a net basis:

Counterparty	Reverse Repurchase Agreements		Fair Value of Non-cash Collateral Pledged Including Accrued Interest			Net Exposure Due (to)/from Counterparty1
BNP Paribas S.A.		$     419,187		$     (417,770	)		$  1,417
Credit Suisse Securities (USA) LLC		2,385,076		(2,383,476	)		1,600
Deutsche Bank Securities, Inc.		1,129,485		(1,124,593	)		4,892
J.P. Morgan Securities LLC		1,769,810		(1,769,333	)		477
Merrill Lynch, Pierce, Fenner & Smith, Inc.		4,989,721		(4,973,463	)		16,258
Total		$10,693,279		$(10,668,635	)		$24,644

¹  Net exposure represents the net receivable (payable) that would be due from/to the counterparty in the event of default.

In the event the counterparty of securities under an MRA files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds from the agreement may be restricted while the counterparty, or its trustee or receiver, determines whether or not to enforce the Fund’s obligation to repurchase the securities.

28 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

5. Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and/or to manage its exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedule of Investments. These contracts may be transacted on an exchange or OTC.

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to changes in interest rates (interest rate risk), changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are agreements between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract.

Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statement of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.

Forward Foreign Currency Exchange Contracts: The Fund enters into forward foreign currency exchange contracts to gain or reduce exposure, to foreign currencies (foreign currency exchange rate risk).

A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a specified date. These contracts help to manage the overall exposure to the currencies in which some of the investments held by the Fund are denominated and in some cases, may be used to obtain exposure to a particular market.

The contract is marked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. When a contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the value at the time it was opened and the value at the time it was closed. Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies.

Options: The Fund purchases and writes call and put options to increase or decrease its exposure to the risks of underlying instruments, including equity risk, interest rate risk and/or commodity price risk and/or, in the case of options written, to generate gains from options premiums.

A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised) the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period.

Premiums paid on options purchased and premiums received on options written, as well as the daily fluctuation in market value, are included in investments at value – unaffiliated and options written at value, respectively, in the Statement of Assets and Liabilities. When an instrument is purchased or sold through the exercise of an option, the premium is offset against the cost or proceeds of the underlying instrument. When an option expires, a realized gain or loss is recorded in the Statement of Operations to the extent of the premiums received or paid. When an option is closed or sold, a gain or loss is recorded in the Statement of Operations to the extent the cost of the closing transaction exceeds the premiums received or paid). When the Fund writes a call option, such option is typically “covered,” meaning that it holds the underlying instrument subject to being called by the option counterparty. When the Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

• Swaptions — The Fund purchases and writes options on swaps (“swaptions”) primarily to preserve a return or spread on a particular investment or portion of the Fund’s holdings, as a duration management technique or to protect against an increase in the price of securities it anticipates purchasing at a later date. The purchaser and writer of a swaption is buying or granting the right to enter into a previously agreed upon interest rate or credit default swap agreement (interest rate risk and/or credit risk) at any time before the expiration of the option.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 29

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

• Foreign currency options — The Fund purchases and writes foreign currency options, foreign currency futures and options on foreign currency futures to gain or reduce exposure to foreign currencies (foreign currency exchange rate risk). Foreign currency options give the purchaser the right to buy from or sell to the writer a foreign currency at any time before the expiration of the option.

In purchasing and writing options, the Fund bears the risk of an unfavorable change in the value of the underlying instrument or the risk that it may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in the Fund purchasing or selling a security when it otherwise would not, or at a price different from the current market value.

Swaps: The Fund enters into swap contracts to manage exposure to issuers, markets and securities. Such contracts are agreements between the Fund and a counterparty to make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be entered into as a bilateral contract (“OTC swaps”) or centrally cleared (“centrally cleared swaps”).

For OTC swaps, any upfront premiums paid and any upfront fees received are shown as swap premiums paid and swap premiums received, respectively, in the Statement of Assets and Liabilities and amortized over the term of the contract. The daily fluctuation in market value is recorded as unrealized appreciation (depreciation) on OTC Swaps in the Statement of Assets and Liabilities. Payments received or paid are recorded in the Statement of Operations as realized gains or losses, respectively. When an OTC swap is terminated, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis in the contract, if any. Generally, the basis of the contract is the premium received or paid.

In a centrally cleared swap, immediately following execution of the swap contract, the swap contract is novated to a central counterparty (the “CCP”) and the Fund’s counterparty on the swap agreement becomes the CCP. The Fund is required to interface with the CCP through the broker. Upon entering into a centrally cleared swap, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on the size and risk profile of the particular swap. Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited is shown as cash pledged for centrally cleared swaps in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and shown as variation margin receivable (or payable) on centrally cleared swaps in the Statement of Assets and Liabilities. Payments received from (paid to) the counterparty, including at termination, are recorded as realized gains (losses) in the Statement of Operations.

• Credit default swaps — The Fund enters into credit default swaps to manage its exposure to the market or certain sectors of the market, to reduce their 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 may either buy or sell (write) credit default swaps on single-name issuers (corporate or sovereign), a combination or basket of single-name issuers or traded indexes. Credit default swaps are agreements in which the protection buyer pays fixed periodic payments to the seller in consideration for a promise from the protection seller to make a specific payment should a negative credit event take place with respect to the referenced entity (e.g., bankruptcy, failure to pay, obligation acceleration, repudiation, moratorium or restructuring). As a buyer, if an underlying credit event occurs, the Fund will either (i) receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising the index, or (ii) receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index. As a seller (writer), if an underlying credit event occurs, the Fund will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising the index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.

• 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 such market or to exchange the risk/return of one market (e.g., fixed income) with another market (e.g., equity or commodity prices) (equity risk, commodity price risk and/or interest rate risk).

Total return swaps are agreements in which there is an exchange of cash flows whereby one party commits to make payments based on the total return (distributions plus capital gains/losses) of an underlying instrument in exchange for fixed or floating rate interest payments. If the total return of the instrument or index underlying the transaction exceeds or falls short of the offsetting fixed or floating interest rate obligation, the Fund receives payment from or makes a payment to the counterparty.

• Interest rate swaps — The Fund enters into interest rate swaps to gain or reduce exposure to interest rates or to manage duration, the yield curve or interest rate (interest rate risk).

30 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

Interest rate swaps are agreements in which one party pays a stream of interest payments, either fixed or floating, in exchange for another party’s stream of interest payments, either fixed or floating, on the same notional amount for a specified period of time. In more complex interest rate swaps, the notional principal amount may decline (or amortize) over time.

