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 811-3329
Variable Insurance Products Fund
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Scott C. Goebel, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | December 31 |
| |
Date of reporting period: | June 30, 2008 |
This report on Form N-CSR relates solely to the Registrant's Equity-Income Portfolio, Growth Portfolio, Overseas Portfolio and Value Portfolio series (each, a "Fund" and collectively, the "Funds").
Item 1. Reports to Stockholders
Fidelity® Variable Insurance Products:
Equity-Income Portfolio
Semiannual Report
June 30, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Shareholder Expense Example | 3 | An example of shareholder expenses. |
Investment Changes | 4 | A summary of major shifts in the fund's investments over the past six months. |
Investments | 5 | A complete list of the fund's investments with their
market values. |
Financial Statements | 11 | Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights. |
Notes | 16 | Notes to the financial statements. |
Proxy Voting Results | 22 | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
January 1, 2008 | Ending
Account Value
June 30, 2008 | Expenses Paid
During Period*
January 1, 2008 to June 30, 2008 |
Initial Class | | | |
Actual | $ 1,000.00 | $ 854.40 | $ 2.58 |
Hypothetical A | $ 1,000.00 | $ 1,022.08 | $ 2.82 |
Service Class | | | |
Actual | $ 1,000.00 | $ 853.90 | $ 3.04 |
Hypothetical A | $ 1,000.00 | $ 1,021.58 | $ 3.32 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 853.10 | $ 3.73 |
Hypothetical A | $ 1,000.00 | $ 1,020.84 | $ 4.07 |
Service Class 2R | | | |
Actual | $ 1,000.00 | $ 853.60 | $ 3.73 |
Hypothetical A | $ 1,000.00 | $ 1,020.84 | $ 4.07 |
Investor Class | | | |
Actual | $ 1,000.00 | $ 854.00 | $ 3.00 |
Hypothetical A | $ 1,000.00 | $ 1,021.63 | $ 3.27 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Initial Class | .56% |
Service Class | .66% |
Service Class 2 | .81% |
Service Class 2R | .81% |
Investor Class | .65% |
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Exxon Mobil Corp. | 5.9 | 6.2 |
AT&T, Inc. | 3.5 | 3.7 |
Chevron Corp. | 2.2 | 1.9 |
ConocoPhillips | 2.0 | 1.4 |
JPMorgan Chase & Co. | 2.0 | 2.1 |
Bank of America Corp. | 2.0 | 2.8 |
Schlumberger Ltd. (NY Shares) | 1.8 | 1.5 |
General Electric Co. | 1.8 | 1.7 |
Verizon Communications, Inc. | 1.5 | 1.6 |
Citigroup, Inc. | 1.5 | 1.6 |
| 24.2 | |
Top Five Market Sectors as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Financials | 21.8 | 24.5 |
Energy | 21.3 | 18.0 |
Consumer Discretionary | 12.9 | 11.2 |
Industrials | 10.0 | 10.1 |
Information Technology | 9.2 | 10.0 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2008 * | As of December 31, 2007 ** |
 | Stocks 98.3% | | | Stocks 98.4% | |
 | Bonds 1.2% | | | Bonds 0.9% | |
 | Short-Term
Investments and
Net Other Assets 0.5% | | | Short-Term
Investments and
Net Other Assets 0.7% | |
* Foreign investments | 11.1% | | ** Foreign investments | 9.7% | |
Semiannual Report
Investments June 30, 2008 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 95.8% |
| Shares | | Value |
CONSUMER DISCRETIONARY - 12.2% |
Auto Components - 0.7% |
American Axle & Manufacturing Holdings, Inc. | 749,853 | | $ 5,991,325 |
Johnson Controls, Inc. | 1,025,852 | | 29,421,435 |
The Goodyear Tire & Rubber Co. (a) | 793,200 | | 14,142,756 |
TRW Automotive Holdings Corp. (a) | 418,600 | | 7,731,542 |
| | 57,287,058 |
Automobiles - 1.0% |
Fiat SpA | 383,700 | | 6,246,650 |
Ford Motor Co. (a) | 3,012,401 | | 14,489,649 |
General Motors Corp. (d) | 1,040,200 | | 11,962,300 |
Harley-Davidson, Inc. | 847,250 | | 30,721,285 |
Renault SA | 147,379 | | 11,994,649 |
Toyota Motor Corp. sponsored ADR | 43,500 | | 4,089,000 |
Winnebago Industries, Inc. (d) | 349,700 | | 3,563,443 |
| | 83,066,976 |
Diversified Consumer Services - 0.3% |
H&R Block, Inc. | 1,392,268 | | 29,794,535 |
Hotels, Restaurants & Leisure - 0.6% |
McDonald's Corp. | 308,300 | | 17,332,626 |
Starbucks Corp. (a) | 1,590,800 | | 25,039,192 |
Wyndham Worldwide Corp. | 286,702 | | 5,134,833 |
| | 47,506,651 |
Household Durables - 1.5% |
Beazer Homes USA, Inc. (d) | 548,987 | | 3,057,858 |
Black & Decker Corp. | 318,300 | | 18,305,433 |
Centex Corp. | 1,082,900 | | 14,478,373 |
KB Home | 197,800 | | 3,348,754 |
Lennar Corp. Class A (d) | 674,700 | | 8,325,798 |
Newell Rubbermaid, Inc. | 952,600 | | 15,994,154 |
Pulte Homes, Inc. | 612,200 | | 5,895,486 |
The Stanley Works | 409,830 | | 18,372,679 |
Whirlpool Corp. | 649,734 | | 40,108,080 |
| | 127,886,615 |
Internet & Catalog Retail - 0.2% |
Liberty Media Corp. - Interactive
Series A (a) | 1,253,369 | | 18,499,726 |
Leisure Equipment & Products - 0.5% |
Brunswick Corp. | 1,296,457 | | 13,742,444 |
Eastman Kodak Co. | 1,466,700 | | 21,164,481 |
Polaris Industries, Inc. (d) | 270,553 | | 10,924,930 |
| | 45,831,855 |
Media - 3.9% |
Belo Corp. Series A | 840,366 | | 6,143,075 |
Citadel Broadcasting Corp. | 1,986,704 | | 2,423,779 |
Clear Channel Communications, Inc. | 1,568,958 | | 55,227,322 |
Comcast Corp. Class A | 2,625,836 | | 49,812,109 |
E.W. Scripps Co. Class A | 524,760 | | 21,798,530 |
Gannett Co., Inc. | 479,800 | | 10,397,266 |
Informa PLC | 602,000 | | 4,932,741 |
|
| Shares | | Value |
McGraw-Hill Companies, Inc. | 182,500 | | $ 7,321,900 |
News Corp. Class B | 1,099,204 | | 16,872,781 |
The McClatchy Co. Class A (d) | 1,152,851 | | 7,816,330 |
The New York Times Co. Class A (d) | 551,808 | | 8,492,325 |
The Walt Disney Co. | 895,300 | | 27,933,360 |
Time Warner Cable, Inc. (a) | 622,300 | | 16,478,504 |
Time Warner, Inc. | 5,646,950 | | 83,574,860 |
Virgin Media, Inc. | 752,873 | | 10,246,602 |
Vivendi | 225,403 | | 8,499,102 |
| | 337,970,586 |
Multiline Retail - 1.8% |
Family Dollar Stores, Inc. | 658,300 | | 13,126,502 |
JCPenney Co., Inc. | 429,600 | | 15,590,184 |
Kohl's Corp. (a) | 1,166,353 | | 46,700,774 |
Macy's, Inc. (d) | 1,438,400 | | 27,933,728 |
Sears Holdings Corp. (a)(d) | 230,600 | | 16,985,996 |
Target Corp. (d) | 680,400 | | 31,631,796 |
Tuesday Morning Corp. (a)(d) | 555,523 | | 2,283,200 |
| | 154,252,180 |
Specialty Retail - 1.6% |
Chico's FAS, Inc. (a) | 781,597 | | 4,197,176 |
Foot Locker, Inc. (d) | 669,157 | | 8,331,005 |
Home Depot, Inc. | 2,691,900 | | 63,044,298 |
OfficeMax, Inc. | 513,300 | | 7,134,870 |
PetSmart, Inc. | 358,968 | | 7,161,412 |
RadioShack Corp. | 557,700 | | 6,842,979 |
Staples, Inc. | 958,945 | | 22,774,944 |
Williams-Sonoma, Inc. (d) | 776,100 | | 15,397,824 |
| | 134,884,508 |
Textiles, Apparel & Luxury Goods - 0.1% |
Liz Claiborne, Inc. | 729,615 | | 10,324,052 |
TOTAL CONSUMER DISCRETIONARY | | 1,047,304,742 |
CONSUMER STAPLES - 4.7% |
Beverages - 0.3% |
Carlsberg AS Series B (d) | 145,050 | | 13,972,630 |
Heineken NV (Bearer) | 243,454 | | 12,397,548 |
| | 26,370,178 |
Food & Staples Retailing - 1.3% |
Rite Aid Corp. (a)(d) | 2,693,868 | | 4,283,250 |
Wal-Mart Stores, Inc. | 1,889,713 | | 106,201,871 |
Winn-Dixie Stores, Inc. (a) | 237,142 | | 3,799,015 |
| | 114,284,136 |
Food Products - 0.9% |
Hershey Co. | 840,800 | | 27,561,424 |
Kraft Foods, Inc. Class A | 526,654 | | 14,983,306 |
Marine Harvest ASA (a) | 18,229,000 | | 13,351,337 |
Nestle SA (Reg.) | 400,970 | | 18,071,351 |
Tyson Foods, Inc. Class A | 400,800 | | 5,987,952 |
| | 79,955,370 |
Common Stocks - continued |
| Shares | | Value |
CONSUMER STAPLES - continued |
Household Products - 0.9% |
Energizer Holdings, Inc. (a) | 113,000 | | $ 8,259,170 |
Kimberly-Clark Corp. | 481,400 | | 28,778,092 |
Procter & Gamble Co. | 615,142 | | 37,406,785 |
| | 74,444,047 |
Personal Products - 0.3% |
Avon Products, Inc. | 479,270 | | 17,263,305 |
Estee Lauder Companies, Inc. Class A | 148,400 | | 6,893,180 |
| | 24,156,485 |
Tobacco - 1.0% |
Altria Group, Inc. | 1,270,705 | | 26,125,695 |
Philip Morris International, Inc. | 1,249,705 | | 61,722,930 |
| | 87,848,625 |
TOTAL CONSUMER STAPLES | | 407,058,841 |
ENERGY - 21.3% |
Energy Equipment & Services - 4.6% |
BJ Services Co. | 452,324 | | 14,447,229 |
Halliburton Co. | 1,000,995 | | 53,122,805 |
Nabors Industries Ltd. (a) | 1,144,413 | | 56,339,452 |
Noble Corp. | 1,587,668 | | 103,134,913 |
Pride International, Inc. (a) | 374,500 | | 17,710,105 |
Schlumberger Ltd. (NY Shares) | 1,407,857 | | 151,246,078 |
| | 396,000,582 |
Oil, Gas & Consumable Fuels - 16.7% |
Apache Corp. | 456,780 | | 63,492,420 |
Boardwalk Pipeline Partners, LP | 310,500 | | 7,293,645 |
Chevron Corp. | 1,951,542 | | 193,456,358 |
ConocoPhillips | 1,867,500 | | 176,273,325 |
CONSOL Energy, Inc. | 43,799 | | 4,921,694 |
EOG Resources, Inc. | 569,400 | | 74,705,280 |
Exxon Mobil Corp. | 5,726,793 | | 504,702,263 |
Hess Corp. | 584,200 | | 73,720,198 |
Occidental Petroleum Corp. | 909,300 | | 81,709,698 |
Peabody Energy Corp. | 297,861 | | 26,226,661 |
Repsol YPF SA | 101,300 | | 3,975,451 |
Repsol YPF SA sponsored ADR | 1,328,174 | | 52,157,393 |
Royal Dutch Shell PLC: | | | |
Class A sponsored ADR | 732,100 | | 59,819,891 |
Class B ADR | 92,000 | | 7,370,120 |
Total SA sponsored ADR | 760,133 | | 64,816,541 |
Valero Energy Corp. | 715,614 | | 29,468,985 |
Williams Companies, Inc. | 464,600 | | 18,728,026 |
| | 1,442,837,949 |
TOTAL ENERGY | | 1,838,838,531 |
|
| Shares | | Value |
FINANCIALS - 20.1% |
Capital Markets - 3.4% |
Bank of New York Mellon Corp. | 2,696,095 | | $ 101,993,274 |
Goldman Sachs Group, Inc. | 281,179 | | 49,178,207 |
KKR Private Equity Investors, LP | 266,500 | | 3,424,525 |
KKR Private Equity Investors, LP Restricted Depositary Units (e) | 601,500 | | 7,729,275 |
Legg Mason, Inc. | 329,950 | | 14,375,922 |
Lehman Brothers Holdings, Inc. | 724,046 | | 14,343,351 |
Merrill Lynch & Co., Inc. (d) | 818,600 | | 25,957,806 |
Morgan Stanley | 1,658,800 | | 59,832,916 |
State Street Corp. | 175,280 | | 11,216,167 |
| | 288,051,443 |
Commercial Banks - 4.4% |
Associated Banc-Corp. (d) | 1,194,855 | | 23,048,753 |
HSBC Holdings PLC sponsored ADR | 611,992 | | 46,939,786 |
KeyCorp | 1,335,100 | | 14,659,398 |
Lloyds TSB Group PLC | 2,265,900 | | 13,901,982 |
Mitsubishi UFJ Financial Group, Inc. sponsored ADR | 524,200 | | 4,612,960 |
PNC Financial Services Group, Inc. | 1,047,039 | | 59,785,927 |
Royal Bank of Scotland Group PLC | 1,695,536 | | 7,218,177 |
Societe Generale Series A | 99,147 | | 8,595,934 |
Sterling Financial Corp., Washington | 750,427 | | 3,106,768 |
U.S. Bancorp, Delaware | 1,153,838 | | 32,180,542 |
Wachovia Corp. | 4,237,757 | | 65,812,366 |
Wells Fargo & Co. | 4,025,100 | | 95,596,125 |
| | 375,458,718 |
Consumer Finance - 0.6% |
Capital One Financial Corp. | 144,399 | | 5,488,606 |
Discover Financial Services | 2,610,969 | | 34,386,462 |
SLM Corp. (a) | 696,432 | | 13,475,959 |
| | 53,351,027 |
Diversified Financial Services - 5.5% |
Bank of America Corp. | 7,169,377 | | 171,133,029 |
CIT Group, Inc. | 439,900 | | 2,995,719 |
Citigroup, Inc. (d) | 7,505,619 | | 125,794,174 |
JPMorgan Chase & Co. | 5,090,712 | | 174,662,329 |
| | 474,585,251 |
Insurance - 3.7% |
ACE Ltd. | 753,096 | | 41,488,059 |
American International Group, Inc. | 4,537,750 | | 120,068,865 |
Hartford Financial Services Group, Inc. | 692,900 | | 44,740,553 |
MetLife, Inc. unit | 722,300 | | 18,931,483 |
Montpelier Re Holdings Ltd. | 1,305,000 | | 19,248,750 |
PartnerRe Ltd. | 403,824 | | 27,916,353 |
The Travelers Companies, Inc. | 884,196 | | 38,374,106 |
XL Capital Ltd. Class A | 262,271 | | 5,392,292 |
| | 316,160,461 |
Real Estate Investment Trusts - 0.8% |
Annaly Capital Management, Inc. | 637,700 | | 9,890,727 |
Common Stocks - continued |
| Shares | | Value |
FINANCIALS - continued |
Real Estate Investment Trusts - continued |
Developers Diversified Realty Corp. | 667,347 | | $ 23,163,614 |
General Growth Properties, Inc. | 52,000 | | 1,821,560 |
HCP, Inc. | 671,500 | | 21,360,415 |
LaSalle Hotel Properties (SBI) | 200,481 | | 5,038,088 |
Senior Housing Properties Trust (SBI) | 559,556 | | 10,928,129 |
| | 72,202,533 |
Real Estate Management & Development - 0.3% |
CB Richard Ellis Group, Inc. Class A (a) | 1,506,641 | | 28,927,507 |
Thrifts & Mortgage Finance - 1.4% |
Countrywide Financial Corp. | 724,710 | | 3,080,018 |
Fannie Mae | 2,848,075 | | 55,565,943 |
Freddie Mac | 1,539,300 | | 25,244,520 |
MGIC Investment Corp. (d) | 722,352 | | 4,413,571 |
New York Community Bancorp, Inc. | 929,120 | | 16,575,501 |
People's United Financial, Inc. | 214,000 | | 3,338,400 |
Washington Mutual, Inc. | 2,951,442 | | 14,550,609 |
| | 122,768,562 |
TOTAL FINANCIALS | | 1,731,505,502 |
HEALTH CARE - 6.4% |
Biotechnology - 0.4% |
Amgen, Inc. (a) | 700,022 | | 33,013,038 |
Cubist Pharmaceuticals, Inc. (a) | 157,102 | | 2,805,842 |
| | 35,818,880 |
Health Care Equipment & Supplies - 0.8% |
Boston Scientific Corp. (a) | 856,500 | | 10,526,385 |
Covidien Ltd. | 825,436 | | 39,530,130 |
Medtronic, Inc. | 315,400 | | 16,321,950 |
| | 66,378,465 |
Health Care Providers & Services - 0.1% |
Brookdale Senior Living, Inc. (d) | 510,193 | | 10,387,529 |
Pharmaceuticals - 5.1% |
Bristol-Myers Squibb Co. | 1,254,600 | | 25,756,938 |
Johnson & Johnson | 1,485,400 | | 95,570,636 |
Merck & Co., Inc. | 1,543,300 | | 58,166,977 |
Pfizer, Inc. | 6,922,000 | | 120,927,340 |
Schering-Plough Corp. | 2,563,936 | | 50,483,900 |
Wyeth | 1,843,600 | | 88,419,056 |
| | 439,324,847 |
TOTAL HEALTH CARE | | 551,909,721 |
INDUSTRIALS - 10.0% |
Aerospace & Defense - 3.0% |
General Dynamics Corp. | 257,200 | | 21,656,240 |
Goodrich Corp. | 306,600 | | 14,551,236 |
Honeywell International, Inc. | 1,854,425 | | 93,240,489 |
|
| Shares | | Value |
Lockheed Martin Corp. | 319,500 | | $ 31,521,870 |
Northrop Grumman Corp. | 37,500 | | 2,508,750 |
Spirit AeroSystems Holdings, Inc.
Class A (a) | 658,082 | | 12,622,013 |
The Boeing Co. | 410,584 | | 26,983,580 |
United Technologies Corp. | 935,640 | | 57,728,988 |
| | 260,813,166 |
Building Products - 0.2% |
Masco Corp. | 1,425,400 | | 22,421,542 |
Commercial Services & Supplies - 0.7% |
Avery Dennison Corp. | 602,279 | | 26,458,116 |
Equifax, Inc. | 370,134 | | 12,443,905 |
Waste Management, Inc. | 564,300 | | 21,279,753 |
| | 60,181,774 |
Industrial Conglomerates - 3.4% |
3M Co. | 823,500 | | 57,307,365 |
General Electric Co. | 5,664,290 | | 151,179,900 |
Siemens AG sponsored ADR | 426,400 | | 46,959,432 |
Tyco International Ltd. | 872,236 | | 34,924,329 |
| | 290,371,026 |
Machinery - 1.7% |
Briggs & Stratton Corp. (d) | 1,147,588 | | 14,551,416 |
Caterpillar, Inc. | 276,700 | | 20,425,994 |
Eaton Corp. | 203,900 | | 17,325,383 |
Illinois Tool Works, Inc. | 292,100 | | 13,877,671 |
Ingersoll-Rand Co. Ltd. Class A | 702,488 | | 26,294,126 |
Kennametal, Inc. | 252,200 | | 8,209,110 |
SPX Corp. | 363,210 | | 47,845,653 |
| | 148,529,353 |
Marine - 0.1% |
Alexander & Baldwin, Inc. | 136,800 | | 6,231,240 |
Road & Rail - 0.9% |
Burlington Northern Santa Fe Corp. | 521,800 | | 52,122,602 |
Union Pacific Corp. | 311,000 | | 23,480,500 |
| | 75,603,102 |
TOTAL INDUSTRIALS | | 864,151,203 |
INFORMATION TECHNOLOGY - 9.0% |
Communications Equipment - 0.9% |
Cisco Systems, Inc. (a) | 1,815,700 | | 42,233,182 |
Harris Corp. | 241,400 | | 12,188,286 |
Motorola, Inc. | 2,489,712 | | 18,274,486 |
| | 72,695,954 |
Computers & Peripherals - 2.5% |
EMC Corp. (a) | 1,303,200 | | 19,144,008 |
Hewlett-Packard Co. | 2,250,611 | | 99,499,512 |
International Business Machines Corp. | 799,700 | | 94,788,441 |
| | 213,431,961 |
Electronic Equipment & Instruments - 0.8% |
Arrow Electronics, Inc. (a) | 642,600 | | 19,740,672 |
Common Stocks - continued |
| Shares | | Value |
INFORMATION TECHNOLOGY - continued |
Electronic Equipment & Instruments - continued |
Avnet, Inc. (a) | 638,230 | | $ 17,410,914 |
Tyco Electronics Ltd. | 986,536 | | 35,337,720 |
| | 72,489,306 |
Internet Software & Services - 0.1% |
Google, Inc. Class A (sub. vtg.) (a) | 21,692 | | 11,419,103 |
IT Services - 0.6% |
Electronic Data Systems Corp. | 691,200 | | 17,031,168 |
MoneyGram International, Inc. | 895,100 | | 814,541 |
The Western Union Co. | 831,400 | | 20,552,208 |
Unisys Corp. (a) | 2,098,000 | | 8,287,100 |
Visa, Inc. | 59,443 | | 4,833,310 |
| | 51,518,327 |
Office Electronics - 0.3% |
Xerox Corp. | 1,763,635 | | 23,914,891 |
Semiconductors & Semiconductor Equipment - 3.0% |
Analog Devices, Inc. | 1,025,500 | | 32,580,135 |
Applied Materials, Inc. | 2,149,400 | | 41,032,046 |
Atmel Corp. (a) | 940,400 | | 3,272,592 |
Intel Corp. | 4,124,600 | | 88,596,408 |
Micron Technology, Inc. (a) | 941,000 | | 5,646,000 |
National Semiconductor Corp. | 1,854,547 | | 38,092,395 |
Novellus Systems, Inc. (a) | 831,039 | | 17,609,716 |
Teradyne, Inc. (a) | 2,076,900 | | 22,991,283 |
Varian Semiconductor Equipment Associates, Inc. (a) | 347,400 | | 12,096,468 |
| | 261,917,043 |
Software - 0.8% |
Microsoft Corp. | 1,598,800 | | 43,982,988 |
Symantec Corp. (a) | 1,227,933 | | 23,760,504 |
| | 67,743,492 |
TOTAL INFORMATION TECHNOLOGY | | 775,130,077 |
MATERIALS - 2.4% |
Chemicals - 1.5% |
Celanese Corp. Class A | 620,800 | | 28,345,728 |
Chemtura Corp. | 2,415,964 | | 14,109,230 |
Dow Chemical Co. | 542,200 | | 18,928,202 |
E.I. du Pont de Nemours & Co. | 549,000 | | 23,546,610 |
Georgia Gulf Corp. (d) | 617,292 | | 1,790,147 |
H.B. Fuller Co. | 389,950 | | 8,750,478 |
Hercules, Inc. | 560,816 | | 9,494,615 |
Linde AG | 194,300 | | 27,291,412 |
| | 132,256,422 |
Containers & Packaging - 0.1% |
Smurfit-Stone Container Corp. (a) | 2,442,972 | | 9,942,896 |
|
| Shares | | Value |
Metals & Mining - 0.8% |
Alcoa, Inc. | 1,576,371 | | $ 56,150,335 |
Nucor Corp. | 133,800 | | 9,990,846 |
| | 66,141,181 |
TOTAL MATERIALS | | 208,340,499 |
TELECOMMUNICATION SERVICES - 6.1% |
Diversified Telecommunication Services - 5.4% |
AT&T, Inc. | 8,847,269 | | 298,064,493 |
Qwest Communications International, Inc. | 8,250,900 | | 32,426,037 |
Verizon Communications, Inc. | 3,689,602 | | 130,611,911 |
| | 461,102,441 |
Wireless Telecommunication Services - 0.7% |
Sprint Nextel Corp. | 3,175,700 | | 30,169,150 |
Vodafone Group PLC sponsored ADR | 1,043,587 | | 30,744,073 |
| | 60,913,223 |
TOTAL TELECOMMUNICATION SERVICES | | 522,015,664 |
UTILITIES - 3.6% |
Electric Utilities - 2.0% |
Allegheny Energy, Inc. | 463,300 | | 23,215,963 |
Entergy Corp. | 535,600 | | 64,529,088 |
Exelon Corp. | 572,700 | | 51,520,092 |
PPL Corp. | 562,400 | | 29,396,648 |
| | 168,661,791 |
Independent Power Producers & Energy Traders - 0.4% |
AES Corp. (a) | 1,755,658 | | 33,726,190 |
Multi-Utilities - 1.2% |
Public Service Enterprise Group, Inc. | 1,555,900 | | 71,462,487 |
Wisconsin Energy Corp. | 782,600 | | 35,389,172 |
| | 106,851,659 |
TOTAL UTILITIES | | 309,239,640 |
TOTAL COMMON STOCKS (Cost $7,485,036,944) | 8,255,494,420 |
Convertible Preferred Stocks - 2.5% |
| | | |
CONSUMER DISCRETIONARY - 0.2% |
Automobiles - 0.1% |
General Motors Corp. Series C, 6.25% | 659,300 | | 8,748,911 |
Hotels, Restaurants & Leisure - 0.1% |
Six Flags, Inc. 7.25% PIERS | 404,400 | | 4,246,200 |
TOTAL CONSUMER DISCRETIONARY | | 12,995,111 |
Convertible Preferred Stocks - continued |
| Shares | | Value |
FINANCIALS - 1.6% |
Capital Markets - 0.4% |
Legg Mason, Inc. 7.00% | 230,600 | | $ 9,649,918 |
Lehman Brothers Holdings, Inc. 7.25% | 32,400 | | 26,063,532 |
| | 35,713,450 |
Commercial Banks - 0.1% |
Huntington Bancshares, Inc. 8.50% | 9,000 | | 6,300,000 |
Diversified Financial Services - 0.5% |
Bank of America Corp. Series L, 7.25% | 17,700 | | 15,642,375 |
CIT Group, Inc.: | | | |
7.75% | 406,600 | | 4,013,142 |
Series C, 8.75% | 81,800 | | 3,343,984 |
Citigroup, Inc. Series T, 6.50% | 432,849 | | 18,828,932 |
| | 41,828,433 |
Insurance - 0.3% |
American International Group, Inc.
Series A, 8.50% | 510,400 | | 30,451,995 |
Thrifts & Mortgage Finance - 0.3% |
Fannie Mae 8.75% | 541,300 | | 20,840,050 |
Washington Mutual, Inc. Series R, 7.75% | 11,800 | | 6,882,350 |
| | 27,722,400 |
TOTAL FINANCIALS | | 142,016,278 |
HEALTH CARE - 0.2% |
Pharmaceuticals - 0.2% |
Schering-Plough Corp. 6.00% | 93,000 | | 17,703,480 |
MATERIALS - 0.5% |
Chemicals - 0.0% |
Celanese Corp. 4.25% | 67,100 | | 3,901,865 |
Metals & Mining - 0.5% |
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 232,700 | | 39,051,249 |
TOTAL MATERIALS | | 42,953,114 |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $256,918,678) | 215,667,983 |
Investment Companies - 0.0% |
| | | |
Ares Capital Corp.
(Cost $10,607,570) | 604,054 | | 6,088,864 |
Corporate Bonds - 1.2% |
| Principal Amount | | |
Convertible Bonds - 1.1% |
CONSUMER DISCRETIONARY - 0.5% |
Automobiles - 0.1% |
Ford Motor Co. 4.25% 12/15/36 | | $ 10,280,000 | | 7,388,236 |
|
| Principal Amount | | Value |
Hotels, Restaurants & Leisure - 0.0% |
Six Flags, Inc. 4.5% 5/15/15 | | $ 3,650,000 | | $ 2,080,500 |
Media - 0.4% |
Liberty Media Corp.: | | | | |
3.5% 1/15/31 | | 259,098 | | 164,931 |
4% 11/15/29 (e) | | 4,750,000 | | 2,565,000 |
3.5% 1/15/31 (e) | | 9,480,719 | | 6,035,027 |
News America, Inc. liquid yield option note: | | | | |
0% 2/28/21 (e) | | 22,670,000 | | 13,233,613 |
0% 2/28/21 | | 3,490,000 | | 2,037,288 |
Virgin Media, Inc. 6.5% 11/15/16 (e) | | 9,500,000 | | 9,788,800 |
| | 33,824,659 |
TOTAL CONSUMER DISCRETIONARY | | 43,293,395 |
CONSUMER STAPLES - 0.1% |
Food & Staples Retailing - 0.1% |
Rite Aid Corp. 8.5% 5/15/15 | | 6,360,000 | | 5,798,412 |
FINANCIALS - 0.1% |
Thrifts & Mortgage Finance - 0.1% |
MGIC Investment Corp. 9% 4/1/63 (e) | | 5,740,000 | | 4,328,069 |
INDUSTRIALS - 0.0% |
Airlines - 0.0% |
UAL Corp.: | | | | |
4.5% 6/30/21 (e) | | 8,490,000 | | 3,207,522 |
4.5% 6/30/21 | | 280,000 | | 105,784 |
| | 3,313,306 |
INFORMATION TECHNOLOGY - 0.2% |
Semiconductors & Semiconductor Equipment - 0.2% |
Advanced Micro Devices, Inc.: | | | | |
6% 5/1/15 (e) | | 14,340,000 | | 9,095,862 |
6% 5/1/15 | | 4,780,000 | | 3,031,954 |
Micron Technology, Inc. 1.875% 6/1/14 | | 2,570,000 | | 1,829,532 |
| | 13,957,348 |
TELECOMMUNICATION SERVICES - 0.2% |
Diversified Telecommunication Services - 0.2% |
Level 3 Communications, Inc.: | | | | |
3.5% 6/15/12 | | 6,320,000 | | 5,033,627 |
5.25% 12/15/11 (e) | | 11,850,000 | | 10,740,129 |
5.25% 12/15/11 | | 4,290,000 | | 3,888,199 |
| | 19,661,955 |
TOTAL CONVERTIBLE BONDS | | 90,352,485 |
Corporate Bonds - continued |
| Principal Amount | | Value |
Nonconvertible Bonds - 0.1% |
MATERIALS - 0.1% |
Chemicals - 0.1% |
Hercules, Inc. 6.5% 6/30/29 unit | | $ 15,700,000 | | $ 11,243,335 |
TOTAL CORPORATE BONDS (Cost $133,000,489) | 101,595,820 |
Money Market Funds - 2.3% |
| Shares | | |
Fidelity Cash Central Fund, 2.38% (b) | 23,908,917 | | 23,908,917 |
Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c) | 172,583,116 | | 172,583,116 |
TOTAL MONEY MARKET FUNDS (Cost $196,492,033) | 196,492,033 |
TOTAL INVESTMENT PORTFOLIO - 101.8% (Cost $8,082,055,714) | | 8,775,339,120 |
NET OTHER ASSETS - (1.8)% | | (155,815,817) |
NET ASSETS - 100% | $ 8,619,523,303 |
Security Type Abbreviation |
PIERS | - | Preferred Income Equity Redeemable Securities |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $66,723,297 or 0.8% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 214,452 |
Fidelity Securities Lending Cash Central Fund | 3,161,485 |
Total | $ 3,375,937 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
#Valuation Inputs at Reporting Date: |
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 8,775,339,120 | $ 8,307,626,353 | $ 467,712,767 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 88.9% |
United Kingdom | 2.2% |
Bermuda | 2.1% |
Netherlands Antilles | 1.8% |
Cayman Islands | 1.7% |
France | 1.1% |
Others (individually less than 1%) | 2.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
| June 30, 2008 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $161,966,591) - See accompanying schedule: Unaffiliated issuers (cost $7,885,563,681) | $ 8,578,847,087 | |
Fidelity Central Funds (cost $196,492,033) | 196,492,033 | |
Total Investments (cost $8,082,055,714) | | $ 8,775,339,120 |
Cash | | 254,870 |
Receivable for investments sold | | 16,463,424 |
Receivable for fund shares sold | | 9,144,398 |
Dividends receivable | | 13,450,945 |
Interest receivable | | 760,649 |
Distributions receivable from Fidelity Central Funds | | 652,088 |
Prepaid expenses | | 17,353 |
Other receivables | | 329,069 |
Total assets | | 8,816,411,916 |
| | |
Liabilities | | |
Payable for investments purchased | $ 5,053,920 | |
Payable for fund shares redeemed | 13,553,601 | |
Accrued management fee | 3,500,905 | |
Distribution fees payable | 534,981 | |
Other affiliated payables | 631,865 | |
Other payables and accrued expenses | 1,030,225 | |
Collateral on securities loaned, at value | 172,583,116 | |
Total liabilities | | 196,888,613 |
| | |
Net Assets | | $ 8,619,523,303 |
Net Assets consist of: | | |
Paid in capital | | $ 7,465,988,382 |
Undistributed net investment income | | 103,593,429 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 356,657,799 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 693,283,693 |
Net Assets | | $ 8,619,523,303 |
Statement of Assets and Liabilities - continued
| June 30, 2008 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($5,602,666,064 ÷ 274,510,254 shares) | | $ 20.41 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($693,769,312 ÷ 34,133,832 shares) | | $ 20.32 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($2,122,863,690 ÷ 105,657,667 shares) | | $ 20.09 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($9,250,599 ÷ 462,803 shares) | | $ 19.99 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($190,973,638 ÷ 9,382,576 shares) | | $ 20.35 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Six months ended June 30, 2008 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 127,539,484 |
Interest | | 3,225,822 |
Income from Fidelity Central Funds | | 3,375,937 |
Total income | | 134,141,243 |
| | |
Expenses | | |
Management fee | $ 22,235,162 | |
Transfer agent fees | 3,342,260 | |
Distribution fees | 3,358,008 | |
Accounting and security lending fees | 656,790 | |
Custodian fees and expenses | 85,219 | |
Independent trustees' compensation | 21,516 | |
Depreciation in deferred trustee compensation account | (933) | |
Audit | 41,207 | |
Legal | 18,784 | |
Interest | 121,154 | |
Miscellaneous | 902,077 | |
Total expenses before reductions | 30,781,244 | |
Expense reductions | (26,890) | 30,754,354 |
Net investment income (loss) | | 103,386,889 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 368,341,704 | |
Investment not meeting investment restrictions | 32,186 | |
Foreign currency transactions | (18,217) | |
Total net realized gain (loss) | | 368,355,673 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (2,006,065,507) | |
Assets and liabilities in foreign currencies | (378) | |
Total change in net unrealized appreciation (depreciation) | | (2,006,065,885) |
Net gain (loss) | | (1,637,710,212) |
Net increase (decrease) in net assets resulting from operations | | $ (1,534,323,323) |
Statement of Changes in Net Assets
| Six months ended June 30, 2008
(Unaudited) | Year ended
December 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 103,386,889 | $ 197,428,237 |
Net realized gain (loss) | 368,355,673 | 910,261,376 |
Change in net unrealized appreciation (depreciation) | (2,006,065,885) | (894,509,627) |
Net increase (decrease) in net assets resulting from operations | (1,534,323,323) | 213,179,986 |
Distributions to shareholders from net investment income | - | (201,405,100) |
Distributions to shareholders from net realized gain | (8,981,541) | (921,452,556) |
Total distributions | (8,981,541) | (1,122,857,656) |
Share transactions - net increase (decrease) | (786,102,687) | (135,088,400) |
Redemption fees | 1,305 | 5,392 |
Total increase (decrease) in net assets | (2,329,406,246) | (1,044,760,678) |
| | |
Net Assets | | |
Beginning of period | 10,948,929,549 | 11,993,690,227 |
End of period (including undistributed net investment income of $103,593,429 and undistributed net investment income of $206,540, respectively) | $ 8,619,523,303 | $ 10,948,929,549 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 23.91 | $ 26.20 | $ 25.49 | $ 25.37 | $ 23.18 | $ 18.16 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .24 | .47 | .45 | .42 | .40 | .36 |
Net realized and unrealized gain (loss) | (3.72) | (.05) H | 4.37 | 1.00 | 2.24 | 5.01 |
Total from investment operations | (3.48) | .42 | 4.82 | 1.42 | 2.64 | 5.37 |
Distributions from net investment income | - | (.50) | (.89) | (.41) | (.36) | (.35) |
Distributions from net realized gain | (.02) | (2.21) | (3.22) | (.89) | (.09) | - |
Total distributions | (.02) | (2.71) | (4.11) | (1.30) | (.45) | (.35) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 20.41 | $ 23.91 | $ 26.20 | $ 25.49 | $ 25.37 | $ 23.18 |
Total Return B, C, D | (14.56)% | 1.53% | 20.19% | 5.87% | 11.53% | 30.33% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .56% A | .55% | .57% | .56% | .58% | .57% |
Expenses net of fee waivers, if any | .56% A | .55% | .57% | .56% | .58% | .57% |
Expenses net of all reductions | .56% A | .54% | .56% | .55% | .57% | .56% |
Net investment income (loss) | 2.20% A | 1.71% | 1.76% | 1.71% | 1.71% | 1.83% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 5,602,666 | $ 7,201,655 | $ 8,315,159 | $ 7,875,801 | $ 8,689,829 | $ 8,402,963 |
Portfolio turnover rate G | 30% A | 20% | 22% | 19% | 22% | 26% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
Financial Highlights - Service Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 23.82 | $ 26.11 | $ 25.39 | $ 25.28 | $ 23.11 | $ 18.10 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .23 | .44 | .43 | .39 | .38 | .34 |
Net realized and unrealized gain (loss) | (3.71) | (.05) H | 4.35 | 1.00 | 2.22 | 5.00 |
Total from investment operations | (3.48) | .39 | 4.78 | 1.39 | 2.60 | 5.34 |
Distributions from net investment income | - | (.47) | (.84) | (.39) | (.34) | (.33) |
Distributions from net realized gain | (.02) | (2.21) | (3.22) | (.89) | (.09) | - |
Total distributions | (.02) | (2.68) | (4.06) | (1.28) | (.43) | (.33) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 20.32 | $ 23.82 | $ 26.11 | $ 25.39 | $ 25.28 | $ 23.11 |
Total Return B, C, D | (14.61)% | 1.42% | 20.08% | 5.76% | 11.38% | 30.22% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .66% A | .65% | .67% | .66% | .68% | .67% |
Expenses net of fee waivers, if any | .66% A | .65% | .67% | .66% | .68% | .67% |
Expenses net of all reductions | .66% A | .64% | .66% | .65% | .67% | .66% |
Net investment income (loss) | 2.10% A | 1.61% | 1.66% | 1.61% | 1.61% | 1.73% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 693,769 | $ 920,054 | $ 1,118,333 | $ 1,079,838 | $ 1,170,778 | $ 1,071,483 |
Portfolio turnover rate G | 30% A | 20% | 22% | 19% | 22% | 26% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Financial Highlights - Service Class 2
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 23.57 | $ 25.87 | $ 25.17 | $ 25.09 | $ 22.96 | $ 18.00 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .21 | .39 | .38 | .35 | .34 | .31 |
Net realized and unrealized gain (loss) | (3.67) | (.04) H | 4.32 | .98 | 2.21 | 4.97 |
Total from investment operations | (3.46) | .35 | 4.70 | 1.33 | 2.55 | 5.28 |
Distributions from net investment income | - | (.44) | (.78) | (.36) | (.33) | (.32) |
Distributions from net realized gain | (.02) | (2.21) | (3.22) | (.89) | (.09) | - |
Total distributions | (.02) | (2.65) | (4.00) | (1.25) | (.42) | (.32) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 20.09 | $ 23.57 | $ 25.87 | $ 25.17 | $ 25.09 | $ 22.96 |
Total Return B, C, D | (14.69)% | 1.27% | 19.93% | 5.57% | 11.23% | 30.03% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .81% A | .80% | .82% | .81% | .83% | .82% |
Expenses net of fee waivers, if any | .81% A | .80% | .82% | .81% | .83% | .82% |
Expenses net of all reductions | .81% A | .80% | .82% | .80% | .82% | .81% |
Net investment income (loss) | 1.94% A | 1.46% | 1.51% | 1.46% | 1.46% | 1.58% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 2,122,864 | $ 2,583,129 | $ 2,373,059 | $ 1,723,546 | $ 1,420,999 | $ 916,679 |
Portfolio turnover rate G | 30% A | 20% | 22% | 19% | 22% | 26% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
Financial Highlights - Service Class 2R
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 23.44 | $ 25.73 | $ 25.08 | $ 25.01 | $ 22.91 | $ 17.99 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .21 | .39 | .38 | .35 | .34 | .31 |
Net realized and unrealized gain (loss) | (3.64) | (.04) H | 4.29 | .99 | 2.20 | 4.96 |
Total from investment operations | (3.43) | .35 | 4.67 | 1.34 | 2.54 | 5.27 |
Distributions from net investment income | - | (.43) | (.80) | (.38) | (.35) | (.35) |
Distributions from net realized gain | (.02) | (2.21) | (3.22) | (.89) | (.09) | - |
Total distributions | (.02) | (2.64) | (4.02) | (1.27) | (.44) | (.35) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 19.99 | $ 23.44 | $ 25.73 | $ 25.08 | $ 25.01 | $ 22.91 |
Total Return B, C, D | (14.64)% | 1.27% | 19.89% | 5.61% | 11.22% | 30.05% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .81% A | .80% | .82% | .81% | .83% | .82% |
Expenses net of fee waivers, if any | .81% A | .80% | .82% | .81% | .83% | .82% |
Expenses net of all reductions | .81% A | .79% | .81% | .80% | .82% | .81% |
Net investment income (loss) | 1.95% A | 1.46% | 1.51% | 1.46% | 1.46% | 1.57% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 9,251 | $ 13,558 | $ 17,089 | $ 9,651 | $ 5,617 | $ 1,891 |
Portfolio turnover rate G | 30% A | 20% | 22% | 19% | 22% | 26% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Investor Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 I |
Selected Per-Share Data | | | | |
Net asset value, beginning of period | $ 23.85 | $ 26.15 | $ 25.48 | $ 24.46 |
Income from Investment Operations | | | | |
Net investment income (loss) E | .23 | .44 | .42 | .17 |
Net realized and unrealized gain (loss) | (3.71) | (.05) H | 4.36 | .85 |
Total from investment operations | (3.48) | .39 | 4.78 | 1.02 |
Distributions from net investment income | - | (.48) | (.89) | - |
Distributions from net realized gain | (.02) | (2.21) | (3.22) | - |
Total distributions | (.02) | (2.69) | (4.11) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 20.35 | $ 23.85 | $ 26.15 | $ 25.48 |
Total Return B, C, D | (14.60)% | 1.39% | 20.04% | 4.17% |
Ratios to Average Net Assets F, J | | | | |
Expenses before reductions | .65% A | .66% | .69% | .74% A |
Expenses net of fee waivers, if any | .65% A | .66% | .69% | .74% A |
Expenses net of all reductions | .65% A | .66% | .69% | .73% A |
Net investment income (loss) | 2.10% A | 1.60% | 1.63% | 1.54% A |
Supplemental Data | | | | |
Net assets, end of period (000 omitted) | $ 190,974 | $ 230,534 | $ 170,050 | $ 37,500 |
Portfolio turnover rate G | 30% A | 20% | 22% | 19% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2008 (Unaudited)
1. Organization.
VIP Equity-Income Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Service Class 2R shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions, market discount, partnerships, deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 2,338,236,470 | |
Unrealized depreciation | (1,659,807,289) | |
Net unrealized appreciation (depreciation) | $ 678,429,181 | |
Cost for federal income tax purposes | $ 8,096,909,939 | |
Trading (Redemption) Fees. Service Class 2R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,473,791,925 and $2,129,352,315, respectively.
