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, 2012 |
Item 1. Reports to Stockholders
Fidelity® Variable Insurance Products:
Equity-Income Portfolio
Semiannual Report
June 30, 2012
(Fidelity Cover Art)
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. |
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/proxyvotingresults 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. © 2012 FMR LLC. All rights reserved.
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, http://www.advisor.fidelity.com, or http://www.401k.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, 2012 to June 30, 2012).
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.
| Annualized
Expense Ratio | Beginning
Account Value
January 1, 2012 | Ending
Account Value
June 30, 2012 | Expenses Paid
During Period*
January 1, 2012
to June 30, 2012 |
Initial Class | .55% | | | |
Actual | | $ 1,000.00 | $ 1,084.50 | $ 2.85 |
HypotheticalA | | $ 1,000.00 | $ 1,022.13 | $ 2.77 |
Service Class | .65% | | | |
Actual | | $ 1,000.00 | $ 1,083.70 | $ 3.37 |
HypotheticalA | | $ 1,000.00 | $ 1,021.63 | $ 3.27 |
Service Class 2 | .80% | | | |
Actual | | $ 1,000.00 | $ 1,083.60 | $ 4.14 |
HypotheticalA | | $ 1,000.00 | $ 1,020.89 | $ 4.02 |
Service Class 2R | .80% | | | |
Actual | | $ 1,000.00 | $ 1,082.80 | $ 4.14 |
HypotheticalA | | $ 1,000.00 | $ 1,020.89 | $ 4.02 |
Investor Class | .64% | | | |
Actual | | $ 1,000.00 | $ 1,084.20 | $ 3.32 |
HypotheticalA | | $ 1,000.00 | $ 1,021.68 | $ 3.22 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Chevron Corp. | 3.6 | 4.2 |
JPMorgan Chase & Co. | 3.5 | 3.3 |
Wells Fargo & Co. | 3.1 | 3.4 |
Comcast Corp. Class A | 3.0 | 1.6 |
Procter & Gamble Co. | 2.6 | 2.7 |
Pfizer, Inc. | 2.5 | 3.3 |
General Electric Co. | 2.2 | 2.2 |
Johnson & Johnson | 2.1 | 1.4 |
Exxon Mobil Corp. | 2.1 | 1.6 |
Paychex, Inc. | 2.0 | 1.7 |
| 26.7 | |
Top Five Market Sectors as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Financials | 19.1 | 19.9 |
Energy | 13.8 | 12.7 |
Health Care | 13.2 | 14.0 |
Consumer Staples | 10.7 | 11.5 |
Industrials | 9.7 | 9.3 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2012* | As of December 31, 2011** |
 | Stocks 93.7% | | | Stocks 96.1% | |
 | Bonds 3.4% | | | Bonds 2.8% | |
 | Short-Term
Investments and
Net Other Assets
(Liabilities) 2.9% | | | Short-Term
Investments and
Net Other Assets
(Liabilities) 1.1% | |
* Foreign investments | 14.4% | | ** Foreign investments | 17.7% | |
Semiannual Report
Investments June 30, 2012 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 91.5% |
| Shares | | Value |
CONSUMER DISCRETIONARY - 8.0% |
Distributors - 0.2% |
Li & Fung Ltd. | 4,554,000 | | $ 8,817,686 |
Hotels, Restaurants & Leisure - 0.8% |
Arcos Dorados Holdings, Inc. | 176,400 | | 2,607,192 |
McDonald's Corp. | 460,252 | | 40,746,110 |
| | 43,353,302 |
Household Durables - 0.5% |
KB Home | 570,948 | | 5,595,290 |
Lennar Corp. Class A | 381,792 | | 11,801,191 |
PulteGroup, Inc. (a) | 1,240,229 | | 13,270,450 |
| | 30,666,931 |
Leisure Equipment & Products - 0.3% |
Hasbro, Inc. | 521,066 | | 17,648,505 |
Media - 4.4% |
Comcast Corp. Class A | 5,117,866 | | 163,618,176 |
Time Warner, Inc. | 2,020,374 | | 77,784,399 |
| | 241,402,575 |
Multiline Retail - 1.5% |
Target Corp. | 1,397,128 | | 81,298,878 |
Specialty Retail - 0.3% |
Lowe's Companies, Inc. | 668,178 | | 19,002,982 |
TOTAL CONSUMER DISCRETIONARY | | 442,190,859 |
CONSUMER STAPLES - 10.5% |
Beverages - 2.1% |
Anheuser-Busch InBev SA NV | 188,681 | | 14,875,850 |
PepsiCo, Inc. | 903,752 | | 63,859,116 |
The Coca-Cola Co. | 477,333 | | 37,322,667 |
| | 116,057,633 |
Food & Staples Retailing - 2.3% |
Safeway, Inc. (d) | 1,026,562 | | 18,632,100 |
Sysco Corp. | 621,800 | | 18,535,858 |
Wal-Mart Stores, Inc. | 825,995 | | 57,588,371 |
Walgreen Co. | 1,049,994 | | 31,058,823 |
| | 125,815,152 |
Food Products - 0.5% |
Kellogg Co. | 587,834 | | 28,997,851 |
Household Products - 3.3% |
Kimberly-Clark Corp. | 306,201 | | 25,650,458 |
Procter & Gamble Co. | 2,341,501 | | 143,416,936 |
Reckitt Benckiser Group PLC | 209,901 | | 11,061,982 |
| | 180,129,376 |
Tobacco - 2.3% |
Altria Group, Inc. | 1,428,874 | | 49,367,597 |
British American Tobacco PLC sponsored ADR | 367,600 | | 37,539,312 |
|
| Shares | | Value |
Lorillard, Inc. | 124,782 | | $ 16,464,985 |
Philip Morris International, Inc. | 266,844 | | 23,284,807 |
| | 126,656,701 |
TOTAL CONSUMER STAPLES | | 577,656,713 |
ENERGY - 13.1% |
Energy Equipment & Services - 1.3% |
BW Offshore Ltd. | 5,396,200 | | 5,850,990 |
Exterran Partners LP | 387,857 | | 7,458,490 |
Halliburton Co. | 803,985 | | 22,825,134 |
National Oilwell Varco, Inc. | 157,156 | | 10,127,133 |
Noble Corp. | 493,202 | | 16,043,861 |
Trinidad Drilling Ltd. (d) | 1,191,800 | | 6,801,255 |
| | 69,106,863 |
Oil, Gas & Consumable Fuels - 11.8% |
Apache Corp. | 390,311 | | 34,304,434 |
BP PLC sponsored ADR | 1,060,136 | | 42,977,913 |
Buckeye Partners LP | 181,720 | | 9,480,332 |
Canadian Natural Resources Ltd. | 610,500 | | 16,376,343 |
Chevron Corp. | 1,899,151 | | 200,360,425 |
EV Energy Partners LP | 58,900 | | 2,972,094 |
Exxon Mobil Corp. | 1,328,669 | | 113,694,206 |
Holly Energy Partners LP | 109,284 | | 6,185,474 |
HollyFrontier Corp. | 504,476 | | 17,873,585 |
Inergy LP | 147,118 | | 2,739,337 |
Inergy Midstream LP | 205,600 | | 4,268,256 |
Legacy Reserves LP | 380,101 | | 9,506,326 |
Markwest Energy Partners LP | 159,900 | | 7,884,669 |
Penn West Petroleum Ltd. (d) | 2,006,500 | | 26,921,511 |
Pioneer Southwest Energy Partners LP | 139,402 | | 3,585,419 |
Royal Dutch Shell PLC Class A sponsored ADR | 1,575,700 | | 106,249,451 |
Suncor Energy, Inc. | 551,100 | | 15,935,943 |
Williams Companies, Inc. | 965,900 | | 27,837,238 |
| | 649,152,956 |
TOTAL ENERGY | | 718,259,819 |
FINANCIALS - 18.0% |
Capital Markets - 2.8% |
Apollo Investment Corp. | 808,738 | | 6,211,108 |
Ashmore Group PLC | 2,251,743 | | 12,290,087 |
BlackRock, Inc. Class A | 59,900 | | 10,172,218 |
Charles Schwab Corp. | 1,921,200 | | 24,841,116 |
FXCM, Inc. Class A (d) | 272,097 | | 3,199,861 |
Goldman Sachs Group, Inc. | 143,335 | | 13,740,093 |
KKR & Co. LP | 1,776,843 | | 22,903,506 |
Manning & Napier, Inc. | 439,100 | | 6,248,393 |
Morgan Stanley | 1,957,993 | | 28,567,118 |
The Blackstone Group LP | 1,844,426 | | 24,106,648 |
| | 152,280,148 |
Common Stocks - continued |
| Shares | | Value |
FINANCIALS - continued |
Commercial Banks - 5.5% |
BB&T Corp. | 463,355 | | $ 14,294,502 |
Comerica, Inc. | 331,820 | | 10,190,192 |
Cullen/Frost Bankers, Inc. | 134,900 | | 7,755,401 |
First Niagara Financial Group, Inc. | 631,834 | | 4,833,530 |
M&T Bank Corp. | 273,493 | | 22,582,317 |
Standard Chartered PLC (United Kingdom) | 381,370 | | 8,269,378 |
SunTrust Banks, Inc. | 862,480 | | 20,897,890 |
U.S. Bancorp | 1,329,738 | | 42,764,374 |
Wells Fargo & Co. | 5,108,236 | | 170,819,412 |
| | 302,406,996 |
Diversified Financial Services - 4.3% |
JPMorgan Chase & Co. | 5,464,519 | | 195,247,264 |
KKR Financial Holdings LLC | 3,028,485 | | 25,802,692 |
New Academy Holding Co. LLC unit (h)(i) | 127,200 | | 14,743,752 |
| | 235,793,708 |
Insurance - 3.6% |
ACE Ltd. | 562,800 | | 41,720,364 |
AFLAC, Inc. | 451,300 | | 19,220,867 |
Assured Guaranty Ltd. | 211,162 | | 2,977,384 |
Berkshire Hathaway, Inc. Class B (a) | 220,375 | | 18,363,849 |
Fidelity National Financial, Inc. Class A | 537,711 | | 10,356,314 |
Hanover Insurance Group, Inc. | 277,728 | | 10,867,497 |
MetLife, Inc. | 2,201,874 | | 67,927,813 |
MetLife, Inc. unit (a) | 144,300 | | 8,922,069 |
Validus Holdings Ltd. | 586,435 | | 18,783,513 |
| | 199,139,670 |
Real Estate Investment Trusts - 1.8% |
American Capital Agency Corp. | 470,888 | | 15,826,546 |
Annaly Capital Management, Inc. (d) | 890,200 | | 14,937,556 |
Digital Realty Trust, Inc. | 124,400 | | 9,338,708 |
Highwoods Properties, Inc. (SBI) | 127,438 | | 4,288,289 |
Lexington Corporate Properties Trust | 308,865 | | 2,616,087 |
Omega Healthcare Investors, Inc. | 464,200 | | 10,444,500 |
Rayonier, Inc. | 239,754 | | 10,764,955 |
Two Harbors Investment Corp. | 1,258,103 | | 13,033,947 |
Ventas, Inc. | 279,338 | | 17,631,815 |
| | 98,882,403 |
Real Estate Management & Development - 0.0% |
Beazer Pre-Owned Rental Homes, Inc. (i) | 149,500 | | 2,990,000 |
TOTAL FINANCIALS | | 991,492,925 |
HEALTH CARE - 12.8% |
Biotechnology - 0.7% |
Amgen, Inc. | 316,100 | | 23,087,944 |
PDL BioPharma, Inc. (d) | 2,246,500 | | 14,894,295 |
| | 37,982,239 |
|
| Shares | | Value |
Health Care Equipment & Supplies - 0.7% |
Baxter International, Inc. | 100,100 | | $ 5,320,315 |
Covidien PLC | 412,000 | | 22,042,000 |
St. Jude Medical, Inc. | 268,500 | | 10,715,835 |
| | 38,078,150 |
Health Care Providers & Services - 1.6% |
Aetna, Inc. | 439,400 | | 17,035,538 |
Brookdale Senior Living, Inc. (a) | 615,830 | | 10,924,824 |
McKesson Corp. | 61,450 | | 5,760,938 |
WellPoint, Inc. | 803,761 | | 51,271,914 |
| | 84,993,214 |
Pharmaceuticals - 9.8% |
Abbott Laboratories | 762,600 | | 49,164,822 |
AstraZeneca PLC sponsored ADR | 466,400 | | 20,871,400 |
Eli Lilly & Co. | 1,095,557 | | 47,010,351 |
Johnson & Johnson | 1,700,268 | | 114,870,106 |
Merck & Co., Inc. | 2,685,789 | | 112,131,691 |
Pfizer, Inc. | 6,030,885 | | 138,710,355 |
Sanofi SA | 459,370 | | 34,774,705 |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 608,822 | | 24,011,940 |
| | 541,545,370 |
TOTAL HEALTH CARE | | 702,598,973 |
INDUSTRIALS - 9.1% |
Aerospace & Defense - 2.4% |
Lockheed Martin Corp. | 302,996 | | 26,384,892 |
Raytheon Co. | 630,741 | | 35,693,633 |
Rockwell Collins, Inc. | 332,585 | | 16,413,070 |
The Boeing Co. | 146,780 | | 10,905,754 |
United Technologies Corp. | 591,376 | | 44,666,629 |
| | 134,063,978 |
Air Freight & Logistics - 1.4% |
C.H. Robinson Worldwide, Inc. | 241,500 | | 14,134,995 |
United Parcel Service, Inc. Class B | 781,704 | | 61,567,007 |
| | 75,702,002 |
Building Products - 0.1% |
Lennox International, Inc. | 75,800 | | 3,534,554 |
Commercial Services & Supplies - 1.1% |
Intrum Justitia AB | 732,919 | | 10,648,195 |
Republic Services, Inc. | 1,961,382 | | 51,898,168 |
| | 62,546,363 |
Industrial Conglomerates - 2.2% |
General Electric Co. | 5,884,241 | | 122,627,582 |
Machinery - 1.1% |
Briggs & Stratton Corp. | 755,567 | | 13,214,867 |
Douglas Dynamics, Inc. | 535,191 | | 7,626,472 |
Harsco Corp. | 116,600 | | 2,376,308 |
Illinois Tool Works, Inc. | 179,121 | | 9,473,710 |
Common Stocks - continued |
| Shares | | Value |
INDUSTRIALS - continued |
Machinery - continued |
Ingersoll-Rand PLC | 443,938 | | $ 18,725,305 |
Stanley Black & Decker, Inc. | 120,391 | | 7,748,365 |
| | 59,165,027 |
Professional Services - 0.3% |
Michael Page International PLC | 2,475,199 | | 14,494,357 |
Road & Rail - 0.5% |
Union Pacific Corp. | 249,462 | | 29,763,311 |
TOTAL INDUSTRIALS | | 501,897,174 |
INFORMATION TECHNOLOGY - 8.7% |
Communications Equipment - 1.0% |
Cisco Systems, Inc. | 3,397,522 | | 58,335,453 |
Computers & Peripherals - 1.4% |
Apple, Inc. (a) | 66,930 | | 39,087,120 |
Hewlett-Packard Co. | 1,791,450 | | 36,026,060 |
| | 75,113,180 |
Electronic Equipment & Components - 0.3% |
Arrow Electronics, Inc. (a) | 202,022 | | 6,628,342 |
TE Connectivity Ltd. | 351,838 | | 11,227,151 |
| | 17,855,493 |
Internet Software & Services - 0.2% |
VeriSign, Inc. (a) | 291,000 | | 12,678,870 |
IT Services - 4.2% |
Accenture PLC Class A | 525,471 | | 31,575,552 |
Cognizant Technology Solutions Corp. Class A (a) | 490,433 | | 29,425,980 |
Fidelity National Information Services, Inc. | 98,697 | | 3,363,594 |
IBM Corp. | 79,449 | | 15,538,635 |
Paychex, Inc. | 3,587,887 | | 112,695,531 |
Visa, Inc. Class A | 305,551 | | 37,775,270 |
| | 230,374,562 |
Semiconductors & Semiconductor Equipment - 1.4% |
Applied Materials, Inc. | 1,457,200 | | 16,699,512 |
KLA-Tencor Corp. | 382,148 | | 18,820,789 |
MKS Instruments, Inc. | 92,421 | | 2,673,740 |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 2,523,619 | | 13,097,583 |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 1,698,500 | | 23,711,060 |
| | 75,002,684 |
Software - 0.2% |
CA Technologies, Inc. | 401,419 | | 10,874,441 |
TOTAL INFORMATION TECHNOLOGY | | 480,234,683 |
|
| Shares | | Value |
MATERIALS - 1.2% |
Chemicals - 0.6% |
Eastman Chemical Co. | 216,300 | | $ 10,895,031 |
PetroLogistics LP | 64,800 | | 697,248 |
PPG Industries, Inc. | 185,136 | | 19,646,632 |
| | 31,238,911 |
Metals & Mining - 0.6% |
ArcelorMittal SA Class A unit (d) | 421,403 | | 6,434,824 |
Commercial Metals Co. | 668,471 | | 8,449,473 |
Freeport-McMoRan Copper & Gold, Inc. | 329,200 | | 11,215,844 |
Nucor Corp. | 190,500 | | 7,219,950 |
| | 33,320,091 |
TOTAL MATERIALS | | 64,559,002 |
TELECOMMUNICATION SERVICES - 4.7% |
Diversified Telecommunication Services - 3.5% |
AT&T, Inc. | 2,960,276 | | 105,563,442 |
CenturyLink, Inc. | 290,455 | | 11,470,068 |
Koninklijke KPN NV | 1,206,976 | | 11,541,247 |
Verizon Communications, Inc. | 1,499,008 | | 66,615,916 |
| | 195,190,673 |
Wireless Telecommunication Services - 1.2% |
Vodafone Group PLC | 22,599,446 | | 63,521,524 |
TOTAL TELECOMMUNICATION SERVICES | | 258,712,197 |
UTILITIES - 5.4% |
Electric Utilities - 3.7% |
Duke Energy Corp. | 2,059,077 | | 47,482,316 |
El Paso Electric Co. | 253,492 | | 8,405,795 |
FirstEnergy Corp. | 563,810 | | 27,733,814 |
NextEra Energy, Inc. | 560,380 | | 38,559,748 |
PPL Corp. | 1,975,734 | | 54,945,163 |
Southern Co. | 601,734 | | 27,860,284 |
| | 204,987,120 |
Multi-Utilities - 1.7% |
Alliant Energy Corp. | 190,801 | | 8,694,802 |
CMS Energy Corp. | 118,500 | | 2,784,750 |
National Grid PLC | 3,127,200 | | 33,142,152 |
PG&E Corp. | 455,105 | | 20,602,603 |
Sempra Energy | 422,100 | | 29,074,248 |
| | 94,298,555 |
TOTAL UTILITIES | | 299,285,675 |
TOTAL COMMON STOCKS (Cost $4,682,960,234) |
5,036,888,020
|
Preferred Stocks - 2.2% |
| Shares | | Value |
Convertible Preferred Stocks - 1.3% |
CONSUMER DISCRETIONARY - 0.2% |
Automobiles - 0.1% |
General Motors Co. 4.75% | 168,490 | | $ 5,593,868 |
Media - 0.1% |
Interpublic Group of Companies, Inc. 5.25% | 6,200 | | 6,435,538 |
TOTAL CONSUMER DISCRETIONARY | | 12,029,406 |
ENERGY - 0.0% |
Oil, Gas & Consumable Fuels - 0.0% |
ATP Oil & Gas Corp. Series B, 8.00% | 3,700 | | 64,750 |
FINANCIALS - 0.3% |
Commercial Banks - 0.2% |
Huntington Bancshares, Inc. 8.50% | 9,000 | | 10,314,000 |
Diversified Financial Services - 0.0% |
Citigroup, Inc. 7.50% | 19,700 | | 1,685,532 |
Real Estate Investment Trusts - 0.1% |
Health Care REIT, Inc. Series I, 6.50% | 84,800 | | 4,579,200 |
TOTAL FINANCIALS | | 16,578,732 |
HEALTH CARE - 0.3% |
Health Care Equipment & Supplies - 0.2% |
Alere, Inc. 3.00% | 41,553 | | 8,601,471 |
Health Care Providers & Services - 0.1% |
HealthSouth Corp. Series A 6.50% | 7,600 | | 8,094,000 |
TOTAL HEALTH CARE | | 16,695,471 |
INDUSTRIALS - 0.3% |
Aerospace & Defense - 0.2% |
United Technologies Corp. 7.50% | 251,000 | | 13,225,190 |
Professional Services - 0.1% |
Nielsen Holdings B.V. 6.25% | 91,500 | | 4,683,656 |
TOTAL INDUSTRIALS | | 17,908,846 |
MATERIALS - 0.1% |
Metals & Mining - 0.1% |
AngloGold Ashanti Holdings Finance PLC 6.00% | 70,100 | | 2,888,120 |
UTILITIES - 0.1% |
Electric Utilities - 0.1% |
PPL Corp. 8.75% | 135,000 | | 7,222,500 |
TOTAL CONVERTIBLE PREFERRED STOCKS | | 73,387,825 |
|
| Shares | | Value |
Nonconvertible Preferred Stocks - 0.9% |
CONSUMER DISCRETIONARY - 0.6% |
Automobiles - 0.6% |
Porsche Automobil Holding SE (Germany) (d) | 193,475 | | $ 9,584,364 |
Volkswagen AG | 156,109 | | 24,615,470 |
| | 34,199,834 |
FINANCIALS - 0.3% |
Consumer Finance - 0.3% |
Ally Financial, Inc. 7.00% (e) | 14,714 | | 13,021,890 |
TOTAL NONCONVERTIBLE PREFERRED STOCKS | | 47,221,724 |
TOTAL PREFERRED STOCKS (Cost $133,159,847) |
120,609,549
|
Corporate Bonds - 3.2% |
| Principal Amount | | |
Convertible Bonds - 2.4% |
CONSUMER DISCRETIONARY - 0.1% |
Hotels, Restaurants & Leisure - 0.1% |
Gaylord Entertainment Co. 3.75% 10/1/14 (e) | | $ 2,210,000 | | 3,296,436 |
ENERGY - 0.5% |
Energy Equipment & Services - 0.1% |
Transocean, Inc. Series C, 1.5% 12/15/37 | | 5,180,000 | | 5,154,100 |
Oil, Gas & Consumable Fuels - 0.4% |
Amyris, Inc. 3% 2/27/17 (i) | | 1,383,000 | | 1,152,025 |
Chesapeake Energy Corp. 2.5% 5/15/37 | | 2,590,000 | | 2,232,062 |
Massey Energy Co. 3.25% 8/1/15 | | 5,860,000 | | 5,054,250 |
Peabody Energy Corp. 4.75% 12/15/66 | | 5,050,000 | | 4,096,813 |
Western Refining, Inc. 5.75% 6/15/14 | | 4,320,000 | | 9,363,600 |
| | 21,898,750 |
TOTAL ENERGY | | 27,052,850 |
FINANCIALS - 0.1% |
Thrifts & Mortgage Finance - 0.1% |
MGIC Investment Corp. 9% 4/1/63 (e) | | 10,438,000 | | 4,436,150 |
HEALTH CARE - 0.1% |
Health Care Equipment & Supplies - 0.1% |
Teleflex, Inc. 3.875% 8/1/17 | | 3,860,000 | | 4,483,004 |
Corporate Bonds - continued |
| Principal Amount | | Value |
Convertible Bonds - continued |
INDUSTRIALS - 0.3% |
Commercial Services & Supplies - 0.2% |
Covanta Holding Corp. 3.25% 6/1/14 | | $ 10,880,000 | | $ 12,751,360 |
Construction & Engineering - 0.1% |
MasTec, Inc.: | | | | |
4% 6/15/14 | | 2,520,000 | | 3,030,300 |
4.25% 12/15/14 | | 1,300,000 | | 1,610,375 |
| | 4,640,675 |
TOTAL INDUSTRIALS | | 17,392,035 |
INFORMATION TECHNOLOGY - 0.8% |
Communications Equipment - 0.1% |
InterDigital, Inc. 2.5% 3/15/16 | | 5,740,000 | | 5,589,612 |
Computers & Peripherals - 0.1% |
SanDisk Corp. 1.5% 8/15/17 | | 8,650,000 | | 8,936,488 |
Internet Software & Services - 0.1% |
VeriSign, Inc. 3.25% 8/15/37 | | 4,410,000 | | 6,140,925 |
IT Services - 0.1% |
CACI International, Inc. 2.125% 5/1/14 | | 4,690,000 | | 5,329,013 |
Semiconductors & Semiconductor Equipment - 0.1% |
Micron Technology, Inc.: | | | | |
1.875% 8/1/31 (e) | | 4,650,000 | | 4,155,938 |
3.125% 5/1/32 (e) | | 650,000 | | 598,406 |
| | 4,754,344 |
Software - 0.3% |
Nuance Communications, Inc. 2.75% 11/1/31 (e) | | 13,380,000 | | 14,768,175 |
TOTAL INFORMATION TECHNOLOGY | | 45,518,557 |
MATERIALS - 0.2% |
Metals & Mining - 0.2% |
Goldcorp, Inc. 2% 8/1/14 | | 4,490,000 | | 5,068,312 |
Newmont Mining Corp. 1.25% 7/15/14 | | 5,990,000 | | 7,427,600 |
Royal Gold, Inc. 2.875% 6/15/19 | | 1,190,000 | | 1,246,525 |
| | 13,742,437 |
TELECOMMUNICATION SERVICES - 0.1% |
Diversified Telecommunication Services - 0.1% |
Clearwire Communications LLC/Clearwire Finance, Inc. 8.25% 12/1/40 (e) | | 6,660,000 | | 4,145,850 |
|
| Principal Amount | | Value |
UTILITIES - 0.2% |
Multi-Utilities - 0.2% |
CMS Energy Corp. 5.5% 6/15/29 | | $ 6,100,000 | | $ 10,347,430 |
TOTAL CONVERTIBLE BONDS | | 130,414,749 |
Nonconvertible Bonds - 0.8% |
CONSUMER DISCRETIONARY - 0.1% |
Multiline Retail - 0.1% |
The Bon-Ton Department Stores, Inc. 10.25% 3/15/14 | | 3,030,000 | | 2,545,200 |
CONSUMER STAPLES - 0.2% |
Food & Staples Retailing - 0.2% |
Rite Aid Corp. 9.5% 6/15/17 | | 9,085,000 | | 9,289,413 |
Tops Markets LLC 10.125% 10/15/15 | | 2,230,000 | | 2,369,375 |
| | 11,658,788 |
ENERGY - 0.1% |
Oil, Gas & Consumable Fuels - 0.1% |
Alpha Natural Resources, Inc. 6% 6/1/19 | | 1,230,000 | | 1,048,575 |
Western Refining, Inc. 11.25% 6/15/17 (e) | | 4,045,000 | | 4,530,400 |
| | 5,578,975 |
FINANCIALS - 0.3% |
Diversified Financial Services - 0.1% |
Goldman Sachs Capital II 5.793% (f)(g) | | 7,850,000 | | 5,314,607 |
Thrifts & Mortgage Finance - 0.2% |
Radian Group, Inc.: | | | | |
5.375% 6/15/15 | | 3,960,000 | | 2,851,200 |
5.625% 2/15/13 | | 10,000,000 | | 9,400,000 |
| | 12,251,200 |
TOTAL FINANCIALS | | 17,565,807 |
MATERIALS - 0.1% |
Paper & Forest Products - 0.1% |
AbitibiBowater, Inc. 10.25% 10/15/18 | | 6,015,000 | | 6,676,650 |
TOTAL NONCONVERTIBLE BONDS | | 44,025,420 |
TOTAL CORPORATE BONDS (Cost $173,855,698) |
174,440,169
|
Floating Rate Loans - 0.2% |
| Principal Amount | | Value |
ENERGY - 0.1% |
Oil, Gas & Consumable Fuels - 0.1% |
Chesapeake Energy Corp. term loan 8.5% 12/2/17 (g) | | $ 5,630,000 | | $ 5,566,663 |
FINANCIALS - 0.1% |
Insurance - 0.1% |
Asurion Corp. Tranche 2nd LN, term loan 9% 5/24/19 (g) | | 5,537,000 | | 5,647,740 |
TOTAL FLOATING RATE LOANS (Cost $11,057,968) |
11,214,403
|
Money Market Funds - 3.0% |
| Shares | | |
Fidelity Cash Central Fund, 0.17% (b) | 99,815,681 | | 99,815,681 |
Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c) | 66,021,525 | | 66,021,525 |
TOTAL MONEY MARKET FUNDS (Cost $165,837,206) |
165,837,206
|
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $5,166,870,953) | | 5,508,989,347 |
NET OTHER ASSETS (LIABILITIES) - (0.1)% | | (3,099,044) |
NET ASSETS - 100% | $ 5,505,890,303 |
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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or 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 $48,953,245 or 0.9% of net assets. |
(f) Security is perpetual in nature with no stated maturity date. |
(g) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end. |
(h) Investment is owned by an entity that is treated as a corporation for U.S. tax purposes which is owned by the Fund. |
(i) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $18,885,777 or 0.3% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Amyris, Inc. 3% 2/27/17 | 2/27/12 | $ 1,383,000 |
Beazer Pre-Owned Rental Homes, Inc. | 5/3/12 | $ 2,990,000 |
New Academy Holding Co. LLC unit | 8/1/11 | $ 13,406,880 |
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 | $ 100,972 |
Fidelity Securities Lending Cash Central Fund | 716,888 |
Total | $ 817,860 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2012, involving the Fund's assets and liabilities carried at fair 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 488,420,099 | $ 473,166,875 | $ 15,253,224 | $ - |
Consumer Staples | 577,656,713 | 562,780,863 | 14,875,850 | - |
Energy | 718,324,569 | 718,259,819 | 64,750 | - |
Financials | 1,021,093,547 | 981,415,836 | 21,943,959 | 17,733,752 |
Health Care | 719,294,444 | 676,425,739 | 42,868,705 | - |
Industrials | 519,806,020 | 515,122,364 | 4,683,656 | - |
Information Technology | 480,234,683 | 480,234,683 | - | - |
Materials | 67,447,122 | 67,447,122 | - | - |
Telecommunication Services | 258,712,197 | 195,190,673 | 63,521,524 | - |
Utilities | 306,508,175 | 266,143,523 | 40,364,652 | - |
Corporate Bonds | 174,440,169 | - | 174,440,169 | - |
Floating Rate Loans | 11,214,403 | - | 11,214,403 | - |
Money Market Funds | 165,837,206 | 165,837,206 | - | - |
Total Investments in Securities: | $ 5,508,989,347 | $ 5,102,024,703 | $ 389,230,892 | $ 17,733,752 |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 85.6% |
United Kingdom | 6.4% |
Ireland | 1.3% |
Canada | 1.3% |
Switzerland | 1.3% |
Others (Individually Less Than 1%) | 4.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2012 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $64,753,841) - See accompanying schedule: Unaffiliated issuers (cost $5,001,033,747) | $ 5,343,152,141 | |
Fidelity Central Funds (cost $165,837,206) | 165,837,206 | |
Total Investments (cost $5,166,870,953) | | $ 5,508,989,347 |
Foreign currency held at value (cost $12,007) | | 12,007 |
Receivable for investments sold | | 133,467,164 |
Receivable for fund shares sold | | 819,201 |
Dividends receivable | | 15,015,591 |
Interest receivable | | 1,491,601 |
Distributions receivable from Fidelity Central Funds | | 48,223 |
Other receivables | | 363,372 |
Total assets | | 5,660,206,506 |
| | |
Liabilities | | |
Payable to custodian bank | $ 506,796 | |
Payable for investments purchased | 79,603,094 | |
Payable for fund shares redeemed | 4,941,230 | |
Accrued management fee | 2,051,647 | |
Distribution and service plan fees payable | 346,654 | |
Other affiliated payables | 511,419 | |
Other payables and accrued expenses | 333,838 | |
Collateral on securities loaned, at value | 66,021,525 | |
Total liabilities | | 154,316,203 |
| | |
Net Assets | | $ 5,505,890,303 |
Net Assets consist of: | | |
Paid in capital | | $ 5,002,371,281 |
Undistributed net investment income | | 80,004,092 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 81,238,620 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 342,276,310 |
Net Assets | | $ 5,505,890,303 |
Statement of Assets and Liabilities - continued
| June 30, 2012 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($3,410,917,771 ÷ 172,545,133 shares) | | $ 19.77 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($348,946,352 ÷ 17,719,120 shares) | | $ 19.69 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($1,543,366,826 ÷ 79,365,464 shares) | | $ 19.45 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($4,905,087 ÷ 253,322 shares) | | $ 19.36 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($197,754,267 ÷ 10,034,099 shares) | | $ 19.71 |
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, 2012 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 91,320,183 |
Interest | | 5,508,617 |
Income from Fidelity Central Funds | | 817,860 |
Total income | | 97,646,660 |
| | |
Expenses | | |
Management fee | $ 12,788,191 | |
Transfer agent fees | 2,065,952 | |
Distribution and service plan fees | 2,166,965 | |
Accounting and security lending fees | 557,433 | |
Custodian fees and expenses | 67,512 | |
Independent trustees' compensation | 18,289 | |
Appreciation in deferred trustee compensation account | 83 | |
Audit | 44,264 | |
Legal | 13,786 | |
Interest | 310 | |
Miscellaneous | 32,674 | |
Total expenses before reductions | 17,755,459 | |
Expense reductions | (225,136) | 17,530,323 |
Net investment income (loss) | | 80,116,337 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 116,971,037 | |
Foreign currency transactions | (136,072) | |
Total net realized gain (loss) | | 116,834,965 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 248,948,696 | |
Assets and liabilities in foreign currencies | 167,017 | |
Total change in net unrealized appreciation (depreciation) | | 249,115,713 |
Net gain (loss) | | 365,950,678 |
Net increase (decrease) in net assets resulting from operations | | $ 446,067,015 |
Statement of Changes in Net Assets
| Six months ended
June 30, 2012
(Unaudited) | Year ended
December 31,
2011 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 80,116,337 | $ 137,582,764 |
Net realized gain (loss) | 116,834,965 | 336,648,895 |
Change in net unrealized appreciation (depreciation) | 249,115,713 | (414,416,618) |
Net increase (decrease) in net assets resulting from operations | 446,067,015 | 59,815,041 |
Distributions to shareholders from net investment income | - | (135,446,653) |
Distributions to shareholders from net realized gain | (141,235,485) | - |
Total distributions | (141,235,485) | (135,446,653) |
Share transactions - net increase (decrease) | (132,387,772) | (594,372,345) |
Redemption fees | 696 | 2,327 |
Total increase (decrease) in net assets | 172,444,454 | (670,001,630) |
| | |
Net Assets | | |
Beginning of period | 5,333,445,849 | 6,003,447,479 |
End of period (including undistributed net investment income of $80,004,092 and distributions in excess of net investment income of $132,585, respectively) | $ 5,505,890,303 | $ 5,333,445,849 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 18.69 | $ 19.02 | $ 16.81 | $ 13.18 | $ 23.91 | $ 26.20 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .29 | .48 | .30 | .33 | .47 | .47 |
Net realized and unrealized gain (loss) | 1.28 | (.31) | 2.24 | 3.64 | (10.67) | (.05) |
Total from investment operations | 1.57 | .17 | 2.54 | 3.97 | (10.20) | .42 |
Distributions from net investment income | - | (.50) | (.33) | (.34) | (.51) | (.50) |
Distributions from net realized gain | (.49) | - | - | - | (.02) | (2.21) |
Total distributions | (.49) | (.50) | (.33) | (.34) | (.53) | (2.71) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.77 | $ 18.69 | $ 19.02 | $ 16.81 | $ 13.18 | $ 23.91 |
Total Return B, C, D | 8.45% | .97% | 15.15% | 30.21% | (42.65)% | 1.53% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .55% A | .56% | .56% | .58% | .57% | .55% |
Expenses net of fee waivers, if any | .55% A | .55% | .55% | .58% | .57% | .55% |
Expenses net of all reductions | .55% A | .54% | .55% | .58% | .57% | .54% |
Net investment income (loss) | 2.95% A | 2.48% | 1.71% | 2.29% | 2.37% | 1.71% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 3,410,918 | $ 3,345,762 | $ 3,798,310 | $ 3,771,733 | $ 3,322,799 | $ 7,201,655 |
Portfolio turnover rate G | 59% A | 96% | 29% | 29% | 34% | 20% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HExpense 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 reductions from 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. IAmount represents less than $.01 per share. |
Financial Highlights - Service Class
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 18.63 | $ 18.96 | $ 16.75 | $ 13.14 | $ 23.82 | $ 26.11 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .28 | .46 | .28 | .31 | .44 | .44 |
Net realized and unrealized gain (loss) | 1.27 | (.31) | 2.24 | 3.63 | (10.62) | (.05) |
Total from investment operations | 1.55 | .15 | 2.52 | 3.94 | (10.18) | .39 |
Distributions from net investment income | - | (.48) | (.31) | (.33) | (.48) | (.47) |
Distributions from net realized gain | (.49) | - | - | - | (.02) | (2.21) |
Total distributions | (.49) | (.48) | (.31) | (.33) | (.50) | (2.68) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.69 | $ 18.63 | $ 18.96 | $ 16.75 | $ 13.14 | $ 23.82 |
Total Return B, C, D | 8.37% | .86% | 15.09% | 30.03% | (42.70)% | 1.42% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .65% A | .66% | .66% | .68% | .67% | .65% |
Expenses net of fee waivers, if any | .65% A | .66% | .65% | .68% | .67% | .65% |
Expenses net of all reductions | .65% A | .64% | .65% | .68% | .67% | .64% |
Net investment income (loss) | 2.85% A | 2.38% | 1.61% | 2.19% | 2.27% | 1.61% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 348,946 | $ 347,999 | $ 414,431 | $ 430,383 | $ 405,082 | $ 920,054 |
Portfolio turnover rate G | 59% A | 96% | 29% | 29% | 34% | 20% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HExpense 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 reductions from 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. IAmount 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 18.41 | $ 18.75 | $ 16.57 | $ 13.00 | $ 23.57 | $ 25.87 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .26 | .42 | .25 | .29 | .41 | .39 |
Net realized and unrealized gain (loss) | 1.27 | (.31) | 2.21 | 3.58 | (10.50) | (.04) |
Total from investment operations | 1.53 | .11 | 2.46 | 3.87 | (10.09) | .35 |
Distributions from net investment income | - | (.45) | (.28) | (.30) | (.46) | (.44) |
Distributions from net realized gain | (.49) | - | - | - | (.02) | (2.21) |
Total distributions | (.49) | (.45) | (.28) | (.30) | (.48) | (2.65) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.45 | $ 18.41 | $ 18.75 | $ 16.57 | $ 13.00 | $ 23.57 |
Total Return B, C, D | 8.36% | .66% | 14.92% | 29.88% | (42.81)% | 1.27% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .80% A | .81% | .81% | .83% | .82% | .80% |
Expenses net of fee waivers, if any | .80% A | .81% | .80% | .83% | .82% | .80% |
Expenses net of all reductions | .80% A | .80% | .80% | .83% | .82% | .80% |
Net investment income (loss) | 2.70% A | 2.23% | 1.46% | 2.04% | 2.12% | 1.46% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 1,543,367 | $ 1,457,230 | $ 1,619,356 | $ 1,558,421 | $ 1,321,569 | $ 2,583,129 |
Portfolio turnover rate G | 59% A | 96% | 29% | 29% | 34% | 20% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HExpense 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 reductions from 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. IAmount represents less than $.01 per share. |
Financial Highlights - Service Class 2R
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 18.34 | $ 18.66 | $ 16.49 | $ 12.93 | $ 23.44 | $ 25.73 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .26 | .42 | .25 | .28 | .41 | .39 |
Net realized and unrealized gain (loss) | 1.25 | (.30) | 2.20 | 3.58 | (10.45) | (.04) |
Total from investment operations | 1.51 | .12 | 2.45 | 3.86 | (10.04) | .35 |
Distributions from net investment income | - | (.44) | (.28) | (.30) | (.45) | (.43) |
Distributions from net realized gain | (.49) | - | - | - | (.02) | (2.21) |
Total distributions | (.49) | (.44) | (.28) | (.30) | (.47) | (2.64) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.36 | $ 18.34 | $ 18.66 | $ 16.49 | $ 12.93 | $ 23.44 |
Total Return B, C, D | 8.28% | .70% | 14.90% | 29.95% | (42.82)% | 1.27% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .80% A | .81% | .81% | .83% | .82% | .80% |
Expenses net of fee waivers, if any | .80% A | .80% | .80% | .83% | .82% | .80% |
Expenses net of all reductions | .80% A | .79% | .80% | .83% | .81% | .79% |
Net investment income (loss) | 2.70% A | 2.23% | 1.46% | 2.04% | 2.12% | 1.46% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 4,905 | $ 3,956 | $ 5,405 | $ 5,259 | $ 5,339 | $ 13,558 |
Portfolio turnover rate G | 59% A | 96% | 29% | 29% | 34% | 20% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HExpense 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 reductions from 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. IAmount 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 18.64 | $ 18.97 | $ 16.77 | $ 13.15 | $ 23.85 | $ 26.15 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .28 | .46 | .28 | .31 | .44 | .44 |
Net realized and unrealized gain (loss) | 1.28 | (.31) | 2.23 | 3.64 | (10.63) | (.05) |
Total from investment operations | 1.56 | .15 | 2.51 | 3.95 | (10.19) | .39 |
Distributions from net investment income | - | (.48) | (.31) | (.33) | (.49) | (.48) |
Distributions from net realized gain | (.49) | - | - | - | (.02) | (2.21) |
Total distributions | (.49) | (.48) | (.31) | (.33) | (.51) | (2.69) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.71 | $ 18.64 | $ 18.97 | $ 16.77 | $ 13.15 | $ 23.85 |
Total Return B, C, D | 8.42% | .89% | 15.04% | 30.09% | (42.71)% | 1.39% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .64% A | .64% | .65% | .68% | .66% | .66% |
Expenses net of fee waivers, if any | .64% A | .64% | .64% | .68% | .66% | .66% |
Expenses net of all reductions | .63% A | .63% | .64% | .68% | .66% | .66% |
Net investment income (loss) | 2.86% A | 2.39% | 1.62% | 2.19% | 2.28% | 1.60% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 197,754 | $ 178,499 | $ 165,946 | $ 147,358 | $ 122,483 | $ 230,534 |
Portfolio turnover rate G | 59% A | 96% | 29% | 29% | 34% | 20% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HExpense 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 reductions from 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. IAmount 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, 2012 (Unaudited)
1. Organization.
VIP Equity-Income PortfolioSM (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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
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 a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For corporate bonds and floating rate loans, pricing vendors utilize matrix pricing which considers yield or price of
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2012, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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 p.m. 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 may elect to defer receipt of a 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, market discount, partnerships, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and futures transactions.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 836,134,469 |
Gross unrealized depreciation | (503,412,986) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 332,721,483 |
| |
Tax cost | $ 5,176,267,864 |
Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days are subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Operating Policies.