• Forward swaps — The Fund enters into forward interest rate swaps and forward total return swaps. In a forward swap, the Fund and the counterparty agree to make periodic net payments beginning on a specified date or a net payment at termination.

Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in interest rates and/or market values associated with these transactions.

Master Netting Arrangements: In order to define its contractual rights and to secure rights that will help it mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrict or prohibit the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties 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. The result would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Fund and the counterparty.

Cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a counterparty is subject to a certain minimum transfer amount threshold before a transfer is required, which is determined at the close of business of the Fund. Any additional required collateral is delivered to/pledged by the Fund on the next business day. Typically, the counterparty is not permitted to sell, re-pledge or use cash and non-cash collateral it receives. The Fund generally agrees not to use non-cash collateral that it receives but may, absent default or certain other circumstances defined in the underlying ISDA Master Agreement, be permitted to use cash collateral received. In such cases, interest may be paid pursuant to the collateral arrangement with the counterparty. To the extent amounts due to the Fund from its counterparties are not fully collateralized, it bears the risk of loss from counterparty non-performance. Likewise, to the extent the Fund has delivered collateral to a counterparty and stands ready to perform under the terms of its agreement with such counterparty, it bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral. Based on the terms of agreements, collateral may not be required for all derivative contracts.

For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statement of Assets and Liabilities.

6. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. is the largest stockholder and an affiliate of BlackRock, Inc. (“BlackRock”) for 1940 Act purposes.

Investment Advisory: The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with the Manager, the Fund’s investment adviser, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administrative services. The Manager is responsible for the management of the Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of the Fund.

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fee
First $1 Billion	0.50%

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 31

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

Average Daily Net Assets	Investment Advisory Fee
$1 Billion — $3 Billion	0.47%
$3 Billion — $5 Billion	0.45%
$5 Billion — $10 Billion	0.44%
Greater than $10 Billion	0.43%

Distribution Fees: The Company, on behalf of the Fund, entered into a Distribution Agreement and a Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing distribution fees. The fees are accrued daily and paid monthly at an annual rate of 0.25% based upon the average daily net assets attributable to Class III.

For the six months ended June 30, 2017, the class specific distribution fees borne directly by Class III is $2,846.

Transfer Agent: The Manager, on behalf of the Fund, entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the six months ended June 30, 2017, the Fund did not pay any amounts to affiliates in return for these services.

In addition, the Fund pays the transfer agent, which is not an affiliate, a fee for issuance, transfer and redemption of shares and the opening and maintenance of shareholder accounts, which is included in transfer agent in the Statement of Operations.

For the six months ended June 30, 2017, the following table shows the class specific transfer agent fees borne directly by each class of the Fund:

Class I	Class III	Total
$69,142	$1,417	$70,559

Expense Limitations, Waivers and Reimbursements: The Manager has agreed to voluntarily waive 0.10% of its investment advisory fee by the Fund. This voluntary waiver may be reduced or discontinued at any time without notice. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, the amount waived was $36,668.

With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). This amount is included in fees waived by the Manager in the Statement of Operations. The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation caps, as applicable, will be reduced by the amount of the affiliated money market fund waiver. For the six months ended June 30, 2017, the amount waived was $197.

The Manager voluntarily agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee. Effective May 1, 2017, the waiver became contractual through April 30, 2018. The contractual agreement may be terminated upon 90 days’ notice by a majority of independent directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”) or by a vote of a majority of the outstanding voting securities of the Fund. This amount is included in fees waived by the Manager in the Statement of Operations. For the six months ended June 30, 2017, there were no fees waived by the Manager.

For the six months ended June 30, 2017, the Fund reimbursed the Manager $476 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Manager has contractually agreed to reimburse transfer agent fees in order to limit such expenses as a percentage of average daily net assets as follows:

Class I	0.00	%
Class III	0.06	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2018, unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund.

These amounts are shown as transfer agent fees reimbursed — class specific in the Statement of Operations. Class specific expense waivers and/or reimbursements are as follows:

32 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

	Class I		Class III	Total
Transfer Agent Fees Reimbursed	$	69,142	$738	$	69,880

With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business (“expense limitation”). The expense limitations as a percentage of average daily net assets are as follows:

Class I	1.25	%
Class III	1.50	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation prior to April 30, 2018 unless approved by the Board, including a majority of the Independent Directors or by a vote of a majority of the outstanding voting securities of the Fund. For the six months ended June 30, 2017, there were no fees waived and/or reimbursed by the Manager.

Officers and Directors: Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Company’s Chief Compliance Officer, which is included in Officer and Directors in the Statement of Operations.

7. Purchases and Sales:

For the six months ended June 30, 2017, purchases and sales of investments, including paydowns and mortgage dollar rolls and excluding short-term securities, were as follows:

	Purchases		Sales
Non-U.S. Government Securities		$320,653,420		$346,456,953
U.S. Government Securities		$103,347,620		$103,575,254

For the six months ended June 30, 2017, purchases and sales related to mortgage dollar rolls were $149,724,256 and $149,718,686, respectively.

8. Income Tax Information:

It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required.

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2016. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of June 30, 2017, inclusive of the open tax return years, and does not believe there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

As of December 31, 2016, the Fund had capital loss carryforwards of $2,865,478, with no expiration dates, available to offset future realized capital gains.

As of June 30, 2017, gross unrealized appreciation and depreciation based on cost for federal income tax purposes were as follows:    

Tax cost	$	97,933,502
Gross unrealized appreciation	$	307,810
Gross unrealized depreciation		(402,228	)
Net unrealized depreciation	$	(94,418	)

9. Bank Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.1 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.6 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.12% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 33

Notes to Financial Statements (continued) BlackRock U.S. Government Bond V.I. Fund

0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2018 unless extended or renewed. Participating Funds paid administration, legal and arrangement fees, which, if applicable, are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the six months ended June 30, 2017, the Fund did not borrow under the credit agreement.

10. Principal Risks:

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 to meet all its obligations, including the ability to pay principal and interest when due (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers of securities owned by the Fund. Changes arising from the general economy, the overall market and local, regional or global political and/or social instability, as well as currency, interest rate and price fluctuations, may also affect the securities’ value.

The Fund may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force the Fund to reinvest in lower yielding securities. The Fund may also be exposed to reinvestment risk, which is the risk that income from the Fund’s portfolio will decline if the Fund invests the proceeds from matured, traded or called fixed income securities at market interest rates that are below the Fund portfolio’s current earnings rate.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments and may experience difficulty in selling those investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.