The Fund realized a gain on the sale of an investment not meeting the investment restrictions of the Fund.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .46% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.
For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:
Service Class | $ 400,775 | |
Service Class 2 | 2,943,837 | |
Service Class 2R | 13,396 | |
| $ 3,358,008 | |
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:
Initial Class | $ 2,119,397 | |
Service Class | 266,537 | |
Service Class 2 | 787,718 | |
Service Class 2R | 3,538 | |
Investor Class | 165,070 | |
| $ 3,342,260 | |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $10,727 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest
Expense |
Borrower | $ 12,847,901 | 2.91% | $84,225 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $10,322 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $3,161,485.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $18,460,150. The weighted average interest rate was 3.60%. The interest expense amounted to $36,929 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $24,967 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,923.
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, FMR or its affiliates were the owners of record of 11% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 20% of the total outstanding shares of the Fund.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $441,909, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
12. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
From net investment income | | |
Initial Class | $ - | $ 137,272,719 |
Service Class | - | 16,555,512 |
Service Class 2 | - | 43,201,505 |
Service Class 2R | - | 237,361 |
Investor Class | - | 4,138,003 |
Total | $ - | $ 201,405,100 |
From net realized gain | | |
Initial Class | $ 5,879,386 | $ 605,242,729 |
Service Class | 748,441 | 77,757,239 |
Service Class 2 | 2,153,837 | 217,894,303 |
Service Class 2R | 10,338 | 1,223,747 |
Investor Class | 189,539 | 19,334,538 |
Total | $ 8,981,541 | $ 921,452,556 |
Semiannual Report
13. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended June 30,
2008 | Year ended
December 31,
2007 | Six months ended June 30,
2008 | Year ended
December 31,
2007 |
Initial Class | | | | |
Shares sold | 4,008,374 | 9,919,751 | $ 88,119,819 | $ 270,689,892 |
Reinvestment of distributions | 269,692 | 30,642,204 | 5,879,386 | 742,515,448 |
Shares redeemed | (30,995,651) | (56,707,193) | (686,122,712) | (1,549,810,794) |
Net increase (decrease) | (26,717,585) | (16,145,238) | $ (592,123,507) | $ (536,605,454) |
Service Class | | | | |
Shares sold | 627,390 | 1,556,560 | $ 13,859,050 | $ 42,122,639 |
Reinvestment of distributions | 34,474 | 3,906,238 | 748,441 | 94,312,751 |
Shares redeemed | (5,152,356) | (9,669,915) | (113,648,355) | (262,876,733) |
Net increase (decrease) | (4,490,492) | (4,207,117) | $ (99,040,864) | $ (126,441,343) |
Service Class 2 | | | | |
Shares sold | 6,157,796 | 19,215,696 | $ 134,555,746 | $ 515,996,306 |
Reinvestment of distributions | 100,318 | 10,936,330 | 2,153,837 | 261,095,808 |
Shares redeemed | (10,216,120) | (12,279,783) | (223,081,382) | (329,898,169) |
Net increase (decrease) | (3,958,006) | 17,872,243 | $ (86,371,799) | $ 447,193,945 |
Service Class 2R | | | | |
Shares sold | 58,100 | 180,145 | $ 1,290,211 | $ 4,895,399 |
Reinvestment of distributions | 484 | 61,484 | 10,338 | 1,461,108 |
Shares redeemed | (174,099) | (327,382) | (3,749,425) | (8,617,113) |
Net increase (decrease) | (115,515) | (85,753) | $ (2,448,876) | $ (2,260,606) |
Investor Class | | | | |
Shares sold | 710,087 | 3,383,207 | $ 15,796,230 | $ 92,001,453 |
Reinvestment of distributions | 8,718 | 971,586 | 189,539 | 23,472,541 |
Shares redeemed | (1,000,797) | (1,193,211) | (22,103,410) | (32,448,936) |
Net increase (decrease) | (281,992) | 3,161,582 | $ (6,117,641) | $ 83,025,058 |
Semiannual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 |
To elect a Board of Trustees.A |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 821,220,039.81 | 95.845 |
Withheld | 35,598,080.64 | 4.155 |
TOTAL | 856,818,120.45 | 100.000 |
Dennis J. Dirks |
Affirmative | 822,124,493.63 | 95.951 |
Withheld | 34,693,626.82 | 4.049 |
TOTAL | 856,818,120.45 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 820,473,313.05 | 95.758 |
Withheld | 36,344,807.40 | 4.242 |
TOTAL | 856,818,120.45 | 100.000 |
Alan J. Lacy |
Affirmative | 822,170,402.95 | 95.956 |
Withheld | 34,647,717.50 | 4.044 |
TOTAL | 856,818,120.45 | 100.000 |
Ned C. Lautenbach |
Affirmative | 821,435,006.18 | 95.870 |
Withheld | 35,383,114.27 | 4.130 |
TOTAL | 856,818,120.45 | 100.000 |
Joseph Mauriello |
Affirmative | 822,174,756.53 | 95.957 |
Withheld | 34,643,363.92 | 4.043 |
TOTAL | 856,818,120.45 | 100.000 |
Cornelia M. Small |
Affirmative | 822,263,792.20 | 95.967 |
Withheld | 34,554,328.25 | 4.033 |
TOTAL | 856,818,120.45 | 100.000 |
William S. Stavropoulos |
Affirmative | 821,014,987.67 | 95.821 |
Withheld | 35,803,132.78 | 4.179 |
TOTAL | 856,818,120.45 | 100.000 |
David M. Thomas |
Affirmative | 822,321,743.26 | 95.974 |
Withheld | 34,496,377.19 | 4.026 |
TOTAL | 856,818,120.45 | 100.000 |
Michael E. Wiley |
Affirmative | 822,218,346.41 | 95.962 |
Withheld | 34,599,774.04 | 4.038 |
TOTAL | 856,818,120.45 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 701,273,514.99 | 81.846 |
Against | 103,131,328.05 | 12.037 |
Abstain | 52,413,277.41 | 6.117 |
TOTAL | 856,818,120.45 | 100.000 |
A Denotes trust-wide proposal and voting results.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, IL
VIPEI-SANN-0808
1.705693.110
Fidelity® Variable Insurance Products:
Equity-Income Portfolio - Service Class 2R
Semiannual Report
June 30, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Shareholder Expense Example | 3 | An example of shareholder expenses. |
Investment Changes | 4 | A summary of major shifts in the fund's investments over the past six months. |
Investments | 5 | A complete list of the fund's investments with their
market values. |
Financial Statements | 11 | Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights. |
Notes | 16 | Notes to the financial statements. |
Proxy Voting Results | 22 | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
January 1, 2008 | Ending
Account Value
June 30, 2008 | Expenses Paid
During Period*
January 1, 2008 to June 30, 2008 |
Initial Class | | | |
Actual | $ 1,000.00 | $ 854.40 | $ 2.58 |
Hypothetical A | $ 1,000.00 | $ 1,022.08 | $ 2.82 |
Service Class | | | |
Actual | $ 1,000.00 | $ 853.90 | $ 3.04 |
Hypothetical A | $ 1,000.00 | $ 1,021.58 | $ 3.32 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 853.10 | $ 3.73 |
Hypothetical A | $ 1,000.00 | $ 1,020.84 | $ 4.07 |
Service Class 2R | | | |
Actual | $ 1,000.00 | $ 853.60 | $ 3.73 |
Hypothetical A | $ 1,000.00 | $ 1,020.84 | $ 4.07 |
Investor Class | | | |
Actual | $ 1,000.00 | $ 854.00 | $ 3.00 |
Hypothetical A | $ 1,000.00 | $ 1,021.63 | $ 3.27 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Initial Class | .56% |
Service Class | .66% |
Service Class 2 | .81% |
Service Class 2R | .81% |
Investor Class | .65% |
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Exxon Mobil Corp. | 5.9 | 6.2 |
AT&T, Inc. | 3.5 | 3.7 |
Chevron Corp. | 2.2 | 1.9 |
ConocoPhillips | 2.0 | 1.4 |
JPMorgan Chase & Co. | 2.0 | 2.1 |
Bank of America Corp. | 2.0 | 2.8 |
Schlumberger Ltd. (NY Shares) | 1.8 | 1.5 |
General Electric Co. | 1.8 | 1.7 |
Verizon Communications, Inc. | 1.5 | 1.6 |
Citigroup, Inc. | 1.5 | 1.6 |
| 24.2 | |
Top Five Market Sectors as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Financials | 21.8 | 24.5 |
Energy | 21.3 | 18.0 |
Consumer Discretionary | 12.9 | 11.2 |
Industrials | 10.0 | 10.1 |
Information Technology | 9.2 | 10.0 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2008 * | As of December 31, 2007 ** |
| Stocks 98.3% | | | Stocks 98.4% | |
| Bonds 1.2% | | | Bonds 0.9% | |
| Short-Term
Investments and
Net Other Assets 0.5% | | | Short-Term
Investments and
Net Other Assets 0.7% | |
* Foreign investments | 11.1% | | ** Foreign investments | 9.7% | |
Semiannual Report
Investments June 30, 2008 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 95.8% |
| Shares | | Value |
CONSUMER DISCRETIONARY - 12.2% |
Auto Components - 0.7% |
American Axle & Manufacturing Holdings, Inc. | 749,853 | | $ 5,991,325 |
Johnson Controls, Inc. | 1,025,852 | | 29,421,435 |
The Goodyear Tire & Rubber Co. (a) | 793,200 | | 14,142,756 |
TRW Automotive Holdings Corp. (a) | 418,600 | | 7,731,542 |
| | 57,287,058 |
Automobiles - 1.0% |
Fiat SpA | 383,700 | | 6,246,650 |
Ford Motor Co. (a) | 3,012,401 | | 14,489,649 |
General Motors Corp. (d) | 1,040,200 | | 11,962,300 |
Harley-Davidson, Inc. | 847,250 | | 30,721,285 |
Renault SA | 147,379 | | 11,994,649 |
Toyota Motor Corp. sponsored ADR | 43,500 | | 4,089,000 |
Winnebago Industries, Inc. (d) | 349,700 | | 3,563,443 |
| | 83,066,976 |
Diversified Consumer Services - 0.3% |
H&R Block, Inc. | 1,392,268 | | 29,794,535 |
Hotels, Restaurants & Leisure - 0.6% |
McDonald's Corp. | 308,300 | | 17,332,626 |
Starbucks Corp. (a) | 1,590,800 | | 25,039,192 |
Wyndham Worldwide Corp. | 286,702 | | 5,134,833 |
| | 47,506,651 |
Household Durables - 1.5% |
Beazer Homes USA, Inc. (d) | 548,987 | | 3,057,858 |
Black & Decker Corp. | 318,300 | | 18,305,433 |
Centex Corp. | 1,082,900 | | 14,478,373 |
KB Home | 197,800 | | 3,348,754 |
Lennar Corp. Class A (d) | 674,700 | | 8,325,798 |
Newell Rubbermaid, Inc. | 952,600 | | 15,994,154 |
Pulte Homes, Inc. | 612,200 | | 5,895,486 |
The Stanley Works | 409,830 | | 18,372,679 |
Whirlpool Corp. | 649,734 | | 40,108,080 |
| | 127,886,615 |
Internet & Catalog Retail - 0.2% |
Liberty Media Corp. - Interactive
Series A (a) | 1,253,369 | | 18,499,726 |
Leisure Equipment & Products - 0.5% |
Brunswick Corp. | 1,296,457 | | 13,742,444 |
Eastman Kodak Co. | 1,466,700 | | 21,164,481 |
Polaris Industries, Inc. (d) | 270,553 | | 10,924,930 |
| | 45,831,855 |
Media - 3.9% |
Belo Corp. Series A | 840,366 | | 6,143,075 |
Citadel Broadcasting Corp. | 1,986,704 | | 2,423,779 |
Clear Channel Communications, Inc. | 1,568,958 | | 55,227,322 |
Comcast Corp. Class A | 2,625,836 | | 49,812,109 |
E.W. Scripps Co. Class A | 524,760 | | 21,798,530 |
Gannett Co., Inc. | 479,800 | | 10,397,266 |
Informa PLC | 602,000 | | 4,932,741 |
|
| Shares | | Value |
McGraw-Hill Companies, Inc. | 182,500 | | $ 7,321,900 |
News Corp. Class B | 1,099,204 | | 16,872,781 |
The McClatchy Co. Class A (d) | 1,152,851 | | 7,816,330 |
The New York Times Co. Class A (d) | 551,808 | | 8,492,325 |
The Walt Disney Co. | 895,300 | | 27,933,360 |
Time Warner Cable, Inc. (a) | 622,300 | | 16,478,504 |
Time Warner, Inc. | 5,646,950 | | 83,574,860 |
Virgin Media, Inc. | 752,873 | | 10,246,602 |
Vivendi | 225,403 | | 8,499,102 |
| | 337,970,586 |
Multiline Retail - 1.8% |
Family Dollar Stores, Inc. | 658,300 | | 13,126,502 |
JCPenney Co., Inc. | 429,600 | | 15,590,184 |
Kohl's Corp. (a) | 1,166,353 | | 46,700,774 |
Macy's, Inc. (d) | 1,438,400 | | 27,933,728 |
Sears Holdings Corp. (a)(d) | 230,600 | | 16,985,996 |
Target Corp. (d) | 680,400 | | 31,631,796 |
Tuesday Morning Corp. (a)(d) | 555,523 | | 2,283,200 |
| | 154,252,180 |
Specialty Retail - 1.6% |
Chico's FAS, Inc. (a) | 781,597 | | 4,197,176 |
Foot Locker, Inc. (d) | 669,157 | | 8,331,005 |
Home Depot, Inc. | 2,691,900 | | 63,044,298 |
OfficeMax, Inc. | 513,300 | | 7,134,870 |
PetSmart, Inc. | 358,968 | | 7,161,412 |
RadioShack Corp. | 557,700 | | 6,842,979 |
Staples, Inc. | 958,945 | | 22,774,944 |
Williams-Sonoma, Inc. (d) | 776,100 | | 15,397,824 |
| | 134,884,508 |
Textiles, Apparel & Luxury Goods - 0.1% |
Liz Claiborne, Inc. | 729,615 | | 10,324,052 |
TOTAL CONSUMER DISCRETIONARY | | 1,047,304,742 |
CONSUMER STAPLES - 4.7% |
Beverages - 0.3% |
Carlsberg AS Series B (d) | 145,050 | | 13,972,630 |
Heineken NV (Bearer) | 243,454 | | 12,397,548 |
| | 26,370,178 |
Food & Staples Retailing - 1.3% |
Rite Aid Corp. (a)(d) | 2,693,868 | | 4,283,250 |
Wal-Mart Stores, Inc. | 1,889,713 | | 106,201,871 |
Winn-Dixie Stores, Inc. (a) | 237,142 | | 3,799,015 |
| | 114,284,136 |
Food Products - 0.9% |
Hershey Co. | 840,800 | | 27,561,424 |
Kraft Foods, Inc. Class A | 526,654 | | 14,983,306 |
Marine Harvest ASA (a) | 18,229,000 | | 13,351,337 |
Nestle SA (Reg.) | 400,970 | | 18,071,351 |
Tyson Foods, Inc. Class A | 400,800 | | 5,987,952 |
| | 79,955,370 |
Common Stocks - continued |
| Shares | | Value |
CONSUMER STAPLES - continued |
Household Products - 0.9% |
Energizer Holdings, Inc. (a) | 113,000 | | $ 8,259,170 |
Kimberly-Clark Corp. | 481,400 | | 28,778,092 |
Procter & Gamble Co. | 615,142 | | 37,406,785 |
| | 74,444,047 |
Personal Products - 0.3% |
Avon Products, Inc. | 479,270 | | 17,263,305 |
Estee Lauder Companies, Inc. Class A | 148,400 | | 6,893,180 |
| | 24,156,485 |
Tobacco - 1.0% |
Altria Group, Inc. | 1,270,705 | | 26,125,695 |
Philip Morris International, Inc. | 1,249,705 | | 61,722,930 |
| | 87,848,625 |
TOTAL CONSUMER STAPLES | | 407,058,841 |
ENERGY - 21.3% |
Energy Equipment & Services - 4.6% |
BJ Services Co. | 452,324 | | 14,447,229 |
Halliburton Co. | 1,000,995 | | 53,122,805 |
Nabors Industries Ltd. (a) | 1,144,413 | | 56,339,452 |
Noble Corp. | 1,587,668 | | 103,134,913 |
Pride International, Inc. (a) | 374,500 | | 17,710,105 |
Schlumberger Ltd. (NY Shares) | 1,407,857 | | 151,246,078 |
| | 396,000,582 |
Oil, Gas & Consumable Fuels - 16.7% |
Apache Corp. | 456,780 | | 63,492,420 |
Boardwalk Pipeline Partners, LP | 310,500 | | 7,293,645 |
Chevron Corp. | 1,951,542 | | 193,456,358 |
ConocoPhillips | 1,867,500 | | 176,273,325 |
CONSOL Energy, Inc. | 43,799 | | 4,921,694 |
EOG Resources, Inc. | 569,400 | | 74,705,280 |
Exxon Mobil Corp. | 5,726,793 | | 504,702,263 |
Hess Corp. | 584,200 | | 73,720,198 |
Occidental Petroleum Corp. | 909,300 | | 81,709,698 |
Peabody Energy Corp. | 297,861 | | 26,226,661 |
Repsol YPF SA | 101,300 | | 3,975,451 |
Repsol YPF SA sponsored ADR | 1,328,174 | | 52,157,393 |
Royal Dutch Shell PLC: | | | |
Class A sponsored ADR | 732,100 | | 59,819,891 |
Class B ADR | 92,000 | | 7,370,120 |
Total SA sponsored ADR | 760,133 | | 64,816,541 |
Valero Energy Corp. | 715,614 | | 29,468,985 |
Williams Companies, Inc. | 464,600 | | 18,728,026 |
| | 1,442,837,949 |
TOTAL ENERGY | | 1,838,838,531 |
|
| Shares | | Value |
FINANCIALS - 20.1% |
Capital Markets - 3.4% |
Bank of New York Mellon Corp. | 2,696,095 | | $ 101,993,274 |
Goldman Sachs Group, Inc. | 281,179 | | 49,178,207 |
KKR Private Equity Investors, LP | 266,500 | | 3,424,525 |
KKR Private Equity Investors, LP Restricted Depositary Units (e) | 601,500 | | 7,729,275 |
Legg Mason, Inc. | 329,950 | | 14,375,922 |
Lehman Brothers Holdings, Inc. | 724,046 | | 14,343,351 |
Merrill Lynch & Co., Inc. (d) | 818,600 | | 25,957,806 |
Morgan Stanley | 1,658,800 | | 59,832,916 |
State Street Corp. | 175,280 | | 11,216,167 |
| | 288,051,443 |
Commercial Banks - 4.4% |
Associated Banc-Corp. (d) | 1,194,855 | | 23,048,753 |
HSBC Holdings PLC sponsored ADR | 611,992 | | 46,939,786 |
KeyCorp | 1,335,100 | | 14,659,398 |
Lloyds TSB Group PLC | 2,265,900 | | 13,901,982 |
Mitsubishi UFJ Financial Group, Inc. sponsored ADR | 524,200 | | 4,612,960 |
PNC Financial Services Group, Inc. | 1,047,039 | | 59,785,927 |
Royal Bank of Scotland Group PLC | 1,695,536 | | 7,218,177 |
Societe Generale Series A | 99,147 | | 8,595,934 |
Sterling Financial Corp., Washington | 750,427 | | 3,106,768 |
U.S. Bancorp, Delaware | 1,153,838 | | 32,180,542 |
Wachovia Corp. | 4,237,757 | | 65,812,366 |
Wells Fargo & Co. | 4,025,100 | | 95,596,125 |
| | 375,458,718 |
Consumer Finance - 0.6% |
Capital One Financial Corp. | 144,399 | | 5,488,606 |
Discover Financial Services | 2,610,969 | | 34,386,462 |
SLM Corp. (a) | 696,432 | | 13,475,959 |
| | 53,351,027 |
Diversified Financial Services - 5.5% |
Bank of America Corp. | 7,169,377 | | 171,133,029 |
CIT Group, Inc. | 439,900 | | 2,995,719 |
Citigroup, Inc. (d) | 7,505,619 | | 125,794,174 |
JPMorgan Chase & Co. | 5,090,712 | | 174,662,329 |
| | 474,585,251 |
Insurance - 3.7% |
ACE Ltd. | 753,096 | | 41,488,059 |
American International Group, Inc. | 4,537,750 | | 120,068,865 |
Hartford Financial Services Group, Inc. | 692,900 | | 44,740,553 |
MetLife, Inc. unit | 722,300 | | 18,931,483 |
Montpelier Re Holdings Ltd. | 1,305,000 | | 19,248,750 |
PartnerRe Ltd. | 403,824 | | 27,916,353 |
The Travelers Companies, Inc. | 884,196 | | 38,374,106 |
XL Capital Ltd. Class A | 262,271 | | 5,392,292 |
| | 316,160,461 |
Real Estate Investment Trusts - 0.8% |
Annaly Capital Management, Inc. | 637,700 | | 9,890,727 |
Common Stocks - continued |
| Shares | | Value |
FINANCIALS - continued |
Real Estate Investment Trusts - continued |
Developers Diversified Realty Corp. | 667,347 | | $ 23,163,614 |
General Growth Properties, Inc. | 52,000 | | 1,821,560 |
HCP, Inc. | 671,500 | | 21,360,415 |
LaSalle Hotel Properties (SBI) | 200,481 | | 5,038,088 |
Senior Housing Properties Trust (SBI) | 559,556 | | 10,928,129 |
| | 72,202,533 |
Real Estate Management & Development - 0.3% |
CB Richard Ellis Group, Inc. Class A (a) | 1,506,641 | | 28,927,507 |
Thrifts & Mortgage Finance - 1.4% |
Countrywide Financial Corp. | 724,710 | | 3,080,018 |
Fannie Mae | 2,848,075 | | 55,565,943 |
Freddie Mac | 1,539,300 | | 25,244,520 |
MGIC Investment Corp. (d) | 722,352 | | 4,413,571 |
New York Community Bancorp, Inc. | 929,120 | | 16,575,501 |
People's United Financial, Inc. | 214,000 | | 3,338,400 |
Washington Mutual, Inc. | 2,951,442 | | 14,550,609 |
| | 122,768,562 |
TOTAL FINANCIALS | | 1,731,505,502 |
HEALTH CARE - 6.4% |
Biotechnology - 0.4% |
Amgen, Inc. (a) | 700,022 | | 33,013,038 |
Cubist Pharmaceuticals, Inc. (a) | 157,102 | | 2,805,842 |
| | 35,818,880 |
Health Care Equipment & Supplies - 0.8% |
Boston Scientific Corp. (a) | 856,500 | | 10,526,385 |
Covidien Ltd. | 825,436 | | 39,530,130 |
Medtronic, Inc. | 315,400 | | 16,321,950 |
| | 66,378,465 |
Health Care Providers & Services - 0.1% |
Brookdale Senior Living, Inc. (d) | 510,193 | | 10,387,529 |
Pharmaceuticals - 5.1% |
Bristol-Myers Squibb Co. | 1,254,600 | | 25,756,938 |
Johnson & Johnson | 1,485,400 | | 95,570,636 |
Merck & Co., Inc. | 1,543,300 | | 58,166,977 |
Pfizer, Inc. | 6,922,000 | | 120,927,340 |
Schering-Plough Corp. | 2,563,936 | | 50,483,900 |
Wyeth | 1,843,600 | | 88,419,056 |
| | 439,324,847 |
TOTAL HEALTH CARE | | 551,909,721 |
INDUSTRIALS - 10.0% |
Aerospace & Defense - 3.0% |
General Dynamics Corp. | 257,200 | | 21,656,240 |
Goodrich Corp. | 306,600 | | 14,551,236 |
Honeywell International, Inc. | 1,854,425 | | 93,240,489 |
|
| Shares | | Value |
Lockheed Martin Corp. | 319,500 | | $ 31,521,870 |
Northrop Grumman Corp. | 37,500 | | 2,508,750 |
Spirit AeroSystems Holdings, Inc.
Class A (a) | 658,082 | | 12,622,013 |
The Boeing Co. | 410,584 | | 26,983,580 |
United Technologies Corp. | 935,640 | | 57,728,988 |
| | 260,813,166 |
Building Products - 0.2% |
Masco Corp. | 1,425,400 | | 22,421,542 |
Commercial Services & Supplies - 0.7% |
Avery Dennison Corp. | 602,279 | | 26,458,116 |
Equifax, Inc. | 370,134 | | 12,443,905 |
Waste Management, Inc. | 564,300 | | 21,279,753 |
| | 60,181,774 |
Industrial Conglomerates - 3.4% |
3M Co. | 823,500 | | 57,307,365 |
General Electric Co. | 5,664,290 | | 151,179,900 |
Siemens AG sponsored ADR | 426,400 | | 46,959,432 |
Tyco International Ltd. | 872,236 | | 34,924,329 |
| | 290,371,026 |
Machinery - 1.7% |
Briggs & Stratton Corp. (d) | 1,147,588 | | 14,551,416 |
Caterpillar, Inc. | 276,700 | | 20,425,994 |
Eaton Corp. | 203,900 | | 17,325,383 |
Illinois Tool Works, Inc. | 292,100 | | 13,877,671 |
Ingersoll-Rand Co. Ltd. Class A | 702,488 | | 26,294,126 |
Kennametal, Inc. | 252,200 | | 8,209,110 |
SPX Corp. | 363,210 | | 47,845,653 |
| | 148,529,353 |
Marine - 0.1% |
Alexander & Baldwin, Inc. | 136,800 | | 6,231,240 |
Road & Rail - 0.9% |
Burlington Northern Santa Fe Corp. | 521,800 | | 52,122,602 |
Union Pacific Corp. | 311,000 | | 23,480,500 |
| | 75,603,102 |
TOTAL INDUSTRIALS | | 864,151,203 |
INFORMATION TECHNOLOGY - 9.0% |
Communications Equipment - 0.9% |
Cisco Systems, Inc. (a) | 1,815,700 | | 42,233,182 |
Harris Corp. | 241,400 | | 12,188,286 |
Motorola, Inc. | 2,489,712 | | 18,274,486 |
| | 72,695,954 |
Computers & Peripherals - 2.5% |
EMC Corp. (a) | 1,303,200 | | 19,144,008 |
Hewlett-Packard Co. | 2,250,611 | | 99,499,512 |
International Business Machines Corp. | 799,700 | | 94,788,441 |
| | 213,431,961 |
Electronic Equipment & Instruments - 0.8% |
Arrow Electronics, Inc. (a) | 642,600 | | 19,740,672 |
Common Stocks - continued |
| Shares | | Value |
INFORMATION TECHNOLOGY - continued |
Electronic Equipment & Instruments - continued |
Avnet, Inc. (a) | 638,230 | | $ 17,410,914 |
Tyco Electronics Ltd. | 986,536 | | 35,337,720 |
| | 72,489,306 |
Internet Software & Services - 0.1% |
Google, Inc. Class A (sub. vtg.) (a) | 21,692 | | 11,419,103 |
IT Services - 0.6% |
Electronic Data Systems Corp. | 691,200 | | 17,031,168 |
MoneyGram International, Inc. | 895,100 | | 814,541 |
The Western Union Co. | 831,400 | | 20,552,208 |
Unisys Corp. (a) | 2,098,000 | | 8,287,100 |
Visa, Inc. | 59,443 | | 4,833,310 |
| | 51,518,327 |
Office Electronics - 0.3% |
Xerox Corp. | 1,763,635 | | 23,914,891 |
Semiconductors & Semiconductor Equipment - 3.0% |
Analog Devices, Inc. | 1,025,500 | | 32,580,135 |
Applied Materials, Inc. | 2,149,400 | | 41,032,046 |
Atmel Corp. (a) | 940,400 | | 3,272,592 |
Intel Corp. | 4,124,600 | | 88,596,408 |
Micron Technology, Inc. (a) | 941,000 | | 5,646,000 |
National Semiconductor Corp. | 1,854,547 | | 38,092,395 |
Novellus Systems, Inc. (a) | 831,039 | | 17,609,716 |
Teradyne, Inc. (a) | 2,076,900 | | 22,991,283 |
Varian Semiconductor Equipment Associates, Inc. (a) | 347,400 | | 12,096,468 |
| | 261,917,043 |
Software - 0.8% |
Microsoft Corp. | 1,598,800 | | 43,982,988 |
Symantec Corp. (a) | 1,227,933 | | 23,760,504 |
| | 67,743,492 |
TOTAL INFORMATION TECHNOLOGY | | 775,130,077 |
MATERIALS - 2.4% |
Chemicals - 1.5% |
Celanese Corp. Class A | 620,800 | | 28,345,728 |
Chemtura Corp. | 2,415,964 | | 14,109,230 |
Dow Chemical Co. | 542,200 | | 18,928,202 |
E.I. du Pont de Nemours & Co. | 549,000 | | 23,546,610 |
Georgia Gulf Corp. (d) | 617,292 | | 1,790,147 |
H.B. Fuller Co. | 389,950 | | 8,750,478 |
Hercules, Inc. | 560,816 | | 9,494,615 |
Linde AG | 194,300 | | 27,291,412 |
| | 132,256,422 |
Containers & Packaging - 0.1% |
Smurfit-Stone Container Corp. (a) | 2,442,972 | | 9,942,896 |
|
| Shares | | Value |
Metals & Mining - 0.8% |
Alcoa, Inc. | 1,576,371 | | $ 56,150,335 |
Nucor Corp. | 133,800 | | 9,990,846 |
| | 66,141,181 |
TOTAL MATERIALS | | 208,340,499 |
TELECOMMUNICATION SERVICES - 6.1% |
Diversified Telecommunication Services - 5.4% |
AT&T, Inc. | 8,847,269 | | 298,064,493 |
Qwest Communications International, Inc. | 8,250,900 | | 32,426,037 |
Verizon Communications, Inc. | 3,689,602 | | 130,611,911 |
| | 461,102,441 |
Wireless Telecommunication Services - 0.7% |
Sprint Nextel Corp. | 3,175,700 | | 30,169,150 |
Vodafone Group PLC sponsored ADR | 1,043,587 | | 30,744,073 |
| | 60,913,223 |
TOTAL TELECOMMUNICATION SERVICES | | 522,015,664 |
UTILITIES - 3.6% |
Electric Utilities - 2.0% |
Allegheny Energy, Inc. | 463,300 | | 23,215,963 |
Entergy Corp. | 535,600 | | 64,529,088 |
Exelon Corp. | 572,700 | | 51,520,092 |
PPL Corp. | 562,400 | | 29,396,648 |
| | 168,661,791 |
Independent Power Producers & Energy Traders - 0.4% |
AES Corp. (a) | 1,755,658 | | 33,726,190 |
Multi-Utilities - 1.2% |
Public Service Enterprise Group, Inc. | 1,555,900 | | 71,462,487 |
Wisconsin Energy Corp. | 782,600 | | 35,389,172 |
| | 106,851,659 |
TOTAL UTILITIES | | 309,239,640 |
TOTAL COMMON STOCKS (Cost $7,485,036,944) | 8,255,494,420 |
Convertible Preferred Stocks - 2.5% |
| | | |
CONSUMER DISCRETIONARY - 0.2% |
Automobiles - 0.1% |
General Motors Corp. Series C, 6.25% | 659,300 | | 8,748,911 |
Hotels, Restaurants & Leisure - 0.1% |
Six Flags, Inc. 7.25% PIERS | 404,400 | | 4,246,200 |
TOTAL CONSUMER DISCRETIONARY | | 12,995,111 |
Convertible Preferred Stocks - continued |
| Shares | | Value |
FINANCIALS - 1.6% |
Capital Markets - 0.4% |
Legg Mason, Inc. 7.00% | 230,600 | | $ 9,649,918 |
Lehman Brothers Holdings, Inc. 7.25% | 32,400 | | 26,063,532 |
| | 35,713,450 |
Commercial Banks - 0.1% |
Huntington Bancshares, Inc. 8.50% | 9,000 | | 6,300,000 |
Diversified Financial Services - 0.5% |
Bank of America Corp. Series L, 7.25% | 17,700 | | 15,642,375 |
CIT Group, Inc.: | | | |
7.75% | 406,600 | | 4,013,142 |
Series C, 8.75% | 81,800 | | 3,343,984 |
Citigroup, Inc. Series T, 6.50% | 432,849 | | 18,828,932 |
| | 41,828,433 |
Insurance - 0.3% |
American International Group, Inc.
Series A, 8.50% | 510,400 | | 30,451,995 |
Thrifts & Mortgage Finance - 0.3% |
Fannie Mae 8.75% | 541,300 | | 20,840,050 |
Washington Mutual, Inc. Series R, 7.75% | 11,800 | | 6,882,350 |
| | 27,722,400 |
TOTAL FINANCIALS | | 142,016,278 |
HEALTH CARE - 0.2% |
Pharmaceuticals - 0.2% |
Schering-Plough Corp. 6.00% | 93,000 | | 17,703,480 |
MATERIALS - 0.5% |
Chemicals - 0.0% |
Celanese Corp. 4.25% | 67,100 | | 3,901,865 |
Metals & Mining - 0.5% |
Freeport-McMoRan Copper & Gold, Inc. 6.75% | 232,700 | | 39,051,249 |
TOTAL MATERIALS | | 42,953,114 |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $256,918,678) | 215,667,983 |
Investment Companies - 0.0% |
| | | |
Ares Capital Corp.