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.
Loans and Other Direct Debt Instruments. The Fund invests in direct debt instruments which are interests in amounts owed to lenders by corporate or other borrowers. These instruments may be in the form of loans, trade claims or other receivables and may include standby financing commitments such as revolving credit facilities that obligate the Fund to supply additional cash to the borrower on demand. Loans may be acquired through assignment or participation, or may be made directly to a borrower. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these loans.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,597,039,051 and $1,883,712,074, 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 .20% of the Fund's average net assets and an annualized 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 Fees. 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, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:
Service Class | $ 178,980 |
Service Class 2 | 1,982,276 |
Service Class 2R | 5,709 |
| $ 2,166,965 |
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. In addition, FIIOC receives an asset-based fee of .0038% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:
Initial Class | $ 1,223,378 |
Service Class | 126,972 |
Service Class 2 | 563,280 |
Service Class 2R | 1,605 |
Investor Class | 150,717 |
| $ 2,065,952 |
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 each 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 $28,450 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
Loan Balance | Weighted Average
Interest Rate | Interest
Expense |
Borrower | $ 13,168,000 | .42% | $ 310 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 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 $8,171 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $716,888, including $2,138 from securities loaned to FCM.
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 $225,136 for the period.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
From net investment income | | |
Initial Class | $ - | $ 87,368,043 |
Service Class | - | 8,664,568 |
Service Class 2 | - | 34,838,681 |
Service Class 2R | - | 92,819 |
Investor Class | - | 4,482,542 |
Total | $ - | $ 135,446,653 |
From net realized gain | | |
Initial Class | $ 86,397,034 | $ - |
Service Class | 9,082,257 | - |
Service Class 2 | 40,893,881 | - |
Service Class 2R | 114,488 | - |
Investor Class | 4,747,825 | - |
Total | $ 141,235,485 | $ - |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 | Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
Initial Class | | | | |
Shares sold | 1,803,095 | 4,371,165 | $ 35,046,037 | $ 84,316,162 |
Reinvestment of distributions | 4,469,583 | 4,832,303 | 86,397,034 | 87,368,043 |
Shares redeemed | (12,761,305) | (29,859,019) | (248,524,253) | (577,640,149) |
Net increase (decrease) | (6,488,627) | (20,655,551) | $ (127,081,182) | $ (405,955,944) |
Service Class | | | | |
Shares sold | 448,743 | 732,651 | $ 8,651,357 | $ 13,967,159 |
Reinvestment of distributions | 471,316 | 480,564 | 9,082,257 | 8,664,568 |
Shares redeemed | (1,882,669) | (4,390,826) | (36,702,132) | (85,219,322) |
Net increase (decrease) | (962,610) | (3,177,611) | $ (18,968,518) | $ (62,587,595) |
Service Class 2 | | | | |
Shares sold | 7,857,246 | 6,218,448 | $ 150,214,185 | $ 117,730,568 |
Reinvestment of distributions | 2,147,788 | 1,955,033 | 40,893,881 | 34,838,681 |
Shares redeemed | (9,778,461) | (15,423,190) | (186,994,630) | (293,235,286) |
Net increase (decrease) | 226,573 | (7,249,709) | $ 4,113,436 | $ (140,666,037) |
Service Class 2R | | | | |
Shares sold | 58,246 | 65,572 | $ 1,106,634 | $ 1,282,023 |
Reinvestment of distributions | 6,038 | 5,229 | 114,488 | 92,819 |
Shares redeemed | (26,686) | (144,784) | (510,428) | (2,656,411) |
Net increase (decrease) | 37,598 | (73,983) | $ 710,694 | $ (1,281,569) |
Investor Class | | | | |
Shares sold | 748,542 | 1,692,332 | $ 14,524,129 | $ 32,847,466 |
Reinvestment of distributions | 246,256 | 248,478 | 4,747,825 | 4,482,542 |
Shares redeemed | (536,653) | (1,110,397) | (10,434,156) | (21,211,208) |
Net increase (decrease) | 458,145 | 830,413 | $ 8,837,798 | $ 16,118,800 |
Semiannual Report
12. 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 18% of the total outstanding shares of the Fund.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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-0812
1.705693.114
Fidelity® Variable Insurance Products:
Equity-Income Portfolio - Service Class 2R
Semiannual Report
June 30, 2012
(Fidelity Cover Art)
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. |
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/proxyvotingresults 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. © 2012 FMR LLC. All rights reserved.
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, http://www.advisor.fidelity.com, or http://www.401k.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, 2012 to June 30, 2012).
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.
| Annualized
Expense Ratio | Beginning
Account Value
January 1, 2012 | Ending
Account Value
June 30, 2012 | Expenses Paid
During Period*
January 1, 2012
to June 30, 2012 |
Initial Class | .55% | | | |
Actual | | $ 1,000.00 | $ 1,084.50 | $ 2.85 |
HypotheticalA | | $ 1,000.00 | $ 1,022.13 | $ 2.77 |
Service Class | .65% | | | |
Actual | | $ 1,000.00 | $ 1,083.70 | $ 3.37 |
HypotheticalA | | $ 1,000.00 | $ 1,021.63 | $ 3.27 |
Service Class 2 | .80% | | | |
Actual | | $ 1,000.00 | $ 1,083.60 | $ 4.14 |
HypotheticalA | | $ 1,000.00 | $ 1,020.89 | $ 4.02 |
Service Class 2R | .80% | | | |
Actual | | $ 1,000.00 | $ 1,082.80 | $ 4.14 |
HypotheticalA | | $ 1,000.00 | $ 1,020.89 | $ 4.02 |
Investor Class | .64% | | | |
Actual | | $ 1,000.00 | $ 1,084.20 | $ 3.32 |
HypotheticalA | | $ 1,000.00 | $ 1,021.68 | $ 3.22 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Chevron Corp. | 3.6 | 4.2 |
JPMorgan Chase & Co. | 3.5 | 3.3 |
Wells Fargo & Co. | 3.1 | 3.4 |
Comcast Corp. Class A | 3.0 | 1.6 |
Procter & Gamble Co. | 2.6 | 2.7 |
Pfizer, Inc. | 2.5 | 3.3 |
General Electric Co. | 2.2 | 2.2 |
Johnson & Johnson | 2.1 | 1.4 |
Exxon Mobil Corp. | 2.1 | 1.6 |
Paychex, Inc. | 2.0 | 1.7 |
| 26.7 | |
Top Five Market Sectors as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Financials | 19.1 | 19.9 |
Energy | 13.8 | 12.7 |
Health Care | 13.2 | 14.0 |
Consumer Staples | 10.7 | 11.5 |
Industrials | 9.7 | 9.3 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2012* | As of December 31, 2011** |
| Stocks 93.7% | | | Stocks 96.1% | |
| Bonds 3.4% | | | Bonds 2.8% | |
| Short-Term
Investments and
Net Other Assets
(Liabilities) 2.9% | | | Short-Term
Investments and
Net Other Assets
(Liabilities) 1.1% | |
* Foreign investments | 14.4% | | ** Foreign investments | 17.7% | |
Semiannual Report
Investments June 30, 2012 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 91.5% |
| Shares | | Value |
CONSUMER DISCRETIONARY - 8.0% |
Distributors - 0.2% |
Li & Fung Ltd. | 4,554,000 | | $ 8,817,686 |
Hotels, Restaurants & Leisure - 0.8% |
Arcos Dorados Holdings, Inc. | 176,400 | | 2,607,192 |
McDonald's Corp. | 460,252 | | 40,746,110 |
| | 43,353,302 |
Household Durables - 0.5% |
KB Home | 570,948 | | 5,595,290 |
Lennar Corp. Class A | 381,792 | | 11,801,191 |
PulteGroup, Inc. (a) | 1,240,229 | | 13,270,450 |
| | 30,666,931 |
Leisure Equipment & Products - 0.3% |
Hasbro, Inc. | 521,066 | | 17,648,505 |
Media - 4.4% |
Comcast Corp. Class A | 5,117,866 | | 163,618,176 |
Time Warner, Inc. | 2,020,374 | | 77,784,399 |
| | 241,402,575 |
Multiline Retail - 1.5% |
Target Corp. | 1,397,128 | | 81,298,878 |
Specialty Retail - 0.3% |
Lowe's Companies, Inc. | 668,178 | | 19,002,982 |
TOTAL CONSUMER DISCRETIONARY | | 442,190,859 |
CONSUMER STAPLES - 10.5% |
Beverages - 2.1% |
Anheuser-Busch InBev SA NV | 188,681 | | 14,875,850 |
PepsiCo, Inc. | 903,752 | | 63,859,116 |
The Coca-Cola Co. | 477,333 | | 37,322,667 |
| | 116,057,633 |
Food & Staples Retailing - 2.3% |
Safeway, Inc. (d) | 1,026,562 | | 18,632,100 |
Sysco Corp. | 621,800 | | 18,535,858 |
Wal-Mart Stores, Inc. | 825,995 | | 57,588,371 |
Walgreen Co. | 1,049,994 | | 31,058,823 |
| | 125,815,152 |
Food Products - 0.5% |
Kellogg Co. | 587,834 | | 28,997,851 |
Household Products - 3.3% |
Kimberly-Clark Corp. | 306,201 | | 25,650,458 |
Procter & Gamble Co. | 2,341,501 | | 143,416,936 |
Reckitt Benckiser Group PLC | 209,901 | | 11,061,982 |
| | 180,129,376 |
Tobacco - 2.3% |
Altria Group, Inc. | 1,428,874 | | 49,367,597 |
British American Tobacco PLC sponsored ADR | 367,600 | | 37,539,312 |
|
| Shares | | Value |
Lorillard, Inc. | 124,782 | | $ 16,464,985 |
Philip Morris International, Inc. | 266,844 | | 23,284,807 |
| | 126,656,701 |
TOTAL CONSUMER STAPLES | | 577,656,713 |
ENERGY - 13.1% |
Energy Equipment & Services - 1.3% |
BW Offshore Ltd. | 5,396,200 | | 5,850,990 |
Exterran Partners LP | 387,857 | | 7,458,490 |
Halliburton Co. | 803,985 | | 22,825,134 |
National Oilwell Varco, Inc. | 157,156 | | 10,127,133 |
Noble Corp. | 493,202 | | 16,043,861 |
Trinidad Drilling Ltd. (d) | 1,191,800 | | 6,801,255 |
| | 69,106,863 |
Oil, Gas & Consumable Fuels - 11.8% |
Apache Corp. | 390,311 | | 34,304,434 |
BP PLC sponsored ADR | 1,060,136 | | 42,977,913 |
Buckeye Partners LP | 181,720 | | 9,480,332 |
Canadian Natural Resources Ltd. | 610,500 | | 16,376,343 |
Chevron Corp. | 1,899,151 | | 200,360,425 |
EV Energy Partners LP | 58,900 | | 2,972,094 |
Exxon Mobil Corp. | 1,328,669 | | 113,694,206 |
Holly Energy Partners LP | 109,284 | | 6,185,474 |
HollyFrontier Corp. | 504,476 | | 17,873,585 |
Inergy LP | 147,118 | | 2,739,337 |
Inergy Midstream LP | 205,600 | | 4,268,256 |
Legacy Reserves LP | 380,101 | | 9,506,326 |
Markwest Energy Partners LP | 159,900 | | 7,884,669 |
Penn West Petroleum Ltd. (d) | 2,006,500 | | 26,921,511 |
Pioneer Southwest Energy Partners LP | 139,402 | | 3,585,419 |
Royal Dutch Shell PLC Class A sponsored ADR | 1,575,700 | | 106,249,451 |
Suncor Energy, Inc. | 551,100 | | 15,935,943 |
Williams Companies, Inc. | 965,900 | | 27,837,238 |
| | 649,152,956 |
TOTAL ENERGY | | 718,259,819 |
FINANCIALS - 18.0% |
Capital Markets - 2.8% |
Apollo Investment Corp. | 808,738 | | 6,211,108 |
Ashmore Group PLC | 2,251,743 | | 12,290,087 |
BlackRock, Inc. Class A | 59,900 | | 10,172,218 |
Charles Schwab Corp. | 1,921,200 | | 24,841,116 |
FXCM, Inc. Class A (d) | 272,097 | | 3,199,861 |
Goldman Sachs Group, Inc. | 143,335 | | 13,740,093 |
KKR & Co. LP | 1,776,843 | | 22,903,506 |
Manning & Napier, Inc. | 439,100 | | 6,248,393 |
Morgan Stanley | 1,957,993 | | 28,567,118 |
The Blackstone Group LP | 1,844,426 | | 24,106,648 |
| | 152,280,148 |
Common Stocks - continued |
| Shares | | Value |
FINANCIALS - continued |
Commercial Banks - 5.5% |
BB&T Corp. | 463,355 | | $ 14,294,502 |
Comerica, Inc. | 331,820 | | 10,190,192 |
Cullen/Frost Bankers, Inc. | 134,900 | | 7,755,401 |
First Niagara Financial Group, Inc. | 631,834 | | 4,833,530 |
M&T Bank Corp. | 273,493 | | 22,582,317 |
Standard Chartered PLC (United Kingdom) | 381,370 | | 8,269,378 |
SunTrust Banks, Inc. | 862,480 | | 20,897,890 |
U.S. Bancorp | 1,329,738 | | 42,764,374 |
Wells Fargo & Co. | 5,108,236 | | 170,819,412 |
| | 302,406,996 |
Diversified Financial Services - 4.3% |
JPMorgan Chase & Co. | 5,464,519 | | 195,247,264 |
KKR Financial Holdings LLC | 3,028,485 | | 25,802,692 |
New Academy Holding Co. LLC unit (h)(i) | 127,200 | | 14,743,752 |
| | 235,793,708 |
Insurance - 3.6% |
ACE Ltd. | 562,800 | | 41,720,364 |
AFLAC, Inc. | 451,300 | | 19,220,867 |
Assured Guaranty Ltd. | 211,162 | | 2,977,384 |
Berkshire Hathaway, Inc. Class B (a) | 220,375 | | 18,363,849 |
Fidelity National Financial, Inc. Class A | 537,711 | | 10,356,314 |
Hanover Insurance Group, Inc. | 277,728 | | 10,867,497 |
MetLife, Inc. | 2,201,874 | | 67,927,813 |
MetLife, Inc. unit (a) | 144,300 | | 8,922,069 |
Validus Holdings Ltd. | 586,435 | | 18,783,513 |
| | 199,139,670 |
Real Estate Investment Trusts - 1.8% |
American Capital Agency Corp. | 470,888 | | 15,826,546 |
Annaly Capital Management, Inc. (d) | 890,200 | | 14,937,556 |
Digital Realty Trust, Inc. | 124,400 | | 9,338,708 |
Highwoods Properties, Inc. (SBI) | 127,438 | | 4,288,289 |
Lexington Corporate Properties Trust | 308,865 | | 2,616,087 |
Omega Healthcare Investors, Inc. | 464,200 | | 10,444,500 |
Rayonier, Inc. | 239,754 | | 10,764,955 |
Two Harbors Investment Corp. | 1,258,103 | | 13,033,947 |
Ventas, Inc. | 279,338 | | 17,631,815 |
| | 98,882,403 |
Real Estate Management & Development - 0.0% |
Beazer Pre-Owned Rental Homes, Inc. (i) | 149,500 | | 2,990,000 |
TOTAL FINANCIALS | | 991,492,925 |
HEALTH CARE - 12.8% |
Biotechnology - 0.7% |
Amgen, Inc. | 316,100 | | 23,087,944 |
PDL BioPharma, Inc. (d) | 2,246,500 | | 14,894,295 |
| | 37,982,239 |
|
| Shares | | Value |
Health Care Equipment & Supplies - 0.7% |
Baxter International, Inc. | 100,100 | | $ 5,320,315 |
Covidien PLC | 412,000 | | 22,042,000 |
St. Jude Medical, Inc. | 268,500 | | 10,715,835 |
| | 38,078,150 |
Health Care Providers & Services - 1.6% |
Aetna, Inc. | 439,400 | | 17,035,538 |
Brookdale Senior Living, Inc. (a) | 615,830 | | 10,924,824 |
McKesson Corp. | 61,450 | | 5,760,938 |
WellPoint, Inc. | 803,761 | | 51,271,914 |
| | 84,993,214 |
Pharmaceuticals - 9.8% |
Abbott Laboratories | 762,600 | | 49,164,822 |
AstraZeneca PLC sponsored ADR | 466,400 | | 20,871,400 |
Eli Lilly & Co. | 1,095,557 | | 47,010,351 |
Johnson & Johnson | 1,700,268 | | 114,870,106 |
Merck & Co., Inc. | 2,685,789 | | 112,131,691 |
Pfizer, Inc. | 6,030,885 | | 138,710,355 |
Sanofi SA | 459,370 | | 34,774,705 |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 608,822 | | 24,011,940 |
| | 541,545,370 |
TOTAL HEALTH CARE | | 702,598,973 |
INDUSTRIALS - 9.1% |
Aerospace & Defense - 2.4% |
Lockheed Martin Corp. | 302,996 | | 26,384,892 |
Raytheon Co. | 630,741 | | 35,693,633 |
Rockwell Collins, Inc. | 332,585 | | 16,413,070 |
The Boeing Co. | 146,780 | | 10,905,754 |
United Technologies Corp. | 591,376 | | 44,666,629 |
| | 134,063,978 |
Air Freight & Logistics - 1.4% |
C.H. Robinson Worldwide, Inc. | 241,500 | | 14,134,995 |
United Parcel Service, Inc. Class B | 781,704 | | 61,567,007 |
| | 75,702,002 |
Building Products - 0.1% |
Lennox International, Inc. | 75,800 | | 3,534,554 |
Commercial Services & Supplies - 1.1% |
Intrum Justitia AB | 732,919 | | 10,648,195 |
Republic Services, Inc. | 1,961,382 | | 51,898,168 |
| | 62,546,363 |
Industrial Conglomerates - 2.2% |
General Electric Co. | 5,884,241 | | 122,627,582 |
Machinery - 1.1% |
Briggs & Stratton Corp. | 755,567 | | 13,214,867 |
Douglas Dynamics, Inc. | 535,191 | | 7,626,472 |
Harsco Corp. | 116,600 | | 2,376,308 |
Illinois Tool Works, Inc. | 179,121 | | 9,473,710 |
Common Stocks - continued |
| Shares | | Value |
INDUSTRIALS - continued |
Machinery - continued |
Ingersoll-Rand PLC | 443,938 | | $ 18,725,305 |
Stanley Black & Decker, Inc. | 120,391 | | 7,748,365 |
| | 59,165,027 |
Professional Services - 0.3% |
Michael Page International PLC | 2,475,199 | | 14,494,357 |
Road & Rail - 0.5% |
Union Pacific Corp. | 249,462 | | 29,763,311 |
TOTAL INDUSTRIALS | | 501,897,174 |
INFORMATION TECHNOLOGY - 8.7% |
Communications Equipment - 1.0% |
Cisco Systems, Inc. | 3,397,522 | | 58,335,453 |
Computers & Peripherals - 1.4% |
Apple, Inc. (a) | 66,930 | | 39,087,120 |
Hewlett-Packard Co. | 1,791,450 | | 36,026,060 |
| | 75,113,180 |
Electronic Equipment & Components - 0.3% |
Arrow Electronics, Inc. (a) | 202,022 | | 6,628,342 |
TE Connectivity Ltd. | 351,838 | | 11,227,151 |
| | 17,855,493 |
Internet Software & Services - 0.2% |
VeriSign, Inc. (a) | 291,000 | | 12,678,870 |
IT Services - 4.2% |
Accenture PLC Class A | 525,471 | | 31,575,552 |
Cognizant Technology Solutions Corp. Class A (a) | 490,433 | | 29,425,980 |
Fidelity National Information Services, Inc. | 98,697 | | 3,363,594 |
IBM Corp. | 79,449 | | 15,538,635 |
Paychex, Inc. | 3,587,887 | | 112,695,531 |
Visa, Inc. Class A | 305,551 | | 37,775,270 |
| | 230,374,562 |
Semiconductors & Semiconductor Equipment - 1.4% |
Applied Materials, Inc. | 1,457,200 | | 16,699,512 |
KLA-Tencor Corp. | 382,148 | | 18,820,789 |
MKS Instruments, Inc. | 92,421 | | 2,673,740 |
Siliconware Precision Industries Co. Ltd. sponsored ADR | 2,523,619 | | 13,097,583 |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 1,698,500 | | 23,711,060 |
| | 75,002,684 |
Software - 0.2% |
CA Technologies, Inc. | 401,419 | | 10,874,441 |
TOTAL INFORMATION TECHNOLOGY | | 480,234,683 |
|
| Shares | | Value |
MATERIALS - 1.2% |
Chemicals - 0.6% |
Eastman Chemical Co. | 216,300 | | $ 10,895,031 |
PetroLogistics LP | 64,800 | | 697,248 |
PPG Industries, Inc. | 185,136 | | 19,646,632 |
| | 31,238,911 |
Metals & Mining - 0.6% |
ArcelorMittal SA Class A unit (d) | 421,403 | | 6,434,824 |
Commercial Metals Co. | 668,471 | | 8,449,473 |
Freeport-McMoRan Copper & Gold, Inc. | 329,200 | | 11,215,844 |
Nucor Corp. | 190,500 | | 7,219,950 |
| | 33,320,091 |
TOTAL MATERIALS | | 64,559,002 |
TELECOMMUNICATION SERVICES - 4.7% |
Diversified Telecommunication Services - 3.5% |
AT&T, Inc. | 2,960,276 | | 105,563,442 |
CenturyLink, Inc. | 290,455 | | 11,470,068 |
Koninklijke KPN NV | 1,206,976 | | 11,541,247 |
Verizon Communications, Inc. | 1,499,008 | | 66,615,916 |
| | 195,190,673 |
Wireless Telecommunication Services - 1.2% |
Vodafone Group PLC | 22,599,446 | | 63,521,524 |
TOTAL TELECOMMUNICATION SERVICES | | 258,712,197 |
UTILITIES - 5.4% |
Electric Utilities - 3.7% |
Duke Energy Corp. | 2,059,077 | | 47,482,316 |
El Paso Electric Co. | 253,492 | | 8,405,795 |
FirstEnergy Corp. | 563,810 | | 27,733,814 |
NextEra Energy, Inc. | 560,380 | | 38,559,748 |
PPL Corp. | 1,975,734 | | 54,945,163 |
Southern Co. | 601,734 | | 27,860,284 |
| | 204,987,120 |
Multi-Utilities - 1.7% |
Alliant Energy Corp. | 190,801 | | 8,694,802 |
CMS Energy Corp. | 118,500 | | 2,784,750 |
National Grid PLC | 3,127,200 | | 33,142,152 |
PG&E Corp. | 455,105 | | 20,602,603 |
Sempra Energy | 422,100 | | 29,074,248 |
| | 94,298,555 |
TOTAL UTILITIES | | 299,285,675 |
TOTAL COMMON STOCKS (Cost $4,682,960,234) |
5,036,888,020
|
Preferred Stocks - 2.2% |
| Shares | | Value |
Convertible Preferred Stocks - 1.3% |
CONSUMER DISCRETIONARY - 0.2% |
Automobiles - 0.1% |
General Motors Co. 4.75% | 168,490 | | $ 5,593,868 |
Media - 0.1% |
Interpublic Group of Companies, Inc. 5.25% | 6,200 | | 6,435,538 |
TOTAL CONSUMER DISCRETIONARY | | 12,029,406 |
ENERGY - 0.0% |
Oil, Gas & Consumable Fuels - 0.0% |
ATP Oil & Gas Corp. Series B, 8.00% | 3,700 | | 64,750 |
FINANCIALS - 0.3% |
Commercial Banks - 0.2% |
Huntington Bancshares, Inc. 8.50% | 9,000 | | 10,314,000 |
Diversified Financial Services - 0.0% |
Citigroup, Inc. 7.50% | 19,700 | | 1,685,532 |
Real Estate Investment Trusts - 0.1% |
Health Care REIT, Inc. Series I, 6.50% | 84,800 | | 4,579,200 |
TOTAL FINANCIALS | | 16,578,732 |
HEALTH CARE - 0.3% |
Health Care Equipment & Supplies - 0.2% |
Alere, Inc. 3.00% | 41,553 | | 8,601,471 |
Health Care Providers & Services - 0.1% |
HealthSouth Corp. Series A 6.50% | 7,600 | | 8,094,000 |
TOTAL HEALTH CARE | | 16,695,471 |
INDUSTRIALS - 0.3% |
Aerospace & Defense - 0.2% |
United Technologies Corp. 7.50% | 251,000 | | 13,225,190 |
Professional Services - 0.1% |
Nielsen Holdings B.V. 6.25% | 91,500 | | 4,683,656 |
TOTAL INDUSTRIALS | | 17,908,846 |
MATERIALS - 0.1% |
Metals & Mining - 0.1% |
AngloGold Ashanti Holdings Finance PLC 6.00% | 70,100 | | 2,888,120 |
UTILITIES - 0.1% |
Electric Utilities - 0.1% |
PPL Corp. 8.75% | 135,000 | | 7,222,500 |
TOTAL CONVERTIBLE PREFERRED STOCKS | | 73,387,825 |
|
| Shares | | Value |
Nonconvertible Preferred Stocks - 0.9% |
CONSUMER DISCRETIONARY - 0.6% |
Automobiles - 0.6% |
Porsche Automobil Holding SE (Germany) (d) | 193,475 | | $ 9,584,364 |
Volkswagen AG | 156,109 | | 24,615,470 |
| | 34,199,834 |
FINANCIALS - 0.3% |
Consumer Finance - 0.3% |
Ally Financial, Inc. 7.00% (e) | 14,714 | | 13,021,890 |
TOTAL NONCONVERTIBLE PREFERRED STOCKS | | 47,221,724 |
TOTAL PREFERRED STOCKS (Cost $133,159,847) |
120,609,549
|
Corporate Bonds - 3.2% |
| Principal Amount | | |
Convertible Bonds - 2.4% |
CONSUMER DISCRETIONARY - 0.1% |
Hotels, Restaurants & Leisure - 0.1% |
Gaylord Entertainment Co. 3.75% 10/1/14 (e) | | $ 2,210,000 | | 3,296,436 |
ENERGY - 0.5% |
Energy Equipment & Services - 0.1% |
Transocean, Inc. Series C, 1.5% 12/15/37 | | 5,180,000 | | 5,154,100 |
Oil, Gas & Consumable Fuels - 0.4% |
Amyris, Inc. 3% 2/27/17 (i) | | 1,383,000 | | 1,152,025 |
Chesapeake Energy Corp. 2.5% 5/15/37 | | 2,590,000 | | 2,232,062 |
Massey Energy Co. 3.25% 8/1/15 | | 5,860,000 | | 5,054,250 |
Peabody Energy Corp. 4.75% 12/15/66 | | 5,050,000 | | 4,096,813 |
Western Refining, Inc. 5.75% 6/15/14 | | 4,320,000 | | 9,363,600 |
| | 21,898,750 |
TOTAL ENERGY | | 27,052,850 |
FINANCIALS - 0.1% |
Thrifts & Mortgage Finance - 0.1% |
MGIC Investment Corp. 9% 4/1/63 (e) | | 10,438,000 | | 4,436,150 |
HEALTH CARE - 0.1% |
Health Care Equipment & Supplies - 0.1% |
Teleflex, Inc. 3.875% 8/1/17 | | 3,860,000 | | 4,483,004 |
Corporate Bonds - continued |
| Principal Amount | | Value |
Convertible Bonds - continued |
INDUSTRIALS - 0.3% |
Commercial Services & Supplies - 0.2% |
Covanta Holding Corp. 3.25% 6/1/14 | | $ 10,880,000 | | $ 12,751,360 |
Construction & Engineering - 0.1% |
MasTec, Inc.: | | | | |
4% 6/15/14 | | 2,520,000 | | 3,030,300 |
4.25% 12/15/14 | | 1,300,000 | | 1,610,375 |
| | 4,640,675 |
TOTAL INDUSTRIALS | | 17,392,035 |
INFORMATION TECHNOLOGY - 0.8% |
Communications Equipment - 0.1% |
InterDigital, Inc. 2.5% 3/15/16 | | 5,740,000 | | 5,589,612 |
Computers & Peripherals - 0.1% |
SanDisk Corp. 1.5% 8/15/17 | | 8,650,000 | | 8,936,488 |
Internet Software & Services - 0.1% |
VeriSign, Inc. 3.25% 8/15/37 | | 4,410,000 | | 6,140,925 |
IT Services - 0.1% |
CACI International, Inc. 2.125% 5/1/14 | | 4,690,000 | | 5,329,013 |
Semiconductors & Semiconductor Equipment - 0.1% |
Micron Technology, Inc.: | | | | |
1.875% 8/1/31 (e) | | 4,650,000 | | 4,155,938 |
3.125% 5/1/32 (e) | | 650,000 | | 598,406 |
| | 4,754,344 |
Software - 0.3% |
Nuance Communications, Inc. 2.75% 11/1/31 (e) | | 13,380,000 | | 14,768,175 |
TOTAL INFORMATION TECHNOLOGY | | 45,518,557 |
MATERIALS - 0.2% |
Metals & Mining - 0.2% |
Goldcorp, Inc. 2% 8/1/14 | | 4,490,000 | | 5,068,312 |
Newmont Mining Corp. 1.25% 7/15/14 | | 5,990,000 | | 7,427,600 |
Royal Gold, Inc. 2.875% 6/15/19 | | 1,190,000 | | 1,246,525 |
| | 13,742,437 |
TELECOMMUNICATION SERVICES - 0.1% |
Diversified Telecommunication Services - 0.1% |
Clearwire Communications LLC/Clearwire Finance, Inc. 8.25% 12/1/40 (e) | | 6,660,000 | | 4,145,850 |
|
| Principal Amount | | Value |
UTILITIES - 0.2% |
Multi-Utilities - 0.2% |
CMS Energy Corp. 5.5% 6/15/29 | | $ 6,100,000 | | $ 10,347,430 |
TOTAL CONVERTIBLE BONDS | | 130,414,749 |
Nonconvertible Bonds - 0.8% |
CONSUMER DISCRETIONARY - 0.1% |
Multiline Retail - 0.1% |
The Bon-Ton Department Stores, Inc. 10.25% 3/15/14 | | 3,030,000 | | 2,545,200 |
CONSUMER STAPLES - 0.2% |
Food & Staples Retailing - 0.2% |
Rite Aid Corp. 9.5% 6/15/17 | | 9,085,000 | | 9,289,413 |
Tops Markets LLC 10.125% 10/15/15 | | 2,230,000 | | 2,369,375 |
| | 11,658,788 |
ENERGY - 0.1% |
Oil, Gas & Consumable Fuels - 0.1% |
Alpha Natural Resources, Inc. 6% 6/1/19 | | 1,230,000 | | 1,048,575 |
Western Refining, Inc. 11.25% 6/15/17 (e) | | 4,045,000 | | 4,530,400 |
| | 5,578,975 |
FINANCIALS - 0.3% |
Diversified Financial Services - 0.1% |
Goldman Sachs Capital II 5.793% (f)(g) | | 7,850,000 | | 5,314,607 |
Thrifts & Mortgage Finance - 0.2% |
Radian Group, Inc.: | | | | |
5.375% 6/15/15 | | 3,960,000 | | 2,851,200 |
5.625% 2/15/13 | | 10,000,000 | | 9,400,000 |
| | 12,251,200 |
TOTAL FINANCIALS | | 17,565,807 |
MATERIALS - 0.1% |
Paper & Forest Products - 0.1% |
AbitibiBowater, Inc. 10.25% 10/15/18 | | 6,015,000 | | 6,676,650 |
TOTAL NONCONVERTIBLE BONDS | | 44,025,420 |
TOTAL CORPORATE BONDS (Cost $173,855,698) |
174,440,169
|
Floating Rate Loans - 0.2% |
| Principal Amount | | Value |
ENERGY - 0.1% |
Oil, Gas & Consumable Fuels - 0.1% |
Chesapeake Energy Corp. term loan 8.5% 12/2/17 (g) | | $ 5,630,000 | | $ 5,566,663 |
FINANCIALS - 0.1% |
Insurance - 0.1% |
Asurion Corp. Tranche 2nd LN, term loan 9% 5/24/19 (g) | | 5,537,000 | | 5,647,740 |
TOTAL FLOATING RATE LOANS (Cost $11,057,968) |
11,214,403
|
Money Market Funds - 3.0% |
| Shares | | |
Fidelity Cash Central Fund, 0.17% (b) | 99,815,681 | | 99,815,681 |
Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c) | 66,021,525 | | 66,021,525 |
TOTAL MONEY MARKET FUNDS (Cost $165,837,206) |
165,837,206
|
TOTAL INVESTMENT PORTFOLIO - 100.1% (Cost $5,166,870,953) | | 5,508,989,347 |
NET OTHER ASSETS (LIABILITIES) - (0.1)% | | (3,099,044) |
NET ASSETS - 100% | $ 5,505,890,303 |
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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or 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 $48,953,245 or 0.9% of net assets. |
(f) Security is perpetual in nature with no stated maturity date. |
(g) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end. |
(h) Investment is owned by an entity that is treated as a corporation for U.S. tax purposes which is owned by the Fund. |
(i) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $18,885,777 or 0.3% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Amyris, Inc. 3% 2/27/17 | 2/27/12 | $ 1,383,000 |
Beazer Pre-Owned Rental Homes, Inc. | 5/3/12 | $ 2,990,000 |
New Academy Holding Co. LLC unit | 8/1/11 | $ 13,406,880 |
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 | $ 100,972 |
Fidelity Securities Lending Cash Central Fund | 716,888 |
Total | $ 817,860 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2012, involving the Fund's assets and liabilities carried at fair 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 488,420,099 | $ 473,166,875 | $ 15,253,224 | $ - |
Consumer Staples | 577,656,713 | 562,780,863 | 14,875,850 | - |
Energy | 718,324,569 | 718,259,819 | 64,750 | - |
Financials | 1,021,093,547 | 981,415,836 | 21,943,959 | 17,733,752 |
Health Care | 719,294,444 | 676,425,739 | 42,868,705 | - |
Industrials | 519,806,020 | 515,122,364 | 4,683,656 | - |
Information Technology | 480,234,683 | 480,234,683 | - | - |
Materials | 67,447,122 | 67,447,122 | - | - |
Telecommunication Services | 258,712,197 | 195,190,673 | 63,521,524 | - |
Utilities | 306,508,175 | 266,143,523 | 40,364,652 | - |
Corporate Bonds | 174,440,169 | - | 174,440,169 | - |
Floating Rate Loans | 11,214,403 | - | 11,214,403 | - |
Money Market Funds | 165,837,206 | 165,837,206 | - | - |
Total Investments in Securities: | $ 5,508,989,347 | $ 5,102,024,703 | $ 389,230,892 | $ 17,733,752 |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 85.6% |
United Kingdom | 6.4% |
Ireland | 1.3% |
Canada | 1.3% |
Switzerland | 1.3% |
Others (Individually Less Than 1%) | 4.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2012 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $64,753,841) - See accompanying schedule: Unaffiliated issuers (cost $5,001,033,747) | $ 5,343,152,141 | |
Fidelity Central Funds (cost $165,837,206) | 165,837,206 | |
Total Investments (cost $5,166,870,953) | | $ 5,508,989,347 |
Foreign currency held at value (cost $12,007) | | 12,007 |
Receivable for investments sold | | 133,467,164 |
Receivable for fund shares sold | | 819,201 |
Dividends receivable | | 15,015,591 |
Interest receivable | | 1,491,601 |
Distributions receivable from Fidelity Central Funds | | 48,223 |
Other receivables | | 363,372 |
Total assets | | 5,660,206,506 |
| | |
Liabilities | | |
Payable to custodian bank | $ 506,796 | |
Payable for investments purchased | 79,603,094 | |
Payable for fund shares redeemed | 4,941,230 | |
Accrued management fee | 2,051,647 | |
Distribution and service plan fees payable | 346,654 | |
Other affiliated payables | 511,419 | |
Other payables and accrued expenses | 333,838 | |
Collateral on securities loaned, at value | 66,021,525 | |
Total liabilities | | 154,316,203 |
| | |
Net Assets | | $ 5,505,890,303 |
Net Assets consist of: | | |
Paid in capital | | $ 5,002,371,281 |
Undistributed net investment income | | 80,004,092 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | 81,238,620 |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 342,276,310 |
Net Assets | | $ 5,505,890,303 |
Statement of Assets and Liabilities - continued
| June 30, 2012 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($3,410,917,771 ÷ 172,545,133 shares) | | $ 19.77 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($348,946,352 ÷ 17,719,120 shares) | | $ 19.69 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($1,543,366,826 ÷ 79,365,464 shares) | | $ 19.45 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($4,905,087 ÷ 253,322 shares) | | $ 19.36 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($197,754,267 ÷ 10,034,099 shares) | | $ 19.71 |
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, 2012 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 91,320,183 |
Interest | | 5,508,617 |
Income from Fidelity Central Funds | | 817,860 |
Total income | | 97,646,660 |
| | |
Expenses | | |
Management fee | $ 12,788,191 | |
Transfer agent fees | 2,065,952 | |
Distribution and service plan fees | 2,166,965 | |
Accounting and security lending fees | 557,433 | |
Custodian fees and expenses | 67,512 | |
Independent trustees' compensation | 18,289 | |
Appreciation in deferred trustee compensation account | 83 | |
Audit | 44,264 | |
Legal | 13,786 | |
Interest | 310 | |
Miscellaneous | 32,674 | |
Total expenses before reductions | 17,755,459 | |
Expense reductions | (225,136) | 17,530,323 |
Net investment income (loss) | | 80,116,337 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 116,971,037 | |
Foreign currency transactions | (136,072) | |
Total net realized gain (loss) | | 116,834,965 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 248,948,696 | |
Assets and liabilities in foreign currencies | 167,017 | |
Total change in net unrealized appreciation (depreciation) | | 249,115,713 |
Net gain (loss) | | 365,950,678 |
Net increase (decrease) in net assets resulting from operations | | $ 446,067,015 |
Statement of Changes in Net Assets
| Six months ended
June 30, 2012
(Unaudited) | Year ended
December 31,
2011 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 80,116,337 | $ 137,582,764 |
Net realized gain (loss) | 116,834,965 | 336,648,895 |
Change in net unrealized appreciation (depreciation) | 249,115,713 | (414,416,618) |
Net increase (decrease) in net assets resulting from operations | 446,067,015 | 59,815,041 |
Distributions to shareholders from net investment income | - | (135,446,653) |
Distributions to shareholders from net realized gain | (141,235,485) | - |
Total distributions | (141,235,485) | (135,446,653) |
Share transactions - net increase (decrease) | (132,387,772) | (594,372,345) |
Redemption fees | 696 | 2,327 |
Total increase (decrease) in net assets | 172,444,454 | (670,001,630) |
| | |
Net Assets | | |
Beginning of period | 5,333,445,849 | 6,003,447,479 |
End of period (including undistributed net investment income of $80,004,092 and distributions in excess of net investment income of $132,585, respectively) | $ 5,505,890,303 | $ 5,333,445,849 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 18.69 | $ 19.02 | $ 16.81 | $ 13.18 | $ 23.91 | $ 26.20 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .29 | .48 | .30 | .33 | .47 | .47 |
Net realized and unrealized gain (loss) | 1.28 | (.31) | 2.24 | 3.64 | (10.67) | (.05) |
Total from investment operations | 1.57 | .17 | 2.54 | 3.97 | (10.20) | .42 |
Distributions from net investment income | - | (.50) | (.33) | (.34) | (.51) | (.50) |
Distributions from net realized gain | (.49) | - | - | - | (.02) | (2.21) |
Total distributions | (.49) | (.50) | (.33) | (.34) | (.53) | (2.71) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.77 | $ 18.69 | $ 19.02 | $ 16.81 | $ 13.18 | $ 23.91 |
Total Return B, C, D | 8.45% | .97% | 15.15% | 30.21% | (42.65)% | 1.53% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .55% A | .56% | .56% | .58% | .57% | .55% |
Expenses net of fee waivers, if any | .55% A | .55% | .55% | .58% | .57% | .55% |
Expenses net of all reductions | .55% A | .54% | .55% | .58% | .57% | .54% |
Net investment income (loss) | 2.95% A | 2.48% | 1.71% | 2.29% | 2.37% | 1.71% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 3,410,918 | $ 3,345,762 | $ 3,798,310 | $ 3,771,733 | $ 3,322,799 | $ 7,201,655 |
Portfolio turnover rate G | 59% A | 96% | 29% | 29% | 34% | 20% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HExpense 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 reductions from 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. IAmount represents less than $.01 per share. |
Financial Highlights - Service Class
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 18.63 | $ 18.96 | $ 16.75 | $ 13.14 | $ 23.82 | $ 26.11 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .28 | .46 | .28 | .31 | .44 | .44 |
Net realized and unrealized gain (loss) | 1.27 | (.31) | 2.24 | 3.63 | (10.62) | (.05) |
Total from investment operations | 1.55 | .15 | 2.52 | 3.94 | (10.18) | .39 |
Distributions from net investment income | - | (.48) | (.31) | (.33) | (.48) | (.47) |
Distributions from net realized gain | (.49) | - | - | - | (.02) | (2.21) |
Total distributions | (.49) | (.48) | (.31) | (.33) | (.50) | (2.68) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.69 | $ 18.63 | $ 18.96 | $ 16.75 | $ 13.14 | $ 23.82 |
Total Return B, C, D | 8.37% | .86% | 15.09% | 30.03% | (42.70)% | 1.42% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .65% A | .66% | .66% | .68% | .67% | .65% |
Expenses net of fee waivers, if any | .65% A | .66% | .65% | .68% | .67% | .65% |
Expenses net of all reductions | .65% A | .64% | .65% | .68% | .67% | .64% |
Net investment income (loss) | 2.85% A | 2.38% | 1.61% | 2.19% | 2.27% | 1.61% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 348,946 | $ 347,999 | $ 414,431 | $ 430,383 | $ 405,082 | $ 920,054 |
Portfolio turnover rate G | 59% A | 96% | 29% | 29% | 34% | 20% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HExpense 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 reductions from 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. IAmount 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 18.41 | $ 18.75 | $ 16.57 | $ 13.00 | $ 23.57 | $ 25.87 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .26 | .42 | .25 | .29 | .41 | .39 |
Net realized and unrealized gain (loss) | 1.27 | (.31) | 2.21 | 3.58 | (10.50) | (.04) |
Total from investment operations | 1.53 | .11 | 2.46 | 3.87 | (10.09) | .35 |
Distributions from net investment income | - | (.45) | (.28) | (.30) | (.46) | (.44) |
Distributions from net realized gain | (.49) | - | - | - | (.02) | (2.21) |
Total distributions | (.49) | (.45) | (.28) | (.30) | (.48) | (2.65) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.45 | $ 18.41 | $ 18.75 | $ 16.57 | $ 13.00 | $ 23.57 |
Total Return B, C, D | 8.36% | .66% | 14.92% | 29.88% | (42.81)% | 1.27% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .80% A | .81% | .81% | .83% | .82% | .80% |
Expenses net of fee waivers, if any | .80% A | .81% | .80% | .83% | .82% | .80% |
Expenses net of all reductions | .80% A | .80% | .80% | .83% | .82% | .80% |
Net investment income (loss) | 2.70% A | 2.23% | 1.46% | 2.04% | 2.12% | 1.46% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 1,543,367 | $ 1,457,230 | $ 1,619,356 | $ 1,558,421 | $ 1,321,569 | $ 2,583,129 |
Portfolio turnover rate G | 59% A | 96% | 29% | 29% | 34% | 20% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HExpense 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 reductions from 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. IAmount represents less than $.01 per share. |
Financial Highlights - Service Class 2R
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 18.34 | $ 18.66 | $ 16.49 | $ 12.93 | $ 23.44 | $ 25.73 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .26 | .42 | .25 | .28 | .41 | .39 |
Net realized and unrealized gain (loss) | 1.25 | (.30) | 2.20 | 3.58 | (10.45) | (.04) |
Total from investment operations | 1.51 | .12 | 2.45 | 3.86 | (10.04) | .35 |
Distributions from net investment income | - | (.44) | (.28) | (.30) | (.45) | (.43) |
Distributions from net realized gain | (.49) | - | - | - | (.02) | (2.21) |
Total distributions | (.49) | (.44) | (.28) | (.30) | (.47) | (2.64) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.36 | $ 18.34 | $ 18.66 | $ 16.49 | $ 12.93 | $ 23.44 |
Total Return B, C, D | 8.28% | .70% | 14.90% | 29.95% | (42.82)% | 1.27% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .80% A | .81% | .81% | .83% | .82% | .80% |
Expenses net of fee waivers, if any | .80% A | .80% | .80% | .83% | .82% | .80% |
Expenses net of all reductions | .80% A | .79% | .80% | .83% | .81% | .79% |
Net investment income (loss) | 2.70% A | 2.23% | 1.46% | 2.04% | 2.12% | 1.46% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 4,905 | $ 3,956 | $ 5,405 | $ 5,259 | $ 5,339 | $ 13,558 |
Portfolio turnover rate G | 59% A | 96% | 29% | 29% | 34% | 20% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HExpense 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 reductions from 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. IAmount 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 18.64 | $ 18.97 | $ 16.77 | $ 13.15 | $ 23.85 | $ 26.15 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .28 | .46 | .28 | .31 | .44 | .44 |
Net realized and unrealized gain (loss) | 1.28 | (.31) | 2.23 | 3.64 | (10.63) | (.05) |
Total from investment operations | 1.56 | .15 | 2.51 | 3.95 | (10.19) | .39 |
Distributions from net investment income | - | (.48) | (.31) | (.33) | (.49) | (.48) |
Distributions from net realized gain | (.49) | - | - | - | (.02) | (2.21) |
Total distributions | (.49) | (.48) | (.31) | (.33) | (.51) | (2.69) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 19.71 | $ 18.64 | $ 18.97 | $ 16.77 | $ 13.15 | $ 23.85 |
Total Return B, C, D | 8.42% | .89% | 15.04% | 30.09% | (42.71)% | 1.39% |
Ratios to Average Net Assets F, H | | | | | | |
Expenses before reductions | .64% A | .64% | .65% | .68% | .66% | .66% |
Expenses net of fee waivers, if any | .64% A | .64% | .64% | .68% | .66% | .66% |
Expenses net of all reductions | .63% A | .63% | .64% | .68% | .66% | .66% |
Net investment income (loss) | 2.86% A | 2.39% | 1.62% | 2.19% | 2.28% | 1.60% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 197,754 | $ 178,499 | $ 165,946 | $ 147,358 | $ 122,483 | $ 230,534 |
Portfolio turnover rate G | 59% A | 96% | 29% | 29% | 34% | 20% |
AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any 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. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HExpense 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 reductions from 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. IAmount 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, 2012 (Unaudited)