The price the Fund could receive upon the sale of any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation methodology or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by the Fund, and the Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. The Fund’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.

Counterparty Credit Risk: Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

The Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain less the value of any collateral held by the Fund.

For OTC options purchased, the Fund bears the risk of loss of the amount in the premiums paid plus the positive change in market values net of any collateral held by the Fund should the counterparty fail to perform under the contracts. Options written by the Fund do not typically give rise to counterparty credit risk, as options written generally obligate the Fund, and not the counterparty, to perform. The Fund may be exposed to counterparty credit risk with respect to options written to the extent the Fund deposits collateral with its counterparty to a written option.

With exchange-traded options purchased, futures and centrally cleared swaps, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures and centrally cleared swaps with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker

34 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Notes to Financial Statements (concluded) BlackRock U.S. Government Bond V.I. Fund

becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a prorata basis across all the clearing broker’s customers, potentially resulting in losses to the Fund.

Concentration Risk: The Fund invests a significant portion of its assets in fixed income securities and/or uses derivatives tied to the fixed income markets. Changes in market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed income securities will increase as interest rates fall and decrease as interest rates rise. The Fund may be subject to a greater risk of rising interest rates due to the current period of historically low rates.

11. Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I	Six Months Ended June 30, 2017					Year Ended December 31, 2016
	Shares			Amount		Shares			Amount
Shares sold		69,653			$    709,543		298,687			$   3,117,025
Shares issued in reinvestment of distributions		72,231			735,920		142,901			1,488,883
Shares redeemed		(559,280	)		(5,702,882)		(1,443,563	)		(15,070,332)
Net decrease		(417,396	)		$(4,257,419)		(1,001,975	)		$(10,464,424)
Class III
Shares sold		42,972			$     437,911		869,182			$  9,025,554
Shares issued in reinvestment of distributions		2,051			20,869		6,710			70,048
Shares redeemed		(181,621)			(1,849,767)		(790,237)			(8,272,721)
Net increase (decrease)		(136,598)			$(1,390,987)		85,655			822,881
Total Net Decrease		(553,994)			$(5,648,406)		(916,320)			$(9,641,543)

At June 30, 2017, 1,963 Class III Shares of the Fund were owned by BlackRock HoldCo 2, Inc., an affiliate of the Fund.

12. 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.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 35

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors (the “Board,” the members of which are referred to as “Board Members”) of BlackRock Variable Series Funds, Inc. (the “Corporation”) met in person on April 6, 2017 (the “April Meeting”) and May 9-10, 2017 (the “May Meeting”) to consider the approval of the investment advisory agreements (collectively, the “Advisory Agreements”) between the Corporation, on behalf of BlackRock Advantage Large Cap Core V.I. Fund (the “Advantage Large Cap Core V.I. Fund”), BlackRock Advantage Large Cap Value V.I. Fund (the “Advantage Large Cap Value V.I. Fund”), BlackRock Advantage U.S. Total Market V.I. Fund (the “Advantage U.S. Total Market 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 Equity Dividend V.I. Fund (the “Equity Dividend 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 Money Market V.I. Fund (the “Government Money Market V.I. Fund”), BlackRock High Yield V.I. Fund (the “High Yield V.I. Fund”), BlackRock International V.I. Fund (the “International V.I. Fund”), BlackRock iShares Alternative Strategies V.I. Fund (the “iShares Alternative Strategies V.I. Fund”), BlackRock iShares Dynamic Allocation V.I. Fund (the “iShares Dynamic Allocation V.I. Fund”), BlackRock iShares Dynamic Fixed Income V.I. Fund (the “iShares Dynamic Fixed Income V.I. Fund”), BlackRock iShares Equity Appreciation V.I. Fund (the “iShares Equity Appreciation V.I. Fund), BlackRock Large Cap Focus Growth V.I. Fund (the “Large Cap Focus Growth V.I. Fund”), BlackRock Managed Volatility V.I. Fund (the “Managed Volatility 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”) and BlackRock U.S. Government Bond V.I. Fund (the “U.S. Government Bond V.I. Fund”) (each, a “Fund,” and collectively, the “Funds”), each a series of the Corporation, and BlackRock Advisors, LLC (the “Manager”), 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 (a) BlackRock International Limited; (b) BlackRock Asset Management North Asia Limited; and (c) BlackRock (Singapore) Limited (collectively, the “Sub-Advisors”), respectively 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

On the date of the May Meeting, the Board consisted of thirteen individuals, eleven of whom were not “interested persons” of the Corporation as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of 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 Chair of the Board is an Independent Board Member. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Performance Oversight Committee and the Executive Committee, each of which also has one interested Board Member).

The Agreements

Pursuant to the 1940 Act, the Board is required to consider the continuation of the Agreements on an annual basis. The Board has four quarterly meetings per year, each extending over two days, a fifth one-day meeting to consider specific information surrounding the consideration of renewing the Agreements and additional in-person and telephonic meetings as needed. In connection with this year-long deliberative process, the Board assessed, among other things, the nature, extent and quality of the services provided to each Fund by BlackRock, BlackRock’s personnel and affiliates, including (as applicable): investment management; administrative and shareholder services; the oversight of fund service providers; marketing; risk oversight; compliance; and ability to meet applicable legal and regulatory requirements.

The Board, acting directly and through its committees, considers at each of its meetings, and from time to time as appropriate, 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. BlackRock also furnished additional information to the Board in response to specific questions from the Board. This additional information is discussed further below in the section titled “Board Considerations in Approving the Agreements.” Among the matters the Board considered were: (a) investment performance for one-year, three-year, five-year, ten-year, and/or since inception periods, as applicable, against peer funds, applicable benchmark, and performance metrics, as applicable, as well as senior management’s and portfolio managers’ analysis of the reasons for any over-performance or underperformance relative to its peers, benchmarks, and other performance metrics, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by each Fund for services; (c) Fund operating expenses and how BlackRock allocates expenses to each Fund; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of each Fund’s investment objective(s), policies and restrictions, and meeting regulatory requirements; (e) each Fund’s adherence to its 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 and risk and compliance oversight mechanisms; (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 management fees for products with similar investment mandates across the open-end fund, exchange-traded fund (“ETF”), closed-end fund, sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable, and the similarities and differences between these products and the services

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 1

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

provided as compared to each Fund; (l) BlackRock’s compensation methodology for its investment professionals and the incentives and accountability it creates, along with investment professionals’ investments in the fund(s) they manage; and (m) periodic updates on BlackRock’s business.