(Cost $10,607,570) | 604,054 | | 6,088,864 |
Corporate Bonds - 1.2% |
| Principal Amount | | |
Convertible Bonds - 1.1% |
CONSUMER DISCRETIONARY - 0.5% |
Automobiles - 0.1% |
Ford Motor Co. 4.25% 12/15/36 | | $ 10,280,000 | | 7,388,236 |
|
| Principal Amount | | Value |
Hotels, Restaurants & Leisure - 0.0% |
Six Flags, Inc. 4.5% 5/15/15 | | $ 3,650,000 | | $ 2,080,500 |
Media - 0.4% |
Liberty Media Corp.: | | | | |
3.5% 1/15/31 | | 259,098 | | 164,931 |
4% 11/15/29 (e) | | 4,750,000 | | 2,565,000 |
3.5% 1/15/31 (e) | | 9,480,719 | | 6,035,027 |
News America, Inc. liquid yield option note: | | | | |
0% 2/28/21 (e) | | 22,670,000 | | 13,233,613 |
0% 2/28/21 | | 3,490,000 | | 2,037,288 |
Virgin Media, Inc. 6.5% 11/15/16 (e) | | 9,500,000 | | 9,788,800 |
| | 33,824,659 |
TOTAL CONSUMER DISCRETIONARY | | 43,293,395 |
CONSUMER STAPLES - 0.1% |
Food & Staples Retailing - 0.1% |
Rite Aid Corp. 8.5% 5/15/15 | | 6,360,000 | | 5,798,412 |
FINANCIALS - 0.1% |
Thrifts & Mortgage Finance - 0.1% |
MGIC Investment Corp. 9% 4/1/63 (e) | | 5,740,000 | | 4,328,069 |
INDUSTRIALS - 0.0% |
Airlines - 0.0% |
UAL Corp.: | | | | |
4.5% 6/30/21 (e) | | 8,490,000 | | 3,207,522 |
4.5% 6/30/21 | | 280,000 | | 105,784 |
| | 3,313,306 |
INFORMATION TECHNOLOGY - 0.2% |
Semiconductors & Semiconductor Equipment - 0.2% |
Advanced Micro Devices, Inc.: | | | | |
6% 5/1/15 (e) | | 14,340,000 | | 9,095,862 |
6% 5/1/15 | | 4,780,000 | | 3,031,954 |
Micron Technology, Inc. 1.875% 6/1/14 | | 2,570,000 | | 1,829,532 |
| | 13,957,348 |
TELECOMMUNICATION SERVICES - 0.2% |
Diversified Telecommunication Services - 0.2% |
Level 3 Communications, Inc.: | | | | |
3.5% 6/15/12 | | 6,320,000 | | 5,033,627 |
5.25% 12/15/11 (e) | | 11,850,000 | | 10,740,129 |
5.25% 12/15/11 | | 4,290,000 | | 3,888,199 |
| | 19,661,955 |
TOTAL CONVERTIBLE BONDS | | 90,352,485 |
Corporate Bonds - continued |
| Principal Amount | | Value |
Nonconvertible Bonds - 0.1% |
MATERIALS - 0.1% |
Chemicals - 0.1% |
Hercules, Inc. 6.5% 6/30/29 unit | | $ 15,700,000 | | $ 11,243,335 |
TOTAL CORPORATE BONDS (Cost $133,000,489) | 101,595,820 |
Money Market Funds - 2.3% |
| Shares | | |
Fidelity Cash Central Fund, 2.38% (b) | 23,908,917 | | 23,908,917 |
Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c) | 172,583,116 | | 172,583,116 |
TOTAL MONEY MARKET FUNDS (Cost $196,492,033) | 196,492,033 |
TOTAL INVESTMENT PORTFOLIO - 101.8% (Cost $8,082,055,714) | | 8,775,339,120 |
NET OTHER ASSETS - (1.8)% | | (155,815,817) |
NET ASSETS - 100% | $ 8,619,523,303 |
Security Type Abbreviation |
PIERS | - | Preferred Income Equity Redeemable Securities |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $66,723,297 or 0.8% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 214,452 |
Fidelity Securities Lending Cash Central Fund | 3,161,485 |
Total | $ 3,375,937 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
#Valuation Inputs at Reporting Date: |
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 8,775,339,120 | $ 8,307,626,353 | $ 467,712,767 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 88.9% |
United Kingdom | 2.2% |
Bermuda | 2.1% |
Netherlands Antilles | 1.8% |
Cayman Islands | 1.7% |
France | 1.1% |
Others (individually less than 1%) | 2.2% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
| June 30, 2008 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $161,966,591) - See accompanying schedule: Unaffiliated issuers (cost $7,885,563,681) | $ 8,578,847,087 | |
Fidelity Central Funds (cost $196,492,033) | 196,492,033 | |
Total Investments (cost $8,082,055,714) | | $ 8,775,339,120 |
Cash | | 254,870 |
Receivable for investments sold | | 16,463,424 |
Receivable for fund shares sold | | 9,144,398 |
Dividends receivable | | 13,450,945 |
Interest receivable | | 760,649 |
Distributions receivable from Fidelity Central Funds | | 652,088 |
Prepaid expenses | | 17,353 |
Other receivables | | 329,069 |
Total assets | | 8,816,411,916 |
| | |
Liabilities | | |
Payable for investments purchased | $ 5,053,920 | |
Payable for fund shares redeemed | 13,553,601 | |
Accrued management fee | 3,500,905 | |
Distribution fees payable | 534,981 | |
Other affiliated payables | 631,865 | |
Other payables and accrued expenses | 1,030,225 | |
Collateral on securities loaned, at value | 172,583,116 | |
Total liabilities | | 196,888,613 |
| | |
Net Assets | | $ 8,619,523,303 |
Net Assets consist of: | | |
Paid in capital | | $ 7,465,988,382 |
Undistributed net investment income | | 103,593,429 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 356,657,799 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 693,283,693 |
Net Assets | | $ 8,619,523,303 |
Statement of Assets and Liabilities - continued
| June 30, 2008 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($5,602,666,064 ÷ 274,510,254 shares) | | $ 20.41 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($693,769,312 ÷ 34,133,832 shares) | | $ 20.32 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($2,122,863,690 ÷ 105,657,667 shares) | | $ 20.09 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($9,250,599 ÷ 462,803 shares) | | $ 19.99 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($190,973,638 ÷ 9,382,576 shares) | | $ 20.35 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Six months ended June 30, 2008 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 127,539,484 |
Interest | | 3,225,822 |
Income from Fidelity Central Funds | | 3,375,937 |
Total income | | 134,141,243 |
| | |
Expenses | | |
Management fee | $ 22,235,162 | |
Transfer agent fees | 3,342,260 | |
Distribution fees | 3,358,008 | |
Accounting and security lending fees | 656,790 | |
Custodian fees and expenses | 85,219 | |
Independent trustees' compensation | 21,516 | |
Depreciation in deferred trustee compensation account | (933) | |
Audit | 41,207 | |
Legal | 18,784 | |
Interest | 121,154 | |
Miscellaneous | 902,077 | |
Total expenses before reductions | 30,781,244 | |
Expense reductions | (26,890) | 30,754,354 |
Net investment income (loss) | | 103,386,889 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 368,341,704 | |
Investment not meeting investment restrictions | 32,186 | |
Foreign currency transactions | (18,217) | |
Total net realized gain (loss) | | 368,355,673 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (2,006,065,507) | |
Assets and liabilities in foreign currencies | (378) | |
Total change in net unrealized appreciation (depreciation) | | (2,006,065,885) |
Net gain (loss) | | (1,637,710,212) |
Net increase (decrease) in net assets resulting from operations | | $ (1,534,323,323) |
Statement of Changes in Net Assets
| Six months ended June 30, 2008
(Unaudited) | Year ended
December 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 103,386,889 | $ 197,428,237 |
Net realized gain (loss) | 368,355,673 | 910,261,376 |
Change in net unrealized appreciation (depreciation) | (2,006,065,885) | (894,509,627) |
Net increase (decrease) in net assets resulting from operations | (1,534,323,323) | 213,179,986 |
Distributions to shareholders from net investment income | - | (201,405,100) |
Distributions to shareholders from net realized gain | (8,981,541) | (921,452,556) |
Total distributions | (8,981,541) | (1,122,857,656) |
Share transactions - net increase (decrease) | (786,102,687) | (135,088,400) |
Redemption fees | 1,305 | 5,392 |
Total increase (decrease) in net assets | (2,329,406,246) | (1,044,760,678) |
| | |
Net Assets | | |
Beginning of period | 10,948,929,549 | 11,993,690,227 |
End of period (including undistributed net investment income of $103,593,429 and undistributed net investment income of $206,540, respectively) | $ 8,619,523,303 | $ 10,948,929,549 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 23.91 | $ 26.20 | $ 25.49 | $ 25.37 | $ 23.18 | $ 18.16 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .24 | .47 | .45 | .42 | .40 | .36 |
Net realized and unrealized gain (loss) | (3.72) | (.05) H | 4.37 | 1.00 | 2.24 | 5.01 |
Total from investment operations | (3.48) | .42 | 4.82 | 1.42 | 2.64 | 5.37 |
Distributions from net investment income | - | (.50) | (.89) | (.41) | (.36) | (.35) |
Distributions from net realized gain | (.02) | (2.21) | (3.22) | (.89) | (.09) | - |
Total distributions | (.02) | (2.71) | (4.11) | (1.30) | (.45) | (.35) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 20.41 | $ 23.91 | $ 26.20 | $ 25.49 | $ 25.37 | $ 23.18 |
Total Return B, C, D | (14.56)% | 1.53% | 20.19% | 5.87% | 11.53% | 30.33% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .56% A | .55% | .57% | .56% | .58% | .57% |
Expenses net of fee waivers, if any | .56% A | .55% | .57% | .56% | .58% | .57% |
Expenses net of all reductions | .56% A | .54% | .56% | .55% | .57% | .56% |
Net investment income (loss) | 2.20% A | 1.71% | 1.76% | 1.71% | 1.71% | 1.83% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 5,602,666 | $ 7,201,655 | $ 8,315,159 | $ 7,875,801 | $ 8,689,829 | $ 8,402,963 |
Portfolio turnover rate G | 30% A | 20% | 22% | 19% | 22% | 26% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
Financial Highlights - Service Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 23.82 | $ 26.11 | $ 25.39 | $ 25.28 | $ 23.11 | $ 18.10 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .23 | .44 | .43 | .39 | .38 | .34 |
Net realized and unrealized gain (loss) | (3.71) | (.05) H | 4.35 | 1.00 | 2.22 | 5.00 |
Total from investment operations | (3.48) | .39 | 4.78 | 1.39 | 2.60 | 5.34 |
Distributions from net investment income | - | (.47) | (.84) | (.39) | (.34) | (.33) |
Distributions from net realized gain | (.02) | (2.21) | (3.22) | (.89) | (.09) | - |
Total distributions | (.02) | (2.68) | (4.06) | (1.28) | (.43) | (.33) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 20.32 | $ 23.82 | $ 26.11 | $ 25.39 | $ 25.28 | $ 23.11 |
Total Return B, C, D | (14.61)% | 1.42% | 20.08% | 5.76% | 11.38% | 30.22% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .66% A | .65% | .67% | .66% | .68% | .67% |
Expenses net of fee waivers, if any | .66% A | .65% | .67% | .66% | .68% | .67% |
Expenses net of all reductions | .66% A | .64% | .66% | .65% | .67% | .66% |
Net investment income (loss) | 2.10% A | 1.61% | 1.66% | 1.61% | 1.61% | 1.73% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 693,769 | $ 920,054 | $ 1,118,333 | $ 1,079,838 | $ 1,170,778 | $ 1,071,483 |
Portfolio turnover rate G | 30% A | 20% | 22% | 19% | 22% | 26% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Financial Highlights - Service Class 2
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 23.57 | $ 25.87 | $ 25.17 | $ 25.09 | $ 22.96 | $ 18.00 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .21 | .39 | .38 | .35 | .34 | .31 |
Net realized and unrealized gain (loss) | (3.67) | (.04) H | 4.32 | .98 | 2.21 | 4.97 |
Total from investment operations | (3.46) | .35 | 4.70 | 1.33 | 2.55 | 5.28 |
Distributions from net investment income | - | (.44) | (.78) | (.36) | (.33) | (.32) |
Distributions from net realized gain | (.02) | (2.21) | (3.22) | (.89) | (.09) | - |
Total distributions | (.02) | (2.65) | (4.00) | (1.25) | (.42) | (.32) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 20.09 | $ 23.57 | $ 25.87 | $ 25.17 | $ 25.09 | $ 22.96 |
Total Return B, C, D | (14.69)% | 1.27% | 19.93% | 5.57% | 11.23% | 30.03% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .81% A | .80% | .82% | .81% | .83% | .82% |
Expenses net of fee waivers, if any | .81% A | .80% | .82% | .81% | .83% | .82% |
Expenses net of all reductions | .81% A | .80% | .82% | .80% | .82% | .81% |
Net investment income (loss) | 1.94% A | 1.46% | 1.51% | 1.46% | 1.46% | 1.58% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 2,122,864 | $ 2,583,129 | $ 2,373,059 | $ 1,723,546 | $ 1,420,999 | $ 916,679 |
Portfolio turnover rate G | 30% A | 20% | 22% | 19% | 22% | 26% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
Financial Highlights - Service Class 2R
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 23.44 | $ 25.73 | $ 25.08 | $ 25.01 | $ 22.91 | $ 17.99 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .21 | .39 | .38 | .35 | .34 | .31 |
Net realized and unrealized gain (loss) | (3.64) | (.04) H | 4.29 | .99 | 2.20 | 4.96 |
Total from investment operations | (3.43) | .35 | 4.67 | 1.34 | 2.54 | 5.27 |
Distributions from net investment income | - | (.43) | (.80) | (.38) | (.35) | (.35) |
Distributions from net realized gain | (.02) | (2.21) | (3.22) | (.89) | (.09) | - |
Total distributions | (.02) | (2.64) | (4.02) | (1.27) | (.44) | (.35) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 19.99 | $ 23.44 | $ 25.73 | $ 25.08 | $ 25.01 | $ 22.91 |
Total Return B, C, D | (14.64)% | 1.27% | 19.89% | 5.61% | 11.22% | 30.05% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .81% A | .80% | .82% | .81% | .83% | .82% |
Expenses net of fee waivers, if any | .81% A | .80% | .82% | .81% | .83% | .82% |
Expenses net of all reductions | .81% A | .79% | .81% | .80% | .82% | .81% |
Net investment income (loss) | 1.95% A | 1.46% | 1.51% | 1.46% | 1.46% | 1.57% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 9,251 | $ 13,558 | $ 17,089 | $ 9,651 | $ 5,617 | $ 1,891 |
Portfolio turnover rate G | 30% A | 20% | 22% | 19% | 22% | 26% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Investor Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 I |
Selected Per-Share Data | | | | |
Net asset value, beginning of period | $ 23.85 | $ 26.15 | $ 25.48 | $ 24.46 |
Income from Investment Operations | | | | |
Net investment income (loss) E | .23 | .44 | .42 | .17 |
Net realized and unrealized gain (loss) | (3.71) | (.05) H | 4.36 | .85 |
Total from investment operations | (3.48) | .39 | 4.78 | 1.02 |
Distributions from net investment income | - | (.48) | (.89) | - |
Distributions from net realized gain | (.02) | (2.21) | (3.22) | - |
Total distributions | (.02) | (2.69) | (4.11) | - |
Redemption fees added to paid in capital E, K | - | - | - | - |
Net asset value, end of period | $ 20.35 | $ 23.85 | $ 26.15 | $ 25.48 |
Total Return B, C, D | (14.60)% | 1.39% | 20.04% | 4.17% |
Ratios to Average Net Assets F, J | | | | |
Expenses before reductions | .65% A | .66% | .69% | .74% A |
Expenses net of fee waivers, if any | .65% A | .66% | .69% | .74% A |
Expenses net of all reductions | .65% A | .66% | .69% | .73% A |
Net investment income (loss) | 2.10% A | 1.60% | 1.63% | 1.54% A |
Supplemental Data | | | | |
Net assets, end of period (000 omitted) | $ 190,974 | $ 230,534 | $ 170,050 | $ 37,500 |
Portfolio turnover rate G | 30% A | 20% | 22% | 19% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2008 (Unaudited)
1. Organization.
VIP Equity-Income Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Service Class 2R shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to short-term capital gains, foreign currency transactions, market discount, partnerships, deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 2,338,236,470 | |
Unrealized depreciation | (1,659,807,289) | |
Net unrealized appreciation (depreciation) | $ 678,429,181 | |
Cost for federal income tax purposes | $ 8,096,909,939 | |
Trading (Redemption) Fees. Service Class 2R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,473,791,925 and $2,129,352,315, respectively.
The Fund realized a gain on the sale of an investment not meeting the investment restrictions of the Fund.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .46% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.
For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:
Service Class | $ 400,775 | |
Service Class 2 | 2,943,837 | |
Service Class 2R | 13,396 | |
| $ 3,358,008 | |
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:
Initial Class | $ 2,119,397 | |
Service Class | 266,537 | |
Service Class 2 | 787,718 | |
Service Class 2R | 3,538 | |
Investor Class | 165,070 | |
| $ 3,342,260 | |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $10,727 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily Loan Balance | Weighted Average Interest Rate | Interest
Expense |
Borrower | $ 12,847,901 | 2.91% | $84,225 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $10,322 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $3,161,485.
9. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $18,460,150. The weighted average interest rate was 3.60%. The interest expense amounted to $36,929 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
10. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $24,967 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,923.
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, FMR or its affiliates were the owners of record of 11% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 20% of the total outstanding shares of the Fund.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $441,909, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
12. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
From net investment income | | |
Initial Class | $ - | $ 137,272,719 |
Service Class | - | 16,555,512 |
Service Class 2 | - | 43,201,505 |
Service Class 2R | - | 237,361 |
Investor Class | - | 4,138,003 |
Total | $ - | $ 201,405,100 |
From net realized gain | | |
Initial Class | $ 5,879,386 | $ 605,242,729 |
Service Class | 748,441 | 77,757,239 |
Service Class 2 | 2,153,837 | 217,894,303 |
Service Class 2R | 10,338 | 1,223,747 |
Investor Class | 189,539 | 19,334,538 |
Total | $ 8,981,541 | $ 921,452,556 |
Semiannual Report
13. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended June 30,
2008 | Year ended
December 31,
2007 | Six months ended June 30,
2008 | Year ended
December 31,
2007 |
Initial Class | | | | |
Shares sold | 4,008,374 | 9,919,751 | $ 88,119,819 | $ 270,689,892 |
Reinvestment of distributions | 269,692 | 30,642,204 | 5,879,386 | 742,515,448 |
Shares redeemed | (30,995,651) | (56,707,193) | (686,122,712) | (1,549,810,794) |
Net increase (decrease) | (26,717,585) | (16,145,238) | $ (592,123,507) | $ (536,605,454) |
Service Class | | | | |
Shares sold | 627,390 | 1,556,560 | $ 13,859,050 | $ 42,122,639 |
Reinvestment of distributions | 34,474 | 3,906,238 | 748,441 | 94,312,751 |
Shares redeemed | (5,152,356) | (9,669,915) | (113,648,355) | (262,876,733) |
Net increase (decrease) | (4,490,492) | (4,207,117) | $ (99,040,864) | $ (126,441,343) |
Service Class 2 | | | | |
Shares sold | 6,157,796 | 19,215,696 | $ 134,555,746 | $ 515,996,306 |
Reinvestment of distributions | 100,318 | 10,936,330 | 2,153,837 | 261,095,808 |
Shares redeemed | (10,216,120) | (12,279,783) | (223,081,382) | (329,898,169) |
Net increase (decrease) | (3,958,006) | 17,872,243 | $ (86,371,799) | $ 447,193,945 |
Service Class 2R | | | | |
Shares sold | 58,100 | 180,145 | $ 1,290,211 | $ 4,895,399 |
Reinvestment of distributions | 484 | 61,484 | 10,338 | 1,461,108 |
Shares redeemed | (174,099) | (327,382) | (3,749,425) | (8,617,113) |
Net increase (decrease) | (115,515) | (85,753) | $ (2,448,876) | $ (2,260,606) |
Investor Class | | | | |
Shares sold | 710,087 | 3,383,207 | $ 15,796,230 | $ 92,001,453 |
Reinvestment of distributions | 8,718 | 971,586 | 189,539 | 23,472,541 |
Shares redeemed | (1,000,797) | (1,193,211) | (22,103,410) | (32,448,936) |
Net increase (decrease) | (281,992) | 3,161,582 | $ (6,117,641) | $ 83,025,058 |
Semiannual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 |
To elect a Board of Trustees.A |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 821,220,039.81 | 95.845 |
Withheld | 35,598,080.64 | 4.155 |
TOTAL | 856,818,120.45 | 100.000 |
Dennis J. Dirks |
Affirmative | 822,124,493.63 | 95.951 |
Withheld | 34,693,626.82 | 4.049 |
TOTAL | 856,818,120.45 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 820,473,313.05 | 95.758 |
Withheld | 36,344,807.40 | 4.242 |
TOTAL | 856,818,120.45 | 100.000 |
Alan J. Lacy |
Affirmative | 822,170,402.95 | 95.956 |
Withheld | 34,647,717.50 | 4.044 |
TOTAL | 856,818,120.45 | 100.000 |
Ned C. Lautenbach |
Affirmative | 821,435,006.18 | 95.870 |
Withheld | 35,383,114.27 | 4.130 |
TOTAL | 856,818,120.45 | 100.000 |
Joseph Mauriello |
Affirmative | 822,174,756.53 | 95.957 |
Withheld | 34,643,363.92 | 4.043 |
TOTAL | 856,818,120.45 | 100.000 |
Cornelia M. Small |
Affirmative | 822,263,792.20 | 95.967 |
Withheld | 34,554,328.25 | 4.033 |
TOTAL | 856,818,120.45 | 100.000 |
William S. Stavropoulos |
Affirmative | 821,014,987.67 | 95.821 |
Withheld | 35,803,132.78 | 4.179 |
TOTAL | 856,818,120.45 | 100.000 |
David M. Thomas |
Affirmative | 822,321,743.26 | 95.974 |
Withheld | 34,496,377.19 | 4.026 |
TOTAL | 856,818,120.45 | 100.000 |
Michael E. Wiley |
Affirmative | 822,218,346.41 | 95.962 |
Withheld | 34,599,774.04 | 4.038 |
TOTAL | 856,818,120.45 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 701,273,514.99 | 81.846 |
Against | 103,131,328.05 | 12.037 |
Abstain | 52,413,277.41 | 6.117 |
TOTAL | 856,818,120.45 | 100.000 |
A Denotes trust-wide proposal and voting results.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Adviser
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Northern Trust Company
Chicago, IL
VIPEI2R-SANN-0808
1.833447.102
Fidelity® Variable Insurance Products:
Growth Portfolio
Semiannual Report
June 30, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Shareholder Expense Example | <Click Here> | An example of shareholder expenses. |
Investment Changes | <Click Here> | A summary of major shifts in the fund's investments over the past six months. |
Investments | <Click Here> | A complete list of the fund's investments with their
market values. |
Financial Statements | <Click Here> | Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights. |
Notes | <Click Here> | Notes to the financial statements. |
Proxy Voting Results | <Click Here> | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
January 1, 2008 | Ending
Account Value
June 30, 2008 | Expenses Paid
During Period*
January 1, 2008
to June 30, 2008 |
Initial Class | | | |
Actual | $ 1,000.00 | $ 898.00 | $ 3.16 |
HypotheticalA | $ 1,000.00 | $ 1,021.53 | $ 3.37 |
Service Class | | | |
Actual | $ 1,000.00 | $ 897.50 | $ 3.63 |
HypotheticalA | $ 1,000.00 | $ 1,021.03 | $ 3.87 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 897.00 | $ 4.34 |
HypotheticalA | $ 1,000.00 | $ 1,020.29 | $ 4.62 |
Service Class 2R | | | |
Actual | $ 1,000.00 | $ 896.90 | $ 4.34 |
HypotheticalA | $ 1,000.00 | $ 1,020.29 | $ 4.62 |
Investor Class | | | |
Actual | $ 1,000.00 | $ 897.80 | $ 3.59 |
HypotheticalA | $ 1,000.00 | $ 1,021.08 | $ 3.82 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Initial Class | .67% |
Service Class | .77% |
Service Class 2 | .92% |
Service Class 2R | .92% |
Investor Class | .76% |
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Berkshire Hathaway, Inc. Class B | 3.7 | 4.4 |
Applied Materials, Inc. | 3.2 | 2.4 |
The Mosaic Co. | 3.1 | 1.2 |
Nokia Corp. sponsored ADR | 2.4 | 5.3 |
Medco Health Solutions, Inc. | 2.3 | 0.5 |
Annaly Capital Management, Inc. | 2.2 | 0.0 |
VeriSign, Inc. | 2.0 | 1.1 |
Fording Canadian Coal Trust | 1.9 | 0.0 |
Denbury Resources, Inc. | 1.9 | 0.9 |
CVS Caremark Corp. | 1.7 | 0.7 |
| 24.4 | |
Top Five Market Sectors as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Information Technology | 25.2 | 37.1 |
Materials | 13.9 | 2.7 |
Financials | 13.8 | 11.0 |
Energy | 13.3 | 10.4 |
Health Care | 12.4 | 12.4 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2008* | As of December 31, 2007** |
| Stocks 98.6% | | | Stocks 99.8% | |
| Short-Term
Investments and
Net Other Assets 1.4% | | | Short-Term
Investments and
Net Other Assets 0.2% | |
* Foreign investments | 27.8% | | ** Foreign investments | 25.5% | |
Semiannual Report
Investments June 30, 2008 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.6% |
| Shares | | Value |
CONSUMER DISCRETIONARY - 4.6% |
Automobiles - 0.2% |
Harley-Davidson, Inc. | 325,700 | | $ 11,809,882 |
Diversified Consumer Services - 1.0% |
Strayer Education, Inc. | 288,471 | | 60,310,632 |
Hotels, Restaurants & Leisure - 0.9% |
BJ's Restaurants, Inc. (a) | 171,492 | | 1,668,617 |
McDonald's Corp. | 783,476 | | 44,047,021 |
Starwood Hotels & Resorts Worldwide, Inc. | 245,700 | | 9,845,199 |
| | 55,560,837 |
Leisure Equipment & Products - 0.7% |
Nikon Corp. | 1,582,000 | | 46,194,131 |
Media - 1.0% |
Focus Media Holding Ltd. ADR (a)(d) | 852,290 | | 23,625,479 |
National CineMedia, Inc. | 819,490 | | 8,735,763 |
The DIRECTV Group, Inc. (a) | 1,049,600 | | 27,195,136 |
| | 59,556,378 |
Specialty Retail - 0.4% |
DSW, Inc. Class A (a)(d) | 1,242,052 | | 14,631,373 |
Gamestop Corp. Class A (a) | 285,600 | | 11,538,240 |
| | 26,169,613 |
Textiles, Apparel & Luxury Goods - 0.4% |
Lululemon Athletica, Inc. | 578,800 | | 16,819,928 |
LVMH Moet Hennessy - Louis Vuitton | 57,700 | | 6,019,072 |
| | 22,839,000 |
TOTAL CONSUMER DISCRETIONARY | | 282,440,473 |
CONSUMER STAPLES - 4.8% |
Food & Staples Retailing - 2.0% |
CVS Caremark Corp. | 2,668,206 | | 105,580,911 |
Whole Foods Market, Inc. (d) | 824,118 | | 19,523,355 |
| | 125,104,266 |
Food Products - 1.2% |
Green Mountain Coffee Roasters, Inc. (a) | 215,952 | | 8,113,317 |
Nestle SA sponsored ADR | 573,500 | | 64,862,850 |
| | 72,976,167 |
Household Products - 1.6% |
Procter & Gamble Co. | 1,590,917 | | 96,743,663 |
TOTAL CONSUMER STAPLES | | 294,824,096 |
ENERGY - 13.3% |
Energy Equipment & Services - 3.8% |
Atwood Oceanics, Inc. (a) | 74,000 | | 9,201,160 |
ENSCO International, Inc. | 222,501 | | 17,964,731 |
FMC Technologies, Inc. (a) | 179,900 | | 13,839,707 |
Helmerich & Payne, Inc. | 199,000 | | 14,331,980 |
National Oilwell Varco, Inc. (a) | 783,348 | | 69,498,635 |
|
| Shares | | Value |
Smith International, Inc. | 659,994 | | $ 54,871,901 |
Transocean, Inc. (a) | 351,600 | | 53,580,324 |
| | 233,288,438 |
Oil, Gas & Consumable Fuels - 9.5% |
Chesapeake Energy Corp. | 305,808 | | 20,171,096 |
Denbury Resources, Inc. (a) | 3,213,050 | | 117,276,325 |
EOG Resources, Inc. | 299,231 | | 39,259,107 |
Galp Energia SGPS SA Class B | 1,015,441 | | 22,521,912 |
Hess Corp. | 215,000 | | 27,130,850 |
OAO Gazprom sponsored ADR | 910,675 | | 52,819,150 |
Occidental Petroleum Corp. | 85,700 | | 7,701,002 |
Petroleo Brasileiro SA - Petrobras sponsored ADR | 1,127,600 | | 79,867,908 |
Reliance Industries Ltd. | 316,559 | | 15,449,303 |
Southwestern Energy Co. (a) | 1,197,900 | | 57,032,019 |
Ultra Petroleum Corp. (a) | 988,526 | | 97,073,253 |
Williams Companies, Inc. | 1,251,547 | | 50,449,860 |
| | 586,751,785 |
TOTAL ENERGY | | 820,040,223 |
FINANCIALS - 13.8% |
Capital Markets - 2.3% |
Bank of New York Mellon Corp. | 401,700 | | 15,196,311 |
Charles Schwab Corp. | 3,070,572 | | 63,069,549 |
Franklin Resources, Inc. | 260,974 | | 23,918,267 |
JMP Group, Inc. | 98,900 | | 653,729 |
Northern Trust Corp. | 186,179 | | 12,766,294 |
State Street Corp. | 377,700 | | 24,169,023 |
| | 139,773,173 |
Commercial Banks - 0.4% |
UCBH Holdings, Inc. | 937,700 | | 2,109,825 |
Wachovia Corp. | 1,492,400 | | 23,176,972 |
| | 25,286,797 |
Diversified Financial Services - 1.3% |
JPMorgan Chase & Co. | 709,014 | | 24,326,270 |
KKR Financial Holdings LLC | 3,594,966 | | 37,747,143 |
MSCI, Inc. Class A | 559,320 | | 20,297,723 |
| | 82,371,136 |
Insurance - 6.8% |
AFLAC, Inc. | 574,620 | | 36,086,136 |
American International Group, Inc. | 1,148,408 | | 30,386,876 |
Assurant, Inc. | 508,556 | | 33,544,354 |
Berkshire Hathaway, Inc.: | | | |
Class A (a) | 358 | | 43,228,500 |
Class B (a) | 56,481 | | 226,601,771 |
Principal Financial Group, Inc. | 423,275 | | 17,764,852 |
Prudential Financial, Inc. | 470,764 | | 28,123,441 |
| | 415,735,930 |
Real Estate Investment Trusts - 3.0% |
Annaly Capital Management, Inc. | 8,741,881 | | 135,586,574 |
Common Stocks - continued |
| Shares | | Value |
FINANCIALS - continued |
Real Estate Investment Trusts - continued |
CapitalSource, Inc. (d) | 1,340,178 | | $ 14,849,172 |
MFA Mortgage Investments, Inc. | 5,174,464 | | 33,737,505 |
| | 184,173,251 |
Thrifts & Mortgage Finance - 0.0% |
New York Community Bancorp, Inc. (d) | 124,078 | | 2,213,552 |
TOTAL FINANCIALS | | 849,553,839 |
HEALTH CARE - 12.4% |
Biotechnology - 4.4% |
Biogen Idec, Inc. (a) | 1,227,524 | | 68,606,316 |
CSL Ltd. | 3,003,761 | | 102,810,854 |
Genentech, Inc. (a) | 450,185 | | 34,169,042 |
Gilead Sciences, Inc. (a) | 1,243,703 | | 65,854,074 |
| | 271,440,286 |
Health Care Equipment & Supplies - 3.9% |
Alcon, Inc. | 192,700 | | 31,369,633 |
Baxter International, Inc. | 784,051 | | 50,132,221 |
Becton, Dickinson & Co. | 405,880 | | 32,998,044 |
C.R. Bard, Inc. | 355,400 | | 31,257,430 |
China Medical Technologies, Inc. sponsored ADR (d) | 499,030 | | 24,652,082 |
Cochlear Ltd. | 280,980 | | 11,758,855 |
Covidien Ltd. | 268,100 | | 12,839,309 |
DENTSPLY International, Inc. | 736,814 | | 27,114,755 |
Mindray Medical International Ltd. sponsored ADR | 523,970 | | 19,554,560 |
| | 241,676,889 |
Health Care Providers & Services - 3.0% |
Henry Schein, Inc. (a) | 811,075 | | 41,827,138 |
Medco Health Solutions, Inc. (a) | 3,015,051 | | 142,310,407 |
| | 184,137,545 |
Life Sciences Tools & Services - 0.9% |
Covance, Inc. (a)(d) | 532,076 | | 45,769,178 |
Pharmaceutical Product Development, Inc. | 304,099 | | 13,045,847 |
| | 58,815,025 |
Pharmaceuticals - 0.2% |
Novo Nordisk AS Series B | 196,600 | | 12,942,279 |
TOTAL HEALTH CARE | | 769,012,024 |
INDUSTRIALS - 6.4% |
Aerospace & Defense - 1.7% |
General Dynamics Corp. | 630,500 | | 53,088,100 |
Rockwell Collins, Inc. | 1,070,506 | | 51,341,468 |
| | 104,429,568 |
Commercial Services & Supplies - 0.4% |
Copart, Inc. (a) | 146,873 | | 6,289,102 |
|
| Shares | | Value |
Corrections Corp. of America (a) | 435,145 | | $ 11,953,433 |
Robert Half International, Inc. | 229,800 | | 5,508,306 |
| | 23,750,841 |
Electrical Equipment - 1.9% |
Alstom SA (d) | 210,127 | | 48,183,248 |
Vestas Wind Systems AS (a) | 548,400 | | 71,400,015 |
| | 119,583,263 |
Industrial Conglomerates - 1.6% |
Global Consumer Acquisition Corp. unit | 501,100 | | 4,935,835 |
McDermott International, Inc. (a) | 1,561,375 | | 96,633,499 |
| | 101,569,334 |
Machinery - 0.6% |
Danaher Corp. | 287,700 | | 22,239,210 |
Hansen Transmission International NV | 2,291,597 | | 12,218,935 |
| | 34,458,145 |
Trading Companies & Distributors - 0.2% |
Fastenal Co. | 312,900 | | 13,504,764 |
TOTAL INDUSTRIALS | | 397,295,915 |
INFORMATION TECHNOLOGY - 25.2% |
Communications Equipment - 6.7% |
Cisco Systems, Inc. (a) | 3,615,457 | | 84,095,530 |
Corning, Inc. | 1,004,500 | | 23,153,725 |
Juniper Networks, Inc. (a) | 1,589,863 | | 35,263,161 |
Nokia Corp. sponsored ADR | 6,040,841 | | 148,000,605 |
QUALCOMM, Inc. | 2,147,853 | | 95,300,238 |
Research In Motion Ltd. (a) | 262,900 | | 30,733,011 |
| | 416,546,270 |
Computers & Peripherals - 2.2% |
Apple, Inc. (a) | 415,469 | | 69,566,129 |
SanDisk Corp. (a) | 3,552,808 | | 66,437,510 |
| | 136,003,639 |
Electronic Equipment & Instruments - 1.0% |
Amphenol Corp. Class A | 1,340,564 | | 60,164,512 |
Internet Software & Services - 3.8% |
Baidu.com, Inc. sponsored ADR (a) | 17,200 | | 5,382,912 |
Google, Inc. Class A (sub. vtg.) (a) | 180,151 | | 94,835,089 |
The Knot, Inc. (a)(d) | 881,115 | | 8,617,305 |
VeriSign, Inc. (a)(d) | 3,301,872 | | 124,810,762 |
| | 233,646,068 |
IT Services - 6.2% |
Cognizant Technology Solutions Corp. Class A (a) | 2,521,662 | | 81,979,232 |
ExlService Holdings, Inc. (a) | 918,112 | | 12,881,111 |
Infosys Technologies Ltd. | 920,800 | | 37,252,398 |
Infosys Technologies Ltd. sponsored ADR | 952,600 | | 41,399,996 |
The Western Union Co. | 4,020,525 | | 99,387,378 |
Visa, Inc. | 1,161,109 | | 94,409,773 |
WNS Holdings Ltd. ADR (a) | 872,100 | | 14,694,885 |
| | 382,004,773 |
Common Stocks - continued |
| Shares | | Value |
INFORMATION TECHNOLOGY - continued |
Semiconductors & Semiconductor Equipment - 3.2% |
Applied Materials, Inc. | 10,282,913 | | $ 196,300,809 |
Software - 2.1% |
Nintendo Co. Ltd. | 114,700 | | 64,094,359 |
Ubisoft Entertainment SA (a) | 350,289 | | 30,633,399 |
VMware, Inc. Class A | 680,861 | | 36,671,173 |
| | 131,398,931 |
TOTAL INFORMATION TECHNOLOGY | | 1,556,065,002 |
MATERIALS - 13.9% |
Chemicals - 5.3% |
FMC Corp. | 430,105 | | 33,307,331 |
Israel Chemicals Ltd. | 1,384,700 | | 32,300,556 |
Monsanto Co. | 406,342 | | 51,377,882 |
Novozymes AS Series B | 200,100 | | 18,014,382 |
The Mosaic Co. (a) | 1,304,604 | | 188,776,199 |
W.R. Grace & Co. (a) | 256,061 | | 6,014,873 |
| | 329,791,223 |
Metals & Mining - 8.6% |
ArcelorMittal SA (NY Shares) Class A | 823,300 | | 81,564,331 |
BHP Billiton PLC | 853,500 | | 32,731,984 |
Compass Minerals International, Inc. | 1,155,645 | | 93,098,761 |
Evraz Group SA GDR | 322,800 | | 37,606,200 |
Fording Canadian Coal Trust (d) | 1,233,900 | | 118,021,533 |
Freeport-McMoRan Copper & Gold, Inc. Class B | 55,300 | | 6,480,607 |
Goldcorp, Inc. | 2,225,200 | | 102,620,937 |
JSW Steel Ltd. | 445,352 | | 9,342,744 |
Rio Tinto PLC sponsored ADR | 71,200 | | 35,244,000 |
Vedanta Resources PLC | 284,400 | | 12,282,122 |
| | 528,993,219 |
TOTAL MATERIALS | | 858,784,442 |
|
| Shares | | Value |
UTILITIES - 4.2% |
Electric Utilities - 2.7% |
Entergy Corp. | 594,214 | | $ 71,590,903 |
Exelon Corp. | 1,058,503 | | 95,222,930 |
| | 166,813,833 |
Independent Power Producers & Energy Traders - 0.9% |
Constellation Energy Group, Inc. | 684,801 | | 56,222,162 |
Multi-Utilities - 0.6% |
Public Service Enterprise Group, Inc. | 801,500 | | 36,812,895 |
TOTAL UTILITIES | | 259,848,890 |
TOTAL COMMON STOCKS (Cost $5,631,253,739) | 6,087,864,904 |
Money Market Funds - 4.0% |
| | | |
Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c) (Cost $243,826,463) | 243,826,463 | | 243,826,463 |
TOTAL INVESTMENT PORTFOLIO - 102.6% (Cost $5,875,080,202) | | 6,331,691,367 |
NET OTHER ASSETS - (2.6)% | | (159,976,488) |
NET ASSETS - 100% | $ 6,171,714,879 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 549,116 |
Fidelity Securities Lending Cash Central Fund | 1,365,797 |
Total | $ 1,914,913 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value,
beginning of
period | Purchases | Sales
Proceeds | Dividend
Income | Value,
end of
period |
Compass Minerals International, Inc. | $ 16,984,537 | $ 69,815,635 | $ 48,481,661 | $ 972,305 | $ - |
Other Information |
The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
#Valuation Inputs at Reporting Date: |
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 6,331,691,367 | $ 6,000,649,660 | $ 331,041,707 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 72.2% |
Canada | 5.7% |
Finland | 2.4% |
Luxembourg | 1.9% |
Australia | 1.9% |
India | 1.8% |
Japan | 1.7% |
Denmark | 1.6% |
Switzerland | 1.6% |
United Kingdom | 1.6% |
Panama | 1.5% |
France | 1.4% |
Brazil | 1.3% |
Others (individually less than 1%) | 3.4% |
| 100.0% |
Income Tax Information |
At December 31, 2007, the fund had a capital loss carryforward of approximately $394,129,722 of which $349,421,868 and $44,707,854 will expire on December 31, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2008 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $237,979,606) - See accompanying schedule: Unaffiliated issuers (cost $5,631,253,739) | $ 6,087,864,904 | |
Fidelity Central Funds (cost $243,826,463) | 243,826,463 | |
Total Investments (cost $5,875,080,202) | | $ 6,331,691,367 |
Foreign currency held at value (cost $2,089,658) | | 2,088,370 |
Receivable for investments sold | | 152,931,091 |
Receivable for fund shares sold | | 528,310 |
Dividends receivable | | 9,661,424 |
Distributions receivable from Fidelity Central Funds | | 321,238 |
Prepaid expenses | | 11,867 |
Other receivables | | 1,713,993 |
Total assets | | 6,498,947,660 |
| | |
Liabilities | | |
Payable to custodian bank | $ 1,453,810 | |
Payable for investments purchased | 53,525,591 | |
Payable for fund shares redeemed | 8,986,663 | |
Accrued management fee | 3,001,714 | |
Distribution fees payable | 237,036 | |
Notes payable to affiliates | 14,813,186 | |
Other affiliated payables | 473,283 | |
Other payables and accrued expenses | 915,035 | |
Collateral on securities loaned, at value | 243,826,463 | |
Total liabilities | | 327,232,781 |
| | |
Net Assets | | $ 6,171,714,879 |
Net Assets consist of: | | |
Paid in capital | | $ 6,067,383,088 |
Undistributed net investment income | | 31,276,649 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (383,523,699) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 456,578,841 |
Net Assets | | $ 6,171,714,879 |
Statement of Assets and Liabilities - continued
| June 30, 2008 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($4,464,135,556 ÷ 110,162,080 shares) | | $ 40.52 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($735,823,090 ÷ 18,221,246 shares) | | $ 40.38 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($795,701,538 ÷ 19,866,393 shares) | | $ 40.05 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($7,698,329 ÷ 193,210 shares) | | $ 39.84 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($168,356,366 ÷ 4,167,424 shares) | | $ 40.40 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Six months ended June 30, 2008 (Unaudited) |
| | |
Investment Income | | |
Dividends (including $972,305 earned from other affiliated issuers) | | $ 53,803,092 |
Interest | | 255,372 |
Income from Fidelity Central Funds | | 1,914,913 |
Total income | | 55,973,377 |
| | |
Expenses | | |
Management fee | $ 19,113,259 | |
Transfer agent fees | 2,389,732 | |
Distribution fees | 1,418,687 | |
Accounting and security lending fees | 585,818 | |
Custodian fees and expenses | 162,676 | |
Independent trustees' compensation | 15,249 | |
Depreciation in deferred trustee compensation account | (633) | |
Audit | 34,394 | |
Legal | 14,232 | |
Interest | 103,290 | |
Miscellaneous | 639,662 | |
Total expenses before reductions | 24,476,366 | |
Expense reductions | (198,192) | 24,278,174 |
Net investment income (loss) | | 31,695,203 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 777,154 | |
Other affiliated issuers | 15,733,677 | |
Foreign currency transactions | (599,238) | |
Futures contracts | 3,114,497 | |
Total net realized gain (loss) | | 19,026,090 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (847,282,929) | |
Assets and liabilities in foreign currencies | (33,881) | |
Total change in net unrealized appreciation (depreciation) | | (847,316,810) |
Net gain (loss) | | (828,290,720) |
Net increase (decrease) in net assets resulting from operations | | $ (796,595,517) |
Statement of Changes in Net Assets
| Six months ended
June 30, 2008
(Unaudited) | Year ended
December 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 31,695,203 | $ 12,923,642 |
Net realized gain (loss) | 19,026,090 | 1,400,632,701 |
Change in net unrealized appreciation (depreciation) | (847,316,810) | 354,436,797 |
Net increase (decrease) in net assets resulting from operations | (796,595,517) | 1,767,993,140 |
Distributions to shareholders from net investment income | - | (57,202,897) |
Distributions to shareholders from net realized gain | - | (6,419,893) |
Total distributions | - | (63,622,790) |
Share transactions - net increase (decrease) | (1,064,171,025) | (869,609,806) |
Redemption fees | 17,491 | 13,352 |
Total increase (decrease) in net assets | (1,860,749,051) | 834,773,896 |
| | |
Net Assets | | |
Beginning of period | 8,032,463,930 | 7,197,690,034 |
End of period (including undistributed net investment income of $31,276,649 and distributions in excess of net investment income of $418,554, respectively) | $ 6,171,714,879 | $ 8,032,463,930 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended
June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 45.12 | $ 35.87 | $ 33.70 | $ 32.01 | $ 31.04 | $ 23.44 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .20 | .09 | .21 | .11 | .15 H, K | .07 |
Net realized and unrealized gain (loss) | (4.80) | 9.53 | 2.09 | 1.74 | .90 | 7.60 |
Total from investment operations | (4.60) | 9.62 | 2.30 | 1.85 | 1.05 | 7.67 |
Distributions from net investment income | - | (.33) | (.13) | (.16) | (.08) | (.07) |
Distributions from net realized gain | - | (.04) | - | - | - | - |
Total distributions | - | (.37) | (.13) | (.16) | (.08) | (.07) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.52 | $ 45.12 | $ 35.87 | $ 33.70 | $ 32.01 | $ 31.04 |
Total Return B, C , D | (10.20)% | 26.96% | 6.85% | 5.80% | 3.38% | 32.85% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .67% A | .65% | .68% | .67% | .68% | .67% |
Expenses net of fee waivers, if any | .67% A | .65% | .68% | .67% | .68% | .67% |
Expenses net of all reductions | .66% A | .64% | .67% | .63% | .65% | .64% |
Net investment income (loss) | .97% A | .21% | .61% | .36% | .47% K | .28% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 4,464,136 | $ 6,002,656 | $ 5,610,629 | $ 6,726,655 | $ 7,796,888 | $ 8,594,509 |
Portfolio turnover rate G | 156% A | 109% | 114% | 79% | 72% | 61% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class. |
Financial Highlights - Service Class
| Six months ended
June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 44.99 | $ 35.72 | $ 33.56 | $ 31.88 | $ 30.92 | $ 23.34 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .18 | .04 | .18 | .08 | .11 H, K | .05 |
Net realized and unrealized gain (loss) | (4.79) | 9.51 | 2.07 | 1.72 | .90 | 7.58 |
Total from investment operations | (4.61) | 9.55 | 2.25 | 1.80 | 1.01 | 7.63 |
Distributions from net investment income | - | (.24) | (.09) | (.12) | (.05) | (.05) |
Distributions from net realized gain | - | (.04) | - | - | - | - |
Total distributions | - | (.28) | (.09) | (.12) | (.05) | (.05) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.38 | $ 44.99 | $ 35.72 | $ 33.56 | $ 31.88 | $ 30.92 |
Total Return B, C , D | (10.25)% | 26.87% | 6.73% | 5.67% | 3.26% | 32.78% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .77% A | .75% | .78% | .77% | .78% | .77% |
Expenses net of fee waivers, if any | .77% A | .75% | .78% | .77% | .78% | .77% |
Expenses net of all reductions | .76% A | .74% | .77% | .73% | .75% | .74% |
Net investment income (loss) | .87% A | .11% | .51% | .26% | .37% K | .18% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 735,823 | $ 929,848 | $ 877,279 | $ 1,086,172 | $ 1,326,262 | $ 1,401,298 |
Portfolio turnover rate G | 156% A | 109% | 114% | 79% | 72% | 61% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Service Class 2
| Six months ended
June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 44.65 | $ 35.42 | $ 33.29 | $ 31.64 | $ 30.72 | $ 23.21 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .15 | (.02) | .12 | .03 | .07 H, K | .01 |
Net realized and unrealized gain (loss) | (4.75) | 9.43 | 2.07 | 1.71 | .89 | 7.53 |
Total from investment operations | (4.60) | 9.41 | 2.19 | 1.74 | .96 | 7.54 |
Distributions from net investment income | - | (.15) | (.06) | (.09) | (.04) | (.03) |
Distributions from net realized gain | - | (.03) | - | - | - | - |
Total distributions | - | (.18) | (.06) | (.09) | (.04) | (.03) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.05 | $ 44.65 | $ 35.42 | $ 33.29 | $ 31.64 | $ 30.72 |
Total Return B, C , D | (10.30)% | 26.66% | 6.57% | 5.50% | 3.12% | 32.54% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .92% A | .90% | .94% | .92% | .93% | .92% |
Expenses net of fee waivers, if any | .92% A | .90% | .94% | .92% | .93% | .92% |
Expenses net of all reductions | .91% A | .89% | .92% | .88% | .90% | .89% |
Net investment income (loss) | .72% A | (.04)% | .36% | .11% | .22% K | .02% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 795,702 | $ 898,204 | $ 627,754 | $ 858,587 | $ 811,126 | $ 609,798 |
Portfolio turnover rate G | 156% A | 109% | 114% | 79% | 72% | 61% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class. |
Financial Highlights - Service Class 2R
| Six months ended
June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 44.42 | $ 35.28 | $ 33.18 | $ 31.54 | $ 30.65 | $ 23.20 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .15 | (.01) | .12 | .04 | .07 H, K | .01 |
Net realized and unrealized gain (loss) | (4.73) | 9.38 | 2.06 | 1.70 | .88 | 7.51 |
Total from investment operations | (4.58) | 9.37 | 2.18 | 1.74 | .95 | 7.52 |
Distributions from net investment income | - | (.19) | (.08) | (.10) | (.06) | (.07) |
Distributions from net realized gain | - | (.04) | - | - | - | - |
Total distributions | - | (.23) | (.08) | (.10) | (.06) | (.07) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 39.84 | $ 44.42 | $ 35.28 | $ 33.18 | $ 31.54 | $ 30.65 |
Total Return B, C , D | (10.31)% | 26.66% | 6.58% | 5.52% | 3.10% | 32.54% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .92% A | .89% | .93% | .92% | .93% | .92% |
Expenses net of fee waivers, if any | .92% A | .89% | .93% | .92% | .93% | .92% |
Expenses net of all reductions | .91% A | .89% | .92% | .88% | .90% | .90% |
Net investment income (loss) | .72% A | (.04)% | .36% | .12% | .22% K | .02% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 7,698 | $ 20,051 | $ 5,063 | $ 5,409 | $ 2,667 | $ 1,369 |
Portfolio turnover rate G | 156% A | 109% | 114% | 79% | 72% | 61% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Investor Class
| Six months ended
June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 H |
Selected Per-Share Data | | | | |
Net asset value, beginning of period | $ 45.00 | $ 35.78 | $ 33.67 | $ 32.60 |
Income from Investment Operations | | | | |
Net investment income (loss) E | .18 | .04 | .17 | .03 |
Net realized and unrealized gain (loss) | (4.78) | 9.50 | 2.08 | 1.04 |
Total from investment operations | (4.60) | 9.54 | 2.25 | 1.07 |
Distributions from net investment income | - | (.28) | (.14) | - |
Distributions from net realized gain | - | (.04) | - | - |
Total distributions | - | (.32) | (.14) | - |
Redemption fees added to paid in capital E, J | - | - | - | - |
Net asset value, end of period | $ 40.40 | $ 45.00 | $ 35.78 | $ 33.67 |
Total Return B, C , D | (10.22)% | 26.81% | 6.72% | 3.28% |
Ratios to Average Net Assets F, I | | | | |
Expenses before reductions | .76% A | .76% | .81% | .83% A |
Expenses net of fee waivers, if any | .76% A | .76% | .81% | .83% A |
Expenses net of all reductions | .75% A | .76% | .80% | .79% A |
Net investment income (loss) | .88% A | .09% | .49% | .23% A |
Supplemental Data | | | | |
Net assets, end of period (000 omitted) | $ 168,356 | $ 181,705 | $ 76,965 | $ 24,166 |
Portfolio turnover rate G | 156% A | 109% | 114% | 79% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2008 (Unaudited)