1. Organization.
VIP Equity-Income PortfolioSM (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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
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 a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For corporate bonds and floating rate loans, pricing vendors utilize matrix pricing which considers yield or price of
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices and are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2012, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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 p.m. 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 may elect to defer receipt of a 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Book-tax differences are primarily due to foreign currency transactions, market discount, partnerships, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and futures transactions.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 836,134,469 |
Gross unrealized depreciation | (503,412,986) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 332,721,483 |
| |
Tax cost | $ 5,176,267,864 |
Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days are subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Operating Policies.
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.
Loans and Other Direct Debt Instruments. The Fund invests in direct debt instruments which are interests in amounts owed to lenders by corporate or other borrowers. These instruments may be in the form of loans, trade claims or other receivables and may include standby financing commitments such as revolving credit facilities that obligate the Fund to supply additional cash to the borrower on demand. Loans may be acquired through assignment or participation, or may be made directly to a borrower. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these loans.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,597,039,051 and $1,883,712,074, 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 .20% of the Fund's average net assets and an annualized 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 Fees. 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, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:
Service Class | $ 178,980 |
Service Class 2 | 1,982,276 |
Service Class 2R | 5,709 |
| $ 2,166,965 |
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. In addition, FIIOC receives an asset-based fee of .0038% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:
Initial Class | $ 1,223,378 |
Service Class | 126,972 |
Service Class 2 | 563,280 |
Service Class 2R | 1,605 |
Investor Class | 150,717 |
| $ 2,065,952 |
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 each 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 $28,450 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
Loan Balance | Weighted Average
Interest Rate | Interest
Expense |
Borrower | $ 13,168,000 | .42% | $ 310 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 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 $8,171 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $716,888, including $2,138 from securities loaned to FCM.
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 $225,136 for the period.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
From net investment income | | |
Initial Class | $ - | $ 87,368,043 |
Service Class | - | 8,664,568 |
Service Class 2 | - | 34,838,681 |
Service Class 2R | - | 92,819 |
Investor Class | - | 4,482,542 |
Total | $ - | $ 135,446,653 |
From net realized gain | | |
Initial Class | $ 86,397,034 | $ - |
Service Class | 9,082,257 | - |
Service Class 2 | 40,893,881 | - |
Service Class 2R | 114,488 | - |
Investor Class | 4,747,825 | - |
Total | $ 141,235,485 | $ - |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 | Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
Initial Class | | | | |
Shares sold | 1,803,095 | 4,371,165 | $ 35,046,037 | $ 84,316,162 |
Reinvestment of distributions | 4,469,583 | 4,832,303 | 86,397,034 | 87,368,043 |
Shares redeemed | (12,761,305) | (29,859,019) | (248,524,253) | (577,640,149) |
Net increase (decrease) | (6,488,627) | (20,655,551) | $ (127,081,182) | $ (405,955,944) |
Service Class | | | | |
Shares sold | 448,743 | 732,651 | $ 8,651,357 | $ 13,967,159 |
Reinvestment of distributions | 471,316 | 480,564 | 9,082,257 | 8,664,568 |
Shares redeemed | (1,882,669) | (4,390,826) | (36,702,132) | (85,219,322) |
Net increase (decrease) | (962,610) | (3,177,611) | $ (18,968,518) | $ (62,587,595) |
Service Class 2 | | | | |
Shares sold | 7,857,246 | 6,218,448 | $ 150,214,185 | $ 117,730,568 |
Reinvestment of distributions | 2,147,788 | 1,955,033 | 40,893,881 | 34,838,681 |
Shares redeemed | (9,778,461) | (15,423,190) | (186,994,630) | (293,235,286) |
Net increase (decrease) | 226,573 | (7,249,709) | $ 4,113,436 | $ (140,666,037) |
Service Class 2R | | | | |
Shares sold | 58,246 | 65,572 | $ 1,106,634 | $ 1,282,023 |
Reinvestment of distributions | 6,038 | 5,229 | 114,488 | 92,819 |
Shares redeemed | (26,686) | (144,784) | (510,428) | (2,656,411) |
Net increase (decrease) | 37,598 | (73,983) | $ 710,694 | $ (1,281,569) |
Investor Class | | | | |
Shares sold | 748,542 | 1,692,332 | $ 14,524,129 | $ 32,847,466 |
Reinvestment of distributions | 246,256 | 248,478 | 4,747,825 | 4,482,542 |
Shares redeemed | (536,653) | (1,110,397) | (10,434,156) | (21,211,208) |
Net increase (decrease) | 458,145 | 830,413 | $ 8,837,798 | $ 16,118,800 |
Semiannual Report
12. 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 18% of the total outstanding shares of the Fund.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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-0812
1.833447.106
Fidelity® Variable Insurance Products:
Growth Portfolio
Semiannual Report
June 30, 2012
(Fidelity Cover Art)
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. |
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/proxyvotingresults 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. © 2012 FMR LLC. All rights reserved.
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, http://www.advisor.fidelity.com, or http://www.401k.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, 2012 to June 30, 2012).
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.
| Annualized
Expense Ratio | Beginning
Account Value
January 1, 2012 | Ending
Account Value
June 30, 2012 | Expenses Paid
During Period*
January 1, 2012
to June 30, 2012 |
Initial Class | .66% | | | |
Actual | | $ 1,000.00 | $ 1,106.00 | $ 3.46 |
HypotheticalA | | $ 1,000.00 | $ 1,021.58 | $ 3.32 |
Service Class | .76% | | | |
Actual | | $ 1,000.00 | $ 1,105.10 | $ 3.98 |
HypotheticalA | | $ 1,000.00 | $ 1,021.08 | $ 3.82 |
Service Class 2 | .91% | | | |
Actual | | $ 1,000.00 | $ 1,104.60 | $ 4.76 |
HypotheticalA | | $ 1,000.00 | $ 1,020.34 | $ 4.57 |
Service Class 2R | .91% | | | |
Actual | | $ 1,000.00 | $ 1,104.50 | $ 4.76 |
HypotheticalA | | $ 1,000.00 | $ 1,020.34 | $ 4.57 |
Investor Class | .75% | | | |
Actual | | $ 1,000.00 | $ 1,105.10 | $ 3.93 |
HypotheticalA | | $ 1,000.00 | $ 1,021.13 | $ 3.77 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Apple, Inc. | 11.5 | 8.7 |
QUALCOMM, Inc. | 2.8 | 2.2 |
Harley-Davidson, Inc. | 2.1 | 0.8 |
The Coca-Cola Co. | 2.0 | 1.3 |
Home Depot, Inc. | 2.0 | 0.3 |
Express Scripts Holding Co. | 1.7 | 0.0 |
Citrix Systems, Inc. | 1.7 | 1.1 |
Danaher Corp. | 1.6 | 1.5 |
Philip Morris International, Inc. | 1.4 | 1.3 |
Google, Inc. Class A | 1.4 | 4.1 |
| 28.2 | |
Top Five Market Sectors as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Information Technology | 31.8 | 32.7 |
Consumer Discretionary | 18.4 | 16.6 |
Industrials | 14.2 | 14.3 |
Consumer Staples | 11.4 | 8.5 |
Health Care | 6.0 | 4.2 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2012* | As of December 31, 2011** |
| Stocks 94.5% | | | Stocks 95.7% | |
| Short-Term
Investments and
Net Other Assets (Liabilities) 5.5% | | | Short-Term
Investments and
Net Other Assets
(Liabilities) 4.3% | |
* Foreign investments | 13.1% | | ** Foreign investments | 14.3% | |
Semiannual Report
Investments June 30, 2012 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 94.5% |
| Shares | | Value |
CONSUMER DISCRETIONARY - 18.4% |
Automobiles - 2.5% |
Harley-Davidson, Inc. | 1,747,260 | | $ 79,902,200 |
Tesla Motors, Inc. (a)(d) | 521,977 | | 16,332,660 |
| | 96,234,860 |
Diversified Consumer Services - 0.7% |
Anhanguera Educacional Participacoes SA | 1,053,000 | | 13,421,359 |
Kroton Educacional SA unit (a) | 844,200 | | 12,210,112 |
| | 25,631,471 |
Hotels, Restaurants & Leisure - 3.4% |
Arcos Dorados Holdings, Inc. | 575,400 | | 8,504,412 |
Chipotle Mexican Grill, Inc. (a) | 17,093 | | 6,494,485 |
Dunkin' Brands Group, Inc. | 500,595 | | 17,190,432 |
McDonald's Corp. | 524,257 | | 46,412,472 |
Sonic Corp. (a) | 391,147 | | 3,919,293 |
Starbucks Corp. | 850,273 | | 45,336,556 |
| | 127,857,650 |
Household Durables - 0.7% |
Mohawk Industries, Inc. (a) | 139,256 | | 9,724,246 |
Tupperware Brands Corp. | 342,184 | | 18,737,996 |
| | 28,462,242 |
Internet & Catalog Retail - 1.3% |
Amazon.com, Inc. (a) | 224,512 | | 51,267,315 |
Media - 0.6% |
Discovery Communications, Inc. Class C (non-vtg.) (a) | 444,191 | | 22,249,527 |
Multiline Retail - 2.1% |
Dollar General Corp. (a) | 529,449 | | 28,796,731 |
Dollarama, Inc. | 722,140 | | 43,395,074 |
Dollarama, Inc. (a)(e) | 128,200 | | 7,703,837 |
| | 79,895,642 |
Specialty Retail - 6.2% |
Bed Bath & Beyond, Inc. (a) | 391,526 | | 24,196,307 |
GNC Holdings, Inc. | 798,685 | | 31,308,452 |
Home Depot, Inc. | 1,423,900 | | 75,452,461 |
PetSmart, Inc. | 101,200 | | 6,899,816 |
Ross Stores, Inc. | 513,568 | | 32,082,593 |
TJX Companies, Inc. | 619,500 | | 26,595,135 |
Ulta Salon, Cosmetics & Fragrance, Inc. | 141,734 | | 13,235,121 |
Vitamin Shoppe, Inc. (a) | 502,484 | | 27,601,446 |
| | 237,371,331 |
Textiles, Apparel & Luxury Goods - 0.9% |
lululemon athletica, Inc. (a) | 190,700 | | 11,371,441 |
NIKE, Inc. Class B | 214,569 | | 18,834,867 |
Ralph Lauren Corp. | 38,300 | | 5,364,298 |
| | 35,570,606 |
TOTAL CONSUMER DISCRETIONARY | | 704,540,644 |
|
| Shares | | Value |
CONSUMER STAPLES - 11.4% |
Beverages - 3.5% |
Anheuser-Busch InBev SA NV ADR | 128,700 | | $ 10,250,955 |
Monster Beverage Corp. (a) | 461,675 | | 32,871,260 |
SABMiller PLC | 295,000 | | 11,804,464 |
The Coca-Cola Co. | 995,434 | | 77,832,984 |
| | 132,759,663 |
Food & Staples Retailing - 0.9% |
Costco Wholesale Corp. | 120,000 | | 11,400,000 |
Drogasil SA | 492,823 | | 4,968,716 |
Whole Foods Market, Inc. | 212,824 | | 20,286,384 |
| | 36,655,100 |
Food Products - 2.0% |
Green Mountain Coffee Roasters, Inc. (a)(d) | 1,345,037 | | 29,294,906 |
Mead Johnson Nutrition Co. Class A | 209,969 | | 16,904,604 |
The Hershey Co. | 366,223 | | 26,379,043 |
Want Want China Holdings Ltd. | 2,491,000 | | 3,080,471 |
| | 75,659,024 |
Household Products - 1.3% |
Colgate-Palmolive Co. | 472,242 | | 49,160,392 |
Personal Products - 1.1% |
Estee Lauder Companies, Inc. Class A | 95,952 | | 5,192,922 |
Herbalife Ltd. | 775,222 | | 37,466,479 |
| | 42,659,401 |
Tobacco - 2.6% |
Altria Group, Inc. | 124,400 | | 4,298,020 |
British American Tobacco PLC sponsored ADR | 333,500 | | 34,057,020 |
Philip Morris International, Inc. | 633,500 | | 55,279,210 |
Swedish Match Co. AB | 162,400 | | 6,543,001 |
| | 100,177,251 |
TOTAL CONSUMER STAPLES | | 437,070,831 |
ENERGY - 5.9% |
Energy Equipment & Services - 2.7% |
Cameron International Corp. (a) | 292,800 | | 12,505,488 |
Dresser-Rand Group, Inc. (a) | 346,491 | | 15,432,709 |
National Oilwell Varco, Inc. | 277,500 | | 17,882,100 |
Oceaneering International, Inc. | 417,974 | | 20,004,236 |
Poseidon Concepts Corp. (d) | 1,455,000 | | 17,821,285 |
Schlumberger Ltd. | 293,728 | | 19,065,884 |
| | 102,711,702 |
Oil, Gas & Consumable Fuels - 3.2% |
Atlas Pipeline Partners, LP | 597,341 | | 18,625,092 |
Concho Resources, Inc. (a) | 230,592 | | 19,627,991 |
Kosmos Energy Ltd. (a) | 1,010,955 | | 11,171,053 |
Markwest Energy Partners LP | 170,100 | | 8,387,631 |
Noble Energy, Inc. | 95,400 | | 8,091,828 |
Pioneer Natural Resources Co. | 154,098 | | 13,592,985 |
Common Stocks - continued |
| Shares | | Value |
ENERGY - continued |
Oil, Gas & Consumable Fuels - continued |
Targa Resources Corp. | 229,280 | | $ 9,790,256 |
Valero Energy Corp. | 573,500 | | 13,850,025 |
Williams Companies, Inc. | 659,500 | | 19,006,790 |
| | 122,143,651 |
TOTAL ENERGY | | 224,855,353 |
FINANCIALS - 2.5% |
Capital Markets - 0.4% |
GP Investments Ltd. (depositary receipt) (a) | 1,387,358 | | 3,239,586 |
Invesco Ltd. | 573,451 | | 12,959,993 |
| | 16,199,579 |
Commercial Banks - 0.2% |
First Republic Bank (a) | 191,124 | | 6,421,766 |
Consumer Finance - 0.2% |
Mahindra & Mahindra Financial Services Ltd. | 284,909 | | 3,341,155 |
Shriram Transport Finance Co. Ltd. | 615,161 | | 5,902,463 |
| | 9,243,618 |
Diversified Financial Services - 0.3% |
CME Group, Inc. | 46,627 | | 12,501,165 |
Real Estate Investment Trusts - 1.3% |
American Tower Corp. | 536,155 | | 37,482,596 |
Public Storage | 76,140 | | 10,995,377 |
| | 48,477,973 |
Real Estate Management & Development - 0.1% |
BR Malls Participacoes SA | 182,600 | | 2,091,013 |
TOTAL FINANCIALS | | 94,935,114 |
HEALTH CARE - 6.0% |
Biotechnology - 2.1% |
Aegerion Pharmaceuticals, Inc. (a) | 123,800 | | 1,837,192 |
Amgen, Inc. | 313,300 | | 22,883,432 |
AVEO Pharmaceuticals, Inc. (a)(d) | 805,822 | | 9,798,796 |
Biogen Idec, Inc. (a) | 248,022 | | 35,809,416 |
Biovitrum AB (a) | 2,298,821 | | 7,809,568 |
Cytokinetics, Inc. | 1,808,300 | | 1,158,216 |
Cytokinetics, Inc. warrants 6/25/17 (a) | 1,084,980 | | 5,877 |
| | 79,302,497 |
Health Care Equipment & Supplies - 0.2% |
Conceptus, Inc. (a) | 274,300 | | 5,436,626 |
Edwards Lifesciences Corp. (a) | 23,700 | | 2,448,210 |
| | 7,884,836 |
Health Care Providers & Services - 1.7% |
Apollo Hospitals Enterprise Ltd. | 158,827 | | 1,769,201 |
Express Scripts Holding Co. (a) | 1,153,554 | | 64,402,920 |
| | 66,172,121 |
|
| Shares | | Value |
Life Sciences Tools & Services - 0.1% |
Illumina, Inc. (a)(d) | 87,507 | | $ 3,534,408 |
Pharmaceuticals - 1.9% |
Novo Nordisk A/S Series B | 182,160 | | 26,419,916 |
Valeant Pharmaceuticals International, Inc. (Canada) (a) | 1,054,619 | | 47,308,172 |
| | 73,728,088 |
TOTAL HEALTH CARE | | 230,621,950 |
INDUSTRIALS - 14.2% |
Aerospace & Defense - 3.1% |
Honeywell International, Inc. | 271,016 | | 15,133,533 |
Precision Castparts Corp. | 206,500 | | 33,967,185 |
Textron, Inc. | 156,044 | | 3,880,814 |
TransDigm Group, Inc. (a) | 195,548 | | 26,262,096 |
United Technologies Corp. | 504,039 | | 38,070,066 |
| | 117,313,694 |
Air Freight & Logistics - 0.9% |
United Parcel Service, Inc. Class B | 458,240 | | 36,090,982 |
Building Products - 0.3% |
USG Corp. (a)(d) | 515,300 | | 9,816,465 |
Commercial Services & Supplies - 0.0% |
Aggreko PLC | 59,788 | | 1,940,158 |
Electrical Equipment - 1.7% |
AMETEK, Inc. | 312,086 | | 15,576,212 |
Regal-Beloit Corp. | 269,845 | | 16,800,550 |
Roper Industries, Inc. | 324,567 | | 31,995,815 |
| | 64,372,577 |
Industrial Conglomerates - 1.6% |
Danaher Corp. | 1,176,735 | | 61,284,359 |
Machinery - 2.5% |
CLARCOR, Inc. | 415,088 | | 19,990,638 |
Graco, Inc. | 178,062 | | 8,205,097 |
Ingersoll-Rand PLC | 949,364 | | 40,044,174 |
Manitowoc Co., Inc. | 1,345,894 | | 15,746,960 |
Terex Corp. (a) | 681,700 | | 12,154,711 |
| | 96,141,580 |
Professional Services - 3.1% |
Advisory Board Co. (a) | 462,700 | | 22,945,293 |
Corporate Executive Board Co. | 701,059 | | 28,659,292 |
Equifax, Inc. | 815,503 | | 38,002,440 |
IHS, Inc. Class A (a) | 217,488 | | 23,429,982 |
Qualicorp SA | 612,800 | | 5,357,614 |
| | 118,394,621 |
Road & Rail - 0.1% |
J.B. Hunt Transport Services, Inc. | 75,600 | | 4,505,760 |
Common Stocks - continued |
| Shares | | Value |
INDUSTRIALS - continued |
Trading Companies & Distributors - 0.9% |
MSC Industrial Direct Co., Inc. Class A | 141,012 | | $ 9,243,337 |
W.W. Grainger, Inc. | 127,400 | | 24,363,976 |
| | 33,607,313 |
TOTAL INDUSTRIALS | | 543,467,509 |
INFORMATION TECHNOLOGY - 31.8% |
Communications Equipment - 3.5% |
Acme Packet, Inc. (a)(d) | 844,142 | | 15,743,248 |
QUALCOMM, Inc. | 1,891,697 | | 105,329,689 |
Riverbed Technology, Inc. (a) | 797,181 | | 12,874,473 |
| | 133,947,410 |
Computers & Peripherals - 12.4% |
Apple, Inc. (a) | 754,506 | | 440,631,507 |
SanDisk Corp. (a) | 943,412 | | 34,415,670 |
| | 475,047,177 |
Electronic Equipment & Components - 0.2% |
InvenSense, Inc. (d) | 576,588 | | 6,515,444 |
Internet Software & Services - 4.6% |
Active Network, Inc. (a) | 250,128 | | 3,849,470 |
Baidu.com, Inc. sponsored ADR (a) | 93,795 | | 10,784,549 |
Bankrate, Inc. | 1,033,946 | | 19,014,267 |
Blucora, Inc. (a) | 653,866 | | 8,055,629 |
CoStar Group, Inc. (a) | 114,314 | | 9,282,297 |
Google, Inc. Class A (a) | 94,290 | | 54,694,800 |
MercadoLibre, Inc. | 105,842 | | 8,022,824 |
SPS Commerce, Inc. (a) | 244,958 | | 7,441,824 |
VeriSign, Inc. (a) | 1,227,210 | | 53,469,540 |
| | 174,615,200 |
IT Services - 1.7% |
Cardtronics, Inc. (a) | 287,993 | | 8,700,269 |
Heartland Payment Systems, Inc. | 445,336 | | 13,395,707 |
MasterCard, Inc. Class A | 23,800 | | 10,236,618 |
ServiceSource International, Inc. (a) | 908,512 | | 12,582,891 |
Visa, Inc. Class A | 151,700 | | 18,754,671 |
| | 63,670,156 |
Semiconductors & Semiconductor Equipment - 3.9% |
Altera Corp. | 273,782 | | 9,264,783 |
ASML Holding NV | 458,600 | | 23,581,212 |
Avago Technologies Ltd. | 734,502 | | 26,368,622 |
Broadcom Corp. Class A | 978,729 | | 33,081,040 |
Cirrus Logic, Inc. (a) | 190,372 | | 5,688,315 |
Ezchip Semiconductor Ltd. (a) | 256,259 | | 10,260,610 |
MagnaChip Semiconductor Corp. (a) | 694,900 | | 6,622,397 |
Maxim Integrated Products, Inc. | 144,300 | | 3,699,852 |
PMC-Sierra, Inc. (a) | 977,475 | | 6,001,697 |
Texas Instruments, Inc. | 899,058 | | 25,793,974 |
| | 150,362,502 |
|
| Shares | | Value |
Software - 5.5% |
ANSYS, Inc. (a) | 301,748 | | $ 19,043,316 |
Citrix Systems, Inc. (a) | 766,177 | | 64,312,897 |
Computer Modelling Group Ltd. | 502,700 | | 8,576,661 |
Intuit, Inc. | 274,856 | | 16,312,704 |
Red Hat, Inc. (a) | 261,500 | | 14,769,520 |
salesforce.com, Inc. (a) | 337,082 | | 46,604,957 |
SolarWinds, Inc. (a) | 486,534 | | 21,193,421 |
VMware, Inc. Class A (a) | 210,777 | | 19,189,138 |
| | 210,002,614 |
TOTAL INFORMATION TECHNOLOGY | | 1,214,160,503 |
MATERIALS - 3.1% |
Chemicals - 2.5% |
Albemarle Corp. | 63,300 | | 3,775,212 |
FMC Corp. | 503,054 | | 26,903,328 |
Monsanto Co. | 290,000 | | 24,006,200 |
Praxair, Inc. | 259,837 | | 28,252,077 |
Sherwin-Williams Co. | 108,300 | | 14,333,505 |
| | 97,270,322 |
Metals & Mining - 0.6% |
Kenmare Resources PLC (a) | 4,600,347 | | 2,845,909 |
Newmont Mining Corp. | 404,405 | | 19,617,687 |
| | 22,463,596 |
TOTAL MATERIALS | | 119,733,918 |
TELECOMMUNICATION SERVICES - 1.2% |
Wireless Telecommunication Services - 1.2% |
SBA Communications Corp. Class A (a) | 468,000 | | 26,699,400 |
TIM Participacoes SA sponsored ADR (d) | 634,600 | | 17,426,116 |
| | 44,125,516 |
TOTAL COMMON STOCKS (Cost $2,809,365,160) |
3,613,511,338
|
Money Market Funds - 3.9% |
| | | |
Fidelity Cash Central Fund, 0.17% (b) | 85,174,212 | | 85,174,212 |
Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c) | 61,795,372 | | 61,795,372 |
TOTAL MONEY MARKET FUNDS (Cost $146,969,584) |
146,969,584
|
TOTAL INVESTMENT PORTFOLIO - 98.4% (Cost $2,956,334,744) | | 3,760,480,922 |
NET OTHER ASSETS (LIABILITIES) - 1.6% | | 61,709,773 |
NET ASSETS - 100% | $ 3,822,190,695 |
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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or 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 $7,703,837 or 0.2% 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 | $ 40,548 |
Fidelity Securities Lending Cash Central Fund | 812,561 |
Total | $ 853,109 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2012, involving the Fund's assets and liabilities carried at fair 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 704,540,644 | $ 704,540,644 | $ - | $ - |
Consumer Staples | 437,070,831 | 433,990,360 | 3,080,471 | - |
Energy | 224,855,353 | 224,855,353 | - | - |
Financials | 94,935,114 | 85,691,496 | 9,243,618 | - |
Health Care | 230,621,950 | 202,426,956 | 28,194,994 | - |
Industrials | 543,467,509 | 543,467,509 | - | - |
Information Technology | 1,214,160,503 | 1,214,160,503 | - | - |
Materials | 119,733,918 | 119,733,918 | - | - |
Telecommunication Services | 44,125,516 | 44,125,516 | - | - |
Money Market Funds | 146,969,584 | 146,969,584 | - | - |
Total Investments in Securities: | $ 3,760,480,922 | $ 3,719,961,839 | $ 40,519,083 | $ - |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 86.9% |
Canada | 3.2% |
Brazil | 1.5% |
Cayman Islands | 1.4% |
United Kingdom | 1.2% |
Ireland | 1.2% |
Others (Individually Less Than 1%) | 4.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2012 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $63,275,577) - See accompanying schedule: Unaffiliated issuers (cost $2,809,365,160) | $ 3,613,511,338 | |
Fidelity Central Funds (cost $146,969,584) | 146,969,584 | |
Total Investments (cost $2,956,334,744) | | $ 3,760,480,922 |
Cash | | 1,263,934 |
Receivable for investments sold | | 175,532,351 |
Receivable for fund shares sold | | 742,632 |
Dividends receivable | | 2,081,057 |
Distributions receivable from Fidelity Central Funds | | 265,440 |
Other receivables | | 174,846 |
Total assets | | 3,940,541,182 |
| | |
Liabilities | | |
Payable for investments purchased | $ 51,968,218 | |
Payable for fund shares redeemed | 2,075,728 | |
Accrued management fee | 1,758,157 | |
Distribution and service plan fees payable | 155,921 | |
Other affiliated payables | 382,229 | |
Other payables and accrued expenses | 214,862 | |
Collateral on securities loaned, at value | 61,795,372 | |
Total liabilities | | 118,350,487 |
| | |
Net Assets | | $ 3,822,190,695 |
Net Assets consist of: | | |
Paid in capital | | $ 4,191,632,390 |
Undistributed net investment income | | 6,953,969 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (1,180,546,341) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 804,150,677 |
Net Assets | | $ 3,822,190,695 |
Statement of Assets and Liabilities - continued
| June 30, 2012 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($2,692,563,092 ÷ 65,996,096 shares) | | $ 40.80 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($409,193,128 ÷ 10,058,609 shares) | | $ 40.68 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($576,861,707 ÷ 14,296,172 shares) | | $ 40.35 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($5,039,008 ÷ 125,132 shares) | | $ 40.27 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($138,533,760 ÷ 3,405,063 shares) | | $ 40.68 |
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, 2012 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 21,776,261 |
Interest | | 11 |
Income from Fidelity Central Funds | | 853,109 |
Total income | | 22,629,381 |
| | |
Expenses | | |
Management fee | $ 11,001,025 | |
Transfer agent fees | 1,465,378 | |
Distribution and service plan fees | 984,464 | |
Accounting and security lending fees | 523,095 | |
Custodian fees and expenses | 60,497 | |
Independent trustees' compensation | 13,106 | |
Appreciation in deferred trustee compensation account | 98 | |
Audit | 35,622 | |
Legal | 10,427 | |
Interest | 124 | |
Miscellaneous | 23,885 | |
Total expenses before reductions | 14,117,721 | |
Expense reductions | (37,549) | 14,080,172 |
Net investment income (loss) | | 8,549,209 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 74,003,060 | |
Foreign currency transactions | 3,288 | |
Total net realized gain (loss) | | 74,006,348 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 304,258,462 | |
Assets and liabilities in foreign currencies | 6,460 | |
Total change in net unrealized appreciation (depreciation) | | 304,264,922 |
Net gain (loss) | | 378,271,270 |
Net increase (decrease) in net assets resulting from operations | | $ 386,820,479 |
Statement of Changes in Net Assets
| Six months ended
June 30, 2012
(Unaudited) | Year ended
December 31,
2011 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 8,549,209 | $ 12,085,920 |
Net realized gain (loss) | 74,006,348 | 390,193,292 |
Change in net unrealized appreciation (depreciation) | 304,264,922 | (386,686,117) |
Net increase (decrease) in net assets resulting from operations | 386,820,479 | 15,593,095 |
Distributions to shareholders from net investment income | - | (13,217,872) |
Distributions to shareholders from net realized gain | - | (12,854,853) |
Total distributions | - | (26,072,725) |
Share transactions - net increase (decrease) | (265,280,746) | (292,123,490) |
Redemption fees | 1,578 | 14,621 |
Total increase (decrease) in net assets | 121,541,311 | (302,588,499) |
| | |
Net Assets | | |
Beginning of period | 3,700,649,384 | 4,003,237,883 |
End of period (including undistributed net investment income of $6,953,969 and distributions in excess of net investment income of $1,595,240, respectively) | $ 3,822,190,695 | $ 3,700,649,384 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 36.89 | $ 37.09 | $ 30.04 | $ 23.53 | $ 45.12 | $ 35.87 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .10 | .14 | .07 | .10 | .27 | .09 |
Net realized and unrealized gain (loss) | 3.81 | (.06) H | 7.18 | 6.55 | (21.55) | 9.53 |
Total from investment operations | 3.91 | .08 | 7.25 | 6.65 | (21.28) | 9.62 |
Distributions from net investment income | - | (.15) M | (.09) | (.12) | (.31) | (.33) |
Distributions from net realized gain | - | (.12) M | (.11) | (.02) | - | (.04) |
Total distributions | - | (.28) L | (.20) | (.14) K | (.31) | (.37) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.80 | $ 36.89 | $ 37.09 | $ 30.04 | $ 23.53 | $ 45.12 |
Total Return B, C, D | 10.60% | .20% | 24.17% | 28.29% | (47.17)% | 26.96% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .66% A | .66% | .67% | .69% | .68% | .65% |
Expenses net of fee waivers, if any | .66% A | .66% | .66% | .69% | .68% | .65% |
Expenses net of all reductions | .66% A | .66% | .66% | .68% | .67% | .64% |
Net investment income (loss) | .49% A | .36% | .22% | .41% | .74% | .21% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 2,692,563 | $ 2,583,122 | $ 2,842,307 | $ 2,618,954 | $ 2,337,892 | $ 6,002,656 |
Portfolio turnover rate G | 63% A | 71% | 75% | 134% | 161% | 109% |
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 if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any 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 reductions from 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 Total distributions of $.14 per share is comprised of distributions from net investment income of $.118 and distributions from net realized gain of $.023 per share. L Total distributions of $.28 per share is comprised of distributions from net investment income of $.152 and distributions from net realized gain of $.123 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Service Class
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 36.81 | $ 36.99 | $ 29.96 | $ 23.47 | $ 44.99 | $ 35.72 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .08 | .10 | .04 | .08 | .23 | .04 |
Net realized and unrealized gain (loss) | 3.79 | (.05) H | 7.16 | 6.52 | (21.48) | 9.51 |
Total from investment operations | 3.87 | .05 | 7.20 | 6.60 | (21.25) | 9.55 |
Distributions from net investment income | - | (.11) L | (.06) | (.09) | (.27) | (.24) |
Distributions from net realized gain | - | (.12) L | (.11) | (.02) | - | (.04) |
Total distributions | - | (.23) | (.17) | (.11) K | (.27) | (.28) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.68 | $ 36.81 | $ 36.99 | $ 29.96 | $ 23.47 | $ 44.99 |
Total Return B, C, D | 10.51% | .14% | 24.06% | 28.15% | (47.23)% | 26.87% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .76% A | .77% | .77% | .79% | .78% | .75% |
Expenses net of fee waivers, if any | .76% A | .76% | .76% | .79% | .78% | .75% |
Expenses net of all reductions | .76% A | .76% | .76% | .78% | .77% | .74% |
Net investment income (loss) | .39% A | .26% | .12% | .31% | .64% | .11% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 409,193 | $ 395,217 | $ 453,063 | $ 421,996 | $ 395,759 | $ 929,848 |
Portfolio turnover rate G | 63% A | 71% | 75% | 134% | 161% | 109% |
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 if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any 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 reductions from 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 Total distributions of $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Service Class 2
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 36.53 | $ 36.72 | $ 29.75 | $ 23.31 | $ 44.65 | $ 35.42 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .05 | .04 | (.01) | .04 | .17 | (.02) |
Net realized and unrealized gain (loss) | 3.77 | (.05) H | 7.10 | 6.48 | (21.29) | 9.43 |
Total from investment operations | 3.82 | (.01) | 7.09 | 6.52 | (21.12) | 9.41 |
Distributions from net investment income | - | (.06) L | (.01) | (.05) | (.22) | (.15) |
Distributions from net realized gain | - | (.12) L | (.11) | (.02) | - | (.03) |
Total distributions | - | (.18) | (.12) | (.08) K | (.22) | (.18) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.35 | $ 36.53 | $ 36.72 | $ 29.75 | $ 23.31 | $ 44.65 |
Total Return B, C, D | 10.46% | (.03)% | 23.86% | 27.97% | (47.31)% | 26.66% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .91% A | .92% | .92% | .94% | .93% | .90% |
Expenses net of fee waivers, if any | .91% A | .91% | .91% | .94% | .93% | .90% |
Expenses net of all reductions | .91% A | .91% | .91% | .93% | .92% | .89% |
Net investment income (loss) | .24% A | .11% | (.03)% | .16% | .49% | (.04)% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 576,862 | $ 590,556 | $ 584,193 | $ 528,819 | $ 447,530 | $ 898,204 |
Portfolio turnover rate G | 63% A | 71% | 75% | 134% | 161% | 109% |
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 if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any 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 reductions from 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 Total distributions of $.08 per share is comprised of distributions from net investment income of $.052 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Service Class 2R
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 36.46 | $ 36.64 | $ 29.70 | $ 23.26 | $ 44.42 | $ 35.28 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .05 | .04 | (.01) | .04 | .18 | (.01) |
Net realized and unrealized gain (loss) | 3.76 | (.05) H | 7.09 | 6.46 | (21.20) | 9.38 |
Total from investment operations | 3.81 | (.01) | 7.08 | 6.50 | (21.02) | 9.37 |
Distributions from net investment income | - | (.05) L | (.03) | (.04) | (.14) | (.19) |
Distributions from net realized gain | - | (.12) L | (.11) | (.02) | - | (.04) |
Total distributions | - | (.17) | (.14) | (.06) K | (.14) | (.23) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.27 | $ 36.46 | $ 36.64 | $ 29.70 | $ 23.26 | $ 44.42 |
Total Return B, C, D | 10.45% | (.02)% | 23.86% | 27.98% | (47.31)% | 26.66% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .91% A | .91% | .92% | .94% | .93% | .89% |
Expenses net of fee waivers, if any | .91% A | .91% | .91% | .94% | .93% | .89% |
Expenses net of all reductions | .91% A | .91% | .91% | .93% | .92% | .89% |
Net investment income (loss) | .24% A | .11% | (.03)% | .16% | .49% | (.04)% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 5,039 | $ 5,202 | $ 5,739 | $ 4,084 | $ 3,061 | $ 20,051 |
Portfolio turnover rate G | 63% A | 71% | 75% | 134% | 161% | 109% |
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 if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any 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 reductions from 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 Total distributions of $.06 per share is comprised of distributions from net investment income of $.041 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Investor Class
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 36.81 | $ 37.00 | $ 29.97 | $ 23.48 | $ 45.00 | $ 35.78 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .08 | .10 | .04 | .08 | .24 | .04 |
Net realized and unrealized gain (loss) | 3.79 | (.05) H | 7.17 | 6.52 | (21.49) | 9.50 |
Total from investment operations | 3.87 | .05 | 7.21 | 6.60 | (21.25) | 9.54 |
Distributions from net investment income | - | (.12) L | (.07) | (.09) | (.27) | (.28) |
Distributions from net realized gain | - | (.12) L | (.11) | (.02) | - | (.04) |
Total distributions | - | (.24) | (.18) | (.11) K | (.27) | (.32) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.68 | $ 36.81 | $ 37.00 | $ 29.97 | $ 23.48 | $ 45.00 |
Total Return B, C, D | 10.51% | .14% | 24.08% | 28.14% | (47.22)% | 26.81% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .75% A | .75% | .76% | .79% | .77% | .76% |
Expenses net of fee waivers, if any | .75% A | .75% | .75% | .79% | .77% | .76% |
Expenses net of all reductions | .75% A | .74% | .75% | .78% | .76% | .76% |
Net investment income (loss) | .40% A | .27% | .13% | .31% | .65% | .09% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 138,534 | $ 126,551 | $ 117,936 | $ 95,531 | $ 93,428 | $ 181,705 |
Portfolio turnover rate G | 63% A | 71% | 75% | 134% | 161% | 109% |
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 if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any 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 reductions from 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 Total distributions of $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2012 (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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
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 a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2012, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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 p.m. 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 may elect to defer receipt of a 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP. These differences resulted in distribution reclassifications for the period ended December 31, 2011.