Board Considerations in Approving the Agreements

The Approval Process: Prior to the April Meeting, the Board requested and received materials specifically relating to the Agreements. The Board is continuously engaged in a process with its independent legal counsel and BlackRock to 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 Broadridge Financial Solutions, Inc. (“Broadridge”) on Fund fees and expenses as compared with a peer group of funds as determined by Broadridge (“Expense Peers”) and the investment performance of each Fund as compared with a peer group of funds as determined by Broadridge¹ and, with respect to Advantage Large Cap Core V.I. Fund, Advantage Large Cap Value V.I. Fund, Advantage U.S. Total Market V.I. Fund, Basic Value V.I. Fund, Capital Appreciation V.I. Fund, Global Opportunities V.I. Fund, International V.I. Fund, and Large Cap Focus Growth V.I. Fund, the applicable Morningstar Classification; (b) information on the profits realized by BlackRock and its affiliates pursuant to the Agreements and a discussion of fall-out benefits to BlackRock and its affiliates; (c) a general analysis provided by BlackRock concerning investment management fees charged to other clients, such as institutional clients, sub-advised mutual funds, ETFs, closed-end funds, and separately managed accounts, under similar investment mandates, as well as the performance of such other clients, as applicable; (d) review of non-management fees; (e) the existence, impact and sharing of potential economies of scale; (f) a summary of aggregate amounts paid by each Fund to BlackRock; and (g) sales and redemption data regarding each Fund’s shares.

At the April Meeting, the Board reviewed materials relating to its consideration of the Agreements. As a result of the discussions that occurred during the April Meeting, and as a culmination of the Board’s year-long deliberative process, the Board presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the May Meeting.

At the May Meeting, the Board, including the Independent Board Members, 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, 2018. 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; (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) each Fund’s costs to investors compared to the costs of Expense Peers and performance compared to the relevant performance metrics as previously discussed; (e) the sharing of potential economies of scale; (f) fall-out benefits to BlackRock and its affiliates as a result of its relationship with each Fund; and (g) other factors deemed relevant by the Board Members.

The Board also considered other matters it deemed important to the approval process, such as other payments made to BlackRock or its affiliates, securities lending and cash management, services related to the valuation and pricing of Fund portfolio holdings, and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services 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, a relevant benchmark, and performance metrics, as applicable. The Board met with BlackRock’s senior management personnel responsible for investment activities, including the senior investment officers. The Board also reviewed the materials provided by each Fund’s portfolio management team discussing each Fund’s performance and each Fund’s investment objective(s), strategies and outlook.

The Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and each Fund’s portfolio management team; BlackRock’s research capabilities; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board engaged in a review 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 and create performance incentives.

In addition to investment advisory services, the Board considered the quality of the administrative and other non-investment advisory services provided to each Fund. BlackRock and its affiliates provide each Fund with certain administrative, shareholder and other services (in addition to any such services provided to each Fund by third parties) and officers and other personnel as are necessary for the operations of each Fund. In particular, BlackRock and its affiliates provide each Fund with administrative services including, among others: (i) preparing disclosure documents, such as the prospectus, the summary prospectus (as applicable), the statement of additional information and periodic shareholder reports; (ii) oversight of daily

¹  Funds are ranked by Broadridge in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable.

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

accounting and pricing; (iii) preparing periodic filings with regulators; (iv) overseeing and coordinating the activities of other service providers; (v) organizing Board meetings and preparing the materials for such Board meetings; (vi) providing legal and compliance support; (vii) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger, consolidation or repurposing of certain open-end funds; and (viii) performing other administrative functions necessary for the operation of each 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, shareholder services, and legal & compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of each 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 Meeting, the Board was provided with reports independently prepared by Broadridge, which included a comprehensive analysis of each Fund’s performance. The Board also reviewed a narrative and statistical analysis of the Broadridge data that was prepared by BlackRock. In connection with its review, the Board received and reviewed information regarding the investment performance of each Fund as compared to other funds in its applicable Broadridge category as well as, with respect to Advantage Large Cap Core V.I. Fund, Advantage Large Cap Value V.I. Fund, Advantage U.S. Total Market V.I. Fund, Basic Value V.I. Fund, Capital Appreciation V.I. Fund, Global Opportunities V.I. Fund, International V.I. Fund, and Large Cap Focus Growth V.I. Fund, the applicable Morningstar Classification. The Board was provided with a description of the methodology used by Broadridge to select peer funds and periodically meets with Broadridge representatives to review its methodology. The Board was provided with information on the composition of the Broadridge performance universes and expense universes. The Board and its Performance Oversight Committee regularly review, and meet with Fund management to discuss, the performance of each Fund throughout the year.

In evaluating performance, the Board recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results. Further, the Board recognized that it is possible that long-term performance can be adversely affected by even one period of significant underperformance so that a single investment decision or theme has the ability to affect long-term performance disproportionately.

The Board noted that for each of the one-, three- and five-year periods reported, the Advantage Large Cap Core V.I. Fund ranked in the third quartile, against its Morningstar Performance Universe. BlackRock believes that the Morningstar Performance Universe is an appropriate performance metric for the Advantage Large Cap Core V.I. Fund. The Board and BlackRock reviewed the Advantage Large Cap Core V.I. Fund’s underperformance during these periods. The Board noted that effective June 12, 2017, the Advantage Large Cap Core V.I. Fund had undergone changes in its investment strategy and portfolio management team, and in connection with such changes, the Fund changed its name from BlackRock Large Cap Core V.I. Fund to BlackRock Advantage Large Cap Core V.I. Fund.

The Board noted that for the one-, three- and five-year periods reported, the Advantage Large Cap Value V.I. Fund ranked in the third, second and third quartiles, respectively, against its Morningstar Performance Universe. BlackRock believes that the Morningstar Performance Universe is an appropriate performance metric for the Advantage Large Cap Value V.I. Fund. The Board and BlackRock reviewed the Advantage Large Cap Value V.I. Fund’s underperformance during the one-year and five-year periods. The Board noted that effective June 12, 2017, the Advantage Large Cap Value V.I. Fund had undergone changes in its investment objective, investment strategy and portfolio management team, and in connection with such changes, the Fund changed its name from BlackRock Large Cap Value V.I. Fund to BlackRock Advantage Large Cap Value V.I. Fund.