1. Organization.
VIP Growth Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Service Class 2R shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships (including allocations from Fidelity Central Funds), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 975,364,226 | |
Unrealized depreciation | (540,847,191) | |
Net unrealized appreciation (depreciation) | $ 434,517,035 | |
Cost for federal income tax purposes | $ 5,897,174,332 | |
Trading (Redemption) Fees. Service Class 2R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
Semiannual Report
3. Significant Accounting Policies - continued
New Accounting Pronouncement. In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $5,328,174,579 and $6,427,355,578, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.
For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:
Service Class | $ 394,460 | |
Service Class 2 | 1,010,743 | |
Service Class 2R | 13,484 | |
| $ 1,418,687 | |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:
Initial Class | $ 1,688,802 | |
Service Class | 264,239 | |
Service Class 2 | 275,163 | |
Service Class 2R | 3,562 | |
Investor Class | 157,966 | |
| $ 2,389,732 | |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $68,045 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans, including accrued interest, at period end are presented under the caption "Notes Payable to Affiliates" in the Fund's Statement of Assets and Liabilities. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily
Loan Balance | Weighted Average
Interest Rate | Interest
Expense |
Borrower | $ 39,211,237 | 2.50% | $ 103,290 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $7,403 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $1,365,797.
Semiannual Report
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $194,001 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $4,191.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $1,601,267, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
At the end of the period, FMR or its affiliates were the owners of record of 13% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 35% of the total outstanding shares of the Fund.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
From net investment income | | |
Initial Class | $ - | $ 48,163,694 |
Service Class | - | 5,568,863 |
Service Class 2 | - | 2,694,835 |
Service Class 2R | - | 42,158 |
Investor Class | - | 733,347 |
Total | $ - | $ 57,202,897 |
From net realized gain | | |
Initial Class | $ - | $ 4,929,899 |
Service Class | - | 762,636 |
Service Class 2 | - | 563,891 |
Service Class 2R | - | 17,112 |
Investor Class | - | 146,355 |
Total | $ - | $ 6,419,893 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 | Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
Initial Class | | | | |
Shares sold | 2,029,413 | 6,352,261 | $ 82,900,824 | $ 263,603,689 |
Reinvestment of distributions | - | 1,365,559 | - | 53,093,593 |
Shares redeemed | (24,902,820) | (31,109,602) | (1,028,770,968) | (1,235,111,333) |
Net increase (decrease) | (22,873,407) | (23,391,782) | $ (945,870,144) | $ (918,414,051) |
Service Class | | | | |
Shares sold | 662,030 | 2,661,654 | $ 26,989,623 | $ 112,874,994 |
Reinvestment of distributions | - | 164,792 | - | 6,331,499 |
Shares redeemed | (3,110,211) | (6,714,602) | (126,602,430) | (264,599,886) |
Net increase (decrease) | (2,448,181) | (3,888,156) | $ (99,612,807) | $ (145,393,393) |
Service Class 2 | | | | |
Shares sold | 2,605,941 | 6,700,657 | $ 104,951,849 | $ 277,901,012 |
Reinvestment of distributions | - | 86,329 | - | 3,258,726 |
Shares redeemed | (2,854,916) | (4,393,246) | (115,775,231) | (178,974,484) |
Net increase (decrease) | (248,975) | 2,393,740 | $ (10,823,382) | $ 102,185,254 |
Service Class 2R | | | | |
Shares sold | 85,115 | 452,190 | $ 3,431,462 | $ 18,759,040 |
Reinvestment of distributions | - | 1,458 | - | 59,270 |
Shares redeemed | (343,294) | (145,771) | (13,860,353) | (6,009,422) |
Net increase (decrease) | (258,179) | 307,877 | $ (10,428,891) | $ 12,808,888 |
Investor Class | | | | |
Shares sold | 1,904,920 | 2,273,784 | $ 74,496,361 | $ 95,486,744 |
Reinvestment of distributions | - | 22,125 | - | 879,702 |
Shares redeemed | (1,775,216) | (409,459) | (71,932,162) | (17,162,950) |
Net increase (decrease) | 129,704 | 1,886,450 | $ 2,564,199 | $ 79,203,496 |
Semiannual Report
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 |
To elect a Board of Trustees.A |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 821,220,039.81 | 95.845 |
Withheld | 35,598,080.64 | 4.155 |
TOTAL | 856,818,120.45 | 100.000 |
Dennis J. Dirks |
Affirmative | 822,124,493.63 | 95.951 |
Withheld | 34,693,626.82 | 4.049 |
TOTAL | 856,818,120.45 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 820,473,313.05 | 95.758 |
Withheld | 36,344,807.40 | 4.242 |
TOTAL | 856,818,120.45 | 100.000 |
Alan J. Lacy |
Affirmative | 822,170,402.95 | 95.956 |
Withheld | 34,647,717.50 | 4.044 |
TOTAL | 856,818,120.45 | 100.000 |
Ned C. Lautenbach |
Affirmative | 821,435,006.18 | 95.870 |
Withheld | 35,383,114.27 | 4.130 |
TOTAL | 856,818,120.45 | 100.000 |
Joseph Mauriello |
Affirmative | 822,174,756.53 | 95.957 |
Withheld | 34,643,363.92 | 4.043 |
TOTAL | 856,818,120.45 | 100.000 |
Cornelia M. Small |
Affirmative | 822,263,792.20 | 95.967 |
Withheld | 34,554,328.25 | 4.033 |
TOTAL | 856,818,120.45 | 100.000 |
William S. Stavropoulos |
Affirmative | 821,014,987.67 | 95.821 |
Withheld | 35,803,132.78 | 4.179 |
TOTAL | 856,818,120.45 | 100.000 |
David M. Thomas |
Affirmative | 822,321,743.26 | 95.974 |
Withheld | 34,496,377.19 | 4.026 |
TOTAL | 856,818,120.45 | 100.000 |
Michael E. Wiley |
Affirmative | 822,218,346.41 | 95.962 |
Withheld | 34,599,774.04 | 4.038 |
TOTAL | 856,818,120.45 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 701,273,514.99 | 81.846 |
Against | 103,131,328.05 | 12.037 |
Abstain | 52,413,277.41 | 6.117 |
TOTAL | 856,818,120.45 | 100.000 |
A Denotes trust-wide proposal and voting results.
Semiannual Report
Investments
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Adviser
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
Fidelity Investments Japan Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank, N.A.
Pittsburgh, PA
VIPGRWT-SANN-0808
1.705692.110
Fidelity® Variable Insurance Products:
Growth Portfolio - Service Class 2R
Semiannual Report
June 30, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Shareholder Expense Example | <Click Here> | An example of shareholder expenses. |
Investment Changes | <Click Here> | A summary of major shifts in the fund's investments over the past six months. |
Investments | <Click Here> | A complete list of the fund's investments with their
market values. |
Financial Statements | <Click Here> | Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights. |
Notes | <Click Here> | Notes to the financial statements. |
Proxy Voting Results | <Click Here> | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
January 1, 2008 | Ending
Account Value
June 30, 2008 | Expenses Paid
During Period*
January 1, 2008
to June 30, 2008 |
Initial Class | | | |
Actual | $ 1,000.00 | $ 898.00 | $ 3.16 |
HypotheticalA | $ 1,000.00 | $ 1,021.53 | $ 3.37 |
Service Class | | | |
Actual | $ 1,000.00 | $ 897.50 | $ 3.63 |
HypotheticalA | $ 1,000.00 | $ 1,021.03 | $ 3.87 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 897.00 | $ 4.34 |
HypotheticalA | $ 1,000.00 | $ 1,020.29 | $ 4.62 |
Service Class 2R | | | |
Actual | $ 1,000.00 | $ 896.90 | $ 4.34 |
HypotheticalA | $ 1,000.00 | $ 1,020.29 | $ 4.62 |
Investor Class | | | |
Actual | $ 1,000.00 | $ 897.80 | $ 3.59 |
HypotheticalA | $ 1,000.00 | $ 1,021.08 | $ 3.82 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Initial Class | .67% |
Service Class | .77% |
Service Class 2 | .92% |
Service Class 2R | .92% |
Investor Class | .76% |
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Berkshire Hathaway, Inc. Class B | 3.7 | 4.4 |
Applied Materials, Inc. | 3.2 | 2.4 |
The Mosaic Co. | 3.1 | 1.2 |
Nokia Corp. sponsored ADR | 2.4 | 5.3 |
Medco Health Solutions, Inc. | 2.3 | 0.5 |
Annaly Capital Management, Inc. | 2.2 | 0.0 |
VeriSign, Inc. | 2.0 | 1.1 |
Fording Canadian Coal Trust | 1.9 | 0.0 |
Denbury Resources, Inc. | 1.9 | 0.9 |
CVS Caremark Corp. | 1.7 | 0.7 |
| 24.4 | |
Top Five Market Sectors as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Information Technology | 25.2 | 37.1 |
Materials | 13.9 | 2.7 |
Financials | 13.8 | 11.0 |
Energy | 13.3 | 10.4 |
Health Care | 12.4 | 12.4 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2008* | As of December 31, 2007** |
| Stocks 98.6% | | | Stocks 99.8% | |
| Short-Term
Investments and
Net Other Assets 1.4% | | | Short-Term
Investments and
Net Other Assets 0.2% | |
* Foreign investments | 27.8% | | ** Foreign investments | 25.5% | |
Semiannual Report
Investments June 30, 2008 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.6% |
| Shares | | Value |
CONSUMER DISCRETIONARY - 4.6% |
Automobiles - 0.2% |
Harley-Davidson, Inc. | 325,700 | | $ 11,809,882 |
Diversified Consumer Services - 1.0% |
Strayer Education, Inc. | 288,471 | | 60,310,632 |
Hotels, Restaurants & Leisure - 0.9% |
BJ's Restaurants, Inc. (a) | 171,492 | | 1,668,617 |
McDonald's Corp. | 783,476 | | 44,047,021 |
Starwood Hotels & Resorts Worldwide, Inc. | 245,700 | | 9,845,199 |
| | 55,560,837 |
Leisure Equipment & Products - 0.7% |
Nikon Corp. | 1,582,000 | | 46,194,131 |
Media - 1.0% |
Focus Media Holding Ltd. ADR (a)(d) | 852,290 | | 23,625,479 |
National CineMedia, Inc. | 819,490 | | 8,735,763 |
The DIRECTV Group, Inc. (a) | 1,049,600 | | 27,195,136 |
| | 59,556,378 |
Specialty Retail - 0.4% |
DSW, Inc. Class A (a)(d) | 1,242,052 | | 14,631,373 |
Gamestop Corp. Class A (a) | 285,600 | | 11,538,240 |
| | 26,169,613 |
Textiles, Apparel & Luxury Goods - 0.4% |
Lululemon Athletica, Inc. | 578,800 | | 16,819,928 |
LVMH Moet Hennessy - Louis Vuitton | 57,700 | | 6,019,072 |
| | 22,839,000 |
TOTAL CONSUMER DISCRETIONARY | | 282,440,473 |
CONSUMER STAPLES - 4.8% |
Food & Staples Retailing - 2.0% |
CVS Caremark Corp. | 2,668,206 | | 105,580,911 |
Whole Foods Market, Inc. (d) | 824,118 | | 19,523,355 |
| | 125,104,266 |
Food Products - 1.2% |
Green Mountain Coffee Roasters, Inc. (a) | 215,952 | | 8,113,317 |
Nestle SA sponsored ADR | 573,500 | | 64,862,850 |
| | 72,976,167 |
Household Products - 1.6% |
Procter & Gamble Co. | 1,590,917 | | 96,743,663 |
TOTAL CONSUMER STAPLES | | 294,824,096 |
ENERGY - 13.3% |
Energy Equipment & Services - 3.8% |
Atwood Oceanics, Inc. (a) | 74,000 | | 9,201,160 |
ENSCO International, Inc. | 222,501 | | 17,964,731 |
FMC Technologies, Inc. (a) | 179,900 | | 13,839,707 |
Helmerich & Payne, Inc. | 199,000 | | 14,331,980 |
National Oilwell Varco, Inc. (a) | 783,348 | | 69,498,635 |
|
| Shares | | Value |
Smith International, Inc. | 659,994 | | $ 54,871,901 |
Transocean, Inc. (a) | 351,600 | | 53,580,324 |
| | 233,288,438 |
Oil, Gas & Consumable Fuels - 9.5% |
Chesapeake Energy Corp. | 305,808 | | 20,171,096 |
Denbury Resources, Inc. (a) | 3,213,050 | | 117,276,325 |
EOG Resources, Inc. | 299,231 | | 39,259,107 |
Galp Energia SGPS SA Class B | 1,015,441 | | 22,521,912 |
Hess Corp. | 215,000 | | 27,130,850 |
OAO Gazprom sponsored ADR | 910,675 | | 52,819,150 |
Occidental Petroleum Corp. | 85,700 | | 7,701,002 |
Petroleo Brasileiro SA - Petrobras sponsored ADR | 1,127,600 | | 79,867,908 |
Reliance Industries Ltd. | 316,559 | | 15,449,303 |
Southwestern Energy Co. (a) | 1,197,900 | | 57,032,019 |
Ultra Petroleum Corp. (a) | 988,526 | | 97,073,253 |
Williams Companies, Inc. | 1,251,547 | | 50,449,860 |
| | 586,751,785 |
TOTAL ENERGY | | 820,040,223 |
FINANCIALS - 13.8% |
Capital Markets - 2.3% |
Bank of New York Mellon Corp. | 401,700 | | 15,196,311 |
Charles Schwab Corp. | 3,070,572 | | 63,069,549 |
Franklin Resources, Inc. | 260,974 | | 23,918,267 |
JMP Group, Inc. | 98,900 | | 653,729 |
Northern Trust Corp. | 186,179 | | 12,766,294 |
State Street Corp. | 377,700 | | 24,169,023 |
| | 139,773,173 |
Commercial Banks - 0.4% |
UCBH Holdings, Inc. | 937,700 | | 2,109,825 |
Wachovia Corp. | 1,492,400 | | 23,176,972 |
| | 25,286,797 |
Diversified Financial Services - 1.3% |
JPMorgan Chase & Co. | 709,014 | | 24,326,270 |
KKR Financial Holdings LLC | 3,594,966 | | 37,747,143 |
MSCI, Inc. Class A | 559,320 | | 20,297,723 |
| | 82,371,136 |
Insurance - 6.8% |
AFLAC, Inc. | 574,620 | | 36,086,136 |
American International Group, Inc. | 1,148,408 | | 30,386,876 |
Assurant, Inc. | 508,556 | | 33,544,354 |
Berkshire Hathaway, Inc.: | | | |
Class A (a) | 358 | | 43,228,500 |
Class B (a) | 56,481 | | 226,601,771 |
Principal Financial Group, Inc. | 423,275 | | 17,764,852 |
Prudential Financial, Inc. | 470,764 | | 28,123,441 |
| | 415,735,930 |
Real Estate Investment Trusts - 3.0% |
Annaly Capital Management, Inc. | 8,741,881 | | 135,586,574 |
Common Stocks - continued |
| Shares | | Value |
FINANCIALS - continued |
Real Estate Investment Trusts - continued |
CapitalSource, Inc. (d) | 1,340,178 | | $ 14,849,172 |
MFA Mortgage Investments, Inc. | 5,174,464 | | 33,737,505 |
| | 184,173,251 |
Thrifts & Mortgage Finance - 0.0% |
New York Community Bancorp, Inc. (d) | 124,078 | | 2,213,552 |
TOTAL FINANCIALS | | 849,553,839 |
HEALTH CARE - 12.4% |
Biotechnology - 4.4% |
Biogen Idec, Inc. (a) | 1,227,524 | | 68,606,316 |
CSL Ltd. | 3,003,761 | | 102,810,854 |
Genentech, Inc. (a) | 450,185 | | 34,169,042 |
Gilead Sciences, Inc. (a) | 1,243,703 | | 65,854,074 |
| | 271,440,286 |
Health Care Equipment & Supplies - 3.9% |
Alcon, Inc. | 192,700 | | 31,369,633 |
Baxter International, Inc. | 784,051 | | 50,132,221 |
Becton, Dickinson & Co. | 405,880 | | 32,998,044 |
C.R. Bard, Inc. | 355,400 | | 31,257,430 |
China Medical Technologies, Inc. sponsored ADR (d) | 499,030 | | 24,652,082 |
Cochlear Ltd. | 280,980 | | 11,758,855 |
Covidien Ltd. | 268,100 | | 12,839,309 |
DENTSPLY International, Inc. | 736,814 | | 27,114,755 |
Mindray Medical International Ltd. sponsored ADR | 523,970 | | 19,554,560 |
| | 241,676,889 |
Health Care Providers & Services - 3.0% |
Henry Schein, Inc. (a) | 811,075 | | 41,827,138 |
Medco Health Solutions, Inc. (a) | 3,015,051 | | 142,310,407 |
| | 184,137,545 |
Life Sciences Tools & Services - 0.9% |
Covance, Inc. (a)(d) | 532,076 | | 45,769,178 |
Pharmaceutical Product Development, Inc. | 304,099 | | 13,045,847 |
| | 58,815,025 |
Pharmaceuticals - 0.2% |
Novo Nordisk AS Series B | 196,600 | | 12,942,279 |
TOTAL HEALTH CARE | | 769,012,024 |
INDUSTRIALS - 6.4% |
Aerospace & Defense - 1.7% |
General Dynamics Corp. | 630,500 | | 53,088,100 |
Rockwell Collins, Inc. | 1,070,506 | | 51,341,468 |
| | 104,429,568 |
Commercial Services & Supplies - 0.4% |
Copart, Inc. (a) | 146,873 | | 6,289,102 |
|
| Shares | | Value |
Corrections Corp. of America (a) | 435,145 | | $ 11,953,433 |
Robert Half International, Inc. | 229,800 | | 5,508,306 |
| | 23,750,841 |
Electrical Equipment - 1.9% |
Alstom SA (d) | 210,127 | | 48,183,248 |
Vestas Wind Systems AS (a) | 548,400 | | 71,400,015 |
| | 119,583,263 |
Industrial Conglomerates - 1.6% |
Global Consumer Acquisition Corp. unit | 501,100 | | 4,935,835 |
McDermott International, Inc. (a) | 1,561,375 | | 96,633,499 |
| | 101,569,334 |
Machinery - 0.6% |
Danaher Corp. | 287,700 | | 22,239,210 |
Hansen Transmission International NV | 2,291,597 | | 12,218,935 |
| | 34,458,145 |
Trading Companies & Distributors - 0.2% |
Fastenal Co. | 312,900 | | 13,504,764 |
TOTAL INDUSTRIALS | | 397,295,915 |
INFORMATION TECHNOLOGY - 25.2% |
Communications Equipment - 6.7% |
Cisco Systems, Inc. (a) | 3,615,457 | | 84,095,530 |
Corning, Inc. | 1,004,500 | | 23,153,725 |
Juniper Networks, Inc. (a) | 1,589,863 | | 35,263,161 |
Nokia Corp. sponsored ADR | 6,040,841 | | 148,000,605 |
QUALCOMM, Inc. | 2,147,853 | | 95,300,238 |
Research In Motion Ltd. (a) | 262,900 | | 30,733,011 |
| | 416,546,270 |
Computers & Peripherals - 2.2% |
Apple, Inc. (a) | 415,469 | | 69,566,129 |
SanDisk Corp. (a) | 3,552,808 | | 66,437,510 |
| | 136,003,639 |
Electronic Equipment & Instruments - 1.0% |
Amphenol Corp. Class A | 1,340,564 | | 60,164,512 |
Internet Software & Services - 3.8% |
Baidu.com, Inc. sponsored ADR (a) | 17,200 | | 5,382,912 |
Google, Inc. Class A (sub. vtg.) (a) | 180,151 | | 94,835,089 |
The Knot, Inc. (a)(d) | 881,115 | | 8,617,305 |
VeriSign, Inc. (a)(d) | 3,301,872 | | 124,810,762 |
| | 233,646,068 |
IT Services - 6.2% |
Cognizant Technology Solutions Corp. Class A (a) | 2,521,662 | | 81,979,232 |
ExlService Holdings, Inc. (a) | 918,112 | | 12,881,111 |
Infosys Technologies Ltd. | 920,800 | | 37,252,398 |
Infosys Technologies Ltd. sponsored ADR | 952,600 | | 41,399,996 |
The Western Union Co. | 4,020,525 | | 99,387,378 |
Visa, Inc. | 1,161,109 | | 94,409,773 |
WNS Holdings Ltd. ADR (a) | 872,100 | | 14,694,885 |
| | 382,004,773 |
Common Stocks - continued |
| Shares | | Value |
INFORMATION TECHNOLOGY - continued |
Semiconductors & Semiconductor Equipment - 3.2% |
Applied Materials, Inc. | 10,282,913 | | $ 196,300,809 |
Software - 2.1% |
Nintendo Co. Ltd. | 114,700 | | 64,094,359 |
Ubisoft Entertainment SA (a) | 350,289 | | 30,633,399 |
VMware, Inc. Class A | 680,861 | | 36,671,173 |
| | 131,398,931 |
TOTAL INFORMATION TECHNOLOGY | | 1,556,065,002 |
MATERIALS - 13.9% |
Chemicals - 5.3% |
FMC Corp. | 430,105 | | 33,307,331 |
Israel Chemicals Ltd. | 1,384,700 | | 32,300,556 |
Monsanto Co. | 406,342 | | 51,377,882 |
Novozymes AS Series B | 200,100 | | 18,014,382 |
The Mosaic Co. (a) | 1,304,604 | | 188,776,199 |
W.R. Grace & Co. (a) | 256,061 | | 6,014,873 |
| | 329,791,223 |
Metals & Mining - 8.6% |
ArcelorMittal SA (NY Shares) Class A | 823,300 | | 81,564,331 |
BHP Billiton PLC | 853,500 | | 32,731,984 |
Compass Minerals International, Inc. | 1,155,645 | | 93,098,761 |
Evraz Group SA GDR | 322,800 | | 37,606,200 |
Fording Canadian Coal Trust (d) | 1,233,900 | | 118,021,533 |
Freeport-McMoRan Copper & Gold, Inc. Class B | 55,300 | | 6,480,607 |
Goldcorp, Inc. | 2,225,200 | | 102,620,937 |
JSW Steel Ltd. | 445,352 | | 9,342,744 |
Rio Tinto PLC sponsored ADR | 71,200 | | 35,244,000 |
Vedanta Resources PLC | 284,400 | | 12,282,122 |
| | 528,993,219 |
TOTAL MATERIALS | | 858,784,442 |
|
| Shares | | Value |
UTILITIES - 4.2% |
Electric Utilities - 2.7% |
Entergy Corp. | 594,214 | | $ 71,590,903 |
Exelon Corp. | 1,058,503 | | 95,222,930 |
| | 166,813,833 |
Independent Power Producers & Energy Traders - 0.9% |
Constellation Energy Group, Inc. | 684,801 | | 56,222,162 |
Multi-Utilities - 0.6% |
Public Service Enterprise Group, Inc. | 801,500 | | 36,812,895 |
TOTAL UTILITIES | | 259,848,890 |
TOTAL COMMON STOCKS (Cost $5,631,253,739) | 6,087,864,904 |
Money Market Funds - 4.0% |
| | | |
Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c) (Cost $243,826,463) | 243,826,463 | | 243,826,463 |
TOTAL INVESTMENT PORTFOLIO - 102.6% (Cost $5,875,080,202) | | 6,331,691,367 |
NET OTHER ASSETS - (2.6)% | | (159,976,488) |
NET ASSETS - 100% | $ 6,171,714,879 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 549,116 |
Fidelity Securities Lending Cash Central Fund | 1,365,797 |
Total | $ 1,914,913 |
Other Affiliated Issuers |
An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows: |
Affiliate | Value,
beginning of
period | Purchases | Sales
Proceeds | Dividend
Income | Value,
end of
period |
Compass Minerals International, Inc. | $ 16,984,537 | $ 69,815,635 | $ 48,481,661 | $ 972,305 | $ - |
Other Information |
The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
#Valuation Inputs at Reporting Date: |
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 6,331,691,367 | $ 6,000,649,660 | $ 331,041,707 | $ - |
Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited) |
United States of America | 72.2% |
Canada | 5.7% |
Finland | 2.4% |
Luxembourg | 1.9% |
Australia | 1.9% |
India | 1.8% |
Japan | 1.7% |
Denmark | 1.6% |
Switzerland | 1.6% |
United Kingdom | 1.6% |
Panama | 1.5% |
France | 1.4% |
Brazil | 1.3% |
Others (individually less than 1%) | 3.4% |
| 100.0% |
Income Tax Information |
At December 31, 2007, the fund had a capital loss carryforward of approximately $394,129,722 of which $349,421,868 and $44,707,854 will expire on December 31, 2010 and 2011, respectively. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2008 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $237,979,606) - See accompanying schedule: Unaffiliated issuers (cost $5,631,253,739) | $ 6,087,864,904 | |
Fidelity Central Funds (cost $243,826,463) | 243,826,463 | |
Total Investments (cost $5,875,080,202) | | $ 6,331,691,367 |
Foreign currency held at value (cost $2,089,658) | | 2,088,370 |
Receivable for investments sold | | 152,931,091 |
Receivable for fund shares sold | | 528,310 |
Dividends receivable | | 9,661,424 |
Distributions receivable from Fidelity Central Funds | | 321,238 |
Prepaid expenses | | 11,867 |
Other receivables | | 1,713,993 |
Total assets | | 6,498,947,660 |
| | |
Liabilities | | |
Payable to custodian bank | $ 1,453,810 | |
Payable for investments purchased | 53,525,591 | |
Payable for fund shares redeemed | 8,986,663 | |
Accrued management fee | 3,001,714 | |
Distribution fees payable | 237,036 | |
Notes payable to affiliates | 14,813,186 | |
Other affiliated payables | 473,283 | |
Other payables and accrued expenses | 915,035 | |
Collateral on securities loaned, at value | 243,826,463 | |
Total liabilities | | 327,232,781 |
| | |
Net Assets | | $ 6,171,714,879 |
Net Assets consist of: | | |
Paid in capital | | $ 6,067,383,088 |
Undistributed net investment income | | 31,276,649 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (383,523,699) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 456,578,841 |
Net Assets | | $ 6,171,714,879 |
Statement of Assets and Liabilities - continued
| June 30, 2008 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($4,464,135,556 ÷ 110,162,080 shares) | | $ 40.52 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($735,823,090 ÷ 18,221,246 shares) | | $ 40.38 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($795,701,538 ÷ 19,866,393 shares) | | $ 40.05 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($7,698,329 ÷ 193,210 shares) | | $ 39.84 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($168,356,366 ÷ 4,167,424 shares) | | $ 40.40 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Six months ended June 30, 2008 (Unaudited) |
| | |
Investment Income | | |
Dividends (including $972,305 earned from other affiliated issuers) | | $ 53,803,092 |
Interest | | 255,372 |
Income from Fidelity Central Funds | | 1,914,913 |
Total income | | 55,973,377 |
| | |
Expenses | | |
Management fee | $ 19,113,259 | |
Transfer agent fees | 2,389,732 | |
Distribution fees | 1,418,687 | |
Accounting and security lending fees | 585,818 | |
Custodian fees and expenses | 162,676 | |
Independent trustees' compensation | 15,249 | |
Depreciation in deferred trustee compensation account | (633) | |
Audit | 34,394 | |
Legal | 14,232 | |
Interest | 103,290 | |
Miscellaneous | 639,662 | |
Total expenses before reductions | 24,476,366 | |
Expense reductions | (198,192) | 24,278,174 |
Net investment income (loss) | | 31,695,203 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 777,154 | |
Other affiliated issuers | 15,733,677 | |
Foreign currency transactions | (599,238) | |
Futures contracts | 3,114,497 | |
Total net realized gain (loss) | | 19,026,090 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (847,282,929) | |
Assets and liabilities in foreign currencies | (33,881) | |
Total change in net unrealized appreciation (depreciation) | | (847,316,810) |
Net gain (loss) | | (828,290,720) |
Net increase (decrease) in net assets resulting from operations | | $ (796,595,517) |
Statement of Changes in Net Assets
| Six months ended
June 30, 2008
(Unaudited) | Year ended
December 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 31,695,203 | $ 12,923,642 |
Net realized gain (loss) | 19,026,090 | 1,400,632,701 |
Change in net unrealized appreciation (depreciation) | (847,316,810) | 354,436,797 |
Net increase (decrease) in net assets resulting from operations | (796,595,517) | 1,767,993,140 |
Distributions to shareholders from net investment income | - | (57,202,897) |
Distributions to shareholders from net realized gain | - | (6,419,893) |
Total distributions | - | (63,622,790) |
Share transactions - net increase (decrease) | (1,064,171,025) | (869,609,806) |
Redemption fees | 17,491 | 13,352 |
Total increase (decrease) in net assets | (1,860,749,051) | 834,773,896 |
| | |
Net Assets | | |
Beginning of period | 8,032,463,930 | 7,197,690,034 |
End of period (including undistributed net investment income of $31,276,649 and distributions in excess of net investment income of $418,554, respectively) | $ 6,171,714,879 | $ 8,032,463,930 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended
June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 45.12 | $ 35.87 | $ 33.70 | $ 32.01 | $ 31.04 | $ 23.44 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .20 | .09 | .21 | .11 | .15 H, K | .07 |
Net realized and unrealized gain (loss) | (4.80) | 9.53 | 2.09 | 1.74 | .90 | 7.60 |
Total from investment operations | (4.60) | 9.62 | 2.30 | 1.85 | 1.05 | 7.67 |
Distributions from net investment income | - | (.33) | (.13) | (.16) | (.08) | (.07) |
Distributions from net realized gain | - | (.04) | - | - | - | - |
Total distributions | - | (.37) | (.13) | (.16) | (.08) | (.07) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.52 | $ 45.12 | $ 35.87 | $ 33.70 | $ 32.01 | $ 31.04 |
Total Return B, C , D | (10.20)% | 26.96% | 6.85% | 5.80% | 3.38% | 32.85% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .67% A | .65% | .68% | .67% | .68% | .67% |
Expenses net of fee waivers, if any | .67% A | .65% | .68% | .67% | .68% | .67% |
Expenses net of all reductions | .66% A | .64% | .67% | .63% | .65% | .64% |
Net investment income (loss) | .97% A | .21% | .61% | .36% | .47% K | .28% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 4,464,136 | $ 6,002,656 | $ 5,610,629 | $ 6,726,655 | $ 7,796,888 | $ 8,594,509 |
Portfolio turnover rate G | 156% A | 109% | 114% | 79% | 72% | 61% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class. |
Financial Highlights - Service Class
| Six months ended
June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 44.99 | $ 35.72 | $ 33.56 | $ 31.88 | $ 30.92 | $ 23.34 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .18 | .04 | .18 | .08 | .11 H, K | .05 |
Net realized and unrealized gain (loss) | (4.79) | 9.51 | 2.07 | 1.72 | .90 | 7.58 |
Total from investment operations | (4.61) | 9.55 | 2.25 | 1.80 | 1.01 | 7.63 |
Distributions from net investment income | - | (.24) | (.09) | (.12) | (.05) | (.05) |
Distributions from net realized gain | - | (.04) | - | - | - | - |
Total distributions | - | (.28) | (.09) | (.12) | (.05) | (.05) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.38 | $ 44.99 | $ 35.72 | $ 33.56 | $ 31.88 | $ 30.92 |
Total Return B, C , D | (10.25)% | 26.87% | 6.73% | 5.67% | 3.26% | 32.78% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .77% A | .75% | .78% | .77% | .78% | .77% |
Expenses net of fee waivers, if any | .77% A | .75% | .78% | .77% | .78% | .77% |
Expenses net of all reductions | .76% A | .74% | .77% | .73% | .75% | .74% |
Net investment income (loss) | .87% A | .11% | .51% | .26% | .37% K | .18% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 735,823 | $ 929,848 | $ 877,279 | $ 1,086,172 | $ 1,326,262 | $ 1,401,298 |
Portfolio turnover rate G | 156% A | 109% | 114% | 79% | 72% | 61% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Service Class 2
| Six months ended
June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 44.65 | $ 35.42 | $ 33.29 | $ 31.64 | $ 30.72 | $ 23.21 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .15 | (.02) | .12 | .03 | .07 H, K | .01 |
Net realized and unrealized gain (loss) | (4.75) | 9.43 | 2.07 | 1.71 | .89 | 7.53 |
Total from investment operations | (4.60) | 9.41 | 2.19 | 1.74 | .96 | 7.54 |
Distributions from net investment income | - | (.15) | (.06) | (.09) | (.04) | (.03) |
Distributions from net realized gain | - | (.03) | - | - | - | - |
Total distributions | - | (.18) | (.06) | (.09) | (.04) | (.03) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.05 | $ 44.65 | $ 35.42 | $ 33.29 | $ 31.64 | $ 30.72 |
Total Return B, C , D | (10.30)% | 26.66% | 6.57% | 5.50% | 3.12% | 32.54% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .92% A | .90% | .94% | .92% | .93% | .92% |
Expenses net of fee waivers, if any | .92% A | .90% | .94% | .92% | .93% | .92% |
Expenses net of all reductions | .91% A | .89% | .92% | .88% | .90% | .89% |
Net investment income (loss) | .72% A | (.04)% | .36% | .11% | .22% K | .02% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 795,702 | $ 898,204 | $ 627,754 | $ 858,587 | $ 811,126 | $ 609,798 |
Portfolio turnover rate G | 156% A | 109% | 114% | 79% | 72% | 61% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class. |
Financial Highlights - Service Class 2R
| Six months ended
June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 44.42 | $ 35.28 | $ 33.18 | $ 31.54 | $ 30.65 | $ 23.20 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .15 | (.01) | .12 | .04 | .07 H, K | .01 |
Net realized and unrealized gain (loss) | (4.73) | 9.38 | 2.06 | 1.70 | .88 | 7.51 |
Total from investment operations | (4.58) | 9.37 | 2.18 | 1.74 | .95 | 7.52 |
Distributions from net investment income | - | (.19) | (.08) | (.10) | (.06) | (.07) |
Distributions from net realized gain | - | (.04) | - | - | - | - |
Total distributions | - | (.23) | (.08) | (.10) | (.06) | (.07) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 39.84 | $ 44.42 | $ 35.28 | $ 33.18 | $ 31.54 | $ 30.65 |
Total Return B, C , D | (10.31)% | 26.66% | 6.58% | 5.52% | 3.10% | 32.54% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .92% A | .89% | .93% | .92% | .93% | .92% |
Expenses net of fee waivers, if any | .92% A | .89% | .93% | .92% | .93% | .92% |
Expenses net of all reductions | .91% A | .89% | .92% | .88% | .90% | .90% |
Net investment income (loss) | .72% A | (.04)% | .36% | .12% | .22% K | .02% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 7,698 | $ 20,051 | $ 5,063 | $ 5,409 | $ 2,667 | $ 1,369 |
Portfolio turnover rate G | 156% A | 109% | 114% | 79% | 72% | 61% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Investor Class
| Six months ended
June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 H |
Selected Per-Share Data | | | | |
Net asset value, beginning of period | $ 45.00 | $ 35.78 | $ 33.67 | $ 32.60 |
Income from Investment Operations | | | | |
Net investment income (loss) E | .18 | .04 | .17 | .03 |
Net realized and unrealized gain (loss) | (4.78) | 9.50 | 2.08 | 1.04 |
Total from investment operations | (4.60) | 9.54 | 2.25 | 1.07 |
Distributions from net investment income | - | (.28) | (.14) | - |
Distributions from net realized gain | - | (.04) | - | - |
Total distributions | - | (.32) | (.14) | - |
Redemption fees added to paid in capital E, J | - | - | - | - |
Net asset value, end of period | $ 40.40 | $ 45.00 | $ 35.78 | $ 33.67 |
Total Return B, C , D | (10.22)% | 26.81% | 6.72% | 3.28% |
Ratios to Average Net Assets F, I | | | | |
Expenses before reductions | .76% A | .76% | .81% | .83% A |
Expenses net of fee waivers, if any | .76% A | .76% | .81% | .83% A |
Expenses net of all reductions | .75% A | .76% | .80% | .79% A |
Net investment income (loss) | .88% A | .09% | .49% | .23% A |
Supplemental Data | | | | |
Net assets, end of period (000 omitted) | $ 168,356 | $ 181,705 | $ 76,965 | $ 24,166 |
Portfolio turnover rate G | 156% A | 109% | 114% | 79% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2008 (Unaudited)
1. Organization.
VIP Growth Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Service Class 2R shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships (including allocations from Fidelity Central Funds), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 975,364,226 | |
Unrealized depreciation | (540,847,191) | |
Net unrealized appreciation (depreciation) | $ 434,517,035 | |
Cost for federal income tax purposes | $ 5,897,174,332 | |
Trading (Redemption) Fees. Service Class 2R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
Semiannual Report
3. Significant Accounting Policies - continued
New Accounting Pronouncement. In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $5,328,174,579 and $6,427,355,578, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.