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, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 950,996,351 |
Gross unrealized depreciation | (155,591,050) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 795,405,301 |
| |
Tax cost | $ 2,965,075,621 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. At December 31, 2011, capital loss carryforwards were as follows:
Fiscal year of expiration | |
2016 | $ (787,084,954) |
2017 | (458,405,642) |
Total capital loss carryforward | $ (1,245,490,596) |
Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days are subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Operating Policies.
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 $1,206,110,813 and $1,510,722,986, 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 an annualized 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 Fees. 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.
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees - continued
For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:
Service Class | $ 210,957 |
Service Class 2 | 767,089 |
Service Class 2R | 6,418 |
| $ 984,464 |
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. In addition, FIIOC receives an asset-based fee of .0038% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:
Initial Class | $ 983,155 |
Service Class | 151,094 |
Service Class 2 | 220,275 |
Service Class 2R | 1,804 |
Investor Class | 109,050 |
| $ 1,465,378 |
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 each 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 $28,842 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 Loan
Balance | Weighted Average
Interest Rate | Interest Expense |
Borrower | $ 10,649,000 | .42% | $ 124 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 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 $5,746 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. The value of securities loaned to FCM at period end was $3,550,975. Security lending income represents the income earned on
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
8. Security Lending - continued
investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $812,561, including $112,246 from securities loaned to FCM.
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 $37,517 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 $32.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
From net investment income | | |
Initial Class | $ - | $ 10,671,389 |
Service Class | - | 1,191,707 |
Service Class 2 | - | 935,559 |
Service Class 2R | - | 7,550 |
Investor Class | - | 411,667 |
Total | $ - | $ 13,217,872 |
From net realized gain | | |
Initial Class | $ - | $ 8,992,576 |
Service Class | - | 1,422,036 |
Service Class 2 | - | 2,010,246 |
Service Class 2R | - | 18,630 |
Investor Class | - | 411,365 |
Total | $ - | $ 12,854,853 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 | Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
Initial Class | | | | |
Shares sold | 1,302,776 | 5,105,832 | $ 53,518,520 | $ 193,724,251 |
Reinvestment of distributions | - | 531,779 | - | 19,663,965 |
Shares redeemed | (5,321,461) | (12,264,436) | (216,589,870) | (468,044,614) |
Net increase (decrease) | (4,018,685) | (6,626,825) | $ (163,071,350) | $ (254,656,398) |
Service Class | | | | |
Shares sold | 265,636 | 823,475 | $ 10,876,911 | $ 31,606,992 |
Reinvestment of distributions | - | 70,516 | - | 2,613,743 |
Shares redeemed | (944,934) | (2,403,651) | (38,308,052) | (92,186,437) |
Net increase (decrease) | (679,298) | (1,509,660) | $ (27,431,141) | $ (57,965,702) |
Service Class 2 | | | | |
Shares sold | 1,591,418 | 5,724,223 | $ 64,688,449 | $ 218,079,773 |
Reinvestment of distributions | - | 79,666 | - | 2,945,805 |
Shares redeemed | (3,459,568) | (5,547,933) | (137,511,871) | (210,350,344) |
Net increase (decrease) | (1,868,150) | 255,956 | $ (72,823,422) | $ 10,675,234 |
Semiannual Report
11. Share Transactions - continued
| Shares | Dollars |
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 | Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
Service Class 2R | | | | |
Shares sold | 27,064 | 116,285 | $ 1,096,906 | $ 4,451,582 |
Reinvestment of distributions | - | 708 | - | 26,180 |
Shares redeemed | (44,618) | (130,935) | (1,764,342) | (4,926,892) |
Net increase (decrease) | (17,554) | (13,942) | $ (667,436) | $ (449,130) |
Investor Class | | | | |
Shares sold | 260,921 | 882,253 | $ 10,695,367 | $ 34,127,993 |
Reinvestment of distributions | - | 22,289 | - | 823,032 |
Shares redeemed | (294,138) | (653,911) | (11,982,764) | (24,678,519) |
Net increase (decrease) | (33,217) | 250,631 | $ (1,287,397) | $ 10,272,506 |
12. 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 13% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 23% of the total outstanding shares of the Fund.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Adviser
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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
VIPGRWT-SANN-0812
1.705692.114
Fidelity® Variable Insurance Products:
Growth Portfolio - Service Class 2R
Semiannual Report
June 30, 2012
(Fidelity Cover Art)
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. |
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/proxyvotingresults 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. © 2012 FMR LLC. All rights reserved.
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, http://www.advisor.fidelity.com, or http://www.401k.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, 2012 to June 30, 2012).
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.
| Annualized
Expense Ratio | Beginning
Account Value
January 1, 2012 | Ending
Account Value
June 30, 2012 | Expenses Paid
During Period*
January 1, 2012
to June 30, 2012 |
Initial Class | .66% | | | |
Actual | | $ 1,000.00 | $ 1,106.00 | $ 3.46 |
HypotheticalA | | $ 1,000.00 | $ 1,021.58 | $ 3.32 |
Service Class | .76% | | | |
Actual | | $ 1,000.00 | $ 1,105.10 | $ 3.98 |
HypotheticalA | | $ 1,000.00 | $ 1,021.08 | $ 3.82 |
Service Class 2 | .91% | | | |
Actual | | $ 1,000.00 | $ 1,104.60 | $ 4.76 |
HypotheticalA | | $ 1,000.00 | $ 1,020.34 | $ 4.57 |
Service Class 2R | .91% | | | |
Actual | | $ 1,000.00 | $ 1,104.50 | $ 4.76 |
HypotheticalA | | $ 1,000.00 | $ 1,020.34 | $ 4.57 |
Investor Class | .75% | | | |
Actual | | $ 1,000.00 | $ 1,105.10 | $ 3.93 |
HypotheticalA | | $ 1,000.00 | $ 1,021.13 | $ 3.77 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Apple, Inc. | 11.5 | 8.7 |
QUALCOMM, Inc. | 2.8 | 2.2 |
Harley-Davidson, Inc. | 2.1 | 0.8 |
The Coca-Cola Co. | 2.0 | 1.3 |
Home Depot, Inc. | 2.0 | 0.3 |
Express Scripts Holding Co. | 1.7 | 0.0 |
Citrix Systems, Inc. | 1.7 | 1.1 |
Danaher Corp. | 1.6 | 1.5 |
Philip Morris International, Inc. | 1.4 | 1.3 |
Google, Inc. Class A | 1.4 | 4.1 |
| 28.2 | |
Top Five Market Sectors as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Information Technology | 31.8 | 32.7 |
Consumer Discretionary | 18.4 | 16.6 |
Industrials | 14.2 | 14.3 |
Consumer Staples | 11.4 | 8.5 |
Health Care | 6.0 | 4.2 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2012* | As of December 31, 2011** |
| Stocks 94.5% | | | Stocks 95.7% | |
| Short-Term
Investments and
Net Other Assets (Liabilities) 5.5% | | | Short-Term
Investments and
Net Other Assets
(Liabilities) 4.3% | |
* Foreign investments | 13.1% | | ** Foreign investments | 14.3% | |
Semiannual Report
Investments June 30, 2012 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 94.5% |
| Shares | | Value |
CONSUMER DISCRETIONARY - 18.4% |
Automobiles - 2.5% |
Harley-Davidson, Inc. | 1,747,260 | | $ 79,902,200 |
Tesla Motors, Inc. (a)(d) | 521,977 | | 16,332,660 |
| | 96,234,860 |
Diversified Consumer Services - 0.7% |
Anhanguera Educacional Participacoes SA | 1,053,000 | | 13,421,359 |
Kroton Educacional SA unit (a) | 844,200 | | 12,210,112 |
| | 25,631,471 |
Hotels, Restaurants & Leisure - 3.4% |
Arcos Dorados Holdings, Inc. | 575,400 | | 8,504,412 |
Chipotle Mexican Grill, Inc. (a) | 17,093 | | 6,494,485 |
Dunkin' Brands Group, Inc. | 500,595 | | 17,190,432 |
McDonald's Corp. | 524,257 | | 46,412,472 |
Sonic Corp. (a) | 391,147 | | 3,919,293 |
Starbucks Corp. | 850,273 | | 45,336,556 |
| | 127,857,650 |
Household Durables - 0.7% |
Mohawk Industries, Inc. (a) | 139,256 | | 9,724,246 |
Tupperware Brands Corp. | 342,184 | | 18,737,996 |
| | 28,462,242 |
Internet & Catalog Retail - 1.3% |
Amazon.com, Inc. (a) | 224,512 | | 51,267,315 |
Media - 0.6% |
Discovery Communications, Inc. Class C (non-vtg.) (a) | 444,191 | | 22,249,527 |
Multiline Retail - 2.1% |
Dollar General Corp. (a) | 529,449 | | 28,796,731 |
Dollarama, Inc. | 722,140 | | 43,395,074 |
Dollarama, Inc. (a)(e) | 128,200 | | 7,703,837 |
| | 79,895,642 |
Specialty Retail - 6.2% |
Bed Bath & Beyond, Inc. (a) | 391,526 | | 24,196,307 |
GNC Holdings, Inc. | 798,685 | | 31,308,452 |
Home Depot, Inc. | 1,423,900 | | 75,452,461 |
PetSmart, Inc. | 101,200 | | 6,899,816 |
Ross Stores, Inc. | 513,568 | | 32,082,593 |
TJX Companies, Inc. | 619,500 | | 26,595,135 |
Ulta Salon, Cosmetics & Fragrance, Inc. | 141,734 | | 13,235,121 |
Vitamin Shoppe, Inc. (a) | 502,484 | | 27,601,446 |
| | 237,371,331 |
Textiles, Apparel & Luxury Goods - 0.9% |
lululemon athletica, Inc. (a) | 190,700 | | 11,371,441 |
NIKE, Inc. Class B | 214,569 | | 18,834,867 |
Ralph Lauren Corp. | 38,300 | | 5,364,298 |
| | 35,570,606 |
TOTAL CONSUMER DISCRETIONARY | | 704,540,644 |
|
| Shares | | Value |
CONSUMER STAPLES - 11.4% |
Beverages - 3.5% |
Anheuser-Busch InBev SA NV ADR | 128,700 | | $ 10,250,955 |
Monster Beverage Corp. (a) | 461,675 | | 32,871,260 |
SABMiller PLC | 295,000 | | 11,804,464 |
The Coca-Cola Co. | 995,434 | | 77,832,984 |
| | 132,759,663 |
Food & Staples Retailing - 0.9% |
Costco Wholesale Corp. | 120,000 | | 11,400,000 |
Drogasil SA | 492,823 | | 4,968,716 |
Whole Foods Market, Inc. | 212,824 | | 20,286,384 |
| | 36,655,100 |
Food Products - 2.0% |
Green Mountain Coffee Roasters, Inc. (a)(d) | 1,345,037 | | 29,294,906 |
Mead Johnson Nutrition Co. Class A | 209,969 | | 16,904,604 |
The Hershey Co. | 366,223 | | 26,379,043 |
Want Want China Holdings Ltd. | 2,491,000 | | 3,080,471 |
| | 75,659,024 |
Household Products - 1.3% |
Colgate-Palmolive Co. | 472,242 | | 49,160,392 |
Personal Products - 1.1% |
Estee Lauder Companies, Inc. Class A | 95,952 | | 5,192,922 |
Herbalife Ltd. | 775,222 | | 37,466,479 |
| | 42,659,401 |
Tobacco - 2.6% |
Altria Group, Inc. | 124,400 | | 4,298,020 |
British American Tobacco PLC sponsored ADR | 333,500 | | 34,057,020 |
Philip Morris International, Inc. | 633,500 | | 55,279,210 |
Swedish Match Co. AB | 162,400 | | 6,543,001 |
| | 100,177,251 |
TOTAL CONSUMER STAPLES | | 437,070,831 |
ENERGY - 5.9% |
Energy Equipment & Services - 2.7% |
Cameron International Corp. (a) | 292,800 | | 12,505,488 |
Dresser-Rand Group, Inc. (a) | 346,491 | | 15,432,709 |
National Oilwell Varco, Inc. | 277,500 | | 17,882,100 |
Oceaneering International, Inc. | 417,974 | | 20,004,236 |
Poseidon Concepts Corp. (d) | 1,455,000 | | 17,821,285 |
Schlumberger Ltd. | 293,728 | | 19,065,884 |
| | 102,711,702 |
Oil, Gas & Consumable Fuels - 3.2% |
Atlas Pipeline Partners, LP | 597,341 | | 18,625,092 |
Concho Resources, Inc. (a) | 230,592 | | 19,627,991 |
Kosmos Energy Ltd. (a) | 1,010,955 | | 11,171,053 |
Markwest Energy Partners LP | 170,100 | | 8,387,631 |
Noble Energy, Inc. | 95,400 | | 8,091,828 |
Pioneer Natural Resources Co. | 154,098 | | 13,592,985 |
Common Stocks - continued |
| Shares | | Value |
ENERGY - continued |
Oil, Gas & Consumable Fuels - continued |
Targa Resources Corp. | 229,280 | | $ 9,790,256 |
Valero Energy Corp. | 573,500 | | 13,850,025 |
Williams Companies, Inc. | 659,500 | | 19,006,790 |
| | 122,143,651 |
TOTAL ENERGY | | 224,855,353 |
FINANCIALS - 2.5% |
Capital Markets - 0.4% |
GP Investments Ltd. (depositary receipt) (a) | 1,387,358 | | 3,239,586 |
Invesco Ltd. | 573,451 | | 12,959,993 |
| | 16,199,579 |
Commercial Banks - 0.2% |
First Republic Bank (a) | 191,124 | | 6,421,766 |
Consumer Finance - 0.2% |
Mahindra & Mahindra Financial Services Ltd. | 284,909 | | 3,341,155 |
Shriram Transport Finance Co. Ltd. | 615,161 | | 5,902,463 |
| | 9,243,618 |
Diversified Financial Services - 0.3% |
CME Group, Inc. | 46,627 | | 12,501,165 |
Real Estate Investment Trusts - 1.3% |
American Tower Corp. | 536,155 | | 37,482,596 |
Public Storage | 76,140 | | 10,995,377 |
| | 48,477,973 |
Real Estate Management & Development - 0.1% |
BR Malls Participacoes SA | 182,600 | | 2,091,013 |
TOTAL FINANCIALS | | 94,935,114 |
HEALTH CARE - 6.0% |
Biotechnology - 2.1% |
Aegerion Pharmaceuticals, Inc. (a) | 123,800 | | 1,837,192 |
Amgen, Inc. | 313,300 | | 22,883,432 |
AVEO Pharmaceuticals, Inc. (a)(d) | 805,822 | | 9,798,796 |
Biogen Idec, Inc. (a) | 248,022 | | 35,809,416 |
Biovitrum AB (a) | 2,298,821 | | 7,809,568 |
Cytokinetics, Inc. | 1,808,300 | | 1,158,216 |
Cytokinetics, Inc. warrants 6/25/17 (a) | 1,084,980 | | 5,877 |
| | 79,302,497 |
Health Care Equipment & Supplies - 0.2% |
Conceptus, Inc. (a) | 274,300 | | 5,436,626 |
Edwards Lifesciences Corp. (a) | 23,700 | | 2,448,210 |
| | 7,884,836 |
Health Care Providers & Services - 1.7% |
Apollo Hospitals Enterprise Ltd. | 158,827 | | 1,769,201 |
Express Scripts Holding Co. (a) | 1,153,554 | | 64,402,920 |
| | 66,172,121 |
|
| Shares | | Value |
Life Sciences Tools & Services - 0.1% |
Illumina, Inc. (a)(d) | 87,507 | | $ 3,534,408 |
Pharmaceuticals - 1.9% |
Novo Nordisk A/S Series B | 182,160 | | 26,419,916 |
Valeant Pharmaceuticals International, Inc. (Canada) (a) | 1,054,619 | | 47,308,172 |
| | 73,728,088 |
TOTAL HEALTH CARE | | 230,621,950 |
INDUSTRIALS - 14.2% |
Aerospace & Defense - 3.1% |
Honeywell International, Inc. | 271,016 | | 15,133,533 |
Precision Castparts Corp. | 206,500 | | 33,967,185 |
Textron, Inc. | 156,044 | | 3,880,814 |
TransDigm Group, Inc. (a) | 195,548 | | 26,262,096 |
United Technologies Corp. | 504,039 | | 38,070,066 |
| | 117,313,694 |
Air Freight & Logistics - 0.9% |
United Parcel Service, Inc. Class B | 458,240 | | 36,090,982 |
Building Products - 0.3% |
USG Corp. (a)(d) | 515,300 | | 9,816,465 |
Commercial Services & Supplies - 0.0% |
Aggreko PLC | 59,788 | | 1,940,158 |
Electrical Equipment - 1.7% |
AMETEK, Inc. | 312,086 | | 15,576,212 |
Regal-Beloit Corp. | 269,845 | | 16,800,550 |
Roper Industries, Inc. | 324,567 | | 31,995,815 |
| | 64,372,577 |
Industrial Conglomerates - 1.6% |
Danaher Corp. | 1,176,735 | | 61,284,359 |
Machinery - 2.5% |
CLARCOR, Inc. | 415,088 | | 19,990,638 |
Graco, Inc. | 178,062 | | 8,205,097 |
Ingersoll-Rand PLC | 949,364 | | 40,044,174 |
Manitowoc Co., Inc. | 1,345,894 | | 15,746,960 |
Terex Corp. (a) | 681,700 | | 12,154,711 |
| | 96,141,580 |
Professional Services - 3.1% |
Advisory Board Co. (a) | 462,700 | | 22,945,293 |
Corporate Executive Board Co. | 701,059 | | 28,659,292 |
Equifax, Inc. | 815,503 | | 38,002,440 |
IHS, Inc. Class A (a) | 217,488 | | 23,429,982 |
Qualicorp SA | 612,800 | | 5,357,614 |
| | 118,394,621 |
Road & Rail - 0.1% |
J.B. Hunt Transport Services, Inc. | 75,600 | | 4,505,760 |
Common Stocks - continued |
| Shares | | Value |
INDUSTRIALS - continued |
Trading Companies & Distributors - 0.9% |
MSC Industrial Direct Co., Inc. Class A | 141,012 | | $ 9,243,337 |
W.W. Grainger, Inc. | 127,400 | | 24,363,976 |
| | 33,607,313 |
TOTAL INDUSTRIALS | | 543,467,509 |
INFORMATION TECHNOLOGY - 31.8% |
Communications Equipment - 3.5% |
Acme Packet, Inc. (a)(d) | 844,142 | | 15,743,248 |
QUALCOMM, Inc. | 1,891,697 | | 105,329,689 |
Riverbed Technology, Inc. (a) | 797,181 | | 12,874,473 |
| | 133,947,410 |
Computers & Peripherals - 12.4% |
Apple, Inc. (a) | 754,506 | | 440,631,507 |
SanDisk Corp. (a) | 943,412 | | 34,415,670 |
| | 475,047,177 |
Electronic Equipment & Components - 0.2% |
InvenSense, Inc. (d) | 576,588 | | 6,515,444 |
Internet Software & Services - 4.6% |
Active Network, Inc. (a) | 250,128 | | 3,849,470 |
Baidu.com, Inc. sponsored ADR (a) | 93,795 | | 10,784,549 |
Bankrate, Inc. | 1,033,946 | | 19,014,267 |
Blucora, Inc. (a) | 653,866 | | 8,055,629 |
CoStar Group, Inc. (a) | 114,314 | | 9,282,297 |
Google, Inc. Class A (a) | 94,290 | | 54,694,800 |
MercadoLibre, Inc. | 105,842 | | 8,022,824 |
SPS Commerce, Inc. (a) | 244,958 | | 7,441,824 |
VeriSign, Inc. (a) | 1,227,210 | | 53,469,540 |
| | 174,615,200 |
IT Services - 1.7% |
Cardtronics, Inc. (a) | 287,993 | | 8,700,269 |
Heartland Payment Systems, Inc. | 445,336 | | 13,395,707 |
MasterCard, Inc. Class A | 23,800 | | 10,236,618 |
ServiceSource International, Inc. (a) | 908,512 | | 12,582,891 |
Visa, Inc. Class A | 151,700 | | 18,754,671 |
| | 63,670,156 |
Semiconductors & Semiconductor Equipment - 3.9% |
Altera Corp. | 273,782 | | 9,264,783 |
ASML Holding NV | 458,600 | | 23,581,212 |
Avago Technologies Ltd. | 734,502 | | 26,368,622 |
Broadcom Corp. Class A | 978,729 | | 33,081,040 |
Cirrus Logic, Inc. (a) | 190,372 | | 5,688,315 |
Ezchip Semiconductor Ltd. (a) | 256,259 | | 10,260,610 |
MagnaChip Semiconductor Corp. (a) | 694,900 | | 6,622,397 |
Maxim Integrated Products, Inc. | 144,300 | | 3,699,852 |
PMC-Sierra, Inc. (a) | 977,475 | | 6,001,697 |
Texas Instruments, Inc. | 899,058 | | 25,793,974 |
| | 150,362,502 |
|
| Shares | | Value |
Software - 5.5% |
ANSYS, Inc. (a) | 301,748 | | $ 19,043,316 |
Citrix Systems, Inc. (a) | 766,177 | | 64,312,897 |
Computer Modelling Group Ltd. | 502,700 | | 8,576,661 |
Intuit, Inc. | 274,856 | | 16,312,704 |
Red Hat, Inc. (a) | 261,500 | | 14,769,520 |
salesforce.com, Inc. (a) | 337,082 | | 46,604,957 |
SolarWinds, Inc. (a) | 486,534 | | 21,193,421 |
VMware, Inc. Class A (a) | 210,777 | | 19,189,138 |
| | 210,002,614 |
TOTAL INFORMATION TECHNOLOGY | | 1,214,160,503 |
MATERIALS - 3.1% |
Chemicals - 2.5% |
Albemarle Corp. | 63,300 | | 3,775,212 |
FMC Corp. | 503,054 | | 26,903,328 |
Monsanto Co. | 290,000 | | 24,006,200 |
Praxair, Inc. | 259,837 | | 28,252,077 |
Sherwin-Williams Co. | 108,300 | | 14,333,505 |
| | 97,270,322 |
Metals & Mining - 0.6% |
Kenmare Resources PLC (a) | 4,600,347 | | 2,845,909 |
Newmont Mining Corp. | 404,405 | | 19,617,687 |
| | 22,463,596 |
TOTAL MATERIALS | | 119,733,918 |
TELECOMMUNICATION SERVICES - 1.2% |
Wireless Telecommunication Services - 1.2% |
SBA Communications Corp. Class A (a) | 468,000 | | 26,699,400 |
TIM Participacoes SA sponsored ADR (d) | 634,600 | | 17,426,116 |
| | 44,125,516 |
TOTAL COMMON STOCKS (Cost $2,809,365,160) |
3,613,511,338
|
Money Market Funds - 3.9% |
| | | |
Fidelity Cash Central Fund, 0.17% (b) | 85,174,212 | | 85,174,212 |
Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c) | 61,795,372 | | 61,795,372 |
TOTAL MONEY MARKET FUNDS (Cost $146,969,584) |
146,969,584
|
TOTAL INVESTMENT PORTFOLIO - 98.4% (Cost $2,956,334,744) | | 3,760,480,922 |
NET OTHER ASSETS (LIABILITIES) - 1.6% | | 61,709,773 |
NET ASSETS - 100% | $ 3,822,190,695 |
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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or 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 $7,703,837 or 0.2% 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 | $ 40,548 |
Fidelity Securities Lending Cash Central Fund | 812,561 |
Total | $ 853,109 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2012, involving the Fund's assets and liabilities carried at fair 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 704,540,644 | $ 704,540,644 | $ - | $ - |
Consumer Staples | 437,070,831 | 433,990,360 | 3,080,471 | - |
Energy | 224,855,353 | 224,855,353 | - | - |
Financials | 94,935,114 | 85,691,496 | 9,243,618 | - |
Health Care | 230,621,950 | 202,426,956 | 28,194,994 | - |
Industrials | 543,467,509 | 543,467,509 | - | - |
Information Technology | 1,214,160,503 | 1,214,160,503 | - | - |
Materials | 119,733,918 | 119,733,918 | - | - |
Telecommunication Services | 44,125,516 | 44,125,516 | - | - |
Money Market Funds | 146,969,584 | 146,969,584 | - | - |
Total Investments in Securities: | $ 3,760,480,922 | $ 3,719,961,839 | $ 40,519,083 | $ - |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 86.9% |
Canada | 3.2% |
Brazil | 1.5% |
Cayman Islands | 1.4% |
United Kingdom | 1.2% |
Ireland | 1.2% |
Others (Individually Less Than 1%) | 4.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2012 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $63,275,577) - See accompanying schedule: Unaffiliated issuers (cost $2,809,365,160) | $ 3,613,511,338 | |
Fidelity Central Funds (cost $146,969,584) | 146,969,584 | |
Total Investments (cost $2,956,334,744) | | $ 3,760,480,922 |
Cash | | 1,263,934 |
Receivable for investments sold | | 175,532,351 |
Receivable for fund shares sold | | 742,632 |
Dividends receivable | | 2,081,057 |
Distributions receivable from Fidelity Central Funds | | 265,440 |
Other receivables | | 174,846 |
Total assets | | 3,940,541,182 |
| | |
Liabilities | | |
Payable for investments purchased | $ 51,968,218 | |
Payable for fund shares redeemed | 2,075,728 | |
Accrued management fee | 1,758,157 | |
Distribution and service plan fees payable | 155,921 | |
Other affiliated payables | 382,229 | |
Other payables and accrued expenses | 214,862 | |
Collateral on securities loaned, at value | 61,795,372 | |
Total liabilities | | 118,350,487 |
| | |
Net Assets | | $ 3,822,190,695 |
Net Assets consist of: | | |
Paid in capital | | $ 4,191,632,390 |
Undistributed net investment income | | 6,953,969 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (1,180,546,341) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 804,150,677 |
Net Assets | | $ 3,822,190,695 |
Statement of Assets and Liabilities - continued
| June 30, 2012 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($2,692,563,092 ÷ 65,996,096 shares) | | $ 40.80 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($409,193,128 ÷ 10,058,609 shares) | | $ 40.68 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($576,861,707 ÷ 14,296,172 shares) | | $ 40.35 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($5,039,008 ÷ 125,132 shares) | | $ 40.27 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($138,533,760 ÷ 3,405,063 shares) | | $ 40.68 |
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, 2012 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 21,776,261 |
Interest | | 11 |
Income from Fidelity Central Funds | | 853,109 |
Total income | | 22,629,381 |
| | |
Expenses | | |
Management fee | $ 11,001,025 | |
Transfer agent fees | 1,465,378 | |
Distribution and service plan fees | 984,464 | |
Accounting and security lending fees | 523,095 | |
Custodian fees and expenses | 60,497 | |
Independent trustees' compensation | 13,106 | |
Appreciation in deferred trustee compensation account | 98 | |
Audit | 35,622 | |
Legal | 10,427 | |
Interest | 124 | |
Miscellaneous | 23,885 | |
Total expenses before reductions | 14,117,721 | |
Expense reductions | (37,549) | 14,080,172 |
Net investment income (loss) | | 8,549,209 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 74,003,060 | |
Foreign currency transactions | 3,288 | |
Total net realized gain (loss) | | 74,006,348 |
Change in net unrealized appreciation (depreciation) on: Investment securities | 304,258,462 | |
Assets and liabilities in foreign currencies | 6,460 | |
Total change in net unrealized appreciation (depreciation) | | 304,264,922 |
Net gain (loss) | | 378,271,270 |
Net increase (decrease) in net assets resulting from operations | | $ 386,820,479 |
Statement of Changes in Net Assets
| Six months ended
June 30, 2012
(Unaudited) | Year ended
December 31,
2011 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 8,549,209 | $ 12,085,920 |
Net realized gain (loss) | 74,006,348 | 390,193,292 |
Change in net unrealized appreciation (depreciation) | 304,264,922 | (386,686,117) |
Net increase (decrease) in net assets resulting from operations | 386,820,479 | 15,593,095 |
Distributions to shareholders from net investment income | - | (13,217,872) |
Distributions to shareholders from net realized gain | - | (12,854,853) |
Total distributions | - | (26,072,725) |
Share transactions - net increase (decrease) | (265,280,746) | (292,123,490) |
Redemption fees | 1,578 | 14,621 |
Total increase (decrease) in net assets | 121,541,311 | (302,588,499) |
| | |
Net Assets | | |
Beginning of period | 3,700,649,384 | 4,003,237,883 |
End of period (including undistributed net investment income of $6,953,969 and distributions in excess of net investment income of $1,595,240, respectively) | $ 3,822,190,695 | $ 3,700,649,384 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 36.89 | $ 37.09 | $ 30.04 | $ 23.53 | $ 45.12 | $ 35.87 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .10 | .14 | .07 | .10 | .27 | .09 |
Net realized and unrealized gain (loss) | 3.81 | (.06) H | 7.18 | 6.55 | (21.55) | 9.53 |
Total from investment operations | 3.91 | .08 | 7.25 | 6.65 | (21.28) | 9.62 |
Distributions from net investment income | - | (.15) M | (.09) | (.12) | (.31) | (.33) |
Distributions from net realized gain | - | (.12) M | (.11) | (.02) | - | (.04) |
Total distributions | - | (.28) L | (.20) | (.14) K | (.31) | (.37) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.80 | $ 36.89 | $ 37.09 | $ 30.04 | $ 23.53 | $ 45.12 |
Total Return B, C, D | 10.60% | .20% | 24.17% | 28.29% | (47.17)% | 26.96% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .66% A | .66% | .67% | .69% | .68% | .65% |
Expenses net of fee waivers, if any | .66% A | .66% | .66% | .69% | .68% | .65% |
Expenses net of all reductions | .66% A | .66% | .66% | .68% | .67% | .64% |
Net investment income (loss) | .49% A | .36% | .22% | .41% | .74% | .21% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 2,692,563 | $ 2,583,122 | $ 2,842,307 | $ 2,618,954 | $ 2,337,892 | $ 6,002,656 |
Portfolio turnover rate G | 63% A | 71% | 75% | 134% | 161% | 109% |
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 if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any 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 reductions from 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 Total distributions of $.14 per share is comprised of distributions from net investment income of $.118 and distributions from net realized gain of $.023 per share. L Total distributions of $.28 per share is comprised of distributions from net investment income of $.152 and distributions from net realized gain of $.123 per share. M The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Service Class
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 36.81 | $ 36.99 | $ 29.96 | $ 23.47 | $ 44.99 | $ 35.72 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .08 | .10 | .04 | .08 | .23 | .04 |
Net realized and unrealized gain (loss) | 3.79 | (.05) H | 7.16 | 6.52 | (21.48) | 9.51 |
Total from investment operations | 3.87 | .05 | 7.20 | 6.60 | (21.25) | 9.55 |
Distributions from net investment income | - | (.11) L | (.06) | (.09) | (.27) | (.24) |
Distributions from net realized gain | - | (.12) L | (.11) | (.02) | - | (.04) |
Total distributions | - | (.23) | (.17) | (.11) K | (.27) | (.28) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.68 | $ 36.81 | $ 36.99 | $ 29.96 | $ 23.47 | $ 44.99 |
Total Return B, C, D | 10.51% | .14% | 24.06% | 28.15% | (47.23)% | 26.87% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .76% A | .77% | .77% | .79% | .78% | .75% |
Expenses net of fee waivers, if any | .76% A | .76% | .76% | .79% | .78% | .75% |
Expenses net of all reductions | .76% A | .76% | .76% | .78% | .77% | .74% |
Net investment income (loss) | .39% A | .26% | .12% | .31% | .64% | .11% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 409,193 | $ 395,217 | $ 453,063 | $ 421,996 | $ 395,759 | $ 929,848 |
Portfolio turnover rate G | 63% A | 71% | 75% | 134% | 161% | 109% |
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 if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any 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 reductions from 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 Total distributions of $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Service Class 2
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 36.53 | $ 36.72 | $ 29.75 | $ 23.31 | $ 44.65 | $ 35.42 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .05 | .04 | (.01) | .04 | .17 | (.02) |
Net realized and unrealized gain (loss) | 3.77 | (.05) H | 7.10 | 6.48 | (21.29) | 9.43 |
Total from investment operations | 3.82 | (.01) | 7.09 | 6.52 | (21.12) | 9.41 |
Distributions from net investment income | - | (.06) L | (.01) | (.05) | (.22) | (.15) |
Distributions from net realized gain | - | (.12) L | (.11) | (.02) | - | (.03) |
Total distributions | - | (.18) | (.12) | (.08) K | (.22) | (.18) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.35 | $ 36.53 | $ 36.72 | $ 29.75 | $ 23.31 | $ 44.65 |
Total Return B, C, D | 10.46% | (.03)% | 23.86% | 27.97% | (47.31)% | 26.66% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .91% A | .92% | .92% | .94% | .93% | .90% |
Expenses net of fee waivers, if any | .91% A | .91% | .91% | .94% | .93% | .90% |
Expenses net of all reductions | .91% A | .91% | .91% | .93% | .92% | .89% |
Net investment income (loss) | .24% A | .11% | (.03)% | .16% | .49% | (.04)% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 576,862 | $ 590,556 | $ 584,193 | $ 528,819 | $ 447,530 | $ 898,204 |
Portfolio turnover rate G | 63% A | 71% | 75% | 134% | 161% | 109% |
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 if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any 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 reductions from 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 Total distributions of $.08 per share is comprised of distributions from net investment income of $.052 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
Financial Highlights - Service Class 2R
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 36.46 | $ 36.64 | $ 29.70 | $ 23.26 | $ 44.42 | $ 35.28 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .05 | .04 | (.01) | .04 | .18 | (.01) |
Net realized and unrealized gain (loss) | 3.76 | (.05) H | 7.09 | 6.46 | (21.20) | 9.38 |
Total from investment operations | 3.81 | (.01) | 7.08 | 6.50 | (21.02) | 9.37 |
Distributions from net investment income | - | (.05) L | (.03) | (.04) | (.14) | (.19) |
Distributions from net realized gain | - | (.12) L | (.11) | (.02) | - | (.04) |
Total distributions | - | (.17) | (.14) | (.06) K | (.14) | (.23) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.27 | $ 36.46 | $ 36.64 | $ 29.70 | $ 23.26 | $ 44.42 |
Total Return B, C, D | 10.45% | (.02)% | 23.86% | 27.98% | (47.31)% | 26.66% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .91% A | .91% | .92% | .94% | .93% | .89% |
Expenses net of fee waivers, if any | .91% A | .91% | .91% | .94% | .93% | .89% |
Expenses net of all reductions | .91% A | .91% | .91% | .93% | .92% | .89% |
Net investment income (loss) | .24% A | .11% | (.03)% | .16% | .49% | (.04)% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 5,039 | $ 5,202 | $ 5,739 | $ 4,084 | $ 3,061 | $ 20,051 |
Portfolio turnover rate G | 63% A | 71% | 75% | 134% | 161% | 109% |
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 if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any 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 reductions from 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 Total distributions of $.06 per share is comprised of distributions from net investment income of $.041 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Investor Class
| Six months ended
June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 36.81 | $ 37.00 | $ 29.97 | $ 23.48 | $ 45.00 | $ 35.78 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .08 | .10 | .04 | .08 | .24 | .04 |
Net realized and unrealized gain (loss) | 3.79 | (.05) H | 7.17 | 6.52 | (21.49) | 9.50 |
Total from investment operations | 3.87 | .05 | 7.21 | 6.60 | (21.25) | 9.54 |
Distributions from net investment income | - | (.12) L | (.07) | (.09) | (.27) | (.28) |
Distributions from net realized gain | - | (.12) L | (.11) | (.02) | - | (.04) |
Total distributions | - | (.24) | (.18) | (.11) K | (.27) | (.32) |
Redemption fees added to paid in capital E, J | - | - | - | - | - | - |
Net asset value, end of period | $ 40.68 | $ 36.81 | $ 37.00 | $ 29.97 | $ 23.48 | $ 45.00 |
Total Return B, C, D | 10.51% | .14% | 24.08% | 28.14% | (47.22)% | 26.81% |
Ratios to Average Net Assets F, I | | | | | | |
Expenses before reductions | .75% A | .75% | .76% | .79% | .77% | .76% |
Expenses net of fee waivers, if any | .75% A | .75% | .75% | .79% | .77% | .76% |
Expenses net of all reductions | .75% A | .74% | .75% | .78% | .76% | .76% |
Net investment income (loss) | .40% A | .27% | .13% | .31% | .65% | .09% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 138,534 | $ 126,551 | $ 117,936 | $ 95,531 | $ 93,428 | $ 181,705 |
Portfolio turnover rate G | 63% A | 71% | 75% | 134% | 161% | 109% |
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 if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any 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 reductions from 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 Total distributions of $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2012 (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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
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 a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2012, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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 p.m. 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 may elect to defer receipt of a 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP. These differences resulted in distribution reclassifications for the period ended December 31, 2011.