The Board noted that for each of the one-, three- and five-year periods reported, the Advantage U.S. Total Market V.I. Fund ranked in the second quartile, against its Morningstar Performance Universe. BlackRock believes that the Morningstar Performance Universe is an appropriate performance metric for the Advantage U.S. Total Market V.I. Fund. The Board noted that effective June 12, 2017, the Advantage U.S. Total Market V.I. Fund had undergone changes in its investment strategy and portfolio management team, and in connection with such changes, the Fund changed its name from BlackRock Value Opportunities V.I. Fund to BlackRock Advantage U.S. Total Market V.I. Fund.

The Board noted that for the one-, three- and five-year periods reported, the Basic Value V.I. Fund ranked in the first, third, and second quartiles, respectively, against its Morningstar Performance Universe. BlackRock believes that the Morningstar Performance Universe is an appropriate performance metric for the Basic Value V.I. Fund. The Board and BlackRock reviewed the Basic Value V.I. Fund’s underperformance during the three-year period. BlackRock and the Board previously had discussed changes within the portfolio management team. The Board will continue to monitor the Basic Value V.I. Fund’s performance.

The Board noted that for each of the one-, three- and five-year periods reported, the Capital Appreciation V.I. Fund ranked in the fourth quartile against its Morningstar Performance Universe. BlackRock believes that the Morningstar Performance Universe is an appropriate performance metric for the Capital Appreciation V.I. Fund. The Board and BlackRock reviewed the Capital Appreciation V.I. Fund’s underperformance during these periods.

The Board and BlackRock discussed BlackRock’s strategy for improving the Capital Appreciation V.I. Fund’s investment performance. Discussions covered topics such as: investment risks undertaken by the Capital Appreciation V.I. Fund; performance attribution; the Fund’s investment personnel; and the resources appropriate to support the Fund’s investment processes.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 3

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

The Board noted that for the one-, three- and five-year periods reported, the Equity Dividend V.I. Fund ranked in the second, first and fourth quartiles, respectively, against its Broadridge Performance Universe. The Board and BlackRock reviewed the Equity Dividend V.I. Fund’s underperformance during the five-year period.

The Board noted that for the one-, three- and five-year periods reported, the Global Allocation V.I. Fund ranked in the third, second and second quartiles, respectively, against its Broadridge Performance Universe. The Board and BlackRock reviewed the Global Allocation V.I. Fund’s underperformance during the one-year period.

The Board noted that for the one-, three- and five-year periods reported, the Global Opportunities V.I. Fund ranked in the third, fourth, and fourth quartiles, respectively, against its Morningstar Performance Universe. BlackRock believes that the Morningstar Performance Universe is an appropriate performance metric for the Global Opportunities V.I. Fund. The Board and BlackRock reviewed the Global Opportunities V.I. Fund’s underperformance during these periods.

The Board and BlackRock discussed BlackRock’s strategy for improving the Global Opportunities V.I. Fund’s investment performance. Discussions covered topics such as: investment risks undertaken by the Global Opportunities V.I. Fund; performance attribution; the Fund’s investment personnel; and the resources appropriate to support the Fund’s investment processes.

The Board noted that for each of the one-, three- and five-year periods reported, the Government Money Market V.I. Fund ranked in the first quartile, against its Broadridge Performance Universe. The Board reviewed the Government Money Market V.I. Fund’s performance within the context of the low yield environment that has existed over the past few years.

The quartile standing of the Government Money Market V.I. Fund in its Broadridge Performance Universe takes into account the Fund’s current yield only. BlackRock has reviewed with the Board that a money market fund can only be understood holistically, accounting for current yield and risk. While the Board reviews the Government Money Market V.I. Fund’s current yield performance, it also examines the liquidity, duration, and credit quality of the Fund’s portfolio. In the Board’s view, BlackRock’s money market funds have performed well over the one-, three- and five-year periods given BlackRock’s emphasis on preserving capital and seeking as high a level of current income as is consistent with liquidity while simultaneously managing risk.

The Board noted that for the one-, three- and five-year periods reported, the High Yield V.I. Fund ranked in the third, second and first quartiles, respectively, against its Broadridge Performance Universe. The Board and BlackRock reviewed the High Yield V.I. Fund’s underperformance during the one-year period.

The Board noted that for each of the one-, three- and five-year periods reported, the International V.I. Fund ranked in the third quartile against its Morningstar Performance Universe. BlackRock believes that the Morningstar Performance Universe is an appropriate performance metric for the International V.I. Fund. The Board and BlackRock reviewed the International V.I. Fund’s underperformance during these periods.

The Board and BlackRock discussed BlackRock’s strategy for improving the International V.I. Fund’s investment performance. Discussions covered topics such as: investment risks undertaken by the International V.I. Fund; performance attribution; the Fund’s investment personnel; and the resources appropriate to support the Fund’s investment processes.

The Board noted that for the one-year and since-inception periods reported, the iShares Alternative Strategies V.I. Fund ranked in the second and first quartiles, respectively, against its Broadridge Performance Universe.

The Board noted that for the one-year and since-inception periods reported, the iShares Dynamic Allocation V.I. Fund ranked in the second and third quartiles, respectively, against its Broadridge Performance Universe. The Board and BlackRock reviewed and discussed the reasons for the iShares Dynamic Allocation V.I. Fund’s underperformance during the since-inception period.

The Board noted that for the one-year and since-inception periods reported, the iShares Dynamic Fixed Income V.I. Fund ranked in the fourth and third quartiles, respectively, against its Broadridge Performance Universe. The Board and BlackRock reviewed the iShares Dynamic Fixed Income V.I. Fund’s underperformance during these periods.

The Board and BlackRock discussed BlackRock’s strategy for improving the iShares Dynamic Fixed Income V.I. Fund’s investment performance. Discussions covered topics such as: investment risks undertaken by the iShares Dynamic Fixed Income V.I. Fund; performance attribution; the Fund’s investment personnel; and the resources appropriate to support the Fund’s investment processes.

The Board noted that for the one-year and since-inception periods reported, the iShares Equity Appreciation V.I. Fund ranked in the first and fourth quartiles, respectively, against its Broadridge Performance Universe. The Board and BlackRock reviewed the iShares Equity Appreciation V.I. Fund’s underperformance during the since-inception period.