For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:
Service Class | $ 394,460 | |
Service Class 2 | 1,010,743 | |
Service Class 2R | 13,484 | |
| $ 1,418,687 | |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
6. Fees and Other Transactions with Affiliates - continued
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:
Initial Class | $ 1,688,802 | |
Service Class | 264,239 | |
Service Class 2 | 275,163 | |
Service Class 2R | 3,562 | |
Investor Class | 157,966 | |
| $ 2,389,732 | |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $68,045 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans, including accrued interest, at period end are presented under the caption "Notes Payable to Affiliates" in the Fund's Statement of Assets and Liabilities. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily
Loan Balance | Weighted Average
Interest Rate | Interest
Expense |
Borrower | $ 39,211,237 | 2.50% | $ 103,290 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $7,403 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $1,365,797.
Semiannual Report
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $194,001 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $4,191.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $1,601,267, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
At the end of the period, FMR or its affiliates were the owners of record of 13% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 35% of the total outstanding shares of the Fund.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
From net investment income | | |
Initial Class | $ - | $ 48,163,694 |
Service Class | - | 5,568,863 |
Service Class 2 | - | 2,694,835 |
Service Class 2R | - | 42,158 |
Investor Class | - | 733,347 |
Total | $ - | $ 57,202,897 |
From net realized gain | | |
Initial Class | $ - | $ 4,929,899 |
Service Class | - | 762,636 |
Service Class 2 | - | 563,891 |
Service Class 2R | - | 17,112 |
Investor Class | - | 146,355 |
Total | $ - | $ 6,419,893 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 | Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
Initial Class | | | | |
Shares sold | 2,029,413 | 6,352,261 | $ 82,900,824 | $ 263,603,689 |
Reinvestment of distributions | - | 1,365,559 | - | 53,093,593 |
Shares redeemed | (24,902,820) | (31,109,602) | (1,028,770,968) | (1,235,111,333) |
Net increase (decrease) | (22,873,407) | (23,391,782) | $ (945,870,144) | $ (918,414,051) |
Service Class | | | | |
Shares sold | 662,030 | 2,661,654 | $ 26,989,623 | $ 112,874,994 |
Reinvestment of distributions | - | 164,792 | - | 6,331,499 |
Shares redeemed | (3,110,211) | (6,714,602) | (126,602,430) | (264,599,886) |
Net increase (decrease) | (2,448,181) | (3,888,156) | $ (99,612,807) | $ (145,393,393) |
Service Class 2 | | | | |
Shares sold | 2,605,941 | 6,700,657 | $ 104,951,849 | $ 277,901,012 |
Reinvestment of distributions | - | 86,329 | - | 3,258,726 |
Shares redeemed | (2,854,916) | (4,393,246) | (115,775,231) | (178,974,484) |
Net increase (decrease) | (248,975) | 2,393,740 | $ (10,823,382) | $ 102,185,254 |
Service Class 2R | | | | |
Shares sold | 85,115 | 452,190 | $ 3,431,462 | $ 18,759,040 |
Reinvestment of distributions | - | 1,458 | - | 59,270 |
Shares redeemed | (343,294) | (145,771) | (13,860,353) | (6,009,422) |
Net increase (decrease) | (258,179) | 307,877 | $ (10,428,891) | $ 12,808,888 |
Investor Class | | | | |
Shares sold | 1,904,920 | 2,273,784 | $ 74,496,361 | $ 95,486,744 |
Reinvestment of distributions | - | 22,125 | - | 879,702 |
Shares redeemed | (1,775,216) | (409,459) | (71,932,162) | (17,162,950) |
Net increase (decrease) | 129,704 | 1,886,450 | $ 2,564,199 | $ 79,203,496 |
Semiannual Report
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 |
To elect a Board of Trustees.A |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 821,220,039.81 | 95.845 |
Withheld | 35,598,080.64 | 4.155 |
TOTAL | 856,818,120.45 | 100.000 |
Dennis J. Dirks |
Affirmative | 822,124,493.63 | 95.951 |
Withheld | 34,693,626.82 | 4.049 |
TOTAL | 856,818,120.45 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 820,473,313.05 | 95.758 |
Withheld | 36,344,807.40 | 4.242 |
TOTAL | 856,818,120.45 | 100.000 |
Alan J. Lacy |
Affirmative | 822,170,402.95 | 95.956 |
Withheld | 34,647,717.50 | 4.044 |
TOTAL | 856,818,120.45 | 100.000 |
Ned C. Lautenbach |
Affirmative | 821,435,006.18 | 95.870 |
Withheld | 35,383,114.27 | 4.130 |
TOTAL | 856,818,120.45 | 100.000 |
Joseph Mauriello |
Affirmative | 822,174,756.53 | 95.957 |
Withheld | 34,643,363.92 | 4.043 |
TOTAL | 856,818,120.45 | 100.000 |
Cornelia M. Small |
Affirmative | 822,263,792.20 | 95.967 |
Withheld | 34,554,328.25 | 4.033 |
TOTAL | 856,818,120.45 | 100.000 |
William S. Stavropoulos |
Affirmative | 821,014,987.67 | 95.821 |
Withheld | 35,803,132.78 | 4.179 |
TOTAL | 856,818,120.45 | 100.000 |
David M. Thomas |
Affirmative | 822,321,743.26 | 95.974 |
Withheld | 34,496,377.19 | 4.026 |
TOTAL | 856,818,120.45 | 100.000 |
Michael E. Wiley |
Affirmative | 822,218,346.41 | 95.962 |
Withheld | 34,599,774.04 | 4.038 |
TOTAL | 856,818,120.45 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 701,273,514.99 | 81.846 |
Against | 103,131,328.05 | 12.037 |
Abstain | 52,413,277.41 | 6.117 |
TOTAL | 856,818,120.45 | 100.000 |
A Denotes trust-wide proposal and voting results.
Semiannual Report
Investments
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Adviser
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
Fidelity Investments Japan Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank, N.A.
Pittsburgh, PA
VIPGRWTR-SANN-0808
1.833448.102
Fidelity® Variable Insurance Products:
Overseas Portfolio
Semiannual Report
June 30, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Shareholder Expense Example | <Click Here> | An example of shareholder expenses. |
Investment Changes | <Click Here> | A summary of major shifts in the fund's investments over the past six months. |
Investments | <Click Here> | A complete list of the fund's investments with their
market values. |
Financial Statements | <Click Here> | Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights. |
Notes | <Click Here> | Notes to the financial statements. |
Proxy Voting Results | <Click Here> | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
January 1, 2008 | Ending
Account Value
June 30, 2008 | Expenses Paid
During Period*
January 1, 2008 to June 30, 2008 |
Initial Class | | | |
Actual | $ 1,000.00 | $ 895.00 | $ 4.05 |
HypotheticalA | $ 1,000.00 | $ 1,020.59 | $ 4.32 |
Service Class | | | |
Actual | $ 1,000.00 | $ 894.50 | $ 4.52 |
HypotheticalA | $ 1,000.00 | $ 1,020.09 | $ 4.82 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 894.00 | $ 5.23 |
HypotheticalA | $ 1,000.00 | $ 1,019.34 | $ 5.57 |
Initial Class R | | | |
Actual | $ 1,000.00 | $ 894.70 | $ 4.05 |
HypotheticalA | $ 1,000.00 | $ 1,020.59 | $ 4.32 |
Service Class R | | | |
Actual | $ 1,000.00 | $ 894.80 | $ 4.52 |
HypotheticalA | $ 1,000.00 | $ 1,020.09 | $ 4.82 |
Service Class 2R | | | |
Actual | $ 1,000.00 | $ 894.10 | $ 5.23 |
HypotheticalA | $ 1,000.00 | $ 1,019.34 | $ 5.57 |
Investor Class R | | | |
Actual | $ 1,000.00 | $ 894.70 | $ 4.48 |
HypotheticalA | $ 1,000.00 | $ 1,020.14 | $ 4.77 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investments
Shareholder Expense Example - continued
| Annualized
Expense Ratio |
Initial Class | .86% |
Service Class | .96% |
Service Class 2 | 1.11% |
Initial Class R | .86% |
Service Class R | .96% |
Service Class 2R | 1.11% |
Investor Class R | .95% |
Semiannual Report
Investment Changes (Unaudited)
Geographic Diversification (% of fund's net assets) |
As of June 30, 2008 |
 | United Kingdom | 26.6% | |
 | Japan | 12.8% | |
 | France | 12.2% | |
 | Germany | 7.9% | |
 | Australia | 6.0% | |
 | Switzerland | 4.7% | |
 | Italy | 4.0% | |
 | United States of America | 3.9% | |
 | Denmark | 2.3% | |
 | Other | 19.6% | |
Percentages are adjusted for the effect of futures contracts, if applicable. |
As of December 31, 2007 |
| United Kingdom | 21.4% | |
| France | 14.8% | |
| Germany | 11.4% | |
| Japan | 11.4% | |
| Switzerland | 6.5% | |
| Australia | 5.9% | |
| United States of America | 5.9% | |
| Italy | 3.6% | |
| Norway | 2.3% | |
| Other | 16.8% | |
Percentages are adjusted for the effect of futures contracts, if applicable. |
Asset Allocation |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Stocks | 99.4 | 96.2 |
Short-Term Investments and Net Other Assets | 0.6 | 3.8 |
Top Ten Stocks as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Alstom SA (France, Electrical Equipment) | 3.8 | 3.1 |
Man Group PLC (United Kingdom, Capital Markets) | 2.2 | 1.7 |
CSL Ltd. (Australia, Biotechnology) | 2.0 | 1.6 |
Vodafone Group PLC (United Kingdom, Wireless Telecommunication Services) | 1.9 | 1.7 |
Royal Dutch Shell PLC Class A (United Kingdom, Oil, Gas & Consumable Fuels) | 1.8 | 1.8 |
E.On AG (Germany, Electric Utilities) | 1.6 | 1.7 |
Telefonica SA (Spain, Diversified Telecommunication Services) | 1.6 | 1.5 |
Sumitomo Mitsui Financial Group, Inc. (Japan, Commercial Banks) | 1.6 | 1.1 |
BP PLC (United Kingdom, Oil, Gas & Consumable Fuels) | 1.4 | 1.5 |
BG Group PLC (United Kingdom, Oil, Gas & Consumable Fuels) | 1.4 | 1.0 |
| 19.3 | |
Market Sectors as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Financials | 22.0 | 20.6 |
Industrials | 13.0 | 18.3 |
Materials | 11.3 | 7.4 |
Energy | 10.9 | 8.7 |
Consumer Staples | 10.4 | 9.1 |
Consumer Discretionary | 8.3 | 8.3 |
Telecommunication Services | 7.6 | 6.8 |
Health Care | 6.0 | 4.6 |
Utilities | 5.1 | 7.5 |
Information Technology | 4.8 | 4.9 |
Semiannual Report
Investments June 30, 2008 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.4% |
| Shares | | Value |
Argentina - 0.2% |
Cresud S.A.C.I.F. y A. sponsored ADR | 430,600 | | $ 6,398,716 |
Australia - 6.0% |
AMP Ltd. | 859,100 | | 5,510,300 |
Australian Wealth Management Ltd. | 2,494,900 | | 3,097,621 |
BHP Billiton Ltd. | 900,617 | | 38,334,519 |
Commonwealth Bank of Australia | 367,933 | | 14,170,199 |
Computershare Ltd. | 1,203,606 | | 10,627,946 |
CSL Ltd. | 1,666,466 | | 57,038,757 |
Energy Resources of Australia Ltd. | 270,330 | | 5,955,931 |
HFA Holdings Ltd. | 1,251,777 | | 1,392,164 |
Lion Nathan Ltd. | 1,266,655 | | 10,383,167 |
National Australia Bank Ltd. | 173,073 | | 4,397,244 |
Rio Tinto Ltd. | 79,200 | | 10,288,922 |
Seek Ltd. | 593,800 | | 2,846,529 |
Telstra Corp. Ltd. | 2,084,657 | | 8,474,339 |
TOTAL AUSTRALIA | | 172,517,638 |
Austria - 0.7% |
Strabag SE | 247,400 | | 19,221,342 |
Belgium - 0.2% |
Hamon & Compagnie International SA (a) | 73,974 | | 3,469,132 |
KBC Groupe SA | 26,700 | | 2,951,451 |
TOTAL BELGIUM | | 6,420,583 |
Bermuda - 0.5% |
Aquarius Platinum Ltd. (United Kingdom) | 547,000 | | 8,716,180 |
Clear Media Ltd. (a) | 249,000 | | 217,153 |
Covidien Ltd. | 125,700 | | 6,019,773 |
TOTAL BERMUDA | | 14,953,106 |
Brazil - 1.7% |
Banco do Brasil SA | 324,800 | | 5,285,699 |
Bolsa de Mercadorias & Futuros - BM&F SA | 408,800 | | 3,521,412 |
Gafisa SA sponsored ADR | 107,100 | | 3,681,027 |
MRV Engenharia e Participacoes SA | 601,500 | | 13,394,180 |
TIM Participacoes SA sponsored ADR (non-vtg.) | 244,400 | | 6,948,292 |
Uniao de Bancos Brasileiros SA (Unibanco) GDR | 43,600 | | 5,534,148 |
Vivo Participacoes SA (PN) sponsored ADR (d) | 1,092,500 | | 6,948,300 |
Votorantim Celulose e Papel SA sponsored ADR (non-vtg.) | 96,100 | | 2,566,831 |
TOTAL BRAZIL | | 47,879,889 |
British Virgin Islands - 0.0% |
Indochina Capital Vietnam Holdings Ltd. (a) | 192,800 | | 964,000 |
Canada - 1.2% |
Canadian Natural Resources Ltd. | 39,900 | | 3,947,139 |
Nexen, Inc. | 115,200 | | 4,595,117 |
Nortel Networks Corp. (a) | 40,149 | | 328,880 |
|
| Shares | | Value |
OPTI Canada, Inc. (a) | 156,100 | | $ 3,537,460 |
Petrobank Energy & Resources Ltd. (a) | 86,200 | | 4,498,788 |
Potash Corp. of Saskatchewan, Inc. | 28,500 | | 6,514,245 |
Suncor Energy, Inc. | 68,800 | | 3,995,644 |
Talisman Energy, Inc. | 205,700 | | 4,556,537 |
TimberWest Forest Corp. | 175,300 | | 2,364,620 |
TOTAL CANADA | | 34,338,430 |
China - 0.3% |
Global Bio-Chem Technology Group Co. Ltd. | 6,534,000 | | 2,715,080 |
Home Inns & Hotels Management, Inc. sponsored ADR (a)(d) | 259,817 | | 4,939,121 |
TOTAL CHINA | | 7,654,201 |
Denmark - 2.3% |
Carlsberg AS Series B (d) | 155,725 | | 15,000,951 |
Novo Nordisk AS Series B | 224,400 | | 14,772,368 |
Novozymes AS Series B (d) | 105,600 | | 9,506,840 |
Vestas Wind Systems AS (a) | 199,400 | | 25,961,274 |
TOTAL DENMARK | | 65,241,433 |
Finland - 1.5% |
Fortum Oyj | 216,800 | | 10,973,430 |
Nokia Corp. sponsored ADR | 684,700 | | 16,775,150 |
Nokian Tyres Ltd. | 299,912 | | 14,225,405 |
TOTAL FINLAND | | 41,973,985 |
France - 12.2% |
Alstom SA (d) | 473,700 | | 108,621,948 |
AXA SA | 247,415 | | 7,290,283 |
AXA SA sponsored ADR | 168,900 | | 4,969,038 |
BNP Paribas SA | 288,302 | | 25,952,028 |
Bouygues SA | 181,900 | | 12,001,160 |
Carrefour SA | 244,200 | | 13,764,998 |
CNP Assurances | 64,600 | | 7,283,424 |
Compagnie Generale de Geophysique SA (a) | 154,000 | | 7,270,808 |
France Telecom SA | 110,361 | | 3,236,557 |
Groupe Danone | 182,700 | | 12,784,249 |
Ingenico SA | 319,400 | | 11,152,305 |
L'Air Liquide SA | 182,578 | | 24,036,476 |
L'Oreal SA | 134,295 | | 14,566,453 |
Sanofi-Aventis sponsored ADR | 85,100 | | 2,827,873 |
Sodexho Alliance SA | 206,500 | | 13,509,136 |
Suez SA (France) | 136,000 | | 9,219,090 |
Total SA: | | | |
Series B | 340,200 | | 28,957,246 |
sponsored ADR | 187,400 | | 15,979,598 |
Unibail-Rodamco | 67,800 | | 15,642,256 |
Vilmorin & Cie | 28,200 | | 5,313,550 |
Vivendi | 201,380 | | 7,593,285 |
TOTAL FRANCE | | 351,971,761 |
Common Stocks - continued |
| Shares | | Value |
Germany - 7.9% |
Allianz AG (Reg.) | 90,400 | | $ 15,901,628 |
Bayer AG | 72,000 | | 6,057,945 |
Beiersdorf AG | 239,400 | | 17,575,642 |
Commerzbank AG | 276,800 | | 8,223,111 |
Daimler AG (Reg.) | 82,200 | | 5,098,516 |
Deutsche Bank AG | 70,200 | | 6,059,995 |
Deutsche Bank AG (NY Shares) | 29,800 | | 2,543,430 |
Deutsche Boerse AG | 91,300 | | 10,320,555 |
Deutsche Postbank AG | 145,600 | | 12,800,253 |
E.ON AG | 231,144 | | 46,585,669 |
Fresenius AG | 132,100 | | 11,437,705 |
GFK AG | 111,269 | | 4,984,389 |
K&S AG | 21,100 | | 12,148,517 |
MLP AG (d) | 990,500 | | 17,811,840 |
Q-Cells AG (a)(d) | 90,100 | | 9,127,219 |
RWE AG | 170,300 | | 21,501,356 |
SAP AG sponsored ADR (d) | 158,100 | | 8,238,591 |
Vossloh AG | 73,300 | | 9,541,866 |
TOTAL GERMANY | | 225,958,227 |
Hong Kong - 0.9% |
China Unicom Ltd. | 10,572,000 | | 19,621,473 |
China Unicom Ltd. sponsored ADR | 214,700 | | 3,976,244 |
Dynasty Fine Wines Group Ltd. | 7,224,000 | | 1,269,278 |
TOTAL HONG KONG | | 24,866,995 |
India - 0.5% |
Satyam Computer Services Ltd. sponsored ADR | 301,200 | | 7,385,424 |
Suzlon Energy Ltd. | 1,400,000 | | 7,042,395 |
TOTAL INDIA | | 14,427,819 |
Indonesia - 0.7% |
PT Bumi Resources Tbk | 9,391,000 | | 8,346,625 |
PT Indosat Tbk sponsored ADR (d) | 298,400 | | 10,811,032 |
TOTAL INDONESIA | | 19,157,657 |
Ireland - 1.0% |
C&C Group PLC | 1,314,700 | | 7,261,745 |
Irish Life & Permanent PLC | 2,027,100 | | 20,951,358 |
TOTAL IRELAND | | 28,213,103 |
Israel - 0.6% |
Israel Chemicals Ltd. | 271,700 | | 6,337,879 |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 239,200 | | 10,955,360 |
TOTAL ISRAEL | | 17,293,239 |
Italy - 4.0% |
A2A SpA | 1,154,100 | | 4,214,676 |
Alleanza Assicurazioni SpA | 948,700 | | 10,261,716 |
Assicurazioni Generali SpA | 376,200 | | 14,377,758 |
Buzzi Unicem SpA | 172,800 | | 4,304,641 |
|
| Shares | | Value |
Edison SpA | 2,559,300 | | $ 5,682,525 |
ENI SpA | 464,586 | | 17,259,495 |
Finmeccanica SpA | 625,900 | | 16,356,895 |
Intesa Sanpaolo SpA | 1,018,700 | | 5,791,940 |
Mariella Burani Fashion Group SpA (d) | 105,600 | | 2,555,907 |
Saipem SpA | 336,100 | | 15,708,502 |
UniCredit SpA | 2,840,000 | | 17,277,489 |
TOTAL ITALY | | 113,791,544 |
Japan - 12.8% |
ACOM Co. Ltd. | 409,250 | | 12,682,452 |
Aeon Co. Ltd. | 528,100 | | 6,521,350 |
Canon, Inc. | 186,200 | | 9,586,622 |
Canon, Inc. sponsored ADR | 309,100 | | 15,829,011 |
Honda Motor Co. Ltd. | 97,400 | | 3,324,564 |
Ibiden Co. Ltd. | 180,500 | | 6,562,709 |
Japan Steel Works Ltd. | 783,000 | | 15,230,019 |
Konica Minolta Holdings, Inc. | 368,000 | | 6,215,080 |
Matsui Securities Co. Ltd. (d) | 659,000 | | 3,960,269 |
Mitsubishi Corp. | 254,100 | | 8,377,054 |
Mitsubishi Electric Corp. | 287,000 | | 3,095,323 |
Mitsubishi Estate Co. Ltd. | 344,000 | | 7,873,781 |
Mitsubishi UFJ Financial Group, Inc. | 2,404,800 | | 21,256,290 |
Mitsui & Co. Ltd. | 384,000 | | 8,481,891 |
Mizuho Financial Group, Inc. | 2,247 | | 10,497,923 |
Murata Manufacturing Co. Ltd. | 58,900 | | 2,773,984 |
Nafco Co. Ltd. | 147,900 | | 2,298,639 |
NGK Insulators Ltd. | 585,000 | | 11,378,750 |
Nidec Corp. | 86,400 | | 5,753,761 |
Nikon Corp. | 275,000 | | 8,029,953 |
Nomura Holdings, Inc. | 1,323,200 | | 19,598,127 |
Nomura Holdings, Inc. sponsored ADR | 303,100 | | 4,470,725 |
NSK Ltd. | 1,575,000 | | 13,782,084 |
NTT DoCoMo, Inc. | 4,310 | | 6,322,840 |
ORIX Corp. | 17,270 | | 2,470,977 |
Point, Inc. | 125,450 | | 3,592,220 |
Rakuten, Inc. | 15,243 | | 7,695,802 |
Ricoh Co. Ltd. | 528,000 | | 9,529,016 |
Sharp Corp. | 261,000 | | 4,250,638 |
Sony Corp. | 98,600 | | 4,322,814 |
Sony Corp. sponsored ADR | 214,100 | | 9,364,734 |
Sumitomo Metal Industries Ltd. | 975,000 | | 4,288,843 |
Sumitomo Mitsui Financial Group, Inc. | 6,003 | | 45,178,702 |
Sumitomo Trust & Banking Co. Ltd. | 1,477,000 | | 10,322,931 |
T&D Holdings, Inc. | 291,400 | | 17,923,440 |
Tokai Carbon Co. Ltd. | 259,000 | | 2,637,206 |
Tokyo Electric Power Co. | 115,000 | | 2,957,189 |
Tokyo Electron Ltd. | 47,500 | | 2,738,191 |
Toyo Tanso Co. Ltd. (d) | 29,800 | | 1,917,148 |
Toyota Motor Corp. | 370,900 | | 17,511,265 |
USS Co. Ltd. | 128,860 | | 8,508,535 |
TOTAL JAPAN | | 369,112,852 |
Common Stocks - continued |
| Shares | | Value |
Korea (South) - 0.3% |
Doosan Heavy Industries & Construction Co. Ltd. | 100,250 | | $ 9,483,754 |
Luxembourg - 1.5% |
ArcelorMittal SA: | | | |
(France) | 147,900 | | 14,534,820 |
(NY Shares) Class A | 112,800 | | 11,175,096 |
Evraz Group SA GDR | 54,900 | | 6,395,850 |
SES SA (A Shares) FDR unit | 442,747 | | 11,061,542 |
TOTAL LUXEMBOURG | | 43,167,308 |
Malaysia - 0.1% |
Gamuda Bhd | 5,333,900 | | 3,819,840 |
Mexico - 0.1% |
America Movil SAB de CV Series L sponsored ADR | 67,600 | | 3,565,900 |
Netherlands - 1.2% |
Advanced Metallurgical Group NV | 40,500 | | 3,427,729 |
ASML Holding NV (NY Shares) | 113,200 | | 2,762,080 |
ING Groep NV (Certificaten Van Aandelen) | 125,724 | | 3,975,092 |
Koninklijke KPN NV | 919,900 | | 15,727,336 |
Unilever NV (NY Shares) | 336,700 | | 9,562,280 |
TOTAL NETHERLANDS | | 35,454,517 |
Norway - 1.8% |
Acta Holding ASA (d) | 787,000 | | 895,586 |
Lighthouse Caledonia ASA | 60,299 | | 70,922 |
Marine Harvest ASA (a) | 7,094,000 | | 5,195,808 |
Orkla ASA (A Shares) | 651,150 | | 8,342,997 |
Petroleum Geo-Services ASA | 645,800 | | 15,813,756 |
Pronova BioPharma ASA | 586,838 | | 2,000,866 |
ProSafe ASA | 274,300 | | 2,715,545 |
StatoilHydro ASA | 320,900 | | 11,971,997 |
StatoilHydro ASA sponsored ADR | 163,600 | | 6,115,368 |
TOTAL NORWAY | | 53,122,845 |
Panama - 0.1% |
McDermott International, Inc. (a) | 63,300 | | 3,917,637 |
Russia - 0.9% |
Mobile TeleSystems OJSC sponsored ADR | 111,900 | | 8,572,659 |
OAO Gazprom sponsored ADR | 140,000 | | 8,120,000 |
Vimpel Communications sponsored ADR | 276,200 | | 8,197,616 |
TOTAL RUSSIA | | 24,890,275 |
South Africa - 0.7% |
Exxaro Resources Ltd. | 540,500 | | 9,969,765 |
Impala Platinum Holdings Ltd. | 229,100 | | 9,039,726 |
TOTAL SOUTH AFRICA | | 19,009,491 |
Spain - 2.2% |
Banco Santander SA | 469,300 | | 8,561,940 |
Repsol YPF SA sponsored ADR | 183,600 | | 7,209,972 |
|
| Shares | | Value |
Telefonica SA | 1,417,480 | | $ 37,511,805 |
Telefonica SA sponsored ADR | 111,200 | | 8,849,296 |
TOTAL SPAIN | | 62,133,013 |
Sweden - 0.6% |
Swedish Match Co. | 627,600 | | 12,790,152 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR (d) | 306,400 | | 3,186,560 |
TOTAL SWEDEN | | 15,976,712 |
Switzerland - 4.7% |
Compagnie Financiere Richemont unit | 218,644 | | 12,135,008 |
Credit Suisse Group sponsored ADR | 62,400 | | 2,827,344 |
Credit Suisse Group (Reg.) | 122,288 | | 5,566,728 |
EFG International | 148,600 | | 4,044,532 |
Julius Baer Holding AG | 114,046 | | 7,649,013 |
Nestle SA (Reg.) | 756,840 | | 34,110,086 |
Novartis AG sponsored ADR | 101,800 | | 5,603,072 |
Roche Holding AG (participation certificate) | 35,466 | | 6,376,429 |
SGS Societe Generale de Surveillance Holding SA (Reg.) | 18,982 | | 27,071,912 |
Sonova Holding AG | 92,538 | | 7,637,908 |
Swisscom AG (Reg.) | 30,718 | | 10,232,055 |
UBS AG: | | | |
(For. Reg.) | 275,307 | | 5,737,475 |
(NY Shares) | 201,943 | | 4,172,142 |
Zurich Financial Services AG (Reg.) | 10,571 | | 2,694,333 |
TOTAL SWITZERLAND | | 135,858,037 |
Thailand - 0.1% |
Total Access Communication PCL: | | | |
unit | 1,175,700 | | 1,776,301 |
(For. Reg.) | 1,779,300 | | 2,688,247 |
TOTAL THAILAND | | 4,464,548 |
United Kingdom - 26.6% |
Anglo American PLC: | | | |
ADR | 354,534 | | 12,568,230 |
(United Kingdom) | 317,408 | | 22,292,912 |
Barclays PLC | 355,800 | | 2,018,636 |
Barclays PLC rights 7/17/08 (a) | 355,800 | | 14,427 |
BG Group PLC | 1,523,200 | | 39,584,400 |
BHP Billiton PLC | 797,195 | | 30,572,670 |
BlueBay Asset Management (d) | 484,200 | | 2,151,726 |
BP PLC | 3,602,306 | | 41,753,155 |
British American Tobacco PLC | 402,800 | | 13,894,221 |
Cadbury PLC ADR | 89,408 | | 4,499,011 |
Centrica PLC | 2,597,000 | | 15,972,937 |
Climate Exchange PLC (a) | 110,500 | | 4,184,524 |
Compass Group PLC | 1,771,300 | | 13,323,706 |
Diageo PLC | 1,382,900 | | 25,336,542 |
DSG International PLC | 3,010,000 | | 2,651,153 |
GlaxoSmithKline PLC | 1,214,900 | | 26,856,503 |
GlaxoSmithKline PLC sponsored ADR | 35,900 | | 1,587,498 |
Common Stocks - continued |
| Shares | | Value |
United Kingdom - continued |
Gottex Fund Management Holdings Ltd. | 73,770 | | $ 2,133,121 |
Hammerson PLC | 289,300 | | 5,124,226 |
HBOS PLC | 529,400 | | 2,898,386 |
HBOS PLC rights 7/18/08 (a) | 211,760 | | 45,116 |
HSBC Holdings PLC: | | | |
(Hong Kong) (Reg.) | 382,000 | | 5,888,082 |
(United Kingdom) (Reg.) | 1,150,426 | | 17,713,857 |
sponsored ADR | 110,800 | | 8,498,360 |
Icap PLC | 536,400 | | 5,745,553 |
Informa PLC | 571,800 | | 4,685,284 |
International Power PLC | 1,803,200 | | 15,447,576 |
Intertek Group PLC | 413,400 | | 8,097,517 |
Jardine Lloyd Thompson Group PLC | 2,703,273 | | 20,251,583 |
Lloyds TSB Group PLC | 548,500 | | 3,365,213 |
Man Group PLC | 5,088,625 | | 62,861,906 |
Misys PLC | 759,700 | | 2,248,040 |
NDS Group PLC sponsored ADR (a) | 63,200 | | 3,741,440 |
New Star Asset Management Group PLC | 770,200 | | 1,555,063 |
Prudential PLC | 1,867,700 | | 19,700,166 |
QinetiQ Group PLC | 1,705,000 | | 6,978,943 |
Reed Elsevier PLC | 2,257,014 | | 25,719,988 |
Rio Tinto PLC: | | | |
(Reg.) | 145,506 | | 17,522,983 |
sponsored ADR | 21,500 | | 10,642,500 |
Royal Bank of Scotland Group PLC | 3,869,375 | | 16,472,570 |
Royal Dutch Shell PLC: | | | |
Class A (United Kingdom) | 665,900 | | 27,296,433 |
Class A sponsored ADR | 308,600 | | 25,215,706 |
Class B | 153,800 | | 6,158,676 |
Scottish & Southern Energy PLC | 553,200 | | 15,413,801 |
Shanks Group PLC | 2,572,200 | | 11,929,009 |
Signet Group PLC | 7,353,100 | | 7,255,362 |
Smith & Nephew PLC sponsored ADR | 75,000 | | 4,106,250 |
SSL International PLC | 472,100 | | 4,186,910 |
Standard Chartered PLC (United Kingdom) | 94,500 | | 2,676,208 |
Taylor Nelson Sofres PLC | 5,050,400 | | 23,291,597 |
Tesco PLC | 3,870,100 | | 28,307,306 |
Vodafone Group PLC | 15,586,462 | | 45,922,922 |
Vodafone Group PLC sponsored ADR | 255,800 | | 7,535,868 |
William Morrison Supermarkets PLC | 3,097,500 | | 16,329,061 |
Xstrata PLC | 140,400 | | 11,184,403 |
TOTAL UNITED KINGDOM | | 763,409,236 |
|
| Shares | | Value |
United States of America - 3.3% |
Apple, Inc. (a) | 42,000 | | $ 7,032,480 |
Becton, Dickinson & Co. | 54,700 | | 4,447,110 |
Calgon Carbon Corp. (a)(d) | 1,353,417 | | 20,923,827 |
Copart, Inc. (a) | 105,500 | | 4,517,510 |
Dr Pepper Snapple Group, Inc. (a) | 67,056 | | 1,406,835 |
Estee Lauder Companies, Inc. Class A (d) | 600,300 | | 27,883,935 |
Fuel Tech, Inc. (a)(d) | 271,800 | | 4,789,116 |
Hypercom Corp. (a) | 171,800 | | 755,920 |
Monsanto Co. | 38,800 | | 4,905,872 |
Stryker Corp. | 92,200 | | 5,797,536 |
Sunpower Corp. Class A (a)(d) | 90,300 | | 6,499,794 |
Visa, Inc. | 81,200 | | 6,602,372 |
TOTAL UNITED STATES OF AMERICA | | 95,562,307 |
TOTAL COMMON STOCKS (Cost $2,540,143,053) | 2,856,191,940 |
Money Market Funds - 7.2% |
| | | |
Fidelity Cash Central Fund, 2.38% (b) | 15,959,095 | | 15,959,095 |
Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c) | 189,087,782 | | 189,087,782 |
TOTAL MONEY MARKET FUNDS (Cost $205,046,877) | 205,046,877 |
TOTAL INVESTMENT PORTFOLIO - 106.6% (Cost $2,745,189,930) | | 3,061,238,817 |
NET OTHER ASSETS - (6.6)% | | (188,439,094) |
NET ASSETS - 100% | $ 2,872,799,723 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,480,349 |
Fidelity Securities Lending Cash Central Fund | 3,185,393 |
Total | $ 4,665,742 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
#Valuation Inputs at Reporting Date: |
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 3,061,238,817 | $ 1,148,318,080 | $ 1,912,920,737 | $ - |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2008 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $181,563,989) - See accompanying schedule: Unaffiliated issuers (cost $2,540,143,053) | $ 2,856,191,940 | |
Fidelity Central Funds (cost $205,046,877) | 205,046,877 | |
Total Investments (cost $2,745,189,930) | | $ 3,061,238,817 |
Cash | | 356,151 |
Foreign currency held at value (cost $8) | | 8 |
Receivable for fund shares sold | | 882,886 |
Dividends receivable | | 8,964,910 |
Distributions receivable from Fidelity Central Funds | | 426,869 |
Prepaid expenses | | 5,316 |
Other receivables | | 379,820 |
Total assets | | 3,072,254,777 |
| | |
Liabilities | | |
Payable for investments purchased | $ 1,853,627 | |
Payable for fund shares redeemed | 5,145,177 | |
Accrued management fee | 1,771,221 | |
Distribution fees payable | 207,842 | |
Other affiliated payables | 291,920 | |
Other payables and accrued expenses | 1,097,485 | |
Collateral on securities loaned, at value | 189,087,782 | |
Total liabilities | | 199,455,054 |
| | |
Net Assets | | $ 2,872,799,723 |
Net Assets consist of: | | |
Paid in capital | | $ 2,428,079,953 |
Undistributed net investment income | | 50,381,070 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 78,218,634 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 316,120,066 |
Net Assets | | $ 2,872,799,723 |
Statement of Assets and Liabilities - continued
| June 30, 2008 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($1,231,326,194 ÷ 60,932,192 shares) | | $ 20.21 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($296,829,829 ÷ 14,760,225 shares) | | $ 20.11 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($708,971,802 ÷ 35,451,968 shares) | | $ 20.00 |
| | |
Initial Class R:
Net Asset Value, offering price and redemption price per share ($225,924,482 ÷ 11,204,213 shares) | | $ 20.16 |
| | |
Service Class R:
Net Asset Value, offering price and redemption price per share ($113,990,593 ÷ 5,676,775 shares) | | $ 20.08 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($80,789,752 ÷ 4,070,700 shares) | | $ 19.85 |
| | |
Investor Class R:
Net Asset Value, offering price and redemption price per share ($214,967,071 ÷ 10,670,172 shares) | | $ 20.15 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Operations
Six months ended June 30, 2008 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 66,839,951 |
Interest | | 13,113 |
Income from Fidelity Central Funds | | 4,665,742 |
| | 71,518,806 |
Less foreign taxes withheld | | (6,390,616) |
Total income | | 65,128,190 |
| | |
Expenses | | |
Management fee | $ 11,312,778 | |
Transfer agent fees | 1,182,637 | |
Distribution fees | 1,268,535 | |
Accounting and security lending fees | 705,996 | |
Custodian fees and expenses | 313,043 | |
Independent trustees' compensation | 6,848 | |
Audit | 34,401 | |
Legal | 5,231 | |
Interest | 9,994 | |
Miscellaneous | 299,973 | |
Total expenses before reductions | 15,139,436 | |
Expense reductions | (347,302) | 14,792,134 |
Net investment income (loss) | | 50,336,056 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers (net of foreign taxes of $617,988) | 88,037,134 | |
Foreign currency transactions | 161,578 | |
Total net realized gain (loss) | | 88,198,712 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $124,985) | (503,427,086) | |
Assets and liabilities in foreign currencies | 72,648 | |
Total change in net unrealized appreciation (depreciation) | | (503,354,438) |
Net gain (loss) | | (415,155,726) |
Net increase (decrease) in net assets resulting from operations | | $ (364,819,670) |
Statement of Changes in Net Assets
| Six months ended
June 30, 2008
(Unaudited) | Year ended
December 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 50,336,056 | $ 61,989,857 |
Net realized gain (loss) | 88,198,712 | 352,592,480 |
Change in net unrealized appreciation (depreciation) | (503,354,438) | 134,088,793 |
Net increase (decrease) in net assets resulting from operations | (364,819,670) | 548,671,130 |
Distributions to shareholders from net investment income | - | (111,357,133) |
Distributions to shareholders from net realized gain | (348,490,470) | (225,173,068) |
Total distributions | (348,490,470) | (336,530,201) |
Share transactions - net increase (decrease) | (41,302,848) | 159,355,663 |
Redemption fees | 41,761 | 118,790 |
Total increase (decrease) in net assets | (754,571,227) | 371,615,382 |
| | |
Net Assets | | |
Beginning of period | 3,627,370,950 | 3,255,755,568 |
End of period (including undistributed net investment income of $50,381,070 and undistributed net investment income of $45,014, respectively) | $ 2,872,799,723 | $ 3,627,370,950 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 25.33 | $ 23.96 | $ 20.60 | $ 17.51 | $ 15.59 | $ 10.98 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .35 | .45 | .38 | .20 | .13 | .11 |
Net realized and unrealized gain (loss) | (3.01) | 3.42 | 3.30 | 3.10 | 1.97 | 4.60 |
Total from investment operations | (2.66) | 3.87 | 3.68 | 3.30 | 2.10 | 4.71 |
Distributions from net investment income | - | (.84) | (.19) | (.12) | (.18) | (.10) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.50) | (.32) | (.21) | (.18) | (.10) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 20.21 | $ 25.33 | $ 23.96 | $ 20.60 | $ 17.51 | $ 15.59 |
Total Return B, C, D | (10.50)% | 17.41% | 18.09% | 19.06% | 13.57% | 43.37% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .86% A | .85% | .88% | .89% | .91% | .90% |
Expenses net of fee waivers, if any | .86% A | .85% | .88% | .89% | .91% | .90% |
Expenses net of all reductions | .84% A | .82% | .81% | .82% | .87% | .86% |
Net investment income (loss) | 3.23% A | 1.85% | 1.76% | 1.11% | .80% | .87% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 1,231,326 | $ 1,702,235 | $ 1,624,901 | $ 1,549,179 | $ 1,491,485 | $ 1,436,137 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
Financial Highlights - Service Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 25.23 | $ 23.86 | $ 20.52 | $ 17.44 | $ 15.53 | $ 10.94 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .33 | .43 | .36 | .18 | .11 | .09 |
Net realized and unrealized gain (loss) | (2.99) | 3.39 | 3.28 | 3.09 | 1.97 | 4.59 |
Total from investment operations | (2.66) | 3.82 | 3.64 | 3.27 | 2.08 | 4.68 |
Distributions from net investment income | - | (.79) | (.17) | (.10) | (.17) | (.09) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.45) | (.30) | (.19) | (.17) | (.09) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 20.11 | $ 25.23 | $ 23.86 | $ 20.52 | $ 17.44 | $ 15.53 |
Total Return B, C, D | (10.55)% | 17.25% | 17.95% | 18.97% | 13.49% | 43.20% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .96% A | .95% | .98% | .99% | 1.01% | 1.00% |
Expenses net of fee waivers, if any | .96% A | .95% | .98% | .99% | 1.01% | 1.00% |
Expenses net of all reductions | .94% A | .92% | .91% | .92% | .97% | .96% |