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, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 950,996,351 |
Gross unrealized depreciation | (155,591,050) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 795,405,301 |
| |
Tax cost | $ 2,965,075,621 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. At December 31, 2011, capital loss carryforwards were as follows:
Fiscal year of expiration | |
2016 | $ (787,084,954) |
2017 | (458,405,642) |
Total capital loss carryforward | $ (1,245,490,596) |
Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days are subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Operating Policies.
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 $1,206,110,813 and $1,510,722,986, 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 an annualized 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 Fees. 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.
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees - continued
For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:
Service Class | $ 210,957 |
Service Class 2 | 767,089 |
Service Class 2R | 6,418 |
| $ 984,464 |
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. In addition, FIIOC receives an asset-based fee of .0038% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:
Initial Class | $ 983,155 |
Service Class | 151,094 |
Service Class 2 | 220,275 |
Service Class 2R | 1,804 |
Investor Class | 109,050 |
| $ 1,465,378 |
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 each 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 $28,842 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 Loan
Balance | Weighted Average
Interest Rate | Interest Expense |
Borrower | $ 10,649,000 | .42% | $ 124 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 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 $5,746 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. The value of securities loaned to FCM at period end was $3,550,975. Security lending income represents the income earned on
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
8. Security Lending - continued
investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $812,561, including $112,246 from securities loaned to FCM.
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 $37,517 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 $32.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
From net investment income | | |
Initial Class | $ - | $ 10,671,389 |
Service Class | - | 1,191,707 |
Service Class 2 | - | 935,559 |
Service Class 2R | - | 7,550 |
Investor Class | - | 411,667 |
Total | $ - | $ 13,217,872 |
From net realized gain | | |
Initial Class | $ - | $ 8,992,576 |
Service Class | - | 1,422,036 |
Service Class 2 | - | 2,010,246 |
Service Class 2R | - | 18,630 |
Investor Class | - | 411,365 |
Total | $ - | $ 12,854,853 |
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 | Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
Initial Class | | | | |
Shares sold | 1,302,776 | 5,105,832 | $ 53,518,520 | $ 193,724,251 |
Reinvestment of distributions | - | 531,779 | - | 19,663,965 |
Shares redeemed | (5,321,461) | (12,264,436) | (216,589,870) | (468,044,614) |
Net increase (decrease) | (4,018,685) | (6,626,825) | $ (163,071,350) | $ (254,656,398) |
Service Class | | | | |
Shares sold | 265,636 | 823,475 | $ 10,876,911 | $ 31,606,992 |
Reinvestment of distributions | - | 70,516 | - | 2,613,743 |
Shares redeemed | (944,934) | (2,403,651) | (38,308,052) | (92,186,437) |
Net increase (decrease) | (679,298) | (1,509,660) | $ (27,431,141) | $ (57,965,702) |
Service Class 2 | | | | |
Shares sold | 1,591,418 | 5,724,223 | $ 64,688,449 | $ 218,079,773 |
Reinvestment of distributions | - | 79,666 | - | 2,945,805 |
Shares redeemed | (3,459,568) | (5,547,933) | (137,511,871) | (210,350,344) |
Net increase (decrease) | (1,868,150) | 255,956 | $ (72,823,422) | $ 10,675,234 |
Semiannual Report
11. Share Transactions - continued
| Shares | Dollars |
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 | Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
Service Class 2R | | | | |
Shares sold | 27,064 | 116,285 | $ 1,096,906 | $ 4,451,582 |
Reinvestment of distributions | - | 708 | - | 26,180 |
Shares redeemed | (44,618) | (130,935) | (1,764,342) | (4,926,892) |
Net increase (decrease) | (17,554) | (13,942) | $ (667,436) | $ (449,130) |
Investor Class | | | | |
Shares sold | 260,921 | 882,253 | $ 10,695,367 | $ 34,127,993 |
Reinvestment of distributions | - | 22,289 | - | 823,032 |
Shares redeemed | (294,138) | (653,911) | (11,982,764) | (24,678,519) |
Net increase (decrease) | (33,217) | 250,631 | $ (1,287,397) | $ 10,272,506 |
12. 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 13% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 23% of the total outstanding shares of the Fund.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Adviser
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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
VIPGRWTR-SANN-0812
1.833448.106
Fidelity® Variable Insurance Products:
High Income Portfolio
Semiannual Report
June 30, 2012
(Fidelity Cover Art)
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. |
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/proxyvotingresults 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. © 2012 FMR LLC. All rights reserved.
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, http://www.advisor.fidelity.com, or http://www.401k.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, 2012 to June 30, 2012).
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.
| Annualized Expense Ratio | Beginning
Account Value
January 1, 2012 | Ending
Account Value
June 30, 2012 | Expenses Paid
During Period*
January 1, 2012
to June 30, 2012 |
Initial Class | .69% | | | |
Actual | | $ 1,000.00 | $ 1,071.10 | $ 3.55 |
HypotheticalA | | $ 1,000.00 | $ 1,021.43 | $ 3.47 |
Service Class | .78% | | | |
Actual | | $ 1,000.00 | $ 1,071.50 | $ 4.02 |
HypotheticalA | | $ 1,000.00 | $ 1,020.98 | $ 3.92 |
Service Class 2 | .94% | | | |
Actual | | $ 1,000.00 | $ 1,069.00 | $ 4.84 |
HypotheticalA | | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
Initial Class R | .68% | | | |
Actual | | $ 1,000.00 | $ 1,071.30 | $ 3.50 |
HypotheticalA | | $ 1,000.00 | $ 1,021.48 | $ 3.42 |
Service Class R | .78% | | | |
Actual | | $ 1,000.00 | $ 1,069.90 | $ 4.01 |
HypotheticalA | | $ 1,000.00 | $ 1,020.98 | $ 3.92 |
Service Class 2R | .94% | | | |
Actual | | $ 1,000.00 | $ 1,069.00 | $ 4.84 |
HypotheticalA | | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
Investor Class | .72% | | | |
Actual | | $ 1,000.00 | $ 1,071.30 | $ 3.71 |
HypotheticalA | | $ 1,000.00 | $ 1,021.28 | $ 3.62 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Five Holdings as of June 30, 2012 |
(by issuer, excluding cash equivalents) | % of fund's
net assets | % of fund's net assets
6 months ago |
Ford Motor Credit Co. LLC | 3.1 | 2.5 |
MGM Mirage, Inc. | 2.9 | 2.3 |
CCO Holdings LLC/CCO Holdings Capital Corp. | 2.7 | 2.3 |
International Lease Finance Corp. | 2.6 | 2.2 |
CIT Group, Inc. | 2.1 | 1.4 |
| 13.4 | |
Top Five Market Sectors as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Energy | 10.8 | 12.6 |
Automotive | 7.7 | 7.2 |
Electric Utilities | 7.3 | 6.2 |
Diversified Financial Services | 7.1 | 5.3 |
Telecommunications | 6.8 | 8.6 |
Quality Diversification (% of fund's net assets) |
As of June 30, 2012 | As of December 31, 2011 |
| BBB 4.8% | | | BBB 2.1% | |
 | BB 30.3% | | | BB 32.0% | |
 | B 43.2% | | | B 44.7% | |
| CCC,CC,C 11.5% | | | CCC,CC,C 11.1% | |
 | Not Rated 1.9% | | | Not Rated 1.7% | |
 | Equities 0.4% | | | Equities 0.4% | |
| Short-Term
Investments and
Net Other Assets 7.9% | | | Short-Term
Investments and
Net Other Assets 8.0% | |
We have used ratings from Moody's Investors Service, Inc. Where Moody's® ratings are not available, we have used S&P® ratings. All ratings are as of the date indicated and do not reflect subsequent changes. |
Asset Allocation (% of fund's net assets) |
As of June 30, 2012 * | As of December 31, 2011 ** |
| Nonconvertible
Bonds 84.1% | | | Nonconvertible
Bonds 83.9% | |
 | Convertible Bonds, Preferred Stocks 0.3% | | | Convertible Bonds, Preferred Stocks 0.3% | |
 | Common Stocks 0.1% | | | Common Stocks 0.1% | |
 | Floating Rate
Loans 7.6% | | | Floating Rate
Loans 7.7% | |
| Short-Term
Investments and
Net Other Assets 7.9% | | | Short-Term
Investments and
Net Other Assets 8.0% | |
* Foreign investments | 12.9% | | ** Foreign investments | 13.7% | |
Semiannual Report
Investments June 30, 2012 (Unaudited)
Showing Percentage of Net Assets
Nonconvertible Bonds - 84.1% |
| Principal Amount | | Value |
Aerospace - 0.4% |
Huntington Ingalls Industries, Inc. 6.875% 3/15/18 | | $ 5,100,000 | | $ 5,316,750 |
Air Transportation - 1.8% |
Continental Airlines, Inc.: | | | | |
pass-thru trust certificates 9.798% 4/1/21 | | 3,272,082 | | 3,517,489 |
6.75% 9/15/15 (d) | | 4,090,000 | | 4,202,475 |
Continental Airlines, Inc. 9.25% 5/10/17 | | 840,632 | | 920,492 |
Delta Air Lines, Inc. pass-thru trust certificates: | | | | |
6.375% 1/2/16 | | 1,985,000 | | 1,985,000 |
6.75% 11/23/15 | | 1,985,000 | | 1,980,038 |
8.021% 8/10/22 | | 1,776,600 | | 1,796,675 |
8.954% 8/10/14 | | 1,548,039 | | 1,578,999 |
Northwest Airlines, Inc. pass-thru trust certificates 8.028% 11/1/17 | | 645,668 | | 652,125 |
United Air Lines, Inc. 9.875% 8/1/13 (d) | | 659,000 | | 685,360 |
United Air Lines, Inc. pass-thru trust certificates: | | | | |
Class B, 7.336% 7/2/19 | | 2,598,479 | | 2,572,495 |
9.75% 1/15/17 | | 2,041,297 | | 2,321,975 |
12% 1/15/16 (d) | | 676,093 | | 731,871 |
| | 22,944,994 |
Automotive - 6.3% |
Chrysler Group LLC/CG Co-Issuer, Inc.: | | | | |
8% 6/15/19 | | 6,970,000 | | 7,161,675 |
8.25% 6/15/21 | | 7,665,000 | | 7,837,463 |
Dana Holding Corp.: | | | | |
6.5% 2/15/19 | | 1,505,000 | | 1,602,825 |
6.75% 2/15/21 | | 1,710,000 | | 1,846,800 |
Delphi Corp.: | | | | |
5.875% 5/15/19 | | 8,625,000 | | 9,185,625 |
6.125% 5/15/21 | | 1,475,000 | | 1,611,438 |
Ford Motor Co. 7.45% 7/16/31 | | 4,370,000 | | 5,473,425 |
Ford Motor Credit Co. LLC: | | | | |
3.875% 1/15/15 | | 6,975,000 | | 7,182,953 |
4.25% 2/3/17 | | 3,465,000 | | 3,632,110 |
5% 5/15/18 | | 7,600,000 | | 8,070,303 |
5.875% 8/2/21 | | 4,145,000 | | 4,611,346 |
6.625% 8/15/17 | | 3,200,000 | | 3,640,000 |
7% 4/15/15 | | 2,250,000 | | 2,491,875 |
8% 12/15/16 | | 4,870,000 | | 5,760,022 |
12% 5/15/15 | | 3,495,000 | | 4,351,275 |
General Motors Financial Co., Inc. 6.75% 6/1/18 | | 3,685,000 | | 4,025,863 |
Tenneco, Inc.: | | | | |
6.875% 12/15/20 | | 1,930,000 | | 2,084,400 |
7.75% 8/15/18 | | 1,685,000 | | 1,807,163 |
| | 82,376,561 |
|
| Principal Amount | | Value |
Banks & Thrifts - 0.8% |
Ally Financial, Inc.: | | | | |
3.6669% 2/11/14 (f) | | $ 3,805,000 | | $ 3,728,900 |
4.625% 6/26/15 | | 2,665,000 | | 2,681,510 |
5.5% 2/15/17 | | 4,355,000 | | 4,431,213 |
| | 10,841,623 |
Broadcasting - 1.7% |
Allbritton Communications Co. 8% 5/15/18 | | 2,205,000 | | 2,293,200 |
Univision Communications, Inc.: | | | | |
6.875% 5/15/19 (d) | | 6,165,000 | | 6,334,538 |
7.875% 11/1/20 (d) | | 1,180,000 | | 1,262,600 |
8.5% 5/15/21 (d) | | 9,605,000 | | 9,677,038 |
UPC Holding BV 9.875% 4/15/18 (d) | | 1,630,000 | | 1,784,850 |
| | 21,352,226 |
Building Materials - 1.8% |
Building Materials Corp. of America: | | | | |
6.75% 5/1/21 (d) | | 3,680,000 | | 3,937,600 |
6.875% 8/15/18 (d) | | 4,490,000 | | 4,770,625 |
HD Supply, Inc.: | | | | |
8.125% 4/15/19 (d) | | 2,725,000 | | 2,943,000 |
11% 4/15/20 (d) | | 1,365,000 | | 1,467,375 |
Headwaters, Inc. 7.625% 4/1/19 | | 5,505,000 | | 5,449,950 |
Masco Corp. 5.95% 3/15/22 | | 1,815,000 | | 1,868,336 |
Texas Industries, Inc. 9.25% 8/15/20 | | 1,565,000 | | 1,561,088 |
USG Corp. 7.875% 3/30/20 (d) | | 970,000 | | 1,003,950 |
| | 23,001,924 |
Cable TV - 5.1% |
Cablevision Systems Corp.: | | | | |
7.75% 4/15/18 | | 1,340,000 | | 1,427,100 |
8.625% 9/15/17 | | 1,000,000 | | 1,115,000 |
CCO Holdings LLC/CCO Holdings Capital Corp.: | | | | |
6.5% 4/30/21 | | 10,700,000 | | 11,395,500 |
6.625% 1/31/22 | | 3,080,000 | | 3,295,600 |
7% 1/15/19 | | 9,810,000 | | 10,594,800 |
7.25% 10/30/17 | | 7,685,000 | | 8,338,225 |
7.875% 4/30/18 | | 985,000 | | 1,071,188 |
Cequel Communications Holdings I LLC/Cequel Capital Corp. 8.625% 11/15/17 (d) | | 11,730,000 | | 12,609,750 |
CSC Holdings LLC: | | | | |
6.75% 11/15/21 (d) | | 1,205,000 | | 1,274,288 |
8.625% 2/15/19 | | 215,000 | | 248,325 |
Harron Communications LP/Harron Finance Corp. 9.125% 4/1/20 (d) | | 530,000 | | 548,550 |
Unitymedia Hessen GmbH & Co. KG / Unitymedia NRW GmbH 7.5% 3/15/19 (d) | | 950,000 | | 1,009,375 |
Nonconvertible Bonds - continued |
| Principal Amount | | Value |
Cable TV - continued |
Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH 8.125% 12/1/17 (d) | | $ 490,000 | | $ 525,525 |
UPCB Finance III Ltd. 6.625% 7/1/20 (d) | | 2,710,000 | | 2,750,650 |
UPCB Finance V Ltd. 7.25% 11/15/21 (d) | | 3,270,000 | | 3,400,800 |
UPCB Finance VI Ltd. 6.875% 1/15/22 (d) | | 1,325,000 | | 1,344,875 |
Zayo Escrow Corp.: | | | | |
8.125% 1/1/20 (d) | | 3,265,000 | | 3,395,600 |
10.125% 7/1/20 (d) | | 1,360,000 | | 1,428,000 |
| | 65,773,151 |
Capital Goods - 0.5% |
Amsted Industries, Inc. 8.125% 3/15/18 (d) | | 2,890,000 | | 3,056,175 |
JB Poindexter & Co., Inc. 9% 4/1/22 (d) | | 3,830,000 | | 3,830,000 |
| | 6,886,175 |
Chemicals - 1.4% |
Celanese US Holdings LLC 6.625% 10/15/18 | | 1,030,000 | | 1,122,700 |
INEOS Finance PLC: | | | | |
7.5% 5/1/20 (d) | | 1,065,000 | | 1,075,650 |
8.375% 2/15/19 (d) | | 865,000 | | 895,275 |
Kinove German Bondco GmbH 9.625% 6/15/18 (d) | | 2,575,000 | | 2,652,250 |
LyondellBasell Industries NV: | | | | |
5% 4/15/19 (d) | | 3,195,000 | | 3,338,775 |
5.75% 4/15/24 (d) | | 2,130,000 | | 2,271,006 |
6% 11/15/21 (d) | | 1,005,000 | | 1,102,988 |
NOVA Chemicals Corp. 3.8549% 11/15/13 (f) | | 5,325,000 | | 5,318,344 |
| | 17,776,988 |
Consumer Products - 0.2% |
NBTY, Inc. 9% 10/1/18 | | 2,690,000 | | 2,975,947 |
Containers - 2.4% |
Ardagh Packaging Finance PLC 7.375% 10/15/17 (d) | | 1,415,000 | | 1,499,900 |
Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer (Luxembourg) SA: | | | | |
7.875% 8/15/19 (d) | | 6,625,000 | | 7,121,875 |
8.5% 5/15/18 (c)(d) | | 4,275,000 | | 4,104,000 |
9.875% 8/15/19 (d) | | 5,145,000 | | 5,260,763 |
9.875% 8/15/19 (d) | | 430,000 | | 446,125 |
Sealed Air Corp.: | | | | |
8.125% 9/15/19 (d) | | 5,645,000 | | 6,237,725 |
8.375% 9/15/21 (d) | | 4,900,000 | | 5,488,000 |
Tekni-Plex, Inc. 9.75% 6/1/19 (d) | | 1,290,000 | | 1,302,900 |
| | 31,461,288 |
|
| Principal Amount | | Value |
Diversified Financial Services - 6.9% |
Aircastle Ltd.: | | | | |
6.75% 4/15/17 | | $ 2,030,000 | | $ 2,050,300 |
9.75% 8/1/18 | | 3,730,000 | | 4,121,650 |
CIT Group, Inc.: | | | | |
4.75% 2/15/15 (d) | | 3,100,000 | | 3,173,625 |
5% 5/15/17 | | 3,230,000 | | 3,310,750 |
5.25% 3/15/18 | | 4,935,000 | | 5,095,388 |
5.375% 5/15/20 | | 2,155,000 | | 2,203,488 |
5.5% 2/15/19 (d) | | 4,280,000 | | 4,397,700 |
7% 5/2/16 (d) | | 7,645,000 | | 7,654,556 |
7% 5/2/17 (d) | | 1,553,687 | | 1,555,629 |
Icahn Enterprises LP/Icahn Enterprises Finance Corp.: | | | | |
7.75% 1/15/16 | | 6,595,000 | | 6,932,994 |
8% 1/15/18 | | 11,845,000 | | 12,585,313 |
ILFC E-Capital Trust II 6.25% 12/21/65 (d)(f) | | 1,275,000 | | 879,750 |
International Lease Finance Corp.: | | | | |
4.875% 4/1/15 | | 3,400,000 | | 3,408,500 |
5.65% 6/1/14 | | 1,315,000 | | 1,347,875 |
5.75% 5/15/16 | | 8,055,000 | | 8,175,825 |
5.875% 4/1/19 | | 1,485,000 | | 1,470,150 |
6.25% 5/15/19 | | 2,245,000 | | 2,287,094 |
8.625% 9/15/15 | | 6,070,000 | | 6,722,525 |
8.625% 1/15/22 | | 3,855,000 | | 4,462,163 |
8.75% 3/15/17 | | 2,110,000 | | 2,373,750 |
8.875% 9/1/17 | | 3,235,000 | | 3,655,550 |
Reynolds Group DL Escrow LLC 7.75% 10/15/16 (c)(d) | | 1,000,000 | | 1,055,000 |
| | 88,919,575 |
Diversified Media - 0.8% |
Nielsen Finance LLC/Nielsen Finance Co.: | | | | |
7.75% 10/15/18 | | 3,900,000 | | 4,338,750 |
11.5% 5/1/16 | | 1,445,000 | | 1,643,688 |
Quebecor Media, Inc.: | | | | |
7.75% 3/15/16 | | 2,612,000 | | 2,696,890 |
7.75% 3/15/16 | | 1,955,000 | | 2,018,538 |
| | 10,697,866 |
Electric Utilities - 7.3% |
Atlantic Power Corp. 9% 11/15/18 (d) | | 6,740,000 | | 6,891,650 |
Calpine Construction Finance Co. LP 8% 6/1/16 (d) | | 5,775,000 | | 6,193,688 |
Dolphin Subsidiary II, Inc.: | | | | |
6.5% 10/15/16 (d) | | 7,095,000 | | 7,662,600 |
7.25% 10/15/21 (d) | | 2,295,000 | | 2,547,450 |
Everest Acquisition LLC / Everest Acquisition Finance, Inc.: | | | | |
6.875% 5/1/19 (d) | | 1,655,000 | | 1,721,200 |
9.375% 5/1/20 (d) | | 2,725,000 | | 2,820,375 |
Nonconvertible Bonds - continued |
| Principal Amount | | Value |
Electric Utilities - continued |
GenOn Energy, Inc.: | | | | |
9.5% 10/15/18 | | $ 3,310,000 | | $ 3,272,763 |
9.875% 10/15/20 | | 1,465,000 | | 1,428,375 |
InterGen NV 9% 6/30/17 (d) | | 4,150,000 | | 4,067,000 |
IPALCO Enterprises, Inc. 5% 5/1/18 | | 1,435,000 | | 1,436,866 |
Mirant Americas Generation LLC: | | | | |
8.5% 10/1/21 | | 7,395,000 | | 6,655,500 |
9.125% 5/1/31 | | 6,570,000 | | 5,847,300 |
NSG Holdings II, LLC 7.75% 12/15/25 (d) | | 9,865,000 | | 9,865,000 |
NV Energy, Inc. 6.25% 11/15/20 | | 4,295,000 | | 4,794,637 |
Otter Tail Corp. 9% 12/15/16 | | 2,460,000 | | 2,669,100 |
Puget Energy, Inc.: | | | | |
5.625% 7/15/22 (d) | | 1,045,000 | | 1,088,054 |
6.5% 12/15/20 | | 3,975,000 | | 4,337,918 |
RRI Energy, Inc. 7.625% 6/15/14 | | 6,280,000 | | 6,405,600 |
The AES Corp.: | | | | |
7.375% 7/1/21 (d) | | 5,145,000 | | 5,723,813 |
7.75% 10/15/15 | | 3,745,000 | | 4,194,400 |
8% 10/15/17 | | 1,515,000 | | 1,715,738 |
9.75% 4/15/16 | | 3,010,000 | | 3,566,850 |
| | 94,905,877 |
Energy - 10.4% |
AmeriGas Partners LP/AmeriGas Finance Corp.: | | | | |
6.25% 8/20/19 | | 1,710,000 | | 1,718,550 |
6.5% 5/20/21 | | 642,000 | | 645,210 |
Antero Resources Finance Corp.: | | | | |
7.25% 8/1/19 | | 1,845,000 | | 1,914,188 |
9.375% 12/1/17 | | 4,215,000 | | 4,636,500 |
Berry Petroleum Co. 6.375% 9/15/22 | | 2,890,000 | | 2,983,925 |
Chesapeake Energy Corp.: | | | | |
6.125% 2/15/21 | | 4,950,000 | | 4,789,125 |
6.775% 3/15/19 | | 2,005,000 | | 1,939,838 |
6.875% 11/15/20 | | 1,250,000 | | 1,231,250 |
Chesapeake Midstream Partners LP/CHKM Finance Corp.: | | | | |
5.875% 4/15/21 | | 615,000 | | 596,550 |
6.125% 7/15/22 | | 1,745,000 | | 1,714,463 |
Chesapeake Oilfield Operating LLC 6.625% 11/15/19 (d) | | 1,680,000 | | 1,512,000 |
Crestwood Midstream Partners LP / Finance Corp. 7.75% 4/1/19 | | 2,315,000 | | 2,297,638 |
Denbury Resources, Inc. 6.375% 8/15/21 | | 2,550,000 | | 2,626,500 |
Edgen Murray Corp. 12.25% 1/15/15 | | 4,760,000 | | 4,688,600 |
Energy Transfer Equity LP 7.5% 10/15/20 | | 2,930,000 | | 3,215,675 |
|
| Principal Amount | | Value |
Expro Finance Luxembourg SCA 8.5% 12/15/16 (d) | | $ 2,812,000 | | $ 2,706,550 |
Exterran Holdings, Inc. 7.25% 12/1/18 | | 7,855,000 | | 7,383,700 |
Ferrellgas LP/Ferrellgas Finance Corp. 6.5% 5/1/21 | | 2,259,000 | | 2,061,338 |
Forbes Energy Services Ltd. 9% 6/15/19 | | 4,680,000 | | 4,352,400 |
Frontier Oil Corp.: | | | | |
6.875% 11/15/18 | | 1,245,000 | | 1,294,800 |
8.5% 9/15/16 | | 2,700,000 | | 2,835,000 |
Hornbeck Offshore Services, Inc.: | | | | |
5.875% 4/1/20 (d) | | 1,400,000 | | 1,393,000 |
8% 9/1/17 | | 215,000 | | 231,125 |
Inergy LP/Inergy Finance Corp.: | | | | |
6.875% 8/1/21 | | 1,415,000 | | 1,415,000 |
7% 10/1/18 | | 3,155,000 | | 3,186,550 |
Kinder Morgan Finance Co. LLC 6% 1/15/18 (d) | | 6,445,000 | | 6,735,025 |
LINN Energy LLC/LINN Energy Finance Corp.: | | | | |
6.5% 5/15/19 (d) | | 2,895,000 | | 2,822,625 |
7.75% 2/1/21 | | 2,390,000 | | 2,515,475 |
8.625% 4/15/20 | | 3,055,000 | | 3,291,763 |
MRC Global, Inc. 9.5% 12/15/16 | | 6,600,000 | | 7,128,000 |
Newfield Exploration Co. 5.625% 7/1/24 | | 1,470,000 | | 1,503,075 |
Offshore Group Investment Ltd.: | | | | |
11.5% 8/1/15 | | 4,390,000 | | 4,719,250 |
11.5% 8/1/15 (d) | | 2,770,000 | | 2,998,525 |
Oil States International, Inc. 6.5% 6/1/19 | | 3,995,000 | | 4,154,800 |
Pan American Energy LLC 7.875% 5/7/21 (d) | | 5,360,000 | | 4,529,200 |
PBF Holding Co. LLC/PBF Finance Corp. 8.25% 2/15/20 (d) | | 4,340,000 | | 4,318,300 |
PetroBakken Energy Ltd. 8.625% 2/1/20 (d) | | 2,015,000 | | 1,994,850 |
Petrohawk Energy Corp. 7.25% 8/15/18 | | 1,685,000 | | 1,904,050 |
Petroleum Geo-Services ASA 7.375% 12/15/18 (d) | | 3,225,000 | | 3,273,375 |
Plains Exploration & Production Co. 6.125% 6/15/19 | | 3,190,000 | | 3,190,000 |
Precision Drilling Corp.: | | | | |
6.5% 12/15/21 | | 290,000 | | 295,800 |
6.625% 11/15/20 | | 2,505,000 | | 2,555,100 |
Quicksilver Resources, Inc. 7.125% 4/1/16 | | 3,255,000 | | 2,571,450 |
Samson Investment Co. 9.75% 2/15/20 (d) | | 5,105,000 | | 5,066,713 |
Targa Resources Partners LP/Targa Resources Partners Finance Corp.: | | | | |
6.375% 8/1/22 (d) | | 800,000 | | 798,000 |
6.875% 2/1/21 | | 900,000 | | 936,000 |
Nonconvertible Bonds - continued |
| Principal Amount | | Value |
Energy - continued |
Targa Resources Partners LP/Targa Resources Partners Finance Corp.: - continued | | | | |
7.875% 10/15/18 | | $ 2,660,000 | | $ 2,872,800 |
WPX Energy, Inc. 6% 1/15/22 | | 1,625,000 | | 1,616,875 |
| | 135,160,526 |
Environmental - 0.5% |
Covanta Holding Corp. 7.25% 12/1/20 | | 6,440,000 | | 6,977,180 |
Food & Drug Retail - 1.4% |
Rite Aid Corp.: | | | | |
9.25% 3/15/20 (d) | | 4,135,000 | | 4,155,675 |
9.25% 3/15/20 (d) | | 3,165,000 | | 3,180,825 |
9.5% 6/15/17 | | 10,170,000 | | 10,398,825 |
| | 17,735,325 |
Food/Beverage/Tobacco - 0.8% |
JBS USA LLC/JBS USA Finance, Inc. 8.25% 2/1/20 (d) | | 3,700,000 | | 3,644,500 |
Post Holdings, Inc. 7.375% 2/15/22 (d) | | 2,730,000 | | 2,866,500 |
US Foodservice, Inc. 8.5% 6/30/19 (d) | | 3,990,000 | | 4,099,725 |
| | 10,610,725 |
Gaming - 4.6% |
Ameristar Casinos, Inc.: | | | | |
7.5% 4/15/21 | | 3,720,000 | | 3,943,200 |
7.5% 4/15/21 (d) | | 2,415,000 | | 2,559,900 |
Chukchansi Economic Development Authority 9.75% 5/30/20 (d) | | 1,378,000 | | 1,102,400 |
CityCenter Holdings LLC/CityCenter Finance Corp.: | | | | |
7.625% 1/15/16 | | 4,240,000 | | 4,452,000 |
7.625% 1/15/16 (d) | | 2,755,000 | | 2,858,313 |
11.5% 1/15/17 pay-in-kind (f) | | 5,277,559 | | 5,528,829 |
MGM Mirage, Inc.: | | | | |
6.625% 7/15/15 | | 8,205,000 | | 8,410,125 |
6.75% 4/1/13 | | 1,140,000 | | 1,168,500 |
7.5% 6/1/16 | | 2,600,000 | | 2,691,000 |
7.625% 1/15/17 | | 10,930,000 | | 11,093,950 |
7.75% 3/15/22 | | 2,720,000 | | 2,767,600 |
8.625% 2/1/19 (d) | | 4,135,000 | | 4,445,125 |
10% 11/1/16 | | 3,185,000 | | 3,487,575 |
11.375% 3/1/18 | | 3,150,000 | | 3,709,125 |
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp. 7.75% 8/15/20 | | 1,895,000 | | 2,084,500 |
| | 60,302,142 |
Healthcare - 5.2% |
DJO Finance LLC/DJO Finance Corp.: | | | | |
7.75% 4/15/18 | | 1,350,000 | | 1,113,750 |
|
| Principal Amount | | Value |
10.875% 11/15/14 | | $ 4,365,000 | | $ 4,441,388 |
Emergency Medical Services Corp. 8.125% 6/1/19 | | 5,100,000 | | 5,323,125 |
Fresenius Medical Care US Finance II, Inc. 5.625% 7/31/19 (d) | | 3,265,000 | | 3,403,763 |
HCA, Inc.: | | | | |
5.875% 3/15/22 | | 670,000 | | 699,313 |
6.5% 2/15/20 | | 755,000 | | 821,063 |
9.875% 2/15/17 | | 1,032,000 | | 1,119,720 |
HealthSouth Corp. 7.25% 10/1/18 | | 4,470,000 | | 4,704,675 |
IASIS Healthcare LLC/IASIS Capital Corp. 8.375% 5/15/19 | | 8,105,000 | | 7,983,425 |
MPT Operating Partnership LP/MPT Finance Corp. 6.875% 5/1/21 | | 2,595,000 | | 2,698,800 |
Mylan, Inc.: | | | | |
6% 11/15/18 (d) | | 2,000,000 | | 2,095,000 |
7.625% 7/15/17 (d) | | 1,255,000 | | 1,380,500 |
Omega Healthcare Investors, Inc. 6.75% 10/15/22 | | 4,540,000 | | 4,835,100 |
Radiation Therapy Services, Inc. 8.875% 1/15/17 (d) | | 1,190,000 | | 1,142,400 |
Rural/Metro Corp. 10.125% 7/15/19 (d) | | 1,055,000 | | 991,700 |
Sabra Health Care LP/Sabra Capital Corp. 8.125% 11/1/18 | | 6,590,000 | | 7,084,250 |
Senior Housing Properties Trust 6.75% 4/15/20 | | 2,640,000 | | 2,861,892 |
Valeant Pharmaceuticals International: | | | | |
6.5% 7/15/16 (d) | | 6,275,000 | | 6,526,000 |
6.75% 8/15/21 (d) | | 1,325,000 | | 1,298,500 |
6.875% 12/1/18 (d) | | 4,655,000 | | 4,817,925 |
7% 10/1/20 (d) | | 375,000 | | 378,281 |
WP Rocket Merger Sub, Inc. 10.125% 7/15/19 (d) | | 2,345,000 | | 2,274,650 |
| | 67,995,220 |
Homebuilders/Real Estate - 2.8% |
CB Richard Ellis Services, Inc. 6.625% 10/15/20 | | 2,370,000 | | 2,512,200 |
D.R. Horton, Inc. 4.75% 5/15/17 | | 1,315,000 | | 1,355,272 |
KB Home 7.25% 6/15/18 | | 5,145,000 | | 5,042,100 |
Lennar Corp.: | | | | |
5.6% 5/31/15 | | 545,000 | | 569,525 |
6.95% 6/1/18 | | 2,515,000 | | 2,684,763 |
12.25% 6/1/17 | | 1,600,000 | | 2,040,000 |
Realogy Corp. 7.625% 1/15/20 (d) | | 3,475,000 | | 3,605,313 |
Standard Pacific Corp.: | | | | |
8.375% 5/15/18 | | 11,850,000 | | 12,946,096 |
8.375% 1/15/21 | | 2,375,000 | | 2,588,750 |
10.75% 9/15/16 | | 2,405,000 | | 2,837,900 |
| | 36,181,919 |
Nonconvertible Bonds - continued |
| Principal Amount | | Value |
Hotels - 0.4% |
Host Hotels & Resorts LP: | | | | |
5.875% 6/15/19 | | $ 2,165,000 | | $ 2,338,200 |
9% 5/15/17 | | 2,195,000 | | 2,425,475 |
| | 4,763,675 |
Leisure - 1.1% |
Equinox Holdings, Inc. 9.5% 2/1/16 (d) | | 3,570,000 | | 3,784,200 |
GWR Operating Partnership LLP/Great Wolf Finance Corp. 10.875% 4/1/17 | | 3,920,000 | | 4,370,800 |
Royal Caribbean Cruises Ltd.: | | | | |
7.25% 3/15/18 | | 1,815,000 | | 1,969,275 |
yankee 7.25% 6/15/16 | | 2,445,000 | | 2,652,825 |
Universal City Development Partners Ltd./UCDP Finance, Inc. 8.875% 11/15/15 | | 809,000 | | 866,860 |
| | 13,643,960 |
Metals/Mining - 1.4% |
Boart Longyear Management Pty Ltd. 7% 4/1/21 (d) | | 1,790,000 | | 1,834,750 |
CONSOL Energy, Inc. 8% 4/1/17 | | 2,080,000 | | 2,147,600 |
FMG Resources (August 2006) Pty Ltd.: | | | | |
6.375% 2/1/16 (d) | | 3,145,000 | | 3,176,450 |
7% 11/1/15 (d) | | 8,120,000 | | 8,302,700 |
Vedanta Resources PLC 6.75% 6/7/16 (d) | | 2,560,000 | | 2,409,472 |
| | 17,870,972 |
Paper - 0.1% |
Sappi Papier Holding GmbH: | | | | |
7.75% 7/15/17 (d)(e) | | 735,000 | | 744,188 |
8.375% 6/15/19 (d)(e) | | 995,000 | | 999,975 |
| | 1,744,163 |
Restaurants - 0.3% |
NPC International, Inc./NPC Operating Co. A, Inc./NPC Operating Co. B, Inc. 10.5% 1/15/20 | | 4,035,000 | | 4,468,763 |
Services - 2.7% |
ARAMARK Corp.: | | | | |
3.9659% 2/1/15 (f) | | 7,820,000 | | 7,761,350 |
8.5% 2/1/15 | | 4,830,000 | | 4,950,750 |
ARAMARK Holdings Corp. 8.625% 5/1/16 pay-in-kind (d)(f) | | 5,580,000 | | 5,726,196 |
Audatex North America, Inc. 6.75% 6/15/18 (d) | | 425,000 | | 448,375 |
FTI Consulting, Inc. 6.75% 10/1/20 | | 3,100,000 | | 3,274,530 |
Hertz Corp.: | | | | |
6.75% 4/15/19 | | 2,660,000 | | 2,766,400 |
6.75% 4/15/19 (d) | | 2,850,000 | | 2,949,750 |
7.5% 10/15/18 | | 7,205,000 | | 7,691,338 |
| | 35,568,689 |
|
| Principal Amount | | Value |
Shipping - 1.1% |
Navios Maritime Holdings, Inc. 8.875% 11/1/17 | | $ 1,725,000 | | $ 1,759,500 |
Overseas Shipholding Group, Inc.: | | | | |
7.5% 2/15/24 | | 475,000 | | 268,375 |
8.125% 3/30/18 | | 2,895,000 | | 2,026,500 |
Ship Finance International Ltd. 8.5% 12/15/13 | | 10,800,000 | | 10,692,000 |
| | 14,746,375 |
Steel - 1.4% |
Essar Steel Algoma, Inc. 9.375% 3/15/15 (d) | | 5,215,000 | | 5,032,475 |
JMC Steel Group, Inc. 8.25% 3/15/18 (d) | | 3,970,000 | | 3,940,225 |
Severstal Columbus LLC 10.25% 2/15/18 | | 5,610,000 | | 5,610,000 |
Steel Dynamics, Inc. 7.625% 3/15/20 | | 3,335,000 | | 3,568,450 |
| | 18,151,150 |
Super Retail - 1.8% |
J. Crew Group, Inc. 8.125% 3/1/19 | | 3,975,000 | | 4,104,188 |
PETCO Animal Supplies, Inc. 9.25% 12/1/18 (d) | | 7,585,000 | | 8,286,613 |
Sonic Automotive, Inc. 7% 7/15/22 (d) | | 945,000 | | 972,216 |
Toys 'R' Us Property Co. II LLC 8.5% 12/1/17 | | 6,795,000 | | 7,100,775 |
Toys 'R' Us, Inc. 7.375% 9/1/16 (d) | | 2,740,000 | | 2,698,900 |
| | 23,162,692 |
Technology - 3.8% |
Amkor Technology, Inc. 7.375% 5/1/18 | | 4,830,000 | | 5,047,350 |
Avaya, Inc.: | | | | |
9.75% 11/1/15 | | 5,735,000 | | 4,631,013 |
10.125% 11/1/15 pay-in-kind (f) | | 5,905,000 | | 4,783,050 |
CDW LLC/CDW Finance Corp. 8.5% 4/1/19 | | 4,650,000 | | 4,929,000 |
Lucent Technologies, Inc.: | | | | |
6.45% 3/15/29 | | 6,625,000 | | 4,505,000 |
6.5% 1/15/28 | | 4,915,000 | | 3,317,625 |
Sanmina-SCI Corp. 7% 5/15/19 (d) | | 6,455,000 | | 6,293,625 |
Spansion LLC 7.875% 11/15/17 | | 5,850,000 | | 5,674,500 |
SunGard Data Systems, Inc.: | | | | |
7.375% 11/15/18 | | 595,000 | | 636,650 |
10.25% 8/15/15 | | 3,080,000 | | 3,187,800 |
Viasystems, Inc. 7.875% 5/1/19 (d) | | 5,880,000 | | 5,850,600 |
| | 48,856,213 |
Nonconvertible Bonds - continued |
| Principal Amount | | Value |
Telecommunications - 6.6% |
Digicel Group Ltd.: | | | | |
7% 2/15/20 (d) | | $ 295,000 | | $ 283,938 |
8.25% 9/1/17 (d) | | 5,395,000 | | 5,529,875 |
8.875% 1/15/15 (d) | | 7,580,000 | | 7,655,800 |
9.125% 1/15/15 pay-in-kind (d)(f) | | 4,447,000 | | 4,491,470 |
Intelsat Jackson Holdings SA 7.25% 10/15/20 (d) | | 2,900,000 | | 3,045,000 |
Intelsat Ltd. 11.25% 6/15/16 | | 1,118,000 | | 1,171,105 |
Intelsat Luxembourg SA: | | | | |
11.25% 2/4/17 | | 8,780,000 | | 9,087,300 |
11.5% 2/4/17 pay-in-kind (d)(f) | | 2,730,000 | | 2,818,725 |
11.5% 2/4/17 pay-in-kind (f) | | 12,031,864 | | 12,422,900 |
Nextel Communications, Inc.: | | | | |
5.95% 3/15/14 | | 4,940,000 | | 4,946,175 |
7.375% 8/1/15 | | 5,195,000 | | 5,201,494 |
NII Capital Corp. 7.625% 4/1/21 | | 2,385,000 | | 2,033,213 |
Sprint Nextel Corp.: | | | | |
6% 12/1/16 | | 10,710,000 | | 10,254,825 |
9% 11/15/18 (d) | | 1,505,000 | | 1,681,838 |
Telesat Canada/Telesat LLC 6% 5/15/17 (d) | | 4,145,000 | | 4,217,538 |
U.S. West Communications 7.5% 6/15/23 | | 9,460,000 | | 9,483,650 |
Wind Acquisition Holdings Finance SA 12.25% 7/15/17 pay-in-kind (d)(f) | | 1,149,105 | | 723,010 |
| | 85,047,856 |
Textiles & Apparel - 0.3% |
Hanesbrands, Inc. 6.375% 12/15/20 | | 1,535,000 | | 1,619,425 |
Levi Strauss & Co. 6.875% 5/1/22 (d) | | 2,590,000 | | 2,648,275 |
| | 4,267,700 |
TOTAL NONCONVERTIBLE BONDS (Cost $1,051,651,456) |
1,092,486,190
|
Commercial Mortgage Securities - 0.0% |
|
LB Multi-family Mortgage Trust Series 1991-4 Class A1, 7.1104% 4/25/21 (f)
(Cost $0) | | 25,932 | |
18,153
|
Common Stocks - 0.1% |
| Shares | | |
Telecommunications - 0.1% |
CUI Acquisition Corp. Class E (d) | 1 | | 873,375 |
|
| Shares | | Value |
Textiles & Apparel - 0.0% |
Arena Brands Holding Corp.