The Board and BlackRock discussed BlackRock’s strategy for improving the iShares Equity Appreciation V.I. Fund’s investment performance. Discussions covered topics such as: investment risks undertaken by the iShares Equity Appreciation V.I. Fund; performance attribution; the Fund’s investment personnel; and the resources appropriate to support the Fund’s investment processes.

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

The Board noted that for the one-, three- and five-year periods reported, the Large Cap Focus Growth V.I. Fund ranked in the first, first and second quartiles, respectively, against its Morningstar Performance Universe. BlackRock believes that the Morningstar Performance Universe is an appropriate performance metric for the Large Cap Focus Growth V.I. Fund. The Board noted that effective June 12, 2017 the Large Cap Focus Growth V.I. Fund had undergone changes in its investment strategy and portfolio management team, and in connection with such changes, the Fund changed its name from BlackRock Large Cap Growth V.I. Fund to BlackRock Large Cap Focus Growth V.I. Fund.

The Board noted that for the one-, three- and five-year periods reported, the Managed Volatility V.I. Fund ranked in the fourth, third, and third quartiles, respectively, against its Broadridge Performance Universe. The Board and BlackRock reviewed the Managed Volatility V.I. Fund’s underperformance during these periods.

The Board and BlackRock discussed BlackRock’s strategy for improving the Managed Volatility V.I. Fund’s investment performance. Discussions covered topics such as: investment risks undertaken by the Managed Volatility V.I. Fund; performance attribution; the Fund’s investment personnel; and the resources appropriate to support the Fund’s investment processes.

The Board noted that for each of the one-, three-, and five-year periods reported, the S&P 500 Index V.I. Fund ranked in the second quartile against its Broadridge Performance Universe.

The Board noted that for the one-, three- and five-year periods reported, the Total Return V.I. Fund ranked in the third, second, and second quartiles, respectively, against its Broadridge Performance Universe. The Board and BlackRock reviewed the Total Return V.I. Fund’s underperformance during the one-year period.

The Board noted that for the one-, three- and five-year periods reported, the U.S. Government Bond V.I. Fund ranked in the first, first and second quartiles, respectively, against its Broadridge Performance Universe.

C. Consideration of the Advisory/Management 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 management fee rate compared with the other funds in its Broadridge category. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any reimbursements or fee waivers. The Board also compared each Fund’s total expense ratio, as well as its actual management fee rate, to those of other funds in its Broadridge category. The total expense ratio represents a fund’s total net operating expenses, including any 12b-1 or non 12b-1 service fees. The total expense ratio gives effect to any expense reimbursements or fee waivers that benefit a fund, and the actual management fee rate gives effect to any management fee reimbursements or waivers that benefit a fund. The Board considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts and sub-advised mutual funds (including mutual funds sponsored by third parties).

The Board received and reviewed statements relating to BlackRock’s financial condition. The Board reviewed BlackRock’s profitability methodology and 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, 2016 compared to available aggregate profitability data provided for the prior two years. The Board reviewed BlackRock’s profitability with respect to certain other U.S. 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, precision of expense allocations and business mix. As a result, calculating and comparing profitability at individual fund levels is difficult.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Board reviewed BlackRock’s overall operating margin, in general, compared to that of certain other publicly-traded asset management firms. The Board considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

In addition, the Board considered the 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 of managing each Fund, to each Fund. The Board may receive and review information from independent third parties as part of its annual evaluation. The Board considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Board. The Board further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk, and liability profile in servicing each Fund in contrast to what is required of BlackRock with respect to other products with similar investment mandates across the open-end fund, ETF, closed-end fund, sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable.

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Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

The Board noted that the Advantage Large Cap Core V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio ranked in the first and second quartiles, respectively, relative to the Fund’s Expense Peers. The Board also noted that the Advantage 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 Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Advantage Large Cap Core V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Advantage Large Cap Core V.I. Fund on a class-by-class basis.

The Board noted that the Advantage Large Cap Value V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio each ranked in the second quartile, relative to the Fund’s Expense Peers. The Board also noted that the Advantage Large Cap Value V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. Additionally, the Board noted that BlackRock had voluntarily agreed to waive a portion of the advisory fee payable by the Advantage Large Cap Value V.I. Fund. This waiver may be discontinued at any time without notice. The Board further noted that BlackRock has contractually agreed to a cap on the Advantage Large Cap Value V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. In addition, the Board noted that, in connection with the changes to the Advantage Large Cap Value V.I. Fund’s investment strategy, BlackRock proposed, and the Board agreed to, a lower contractual expense cap on a class-by-class basis. This contractual expense cap reduction was implemented on June 12, 2017. Finally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Advantage Large Cap Value V.I. Fund on a class-by-class basis. The Board also noted that under the new contractual expense cap the Advantage Large Cap Value V.I. Fund’s estimated total expense ratio is expected to rank in the first quartile.

The Board noted that the Advantage U.S. Total Market V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio ranked in the first and second quartiles, respectively, relative to the Fund’s Expense Peers. The Board also noted that the Advantage U.S. Total Market V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Advantage U.S. Total Market V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. In addition, the Board noted that, in connection with the changes to the Advantage U.S. Total Market V.I. Fund’s investment strategy, BlackRock proposed, and the Board agreed to, a lower contractual expense cap on a class-by-class basis. This contractual expense cap reduction was implemented on June 12, 2017. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Advantage U.S. Total Market V.I. Fund on a class-by-class basis. The Board also noted that based on a pro-forma Broadridge expense group chosen for the new investment strategy of the Advantage U.S. Total Market V.I. Fund, and under the new contractual expense cap, the Fund’s estimated total expense ratio is expected to rank in the first quartile.

The Board noted that the Basic Value V.I. Fund’s contractual management fee rate ranked in the third quartile, and that the actual management fee rate and total expense ratio ranked in the third and second quartiles, respectively, relative to the Fund’s Expense Peers. The Board also noted that the Basic Value V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Basic Value V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Basic Value V.I. Fund on a class-by-class basis.

The Board noted that the Capital Appreciation V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio ranked in the first and second quartiles, respectively, relative to the Fund’s Expense Peers. The Board also noted that the Capital Appreciation V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Capital Appreciation V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Capital Appreciation V.I. Fund on a class-by-class basis.

The Board noted that the Equity Dividend V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Fund’s Expense Peers. The Board also noted that the Equity Dividend V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Equity Dividend V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Equity Dividend V.I. Fund on a class-by-class basis.

The Board noted that the Global Allocation V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio ranked in the second and first quartiles, respectively, relative to the Fund’s Expense Peers. The Board also noted that the Global Allocation V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Global Allocation V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Global Allocation V.I. Fund on a class-by-class basis.