Net investment income (loss) | 3.13% A | 1.75% | 1.66% | 1.02% | .69% | .77% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 296,830 | $ 366,777 | $ 362,060 | $ 329,759 | $ 322,649 | $ 246,632 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Service Class 2
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 25.12 | $ 23.75 | $ 20.43 | $ 17.39 | $ 15.50 | $ 10.90 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .32 | .39 | .33 | .14 | .08 | .08 |
Net realized and unrealized gain (loss) | (2.98) | 3.37 | 3.27 | 3.08 | 1.97 | 4.58 |
Total from investment operations | (2.66) | 3.76 | 3.60 | 3.22 | 2.05 | 4.66 |
Distributions from net investment income | - | (.73) | (.15) | (.09) | (.16) | (.06) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.39) | (.28) | (.18) | (.16) | (.06) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 20.00 | $ 25.12 | $ 23.75 | $ 20.43 | $ 17.39 | $ 15.50 |
Total Return B, C, D | (10.60)% | 17.05% | 17.83% | 18.72% | 13.31% | 43.04% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | 1.11% A | 1.10% | 1.13% | 1.14% | 1.16% | 1.16% |
Expenses net of fee waivers, if any | 1.11% A | 1.10% | 1.13% | 1.14% | 1.16% | 1.16% |
Expenses net of all reductions | 1.09% A | 1.07% | 1.06% | 1.07% | 1.12% | 1.12% |
Net investment income (loss) | 2.98% A | 1.60% | 1.51% | .79% | .54% | .61% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 708,972 | $ 821,943 | $ 703,421 | $ 502,801 | $ 319,708 | $ 140,822 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
Financial Highlights - Initial Class R
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 25.28 | $ 23.92 | $ 20.57 | $ 17.49 | $ 15.57 | $ 10.98 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .35 | .45 | .38 | .19 | .12 | .11 |
Net realized and unrealized gain (loss) | (3.01) | 3.41 | 3.29 | 3.10 | 1.98 | 4.59 |
Total from investment operations | (2.66) | 3.86 | 3.67 | 3.29 | 2.10 | 4.70 |
Distributions from net investment income | - | (.84) | (.19) | (.12) | (.18) | (.11) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.50) | (.32) | (.21) | (.18) | (.11) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 20.16 | $ 25.28 | $ 23.92 | $ 20.57 | $ 17.49 | $ 15.57 |
Total Return B, C, D | (10.53)% | 17.40% | 18.08% | 19.05% | 13.59% | 43.32% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .86% A | .85% | .88% | .89% | .91% | .90% |
Expenses net of fee waivers, if any | .86% A | .85% | .88% | .89% | .91% | .90% |
Expenses net of all reductions | .84% A | .82% | .81% | .82% | .87% | .86% |
Net investment income (loss) | 3.23% A | 1.85% | 1.76% | 1.08% | .79% | .87% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 225,924 | $ 275,678 | $ 240,693 | $ 184,245 | $ 132,064 | $ 39,466 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Service Class R
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 25.19 | $ 23.83 | $ 20.50 | $ 17.43 | $ 15.52 | $ 10.94 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .33 | .43 | .36 | .17 | .11 | .10 |
Net realized and unrealized gain (loss) | (2.98) | 3.38 | 3.27 | 3.09 | 1.97 | 4.58 |
Total from investment operations | (2.65) | 3.81 | 3.63 | 3.26 | 2.08 | 4.68 |
Distributions from net investment income | - | (.79) | (.17) | (.10) | (.17) | (.10) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.45) | (.30) | (.19) | (.17) | (.10) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 20.08 | $ 25.19 | $ 23.83 | $ 20.50 | $ 17.43 | $ 15.52 |
Total Return B, C, D | (10.52)% | 17.23% | 17.95% | 18.92% | 13.50% | 43.25% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .96% A | .94% | .98% | .99% | 1.01% | 1.00% |
Expenses net of fee waivers, if any | .96% A | .94% | .98% | .99% | 1.01% | 1.00% |
Expenses net of all reductions | .94% A | .92% | .91% | .92% | .96% | .96% |
Net investment income (loss) | 3.13% A | 1.75% | 1.66% | .96% | .70% | .77% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 113,991 | $ 135,038 | $ 133,934 | $ 115,449 | $ 86,509 | $ 56,141 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
Financial Highlights - Service Class 2R
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 24.95 | $ 23.61 | $ 20.32 | $ 17.30 | $ 15.42 | $ 10.90 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .31 | .39 | .32 | .14 | .08 | .08 |
Net realized and unrealized gain (loss) | (2.95) | 3.35 | 3.26 | 3.07 | 1.96 | 4.55 |
Total from investment operations | (2.64) | 3.74 | 3.58 | 3.21 | 2.04 | 4.63 |
Distributions from net investment income | - | (.74) | (.16) | (.10) | (.16) | (.11) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.40) | (.29) | (.19) | (.16) | (.11) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.85 | $ 24.95 | $ 23.61 | $ 20.32 | $ 17.30 | $ 15.42 |
Total Return B, C, D | (10.59)% | 17.06% | 17.81% | 18.74% | 13.32% | 43.00% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | 1.11% A | 1.09% | 1.13% | 1.14% | 1.16% | 1.15% |
Expenses net of fee waivers, if any | 1.11% A | 1.09% | 1.13% | 1.14% | 1.16% | 1.15% |
Expenses net of all reductions | 1.09% A | 1.07% | 1.06% | 1.07% | 1.11% | 1.11% |
Net investment income (loss) | 2.98% A | 1.60% | 1.51% | .77% | .55% | .62% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 80,790 | $ 95,871 | $ 68,729 | $ 49,373 | $ 27,562 | $ 7,072 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Investor Class R
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 H |
Selected Per-Share Data | | | | |
Net asset value, beginning of period | $ 25.27 | $ 23.91 | $ 20.59 | $ 17.69 |
Income from Investment Operations | | | | |
Net investment income (loss) E | .34 | .42 | .36 | .02 |
Net realized and unrealized gain (loss) | (3.00) | 3.41 | 3.29 | 2.88 |
Total from investment operations | (2.66) | 3.83 | 3.65 | 2.90 |
Distributions from net investment income | - | (.81) | (.20) | - |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | - |
Total distributions | (2.46) | (2.47) | (.33) | - |
Redemption fees added to paid in capital E, J | - | - | - | - |
Net asset value, end of period | $ 20.15 | $ 25.27 | $ 23.91 | $ 20.59 |
Total Return B, C, D | (10.53)% | 17.25% | 17.94% | 16.39% |
Ratios to Average Net Assets F, I | | | | |
Expenses before reductions | .95% A | .96% | 1.01% | 1.07% A |
Expenses net of fee waivers, if any | .95% A | .96% | 1.01% | 1.07% A |
Expenses net of all reductions | .93% A | .94% | .93% | 1.00% A |
Net investment income (loss) | 3.14% A | 1.74% | 1.64% | .23% A |
Supplemental Data | | | | |
Net assets, end of period (000 omitted) | $ 214,967 | $ 229,829 | $ 122,018 | $ 29,544 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2008 (Unaudited)
1. Organization.
VIP Overseas Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Initial Class R shares, Service Class R shares, Service Class 2R shares, and Investor Class R shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Semiannual Report
3. Significant Accounting Policies. - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 550,219,358 |
Unrealized depreciation | (241,148,633) |
Net unrealized appreciation (depreciation) | $ 309,070,725 |
Cost for federal income tax purposes | $ 2,752,168,092 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,128,009,914 and $1,344,611,363, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .71% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' and Service Class R's average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.
For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:
Service Class | $ 162,191 |
Service Class 2 | 936,560 |
Service Class R | 60,711 |
Service Class 2R | 109,073 |
| $ 1,268,535 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class with the exception of Investor Class R pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class R pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class R paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:
Initial Class | $ 497,077 |
Service Class | 109,907 |
Service Class 2 | 252,329 |
Initial Class R | 81,770 |
Service Class R | 40,106 |
Service Class 2R | 28,822 |
Investor Class R | 172,626 |
| $ 1,182,637 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $381 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily
Loan Balance | Weighted Average Interest Rate | Interest
Expense |
Borrower | $ 10,743,533 | 2.23% | $ 9,994 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $3,364 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $3,185,393.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $346,142 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,160.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, FMR or its affiliates were the owners of record of 17% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 37% of the total outstanding shares of the Fund.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
10. Other - continued
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $27,232, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
From net investment income | | |
Initial Class | $ - | $ 55,739,563 |
Service Class | - | 11,576,654 |
Service Class 2 | - | 22,633,556 |
Initial Class R | - | 8,762,292 |
Service Class R | - | 4,244,546 |
Service Class 2R | - | 2,489,770 |
Investor Class R | - | 5,910,752 |
Total | $ - | $ 111,357,133 |
From net realized gain | | |
Initial Class | $ 163,022,999 | $ 111,097,557 |
Service Class | 34,891,161 | 25,082,728 |
Service Class 2 | 79,417,694 | 49,162,218 |
Initial Class R | 26,045,726 | 16,729,732 |
Service Class R | 12,931,868 | 9,169,613 |
Service Class 2R | 9,495,528 | 4,853,334 |
Investor Class R | 22,685,494 | 9,077,886 |
Total | $ 348,490,470 | $ 225,173,068 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 | Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
Initial Class | | | | |
Shares sold | 3,010,669 | 8,581,542 | $ 65,052,508 | $ 209,859,014 |
Reinvestment of distributions | 8,066,452 | 7,280,031 | 163,022,999 | 166,837,120 |
Shares redeemed | (17,358,827) | (16,452,957) | (371,867,409) | (401,808,271) |
Net increase (decrease) | (6,281,706) | (591,384) | $ (143,791,902) | $ (25,112,137) |
Service Class | | | | |
Shares sold | 614,372 | 1,382,854 | $ 13,143,095 | $ 33,724,214 |
Reinvestment of distributions | 1,734,153 | 1,608,100 | 34,891,161 | 36,659,382 |
Shares redeemed | (2,127,027) | (3,627,586) | (45,581,308) | (88,845,433) |
Net increase (decrease) | 221,498 | (636,632) | $ 2,452,948 | $ (18,461,837) |
Service Class 2 | | | | |
Shares sold | 2,746,903 | 4,978,892 | $ 57,818,849 | $ 121,295,683 |
Reinvestment of distributions | 3,966,918 | 3,159,253 | 79,417,694 | 71,795,774 |
Shares redeemed | (3,983,225) | (5,039,553) | (84,949,748) | (122,533,831) |
Net increase (decrease) | 2,730,596 | 3,098,592 | $ 52,286,795 | $ 70,557,626 |
Semiannual Report
12. Share Transactions. - continued
| Shares | Dollars |
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 | Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
Initial Class R | | | | |
Shares sold | 393,440 | 1,573,581 | $ 8,505,191 | $ 38,800,759 |
Reinvestment of distributions | 1,291,310 | 1,112,826 | 26,045,726 | 25,492,024 |
Shares redeemed | (1,387,260) | (1,840,544) | (29,696,863) | (44,022,123) |
Net increase (decrease) | 297,490 | 845,863 | $ 4,854,054 | $ 20,270,660 |
Service Class R | | | | |
Shares sold | 347,452 | 794,023 | $ 7,316,088 | $ 19,027,863 |
Reinvestment of distributions | 643,697 | 589,118 | 12,931,868 | 13,414,159 |
Shares redeemed | (674,330) | (1,643,900) | (14,373,183) | (39,376,291) |
Net increase (decrease) | 316,819 | (260,759) | $ 5,874,773 | $ (6,934,269) |
Service Class 2R | | | | |
Shares sold | 453,302 | 1,154,726 | $ 9,521,978 | $ 28,069,168 |
Reinvestment of distributions | 477,883 | 324,060 | 9,495,528 | 7,343,104 |
Shares redeemed | (703,065) | (547,588) | (14,463,758) | (13,063,580) |
Net increase (decrease) | 228,120 | 931,198 | $ 4,553,748 | $ 22,348,692 |
Investor Class R | | | | |
Shares sold | 1,025,868 | 3,876,633 | $ 22,122,615 | $ 95,023,834 |
Reinvestment of distributions | 1,125,273 | 648,994 | 22,685,494 | 14,988,638 |
Shares redeemed | (577,169) | (532,623) | (12,341,373) | (13,325,544) |
Net increase (decrease) | 1,573,972 | 3,993,004 | $ 32,466,736 | $ 96,686,928 |
Semiannual Report
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 |
To elect a Board of Trustees.A |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 821,220,039.81 | 95.845 |
Withheld | 35,598,080.64 | 4.155 |
TOTAL | 856,818,120.45 | 100.000 |
Dennis J. Dirks |
Affirmative | 822,124,493.63 | 95.951 |
Withheld | 34,693,626.82 | 4.049 |
TOTAL | 856,818,120.45 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 820,473,313.05 | 95.758 |
Withheld | 36,344,807.40 | 4.242 |
TOTAL | 856,818,120.45 | 100.000 |
Alan J. Lacy |
Affirmative | 822,170,402.95 | 95.956 |
Withheld | 34,647,717.50 | 4.044 |
TOTAL | 856,818,120.45 | 100.000 |
Ned C. Lautenbach |
Affirmative | 821,435,006.18 | 95.870 |
Withheld | 35,383,114.27 | 4.130 |
TOTAL | 856,818,120.45 | 100.000 |
Joseph Mauriello |
Affirmative | 822,174,756.53 | 95.957 |
Withheld | 34,643,363.92 | 4.043 |
TOTAL | 856,818,120.45 | 100.000 |
Cornelia M. Small |
Affirmative | 822,263,792.20 | 95.967 |
Withheld | 34,554,328.25 | 4.033 |
TOTAL | 856,818,120.45 | 100.000 |
William S. Stavropoulos |
Affirmative | 821,014,987.67 | 95.821 |
Withheld | 35,803,132.78 | 4.179 |
TOTAL | 856,818,120.45 | 100.000 |
David M. Thomas |
Affirmative | 822,321,743.26 | 95.974 |
Withheld | 34,496,377.19 | 4.026 |
TOTAL | 856,818,120.45 | 100.000 |
Michael E. Wiley |
Affirmative | 822,218,346.41 | 95.962 |
Withheld | 34,599,774.04 | 4.038 |
TOTAL | 856,818,120.45 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 701,273,514.99 | 81.846 |
Against | 103,131,328.05 | 12.037 |
Abstain | 52,413,277.41 | 6.117 |
TOTAL | 856,818,120.45 | 100.000 |
A Denotes trust-wide proposal and voting results.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
Fidelity Investments Japan Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
JPMorgan Chase Bank
New York, NY
VIPOVRS-SANN-0808
1.705696.110
Fidelity® Variable Insurance Products:
Overseas Portfolio - Class R
Semiannual Report
June 30, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Shareholder Expense Example | <Click Here> | An example of shareholder expenses. |
Investment Changes | <Click Here> | A summary of major shifts in the fund's investments over the past six months. |
Investments | <Click Here> | A complete list of the fund's investments with their
market values. |
Financial Statements | <Click Here> | Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights. |
Notes | <Click Here> | Notes to the financial statements. |
Proxy Voting Results | <Click Here> | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
January 1, 2008 | Ending
Account Value
June 30, 2008 | Expenses Paid
During Period*
January 1, 2008 to June 30, 2008 |
Initial Class | | | |
Actual | $ 1,000.00 | $ 895.00 | $ 4.05 |
HypotheticalA | $ 1,000.00 | $ 1,020.59 | $ 4.32 |
Service Class | | | |
Actual | $ 1,000.00 | $ 894.50 | $ 4.52 |
HypotheticalA | $ 1,000.00 | $ 1,020.09 | $ 4.82 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 894.00 | $ 5.23 |
HypotheticalA | $ 1,000.00 | $ 1,019.34 | $ 5.57 |
Initial Class R | | | |
Actual | $ 1,000.00 | $ 894.70 | $ 4.05 |
HypotheticalA | $ 1,000.00 | $ 1,020.59 | $ 4.32 |
Service Class R | | | |
Actual | $ 1,000.00 | $ 894.80 | $ 4.52 |
HypotheticalA | $ 1,000.00 | $ 1,020.09 | $ 4.82 |
Service Class 2R | | | |
Actual | $ 1,000.00 | $ 894.10 | $ 5.23 |
HypotheticalA | $ 1,000.00 | $ 1,019.34 | $ 5.57 |
Investor Class R | | | |
Actual | $ 1,000.00 | $ 894.70 | $ 4.48 |
HypotheticalA | $ 1,000.00 | $ 1,020.14 | $ 4.77 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investments
Shareholder Expense Example - continued
| Annualized
Expense Ratio |
Initial Class | .86% |
Service Class | .96% |
Service Class 2 | 1.11% |
Initial Class R | .86% |
Service Class R | .96% |
Service Class 2R | 1.11% |
Investor Class R | .95% |
Semiannual Report
Investment Changes (Unaudited)
Geographic Diversification (% of fund's net assets) |
As of June 30, 2008 |
| United Kingdom | 26.6% | |
| Japan | 12.8% | |
| France | 12.2% | |
| Germany | 7.9% | |
| Australia | 6.0% | |
| Switzerland | 4.7% | |
| Italy | 4.0% | |
| United States of America | 3.9% | |
| Denmark | 2.3% | |
| Other | 19.6% | |
Percentages are adjusted for the effect of futures contracts, if applicable. |
As of December 31, 2007 |
| United Kingdom | 21.4% | |
| France | 14.8% | |
| Germany | 11.4% | |
| Japan | 11.4% | |
| Switzerland | 6.5% | |
| Australia | 5.9% | |
| United States of America | 5.9% | |
| Italy | 3.6% | |
| Norway | 2.3% | |
| Other | 16.8% | |
Percentages are adjusted for the effect of futures contracts, if applicable. |
Asset Allocation |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Stocks | 99.4 | 96.2 |
Short-Term Investments and Net Other Assets | 0.6 | 3.8 |
Top Ten Stocks as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Alstom SA (France, Electrical Equipment) | 3.8 | 3.1 |
Man Group PLC (United Kingdom, Capital Markets) | 2.2 | 1.7 |
CSL Ltd. (Australia, Biotechnology) | 2.0 | 1.6 |
Vodafone Group PLC (United Kingdom, Wireless Telecommunication Services) | 1.9 | 1.7 |
Royal Dutch Shell PLC Class A (United Kingdom, Oil, Gas & Consumable Fuels) | 1.8 | 1.8 |
E.On AG (Germany, Electric Utilities) | 1.6 | 1.7 |
Telefonica SA (Spain, Diversified Telecommunication Services) | 1.6 | 1.5 |
Sumitomo Mitsui Financial Group, Inc. (Japan, Commercial Banks) | 1.6 | 1.1 |
BP PLC (United Kingdom, Oil, Gas & Consumable Fuels) | 1.4 | 1.5 |
BG Group PLC (United Kingdom, Oil, Gas & Consumable Fuels) | 1.4 | 1.0 |
| 19.3 | |
Market Sectors as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Financials | 22.0 | 20.6 |
Industrials | 13.0 | 18.3 |
Materials | 11.3 | 7.4 |
Energy | 10.9 | 8.7 |
Consumer Staples | 10.4 | 9.1 |
Consumer Discretionary | 8.3 | 8.3 |
Telecommunication Services | 7.6 | 6.8 |
Health Care | 6.0 | 4.6 |
Utilities | 5.1 | 7.5 |
Information Technology | 4.8 | 4.9 |
Semiannual Report
Investments June 30, 2008 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.4% |
| Shares | | Value |
Argentina - 0.2% |
Cresud S.A.C.I.F. y A. sponsored ADR | 430,600 | | $ 6,398,716 |
Australia - 6.0% |
AMP Ltd. | 859,100 | | 5,510,300 |
Australian Wealth Management Ltd. | 2,494,900 | | 3,097,621 |
BHP Billiton Ltd. | 900,617 | | 38,334,519 |
Commonwealth Bank of Australia | 367,933 | | 14,170,199 |
Computershare Ltd. | 1,203,606 | | 10,627,946 |
CSL Ltd. | 1,666,466 | | 57,038,757 |
Energy Resources of Australia Ltd. | 270,330 | | 5,955,931 |
HFA Holdings Ltd. | 1,251,777 | | 1,392,164 |
Lion Nathan Ltd. | 1,266,655 | | 10,383,167 |
National Australia Bank Ltd. | 173,073 | | 4,397,244 |
Rio Tinto Ltd. | 79,200 | | 10,288,922 |
Seek Ltd. | 593,800 | | 2,846,529 |
Telstra Corp. Ltd. | 2,084,657 | | 8,474,339 |
TOTAL AUSTRALIA | | 172,517,638 |
Austria - 0.7% |
Strabag SE | 247,400 | | 19,221,342 |
Belgium - 0.2% |
Hamon & Compagnie International SA (a) | 73,974 | | 3,469,132 |
KBC Groupe SA | 26,700 | | 2,951,451 |
TOTAL BELGIUM | | 6,420,583 |
Bermuda - 0.5% |
Aquarius Platinum Ltd. (United Kingdom) | 547,000 | | 8,716,180 |
Clear Media Ltd. (a) | 249,000 | | 217,153 |
Covidien Ltd. | 125,700 | | 6,019,773 |
TOTAL BERMUDA | | 14,953,106 |
Brazil - 1.7% |
Banco do Brasil SA | 324,800 | | 5,285,699 |
Bolsa de Mercadorias & Futuros - BM&F SA | 408,800 | | 3,521,412 |
Gafisa SA sponsored ADR | 107,100 | | 3,681,027 |
MRV Engenharia e Participacoes SA | 601,500 | | 13,394,180 |
TIM Participacoes SA sponsored ADR (non-vtg.) | 244,400 | | 6,948,292 |
Uniao de Bancos Brasileiros SA (Unibanco) GDR | 43,600 | | 5,534,148 |
Vivo Participacoes SA (PN) sponsored ADR (d) | 1,092,500 | | 6,948,300 |
Votorantim Celulose e Papel SA sponsored ADR (non-vtg.) | 96,100 | | 2,566,831 |
TOTAL BRAZIL | | 47,879,889 |
British Virgin Islands - 0.0% |
Indochina Capital Vietnam Holdings Ltd. (a) | 192,800 | | 964,000 |
Canada - 1.2% |
Canadian Natural Resources Ltd. | 39,900 | | 3,947,139 |
Nexen, Inc. | 115,200 | | 4,595,117 |
Nortel Networks Corp. (a) | 40,149 | | 328,880 |
|
| Shares | | Value |
OPTI Canada, Inc. (a) | 156,100 | | $ 3,537,460 |
Petrobank Energy & Resources Ltd. (a) | 86,200 | | 4,498,788 |
Potash Corp. of Saskatchewan, Inc. | 28,500 | | 6,514,245 |
Suncor Energy, Inc. | 68,800 | | 3,995,644 |
Talisman Energy, Inc. | 205,700 | | 4,556,537 |
TimberWest Forest Corp. | 175,300 | | 2,364,620 |
TOTAL CANADA | | 34,338,430 |
China - 0.3% |
Global Bio-Chem Technology Group Co. Ltd. | 6,534,000 | | 2,715,080 |
Home Inns & Hotels Management, Inc. sponsored ADR (a)(d) | 259,817 | | 4,939,121 |
TOTAL CHINA | | 7,654,201 |
Denmark - 2.3% |
Carlsberg AS Series B (d) | 155,725 | | 15,000,951 |
Novo Nordisk AS Series B | 224,400 | | 14,772,368 |
Novozymes AS Series B (d) | 105,600 | | 9,506,840 |
Vestas Wind Systems AS (a) | 199,400 | | 25,961,274 |
TOTAL DENMARK | | 65,241,433 |
Finland - 1.5% |
Fortum Oyj | 216,800 | | 10,973,430 |
Nokia Corp. sponsored ADR | 684,700 | | 16,775,150 |
Nokian Tyres Ltd. | 299,912 | | 14,225,405 |
TOTAL FINLAND | | 41,973,985 |
France - 12.2% |
Alstom SA (d) | 473,700 | | 108,621,948 |
AXA SA | 247,415 | | 7,290,283 |
AXA SA sponsored ADR | 168,900 | | 4,969,038 |
BNP Paribas SA | 288,302 | | 25,952,028 |
Bouygues SA | 181,900 | | 12,001,160 |
Carrefour SA | 244,200 | | 13,764,998 |
CNP Assurances | 64,600 | | 7,283,424 |
Compagnie Generale de Geophysique SA (a) | 154,000 | | 7,270,808 |
France Telecom SA | 110,361 | | 3,236,557 |
Groupe Danone | 182,700 | | 12,784,249 |
Ingenico SA | 319,400 | | 11,152,305 |
L'Air Liquide SA | 182,578 | | 24,036,476 |
L'Oreal SA | 134,295 | | 14,566,453 |
Sanofi-Aventis sponsored ADR | 85,100 | | 2,827,873 |
Sodexho Alliance SA | 206,500 | | 13,509,136 |
Suez SA (France) | 136,000 | | 9,219,090 |
Total SA: | | | |
Series B | 340,200 | | 28,957,246 |
sponsored ADR | 187,400 | | 15,979,598 |
Unibail-Rodamco | 67,800 | | 15,642,256 |
Vilmorin & Cie | 28,200 | | 5,313,550 |
Vivendi | 201,380 | | 7,593,285 |
TOTAL FRANCE | | 351,971,761 |
Common Stocks - continued |
| Shares | | Value |
Germany - 7.9% |
Allianz AG (Reg.) | 90,400 | | $ 15,901,628 |
Bayer AG | 72,000 | | 6,057,945 |
Beiersdorf AG | 239,400 | | 17,575,642 |
Commerzbank AG | 276,800 | | 8,223,111 |
Daimler AG (Reg.) | 82,200 | | 5,098,516 |
Deutsche Bank AG | 70,200 | | 6,059,995 |
Deutsche Bank AG (NY Shares) | 29,800 | | 2,543,430 |
Deutsche Boerse AG | 91,300 | | 10,320,555 |
Deutsche Postbank AG | 145,600 | | 12,800,253 |
E.ON AG | 231,144 | | 46,585,669 |
Fresenius AG | 132,100 | | 11,437,705 |
GFK AG | 111,269 | | 4,984,389 |
K&S AG | 21,100 | | 12,148,517 |
MLP AG (d) | 990,500 | | 17,811,840 |
Q-Cells AG (a)(d) | 90,100 | | 9,127,219 |
RWE AG | 170,300 | | 21,501,356 |
SAP AG sponsored ADR (d) | 158,100 | | 8,238,591 |
Vossloh AG | 73,300 | | 9,541,866 |
TOTAL GERMANY | | 225,958,227 |
Hong Kong - 0.9% |
China Unicom Ltd. | 10,572,000 | | 19,621,473 |
China Unicom Ltd. sponsored ADR | 214,700 | | 3,976,244 |
Dynasty Fine Wines Group Ltd. | 7,224,000 | | 1,269,278 |
TOTAL HONG KONG | | 24,866,995 |
India - 0.5% |
Satyam Computer Services Ltd. sponsored ADR | 301,200 | | 7,385,424 |
Suzlon Energy Ltd. | 1,400,000 | | 7,042,395 |
TOTAL INDIA | | 14,427,819 |
Indonesia - 0.7% |
PT Bumi Resources Tbk | 9,391,000 | | 8,346,625 |
PT Indosat Tbk sponsored ADR (d) | 298,400 | | 10,811,032 |
TOTAL INDONESIA | | 19,157,657 |
Ireland - 1.0% |
C&C Group PLC | 1,314,700 | | 7,261,745 |
Irish Life & Permanent PLC | 2,027,100 | | 20,951,358 |
TOTAL IRELAND | | 28,213,103 |
Israel - 0.6% |
Israel Chemicals Ltd. | 271,700 | | 6,337,879 |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 239,200 | | 10,955,360 |
TOTAL ISRAEL | | 17,293,239 |
Italy - 4.0% |
A2A SpA | 1,154,100 | | 4,214,676 |
Alleanza Assicurazioni SpA | 948,700 | | 10,261,716 |
Assicurazioni Generali SpA | 376,200 | | 14,377,758 |
Buzzi Unicem SpA | 172,800 | | 4,304,641 |
|
| Shares | | Value |
Edison SpA | 2,559,300 | | $ 5,682,525 |
ENI SpA | 464,586 | | 17,259,495 |
Finmeccanica SpA | 625,900 | | 16,356,895 |
Intesa Sanpaolo SpA | 1,018,700 | | 5,791,940 |
Mariella Burani Fashion Group SpA (d) | 105,600 | | 2,555,907 |
Saipem SpA | 336,100 | | 15,708,502 |
UniCredit SpA | 2,840,000 | | 17,277,489 |
TOTAL ITALY | | 113,791,544 |
Japan - 12.8% |
ACOM Co. Ltd. | 409,250 | | 12,682,452 |
Aeon Co. Ltd. | 528,100 | | 6,521,350 |
Canon, Inc. | 186,200 | | 9,586,622 |
Canon, Inc. sponsored ADR | 309,100 | | 15,829,011 |
Honda Motor Co. Ltd. | 97,400 | | 3,324,564 |
Ibiden Co. Ltd. | 180,500 | | 6,562,709 |
Japan Steel Works Ltd. | 783,000 | | 15,230,019 |
Konica Minolta Holdings, Inc. | 368,000 | | 6,215,080 |
Matsui Securities Co. Ltd. (d) | 659,000 | | 3,960,269 |
Mitsubishi Corp. | 254,100 | | 8,377,054 |
Mitsubishi Electric Corp. | 287,000 | | 3,095,323 |
Mitsubishi Estate Co. Ltd. | 344,000 | | 7,873,781 |
Mitsubishi UFJ Financial Group, Inc. | 2,404,800 | | 21,256,290 |
Mitsui & Co. Ltd. | 384,000 | | 8,481,891 |
Mizuho Financial Group, Inc. | 2,247 | | 10,497,923 |
Murata Manufacturing Co. Ltd. | 58,900 | | 2,773,984 |
Nafco Co. Ltd. | 147,900 | | 2,298,639 |
NGK Insulators Ltd. | 585,000 | | 11,378,750 |
Nidec Corp. | 86,400 | | 5,753,761 |
Nikon Corp. | 275,000 | | 8,029,953 |
Nomura Holdings, Inc. | 1,323,200 | | 19,598,127 |
Nomura Holdings, Inc. sponsored ADR | 303,100 | | 4,470,725 |
NSK Ltd. | 1,575,000 | | 13,782,084 |
NTT DoCoMo, Inc. | 4,310 | | 6,322,840 |
ORIX Corp. | 17,270 | | 2,470,977 |
Point, Inc. | 125,450 | | 3,592,220 |
Rakuten, Inc. | 15,243 | | 7,695,802 |
Ricoh Co. Ltd. | 528,000 | | 9,529,016 |
Sharp Corp. | 261,000 | | 4,250,638 |
Sony Corp. | 98,600 | | 4,322,814 |
Sony Corp. sponsored ADR | 214,100 | | 9,364,734 |
Sumitomo Metal Industries Ltd. | 975,000 | | 4,288,843 |
Sumitomo Mitsui Financial Group, Inc. | 6,003 | | 45,178,702 |
Sumitomo Trust & Banking Co. Ltd. | 1,477,000 | | 10,322,931 |
T&D Holdings, Inc. | 291,400 | | 17,923,440 |
Tokai Carbon Co. Ltd. | 259,000 | | 2,637,206 |
Tokyo Electric Power Co. | 115,000 | | 2,957,189 |
Tokyo Electron Ltd. | 47,500 | | 2,738,191 |
Toyo Tanso Co. Ltd. (d) | 29,800 | | 1,917,148 |
Toyota Motor Corp. | 370,900 | | 17,511,265 |
USS Co. Ltd. | 128,860 | | 8,508,535 |
TOTAL JAPAN | | 369,112,852 |
Common Stocks - continued |
| Shares | | Value |
Korea (South) - 0.3% |
Doosan Heavy Industries & Construction Co. Ltd. | 100,250 | | $ 9,483,754 |
Luxembourg - 1.5% |
ArcelorMittal SA: | | | |
(France) | 147,900 | | 14,534,820 |
(NY Shares) Class A | 112,800 | | 11,175,096 |
Evraz Group SA GDR | 54,900 | | 6,395,850 |
SES SA (A Shares) FDR unit | 442,747 | | 11,061,542 |
TOTAL LUXEMBOURG | | 43,167,308 |
Malaysia - 0.1% |
Gamuda Bhd | 5,333,900 | | 3,819,840 |
Mexico - 0.1% |
America Movil SAB de CV Series L sponsored ADR | 67,600 | | 3,565,900 |
Netherlands - 1.2% |
Advanced Metallurgical Group NV | 40,500 | | 3,427,729 |
ASML Holding NV (NY Shares) | 113,200 | | 2,762,080 |
ING Groep NV (Certificaten Van Aandelen) | 125,724 | | 3,975,092 |
Koninklijke KPN NV | 919,900 | | 15,727,336 |
Unilever NV (NY Shares) | 336,700 | | 9,562,280 |
TOTAL NETHERLANDS | | 35,454,517 |
Norway - 1.8% |
Acta Holding ASA (d) | 787,000 | | 895,586 |
Lighthouse Caledonia ASA | 60,299 | | 70,922 |
Marine Harvest ASA (a) | 7,094,000 | | 5,195,808 |
Orkla ASA (A Shares) | 651,150 | | 8,342,997 |
Petroleum Geo-Services ASA | 645,800 | | 15,813,756 |
Pronova BioPharma ASA | 586,838 | | 2,000,866 |
ProSafe ASA | 274,300 | | 2,715,545 |
StatoilHydro ASA | 320,900 | | 11,971,997 |
StatoilHydro ASA sponsored ADR | 163,600 | | 6,115,368 |
TOTAL NORWAY | | 53,122,845 |
Panama - 0.1% |
McDermott International, Inc. (a) | 63,300 | | 3,917,637 |
Russia - 0.9% |
Mobile TeleSystems OJSC sponsored ADR | 111,900 | | 8,572,659 |
OAO Gazprom sponsored ADR | 140,000 | | 8,120,000 |
Vimpel Communications sponsored ADR | 276,200 | | 8,197,616 |
TOTAL RUSSIA | | 24,890,275 |
South Africa - 0.7% |
Exxaro Resources Ltd. | 540,500 | | 9,969,765 |
Impala Platinum Holdings Ltd. | 229,100 | | 9,039,726 |
TOTAL SOUTH AFRICA | | 19,009,491 |
Spain - 2.2% |
Banco Santander SA | 469,300 | | 8,561,940 |
Repsol YPF SA sponsored ADR | 183,600 | | 7,209,972 |
|
| Shares | | Value |
Telefonica SA | 1,417,480 | | $ 37,511,805 |
Telefonica SA sponsored ADR | 111,200 | | 8,849,296 |
TOTAL SPAIN | | 62,133,013 |
Sweden - 0.6% |
Swedish Match Co. | 627,600 | | 12,790,152 |
Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR (d) | 306,400 | | 3,186,560 |
TOTAL SWEDEN | | 15,976,712 |
Switzerland - 4.7% |
Compagnie Financiere Richemont unit | 218,644 | | 12,135,008 |
Credit Suisse Group sponsored ADR | 62,400 | | 2,827,344 |
Credit Suisse Group (Reg.) | 122,288 | | 5,566,728 |
EFG International | 148,600 | | 4,044,532 |
Julius Baer Holding AG | 114,046 | | 7,649,013 |
Nestle SA (Reg.) | 756,840 | | 34,110,086 |
Novartis AG sponsored ADR | 101,800 | | 5,603,072 |
Roche Holding AG (participation certificate) | 35,466 | | 6,376,429 |
SGS Societe Generale de Surveillance Holding SA (Reg.) | 18,982 | | 27,071,912 |
Sonova Holding AG | 92,538 | | 7,637,908 |
Swisscom AG (Reg.) | 30,718 | | 10,232,055 |
UBS AG: | | | |
(For. Reg.) | 275,307 | | 5,737,475 |
(NY Shares) | 201,943 | | 4,172,142 |
Zurich Financial Services AG (Reg.) | 10,571 | | 2,694,333 |
TOTAL SWITZERLAND | | 135,858,037 |
Thailand - 0.1% |
Total Access Communication PCL: | | | |
unit | 1,175,700 | | 1,776,301 |
(For. Reg.) | 1,779,300 | | 2,688,247 |
TOTAL THAILAND | | 4,464,548 |
United Kingdom - 26.6% |
Anglo American PLC: | | | |
ADR | 354,534 | | 12,568,230 |
(United Kingdom) | 317,408 | | 22,292,912 |
Barclays PLC | 355,800 | | 2,018,636 |
Barclays PLC rights 7/17/08 (a) | 355,800 | | 14,427 |
BG Group PLC | 1,523,200 | | 39,584,400 |
BHP Billiton PLC | 797,195 | | 30,572,670 |
BlueBay Asset Management (d) | 484,200 | | 2,151,726 |
BP PLC | 3,602,306 | | 41,753,155 |
British American Tobacco PLC | 402,800 | | 13,894,221 |
Cadbury PLC ADR | 89,408 | | 4,499,011 |
Centrica PLC | 2,597,000 | | 15,972,937 |
Climate Exchange PLC (a) | 110,500 | | 4,184,524 |
Compass Group PLC | 1,771,300 | | 13,323,706 |
Diageo PLC | 1,382,900 | | 25,336,542 |
DSG International PLC | 3,010,000 | | 2,651,153 |
GlaxoSmithKline PLC | 1,214,900 | | 26,856,503 |
GlaxoSmithKline PLC sponsored ADR | 35,900 | | 1,587,498 |
Common Stocks - continued |
| Shares | | Value |
United Kingdom - continued |
Gottex Fund Management Holdings Ltd. | 73,770 | | $ 2,133,121 |
Hammerson PLC | 289,300 | | 5,124,226 |
HBOS PLC | 529,400 | | 2,898,386 |
HBOS PLC rights 7/18/08 (a) | 211,760 | | 45,116 |
HSBC Holdings PLC: | | | |
(Hong Kong) (Reg.) | 382,000 | | 5,888,082 |
(United Kingdom) (Reg.) | 1,150,426 | | 17,713,857 |
sponsored ADR | 110,800 | | 8,498,360 |
Icap PLC | 536,400 | | 5,745,553 |
Informa PLC | 571,800 | | 4,685,284 |
International Power PLC | 1,803,200 | | 15,447,576 |
Intertek Group PLC | 413,400 | | 8,097,517 |
Jardine Lloyd Thompson Group PLC | 2,703,273 | | 20,251,583 |
Lloyds TSB Group PLC | 548,500 | | 3,365,213 |
Man Group PLC | 5,088,625 | | 62,861,906 |
Misys PLC | 759,700 | | 2,248,040 |
NDS Group PLC sponsored ADR (a) | 63,200 | | 3,741,440 |
New Star Asset Management Group PLC | 770,200 | | 1,555,063 |
Prudential PLC | 1,867,700 | | 19,700,166 |
QinetiQ Group PLC | 1,705,000 | | 6,978,943 |
Reed Elsevier PLC | 2,257,014 | | 25,719,988 |
Rio Tinto PLC: | | | |
(Reg.) | 145,506 | | 17,522,983 |
sponsored ADR | 21,500 | | 10,642,500 |
Royal Bank of Scotland Group PLC | 3,869,375 | | 16,472,570 |
Royal Dutch Shell PLC: | | | |
Class A (United Kingdom) | 665,900 | | 27,296,433 |
Class A sponsored ADR | 308,600 | | 25,215,706 |
Class B | 153,800 | | 6,158,676 |
Scottish & Southern Energy PLC | 553,200 | | 15,413,801 |
Shanks Group PLC | 2,572,200 | | 11,929,009 |
Signet Group PLC | 7,353,100 | | 7,255,362 |
Smith & Nephew PLC sponsored ADR | 75,000 | | 4,106,250 |
SSL International PLC | 472,100 | | 4,186,910 |
Standard Chartered PLC (United Kingdom) | 94,500 | | 2,676,208 |
Taylor Nelson Sofres PLC | 5,050,400 | | 23,291,597 |
Tesco PLC | 3,870,100 | | 28,307,306 |
Vodafone Group PLC | 15,586,462 | | 45,922,922 |
Vodafone Group PLC sponsored ADR | 255,800 | | 7,535,868 |
William Morrison Supermarkets PLC | 3,097,500 | | 16,329,061 |
Xstrata PLC | 140,400 | | 11,184,403 |
TOTAL UNITED KINGDOM | | 763,409,236 |
|
| Shares | | Value |
United States of America - 3.3% |
Apple, Inc. (a) | 42,000 | | $ 7,032,480 |