Class B (a)(g) | 48,889 | | $ 341,734 |
TOTAL COMMON STOCKS (Cost $3,248,508) |
1,215,109
|
Convertible Preferred Stocks - 0.3% |
| | | |
Automotive - 0.3% |
General Motors Co. 4.75%
(Cost $5,336,226) | 111,200 | |
3,691,840
|
Floating Rate Loans - 7.6% |
| Principal Amount | | |
Air Transportation - 1.0% |
Delta Air Lines, Inc. Tranche B, term loan 5.5% 4/20/17 (f) | | $ 7,271,550 | | 7,280,639 |
US Airways Group, Inc. term loan 2.7453% 3/23/14 (f) | | 5,541,187 | | 5,264,128 |
| | 12,544,767 |
Automotive - 1.1% |
Chrysler Group LLC Tranche B, term loan 6% 5/24/17 (f) | | 8,761,351 | | 8,827,061 |
Federal-Mogul Corp.: | | | | |
Tranche B, term loan 2.1776% 12/27/14 (f) | | 3,589,525 | | 3,410,049 |
Tranche C, term loan 2.1776% 12/27/15 (f) | | 2,415,458 | | 2,294,685 |
| | 14,531,795 |
Broadcasting - 0.5% |
Univision Communications, Inc. term loan 4.4953% 3/31/17 (f) | | 6,722,026 | | 6,318,704 |
Cable TV - 0.3% |
Harron Communications LP Tranche B, term loan 5.5% 10/6/17 (f) | | 2,720,638 | | 2,720,638 |
UPC Broadband Holding BV Tranche AB, term loan 4.75% 12/31/17 (f) | | 1,640,000 | | 1,607,200 |
| | 4,327,838 |
Capital Goods - 0.3% |
Colfax Corp. Tranche B, term loan 4.5% 9/12/18 (f) | | 3,427,775 | | 3,419,206 |
Chemicals - 0.3% |
Ascend Performance Materials Operation LLC Tranche B, term loan 6.75% 4/10/18 (f) | | 3,157,088 | | 3,062,375 |
Kronos Worldwide, Inc. term loan 5.75% 6/13/18 (f) | | 1,340,000 | | 1,336,650 |
| | 4,399,025 |
Consumer Products - 0.2% |
Visant Corp. Tranche B, term loan 5.25% 12/22/16 (f) | | 2,849,186 | | 2,763,711 |
Floating Rate Loans - continued |
| Principal Amount | | Value |
Containers - 0.3% |
Anchor Glass Container Corp.: | | | | |
Tranche 1LN, term loan 6% 3/2/16 (f) | | $ 1,523,734 | | $ 1,523,734 |
Tranche 2LN, term loan 10% 9/2/16 (f) | | 2,070,000 | | 2,070,000 |
| | 3,593,734 |
Diversified Financial Services - 0.2% |
Flying Fortress, Inc. Tranche 3, term loan 5% 6/30/17 (f) | | 2,310,000 | | 2,318,778 |
Electric Utilities - 0.0% |
The AES Corp. Tranche B, term loan 4.25% 5/27/18 (f) | | 661,625 | | 661,625 |
Energy - 0.4% |
Chesapeake Energy Corp. term loan 8.5% 12/2/17 (f) | | 1,450,000 | | 1,433,688 |
Crestwood Holdings Partners LLC Tranche B, term loan 9.75% 3/26/18 (f) | | 1,810,000 | | 1,819,050 |
Energy Transfer Equity LP Tranche B, term loan 3.75% 3/23/17 (f) | | 2,660,000 | | 2,606,800 |
| | 5,859,538 |
Food & Drug Retail - 0.2% |
SUPERVALU, Inc. Tranche B 3LN, term loan 4.5% 4/29/18 (f) | | 2,058,938 | | 2,026,345 |
Healthcare - 0.8% |
Emergency Medical Services Corp. Tranche B, term loan 5.25% 5/25/18 (f) | | 2,893,778 | | 2,868,458 |
HCA, Inc. Tranche B2, term loan 3.7106% 3/31/17 (f) | | 3,135,000 | | 3,052,863 |
Quintiles Transnational Corp. Tranche B, term loan 5% 6/8/18 (f) | | 3,977,976 | | 3,928,252 |
| | 9,849,573 |
Insurance - 0.8% |
Asurion Corp.: | | | | |
Tranche 1st LN, term loan 5.5% 5/24/18 (f) | | 2,735,227 | | 2,725,107 |
Tranche 2nd LN, term loan 9% 5/24/19 (f) | | 5,360,000 | | 5,467,200 |
Lonestar Inter Super Hld LLC term loan 11% 9/2/19 (f) | | 2,760,000 | | 2,884,200 |
| | 11,076,507 |
Metals/Mining - 0.1% |
Arch Coal, Inc. Tranche B, term loan 5.75% 5/16/18 (f) | | 965,000 | | 945,700 |
Publishing/Printing - 0.1% |
Newsday LLC term loan 10.5% 8/1/13 | | 925,000 | | 938,875 |
Restaurants - 0.2% |
Landry's Restaurants, Inc. Tranche B, term loan 6.5% 4/24/18 (f) | | 2,718,188 | | 2,718,188 |
|
| Principal Amount | | Value |
Services - 0.2% |
U.S. Foodservice term loan 5.75% 3/31/17 (f) | | $ 2,791,800 | | $ 2,666,169 |
Steel - 0.2% |
JMC Steel Group, Inc. term loan 4.75% 4/1/17 (f) | | 3,033,613 | | 3,026,029 |
Super Retail - 0.3% |
Neiman Marcus Group, Inc. Tranche B, term loan 4.75% 5/16/18 (f) | | 3,335,000 | | 3,301,650 |
PETCO Animal Supplies, Inc. term loan 4.5% 11/24/17 (f) | | 480,200 | | 476,599 |
| | 3,778,249 |
Telecommunications - 0.1% |
Intelsat Jackson Holdings SA term loan 3.2408% 2/1/14 (f) | | 830,000 | | 805,100 |
TOTAL FLOATING RATE LOANS (Cost $96,960,248) |
98,569,456
|
Money Market Funds - 6.0% |
| Shares | | |
Fidelity Cash Central Fund, 0.17% (b)
(Cost $78,021,675) | 78,021,675 | |
78,021,675
|
TOTAL INVESTMENT PORTFOLIO - 98.1% (Cost $1,235,218,113) | 1,274,002,423 |
NET OTHER ASSETS (LIABILITIES) - 1.9% | 24,517,815 |
NET ASSETS - 100% | $ 1,298,520,238 |
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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request. |
(c) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(d) 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 $376,463,904 or 29.0% of net assets. |
(e) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
(f) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end. |
(g) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $341,734 or 0.0% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Arena Brands Holding Corp. Class B | 6/18/97 | $ 1,974,627 |
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 | $ 46,168 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2012, involving the Fund's assets and liabilities carried at fair 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 4,033,574 | $ 3,691,840 | $ - | $ 341,734 |
Telecommunication Services | 873,375 | - | - | 873,375 |
Corporate Bonds | 1,092,486,190 | - | 1,092,486,190 | - |
Commercial Mortgage Securities | 18,153 | - | - | 18,153 |
Floating Rate Loans | 98,569,456 | - | 98,569,456 | - |
Money Market Funds | 78,021,675 | 78,021,675 | - | - |
Total Investments in Securities: | $ 1,274,002,423 | $ 81,713,515 | $ 1,191,055,646 | $ 1,233,262 |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 87.1% |
Bermuda | 2.9% |
Canada | 2.4% |
Luxembourg | 2.4% |
Cayman Islands | 1.2% |
Australia | 1.0% |
Others (Individually Less Than 1%) | 3.0% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2012 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $1,157,196,438) | $ 1,195,980,748 | |
Fidelity Central Funds (cost $78,021,675) | 78,021,675 | |
Total Investments (cost $1,235,218,113) | | $ 1,274,002,423 |
Cash | | 126,402 |
Receivable for investments sold | | 7,520,700 |
Receivable for fund shares sold | | 1,224,221 |
Interest receivable | | 21,001,010 |
Distributions receivable from Fidelity Central Funds | | 6,073 |
Total assets | | 1,303,880,829 |
| | |
Liabilities | | |
Payable for investments purchased
Regular delivery | $ 2,276,590 | |
Delayed delivery | 1,730,000 | |
Payable for fund shares redeemed | 500,425 | |
Accrued management fee | 611,932 | |
Distribution and service plan fees payable | 51,977 | |
Other affiliated payables | 145,474 | |
Other payables and accrued expenses | 44,193 | |
Total liabilities | | 5,360,591 |
| | |
Net Assets | | $ 1,298,520,238 |
Net Assets consist of: | | |
Paid in capital | | $ 1,324,501,256 |
Undistributed net investment income | | 48,800,111 |
Accumulated undistributed net realized gain (loss) on investments | | (113,565,439) |
Net unrealized appreciation (depreciation) on investments | | 38,784,310 |
Net Assets | | $ 1,298,520,238 |
Statement of Assets and Liabilities - continued
| June 30, 2012 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($580,134,083 ÷ 100,556,569 shares) | | $ 5.77 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($77,482,244 ÷ 13,506,900 shares) | | $ 5.74 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($201,590,760 ÷ 35,854,899 shares) | | $ 5.62 |
| | |
Initial Class R:
Net Asset Value, offering price and redemption price per share ($32,203,203 ÷ 5,601,531 shares) | | $ 5.75 |
| | |
Service Class R:
Net Asset Value, offering price and redemption price per share ($38,215,857 ÷ 6,693,688 shares) | | $ 5.71 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($1,813,910 ÷ 322,498 shares) | | $ 5.62 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($367,080,181 ÷ 63,834,407 shares) | | $ 5.75 |
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, 2012 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 316,467 |
Interest | | 47,667,358 |
Income from Fidelity Central Funds | | 46,168 |
Total income | | 48,029,993 |
| | |
Expenses | | |
Management fee | $ 3,739,200 | |
Transfer agent fees | 538,900 | |
Distribution and service plan fees | 361,161 | |
Accounting fees and expenses | 227,525 | |
Custodian fees and expenses | 12,005 | |
Independent trustees' compensation | 4,330 | |
Audit | 38,344 | |
Legal | 11,752 | |
Interest | 153 | |
Miscellaneous | 6,997 | |
Total expenses before reductions | 4,940,367 | |
Expense reductions | (273) | 4,940,094 |
Net investment income (loss) | | 43,089,899 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | | 5,621,562 |
Change in net unrealized appreciation (depreciation) on investment securities | | 38,609,156 |
Net gain (loss) | | 44,230,718 |
Net increase (decrease) in net assets resulting from operations | | $ 87,320,617 |
Statement of Changes in Net Assets
| Six months ended June 30, 2012
(Unaudited) | Year ended
December 31, 2011 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 43,089,899 | $ 82,841,870 |
Net realized gain (loss) | 5,621,562 | 30,894,343 |
Change in net unrealized appreciation (depreciation) | 38,609,156 | (67,492,572) |
Net increase (decrease) in net assets resulting from operations | 87,320,617 | 46,243,641 |
Distributions to shareholders from net investment income | (713,358) | (84,003,585) |
Share transactions - net increase (decrease) | (42,452,271) | 65,821,196 |
Redemption fees | 42,274 | 88,182 |
Total increase (decrease) in net assets | 44,197,262 | 28,149,434 |
| | |
Net Assets | | |
Beginning of period | 1,254,322,976 | 1,226,173,542 |
End of period (including undistributed net investment income of $48,800,111 and undistributed net investment income of $6,423,570, respectively) | $ 1,298,520,238 | $ 1,254,322,976 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.39 | $ 5.57 | $ 5.29 | $ 3.96 | $ 5.98 | $ 6.35 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .186 | .391 | .439 | .438 | .475 | .485 |
Net realized and unrealized gain (loss) | .197 | (.171) | .288 | 1.298 | (1.990) | (.311) |
Total from investment operations | .383 | .220 | .727 | 1.736 | (1.515) | .174 |
Distributions from net investment income | (.003) | (.400) | (.448) | (.406) | (.506) | (.545) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.77 | $ 5.39 | $ 5.57 | $ 5.29 | $ 3.96 | $ 5.98 |
Total Return B,C,D | 7.11% | 4.03% | 13.82% | 43.96% | (24.98)% | 2.79% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .69% A | .69% | .69% | .70% | .71% | .68% |
Expenses net of fee waivers, if any | .69% A | .69% | .69% | .70% | .71% | .68% |
Expenses net of all reductions | .69% A | .69% | .69% | .70% | .70% | .68% |
Net investment income (loss) | 6.61% A | 6.85% | 7.84% | 9.02% | 8.48% | 7.47% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 580,134 | $ 561,514 | $ 594,688 | $ 608,802 | $ 451,824 | $ 726,409 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 per share.
Financial Highlights - Service Class
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.36 | $ 5.54 | $ 5.26 | $ 3.95 | $ 5.95 | $ 6.32 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .182 | .384 | .431 | .429 | .469 | .477 |
Net realized and unrealized gain (loss) | .201 | (.171) | .290 | 1.281 | (1.971) | (.312) |
Total from investment operations | .383 | .213 | .721 | 1.710 | (1.502) | .165 |
Distributions from net investment income | (.003) | (.393) | (.442) | (.400) | (.499) | (.536) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.74 | $ 5.36 | $ 5.54 | $ 5.26 | $ 3.95 | $ 5.95 |
Total Return B,C,D | 7.15% | 3.93% | 13.79% | 43.41% | (24.87)% | 2.66% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .78% A | .79% | .79% | .80% | .80% | .78% |
Expenses net of fee waivers, if any | .78% A | .79% | .78% | .80% | .80% | .78% |
Expenses net of all reductions | .78% A | .79% | .78% | .80% | .80% | .78% |
Net investment income (loss) | 6.52% A | 6.75% | 7.74% | 8.92% | 8.39% | 7.37% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 77,482 | $ 91,573 | $ 98,988 | $ 103,511 | $ 95,461 | $ 180,837 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.26 | $ 5.45 | $ 5.18 | $ 3.89 | $ 5.88 | $ 6.25 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .174 | .368 | .417 | .422 | .450 | .461 |
Net realized and unrealized gain (loss) | .189 | (.170) | .287 | 1.264 | (1.949) | (.305) |
Total from investment operations | .363 | .198 | .704 | 1.686 | (1.499) | .156 |
Distributions from net investment income | (.003) | (.388) | (.435) | (.396) | (.492) | (.527) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.62 | $ 5.26 | $ 5.45 | $ 5.18 | $ 3.89 | $ 5.88 |
Total Return B,C,D | 6.90% | 3.72% | 13.67% | 43.46% | (25.14)% | 2.54% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .94% A | .94% | .94% | .95% | .96% | .93% |
Expenses net of fee waivers, if any | .94% A | .94% | .94% | .95% | .96% | .93% |
Expenses net of all reductions | .94% A | .94% | .94% | .95% | .96% | .93% |
Net investment income (loss) | 6.36% A | 6.60% | 7.59% | 8.77% | 8.23% | 7.22% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 201,591 | $ 220,333 | $ 182,465 | $ 181,377 | $ 87,077 | $ 97,266 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 per share.
Financial Highlights - Initial Class R
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.37 | $ 5.55 | $ 5.27 | $ 3.95 | $ 5.96 | $ 6.34 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .185 | .391 | .439 | .440 | .471 | .479 |
Net realized and unrealized gain (loss) | .198 | (.171) | .288 | 1.286 | (1.975) | (.313) |
Total from investment operations | .383 | .220 | .727 | 1.726 | (1.504) | .166 |
Distributions from net investment income | (.003) | (.400) | (.448) | (.406) | (.507) | (.547) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.75 | $ 5.37 | $ 5.55 | $ 5.27 | $ 3.95 | $ 5.96 |
Total Return B,C,D | 7.13% | 4.05% | 13.88% | 43.82% | (24.88)% | 2.65% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .68% A | .68% | .69% | .70% | .70% | .68% |
Expenses net of fee waivers, if any | .68% A | .68% | .68% | .70% | .70% | .68% |
Expenses net of all reductions | .68% A | .68% | .68% | .69% | .70% | .67% |
Net investment income (loss) | 6.61% A | 6.85% | 7.84% | 9.02% | 8.49% | 7.47% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 32,203 | $ 31,627 | $ 34,946 | $ 34,080 | $ 19,801 | $ 19,401 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.34 | $ 5.52 | $ 5.25 | $ 3.94 | $ 5.93 | $ 6.32 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .182 | .383 | .433 | .431 | .467 | .471 |
Net realized and unrealized gain (loss) | .191 | (.167) | .280 | 1.280 | (1.959) | (.318) |
Total from investment operations | .373 | .216 | .713 | 1.711 | (1.492) | .153 |
Distributions from net investment income | (.003) | (.396) | (.444) | (.401) | (.499) | (.544) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.71 | $ 5.34 | $ 5.52 | $ 5.25 | $ 3.94 | $ 5.93 |
Total Return B,C,D | 6.99% | 3.99% | 13.66% | 43.56% | (24.79)% | 2.45% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .78% A | .78% | .79% | .80% | .80% | .78% |
Expenses net of fee waivers, if any | .78% A | .78% | .78% | .80% | .80% | .78% |
Expenses net of all reductions | .78% A | .78% | .78% | .80% | .80% | .77% |
Net investment income (loss) | 6.52% A | 6.75% | 7.74% | 8.92% | 8.39% | 7.37% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 38,216 | $ 63,557 | $ 68,806 | $ 47,873 | $ 26,572 | $ 33,129 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 per share.
Financial Highlights - Service Class 2R
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.26 | $ 5.45 | $ 5.17 | $ 3.89 | $ 5.87 | $ 6.25 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .174 | .369 | .415 | .416 | .451 | .453 |
Net realized and unrealized gain (loss) | .189 | (.175) | .293 | 1.257 | (1.940) | (.294) |
Total from investment operations | .363 | .194 | .708 | 1.673 | (1.489) | .159 |
Distributions from net investment income | (.003) | (.384) | (.429) | (.393) | (.492) | (.540) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.62 | $ 5.26 | $ 5.45 | $ 5.17 | $ 3.89 | $ 5.87 |
Total Return B,C,D | 6.90% | 3.64% | 13.79% | 43.13% | (24.99)% | 2.59% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .94% A | .93% | .94% | .95% | .95% | .93% |
Expenses net of fee waivers, if any | .94% A | .93% | .93% | .95% | .95% | .93% |
Expenses net of all reductions | .94% A | .93% | .93% | .94% | .95% | .92% |
Net investment income (loss) | 6.36% A | 6.60% | 7.59% | 8.77% | 8.24% | 7.23% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 1,814 | $ 1,350 | $ 1,543 | $ 2,016 | $ 1,487 | $ 2,347 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.37 | $ 5.56 | $ 5.27 | $ 3.96 | $ 5.96 | $ 6.34 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .184 | .388 | .437 | .441 | .473 | .477 |
Net realized and unrealized gain (loss) | .199 | (.180) | .298 | 1.274 | (1.971) | (.317) |
Total from investment operations | .383 | .208 | .735 | 1.715 | (1.498) | .160 |
Distributions from net investment income | (.003) | (.398) | (.446) | (.405) | (.503) | (.541) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.75 | $ 5.37 | $ 5.56 | $ 5.27 | $ 3.96 | $ 5.96 |
Total Return B,C,D | 7.13% | 3.82% | 14.04% | 43.43% | (24.76)% | 2.56% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .72% A | .72% | .73% | .73% | .74% | .75% |
Expenses net of fee waivers, if any | .72% A | .72% | .72% | .73% | .74% | .75% |
Expenses net of all reductions | .72% A | .72% | .72% | .73% | .74% | .75% |
Net investment income (loss) | 6.58% A | 6.82% | 7.81% | 8.99% | 8.45% | 7.40% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 367,080 | $ 284,370 | $ 244,738 | $ 182,806 | $ 90,312 | $ 105,920 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 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, 2012 (Unaudited)
1. Organization.
VIP High 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, Initial Class R shares, and Service Class R 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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by security type and may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For corporate bonds and floating rate loans, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices and are generally categorized as Level 2 in the hierarchy. For commercial mortgage securities, pricing vendors utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices and, accordingly, such securities are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances. The Fund invests a significant portion of its assets in below investment grade securities. The value of these securities can be more volatile due to changes in the credit quality of the issuer and is sensitive to changes in economic, market and regulatory conditions.
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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 a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2012 for the Fund's investments, is included at the end of Fund's Schedule of Investments.
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 p.m. 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. 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.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction.
Distributions are declared and 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 GAAP.
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 market discount, equity-debt classifications, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 61,835,024 |
Gross unrealized depreciation | (16,007,787) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 45,827,237 |
| |
Tax cost | $ 1,228,175,186 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. At December 31, 2011, capital loss carryforwards were as follows:
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Fiscal year of expiration | |
2016 | $ (39,467,710) |
2017 | (79,447,269) |
Total capital loss carryforward | $ (118,914,979) |
Trading (Redemption) Fees. Initial Class R shares, Service Class R shares and Service Class 2 R shares held by investors less than 60 days are subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
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.
Loans and Other Direct Debt Instruments. The Fund invests in direct debt instruments which are interests in amounts owed to lenders by corporate or other borrowers. These instruments may be in the form of loans, trade claims or other receivables and may include standby financing commitments such as revolving credit facilities that obligate the Fund to supply additional cash to the borrower on demand. Loans may be acquired through assignment or participation, or may be made directly to a borrower. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these loans.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $315,370,188 and $319,470,044, 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 an annualized group fee rate that averaged .12% 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 .57% of the Fund's average net assets.
Distribution and Service Plan Fees. 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, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:
Service Class | $ 42,338 |
Service Class 2 | 285,832 |
Service Class R | 31,148 |
Service Class 2 R | 1,843 |
| $ 361,161 |
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 .10% of average net assets. In addition, FIIOC receives an asset-based fee of .0038% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:
Initial Class | $ 218,112 |
Service Class | 30,564 |
Service Class 2 | 82,835 |
Initial Class R | 11,582 |
Service Class R | 21,812 |
Service Class 2R | 518 |
Investor Class | 173,477 |
| $ 538,900 |
Accounting Fees. Fidelity Service Company, Inc.(FSC),an affiliate of FMR, maintains the Fund's accounting records. The fee is based on the level of average net assets for each month.
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 Loan
Balance | Weighted Average Interest Rate | Interest
Expense |
Borrower | $ 6,556,000 | .42% | $ 153 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 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 $1,893 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Expense Reductions.
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 $273.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
From net investment income | | |
Initial Class | $ 311,601 | $ 38,834,457 |
Service Class | 51,381 | 5,348,721 |
Service Class 2 | 127,438 | 14,701,408 |
Initial Class R | 17,999 | 2,203,822 |
Service Class R | 35,933 | 4,443,415 |
Service Class 2R | 753 | 92,376 |
Investor Class | 168,253 | 18,379,386 |
Total | $ 713,358 | $ 84,003,585 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended June 30,
2012 | Year ended
December 31,
2011 | Six months ended June 30,
2012 | Year ended
December 31,
2011 |
Initial Class | | | | |
Shares sold | 6,729,348 | 14,954,963 | $ 38,008,922 | $ 85,548,272 |
Reinvestment of distributions | 55,743 | 7,279,400 | 311,601 | 38,834,457 |
Shares redeemed | (10,390,858) | (24,811,221) | (58,723,626) | (141,718,667) |
Net increase (decrease) | (3,605,767) | (2,576,858) | $ (20,403,103) | $ (17,335,938) |
Service Class | | | | |
Shares sold | 1,103,599 | 4,391,885 | $ 6,139,214 | $ 23,974,978 |
Reinvestment of distributions | 9,241 | 1,008,126 | 51,381 | 5,348,721 |
Shares redeemed | (4,681,926) | (6,182,000) | (26,388,477) | (35,059,439) |
Net increase (decrease) | (3,569,086) | (781,989) | $ (20,197,882) | $ (5,735,740) |
Service Class 2 | | | | |
Shares sold | 7,730,084 | 35,272,315 | $ 42,652,629 | $ 197,650,737 |
Reinvestment of distributions | 23,340 | 2,824,984 | 127,438 | 14,701,408 |
Shares redeemed | (13,786,164) | (29,704,714) | (75,952,033) | (165,911,073) |
Net increase (decrease) | (6,032,740) | 8,392,585 | $ (33,171,966) | $ 46,441,072 |
Initial Class R | | | | |
Shares sold | 1,124,028 | 2,974,865 | $ 6,357,182 | $ 17,006,544 |
Reinvestment of distributions | 3,231 | 414,639 | 17,999 | 2,203,822 |
Shares redeemed | (1,413,356) | (3,795,258) | (7,958,959) | (21,688,955) |
Net increase (decrease) | (286,097) | (405,754) | $ (1,583,778) | $ (2,478,589) |
Service Class R | | | | |
Shares sold | 1,338,183 | 8,003,006 | $ 7,516,332 | $ 45,643,141 |
Reinvestment of distributions | 6,486 | 840,752 | 35,933 | 4,443,415 |
Shares redeemed | (6,559,305) | (9,397,413) | (36,538,504) | (53,628,031) |
Net increase (decrease) | (5,214,636) | (553,655) | $ (28,986,239) | $ (3,541,475) |
Service Class 2R | | | | |
Shares sold | 144,235 | 77,098 | $ 805,255 | $ 432,475 |
Reinvestment of distributions | 138 | 17,746 | 753 | 92,376 |
Shares redeemed | (78,416) | (121,577) | (432,764) | (682,497) |
Net increase (decrease) | 65,957 | (26,733) | $ 373,244 | $ (157,646) |
Investor Class | | | | |
Shares sold | 16,931,787 | 35,223,887 | $ 95,479,603 | $ 199,792,708 |
Reinvestment of distributions | 30,153 | 3,458,337 | 168,253 | 18,379,386 |
Shares redeemed | (6,042,930) | (29,823,638) | (34,130,403) | (169,542,582) |
Net increase (decrease) | 10,919,010 | 8,858,586 | $ 61,517,453 | $ 48,629,512 |
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 38% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 18% of the total outstanding shares of the Fund.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Bank of New York Mellon
New York, NY
VIPHI-SANN-0812
1.705694.114
Fidelity® Variable Insurance Products:
High Income Portfolio - Class R
Semiannual Report
June 30, 2012
(Fidelity Cover Art)
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. |
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/proxyvotingresults 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. © 2012 FMR LLC. All rights reserved.
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, http://www.advisor.fidelity.com, or http://www.401k.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, 2012 to June 30, 2012).
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.