The Board noted that the Global Opportunities V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio ranked in the first and second quartiles, respectively, relative to the Fund’s Expense Peers. The Board also noted that the Global Opportunities V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Global Opportunities V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. The Board also noted that BlackRock agreed to a lower contractual expense cap on a class-by-class basis. The expense cap reduction was implemented on June 1, 2015. After discussions between the Board, including the Independent Board Members, and BlackRock, the Board and BlackRock agreed to a continuation of the contractual cap. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Global Opportunities V.I. Fund on a class-by-class basis.

The Board noted that the Government Money Market V.I. Fund’s contractual management fee rate ranked in the third quartile, and that the actual management fee rate and total expense ratio each ranked in the fourth quartile, relative to the Fund’s Expense Peers. The Board reviewed the Government Money Market V.I. Fund’s expenses within the context of the low yield environment and consequent expense waivers and reimbursements. The Board also noted that the Government Money Market V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Government Money Market V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. In addition, the Board noted that BlackRock proposed, and the Board agreed to, a lower contractual expense cap on a class by class basis, which was implemented on March 1, 2016. The Board also noted that, in connection with the lower contractual expense cap, effective March 1, 2016, BlackRock had discontinued the cap on certain operational and recordkeeping fees for the Government Money Market V.I. Fund on a class-by-class basis. Finally, the Board noted that, to enable the Government Money Market V.I. Fund to maintain minimum levels of daily net investment income, BlackRock has voluntarily agreed to waive a portion of its fees and/or reimburse the Fund’s operating expenses as necessary. This waiver and/or reimbursement may be discontinued at any time without notice.

The Board noted that the High Yield V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Fund’s Expense Peers. The Board also noted that the High Yield V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the aggregate assets of the Fund, combined with the assets of Total Return V.I. Fund, increase above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the High Yield V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the High Yield V.I. Fund on a class-by-class basis.

The Board noted that the International V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio each ranked in the second quartile, relative to the Fund’s Expense Peers. The Board also noted that the International V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the International V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the International V.I. Fund on a class-by-class basis.

BlackRock has reviewed with the Board that the varying fee structure for fund of funds can limit the value of management fee comparisons. The Board noted that the iShares Alternative Strategies V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Fund’s Expense Peers. The Board further noted that the iShares Alternative Strategies V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. Additionally, the Board noted that BlackRock has contractually agreed to a cap on the iShares Alternative Strategies V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis.

BlackRock has reviewed with the Board that the varying fee structure for fund of funds can limit the value of management fee comparisons. The Board noted that the iShares Dynamic Allocation V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Fund’s Expense Peers. The Board further noted that the iShares Dynamic Allocation V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. Additionally, the Board noted that BlackRock has contractually agreed to a cap on the iShares Dynamic Allocation V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 7

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (continued)

BlackRock has reviewed with the Board that the varying fee structure for fund of funds can limit the value of management fee comparisons. The Board noted that the iShares Dynamic Fixed Income V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Fund’s Expense Peers. The Board further noted that the iShares Dynamic Fixed Income V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. Additionally, the Board noted that BlackRock has contractually agreed to a cap on the iShares Dynamic Fixed Income V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis.

BlackRock has reviewed with the Board that the varying fee structure for fund of funds can limit the value of management fee comparisons. The Board noted that the iShares Equity Appreciation V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Fund’s Expense Peers. The Board further noted that the iShares Equity Appreciation V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. Additionally, the Board noted that BlackRock has contractually agreed to a cap on the iShares Equity Appreciation V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis.

The Board noted that the Large Cap Focus Growth V.I. Fund’s contractual management fee rate ranked in the third quartile, and that the actual management fee rate and total expense ratio each ranked in the third quartile, relative to the Fund’s Expense Peers. The Board also noted that the Large Cap Focus Growth V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Large Cap Focus Growth V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Large Cap Focus Growth V.I. Fund on a class-by-class basis. The Board also noted that based on a pro-forma Broadridge expense group chosen for the new investment strategy of the Large Cap Focus Growth V.I. Fund, the Fund’s estimated total expense ratio is expected to rank in the third quartile.

The Board noted that the Managed Volatility V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio ranked in the second and third quartiles, respectively, relative to the Fund’s Expense Peers. The Board also noted that the Managed Volatility V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Managed Volatility V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. The Board also noted that BlackRock had agreed to a lower contractual expense cap on a class-by-class basis. The contractual expense cap reduction was implemented on June 1, 2014. After discussions between the Board, including the Independent Board Members, and BlackRock, the Board and BlackRock agreed to a continuation of the contractual cap. Finally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Managed Volatility V.I. Fund on a class-by-class basis.

The Board noted that the S&P 500 Index V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio each ranked in the second quartile, relative to the Fund’s Expense Peers. The Board also noted that BlackRock has contractually agreed to a cap on the S&P 500 Index V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to waive a portion of the advisory fee payable by the S&P 500 Index V.I. Fund. Finally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the S&P 500 Index V.I. Fund on a class-by-class basis.

The Board noted that the Total Return V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio ranked in the third and first quartiles, respectively, relative to the Fund’s Expense Peers. The Board also noted that the Total Return V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the aggregate assets of the Fund, combined with the assets of High Yield V.I. Fund, increase above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the Total Return V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the Total Return V.I. Fund on a class-by-class basis.

The Board noted that the U.S. Government Bond V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio ranked in the second and fourth quartiles, respectively, relative to the Fund’s Expense Peers. The Board also noted that the U.S. Government Bond V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to a cap on the U.S. Government Bond V.I. Fund’s total expenses as a percentage of the Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock has contractually agreed to a cap on certain operational and recordkeeping fees for the U.S. Government Bond V.I. Fund on a class-by-class basis. In addition, the Board noted that BlackRock has voluntarily agreed to waive a portion of the advisory fee payable by the U.S. Government Bond V.I. Fund. The waiver was increased on June 15, 2016. After discussion between the Board, including the Independent Board Members, and BlackRock, the Board and BlackRock agreed to a continuation of the voluntary advisory fee waiver. This waiver may be discontinued at any time without notice.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements (concluded)

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, as well as the existence of expense caps, as applicable. The Board also considered the extent to which each Fund benefits from such economies in a variety of ways, and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable each Fund to more fully participate in these economies of scale. The Board considered each Fund’s asset levels and whether the current fee schedule was appropriate. In its consideration, the Board Members took into account the existence of any expense caps and further considered the continuation and/or implementation, as applicable, of such caps.