Becton, Dickinson & Co. | 54,700 | | 4,447,110 |
Calgon Carbon Corp. (a)(d) | 1,353,417 | | 20,923,827 |
Copart, Inc. (a) | 105,500 | | 4,517,510 |
Dr Pepper Snapple Group, Inc. (a) | 67,056 | | 1,406,835 |
Estee Lauder Companies, Inc. Class A (d) | 600,300 | | 27,883,935 |
Fuel Tech, Inc. (a)(d) | 271,800 | | 4,789,116 |
Hypercom Corp. (a) | 171,800 | | 755,920 |
Monsanto Co. | 38,800 | | 4,905,872 |
Stryker Corp. | 92,200 | | 5,797,536 |
Sunpower Corp. Class A (a)(d) | 90,300 | | 6,499,794 |
Visa, Inc. | 81,200 | | 6,602,372 |
TOTAL UNITED STATES OF AMERICA | | 95,562,307 |
TOTAL COMMON STOCKS (Cost $2,540,143,053) | 2,856,191,940 |
Money Market Funds - 7.2% |
| | | |
Fidelity Cash Central Fund, 2.38% (b) | 15,959,095 | | 15,959,095 |
Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c) | 189,087,782 | | 189,087,782 |
TOTAL MONEY MARKET FUNDS (Cost $205,046,877) | 205,046,877 |
TOTAL INVESTMENT PORTFOLIO - 106.6% (Cost $2,745,189,930) | | 3,061,238,817 |
NET OTHER ASSETS - (6.6)% | | (188,439,094) |
NET ASSETS - 100% | $ 2,872,799,723 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 1,480,349 |
Fidelity Securities Lending Cash Central Fund | 3,185,393 |
Total | $ 4,665,742 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
#Valuation Inputs at Reporting Date: |
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 3,061,238,817 | $ 1,148,318,080 | $ 1,912,920,737 | $ - |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2008 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $181,563,989) - See accompanying schedule: Unaffiliated issuers (cost $2,540,143,053) | $ 2,856,191,940 | |
Fidelity Central Funds (cost $205,046,877) | 205,046,877 | |
Total Investments (cost $2,745,189,930) | | $ 3,061,238,817 |
Cash | | 356,151 |
Foreign currency held at value (cost $8) | | 8 |
Receivable for fund shares sold | | 882,886 |
Dividends receivable | | 8,964,910 |
Distributions receivable from Fidelity Central Funds | | 426,869 |
Prepaid expenses | | 5,316 |
Other receivables | | 379,820 |
Total assets | | 3,072,254,777 |
| | |
Liabilities | | |
Payable for investments purchased | $ 1,853,627 | |
Payable for fund shares redeemed | 5,145,177 | |
Accrued management fee | 1,771,221 | |
Distribution fees payable | 207,842 | |
Other affiliated payables | 291,920 | |
Other payables and accrued expenses | 1,097,485 | |
Collateral on securities loaned, at value | 189,087,782 | |
Total liabilities | | 199,455,054 |
| | |
Net Assets | | $ 2,872,799,723 |
Net Assets consist of: | | |
Paid in capital | | $ 2,428,079,953 |
Undistributed net investment income | | 50,381,070 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 78,218,634 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 316,120,066 |
Net Assets | | $ 2,872,799,723 |
Statement of Assets and Liabilities - continued
| June 30, 2008 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($1,231,326,194 ÷ 60,932,192 shares) | | $ 20.21 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($296,829,829 ÷ 14,760,225 shares) | | $ 20.11 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($708,971,802 ÷ 35,451,968 shares) | | $ 20.00 |
| | |
Initial Class R:
Net Asset Value, offering price and redemption price per share ($225,924,482 ÷ 11,204,213 shares) | | $ 20.16 |
| | |
Service Class R:
Net Asset Value, offering price and redemption price per share ($113,990,593 ÷ 5,676,775 shares) | | $ 20.08 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($80,789,752 ÷ 4,070,700 shares) | | $ 19.85 |
| | |
Investor Class R:
Net Asset Value, offering price and redemption price per share ($214,967,071 ÷ 10,670,172 shares) | | $ 20.15 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Operations
Six months ended June 30, 2008 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 66,839,951 |
Interest | | 13,113 |
Income from Fidelity Central Funds | | 4,665,742 |
| | 71,518,806 |
Less foreign taxes withheld | | (6,390,616) |
Total income | | 65,128,190 |
| | |
Expenses | | |
Management fee | $ 11,312,778 | |
Transfer agent fees | 1,182,637 | |
Distribution fees | 1,268,535 | |
Accounting and security lending fees | 705,996 | |
Custodian fees and expenses | 313,043 | |
Independent trustees' compensation | 6,848 | |
Audit | 34,401 | |
Legal | 5,231 | |
Interest | 9,994 | |
Miscellaneous | 299,973 | |
Total expenses before reductions | 15,139,436 | |
Expense reductions | (347,302) | 14,792,134 |
Net investment income (loss) | | 50,336,056 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers (net of foreign taxes of $617,988) | 88,037,134 | |
Foreign currency transactions | 161,578 | |
Total net realized gain (loss) | | 88,198,712 |
Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $124,985) | (503,427,086) | |
Assets and liabilities in foreign currencies | 72,648 | |
Total change in net unrealized appreciation (depreciation) | | (503,354,438) |
Net gain (loss) | | (415,155,726) |
Net increase (decrease) in net assets resulting from operations | | $ (364,819,670) |
Statement of Changes in Net Assets
| Six months ended
June 30, 2008
(Unaudited) | Year ended
December 31,
2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 50,336,056 | $ 61,989,857 |
Net realized gain (loss) | 88,198,712 | 352,592,480 |
Change in net unrealized appreciation (depreciation) | (503,354,438) | 134,088,793 |
Net increase (decrease) in net assets resulting from operations | (364,819,670) | 548,671,130 |
Distributions to shareholders from net investment income | - | (111,357,133) |
Distributions to shareholders from net realized gain | (348,490,470) | (225,173,068) |
Total distributions | (348,490,470) | (336,530,201) |
Share transactions - net increase (decrease) | (41,302,848) | 159,355,663 |
Redemption fees | 41,761 | 118,790 |
Total increase (decrease) in net assets | (754,571,227) | 371,615,382 |
| | |
Net Assets | | |
Beginning of period | 3,627,370,950 | 3,255,755,568 |
End of period (including undistributed net investment income of $50,381,070 and undistributed net investment income of $45,014, respectively) | $ 2,872,799,723 | $ 3,627,370,950 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 25.33 | $ 23.96 | $ 20.60 | $ 17.51 | $ 15.59 | $ 10.98 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .35 | .45 | .38 | .20 | .13 | .11 |
Net realized and unrealized gain (loss) | (3.01) | 3.42 | 3.30 | 3.10 | 1.97 | 4.60 |
Total from investment operations | (2.66) | 3.87 | 3.68 | 3.30 | 2.10 | 4.71 |
Distributions from net investment income | - | (.84) | (.19) | (.12) | (.18) | (.10) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.50) | (.32) | (.21) | (.18) | (.10) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 20.21 | $ 25.33 | $ 23.96 | $ 20.60 | $ 17.51 | $ 15.59 |
Total Return B, C, D | (10.50)% | 17.41% | 18.09% | 19.06% | 13.57% | 43.37% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .86% A | .85% | .88% | .89% | .91% | .90% |
Expenses net of fee waivers, if any | .86% A | .85% | .88% | .89% | .91% | .90% |
Expenses net of all reductions | .84% A | .82% | .81% | .82% | .87% | .86% |
Net investment income (loss) | 3.23% A | 1.85% | 1.76% | 1.11% | .80% | .87% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 1,231,326 | $ 1,702,235 | $ 1,624,901 | $ 1,549,179 | $ 1,491,485 | $ 1,436,137 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
Financial Highlights - Service Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 25.23 | $ 23.86 | $ 20.52 | $ 17.44 | $ 15.53 | $ 10.94 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .33 | .43 | .36 | .18 | .11 | .09 |
Net realized and unrealized gain (loss) | (2.99) | 3.39 | 3.28 | 3.09 | 1.97 | 4.59 |
Total from investment operations | (2.66) | 3.82 | 3.64 | 3.27 | 2.08 | 4.68 |
Distributions from net investment income | - | (.79) | (.17) | (.10) | (.17) | (.09) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.45) | (.30) | (.19) | (.17) | (.09) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 20.11 | $ 25.23 | $ 23.86 | $ 20.52 | $ 17.44 | $ 15.53 |
Total Return B, C, D | (10.55)% | 17.25% | 17.95% | 18.97% | 13.49% | 43.20% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .96% A | .95% | .98% | .99% | 1.01% | 1.00% |
Expenses net of fee waivers, if any | .96% A | .95% | .98% | .99% | 1.01% | 1.00% |
Expenses net of all reductions | .94% A | .92% | .91% | .92% | .97% | .96% |
Net investment income (loss) | 3.13% A | 1.75% | 1.66% | 1.02% | .69% | .77% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 296,830 | $ 366,777 | $ 362,060 | $ 329,759 | $ 322,649 | $ 246,632 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Service Class 2
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 25.12 | $ 23.75 | $ 20.43 | $ 17.39 | $ 15.50 | $ 10.90 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .32 | .39 | .33 | .14 | .08 | .08 |
Net realized and unrealized gain (loss) | (2.98) | 3.37 | 3.27 | 3.08 | 1.97 | 4.58 |
Total from investment operations | (2.66) | 3.76 | 3.60 | 3.22 | 2.05 | 4.66 |
Distributions from net investment income | - | (.73) | (.15) | (.09) | (.16) | (.06) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.39) | (.28) | (.18) | (.16) | (.06) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 20.00 | $ 25.12 | $ 23.75 | $ 20.43 | $ 17.39 | $ 15.50 |
Total Return B, C, D | (10.60)% | 17.05% | 17.83% | 18.72% | 13.31% | 43.04% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | 1.11% A | 1.10% | 1.13% | 1.14% | 1.16% | 1.16% |
Expenses net of fee waivers, if any | 1.11% A | 1.10% | 1.13% | 1.14% | 1.16% | 1.16% |
Expenses net of all reductions | 1.09% A | 1.07% | 1.06% | 1.07% | 1.12% | 1.12% |
Net investment income (loss) | 2.98% A | 1.60% | 1.51% | .79% | .54% | .61% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 708,972 | $ 821,943 | $ 703,421 | $ 502,801 | $ 319,708 | $ 140,822 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
Financial Highlights - Initial Class R
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 25.28 | $ 23.92 | $ 20.57 | $ 17.49 | $ 15.57 | $ 10.98 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .35 | .45 | .38 | .19 | .12 | .11 |
Net realized and unrealized gain (loss) | (3.01) | 3.41 | 3.29 | 3.10 | 1.98 | 4.59 |
Total from investment operations | (2.66) | 3.86 | 3.67 | 3.29 | 2.10 | 4.70 |
Distributions from net investment income | - | (.84) | (.19) | (.12) | (.18) | (.11) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.50) | (.32) | (.21) | (.18) | (.11) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 20.16 | $ 25.28 | $ 23.92 | $ 20.57 | $ 17.49 | $ 15.57 |
Total Return B, C, D | (10.53)% | 17.40% | 18.08% | 19.05% | 13.59% | 43.32% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .86% A | .85% | .88% | .89% | .91% | .90% |
Expenses net of fee waivers, if any | .86% A | .85% | .88% | .89% | .91% | .90% |
Expenses net of all reductions | .84% A | .82% | .81% | .82% | .87% | .86% |
Net investment income (loss) | 3.23% A | 1.85% | 1.76% | 1.08% | .79% | .87% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 225,924 | $ 275,678 | $ 240,693 | $ 184,245 | $ 132,064 | $ 39,466 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Service Class R
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 25.19 | $ 23.83 | $ 20.50 | $ 17.43 | $ 15.52 | $ 10.94 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .33 | .43 | .36 | .17 | .11 | .10 |
Net realized and unrealized gain (loss) | (2.98) | 3.38 | 3.27 | 3.09 | 1.97 | 4.58 |
Total from investment operations | (2.65) | 3.81 | 3.63 | 3.26 | 2.08 | 4.68 |
Distributions from net investment income | - | (.79) | (.17) | (.10) | (.17) | (.10) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.45) | (.30) | (.19) | (.17) | (.10) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 20.08 | $ 25.19 | $ 23.83 | $ 20.50 | $ 17.43 | $ 15.52 |
Total Return B, C, D | (10.52)% | 17.23% | 17.95% | 18.92% | 13.50% | 43.25% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .96% A | .94% | .98% | .99% | 1.01% | 1.00% |
Expenses net of fee waivers, if any | .96% A | .94% | .98% | .99% | 1.01% | 1.00% |
Expenses net of all reductions | .94% A | .92% | .91% | .92% | .96% | .96% |
Net investment income (loss) | 3.13% A | 1.75% | 1.66% | .96% | .70% | .77% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 113,991 | $ 135,038 | $ 133,934 | $ 115,449 | $ 86,509 | $ 56,141 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
Financial Highlights - Service Class 2R
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 24.95 | $ 23.61 | $ 20.32 | $ 17.30 | $ 15.42 | $ 10.90 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .31 | .39 | .32 | .14 | .08 | .08 |
Net realized and unrealized gain (loss) | (2.95) | 3.35 | 3.26 | 3.07 | 1.96 | 4.55 |
Total from investment operations | (2.64) | 3.74 | 3.58 | 3.21 | 2.04 | 4.63 |
Distributions from net investment income | - | (.74) | (.16) | (.10) | (.16) | (.11) |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | (.09) | - | - |
Total distributions | (2.46) | (2.40) | (.29) | (.19) | (.16) | (.11) |
Redemption fees added to paid in capital E, I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.85 | $ 24.95 | $ 23.61 | $ 20.32 | $ 17.30 | $ 15.42 |
Total Return B, C, D | (10.59)% | 17.06% | 17.81% | 18.74% | 13.32% | 43.00% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | 1.11% A | 1.09% | 1.13% | 1.14% | 1.16% | 1.15% |
Expenses net of fee waivers, if any | 1.11% A | 1.09% | 1.13% | 1.14% | 1.16% | 1.15% |
Expenses net of all reductions | 1.09% A | 1.07% | 1.06% | 1.07% | 1.11% | 1.11% |
Net investment income (loss) | 2.98% A | 1.60% | 1.51% | .77% | .55% | .62% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 80,790 | $ 95,871 | $ 68,729 | $ 49,373 | $ 27,562 | $ 7,072 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% | 84% | 99% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Investor Class R
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 H |
Selected Per-Share Data | | | | |
Net asset value, beginning of period | $ 25.27 | $ 23.91 | $ 20.59 | $ 17.69 |
Income from Investment Operations | | | | |
Net investment income (loss) E | .34 | .42 | .36 | .02 |
Net realized and unrealized gain (loss) | (3.00) | 3.41 | 3.29 | 2.88 |
Total from investment operations | (2.66) | 3.83 | 3.65 | 2.90 |
Distributions from net investment income | - | (.81) | (.20) | - |
Distributions from net realized gain | (2.46) | (1.66) | (.13) | - |
Total distributions | (2.46) | (2.47) | (.33) | - |
Redemption fees added to paid in capital E, J | - | - | - | - |
Net asset value, end of period | $ 20.15 | $ 25.27 | $ 23.91 | $ 20.59 |
Total Return B, C, D | (10.53)% | 17.25% | 17.94% | 16.39% |
Ratios to Average Net Assets F, I | | | | |
Expenses before reductions | .95% A | .96% | 1.01% | 1.07% A |
Expenses net of fee waivers, if any | .95% A | .96% | 1.01% | 1.07% A |
Expenses net of all reductions | .93% A | .94% | .93% | 1.00% A |
Net investment income (loss) | 3.14% A | 1.74% | 1.64% | .23% A |
Supplemental Data | | | | |
Net assets, end of period (000 omitted) | $ 214,967 | $ 229,829 | $ 122,018 | $ 29,544 |
Portfolio turnover rate G | 72% A | 62% | 123% | 92% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2008 (Unaudited)
1. Organization.
VIP Overseas Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Initial Class R shares, Service Class R shares, Service Class 2R shares, and Investor Class R shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Semiannual Report
3. Significant Accounting Policies. - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 550,219,358 |
Unrealized depreciation | (241,148,633) |
Net unrealized appreciation (depreciation) | $ 309,070,725 |
Cost for federal income tax purposes | $ 2,752,168,092 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,128,009,914 and $1,344,611,363, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .71% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' and Service Class R's average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.
For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:
Service Class | $ 162,191 |
Service Class 2 | 936,560 |
Service Class R | 60,711 |
Service Class 2R | 109,073 |
| $ 1,268,535 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class with the exception of Investor Class R pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class R pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class R paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:
Initial Class | $ 497,077 |
Service Class | 109,907 |
Service Class 2 | 252,329 |
Initial Class R | 81,770 |
Service Class R | 40,106 |
Service Class 2R | 28,822 |
Investor Class R | 172,626 |
| $ 1,182,637 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $381 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Daily
Loan Balance | Weighted Average Interest Rate | Interest
Expense |
Borrower | $ 10,743,533 | 2.23% | $ 9,994 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $3,364 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $3,185,393.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $346,142 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,160.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, FMR or its affiliates were the owners of record of 17% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 37% of the total outstanding shares of the Fund.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
10. Other - continued
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $27,232, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
From net investment income | | |
Initial Class | $ - | $ 55,739,563 |
Service Class | - | 11,576,654 |
Service Class 2 | - | 22,633,556 |
Initial Class R | - | 8,762,292 |
Service Class R | - | 4,244,546 |
Service Class 2R | - | 2,489,770 |
Investor Class R | - | 5,910,752 |
Total | $ - | $ 111,357,133 |
From net realized gain | | |
Initial Class | $ 163,022,999 | $ 111,097,557 |
Service Class | 34,891,161 | 25,082,728 |
Service Class 2 | 79,417,694 | 49,162,218 |
Initial Class R | 26,045,726 | 16,729,732 |
Service Class R | 12,931,868 | 9,169,613 |
Service Class 2R | 9,495,528 | 4,853,334 |
Investor Class R | 22,685,494 | 9,077,886 |
Total | $ 348,490,470 | $ 225,173,068 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 | Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
Initial Class | | | | |
Shares sold | 3,010,669 | 8,581,542 | $ 65,052,508 | $ 209,859,014 |
Reinvestment of distributions | 8,066,452 | 7,280,031 | 163,022,999 | 166,837,120 |
Shares redeemed | (17,358,827) | (16,452,957) | (371,867,409) | (401,808,271) |
Net increase (decrease) | (6,281,706) | (591,384) | $ (143,791,902) | $ (25,112,137) |
Service Class | | | | |
Shares sold | 614,372 | 1,382,854 | $ 13,143,095 | $ 33,724,214 |
Reinvestment of distributions | 1,734,153 | 1,608,100 | 34,891,161 | 36,659,382 |
Shares redeemed | (2,127,027) | (3,627,586) | (45,581,308) | (88,845,433) |
Net increase (decrease) | 221,498 | (636,632) | $ 2,452,948 | $ (18,461,837) |
Service Class 2 | | | | |
Shares sold | 2,746,903 | 4,978,892 | $ 57,818,849 | $ 121,295,683 |
Reinvestment of distributions | 3,966,918 | 3,159,253 | 79,417,694 | 71,795,774 |
Shares redeemed | (3,983,225) | (5,039,553) | (84,949,748) | (122,533,831) |
Net increase (decrease) | 2,730,596 | 3,098,592 | $ 52,286,795 | $ 70,557,626 |
Semiannual Report
12. Share Transactions. - continued
| Shares | Dollars |
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 | Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
Initial Class R | | | | |
Shares sold | 393,440 | 1,573,581 | $ 8,505,191 | $ 38,800,759 |
Reinvestment of distributions | 1,291,310 | 1,112,826 | 26,045,726 | 25,492,024 |
Shares redeemed | (1,387,260) | (1,840,544) | (29,696,863) | (44,022,123) |
Net increase (decrease) | 297,490 | 845,863 | $ 4,854,054 | $ 20,270,660 |
Service Class R | | | | |
Shares sold | 347,452 | 794,023 | $ 7,316,088 | $ 19,027,863 |
Reinvestment of distributions | 643,697 | 589,118 | 12,931,868 | 13,414,159 |
Shares redeemed | (674,330) | (1,643,900) | (14,373,183) | (39,376,291) |
Net increase (decrease) | 316,819 | (260,759) | $ 5,874,773 | $ (6,934,269) |
Service Class 2R | | | | |
Shares sold | 453,302 | 1,154,726 | $ 9,521,978 | $ 28,069,168 |
Reinvestment of distributions | 477,883 | 324,060 | 9,495,528 | 7,343,104 |
Shares redeemed | (703,065) | (547,588) | (14,463,758) | (13,063,580) |
Net increase (decrease) | 228,120 | 931,198 | $ 4,553,748 | $ 22,348,692 |
Investor Class R | | | | |
Shares sold | 1,025,868 | 3,876,633 | $ 22,122,615 | $ 95,023,834 |
Reinvestment of distributions | 1,125,273 | 648,994 | 22,685,494 | 14,988,638 |
Shares redeemed | (577,169) | (532,623) | (12,341,373) | (13,325,544) |
Net increase (decrease) | 1,573,972 | 3,993,004 | $ 32,466,736 | $ 96,686,928 |
Semiannual Report
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 |
To elect a Board of Trustees.A |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 821,220,039.81 | 95.845 |
Withheld | 35,598,080.64 | 4.155 |
TOTAL | 856,818,120.45 | 100.000 |
Dennis J. Dirks |
Affirmative | 822,124,493.63 | 95.951 |
Withheld | 34,693,626.82 | 4.049 |
TOTAL | 856,818,120.45 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 820,473,313.05 | 95.758 |
Withheld | 36,344,807.40 | 4.242 |
TOTAL | 856,818,120.45 | 100.000 |
Alan J. Lacy |
Affirmative | 822,170,402.95 | 95.956 |
Withheld | 34,647,717.50 | 4.044 |
TOTAL | 856,818,120.45 | 100.000 |
Ned C. Lautenbach |
Affirmative | 821,435,006.18 | 95.870 |
Withheld | 35,383,114.27 | 4.130 |
TOTAL | 856,818,120.45 | 100.000 |
Joseph Mauriello |
Affirmative | 822,174,756.53 | 95.957 |
Withheld | 34,643,363.92 | 4.043 |
TOTAL | 856,818,120.45 | 100.000 |
Cornelia M. Small |
Affirmative | 822,263,792.20 | 95.967 |
Withheld | 34,554,328.25 | 4.033 |
TOTAL | 856,818,120.45 | 100.000 |
William S. Stavropoulos |
Affirmative | 821,014,987.67 | 95.821 |
Withheld | 35,803,132.78 | 4.179 |
TOTAL | 856,818,120.45 | 100.000 |
David M. Thomas |
Affirmative | 822,321,743.26 | 95.974 |
Withheld | 34,496,377.19 | 4.026 |
TOTAL | 856,818,120.45 | 100.000 |
Michael E. Wiley |
Affirmative | 822,218,346.41 | 95.962 |
Withheld | 34,599,774.04 | 4.038 |
TOTAL | 856,818,120.45 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 701,273,514.99 | 81.846 |
Against | 103,131,328.05 | 12.037 |
Abstain | 52,413,277.41 | 6.117 |
TOTAL | 856,818,120.45 | 100.000 |
A Denotes trust-wide proposal and voting results.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
Fidelity Investments Japan Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
JPMorgan Chase Bank
New York, NY
VIPOVRSR-SANN-0808
1.774855.106
Fidelity® Variable Insurance Products:
Value Portfolio
Semiannual Report
June 30, 2008
(2_fidelity_logos) (Registered_Trademark)
Contents
Shareholder Expense Example | <Click Here> | An example of shareholder expenses. |
Investment Changes | <Click Here> | A summary of major shifts in the fund's investments over the past six months. |
Investments | <Click Here> | A complete list of the fund's investments with their
market values. |
Financial Statements | <Click Here> | Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights. |
Notes | <Click Here> | Notes to the financial statements. |
Proxy Voting Results | <Click Here> | |
| | |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting results") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning
Account Value
January 1, 2008 | Ending
Account Value
June 30, 2008 | Expenses Paid
During Period*
January 1, 2008 to June 30, 2008 |
Initial Class | | | |
Actual | $ 1,000.00 | $ 886.60 | $ 3.66 |
HypotheticalA | $ 1,000.00 | $ 1,020.98 | $ 3.92 |
Service Class | | | |
Actual | $ 1,000.00 | $ 886.30 | $ 4.08 |
HypotheticalA | $ 1,000.00 | $ 1,020.54 | $ 4.37 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 884.70 | $ 4.83 |
HypotheticalA | $ 1,000.00 | $ 1,019.74 | $ 5.17 |
Investor Class | | | |
Actual | $ 1,000.00 | $ 885.80 | $ 4.08 |
HypotheticalA | $ 1,000.00 | $ 1,020.54 | $ 4.37 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
| Annualized
Expense Ratio |
Initial Class | .78% |
Service Class | .87% |
Service Class 2 | 1.03% |
Investor Class | .87% |
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Allied Waste Industries, Inc. | 1.3 | 0.9 |
Avon Products, Inc. | 1.3 | 1.1 |
Xerox Corp. | 1.2 | 1.2 |
National Semiconductor Corp. | 1.1 | 0.9 |
PPL Corp. | 1.0 | 0.7 |
Arrow Electronics, Inc. | 1.0 | 0.9 |
Entergy Corp. | 1.0 | 0.8 |
National Oilwell Varco, Inc. | 1.0 | 0.9 |
Sysco Corp. | 0.9 | 0.8 |
Avnet, Inc. | 0.9 | 0.9 |
| 10.7 | |
Top Five Market Sectors as of June 30, 2008 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Consumer Discretionary | 18.5 | 17.4 |
Financials | 16.9 | 15.3 |
Information Technology | 16.5 | 19.3 |
Energy | 11.8 | 10.8 |
Industrials | 10.7 | 9.2 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2008 * | As of December 31, 2007 ** |
| Stocks 99.2% | | | Stocks 97.6% | |
| Short-Term
Investments and
Net Other Assets 0.8% | | | Short-Term
Investments and
Net Other Assets 2.4% | |
* Foreign investments | 9.6% | | * *Foreign investments | 10.2% | |
Semiannual Report
Investments June 30, 2008 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.8% |
| Shares | | Value |
CONSUMER DISCRETIONARY - 18.5% |
Auto Components - 0.8% |
ArvinMeritor, Inc. | 9,777 | | $ 122,017 |
Gentex Corp. | 7,640 | | 110,322 |
Johnson Controls, Inc. | 11,600 | | 332,688 |
The Goodyear Tire & Rubber Co. (a) | 17,000 | | 303,110 |
| | 868,137 |
Automobiles - 1.2% |
Fiat SpA | 8,400 | | 136,752 |
Ford Motor Co. (a) | 82,200 | | 395,382 |
Harley-Davidson, Inc. | 3,000 | | 108,780 |
Nissan Motor Co. Ltd. | 18,300 | | 152,019 |
Renault SA | 5,300 | | 431,348 |
Winnebago Industries, Inc. | 11,453 | | 116,706 |
| | 1,340,987 |
Diversified Consumer Services - 1.0% |
H&R Block, Inc. | 32,100 | | 686,940 |
Hillenbrand, Inc. | 15,018 | | 321,385 |
Regis Corp. | 2,600 | | 68,510 |
Service Corp. International | 8,400 | | 82,824 |
| | 1,159,659 |
Hotels, Restaurants & Leisure - 1.8% |
Brinker International, Inc. | 30,200 | | 570,780 |
Carnival Corp. unit | 19,100 | | 629,536 |
DineEquity, Inc. | 1,000 | | 37,360 |
Pinnacle Entertainment, Inc. (a) | 4,200 | | 44,058 |
Royal Caribbean Cruises Ltd. | 29,500 | | 662,865 |
Starwood Hotels & Resorts Worldwide, Inc. | 600 | | 24,042 |
Vail Resorts, Inc. (a) | 2,700 | | 115,641 |
| | 2,084,282 |
Household Durables - 4.1% |
Black & Decker Corp. | 14,485 | | 833,032 |
Centex Corp. | 23,600 | | 315,532 |
Ethan Allen Interiors, Inc. | 17,243 | | 424,178 |
Jarden Corp. (a) | 14,940 | | 272,506 |
KB Home | 4,700 | | 79,571 |
La-Z-Boy, Inc. | 10,200 | | 78,030 |
Leggett & Platt, Inc. | 33,600 | | 563,472 |
Newell Rubbermaid, Inc. | 13,700 | | 230,023 |
Pulte Homes, Inc. | 14,100 | | 135,783 |
Sealy Corp., Inc. | 22,456 | | 128,897 |
Tempur-Pedic International, Inc. | 11,200 | | 87,472 |
The Stanley Works | 21,000 | | 941,430 |
Whirlpool Corp. | 9,900 | | 611,127 |
| | 4,701,053 |
Leisure Equipment & Products - 1.3% |
Brunswick Corp. | 34,292 | | 363,495 |
Eastman Kodak Co. | 66,700 | | 962,481 |
|
| Shares | | Value |
Polaris Industries, Inc. | 2,581 | | $ 104,221 |
Pool Corp. | 5,002 | | 88,836 |
| | 1,519,033 |
Media - 2.7% |
Cinemark Holdings, Inc. | 28,856 | | 376,859 |
E.W. Scripps Co. Class A | 25,206 | | 1,047,057 |
Gannett Co., Inc. | 15,400 | | 333,718 |
Informa PLC | 15,500 | | 127,006 |
Lamar Advertising Co. Class A (a) | 6,699 | | 241,365 |
Live Nation, Inc. (a) | 10,500 | | 111,090 |
Omnicom Group, Inc. | 9,500 | | 426,360 |
R.H. Donnelley Corp. (a) | 17,400 | | 52,200 |
Regal Entertainment Group Class A | 24,764 | | 378,394 |
| | 3,094,049 |
Multiline Retail - 0.7% |
Family Dollar Stores, Inc. | 26,000 | | 518,440 |
Sears Holdings Corp. (a)(d) | 3,459 | | 254,790 |
| | 773,230 |
Specialty Retail - 4.4% |
Advance Auto Parts, Inc. | 4,600 | | 178,618 |
AnnTaylor Stores Corp. (a) | 16,977 | | 406,769 |
Asbury Automotive Group, Inc. | 12,714 | | 163,375 |
AutoNation, Inc. (a) | 6,300 | | 63,126 |
AutoZone, Inc. (a) | 5,000 | | 605,050 |
Chico's FAS, Inc. (a) | 12,000 | | 64,440 |
Foot Locker, Inc. | 10,300 | | 128,235 |
Group 1 Automotive, Inc. | 10,432 | | 207,284 |
OfficeMax, Inc. | 29,774 | | 413,859 |
PetSmart, Inc. | 36,053 | | 719,257 |
Pier 1 Imports, Inc. (a) | 28,600 | | 98,384 |
Select Comfort Corp. (a) | 11,566 | | 18,968 |
Sherwin-Williams Co. | 4,200 | | 192,906 |
Staples, Inc. | 22,843 | | 542,521 |
Talbots, Inc. | 1,600 | | 18,544 |
The Children's Place Retail Stores, Inc. (a) | 8,487 | | 306,381 |
The Men's Wearhouse, Inc. | 5,200 | | 84,708 |
Williams-Sonoma, Inc. (d) | 40,400 | | 801,536 |
| | 5,013,961 |
Textiles, Apparel & Luxury Goods - 0.5% |
Liz Claiborne, Inc. | 36,736 | | 519,814 |
VF Corp. | 400 | | 28,472 |
| | 548,286 |
TOTAL CONSUMER DISCRETIONARY | | 21,102,677 |
CONSUMER STAPLES - 4.7% |
Beverages - 0.4% |
Carlsberg AS: | | | |
Series A | 900 | | 86,688 |
Series B | 1,400 | | 134,862 |
SABMiller PLC | 11,600 | | 265,025 |
| | 486,575 |
Common Stocks - continued |
| Shares | | Value |
CONSUMER STAPLES - continued |
Food & Staples Retailing - 1.7% |
Rite Aid Corp. (a) | 123,800 | | $ 196,842 |
SUPERVALU, Inc. | 16,700 | | 515,863 |
Sysco Corp. | 38,900 | | 1,070,139 |
Winn-Dixie Stores, Inc. (a) | 8,187 | | 131,156 |
| | 1,914,000 |
Food Products - 0.9% |
Cermaq ASA | 8,000 | | 95,280 |
Leroy Seafood Group ASA | 7,200 | | 136,710 |
Marine Harvest ASA (a) | 365,000 | | 267,334 |
Tyson Foods, Inc. Class A | 36,000 | | 537,840 |
| | 1,037,164 |
Household Products - 0.4% |
Energizer Holdings, Inc. (a) | 6,974 | | 509,730 |
Personal Products - 1.3% |
Avon Products, Inc. | 40,200 | | 1,448,004 |
TOTAL CONSUMER STAPLES | | 5,395,473 |
ENERGY - 11.8% |
Energy Equipment & Services - 4.4% |
BJ Services Co. | 14,100 | | 450,354 |
Calfrac Well Services Ltd. | 3,800 | | 119,776 |
Cameron International Corp. (a) | 2,900 | | 160,515 |
ENSCO International, Inc. | 1,500 | | 121,110 |
FMC Technologies, Inc. (a) | 3,225 | | 248,099 |
Nabors Industries Ltd. (a) | 7,100 | | 349,533 |
National Oilwell Varco, Inc. (a) | 12,328 | | 1,093,740 |
Noble Corp. | 5,300 | | 344,288 |
Patterson-UTI Energy, Inc. | 6,426 | | 231,593 |
Smith International, Inc. | 9,800 | | 814,772 |
Transocean, Inc. (a) | 1,124 | | 171,286 |
Weatherford International Ltd. (a) | 18,366 | | 910,770 |
| | 5,015,836 |
Oil, Gas & Consumable Fuels - 7.4% |
Arch Coal, Inc. | 4,000 | | 300,120 |
Boardwalk Pipeline Partners, LP | 11,142 | | 261,726 |
Cabot Oil & Gas Corp. | 14,800 | | 1,002,404 |
Canadian Natural Resources Ltd. | 5,000 | | 494,629 |
CONSOL Energy, Inc. | 800 | | 89,896 |
Copano Energy LLC | 4,994 | | 168,548 |
El Paso Pipeline Partners LP | 4,000 | | 82,600 |
Energy Transfer Equity LP | 7,220 | | 209,308 |
EOG Resources, Inc. | 5,400 | | 708,480 |
EXCO Resources, Inc. (a) | 14,500 | | 535,195 |
Foundation Coal Holdings, Inc. | 8,725 | | 772,861 |
Hess Corp. | 6,350 | | 801,307 |
NuStar Energy LP | 3,100 | | 146,909 |
Petrohawk Energy Corp. (a) | 5,900 | | 273,229 |
Plains Exploration & Production Co. (a) | 2,400 | | 175,128 |
Southwestern Energy Co. (a) | 3,400 | | 161,874 |
|
| Shares | | Value |
Suncor Energy, Inc. | 12,000 | | $ 696,915 |
Talisman Energy, Inc. | 4,500 | | 99,681 |
Ultra Petroleum Corp. (a) | 6,100 | | 599,020 |
Valero Energy Corp. | 19,700 | | 811,246 |
Western Gas Partners LP | 3,700 | | 62,345 |
| | 8,453,421 |
TOTAL ENERGY | | 13,469,257 |
FINANCIALS - 15.7% |
Capital Markets - 1.9% |
Bank of New York Mellon Corp. | 6,090 | | 230,385 |
Fortress Investment Group LLC | 12,740 | | 156,957 |
Greenhill & Co., Inc. | 400 | | 21,544 |
Janus Capital Group, Inc. | 7,800 | | 206,466 |
Legg Mason, Inc. | 10,830 | | 471,863 |
Lehman Brothers Holdings, Inc. | 16,200 | | 320,922 |
State Street Corp. | 2,800 | | 179,172 |
T. Rowe Price Group, Inc. | 5,459 | | 308,270 |
TD Ameritrade Holding Corp. (a) | 14,900 | | 269,541 |
| | 2,165,120 |
Commercial Banks - 2.4% |
Associated Banc-Corp. | 9,451 | | 182,310 |
Boston Private Financial Holdings, Inc. | 8,663 | | 49,119 |
KeyCorp | 30,300 | | 332,694 |
PNC Financial Services Group, Inc. | 3,800 | | 216,980 |
Prosperity Bancshares, Inc. | 1,700 | | 45,441 |
Sterling Financial Corp., Washington | 3,115 | | 12,896 |
Susquehanna Bancshares, Inc., Pennsylvania | 6,700 | | 91,723 |
U.S. Bancorp, Delaware | 9,600 | | 267,744 |
UCBH Holdings, Inc. | 23,149 | | 52,085 |
UnionBanCal Corp. | 9,300 | | 375,906 |
Wachovia Corp. | 40,400 | | 627,412 |
Zions Bancorp | 15,504 | | 488,221 |
| | 2,742,531 |