| Annualized Expense Ratio | Beginning
Account Value
January 1, 2012 | Ending
Account Value
June 30, 2012 | Expenses Paid
During Period*
January 1, 2012
to June 30, 2012 |
Initial Class | .69% | | | |
Actual | | $ 1,000.00 | $ 1,071.10 | $ 3.55 |
HypotheticalA | | $ 1,000.00 | $ 1,021.43 | $ 3.47 |
Service Class | .78% | | | |
Actual | | $ 1,000.00 | $ 1,071.50 | $ 4.02 |
HypotheticalA | | $ 1,000.00 | $ 1,020.98 | $ 3.92 |
Service Class 2 | .94% | | | |
Actual | | $ 1,000.00 | $ 1,069.00 | $ 4.84 |
HypotheticalA | | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
Initial Class R | .68% | | | |
Actual | | $ 1,000.00 | $ 1,071.30 | $ 3.50 |
HypotheticalA | | $ 1,000.00 | $ 1,021.48 | $ 3.42 |
Service Class R | .78% | | | |
Actual | | $ 1,000.00 | $ 1,069.90 | $ 4.01 |
HypotheticalA | | $ 1,000.00 | $ 1,020.98 | $ 3.92 |
Service Class 2R | .94% | | | |
Actual | | $ 1,000.00 | $ 1,069.00 | $ 4.84 |
HypotheticalA | | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
Investor Class | .72% | | | |
Actual | | $ 1,000.00 | $ 1,071.30 | $ 3.71 |
HypotheticalA | | $ 1,000.00 | $ 1,021.28 | $ 3.62 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Five Holdings as of June 30, 2012 |
(by issuer, excluding cash equivalents) | % of fund's
net assets | % of fund's net assets
6 months ago |
Ford Motor Credit Co. LLC | 3.1 | 2.5 |
MGM Mirage, Inc. | 2.9 | 2.3 |
CCO Holdings LLC/CCO Holdings Capital Corp. | 2.7 | 2.3 |
International Lease Finance Corp. | 2.6 | 2.2 |
CIT Group, Inc. | 2.1 | 1.4 |
| 13.4 | |
Top Five Market Sectors as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Energy | 10.8 | 12.6 |
Automotive | 7.7 | 7.2 |
Electric Utilities | 7.3 | 6.2 |
Diversified Financial Services | 7.1 | 5.3 |
Telecommunications | 6.8 | 8.6 |
Quality Diversification (% of fund's net assets) |
As of June 30, 2012 | As of December 31, 2011 |
| BBB 4.8% | | | BBB 2.1% | |
| BB 30.3% | | | BB 32.0% | |
| B 43.2% | | | B 44.7% | |
| CCC,CC,C 11.5% | | | CCC,CC,C 11.1% | |
| Not Rated 1.9% | | | Not Rated 1.7% | |
| Equities 0.4% | | | Equities 0.4% | |
| Short-Term
Investments and
Net Other Assets 7.9% | | | Short-Term
Investments and
Net Other Assets 8.0% | |
We have used ratings from Moody's Investors Service, Inc. Where Moody's® ratings are not available, we have used S&P® ratings. All ratings are as of the date indicated and do not reflect subsequent changes. |
Asset Allocation (% of fund's net assets) |
As of June 30, 2012 * | As of December 31, 2011 ** |
| Nonconvertible
Bonds 84.1% | | | Nonconvertible
Bonds 83.9% | |
| Convertible Bonds, Preferred Stocks 0.3% | | | Convertible Bonds, Preferred Stocks 0.3% | |
| Common Stocks 0.1% | | | Common Stocks 0.1% | |
| Floating Rate
Loans 7.6% | | | Floating Rate
Loans 7.7% | |
| Short-Term
Investments and
Net Other Assets 7.9% | | | Short-Term
Investments and
Net Other Assets 8.0% | |
* Foreign investments | 12.9% | | ** Foreign investments | 13.7% | |
Semiannual Report
Investments June 30, 2012 (Unaudited)
Showing Percentage of Net Assets
Nonconvertible Bonds - 84.1% |
| Principal Amount | | Value |
Aerospace - 0.4% |
Huntington Ingalls Industries, Inc. 6.875% 3/15/18 | | $ 5,100,000 | | $ 5,316,750 |
Air Transportation - 1.8% |
Continental Airlines, Inc.: | | | | |
pass-thru trust certificates 9.798% 4/1/21 | | 3,272,082 | | 3,517,489 |
6.75% 9/15/15 (d) | | 4,090,000 | | 4,202,475 |
Continental Airlines, Inc. 9.25% 5/10/17 | | 840,632 | | 920,492 |
Delta Air Lines, Inc. pass-thru trust certificates: | | | | |
6.375% 1/2/16 | | 1,985,000 | | 1,985,000 |
6.75% 11/23/15 | | 1,985,000 | | 1,980,038 |
8.021% 8/10/22 | | 1,776,600 | | 1,796,675 |
8.954% 8/10/14 | | 1,548,039 | | 1,578,999 |
Northwest Airlines, Inc. pass-thru trust certificates 8.028% 11/1/17 | | 645,668 | | 652,125 |
United Air Lines, Inc. 9.875% 8/1/13 (d) | | 659,000 | | 685,360 |
United Air Lines, Inc. pass-thru trust certificates: | | | | |
Class B, 7.336% 7/2/19 | | 2,598,479 | | 2,572,495 |
9.75% 1/15/17 | | 2,041,297 | | 2,321,975 |
12% 1/15/16 (d) | | 676,093 | | 731,871 |
| | 22,944,994 |
Automotive - 6.3% |
Chrysler Group LLC/CG Co-Issuer, Inc.: | | | | |
8% 6/15/19 | | 6,970,000 | | 7,161,675 |
8.25% 6/15/21 | | 7,665,000 | | 7,837,463 |
Dana Holding Corp.: | | | | |
6.5% 2/15/19 | | 1,505,000 | | 1,602,825 |
6.75% 2/15/21 | | 1,710,000 | | 1,846,800 |
Delphi Corp.: | | | | |
5.875% 5/15/19 | | 8,625,000 | | 9,185,625 |
6.125% 5/15/21 | | 1,475,000 | | 1,611,438 |
Ford Motor Co. 7.45% 7/16/31 | | 4,370,000 | | 5,473,425 |
Ford Motor Credit Co. LLC: | | | | |
3.875% 1/15/15 | | 6,975,000 | | 7,182,953 |
4.25% 2/3/17 | | 3,465,000 | | 3,632,110 |
5% 5/15/18 | | 7,600,000 | | 8,070,303 |
5.875% 8/2/21 | | 4,145,000 | | 4,611,346 |
6.625% 8/15/17 | | 3,200,000 | | 3,640,000 |
7% 4/15/15 | | 2,250,000 | | 2,491,875 |
8% 12/15/16 | | 4,870,000 | | 5,760,022 |
12% 5/15/15 | | 3,495,000 | | 4,351,275 |
General Motors Financial Co., Inc. 6.75% 6/1/18 | | 3,685,000 | | 4,025,863 |
Tenneco, Inc.: | | | | |
6.875% 12/15/20 | | 1,930,000 | | 2,084,400 |
7.75% 8/15/18 | | 1,685,000 | | 1,807,163 |
| | 82,376,561 |
|
| Principal Amount | | Value |
Banks & Thrifts - 0.8% |
Ally Financial, Inc.: | | | | |
3.6669% 2/11/14 (f) | | $ 3,805,000 | | $ 3,728,900 |
4.625% 6/26/15 | | 2,665,000 | | 2,681,510 |
5.5% 2/15/17 | | 4,355,000 | | 4,431,213 |
| | 10,841,623 |
Broadcasting - 1.7% |
Allbritton Communications Co. 8% 5/15/18 | | 2,205,000 | | 2,293,200 |
Univision Communications, Inc.: | | | | |
6.875% 5/15/19 (d) | | 6,165,000 | | 6,334,538 |
7.875% 11/1/20 (d) | | 1,180,000 | | 1,262,600 |
8.5% 5/15/21 (d) | | 9,605,000 | | 9,677,038 |
UPC Holding BV 9.875% 4/15/18 (d) | | 1,630,000 | | 1,784,850 |
| | 21,352,226 |
Building Materials - 1.8% |
Building Materials Corp. of America: | | | | |
6.75% 5/1/21 (d) | | 3,680,000 | | 3,937,600 |
6.875% 8/15/18 (d) | | 4,490,000 | | 4,770,625 |
HD Supply, Inc.: | | | | |
8.125% 4/15/19 (d) | | 2,725,000 | | 2,943,000 |
11% 4/15/20 (d) | | 1,365,000 | | 1,467,375 |
Headwaters, Inc. 7.625% 4/1/19 | | 5,505,000 | | 5,449,950 |
Masco Corp. 5.95% 3/15/22 | | 1,815,000 | | 1,868,336 |
Texas Industries, Inc. 9.25% 8/15/20 | | 1,565,000 | | 1,561,088 |
USG Corp. 7.875% 3/30/20 (d) | | 970,000 | | 1,003,950 |
| | 23,001,924 |
Cable TV - 5.1% |
Cablevision Systems Corp.: | | | | |
7.75% 4/15/18 | | 1,340,000 | | 1,427,100 |
8.625% 9/15/17 | | 1,000,000 | | 1,115,000 |
CCO Holdings LLC/CCO Holdings Capital Corp.: | | | | |
6.5% 4/30/21 | | 10,700,000 | | 11,395,500 |
6.625% 1/31/22 | | 3,080,000 | | 3,295,600 |
7% 1/15/19 | | 9,810,000 | | 10,594,800 |
7.25% 10/30/17 | | 7,685,000 | | 8,338,225 |
7.875% 4/30/18 | | 985,000 | | 1,071,188 |
Cequel Communications Holdings I LLC/Cequel Capital Corp. 8.625% 11/15/17 (d) | | 11,730,000 | | 12,609,750 |
CSC Holdings LLC: | | | | |
6.75% 11/15/21 (d) | | 1,205,000 | | 1,274,288 |
8.625% 2/15/19 | | 215,000 | | 248,325 |
Harron Communications LP/Harron Finance Corp. 9.125% 4/1/20 (d) | | 530,000 | | 548,550 |
Unitymedia Hessen GmbH & Co. KG / Unitymedia NRW GmbH 7.5% 3/15/19 (d) | | 950,000 | | 1,009,375 |
Nonconvertible Bonds - continued |
| Principal Amount | | Value |
Cable TV - continued |
Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH 8.125% 12/1/17 (d) | | $ 490,000 | | $ 525,525 |
UPCB Finance III Ltd. 6.625% 7/1/20 (d) | | 2,710,000 | | 2,750,650 |
UPCB Finance V Ltd. 7.25% 11/15/21 (d) | | 3,270,000 | | 3,400,800 |
UPCB Finance VI Ltd. 6.875% 1/15/22 (d) | | 1,325,000 | | 1,344,875 |
Zayo Escrow Corp.: | | | | |
8.125% 1/1/20 (d) | | 3,265,000 | | 3,395,600 |
10.125% 7/1/20 (d) | | 1,360,000 | | 1,428,000 |
| | 65,773,151 |
Capital Goods - 0.5% |
Amsted Industries, Inc. 8.125% 3/15/18 (d) | | 2,890,000 | | 3,056,175 |
JB Poindexter & Co., Inc. 9% 4/1/22 (d) | | 3,830,000 | | 3,830,000 |
| | 6,886,175 |
Chemicals - 1.4% |
Celanese US Holdings LLC 6.625% 10/15/18 | | 1,030,000 | | 1,122,700 |
INEOS Finance PLC: | | | | |
7.5% 5/1/20 (d) | | 1,065,000 | | 1,075,650 |
8.375% 2/15/19 (d) | | 865,000 | | 895,275 |
Kinove German Bondco GmbH 9.625% 6/15/18 (d) | | 2,575,000 | | 2,652,250 |
LyondellBasell Industries NV: | | | | |
5% 4/15/19 (d) | | 3,195,000 | | 3,338,775 |
5.75% 4/15/24 (d) | | 2,130,000 | | 2,271,006 |
6% 11/15/21 (d) | | 1,005,000 | | 1,102,988 |
NOVA Chemicals Corp. 3.8549% 11/15/13 (f) | | 5,325,000 | | 5,318,344 |
| | 17,776,988 |
Consumer Products - 0.2% |
NBTY, Inc. 9% 10/1/18 | | 2,690,000 | | 2,975,947 |
Containers - 2.4% |
Ardagh Packaging Finance PLC 7.375% 10/15/17 (d) | | 1,415,000 | | 1,499,900 |
Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer (Luxembourg) SA: | | | | |
7.875% 8/15/19 (d) | | 6,625,000 | | 7,121,875 |
8.5% 5/15/18 (c)(d) | | 4,275,000 | | 4,104,000 |
9.875% 8/15/19 (d) | | 5,145,000 | | 5,260,763 |
9.875% 8/15/19 (d) | | 430,000 | | 446,125 |
Sealed Air Corp.: | | | | |
8.125% 9/15/19 (d) | | 5,645,000 | | 6,237,725 |
8.375% 9/15/21 (d) | | 4,900,000 | | 5,488,000 |
Tekni-Plex, Inc. 9.75% 6/1/19 (d) | | 1,290,000 | | 1,302,900 |
| | 31,461,288 |
|
| Principal Amount | | Value |
Diversified Financial Services - 6.9% |
Aircastle Ltd.: | | | | |
6.75% 4/15/17 | | $ 2,030,000 | | $ 2,050,300 |
9.75% 8/1/18 | | 3,730,000 | | 4,121,650 |
CIT Group, Inc.: | | | | |
4.75% 2/15/15 (d) | | 3,100,000 | | 3,173,625 |
5% 5/15/17 | | 3,230,000 | | 3,310,750 |
5.25% 3/15/18 | | 4,935,000 | | 5,095,388 |
5.375% 5/15/20 | | 2,155,000 | | 2,203,488 |
5.5% 2/15/19 (d) | | 4,280,000 | | 4,397,700 |
7% 5/2/16 (d) | | 7,645,000 | | 7,654,556 |
7% 5/2/17 (d) | | 1,553,687 | | 1,555,629 |
Icahn Enterprises LP/Icahn Enterprises Finance Corp.: | | | | |
7.75% 1/15/16 | | 6,595,000 | | 6,932,994 |
8% 1/15/18 | | 11,845,000 | | 12,585,313 |
ILFC E-Capital Trust II 6.25% 12/21/65 (d)(f) | | 1,275,000 | | 879,750 |
International Lease Finance Corp.: | | | | |
4.875% 4/1/15 | | 3,400,000 | | 3,408,500 |
5.65% 6/1/14 | | 1,315,000 | | 1,347,875 |
5.75% 5/15/16 | | 8,055,000 | | 8,175,825 |
5.875% 4/1/19 | | 1,485,000 | | 1,470,150 |
6.25% 5/15/19 | | 2,245,000 | | 2,287,094 |
8.625% 9/15/15 | | 6,070,000 | | 6,722,525 |
8.625% 1/15/22 | | 3,855,000 | | 4,462,163 |
8.75% 3/15/17 | | 2,110,000 | | 2,373,750 |
8.875% 9/1/17 | | 3,235,000 | | 3,655,550 |
Reynolds Group DL Escrow LLC 7.75% 10/15/16 (c)(d) | | 1,000,000 | | 1,055,000 |
| | 88,919,575 |
Diversified Media - 0.8% |
Nielsen Finance LLC/Nielsen Finance Co.: | | | | |
7.75% 10/15/18 | | 3,900,000 | | 4,338,750 |
11.5% 5/1/16 | | 1,445,000 | | 1,643,688 |
Quebecor Media, Inc.: | | | | |
7.75% 3/15/16 | | 2,612,000 | | 2,696,890 |
7.75% 3/15/16 | | 1,955,000 | | 2,018,538 |
| | 10,697,866 |
Electric Utilities - 7.3% |
Atlantic Power Corp. 9% 11/15/18 (d) | | 6,740,000 | | 6,891,650 |
Calpine Construction Finance Co. LP 8% 6/1/16 (d) | | 5,775,000 | | 6,193,688 |
Dolphin Subsidiary II, Inc.: | | | | |
6.5% 10/15/16 (d) | | 7,095,000 | | 7,662,600 |
7.25% 10/15/21 (d) | | 2,295,000 | | 2,547,450 |
Everest Acquisition LLC / Everest Acquisition Finance, Inc.: | | | | |
6.875% 5/1/19 (d) | | 1,655,000 | | 1,721,200 |
9.375% 5/1/20 (d) | | 2,725,000 | | 2,820,375 |
Nonconvertible Bonds - continued |
| Principal Amount | | Value |
Electric Utilities - continued |
GenOn Energy, Inc.: | | | | |
9.5% 10/15/18 | | $ 3,310,000 | | $ 3,272,763 |
9.875% 10/15/20 | | 1,465,000 | | 1,428,375 |
InterGen NV 9% 6/30/17 (d) | | 4,150,000 | | 4,067,000 |
IPALCO Enterprises, Inc. 5% 5/1/18 | | 1,435,000 | | 1,436,866 |
Mirant Americas Generation LLC: | | | | |
8.5% 10/1/21 | | 7,395,000 | | 6,655,500 |
9.125% 5/1/31 | | 6,570,000 | | 5,847,300 |
NSG Holdings II, LLC 7.75% 12/15/25 (d) | | 9,865,000 | | 9,865,000 |
NV Energy, Inc. 6.25% 11/15/20 | | 4,295,000 | | 4,794,637 |
Otter Tail Corp. 9% 12/15/16 | | 2,460,000 | | 2,669,100 |
Puget Energy, Inc.: | | | | |
5.625% 7/15/22 (d) | | 1,045,000 | | 1,088,054 |
6.5% 12/15/20 | | 3,975,000 | | 4,337,918 |
RRI Energy, Inc. 7.625% 6/15/14 | | 6,280,000 | | 6,405,600 |
The AES Corp.: | | | | |
7.375% 7/1/21 (d) | | 5,145,000 | | 5,723,813 |
7.75% 10/15/15 | | 3,745,000 | | 4,194,400 |
8% 10/15/17 | | 1,515,000 | | 1,715,738 |
9.75% 4/15/16 | | 3,010,000 | | 3,566,850 |
| | 94,905,877 |
Energy - 10.4% |
AmeriGas Partners LP/AmeriGas Finance Corp.: | | | | |
6.25% 8/20/19 | | 1,710,000 | | 1,718,550 |
6.5% 5/20/21 | | 642,000 | | 645,210 |
Antero Resources Finance Corp.: | | | | |
7.25% 8/1/19 | | 1,845,000 | | 1,914,188 |
9.375% 12/1/17 | | 4,215,000 | | 4,636,500 |
Berry Petroleum Co. 6.375% 9/15/22 | | 2,890,000 | | 2,983,925 |
Chesapeake Energy Corp.: | | | | |
6.125% 2/15/21 | | 4,950,000 | | 4,789,125 |
6.775% 3/15/19 | | 2,005,000 | | 1,939,838 |
6.875% 11/15/20 | | 1,250,000 | | 1,231,250 |
Chesapeake Midstream Partners LP/CHKM Finance Corp.: | | | | |
5.875% 4/15/21 | | 615,000 | | 596,550 |
6.125% 7/15/22 | | 1,745,000 | | 1,714,463 |
Chesapeake Oilfield Operating LLC 6.625% 11/15/19 (d) | | 1,680,000 | | 1,512,000 |
Crestwood Midstream Partners LP / Finance Corp. 7.75% 4/1/19 | | 2,315,000 | | 2,297,638 |
Denbury Resources, Inc. 6.375% 8/15/21 | | 2,550,000 | | 2,626,500 |
Edgen Murray Corp. 12.25% 1/15/15 | | 4,760,000 | | 4,688,600 |
Energy Transfer Equity LP 7.5% 10/15/20 | | 2,930,000 | | 3,215,675 |
|
| Principal Amount | | Value |
Expro Finance Luxembourg SCA 8.5% 12/15/16 (d) | | $ 2,812,000 | | $ 2,706,550 |
Exterran Holdings, Inc. 7.25% 12/1/18 | | 7,855,000 | | 7,383,700 |
Ferrellgas LP/Ferrellgas Finance Corp. 6.5% 5/1/21 | | 2,259,000 | | 2,061,338 |
Forbes Energy Services Ltd. 9% 6/15/19 | | 4,680,000 | | 4,352,400 |
Frontier Oil Corp.: | | | | |
6.875% 11/15/18 | | 1,245,000 | | 1,294,800 |
8.5% 9/15/16 | | 2,700,000 | | 2,835,000 |
Hornbeck Offshore Services, Inc.: | | | | |
5.875% 4/1/20 (d) | | 1,400,000 | | 1,393,000 |
8% 9/1/17 | | 215,000 | | 231,125 |
Inergy LP/Inergy Finance Corp.: | | | | |
6.875% 8/1/21 | | 1,415,000 | | 1,415,000 |
7% 10/1/18 | | 3,155,000 | | 3,186,550 |
Kinder Morgan Finance Co. LLC 6% 1/15/18 (d) | | 6,445,000 | | 6,735,025 |
LINN Energy LLC/LINN Energy Finance Corp.: | | | | |
6.5% 5/15/19 (d) | | 2,895,000 | | 2,822,625 |
7.75% 2/1/21 | | 2,390,000 | | 2,515,475 |
8.625% 4/15/20 | | 3,055,000 | | 3,291,763 |
MRC Global, Inc. 9.5% 12/15/16 | | 6,600,000 | | 7,128,000 |
Newfield Exploration Co. 5.625% 7/1/24 | | 1,470,000 | | 1,503,075 |
Offshore Group Investment Ltd.: | | | | |
11.5% 8/1/15 | | 4,390,000 | | 4,719,250 |
11.5% 8/1/15 (d) | | 2,770,000 | | 2,998,525 |
Oil States International, Inc. 6.5% 6/1/19 | | 3,995,000 | | 4,154,800 |
Pan American Energy LLC 7.875% 5/7/21 (d) | | 5,360,000 | | 4,529,200 |
PBF Holding Co. LLC/PBF Finance Corp. 8.25% 2/15/20 (d) | | 4,340,000 | | 4,318,300 |
PetroBakken Energy Ltd. 8.625% 2/1/20 (d) | | 2,015,000 | | 1,994,850 |
Petrohawk Energy Corp. 7.25% 8/15/18 | | 1,685,000 | | 1,904,050 |
Petroleum Geo-Services ASA 7.375% 12/15/18 (d) | | 3,225,000 | | 3,273,375 |
Plains Exploration & Production Co. 6.125% 6/15/19 | | 3,190,000 | | 3,190,000 |
Precision Drilling Corp.: | | | | |
6.5% 12/15/21 | | 290,000 | | 295,800 |
6.625% 11/15/20 | | 2,505,000 | | 2,555,100 |
Quicksilver Resources, Inc. 7.125% 4/1/16 | | 3,255,000 | | 2,571,450 |
Samson Investment Co. 9.75% 2/15/20 (d) | | 5,105,000 | | 5,066,713 |
Targa Resources Partners LP/Targa Resources Partners Finance Corp.: | | | | |
6.375% 8/1/22 (d) | | 800,000 | | 798,000 |
6.875% 2/1/21 | | 900,000 | | 936,000 |
Nonconvertible Bonds - continued |
| Principal Amount | | Value |
Energy - continued |
Targa Resources Partners LP/Targa Resources Partners Finance Corp.: - continued | | | | |
7.875% 10/15/18 | | $ 2,660,000 | | $ 2,872,800 |
WPX Energy, Inc. 6% 1/15/22 | | 1,625,000 | | 1,616,875 |
| | 135,160,526 |
Environmental - 0.5% |
Covanta Holding Corp. 7.25% 12/1/20 | | 6,440,000 | | 6,977,180 |
Food & Drug Retail - 1.4% |
Rite Aid Corp.: | | | | |
9.25% 3/15/20 (d) | | 4,135,000 | | 4,155,675 |
9.25% 3/15/20 (d) | | 3,165,000 | | 3,180,825 |
9.5% 6/15/17 | | 10,170,000 | | 10,398,825 |
| | 17,735,325 |
Food/Beverage/Tobacco - 0.8% |
JBS USA LLC/JBS USA Finance, Inc. 8.25% 2/1/20 (d) | | 3,700,000 | | 3,644,500 |
Post Holdings, Inc. 7.375% 2/15/22 (d) | | 2,730,000 | | 2,866,500 |
US Foodservice, Inc. 8.5% 6/30/19 (d) | | 3,990,000 | | 4,099,725 |
| | 10,610,725 |
Gaming - 4.6% |
Ameristar Casinos, Inc.: | | | | |
7.5% 4/15/21 | | 3,720,000 | | 3,943,200 |
7.5% 4/15/21 (d) | | 2,415,000 | | 2,559,900 |
Chukchansi Economic Development Authority 9.75% 5/30/20 (d) | | 1,378,000 | | 1,102,400 |
CityCenter Holdings LLC/CityCenter Finance Corp.: | | | | |
7.625% 1/15/16 | | 4,240,000 | | 4,452,000 |
7.625% 1/15/16 (d) | | 2,755,000 | | 2,858,313 |
11.5% 1/15/17 pay-in-kind (f) | | 5,277,559 | | 5,528,829 |
MGM Mirage, Inc.: | | | | |
6.625% 7/15/15 | | 8,205,000 | | 8,410,125 |
6.75% 4/1/13 | | 1,140,000 | | 1,168,500 |
7.5% 6/1/16 | | 2,600,000 | | 2,691,000 |
7.625% 1/15/17 | | 10,930,000 | | 11,093,950 |
7.75% 3/15/22 | | 2,720,000 | | 2,767,600 |
8.625% 2/1/19 (d) | | 4,135,000 | | 4,445,125 |
10% 11/1/16 | | 3,185,000 | | 3,487,575 |
11.375% 3/1/18 | | 3,150,000 | | 3,709,125 |
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp. 7.75% 8/15/20 | | 1,895,000 | | 2,084,500 |
| | 60,302,142 |
Healthcare - 5.2% |
DJO Finance LLC/DJO Finance Corp.: | | | | |
7.75% 4/15/18 | | 1,350,000 | | 1,113,750 |
|
| Principal Amount | | Value |
10.875% 11/15/14 | | $ 4,365,000 | | $ 4,441,388 |
Emergency Medical Services Corp. 8.125% 6/1/19 | | 5,100,000 | | 5,323,125 |
Fresenius Medical Care US Finance II, Inc. 5.625% 7/31/19 (d) | | 3,265,000 | | 3,403,763 |
HCA, Inc.: | | | | |
5.875% 3/15/22 | | 670,000 | | 699,313 |
6.5% 2/15/20 | | 755,000 | | 821,063 |
9.875% 2/15/17 | | 1,032,000 | | 1,119,720 |
HealthSouth Corp. 7.25% 10/1/18 | | 4,470,000 | | 4,704,675 |
IASIS Healthcare LLC/IASIS Capital Corp. 8.375% 5/15/19 | | 8,105,000 | | 7,983,425 |
MPT Operating Partnership LP/MPT Finance Corp. 6.875% 5/1/21 | | 2,595,000 | | 2,698,800 |
Mylan, Inc.: | | | | |
6% 11/15/18 (d) | | 2,000,000 | | 2,095,000 |
7.625% 7/15/17 (d) | | 1,255,000 | | 1,380,500 |
Omega Healthcare Investors, Inc. 6.75% 10/15/22 | | 4,540,000 | | 4,835,100 |
Radiation Therapy Services, Inc. 8.875% 1/15/17 (d) | | 1,190,000 | | 1,142,400 |
Rural/Metro Corp. 10.125% 7/15/19 (d) | | 1,055,000 | | 991,700 |
Sabra Health Care LP/Sabra Capital Corp. 8.125% 11/1/18 | | 6,590,000 | | 7,084,250 |
Senior Housing Properties Trust 6.75% 4/15/20 | | 2,640,000 | | 2,861,892 |
Valeant Pharmaceuticals International: | | | | |
6.5% 7/15/16 (d) | | 6,275,000 | | 6,526,000 |
6.75% 8/15/21 (d) | | 1,325,000 | | 1,298,500 |
6.875% 12/1/18 (d) | | 4,655,000 | | 4,817,925 |
7% 10/1/20 (d) | | 375,000 | | 378,281 |
WP Rocket Merger Sub, Inc. 10.125% 7/15/19 (d) | | 2,345,000 | | 2,274,650 |
| | 67,995,220 |
Homebuilders/Real Estate - 2.8% |
CB Richard Ellis Services, Inc. 6.625% 10/15/20 | | 2,370,000 | | 2,512,200 |
D.R. Horton, Inc. 4.75% 5/15/17 | | 1,315,000 | | 1,355,272 |
KB Home 7.25% 6/15/18 | | 5,145,000 | | 5,042,100 |
Lennar Corp.: | | | | |
5.6% 5/31/15 | | 545,000 | | 569,525 |
6.95% 6/1/18 | | 2,515,000 | | 2,684,763 |
12.25% 6/1/17 | | 1,600,000 | | 2,040,000 |
Realogy Corp. 7.625% 1/15/20 (d) | | 3,475,000 | | 3,605,313 |
Standard Pacific Corp.: | | | | |
8.375% 5/15/18 | | 11,850,000 | | 12,946,096 |
8.375% 1/15/21 | | 2,375,000 | | 2,588,750 |
10.75% 9/15/16 | | 2,405,000 | | 2,837,900 |
| | 36,181,919 |
Nonconvertible Bonds - continued |
| Principal Amount | | Value |
Hotels - 0.4% |
Host Hotels & Resorts LP: | | | | |
5.875% 6/15/19 | | $ 2,165,000 | | $ 2,338,200 |
9% 5/15/17 | | 2,195,000 | | 2,425,475 |
| | 4,763,675 |
Leisure - 1.1% |
Equinox Holdings, Inc. 9.5% 2/1/16 (d) | | 3,570,000 | | 3,784,200 |
GWR Operating Partnership LLP/Great Wolf Finance Corp. 10.875% 4/1/17 | | 3,920,000 | | 4,370,800 |
Royal Caribbean Cruises Ltd.: | | | | |
7.25% 3/15/18 | | 1,815,000 | | 1,969,275 |
yankee 7.25% 6/15/16 | | 2,445,000 | | 2,652,825 |
Universal City Development Partners Ltd./UCDP Finance, Inc. 8.875% 11/15/15 | | 809,000 | | 866,860 |
| | 13,643,960 |
Metals/Mining - 1.4% |
Boart Longyear Management Pty Ltd. 7% 4/1/21 (d) | | 1,790,000 | | 1,834,750 |
CONSOL Energy, Inc. 8% 4/1/17 | | 2,080,000 | | 2,147,600 |
FMG Resources (August 2006) Pty Ltd.: | | | | |
6.375% 2/1/16 (d) | | 3,145,000 | | 3,176,450 |
7% 11/1/15 (d) | | 8,120,000 | | 8,302,700 |
Vedanta Resources PLC 6.75% 6/7/16 (d) | | 2,560,000 | | 2,409,472 |
| | 17,870,972 |
Paper - 0.1% |
Sappi Papier Holding GmbH: | | | | |
7.75% 7/15/17 (d)(e) | | 735,000 | | 744,188 |
8.375% 6/15/19 (d)(e) | | 995,000 | | 999,975 |
| | 1,744,163 |
Restaurants - 0.3% |
NPC International, Inc./NPC Operating Co. A, Inc./NPC Operating Co. B, Inc. 10.5% 1/15/20 | | 4,035,000 | | 4,468,763 |
Services - 2.7% |
ARAMARK Corp.: | | | | |
3.9659% 2/1/15 (f) | | 7,820,000 | | 7,761,350 |
8.5% 2/1/15 | | 4,830,000 | | 4,950,750 |
ARAMARK Holdings Corp. 8.625% 5/1/16 pay-in-kind (d)(f) | | 5,580,000 | | 5,726,196 |
Audatex North America, Inc. 6.75% 6/15/18 (d) | | 425,000 | | 448,375 |
FTI Consulting, Inc. 6.75% 10/1/20 | | 3,100,000 | | 3,274,530 |
Hertz Corp.: | | | | |
6.75% 4/15/19 | | 2,660,000 | | 2,766,400 |
6.75% 4/15/19 (d) | | 2,850,000 | | 2,949,750 |
7.5% 10/15/18 | | 7,205,000 | | 7,691,338 |
| | 35,568,689 |
|
| Principal Amount | | Value |
Shipping - 1.1% |
Navios Maritime Holdings, Inc. 8.875% 11/1/17 | | $ 1,725,000 | | $ 1,759,500 |
Overseas Shipholding Group, Inc.: | | | | |
7.5% 2/15/24 | | 475,000 | | 268,375 |
8.125% 3/30/18 | | 2,895,000 | | 2,026,500 |
Ship Finance International Ltd. 8.5% 12/15/13 | | 10,800,000 | | 10,692,000 |
| | 14,746,375 |
Steel - 1.4% |
Essar Steel Algoma, Inc. 9.375% 3/15/15 (d) | | 5,215,000 | | 5,032,475 |
JMC Steel Group, Inc. 8.25% 3/15/18 (d) | | 3,970,000 | | 3,940,225 |
Severstal Columbus LLC 10.25% 2/15/18 | | 5,610,000 | | 5,610,000 |
Steel Dynamics, Inc. 7.625% 3/15/20 | | 3,335,000 | | 3,568,450 |
| | 18,151,150 |
Super Retail - 1.8% |
J. Crew Group, Inc. 8.125% 3/1/19 | | 3,975,000 | | 4,104,188 |
PETCO Animal Supplies, Inc. 9.25% 12/1/18 (d) | | 7,585,000 | | 8,286,613 |
Sonic Automotive, Inc. 7% 7/15/22 (d) | | 945,000 | | 972,216 |
Toys 'R' Us Property Co. II LLC 8.5% 12/1/17 | | 6,795,000 | | 7,100,775 |
Toys 'R' Us, Inc. 7.375% 9/1/16 (d) | | 2,740,000 | | 2,698,900 |
| | 23,162,692 |
Technology - 3.8% |
Amkor Technology, Inc. 7.375% 5/1/18 | | 4,830,000 | | 5,047,350 |
Avaya, Inc.: | | | | |
9.75% 11/1/15 | | 5,735,000 | | 4,631,013 |
10.125% 11/1/15 pay-in-kind (f) | | 5,905,000 | | 4,783,050 |
CDW LLC/CDW Finance Corp. 8.5% 4/1/19 | | 4,650,000 | | 4,929,000 |
Lucent Technologies, Inc.: | | | | |
6.45% 3/15/29 | | 6,625,000 | | 4,505,000 |
6.5% 1/15/28 | | 4,915,000 | | 3,317,625 |
Sanmina-SCI Corp. 7% 5/15/19 (d) | | 6,455,000 | | 6,293,625 |
Spansion LLC 7.875% 11/15/17 | | 5,850,000 | | 5,674,500 |
SunGard Data Systems, Inc.: | | | | |
7.375% 11/15/18 | | 595,000 | | 636,650 |
10.25% 8/15/15 | | 3,080,000 | | 3,187,800 |
Viasystems, Inc. 7.875% 5/1/19 (d) | | 5,880,000 | | 5,850,600 |
| | 48,856,213 |
Nonconvertible Bonds - continued |
| Principal Amount | | Value |
Telecommunications - 6.6% |
Digicel Group Ltd.: | | | | |
7% 2/15/20 (d) | | $ 295,000 | | $ 283,938 |
8.25% 9/1/17 (d) | | 5,395,000 | | 5,529,875 |
8.875% 1/15/15 (d) | | 7,580,000 | | 7,655,800 |
9.125% 1/15/15 pay-in-kind (d)(f) | | 4,447,000 | | 4,491,470 |
Intelsat Jackson Holdings SA 7.25% 10/15/20 (d) | | 2,900,000 | | 3,045,000 |
Intelsat Ltd. 11.25% 6/15/16 | | 1,118,000 | | 1,171,105 |
Intelsat Luxembourg SA: | | | | |
11.25% 2/4/17 | | 8,780,000 | | 9,087,300 |
11.5% 2/4/17 pay-in-kind (d)(f) | | 2,730,000 | | 2,818,725 |
11.5% 2/4/17 pay-in-kind (f) | | 12,031,864 | | 12,422,900 |
Nextel Communications, Inc.: | | | | |
5.95% 3/15/14 | | 4,940,000 | | 4,946,175 |
7.375% 8/1/15 | | 5,195,000 | | 5,201,494 |
NII Capital Corp. 7.625% 4/1/21 | | 2,385,000 | | 2,033,213 |
Sprint Nextel Corp.: | | | | |
6% 12/1/16 | | 10,710,000 | | 10,254,825 |
9% 11/15/18 (d) | | 1,505,000 | | 1,681,838 |
Telesat Canada/Telesat LLC 6% 5/15/17 (d) | | 4,145,000 | | 4,217,538 |
U.S. West Communications 7.5% 6/15/23 | | 9,460,000 | | 9,483,650 |
Wind Acquisition Holdings Finance SA 12.25% 7/15/17 pay-in-kind (d)(f) | | 1,149,105 | | 723,010 |
| | 85,047,856 |
Textiles & Apparel - 0.3% |
Hanesbrands, Inc. 6.375% 12/15/20 | | 1,535,000 | | 1,619,425 |
Levi Strauss & Co. 6.875% 5/1/22 (d) | | 2,590,000 | | 2,648,275 |
| | 4,267,700 |
TOTAL NONCONVERTIBLE BONDS (Cost $1,051,651,456) |
1,092,486,190
|
Commercial Mortgage Securities - 0.0% |
|
LB Multi-family Mortgage Trust Series 1991-4 Class A1, 7.1104% 4/25/21 (f)
(Cost $0) | | 25,932 | |
18,153
|
Common Stocks - 0.1% |
| Shares | | |
Telecommunications - 0.1% |
CUI Acquisition Corp. Class E (d) | 1 | | 873,375 |
|
| Shares | | Value |
Textiles & Apparel - 0.0% |
Arena Brands Holding Corp.
Class B (a)(g) | 48,889 | | $ 341,734 |
TOTAL COMMON STOCKS (Cost $3,248,508) |
1,215,109
|
Convertible Preferred Stocks - 0.3% |
| | | |
Automotive - 0.3% |
General Motors Co. 4.75%
(Cost $5,336,226) | 111,200 | |
3,691,840
|
Floating Rate Loans - 7.6% |
| Principal Amount | | |
Air Transportation - 1.0% |
Delta Air Lines, Inc. Tranche B, term loan 5.5% 4/20/17 (f) | | $ 7,271,550 | | 7,280,639 |
US Airways Group, Inc. term loan 2.7453% 3/23/14 (f) | | 5,541,187 | | 5,264,128 |
| | 12,544,767 |
Automotive - 1.1% |
Chrysler Group LLC Tranche B, term loan 6% 5/24/17 (f) | | 8,761,351 | | 8,827,061 |
Federal-Mogul Corp.: | | | | |
Tranche B, term loan 2.1776% 12/27/14 (f) | | 3,589,525 | | 3,410,049 |
Tranche C, term loan 2.1776% 12/27/15 (f) | | 2,415,458 | | 2,294,685 |
| | 14,531,795 |
Broadcasting - 0.5% |
Univision Communications, Inc. term loan 4.4953% 3/31/17 (f) | | 6,722,026 | | 6,318,704 |
Cable TV - 0.3% |
Harron Communications LP Tranche B, term loan 5.5% 10/6/17 (f) | | 2,720,638 | | 2,720,638 |
UPC Broadband Holding BV Tranche AB, term loan 4.75% 12/31/17 (f) | | 1,640,000 | | 1,607,200 |
| | 4,327,838 |
Capital Goods - 0.3% |
Colfax Corp. Tranche B, term loan 4.5% 9/12/18 (f) | | 3,427,775 | | 3,419,206 |
Chemicals - 0.3% |
Ascend Performance Materials Operation LLC Tranche B, term loan 6.75% 4/10/18 (f) | | 3,157,088 | | 3,062,375 |
Kronos Worldwide, Inc. term loan 5.75% 6/13/18 (f) | | 1,340,000 | | 1,336,650 |
| | 4,399,025 |
Consumer Products - 0.2% |
Visant Corp. Tranche B, term loan 5.25% 12/22/16 (f) | | 2,849,186 | | 2,763,711 |
Floating Rate Loans - continued |
| Principal Amount | | Value |
Containers - 0.3% |
Anchor Glass Container Corp.: | | | | |
Tranche 1LN, term loan 6% 3/2/16 (f) | | $ 1,523,734 | | $ 1,523,734 |
Tranche 2LN, term loan 10% 9/2/16 (f) | | 2,070,000 | | 2,070,000 |
| | 3,593,734 |
Diversified Financial Services - 0.2% |
Flying Fortress, Inc. Tranche 3, term loan 5% 6/30/17 (f) | | 2,310,000 | | 2,318,778 |
Electric Utilities - 0.0% |
The AES Corp. Tranche B, term loan 4.25% 5/27/18 (f) | | 661,625 | | 661,625 |
Energy - 0.4% |
Chesapeake Energy Corp. term loan 8.5% 12/2/17 (f) | | 1,450,000 | | 1,433,688 |
Crestwood Holdings Partners LLC Tranche B, term loan 9.75% 3/26/18 (f) | | 1,810,000 | | 1,819,050 |
Energy Transfer Equity LP Tranche B, term loan 3.75% 3/23/17 (f) | | 2,660,000 | | 2,606,800 |
| | 5,859,538 |
Food & Drug Retail - 0.2% |
SUPERVALU, Inc. Tranche B 3LN, term loan 4.5% 4/29/18 (f) | | 2,058,938 | | 2,026,345 |
Healthcare - 0.8% |
Emergency Medical Services Corp. Tranche B, term loan 5.25% 5/25/18 (f) | | 2,893,778 | | 2,868,458 |
HCA, Inc. Tranche B2, term loan 3.7106% 3/31/17 (f) | | 3,135,000 | | 3,052,863 |
Quintiles Transnational Corp. Tranche B, term loan 5% 6/8/18 (f) | | 3,977,976 | | 3,928,252 |
| | 9,849,573 |
Insurance - 0.8% |
Asurion Corp.: | | | | |
Tranche 1st LN, term loan 5.5% 5/24/18 (f) | | 2,735,227 | | 2,725,107 |
Tranche 2nd LN, term loan 9% 5/24/19 (f) | | 5,360,000 | | 5,467,200 |
Lonestar Inter Super Hld LLC term loan 11% 9/2/19 (f) | | 2,760,000 | | 2,884,200 |
| | 11,076,507 |
Metals/Mining - 0.1% |
Arch Coal, Inc. Tranche B, term loan 5.75% 5/16/18 (f) | | 965,000 | | 945,700 |
Publishing/Printing - 0.1% |
Newsday LLC term loan 10.5% 8/1/13 | | 925,000 | | 938,875 |
Restaurants - 0.2% |
Landry's Restaurants, Inc. Tranche B, term loan 6.5% 4/24/18 (f) | | 2,718,188 | | 2,718,188 |
|
| Principal Amount | | Value |
Services - 0.2% |
U.S. Foodservice term loan 5.75% 3/31/17 (f) | | $ 2,791,800 | | $ 2,666,169 |
Steel - 0.2% |
JMC Steel Group, Inc. term loan 4.75% 4/1/17 (f) | | 3,033,613 | | 3,026,029 |
Super Retail - 0.3% |
Neiman Marcus Group, Inc. Tranche B, term loan 4.75% 5/16/18 (f) | | 3,335,000 | | 3,301,650 |
PETCO Animal Supplies, Inc. term loan 4.5% 11/24/17 (f) | | 480,200 | | 476,599 |
| | 3,778,249 |
Telecommunications - 0.1% |
Intelsat Jackson Holdings SA term loan 3.2408% 2/1/14 (f) | | 830,000 | | 805,100 |
TOTAL FLOATING RATE LOANS (Cost $96,960,248) |
98,569,456
|
Money Market Funds - 6.0% |
| Shares | | |
Fidelity Cash Central Fund, 0.17% (b)
(Cost $78,021,675) | 78,021,675 | |
78,021,675
|
TOTAL INVESTMENT PORTFOLIO - 98.1% (Cost $1,235,218,113) | 1,274,002,423 |
NET OTHER ASSETS (LIABILITIES) - 1.9% | 24,517,815 |
NET ASSETS - 100% | $ 1,298,520,238 |
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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request. |
(c) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
(d) 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 $376,463,904 or 29.0% of net assets. |
(e) Security or a portion of the security purchased on a delayed delivery or when-issued basis. |
(f) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end. |
(g) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $341,734 or 0.0% of net assets. |
Additional information on each restricted holding is as follows: |
Security | Acquisition Date | Acquisition Cost |
Arena Brands Holding Corp. Class B | 6/18/97 | $ 1,974,627 |
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 | $ 46,168 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2012, involving the Fund's assets and liabilities carried at fair 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 4,033,574 | $ 3,691,840 | $ - | $ 341,734 |
Telecommunication Services | 873,375 | - | - | 873,375 |
Corporate Bonds | 1,092,486,190 | - | 1,092,486,190 | - |
Commercial Mortgage Securities | 18,153 | - | - | 18,153 |
Floating Rate Loans | 98,569,456 | - | 98,569,456 | - |
Money Market Funds | 78,021,675 | 78,021,675 | - | - |
Total Investments in Securities: | $ 1,274,002,423 | $ 81,713,515 | $ 1,191,055,646 | $ 1,233,262 |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 87.1% |
Bermuda | 2.9% |
Canada | 2.4% |
Luxembourg | 2.4% |
Cayman Islands | 1.2% |
Australia | 1.0% |
Others (Individually Less Than 1%) | 3.0% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2012 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value - See accompanying schedule: Unaffiliated issuers (cost $1,157,196,438) | $ 1,195,980,748 | |
Fidelity Central Funds (cost $78,021,675) | 78,021,675 | |
Total Investments (cost $1,235,218,113) | | $ 1,274,002,423 |
Cash | | 126,402 |
Receivable for investments sold | | 7,520,700 |
Receivable for fund shares sold | | 1,224,221 |
Interest receivable | | 21,001,010 |
Distributions receivable from Fidelity Central Funds | | 6,073 |
Total assets | | 1,303,880,829 |
| | |
Liabilities | | |
Payable for investments purchased
Regular delivery | $ 2,276,590 | |
Delayed delivery | 1,730,000 | |
Payable for fund shares redeemed | 500,425 | |
Accrued management fee | 611,932 | |
Distribution and service plan fees payable | 51,977 | |
Other affiliated payables | 145,474 | |
Other payables and accrued expenses | 44,193 | |
Total liabilities | | 5,360,591 |
| | |
Net Assets | | $ 1,298,520,238 |
Net Assets consist of: | | |
Paid in capital | | $ 1,324,501,256 |
Undistributed net investment income | | 48,800,111 |
Accumulated undistributed net realized gain (loss) on investments | | (113,565,439) |
Net unrealized appreciation (depreciation) on investments | | 38,784,310 |
Net Assets | | $ 1,298,520,238 |
Statement of Assets and Liabilities - continued
| June 30, 2012 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($580,134,083 ÷ 100,556,569 shares) | | $ 5.77 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($77,482,244 ÷ 13,506,900 shares) | | $ 5.74 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($201,590,760 ÷ 35,854,899 shares) | | $ 5.62 |
| | |
Initial Class R:
Net Asset Value, offering price and redemption price per share ($32,203,203 ÷ 5,601,531 shares) | | $ 5.75 |
| | |
Service Class R:
Net Asset Value, offering price and redemption price per share ($38,215,857 ÷ 6,693,688 shares) | | $ 5.71 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($1,813,910 ÷ 322,498 shares) | | $ 5.62 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($367,080,181 ÷ 63,834,407 shares) | | $ 5.75 |
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, 2012 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 316,467 |
Interest | | 47,667,358 |
Income from Fidelity Central Funds | | 46,168 |
Total income | | 48,029,993 |
| | |
Expenses | | |
Management fee | $ 3,739,200 | |
Transfer agent fees | 538,900 | |
Distribution and service plan fees | 361,161 | |
Accounting fees and expenses | 227,525 | |
Custodian fees and expenses | 12,005 | |
Independent trustees' compensation | 4,330 | |
Audit | 38,344 | |
Legal | 11,752 | |
Interest | 153 | |
Miscellaneous | 6,997 | |
Total expenses before reductions | 4,940,367 | |
Expense reductions | (273) | 4,940,094 |
Net investment income (loss) | | 43,089,899 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | | 5,621,562 |
Change in net unrealized appreciation (depreciation) on investment securities | | 38,609,156 |
Net gain (loss) | | 44,230,718 |
Net increase (decrease) in net assets resulting from operations | | $ 87,320,617 |
Statement of Changes in Net Assets
| Six months ended June 30, 2012
(Unaudited) | Year ended
December 31, 2011 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 43,089,899 | $ 82,841,870 |
Net realized gain (loss) | 5,621,562 | 30,894,343 |
Change in net unrealized appreciation (depreciation) | 38,609,156 | (67,492,572) |
Net increase (decrease) in net assets resulting from operations | 87,320,617 | 46,243,641 |
Distributions to shareholders from net investment income | (713,358) | (84,003,585) |
Share transactions - net increase (decrease) | (42,452,271) | 65,821,196 |
Redemption fees | 42,274 | 88,182 |
Total increase (decrease) in net assets | 44,197,262 | 28,149,434 |
| | |
Net Assets | | |
Beginning of period | 1,254,322,976 | 1,226,173,542 |
End of period (including undistributed net investment income of $48,800,111 and undistributed net investment income of $6,423,570, respectively) | $ 1,298,520,238 | $ 1,254,322,976 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.39 | $ 5.57 | $ 5.29 | $ 3.96 | $ 5.98 | $ 6.35 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .186 | .391 | .439 | .438 | .475 | .485 |
Net realized and unrealized gain (loss) | .197 | (.171) | .288 | 1.298 | (1.990) | (.311) |
Total from investment operations | .383 | .220 | .727 | 1.736 | (1.515) | .174 |
Distributions from net investment income | (.003) | (.400) | (.448) | (.406) | (.506) | (.545) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.77 | $ 5.39 | $ 5.57 | $ 5.29 | $ 3.96 | $ 5.98 |
Total Return B,C,D | 7.11% | 4.03% | 13.82% | 43.96% | (24.98)% | 2.79% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .69% A | .69% | .69% | .70% | .71% | .68% |
Expenses net of fee waivers, if any | .69% A | .69% | .69% | .70% | .71% | .68% |
Expenses net of all reductions | .69% A | .69% | .69% | .70% | .70% | .68% |
Net investment income (loss) | 6.61% A | 6.85% | 7.84% | 9.02% | 8.48% | 7.47% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 580,134 | $ 561,514 | $ 594,688 | $ 608,802 | $ 451,824 | $ 726,409 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 per share.