E. Other Factors Deemed Relevant by the Board Members

The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates 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 and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to each Fund, including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts.

In connection with its consideration of the 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 each Fund’s fees and expenses are too high or if they are dissatisfied with the performance of each Fund.

Conclusion

The Board, including the Independent Board Members, 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, 2018, and the Sub-Advisory Agreements between the Manager and the Sub-Advisors, with respect to each Fund, as applicable, for a one-year term ending June 30, 2018. Based upon its evaluation of all of the aforementioned factors in their totality, as well as other information, the Board, including the Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of each Fund and its shareholders. In arriving at its 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. As a result, the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 9

Disclosure of Sub-Advisory Agreement

BlackRock Global Opportunities V.I. Fund

The Board of Directors (the “Board,” and the members of which are referred to as “Board Members”) of BlackRock Variable Series Funds, Inc. (the “Corporation”), on behalf of its series BlackRock Global Opportunities V.I. Fund (the “Fund”), met in person on May 9-10, 2017 (the “May Meeting”) to consider the initial approval of the sub-advisory agreement (the “Sub-Advisory Agreement”) between BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, and BlackRock International Limited with respect to the Fund. The Sub-Advisory Agreement was substantially similar to the sub-advisory agreements previously approved with respect to certain other portfolios of the Corporation.

On the date of the May Meeting, the Board consisted of thirteen individuals, eleven of whom were not “interested persons” of the Fund as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). Pursuant to the 1940 Act, the Board is required to consider the initial approval of the Sub-Advisory Agreement.

At the May Meeting, the Board reviewed materials relating to its consideration of the proposed Sub-Advisory Agreement. The Fund’s investment advisory agreement with the Manager was most recently approved by the Board at in-person meetings on April 6, 2017 (the “April Meeting”) and the May Meeting. A discussion of the basis for the Board’s approval of this agreement at the April and May Meetings is included in this shareholder report. The factors considered by the Board at the May Meeting in connection with approval of the proposed Sub-Advisory Agreement were substantially the same as the factors considered at the April and May Meetings for the Fund’s investment advisory agreement with the Manager.

Following discussion, all the Board Members present at the May Meeting, including all the Independent Board Members present, approved the Sub-Advisory Agreement between the Manager and BlackRock International Limited with respect to the Fund for a two-year term beginning on the effective date of the Sub-Advisory Agreement. 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 Sub-Advisory Agreement were fair and reasonable and in the best interest of the Fund and its shareholders. In arriving at its decision to approve the Sub-Advisory Agreement, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

Officers and Directors

Robert M. Hernandez, Chair of the Board and Director

James H. Bodurtha, Director

Bruce R. Bond, Director

Donald W. Burton, Director

Honorable Stuart E. Eizenstat, Director

Henry Gabbay, Director

Lena G. Goldberg, Director

Henry R. Keizer, Director

John F. O’Brien, Director

Donald C. Opatrny, Director

Roberta Cooper Ramo, Director

Robert Fairbairn, Director

John M. Perlowski, Director, President and Chief Executive Officer

Jennifer McGovern, Vice President

Neal J. Andrews, Chief Financial Officer

Jay M. Fife, Treasurer

Charles Park, Chief Compliance Officer

Fernanda Piedra, Anti-Money Laundering Compliance Officer

Benjamin Archibald, Secretary

Investment Adviser BlackRock Advisors, LLC Wilmington, DE 19809	Sub-Advisers BlackRock International Limited1 Edinburgh, United Kingdom BlackRock Asset Management North Asia Limited2 Hong Kong BlackRock (Singapore) Limited2 079912 Singapore	Accounting Agent and Transfer Agent BNY Mellon Investment Servicing (US) Inc. Wilmington, DE 19809	Custodians The Bank of New York Mellon3 New York, NY 10286 Brown Brothers Harriman & Co.4 Boston, MA 02109
Distributor BlackRock Investments, LLC New York, NY 10022	Legal Counsel Willkie Farr & Gallagher LLP New York, NY 10019	Independent Registered Public Accounting Firm Deloitte & Touche LLP Philadelphia, PA 19103	Address of the Funds 100 Bellevue Parkway Wilmington, DE 19809

¹  For BlackRock International V.I. Fund and BlackRock Managed Volatility V.I Fund.

²  For BlackRock Managed Volatility V.I. Fund.

³  For all Funds except BlackRock Global Allocation V.I. Fund, BlackRock International V.I. Fund and BlackRock Large Cap Growth V.I. Fund.

⁴  For BlackRock Global Allocation V.I. Fund, BlackRock International V.I. Fund and BlackRock Large Cap Growth V.I. Fund.

BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017 11

Additional Information

      General Information

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 or how to access documents on the SEC’s website without charge 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.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available upon request and without charge (1) by calling (800) 441-7762; (2) at http://www.blackrock.com/prospectus/insurance; and (3) on the SEC’s website at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent 12-month period ended June 30 is available upon request and without charge (1) at http://www.blackrock.com/prospectus/insurance or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.

      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 non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2017

This report is only for distribution to shareholders of the Funds of BlackRock Variable Series Funds, Inc. Past performance results shown in this report should not be considered a representation of future performance. Investment return and principal value of non-money market fund shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. An investment in the BlackRock Government Money Market V.I. Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in money market funds. Statements and other information herein are as dated and are subject to change.

VS-6/17-SAR

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 –There have been no material changes to these procedures.

Item 11 – Controls and Procedures

(a) – The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined 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 15d-15(b) under the Securities Exchange Act of 1934, as amended.

(b) – There were no changes in the registrant’s internal control over financial reporting (as defined 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

(a)(1) – Code of Ethics – Not Applicable to this semi-annual report

(a)(2) – Certifications – Attached hereto

(a)(3) – Not Applicable

(b) – Certifications – Attached hereto

2

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/ John M. Perlowski
	John M. Perlowski
	Chief Executive Officer (principal executive officer) of
	BlackRock Variable Series Funds, Inc.

Date: August 28, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ John M. Perlowski
	John M. Perlowski
	Chief Executive Officer (principal executive officer) of
	BlackRock Variable Series Funds, Inc.

Date: August 28, 2017

By:	/s/ Neal J. Andrews
	Neal J. Andrews
	Chief Financial Officer (principal financial officer) of
	BlackRock Variable Series Funds, Inc.

Date: August 28, 2017

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