Consumer Finance - 0.8% |
Capital One Financial Corp. | 19,900 | | 756,399 |
Discover Financial Services | 11,986 | | 157,856 |
| | 914,255 |
Diversified Financial Services - 1.2% |
Bank of America Corp. | 15,620 | | 372,849 |
Bolsa de Mercadorias & Futuros - BM&F SA | 2,900 | | 24,981 |
CIT Group, Inc. | 5,500 | | 37,455 |
Citigroup, Inc. | 7,600 | | 127,376 |
Deutsche Boerse AG | 500 | | 56,520 |
JPMorgan Chase & Co. | 20,686 | | 709,737 |
KKR Financial Holdings LLC | 8,620 | | 90,510 |
| | 1,419,428 |
Insurance - 1.7% |
AMBAC Financial Group, Inc. | 15,400 | | 20,636 |
Common Stocks - continued |
| Shares | | Value |
FINANCIALS - continued |
Insurance - continued |
American International Group, Inc. | 13,400 | | $ 354,564 |
LandAmerica Financial Group, Inc. | 300 | | 6,657 |
Maiden Holdings Ltd. (e) | 4,900 | | 31,360 |
Marsh & McLennan Companies, Inc. | 27,700 | | 735,435 |
MBIA, Inc. | 12,200 | | 53,558 |
Principal Financial Group, Inc. | 9,284 | | 389,649 |
Willis Group Holdings Ltd. | 10,400 | | 326,248 |
| | 1,918,107 |
Real Estate Investment Trusts - 4.9% |
Alexandria Real Estate Equities, Inc. | 3,300 | | 321,222 |
Annaly Capital Management, Inc. | 4,200 | | 65,142 |
British Land Co. PLC | 3,359 | | 47,236 |
CapitalSource, Inc. | 15,000 | | 166,200 |
Chimera Investment Corp. | 4,600 | | 41,446 |
Developers Diversified Realty Corp. | 9,582 | | 332,591 |
Digital Realty Trust, Inc. | 9,508 | | 388,972 |
General Growth Properties, Inc. | 19,323 | | 676,885 |
HCP, Inc. | 15,600 | | 496,236 |
Highwoods Properties, Inc. (SBI) | 10,070 | | 316,399 |
Kimco Realty Corp. | 9,700 | | 334,844 |
MFA Mortgage Investments, Inc. | 2,600 | | 16,952 |
Public Storage | 8,200 | | 662,478 |
Simon Property Group, Inc. | 3,800 | | 341,582 |
SL Green Realty Corp. | 3,200 | | 264,704 |
Tanger Factory Outlet Centers, Inc. | 3,000 | | 107,790 |
UDR, Inc. | 17,154 | | 383,907 |
Vornado Realty Trust | 6,900 | | 607,200 |
| | 5,571,786 |
Real Estate Management & Development - 0.9% |
Brookfield Properties Corp. | 16,900 | | 300,651 |
CB Richard Ellis Group, Inc. Class A (a) | 34,422 | | 660,902 |
The St. Joe Co. | 2,500 | | 85,800 |
| | 1,047,353 |
Thrifts & Mortgage Finance - 1.9% |
Fannie Mae | 26,500 | | 517,015 |
Freddie Mac | 19,500 | | 319,800 |
Hudson City Bancorp, Inc. | 27,300 | | 455,364 |
MGIC Investment Corp. | 3,900 | | 23,829 |
New York Community Bancorp, Inc. | 27,900 | | 497,736 |
People's United Financial, Inc. | 6,000 | | 93,600 |
Washington Federal, Inc. | 12,041 | | 217,942 |
| | 2,125,286 |
TOTAL FINANCIALS | | 17,903,866 |
HEALTH CARE - 5.5% |
Biotechnology - 0.5% |
Cephalon, Inc. (a) | 6,600 | | 440,154 |
|
| Shares | | Value |
Cubist Pharmaceuticals, Inc. (a) | 6,045 | | $ 107,964 |
Molecular Insight Pharmaceuticals, Inc. (a) | 1,100 | | 6,061 |
| | 554,179 |
Health Care Equipment & Supplies - 0.3% |
American Medical Systems Holdings, Inc. (a) | 6,100 | | 91,195 |
Boston Scientific Corp. (a) | 9,900 | | 121,671 |
Hill-Rom Holdings, Inc. | 6,502 | | 175,424 |
| | 388,290 |
Health Care Providers & Services - 2.8% |
AmerisourceBergen Corp. | 5,800 | | 231,942 |
Brookdale Senior Living, Inc. | 13,747 | | 279,889 |
Community Health Systems, Inc. (a) | 22,700 | | 748,646 |
Emeritus Corp. (a) | 3,010 | | 44,006 |
HealthSouth Corp. (a) | 20,180 | | 335,593 |
McKesson Corp. | 4,900 | | 273,959 |
Quest Diagnostics, Inc. | 2,600 | | 126,022 |
Universal Health Services, Inc. Class B | 15,500 | | 979,910 |
VCA Antech, Inc. (a) | 4,231 | | 117,537 |
| | 3,137,504 |
Health Care Technology - 0.4% |
IMS Health, Inc. | 20,780 | | 484,174 |
Pharmaceuticals - 1.5% |
Alpharma, Inc. Class A (a) | 16,800 | | 378,504 |
Barr Pharmaceuticals, Inc. (a) | 16,085 | | 725,112 |
Mylan, Inc. | 12,056 | | 145,516 |
Schering-Plough Corp. | 18,000 | | 354,420 |
Sepracor, Inc. (a) | 5,300 | | 105,576 |
| | 1,709,128 |
TOTAL HEALTH CARE | | 6,273,275 |
INDUSTRIALS - 10.7% |
Aerospace & Defense - 0.4% |
Heico Corp. Class A | 2,639 | | 70,145 |
Honeywell International, Inc. | 7,200 | | 362,016 |
| | 432,161 |
Air Freight & Logistics - 0.7% |
United Parcel Service, Inc. Class B | 13,200 | | 811,404 |
Airlines - 0.1% |
Delta Air Lines, Inc. (a) | 11,300 | | 64,410 |
Building Products - 0.7% |
Masco Corp. | 41,500 | | 652,795 |
Owens Corning (a) | 7,275 | | 165,506 |
| | 818,301 |
Commercial Services & Supplies - 3.2% |
ACCO Brands Corp. (a) | 29,010 | | 325,782 |
Allied Waste Industries, Inc. (a) | 118,278 | | 1,492,666 |
Consolidated Graphics, Inc. (a) | 4,888 | | 240,832 |
Copart, Inc. (a) | 1,500 | | 64,230 |
Manpower, Inc. | 800 | | 46,592 |
Common Stocks - continued |
| Shares | | Value |
INDUSTRIALS - continued |
Commercial Services & Supplies - continued |
Monster Worldwide, Inc. (a) | 2,300 | | $ 47,403 |
R.R. Donnelley & Sons Co. | 21,117 | | 626,964 |
The Brink's Co. | 12,549 | | 820,956 |
| | 3,665,425 |
Construction & Engineering - 0.5% |
Dycom Industries, Inc. (a) | 26,500 | | 384,780 |
URS Corp. (a) | 4,798 | | 201,372 |
| | 586,152 |
Electrical Equipment - 0.1% |
Cooper Industries Ltd. Class A | 2,900 | | 114,550 |
Zumtobel AG | 1,400 | | 31,797 |
| | 146,347 |
Machinery - 2.9% |
Albany International Corp. Class A | 11,465 | | 332,485 |
Briggs & Stratton Corp. | 16,400 | | 207,952 |
Eaton Corp. | 1,500 | | 127,455 |
Illinois Tool Works, Inc. | 18,100 | | 859,931 |
Ingersoll-Rand Co. Ltd. Class A | 6,400 | | 239,552 |
Navistar International Corp. (a) | 5,600 | | 368,592 |
Pentair, Inc. | 22,900 | | 801,958 |
Sulzer AG (Reg.) | 2,260 | | 285,553 |
Wabash National Corp. | 7,900 | | 59,724 |
| | 3,283,202 |
Marine - 0.1% |
Alexander & Baldwin, Inc. | 1,100 | | 50,105 |
Safe Bulkers, Inc. | 700 | | 13,188 |
| | 63,293 |
Road & Rail - 1.4% |
Canadian National Railway Co. | 5,900 | | 283,496 |
Con-way, Inc. | 17,650 | | 834,139 |
J.B. Hunt Transport Services, Inc. | 2,300 | | 76,544 |
Ryder System, Inc. | 6,302 | | 434,082 |
| | 1,628,261 |
Trading Companies & Distributors - 0.4% |
Beacon Roofing Supply, Inc. (a) | 7,699 | | 81,686 |
W.W. Grainger, Inc. | 2,100 | | 171,780 |
WESCO International, Inc. (a) | 4,900 | | 196,196 |
| | 449,662 |
Transportation Infrastructure - 0.2% |
Macquarie Infrastructure Co. LLC | 10,600 | | 268,074 |
TOTAL INDUSTRIALS | | 12,216,692 |
INFORMATION TECHNOLOGY - 16.5% |
Communications Equipment - 0.9% |
Alcatel-Lucent SA sponsored ADR | 74,221 | | 448,295 |
Avocent Corp. (a) | 6,429 | | 119,579 |
|
| Shares | | Value |
Motorola, Inc. | 54,600 | | $ 400,764 |
Powerwave Technologies, Inc. (a) | 27,500 | | 116,875 |
| | 1,085,513 |
Computers & Peripherals - 1.2% |
Gemalto NV (a) | 1,500 | | 54,426 |
NCR Corp. (a) | 24,300 | | 612,360 |
NetApp, Inc. (a) | 24,985 | | 541,175 |
SanDisk Corp. (a) | 1,300 | | 24,310 |
Western Digital Corp. (a) | 4,400 | | 151,932 |
| | 1,384,203 |
Electronic Equipment & Instruments - 5.0% |
Agilent Technologies, Inc. (a) | 29,249 | | 1,039,509 |
Arrow Electronics, Inc. (a) | 36,555 | | 1,122,970 |
Avnet, Inc. (a) | 38,677 | | 1,055,109 |
Cogent, Inc. (a) | 1,400 | | 15,918 |
Flextronics International Ltd. (a) | 110,300 | | 1,036,820 |
Ingram Micro, Inc. Class A (a) | 14,900 | | 264,475 |
Itron, Inc. (a) | 3,116 | | 306,459 |
Tyco Electronics Ltd. | 22,600 | | 809,532 |
| | 5,650,792 |
Internet Software & Services - 1.0% |
Google, Inc. Class A (sub. vtg.) (a) | 100 | | 52,642 |
VeriSign, Inc. (a) | 13,500 | | 510,300 |
Yahoo!, Inc. (a) | 25,900 | | 535,094 |
| | 1,098,036 |
IT Services - 1.8% |
Accenture Ltd. Class A | 3,600 | | 146,592 |
NeuStar, Inc. Class A (a) | 3,800 | | 81,928 |
The Western Union Co. | 42,400 | | 1,048,128 |
Unisys Corp. (a) | 88,100 | | 347,995 |
Visa, Inc. | 4,800 | | 390,288 |
| | 2,014,931 |
Office Electronics - 1.2% |
Xerox Corp. | 101,900 | | 1,381,764 |
Semiconductors & Semiconductor Equipment - 4.4% |
Advanced Micro Devices, Inc. (a) | 6,400 | | 37,312 |
Applied Materials, Inc. | 37,600 | | 717,784 |
ASML Holding NV (NY Shares) | 18,144 | | 442,714 |
Atmel Corp. (a) | 56,100 | | 195,228 |
Fairchild Semiconductor International, Inc. (a) | 80,100 | | 939,573 |
Integrated Device Technology, Inc. (a) | 26,400 | | 262,416 |
Lam Research Corp. (a) | 2,100 | | 75,915 |
LSI Corp. (a) | 22,700 | | 139,378 |
Maxim Integrated Products, Inc. | 14,200 | | 300,330 |
MKS Instruments, Inc. (a) | 11,200 | | 245,280 |
National Semiconductor Corp. | 58,400 | | 1,199,536 |
Standard Microsystems Corp. (a) | 8,554 | | 232,241 |
Varian Semiconductor Equipment Associates, Inc. (a) | 7,351 | | 255,962 |
| | 5,043,669 |
Common Stocks - continued |
| Shares | | Value |
INFORMATION TECHNOLOGY - continued |
Software - 1.0% |
Electronic Arts, Inc. (a) | 15,594 | | $ 692,841 |
Fair Isaac Corp. | 5,300 | | 110,081 |
Misys PLC | 35,300 | | 104,457 |
Parametric Technology Corp. (a) | 8,600 | | 143,362 |
THQ, Inc. (a) | 4,468 | | 90,522 |
| | 1,141,263 |
TOTAL INFORMATION TECHNOLOGY | | 18,800,171 |
MATERIALS - 3.2% |
Chemicals - 1.4% |
Albemarle Corp. | 9,826 | | 392,156 |
Arkema sponsored ADR | 2,000 | | 112,900 |
Ashland, Inc. | 1,200 | | 57,840 |
Chemtura Corp. | 75,700 | | 442,088 |
FMC Corp. | 600 | | 46,464 |
Georgia Gulf Corp. | 3,417 | | 9,909 |
H.B. Fuller Co. | 10,100 | | 226,644 |
Rohm & Haas Co. | 5,500 | | 255,420 |
W.R. Grace & Co. (a) | 3,900 | | 91,611 |
| | 1,635,032 |
Containers & Packaging - 0.7% |
Ball Corp. | 6,900 | | 329,406 |
Owens-Illinois, Inc. (a) | 7,152 | | 298,167 |
Rock-Tenn Co. Class A | 4,690 | | 140,653 |
| | 768,226 |
Metals & Mining - 1.1% |
Alcoa, Inc. | 16,900 | | 601,978 |
Barrick Gold Corp. | 2,200 | | 100,595 |
Goldcorp, Inc. | 700 | | 32,282 |
Kinross Gold Corp. | 5,800 | | 137,127 |
Lihir Gold Ltd. (a) | 29,160 | | 91,979 |
Newcrest Mining Ltd. | 4,791 | | 134,586 |
Randgold Resources Ltd. sponsored ADR | 2,934 | | 135,492 |
| | 1,234,039 |
TOTAL MATERIALS | | 3,637,297 |
TELECOMMUNICATION SERVICES - 2.2% |
Diversified Telecommunication Services - 1.6% |
AT&T, Inc. | 9,115 | | 307,084 |
Cbeyond, Inc. (a) | 1,300 | | 20,826 |
Cincinnati Bell, Inc. (a) | 38,318 | | 152,506 |
Embarq Corp. | 5,500 | | 259,985 |
Qwest Communications International, Inc. | 124,266 | | 488,365 |
Telefonica SA sponsored ADR | 600 | | 47,748 |
|
| Shares | | Value |
Verizon Communications, Inc. | 14,400 | | $ 509,760 |
Vimpel Communications sponsored ADR | 1,500 | | 44,520 |
| | 1,830,794 |
Wireless Telecommunication Services - 0.6% |
Crown Castle International Corp. (a) | 6,600 | | 255,618 |
Sprint Nextel Corp. | 48,400 | | 459,800 |
| | 715,418 |
TOTAL TELECOMMUNICATION SERVICES | | 2,546,212 |
UTILITIES - 9.0% |
Electric Utilities - 5.4% |
Allegheny Energy, Inc. | 19,500 | | 977,145 |
American Electric Power Co., Inc. | 10,600 | | 426,438 |
DPL, Inc. | 3,904 | | 102,988 |
Edison International | 13,500 | | 693,630 |
Entergy Corp. | 9,200 | | 1,108,416 |
Exelon Corp. | 3,900 | | 350,844 |
FirstEnergy Corp. | 8,900 | | 732,737 |
FPL Group, Inc. | 8,500 | | 557,430 |
PPL Corp. | 21,900 | | 1,144,713 |
| | 6,094,341 |
Gas Utilities - 0.1% |
Energen Corp. | 1,100 | | 85,833 |
Equitable Resources, Inc. | 500 | | 34,530 |
| | 120,363 |
Independent Power Producers & Energy Traders - 2.5% |
AES Corp. (a) | 21,500 | | 413,015 |
Constellation Energy Group, Inc. | 9,300 | | 763,530 |
NRG Energy, Inc. (a) | 23,500 | | 1,008,150 |
Reliant Energy, Inc. (a) | 33,407 | | 710,567 |
| | 2,895,262 |
Multi-Utilities - 1.0% |
CMS Energy Corp. | 11,100 | | 165,390 |
Public Service Enterprise Group, Inc. | 17,900 | | 822,147 |
Sempra Energy | 600 | | 33,870 |
Wisconsin Energy Corp. | 1,988 | | 89,897 |
| | 1,111,304 |
TOTAL UTILITIES | | 10,221,270 |
TOTAL COMMON STOCKS (Cost $133,228,759) | 111,566,190 |
Preferred Stocks - 1.2% |
| Shares | | Value |
Convertible Preferred Stocks - 1.1% |
FINANCIALS - 1.1% |
Capital Markets - 0.5% |
Legg Mason, Inc. 7.00% | 2,900 | | $ 121,356 |
Lehman Brothers Holdings, Inc.: | | | |
7.25% | 300 | | 241,329 |
Series Q, 8.75% | 320 | | 244,832 |
| | 607,517 |
Commercial Banks - 0.2% |
Huntington Bancshares, Inc. 8.50% | 300 | | 210,000 |
Diversified Financial Services - 0.1% |
CIT Group, Inc. Series C, 8.75% | 1,000 | | 40,880 |
Citigroup, Inc. Series T, 6.50% | 2,435 | | 105,923 |
| | 146,803 |
Thrifts & Mortgage Finance - 0.3% |
Fannie Mae 8.75% | 6,900 | | 265,650 |
TOTAL FINANCIALS | | 1,229,970 |
Nonconvertible Preferred Stocks - 0.1% |
FINANCIALS - 0.1% |
Thrifts & Mortgage Finance - 0.1% |
Fannie Mae Series S, 8.25% | 3,586 | | 82,299 |
Freddie Mac Series Z, 8.375% | 3,530 | | 85,779 |
| | 168,078 |
TOTAL PREFERRED STOCKS (Cost $1,729,969) | 1,398,048 |
Investment Companies - 0.2% |
| | | |
Ares Capital Corp.
(Cost $384,654) | 24,787 | | 249,853 |
Money Market Funds - 1.6% |
| Shares | | Value |
Fidelity Cash Central Fund, 2.38% (b) | 729,885 | | $ 729,885 |
Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c) | 1,017,150 | | 1,017,150 |
TOTAL MONEY MARKET FUNDS (Cost $1,747,035) | 1,747,035 |
TOTAL INVESTMENT PORTFOLIO - 100.8% (Cost $137,090,417) | 114,961,126 |
NET OTHER ASSETS - (0.8)% | (882,556) |
NET ASSETS - 100% | $ 114,078,570 |
Legend |
(a) Non-income producing |
(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. |
(c) Investment made with cash collateral received from securities on loan. |
(d) Security or a portion of the security is on loan at period end. |
(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $31,360 or 0.0% of net assets. |
Affiliated Central Funds |
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows: |
Fund | Income earned |
Fidelity Cash Central Fund | $ 31,302 |
Fidelity Securities Lending Cash Central Fund | 23,085 |
Total | $ 54,387 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements. |
#Valuation Inputs at Reporting Date: |
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities | $ 114,961,126 | $ 111,318,143 | $ 3,642,983 | $ - |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2008 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $956,474) - See accompanying schedule: Unaffiliated issuers (cost $135,343,382) | $ 113,214,091 | |
Fidelity Central Funds (cost $1,747,035) | 1,747,035 | |
Total Investments (cost $137,090,417) | | $ 114,961,126 |
Cash | | 8,864 |
Foreign currency held at value (cost $711) | | 711 |
Receivable for investments sold | | 941,941 |
Receivable for fund shares sold | | 69,600 |
Dividends receivable | | 133,755 |
Distributions receivable from Fidelity Central Funds | | 7,922 |
Prepaid expenses | | 259 |
Other receivables | | 240 |
Total assets | | 116,124,418 |
| | |
Liabilities | | |
Payable for investments purchased | $ 778,000 | |
Payable for fund shares redeemed | 136,205 | |
Accrued management fee | 56,869 | |
Distribution fees payable | 2,199 | |
Other affiliated payables | 14,816 | |
Other payables and accrued expenses | 40,609 | |
Collateral on securities loaned, at value | 1,017,150 | |
Total liabilities | | 2,045,848 |
| | |
Net Assets | | $ 114,078,570 |
Net Assets consist of: | | |
Paid in capital | | $ 134,426,774 |
Undistributed net investment income | | 634,880 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 1,146,212 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | (22,129,296) |
Net Assets | | $ 114,078,570 |
Statement of Assets and Liabilities - continued
| June 30, 2008 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($50,456,163 ÷ 4,481,447 shares) | | $ 11.26 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($783,689 ÷ 69,848 shares) | | $ 11.22 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($9,006,329 ÷ 809,609 shares) | | $ 11.12 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($53,832,389 ÷ 4,788,532 shares) | | $ 11.24 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Operations
Six months ended June 30, 2008 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 1,083,929 |
Interest | | 241 |
Income from Fidelity Central Funds | | 54,387 |
Total income | | 1,138,557 |
| | |
Expenses | | |
Management fee | $ 335,919 | |
Transfer agent fees | 72,763 | |
Distribution fees | 13,402 | |
Accounting and security lending fees | 26,023 | |
Custodian fees and expenses | 28,300 | |
Independent trustees' compensation | 260 | |
Audit | 22,244 | |
Legal | 172 | |
Miscellaneous | 10,914 | |
Total expenses before reductions | 509,997 | |
Expense reductions | (467) | 509,530 |
Net investment income (loss) | | 629,027 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 1,315,350 | |
Investment not meeting investment restrictions | 457 | |
Foreign currency transactions | (274) | |
Total net realized gain (loss) | | 1,315,533 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (16,413,425) | |
Assets and liabilities in foreign currencies | (20) | |
Total change in net unrealized appreciation (depreciation) | | (16,413,445) |
Net gain (loss) | | (15,097,912) |
Net increase (decrease) in net assets resulting from operations | | $ (14,468,885) |
Statement of Changes in Net Assets
| Six months ended June 30, 2008
(Unaudited) | Year ended
December 31, 2007 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 629,027 | $ 737,354 |
Net realized gain (loss) | 1,315,533 | 7,462,819 |
Change in net unrealized appreciation (depreciation) | (16,413,445) | (8,712,995) |
Net increase (decrease) in net assets resulting from operations | (14,468,885) | (512,822) |
Distributions to shareholders from net investment income | - | (758,002) |
Distributions to shareholders from net realized gain | (3,606,092) | (9,838,231) |
Total distributions | (3,606,092) | (10,596,233) |
Share transactions - net increase (decrease) | 6,518,628 | 55,267,994 |
Total increase (decrease) in net assets | (11,556,349) | 44,158,939 |
| | |
Net Assets | | |
Beginning of period | 125,634,919 | 81,475,980 |
End of period (including undistributed net investment income of $634,880 and undistributed net investment income of $5,853, respectively) | $ 114,078,570 | $ 125,634,919 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.10 | $ 14.28 | $ 12.63 | $ 11.97 | $ 10.86 | $ 8.12 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .07 | .10 | .16 | .15 | .14 H | .05 |
Net realized and unrealized gain (loss) | (1.54) | .22 I | 1.70 | .58 | 1.08 | 2.72 |
Total from investment operations | (1.47) | .32 | 1.86 | .73 | 1.22 | 2.77 |
Distributions from net investment income | - | (.09) | (.13) | (.07) | (.11) | (.03) |
Distributions from net realized gain | (.37) | (1.41) | (.08) | - | - | - |
Total distributions | (.37) | (1.50) K | (.21) | (.07) | (.11) | (.03) |
Net asset value, end of period | $ 11.26 | $ 13.10 | $ 14.28 | $ 12.63 | $ 11.97 | $ 10.86 |
Total Return B, C, D | (11.34)% | 2.02% | 14.75% | 6.09% | 11.24% | 34.16% |
Ratios to Average Net Assets F, J | | | | | | |
Expenses before reductions | .78% A | .77% | .88% | 1.19% | 2.65% | 4.32% |
Expenses net of fee waivers, if any | .78% A | .77% | .85% | .85% | 1.00% | 1.28% |
Expenses net of all reductions | .78% A | .77% | .84% | .78% | .95% | 1.22% |
Net investment income (loss) | 1.10% A | .68% | 1.16% | 1.21% | 1.26% | .57% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 50,456 | $ 52,544 | $ 35,416 | $ 18,478 | $ 583 | $ 413 |
Portfolio turnover rate G | 42% A | 52% | 263% | 181% | 155% | 164% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total return shown
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.03 per share. I The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Total distributions of $1.50 per share is comprised of distributions from net investment income of $.092 and distributions from net realized gain of $1.405 per share. |
Financial Highlights - Service Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.06 | $ 14.24 | $ 12.60 | $ 11.93 | $ 10.84 | $ 8.12 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .06 | .09 | .14 | .13 | .13 H | .05 |
Net realized and unrealized gain (loss) | (1.53) | .21 I | 1.69 | .60 | 1.07 | 2.70 |
Total from investment operations | (1.47) | .30 | 1.83 | .73 | 1.20 | 2.75 |
Distributions from net investment income | - | (.08) | (.11) | (.06) | (.11) | (.03) |
Distributions from net realized gain | (.37) | (1.41) | (.08) | - | - | - |
Total distributions | (.37) | (1.48) K | (.19) | (.06) | (.11) | (.03) |
Net asset value, end of period | $ 11.22 | $ 13.06 | $ 14.24 | $ 12.60 | $ 11.93 | $ 10.84 |
Total Return B, C, D | (11.37)% | 1.92% | 14.56% | 6.08% | 11.07% | 33.91% |
Ratios to Average Net Assets F, J | | | | | | |
Expenses before reductions | .87% A | .86% | .96% | 1.60% | 2.75% | 4.35% |
Expenses net of fee waivers, if any | .87% A | .86% | .95% | .97% | 1.10% | 1.35% |
Expenses net of all reductions | .87% A | .86% | .94% | .90% | 1.04% | 1.29% |
Net investment income (loss) | 1.02% A | .60% | 1.06% | 1.09% | 1.17% | .50% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 784 | $ 958 | $ 1,017 | $ 1,232 | $ 1,225 | $ 972 |
Portfolio turnover rate G | 42% A | 52% | 263% | 181% | 155% | 164% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.03 per share. I The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Total distributions of $1.48 per share is comprised of distributions from net investment income of $.077 and distributions from net realized gain of $1.405 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Service Class 2
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 | 2004 | 2003 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 12.97 | $ 14.14 | $ 12.53 | $ 11.87 | $ 10.80 | $ 8.10 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .05 | .06 | .12 | .11 | .11 H | .03 |
Net realized and unrealized gain (loss) | (1.53) | .23 I | 1.67 | .59 | 1.07 | 2.70 |
Total from investment operations | (1.48) | .29 | 1.79 | .70 | 1.18 | 2.73 |
Distributions from net investment income | - | (.06) | (.10) | (.04) | (.11) | (.03) |
Distributions from net realized gain | (.37) | (1.41) | (.08) | - | - | - |
Total distributions | (.37) | (1.46) K | (.18) | (.04) | (.11) | (.03) |
Net asset value, end of period | $ 11.12 | $ 12.97 | $ 14.14 | $ 12.53 | $ 11.87 | $ 10.80 |
Total Return B, C, D | (11.53)% | 1.86% | 14.32% | 5.92% | 10.93% | 33.75% |
Ratios to Average Net Assets F, J | | | | | | |
Expenses before reductions | 1.03% A | 1.02% | 1.15% | 1.76% | 2.93% | 4.50% |
Expenses net of fee waivers, if any | 1.03% A | 1.02% | 1.10% | 1.11% | 1.25% | 1.51% |
Expenses net of all reductions | 1.03% A | 1.02% | 1.09% | 1.05% | 1.20% | 1.45% |
Net investment income (loss) | .86% A | .43% | .91% | .94% | 1.01% | .34% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 9,006 | $ 11,081 | $ 7,803 | $ 5,262 | $ 3,575 | $ 2,865 |
Portfolio turnover rate G | 42% A | 52% | 263% | 181% | 155% | 164% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.03 per share. I The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Total distributions of $1.46 per share is comprised of distributions from net investment income of $.058 and distributions from net realized gain of $1.405 per share. |
Financial Highlights - Investor Class
| Six months ended June 30, 2008 | Years ended December 31, |
| (Unaudited) | 2007 | 2006 | 2005 I |
Selected Per-Share Data | | | | |
Net asset value, beginning of period | $ 13.09 | $ 14.26 | $ 12.63 | $ 12.23 |
Income from Investment Operations | | | | |
Net investment income (loss) E | .06 | .08 | .14 | .06 |
Net realized and unrealized gain (loss) | (1.54) | .23 H | 1.69 | .40 |
Total from investment operations | (1.48) | .31 | 1.83 | .46 |
Distributions from net investment income | - | (.08) | (.12) | (.06) |
Distributions from net realized gain | (.37) | (1.41) | (.08) | - |
Total distributions | (.37) | (1.48) K | (.20) | (.06) |
Net asset value, end of period | $ 11.24 | $ 13.09 | $ 14.26 | $ 12.63 |
Total Return B, C, D | (11.42)% | 1.99% | 14.49% | 3.77% |
Ratios to Average Net Assets F, J | | | | |
Expenses before reductions | .87% A | .88% | .99% | 1.27% A |
Expenses net of fee waivers, if any | .87% A | .88% | .99% | 1.00% A |
Expenses net of all reductions | .87% A | .88% | .98% | .93% A |
Net investment income (loss) | 1.02% A | .58% | 1.01% | 1.06% A |
Supplemental Data | | | | |
Net assets, end of period (000 omitted) | $ 53,832 | $ 61,052 | $ 37,239 | $ 11,034 |
Portfolio turnover rate G | 42% A | 52% | 263% | 181% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Total distributions of $1.48 per share is comprised of distributions from net investment income of $.078 and distributions from net realized gain of $1.405 per share. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2008 (Unaudited)
1. Organization.
VIP Value Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.
2. Investments in Fidelity Central Funds.
The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:
Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.
When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.
The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:
Level 1 | Quoted prices in active markets for identical securities. |
Level 2 | Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. |
Level 3 | Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available. |
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Security Valuation - continued
The aggregate value by input level as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships and losses deferred due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 9,837,834 | |
Unrealized depreciation | (32,149,644) | |
Net unrealized appreciation (depreciation) | $ (22,311,810) | |
Cost for federal income tax purposes | $ 137,272,936 | |
4. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
Semiannual Report
4. Operating Policies - continued
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $30,760,696 and $24,994,940, respectively.
The Fund realized a gain on the sale of an investment not meeting the investment restrictions of the Fund.
6. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% of the Fund's average net assets.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's average net assets.
For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:
Service Class | $ 441 | |
Service Class 2 | 12,961 | |
| $ 13,402 | |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:
Initial Class | $ 21,311 | |
Service Class | 297 | |
Service Class 2 | 4,088 | |
Investor Class | 47,067 | |
| $ 72,763 | |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $1,481 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $121 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
8. Security Lending.
The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $23,085.
9. Expense Reductions.
Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $467 for the period.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, VIP Freedom 2020 Porfolio was the owner of record of approximately 13% of the total outstanding shares of the Fund. The VIP Freedom Funds were the owners of record, in the aggregate, of approximately 31% of the total outstanding shares of the Fund. FMR or its affiliates were the owners of record of 40% of the total outstanding shares of the fund.
In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.
In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $1,412, which is recorded in the accompanying Statement of Operations.
In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
From net investment income | | |
Initial Class | $ - | $ 354,828 |
Service Class | - | 5,442 |
Service Class 2 | - | 48,475 |
Investor Class | - | 349,257 |
Total | $ - | $ 758,002 |
Semiannual Report
11. Distributions to Shareholders - continued
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2008 | Year ended
December 31,
2007 |
From net realized gain | | |
Initial Class | $ 1,550,219 | $ 4,201,819 |
Service Class | 27,064 | 99,826 |
Service Class 2 | 300,918 | 854,017 |
Investor Class | 1,727,891 | 4,682,569 |
Total | $ 3,606,092 | $ 9,838,231 |
12. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended June 30,
2008 | Year ended
December 31,
2007 | Six months ended June 30,
2008 | Year ended
December 31,
2007 |
Initial Class | | | | |
Shares sold | 1,038,696 | 2,350,969 | $ 12,392,942 | $ 33,804,671 |
Reinvestment of distributions | 132,046 | 334,365 | 1,550,219 | 4,556,647 |
Shares redeemed | (699,335) | (1,155,992) | (8,379,799) | (16,669,767) |
Net increase (decrease) | 471,407 | 1,529,342 | $ 5,563,362 | $ 21,691,551 |
Service Class | | | | |
Shares sold | 53 | 1,391 | $ 652 | $ 20,703 |
Reinvestment of distributions | 2,313 | 7,711 | 27,064 | 105,268 |
Shares redeemed | (5,820) | (7,243) | (67,492) | (102,690) |
Net increase (decrease) | (3,454) | 1,859 | $ (39,776) | $ 23,281 |
Service Class 2 | | | | |
Shares sold | 238,895 | 627,391 | $ 2,814,374 | $ 8,911,215 |
Reinvestment of distributions | 25,919 | 66,948 | 300,918 | 902,492 |
Shares redeemed | (309,775) | (391,453) | (3,635,959) | (5,568,414) |
Net increase (decrease) | (44,961) | 302,886 | $ (520,667) | $ 4,245,293 |
Investor Class | | | | |
Shares sold | 700,392 | 2,580,718 | $ 8,390,728 | $ 37,026,404 |
Reinvestment of distributions | 147,431 | 369,836 | 1,727,891 | 5,031,826 |
Shares redeemed | (723,444) | (897,132) | (8,602,910) | (12,750,361) |
Net increase (decrease) | 124,379 | 2,053,422 | $ 1,515,709 | $ 29,307,869 |
Semiannual Report
A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 |
To elect a Board of Trustees.A |
| # of
Votes | % of
Votes |
James C. Curvey |
Affirmative | 821,220,039.81 | 95.845 |
Withheld | 35,598,080.64 | 4.155 |
TOTAL | 856,818,120.45 | 100.000 |
Dennis J. Dirks |
Affirmative | 822,124,493.63 | 95.951 |
Withheld | 34,693,626.82 | 4.049 |
TOTAL | 856,818,120.45 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 820,473,313.05 | 95.758 |
Withheld | 36,344,807.40 | 4.242 |
TOTAL | 856,818,120.45 | 100.000 |
Alan J. Lacy |
Affirmative | 822,170,402.95 | 95.956 |
Withheld | 34,647,717.50 | 4.044 |
TOTAL | 856,818,120.45 | 100.000 |
Ned C. Lautenbach |
Affirmative | 821,435,006.18 | 95.870 |
Withheld | 35,383,114.27 | 4.130 |
TOTAL | 856,818,120.45 | 100.000 |
Joseph Mauriello |
Affirmative | 822,174,756.53 | 95.957 |
Withheld | 34,643,363.92 | 4.043 |
TOTAL | 856,818,120.45 | 100.000 |
Cornelia M. Small |
Affirmative | 822,263,792.20 | 95.967 |
Withheld | 34,554,328.25 | 4.033 |
TOTAL | 856,818,120.45 | 100.000 |
William S. Stavropoulos |
Affirmative | 821,014,987.67 | 95.821 |
Withheld | 35,803,132.78 | 4.179 |
TOTAL | 856,818,120.45 | 100.000 |
David M. Thomas |
Affirmative | 822,321,743.26 | 95.974 |
Withheld | 34,496,377.19 | 4.026 |
TOTAL | 856,818,120.45 | 100.000 |
Michael E. Wiley |
Affirmative | 822,218,346.41 | 95.962 |
Withheld | 34,599,774.04 | 4.038 |
TOTAL | 856,818,120.45 | 100.000 |
PROPOSAL 2 |
To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A |
| # of
Votes | % of
Votes |
Affirmative | 701,273,514.99 | 81.846 |
Against | 103,131,328.05 | 12.037 |
Abstain | 52,413,277.41 | 6.117 |
TOTAL | 856,818,120.45 | 100.000 |
A Denotes trust-wide proposal and voting results.
Semiannual Report
Investments
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Research & Analysis Company
Fidelity Investments Japan Limited
Fidelity International Investment Advisors
Fidelity International Investment Advisors (U.K.) Limited
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
State Street Bank and Trust Company
Quincy, MA
VIPVAL-SANN-0808
1.761034.107
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Not applicable.
(b) Not applicable
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. Purchase 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 were no material changes to the procedures by which shareholders may recommend nominees to the Variable Insurance Products Fund's Board of Trustees.
Item 11. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) for each Fund provide reasonable assurances that material information relating to such Fund is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in a Fund's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, a Fund's internal control over financial reporting.
Item 12. Exhibits
(a) | (1) | Not applicable. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) | | Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
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.
Variable Insurance Products Fund
By: | /s/ Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
| |
Date: | August 25, 2008 |
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/ Kenneth B. Robins |
| Kenneth B. Robins |
| President and Treasurer |
| |
Date: | August 25, 2008 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
| |
Date: | August 25, 2008 |