Financial Highlights - Service Class
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.36 | $ 5.54 | $ 5.26 | $ 3.95 | $ 5.95 | $ 6.32 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .182 | .384 | .431 | .429 | .469 | .477 |
Net realized and unrealized gain (loss) | .201 | (.171) | .290 | 1.281 | (1.971) | (.312) |
Total from investment operations | .383 | .213 | .721 | 1.710 | (1.502) | .165 |
Distributions from net investment income | (.003) | (.393) | (.442) | (.400) | (.499) | (.536) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.74 | $ 5.36 | $ 5.54 | $ 5.26 | $ 3.95 | $ 5.95 |
Total Return B,C,D | 7.15% | 3.93% | 13.79% | 43.41% | (24.87)% | 2.66% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .78% A | .79% | .79% | .80% | .80% | .78% |
Expenses net of fee waivers, if any | .78% A | .79% | .78% | .80% | .80% | .78% |
Expenses net of all reductions | .78% A | .79% | .78% | .80% | .80% | .78% |
Net investment income (loss) | 6.52% A | 6.75% | 7.74% | 8.92% | 8.39% | 7.37% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 77,482 | $ 91,573 | $ 98,988 | $ 103,511 | $ 95,461 | $ 180,837 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.26 | $ 5.45 | $ 5.18 | $ 3.89 | $ 5.88 | $ 6.25 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .174 | .368 | .417 | .422 | .450 | .461 |
Net realized and unrealized gain (loss) | .189 | (.170) | .287 | 1.264 | (1.949) | (.305) |
Total from investment operations | .363 | .198 | .704 | 1.686 | (1.499) | .156 |
Distributions from net investment income | (.003) | (.388) | (.435) | (.396) | (.492) | (.527) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.62 | $ 5.26 | $ 5.45 | $ 5.18 | $ 3.89 | $ 5.88 |
Total Return B,C,D | 6.90% | 3.72% | 13.67% | 43.46% | (25.14)% | 2.54% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .94% A | .94% | .94% | .95% | .96% | .93% |
Expenses net of fee waivers, if any | .94% A | .94% | .94% | .95% | .96% | .93% |
Expenses net of all reductions | .94% A | .94% | .94% | .95% | .96% | .93% |
Net investment income (loss) | 6.36% A | 6.60% | 7.59% | 8.77% | 8.23% | 7.22% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 201,591 | $ 220,333 | $ 182,465 | $ 181,377 | $ 87,077 | $ 97,266 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 per share.
Financial Highlights - Initial Class R
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.37 | $ 5.55 | $ 5.27 | $ 3.95 | $ 5.96 | $ 6.34 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .185 | .391 | .439 | .440 | .471 | .479 |
Net realized and unrealized gain (loss) | .198 | (.171) | .288 | 1.286 | (1.975) | (.313) |
Total from investment operations | .383 | .220 | .727 | 1.726 | (1.504) | .166 |
Distributions from net investment income | (.003) | (.400) | (.448) | (.406) | (.507) | (.547) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.75 | $ 5.37 | $ 5.55 | $ 5.27 | $ 3.95 | $ 5.96 |
Total Return B,C,D | 7.13% | 4.05% | 13.88% | 43.82% | (24.88)% | 2.65% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .68% A | .68% | .69% | .70% | .70% | .68% |
Expenses net of fee waivers, if any | .68% A | .68% | .68% | .70% | .70% | .68% |
Expenses net of all reductions | .68% A | .68% | .68% | .69% | .70% | .67% |
Net investment income (loss) | 6.61% A | 6.85% | 7.84% | 9.02% | 8.49% | 7.47% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 32,203 | $ 31,627 | $ 34,946 | $ 34,080 | $ 19,801 | $ 19,401 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.34 | $ 5.52 | $ 5.25 | $ 3.94 | $ 5.93 | $ 6.32 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .182 | .383 | .433 | .431 | .467 | .471 |
Net realized and unrealized gain (loss) | .191 | (.167) | .280 | 1.280 | (1.959) | (.318) |
Total from investment operations | .373 | .216 | .713 | 1.711 | (1.492) | .153 |
Distributions from net investment income | (.003) | (.396) | (.444) | (.401) | (.499) | (.544) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.71 | $ 5.34 | $ 5.52 | $ 5.25 | $ 3.94 | $ 5.93 |
Total Return B,C,D | 6.99% | 3.99% | 13.66% | 43.56% | (24.79)% | 2.45% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .78% A | .78% | .79% | .80% | .80% | .78% |
Expenses net of fee waivers, if any | .78% A | .78% | .78% | .80% | .80% | .78% |
Expenses net of all reductions | .78% A | .78% | .78% | .80% | .80% | .77% |
Net investment income (loss) | 6.52% A | 6.75% | 7.74% | 8.92% | 8.39% | 7.37% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 38,216 | $ 63,557 | $ 68,806 | $ 47,873 | $ 26,572 | $ 33,129 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 per share.
Financial Highlights - Service Class 2R
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.26 | $ 5.45 | $ 5.17 | $ 3.89 | $ 5.87 | $ 6.25 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .174 | .369 | .415 | .416 | .451 | .453 |
Net realized and unrealized gain (loss) | .189 | (.175) | .293 | 1.257 | (1.940) | (.294) |
Total from investment operations | .363 | .194 | .708 | 1.673 | (1.489) | .159 |
Distributions from net investment income | (.003) | (.384) | (.429) | (.393) | (.492) | (.540) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.62 | $ 5.26 | $ 5.45 | $ 5.17 | $ 3.89 | $ 5.87 |
Total Return B,C,D | 6.90% | 3.64% | 13.79% | 43.13% | (24.99)% | 2.59% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .94% A | .93% | .94% | .95% | .95% | .93% |
Expenses net of fee waivers, if any | .94% A | .93% | .93% | .95% | .95% | .93% |
Expenses net of all reductions | .94% A | .93% | .93% | .94% | .95% | .92% |
Net investment income (loss) | 6.36% A | 6.60% | 7.59% | 8.77% | 8.24% | 7.23% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 1,814 | $ 1,350 | $ 1,543 | $ 2,016 | $ 1,487 | $ 2,347 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 5.37 | $ 5.56 | $ 5.27 | $ 3.96 | $ 5.96 | $ 6.34 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .184 | .388 | .437 | .441 | .473 | .477 |
Net realized and unrealized gain (loss) | .199 | (.180) | .298 | 1.274 | (1.971) | (.317) |
Total from investment operations | .383 | .208 | .735 | 1.715 | (1.498) | .160 |
Distributions from net investment income | (.003) | (.398) | (.446) | (.405) | (.503) | (.541) |
Redemption fees added to paid in capital E | - I | - I | .001 | - I | .001 | .001 |
Net asset value, end of period | $ 5.75 | $ 5.37 | $ 5.56 | $ 5.27 | $ 3.96 | $ 5.96 |
Total Return B,C,D | 7.13% | 3.82% | 14.04% | 43.43% | (24.76)% | 2.56% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .72% A | .72% | .73% | .73% | .74% | .75% |
Expenses net of fee waivers, if any | .72% A | .72% | .72% | .73% | .74% | .75% |
Expenses net of all reductions | .72% A | .72% | .72% | .73% | .74% | .75% |
Net investment income (loss) | 6.58% A | 6.82% | 7.81% | 8.99% | 8.45% | 7.40% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 367,080 | $ 284,370 | $ 244,738 | $ 182,806 | $ 90,312 | $ 105,920 |
Portfolio turnover rate G | 51% A | 79% | 81% | 70% | 58% | 70% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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 $.001 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, 2012 (Unaudited)
1. Organization.
VIP High 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, Initial Class R shares, and Service Class R 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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by security type and may include market or security specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For corporate bonds and floating rate loans, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices and are generally categorized as Level 2 in the hierarchy. For commercial mortgage securities, pricing vendors utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices and, accordingly, such securities are generally categorized as Level 2 in the hierarchy. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances. The Fund invests a significant portion of its assets in below investment grade securities. The value of these securities can be more volatile due to changes in the credit quality of the issuer and is sensitive to changes in economic, market and regulatory conditions.
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
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 a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2012 for the Fund's investments, is included at the end of Fund's Schedule of Investments.
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 p.m. 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. 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.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction.
Distributions are declared and 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 GAAP.
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 market discount, equity-debt classifications, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 61,835,024 |
Gross unrealized depreciation | (16,007,787) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 45,827,237 |
| |
Tax cost | $ 1,228,175,186 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. At December 31, 2011, capital loss carryforwards were as follows:
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Fiscal year of expiration | |
2016 | $ (39,467,710) |
2017 | (79,447,269) |
Total capital loss carryforward | $ (118,914,979) |
Trading (Redemption) Fees. Initial Class R shares, Service Class R shares and Service Class 2 R shares held by investors less than 60 days are subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
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.
Loans and Other Direct Debt Instruments. The Fund invests in direct debt instruments which are interests in amounts owed to lenders by corporate or other borrowers. These instruments may be in the form of loans, trade claims or other receivables and may include standby financing commitments such as revolving credit facilities that obligate the Fund to supply additional cash to the borrower on demand. Loans may be acquired through assignment or participation, or may be made directly to a borrower. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these loans.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $315,370,188 and $319,470,044, 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 an annualized group fee rate that averaged .12% 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 .57% of the Fund's average net assets.
Distribution and Service Plan Fees. 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, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:
Service Class | $ 42,338 |
Service Class 2 | 285,832 |
Service Class R | 31,148 |
Service Class 2 R | 1,843 |
| $ 361,161 |
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 .10% of average net assets. In addition, FIIOC receives an asset-based fee of .0038% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:
Initial Class | $ 218,112 |
Service Class | 30,564 |
Service Class 2 | 82,835 |
Initial Class R | 11,582 |
Service Class R | 21,812 |
Service Class 2R | 518 |
Investor Class | 173,477 |
| $ 538,900 |
Accounting Fees. Fidelity Service Company, Inc.(FSC),an affiliate of FMR, maintains the Fund's accounting records. The fee is based on the level of average net assets for each month.
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 Loan
Balance | Weighted Average Interest Rate | Interest
Expense |
Borrower | $ 6,556,000 | .42% | $ 153 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 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 $1,893 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.
8. Expense Reductions.
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 $273.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
From net investment income | | |
Initial Class | $ 311,601 | $ 38,834,457 |
Service Class | 51,381 | 5,348,721 |
Service Class 2 | 127,438 | 14,701,408 |
Initial Class R | 17,999 | 2,203,822 |
Service Class R | 35,933 | 4,443,415 |
Service Class 2R | 753 | 92,376 |
Investor Class | 168,253 | 18,379,386 |
Total | $ 713,358 | $ 84,003,585 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended June 30,
2012 | Year ended
December 31,
2011 | Six months ended June 30,
2012 | Year ended
December 31,
2011 |
Initial Class | | | | |
Shares sold | 6,729,348 | 14,954,963 | $ 38,008,922 | $ 85,548,272 |
Reinvestment of distributions | 55,743 | 7,279,400 | 311,601 | 38,834,457 |
Shares redeemed | (10,390,858) | (24,811,221) | (58,723,626) | (141,718,667) |
Net increase (decrease) | (3,605,767) | (2,576,858) | $ (20,403,103) | $ (17,335,938) |
Service Class | | | | |
Shares sold | 1,103,599 | 4,391,885 | $ 6,139,214 | $ 23,974,978 |
Reinvestment of distributions | 9,241 | 1,008,126 | 51,381 | 5,348,721 |
Shares redeemed | (4,681,926) | (6,182,000) | (26,388,477) | (35,059,439) |
Net increase (decrease) | (3,569,086) | (781,989) | $ (20,197,882) | $ (5,735,740) |
Service Class 2 | | | | |
Shares sold | 7,730,084 | 35,272,315 | $ 42,652,629 | $ 197,650,737 |
Reinvestment of distributions | 23,340 | 2,824,984 | 127,438 | 14,701,408 |
Shares redeemed | (13,786,164) | (29,704,714) | (75,952,033) | (165,911,073) |
Net increase (decrease) | (6,032,740) | 8,392,585 | $ (33,171,966) | $ 46,441,072 |
Initial Class R | | | | |
Shares sold | 1,124,028 | 2,974,865 | $ 6,357,182 | $ 17,006,544 |
Reinvestment of distributions | 3,231 | 414,639 | 17,999 | 2,203,822 |
Shares redeemed | (1,413,356) | (3,795,258) | (7,958,959) | (21,688,955) |
Net increase (decrease) | (286,097) | (405,754) | $ (1,583,778) | $ (2,478,589) |
Service Class R | | | | |
Shares sold | 1,338,183 | 8,003,006 | $ 7,516,332 | $ 45,643,141 |
Reinvestment of distributions | 6,486 | 840,752 | 35,933 | 4,443,415 |
Shares redeemed | (6,559,305) | (9,397,413) | (36,538,504) | (53,628,031) |
Net increase (decrease) | (5,214,636) | (553,655) | $ (28,986,239) | $ (3,541,475) |
Service Class 2R | | | | |
Shares sold | 144,235 | 77,098 | $ 805,255 | $ 432,475 |
Reinvestment of distributions | 138 | 17,746 | 753 | 92,376 |
Shares redeemed | (78,416) | (121,577) | (432,764) | (682,497) |
Net increase (decrease) | 65,957 | (26,733) | $ 373,244 | $ (157,646) |
Investor Class | | | | |
Shares sold | 16,931,787 | 35,223,887 | $ 95,479,603 | $ 199,792,708 |
Reinvestment of distributions | 30,153 | 3,458,337 | 168,253 | 18,379,386 |
Shares redeemed | (6,042,930) | (29,823,638) | (34,130,403) | (169,542,582) |
Net increase (decrease) | 10,919,010 | 8,858,586 | $ 61,517,453 | $ 48,629,512 |
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 38% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 18% of the total outstanding shares of the Fund.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Bank of New York Mellon
New York, NY
VIPHIR-SANN-0812
1.833449.106
Fidelity® Variable Insurance Products:
Overseas Portfolio
Semiannual Report
June 30, 2012
(Fidelity Cover Art)
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. |
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/proxyvotingresults 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. © 2012 FMR LLC. All rights reserved.
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, http://www.advisor.fidelity.com, or http://www.401k.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, 2012 to June 30, 2012).
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.
| Annualized Expense Ratio | Beginning
Account Value
January 1, 2012 | Ending
Account Value
June 30, 2012 | Expenses Paid
During Period*
January 1, 2012
to June 30, 2012 |
Initial Class | .85% | | | |
Actual | | $ 1,000.00 | $ 1,066.80 | $ 4.37 |
HypotheticalA | | $ 1,000.00 | $ 1,020.64 | $ 4.27 |
Service Class | .95% | | | |
Actual | | $ 1,000.00 | $ 1,066.30 | $ 4.88 |
HypotheticalA | | $ 1,000.00 | $ 1,020.14 | $ 4.77 |
Service Class 2 | 1.09% | | | |
Actual | | $ 1,000.00 | $ 1,065.10 | $ 5.60 |
HypotheticalA | | $ 1,000.00 | $ 1,019.44 | $ 5.47 |
Initial Class R | .85% | | | |
Actual | | $ 1,000.00 | $ 1,066.90 | $ 4.37 |
HypotheticalA | | $ 1,000.00 | $ 1,020.64 | $ 4.27 |
Service Class R | .94% | | | |
Actual | | $ 1,000.00 | $ 1,065.60 | $ 4.83 |
HypotheticalA | | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
Service Class 2R | 1.09% | | | |
Actual | | $ 1,000.00 | $ 1,064.90 | $ 5.60 |
HypotheticalA | | $ 1,000.00 | $ 1,019.44 | $ 5.47 |
Investor Class R | .93% | | | |
Actual | | $ 1,000.00 | $ 1,066.20 | $ 4.78 |
HypotheticalA | | $ 1,000.00 | $ 1,020.24 | $ 4.67 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Geographic Diversification (% of fund's net assets) |
As of June 30, 2012 |
 | United Kingdom | 21.4% | |
 | Japan | 15.9% | |
 | France | 12.2% | |
 | Switzerland | 8.7% | |
 | Germany | 8.4% | |
 | United States of America | 7.4% | |
 | Cayman Islands | 4.4% | |
 | Denmark | 2.9% | |
 | Ireland | 2.7% | |
 | Other | 16.0% | |
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable. |
As of December 31, 2011 |
| United Kingdom | 18.8% | |
| Japan | 16.7% | |
| France | 12.3% | |
| Germany | 10.8% | |
| Switzerland | 7.9% | |
| Ireland | 4.2% | |
| United States of America | 4.0% | |
| Cayman Islands | 4.0% | |
| Denmark | 3.0% | |
| Other | 18.3% | |
Percentages are based on country or territory of incorporation and 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 | 97.6 | 98.3 |
Short-Term Investments and Net Other Assets (Liabilities) | 2.4 | 1.7 |
Top Ten Stocks as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Novo Nordisk A/S Series B (Denmark, Pharmaceuticals) | 2.8 | 2.3 |
Sanofi SA (France, Pharmaceuticals) | 2.5 | 2.1 |
Rakuten, Inc. (Japan, Internet & Catalog Retail) | 2.4 | 2.2 |
Nestle SA (Switzerland, Food Products) | 2.3 | 0.0 |
Diageo PLC (United Kingdom, Beverages) | 1.8 | 1.3 |
Softbank Corp. (Japan, Wireless Telecommunication Services) | 1.8 | 0.9 |
Imperial Tobacco Group PLC (United Kingdom, Tobacco) | 1.7 | 1.7 |
LVMH Moet Hennessy - Louis Vuitton SA (France, Textiles, Apparel & Luxury Goods) | 1.7 | 1.6 |
Paddy Power PLC (Ireland) (Ireland, Hotels, Restaurants & Leisure) | 1.7 | 1.5 |
HSBC Holdings PLC (United Kingdom, Commercial Banks) | 1.7 | 1.7 |
| 20.4 | |
Market Sectors as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Consumer Discretionary | 20.3 | 23.4 |
Financials | 15.5 | 16.0 |
Consumer Staples | 15.1 | 9.0 |
Information Technology | 10.9 | 9.4 |
Materials | 9.8 | 12.2 |
Health Care | 7.6 | 6.6 |
Energy | 7.1 | 8.0 |
Industrials | 6.4 | 7.0 |
Telecommunication Services | 4.3 | 5.1 |
Utilities | 0.6 | 1.6 |
Semiannual Report
Investments June 30, 2012 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 95.9% |
| Shares | | Value |
Australia - 2.4% |
Aristocrat Leisure Ltd. | 1,050,218 | | $ 2,994,092 |
BHP Billiton Ltd. | 318,002 | | 10,358,067 |
Fortescue Metals Group Ltd. | 258,379 | | 1,320,222 |
Macquarie Group Ltd. | 105,682 | | 2,853,825 |
Newcrest Mining Ltd. | 304,955 | | 7,096,639 |
Rio Tinto Ltd. | 24,301 | | 1,426,637 |
Westfield Group unit | 811,159 | | 7,942,374 |
TOTAL AUSTRALIA | | 33,991,856 |
Bailiwick of Jersey - 1.0% |
Informa PLC | 903,074 | | 5,375,942 |
Wolseley PLC | 43,800 | | 1,630,559 |
WPP PLC | 583,107 | | 7,078,772 |
TOTAL BAILIWICK OF JERSEY | | 14,085,273 |
Belgium - 0.4% |
Ageas | 743,600 | | 1,468,000 |
Anheuser-Busch InBev SA NV | 33,577 | | 2,647,253 |
Hamon & Compagnie International SA | 73,974 | | 1,465,061 |
TOTAL BELGIUM | | 5,580,314 |
Bermuda - 0.9% |
Clear Media Ltd. | 2,035,000 | | 1,053,539 |
Oriental Watch Holdings Ltd. | 10,492,000 | | 2,813,795 |
Petra Diamonds Ltd. (a) | 809,300 | | 1,529,855 |
Signet Jewelers Ltd. | 161,500 | | 7,107,615 |
TOTAL BERMUDA | | 12,504,804 |
Brazil - 0.4% |
Drogasil SA | 66,000 | | 665,422 |
Souza Cruz SA | 351,900 | | 5,165,055 |
TOTAL BRAZIL | | 5,830,477 |
British Virgin Islands - 0.7% |
Gem Diamonds Ltd. (a) | 796,100 | | 2,443,752 |
Mail.ru Group Ltd.: | | | |
GDR (a)(e) | 6,600 | | 223,674 |
GDR (Reg. S) (a) | 235,300 | | 7,974,317 |
TOTAL BRITISH VIRGIN ISLANDS | | 10,641,743 |
Canada - 1.0% |
Barrick Gold Corp. | 90,000 | | 3,390,138 |
Potash Corp. of Saskatchewan, Inc. | 167,900 | | 7,338,719 |
Yamana Gold, Inc. | 196,700 | | 3,035,220 |
TOTAL CANADA | | 13,764,077 |
Cayman Islands - 4.4% |
Baidu.com, Inc. sponsored ADR (a) | 114,300 | | 13,142,214 |
Biostime International Holdings Ltd. | 1,325,000 | | 3,473,297 |
Hengdeli Holdings Ltd. | 47,490,000 | | 15,171,842 |
Natural Beauty Bio-Technology Ltd. | 8,580,000 | | 1,377,230 |
Noah Holdings Ltd. sponsored ADR (d) | 348,200 | | 1,713,144 |
|
| Shares | | Value |
Perfect World Co. Ltd. sponsored ADR Class B | 237,700 | | $ 2,381,754 |
Renren, Inc. ADR (a)(d) | 25,900 | | 116,809 |
Shenguan Holdings Group Ltd. | 5,328,000 | | 3,075,042 |
SINA Corp. (a)(d) | 18,800 | | 974,028 |
Tencent Holdings Ltd. | 624,400 | | 18,439,335 |
YouKu.com, Inc. ADR (a)(d) | 96,000 | | 2,081,280 |
TOTAL CAYMAN ISLANDS | | 61,945,975 |
Denmark - 2.9% |
Danske Bank A/S (a) | 96,100 | | 1,331,519 |
Novo Nordisk A/S: | | | |
Series B | 51,925 | | 7,531,039 |
Series B sponsored ADR | 222,000 | | 32,265,480 |
TOTAL DENMARK | | 41,128,038 |
France - 12.2% |
Alstom SA (d) | 287,302 | | 9,064,066 |
Atos Origin SA | 72,705 | | 4,335,425 |
AXA SA | 67,020 | | 888,849 |
AXA SA sponsored ADR | 158,600 | | 2,114,138 |
Beneteau SA | 196,900 | | 1,893,745 |
BNP Paribas SA | 142,299 | | 5,462,708 |
Club Mediterranee SA (a) | 85,000 | | 1,452,161 |
Danone SA | 305,612 | | 18,956,649 |
Gameloft (a) | 537,900 | | 3,335,491 |
GDF Suez | 185,600 | | 4,405,114 |
Iliad SA | 28,200 | | 4,077,251 |
Ingenico SA | 106,367 | | 5,158,157 |
Ipsos SA (d) | 149,292 | | 4,385,043 |
Lafarge SA (Bearer) (d) | 85,200 | | 3,790,433 |
LVMH Moet Hennessy - Louis Vuitton SA | 159,541 | | 24,197,611 |
Pernod Ricard SA (d) | 163,500 | | 17,434,173 |
Safran SA | 118,400 | | 4,375,188 |
Sanofi SA | 139,290 | | 10,544,373 |
Sanofi SA sponsored ADR | 620,600 | | 23,446,268 |
Societe Generale Series A | 45,643 | | 1,063,384 |
Total SA | 307,200 | | 13,826,747 |
Total SA sponsored ADR | 31,400 | | 1,411,430 |
Unibail-Rodamco | 32,400 | | 5,949,419 |
TOTAL FRANCE | | 171,567,823 |
Germany - 6.7% |
adidas AG | 102,600 | | 7,330,783 |
Allianz AG | 77,600 | | 7,768,824 |
Bayer AG | 131,478 | | 9,447,364 |
Beiersdorf AG | 214,700 | | 13,897,601 |
Commerzbank AG (a) | 555,200 | | 938,681 |
Deutsche Bank AG | 77,046 | | 2,780,841 |
Deutsche Boerse AG | 180,720 | | 9,726,660 |
Deutsche Post AG | 273,501 | | 4,824,850 |
GSW Immobilien AG | 59,000 | | 2,014,448 |
K&S AG | 37,600 | | 1,712,981 |
Linde AG | 51,987 | | 8,069,088 |
Common Stocks - continued |
| Shares | | Value |
Germany - continued |
Munich Re Group AG | 23,549 | | $ 3,312,410 |
Puma AG | 20,483 | | 5,903,562 |
SAP AG | 189,513 | | 11,222,095 |
SAP AG sponsored ADR (d) | 84,700 | | 5,027,792 |
Tom Tailor Holding AG | 45,300 | | 737,514 |
TOTAL GERMANY | | 94,715,494 |
Hong Kong - 1.7% |
AIA Group Ltd. | 1,274,400 | | 4,401,853 |
Cheung Kong Holdings Ltd. | 334,000 | | 4,123,665 |
Henderson Land Development Co. Ltd. | 814,919 | | 4,530,486 |
Hutchison Whampoa Ltd. | 278,000 | | 2,411,346 |
Television Broadcasts Ltd. | 1,125,000 | | 7,842,436 |
TOTAL HONG KONG | | 23,309,786 |
Ireland - 2.7% |
CRH PLC | 505,756 | | 9,689,342 |
Kingspan Group PLC (United Kingdom) | 623,100 | | 5,046,612 |
Paddy Power PLC (Ireland) | 363,800 | | 23,733,048 |
TOTAL IRELAND | | 38,469,002 |
Israel - 0.1% |
Israel Chemicals Ltd. | 116,100 | | 1,247,030 |
Italy - 1.5% |
Assicurazioni Generali SpA | 158,500 | | 2,138,201 |
Brunello Cucinelli SpA | 11,600 | | 165,001 |
ENI SpA | 200,700 | | 4,263,903 |
ENI SpA sponsored ADR (d) | 67,900 | | 2,887,108 |
Intesa Sanpaolo SpA | 685,202 | | 969,444 |
Saipem SpA | 207,303 | | 9,179,345 |
UniCredit SpA (a) | 276,159 | | 1,041,448 |
TOTAL ITALY | | 20,644,450 |
Japan - 15.9% |
Calbee, Inc. | 48,500 | | 3,045,591 |
Canon, Inc. sponsored ADR | 53,200 | | 2,124,808 |
Dai-ichi Mutual Life Insurance Co. | 1,893 | | 2,192,355 |
Denso Corp. | 87,400 | | 2,986,547 |
East Japan Railway Co. | 43,300 | | 2,718,859 |
Fanuc Corp. | 42,500 | | 6,986,198 |
Fuji Media Holdings, Inc. | 1,691 | | 2,906,914 |
Honda Motor Co. Ltd. | 250,400 | | 8,737,846 |
Japan Retail Fund Investment Corp. | 2,795 | | 4,433,583 |
Japan Tobacco, Inc. | 323,400 | | 9,580,934 |
Kakaku.com, Inc. (d) | 104,400 | | 3,542,651 |
KDDI Corp. | 1,087 | | 7,012,141 |
Keyence Corp. | 33,220 | | 8,217,734 |
Mitsubishi Corp. | 461,800 | | 9,334,960 |
Mitsubishi Estate Co. Ltd. | 223,000 | | 4,000,799 |
Mitsubishi UFJ Financial Group, Inc. (d) | 2,944,500 | | 14,106,744 |
|
| Shares | | Value |
Mitsubishi UFJ Financial Group, Inc. sponsored ADR (d) | 489,200 | | $ 2,323,700 |
Mitsui & Co. Ltd. | 431,700 | | 6,414,999 |
MS&AD Insurance Group Holdings, Inc. | 141,900 | | 2,482,582 |
NKSJ Holdings, Inc. | 95,000 | | 2,022,345 |
Nomura Holdings, Inc. | 505,000 | | 1,887,963 |
ORIX Corp. | 83,930 | | 7,821,927 |
Rakuten, Inc. | 3,282,300 | | 33,934,614 |
Softbank Corp. | 665,200 | | 24,761,194 |
Start Today Co. Ltd. (d) | 617,300 | | 8,626,455 |
Sumitomo Mitsui Financial Group, Inc. | 324,200 | | 10,709,925 |
Tokio Marine Holdings, Inc. | 158,300 | | 3,972,238 |
Tokyo Electron Ltd. | 35,700 | | 1,674,148 |
Toshiba Corp. | 672,000 | | 2,557,873 |
Toyota Motor Corp. | 314,000 | | 12,673,738 |
Unicharm Corp. | 107,300 | | 6,107,651 |
Yahoo! Japan Corp. | 12,647 | | 4,094,632 |
TOTAL JAPAN | | 223,994,648 |
Korea (South) - 0.5% |
Samsung Electronics Co. Ltd. | 6,722 | | 7,143,645 |
Luxembourg - 0.4% |
ArcelorMittal SA Class A unit (d) | 117,100 | | 1,788,117 |
L'Occitane Ltd. | 1,209,500 | | 3,356,720 |
TOTAL LUXEMBOURG | | 5,144,837 |
Netherlands - 1.6% |
AEGON NV (d) | 259,400 | | 1,202,990 |
ASML Holding NV | 44,300 | | 2,277,906 |
Gemalto NV | 48,009 | | 3,438,148 |
ING Groep NV (Certificaten Van Aandelen) (a) | 558,084 | | 3,741,453 |
Koninklijke Philips Electronics NV | 304,416 | | 5,998,726 |
Koninklijke Philips Electronics NV (depositary receipt) (NY Reg.) | 173,900 | | 3,420,613 |
Yandex NV (a) | 124,400 | | 2,369,820 |
TOTAL NETHERLANDS | | 22,449,656 |
Nigeria - 0.2% |
Guinness Nigeria PLC | 728,214 | | 1,020,171 |
Nigerian Breweries PLC | 2,274,042 | | 1,414,447 |
TOTAL NIGERIA | | 2,434,618 |
Norway - 0.9% |
DnB NOR ASA | 294,800 | | 2,921,412 |
Schibsted ASA (B Shares) | 210,200 | | 6,805,665 |
StatoilHydro ASA | 14,100 | | 336,264 |
StatoilHydro ASA sponsored ADR (d) | 103,300 | | 2,464,738 |
TOTAL NORWAY | | 12,528,079 |
Singapore - 0.2% |
United Overseas Bank Ltd. | 180,973 | | 2,687,365 |
Common Stocks - continued |
| Shares | | Value |
South Africa - 0.3% |
City Lodge Hotels Ltd. | 73,400 | | $ 762,736 |
Life Healthcare Group Holdings Ltd. | 905,400 | | 3,447,740 |
TOTAL SOUTH AFRICA | | 4,210,476 |
Spain - 0.5% |
Banco Bilbao Vizcaya Argentaria SA | 574,666 | | 4,103,896 |
Banco Santander SA (Spain) | 469,908 | | 3,108,562 |
TOTAL SPAIN | | 7,212,458 |
Sweden - 1.2% |
Nordea Bank AB | 417,800 | | 3,587,640 |
Swedbank AB (A Shares) | 102,432 | | 1,608,124 |
Swedish Match Co. AB | 278,200 | | 11,208,515 |
TOTAL SWEDEN | | 16,404,279 |
Switzerland - 8.7% |
Adecco SA (Reg.) | 200,790 | | 8,884,981 |
Compagnie Financiere Richemont SA Series A | 289,809 | | 15,831,635 |
Credit Suisse Group | 71,082 | | 1,300,591 |
Credit Suisse Group sponsored ADR (d) | 95,368 | | 1,748,095 |
Nestle SA | 532,300 | | 31,714,234 |
Roche Holding AG (participation certificate) | 93,528 | | 16,120,930 |
Sika AG (Bearer) | 2,710 | | 5,219,280 |
Swatch Group AG (Bearer) | 36,070 | | 14,193,905 |
Swiss Re Ltd. | 50,606 | | 3,175,038 |
Syngenta AG (Switzerland) | 38,450 | | 13,162,404 |
UBS AG | 504,997 | | 5,909,564 |
Zurich Financial Services AG | 25,658 | | 5,771,462 |
TOTAL SWITZERLAND | | 123,032,119 |
Taiwan - 0.1% |
Wowprime Corp. | 92,000 | | 1,373,892 |
United Kingdom - 21.4% |
Anglo American PLC: | | | |
ADR | 238,400 | | 3,940,752 |
(United Kingdom) | 262,580 | | 8,588,741 |
ARM Holdings PLC | 219,900 | | 1,742,183 |
Aviva PLC | 431,600 | | 1,848,091 |
Barclays PLC | 1,821,577 | | 4,654,588 |
BG Group PLC | 745,038 | | 15,168,937 |
BHP Billiton PLC | 545,809 | | 15,513,215 |
BP PLC | 1,601,793 | | 10,697,091 |
BP PLC sponsored ADR | 96,295 | | 3,903,799 |
Brammer PLC | 488,700 | | 1,995,722 |
|
| Shares | | Value |
Centrica PLC | 765,200 | | $ 3,810,969 |
Diageo PLC | 972,707 | | 25,071,509 |
Hays PLC | 6,757,500 | | 7,794,570 |
HSBC Holdings PLC: | | | |
(United Kingdom) | 767,422 | | 6,762,397 |
sponsored ADR | 382,370 | | 16,873,988 |
Imperial Tobacco Group PLC | 633,283 | | 24,349,087 |
Johnson Matthey PLC | 181,970 | | 6,292,630 |
Legal & General Group PLC | 1,128,633 | | 2,250,166 |
Lloyds Banking Group PLC (a) | 5,811,344 | | 2,838,895 |
Prudential PLC | 239,221 | | 2,773,771 |
Reckitt Benckiser Group PLC | 272,400 | | 14,355,738 |
Rio Tinto PLC | 176,515 | | 8,388,637 |
Rio Tinto PLC sponsored ADR (d) | 103,200 | | 4,933,992 |
Rolls-Royce Group PLC | 268,408 | | 3,606,751 |
Royal Bank of Scotland Group PLC (a) | 255,480 | | 865,397 |
Royal Dutch Shell PLC: | | | |
Class A (United Kingdom) | 549,741 | | 18,522,401 |
Class B (United Kingdom) | 443,001 | | 15,471,245 |
SABMiller PLC | 428,600 | | 17,150,486 |
Standard Chartered PLC (United Kingdom) | 266,071 | | 5,769,310 |
Sthree PLC | 229,400 | | 955,671 |
Vodafone Group PLC | 6,973,198 | | 19,599,957 |
Vodafone Group PLC sponsored ADR | 131,500 | | 3,705,670 |
William Hill PLC | 3,273,400 | | 14,498,125 |
Xstrata PLC | 433,400 | | 5,420,653 |
TOTAL UNITED KINGDOM | | 300,115,134 |
United States of America - 5.0% |
Apple, Inc. (a) | 23,500 | | 13,724,000 |
Deckers Outdoor Corp. (a)(d) | 279,900 | | 12,318,399 |
Dunkin' Brands Group, Inc. | 136,400 | | 4,683,976 |
Google, Inc. Class A (a) | 24,100 | | 13,979,687 |
Life Technologies Corp. (a) | 45,700 | | 2,056,043 |
Lorillard, Inc. | 21,800 | | 2,876,510 |
MercadoLibre, Inc. | 26,700 | | 2,023,860 |
Monsanto Co. | 34,400 | | 2,847,632 |
Republic Services, Inc. | 145,100 | | 3,839,346 |
Visa, Inc. Class A | 94,000 | | 11,621,220 |
TOTAL UNITED STATES OF AMERICA | | 69,970,673 |
TOTAL COMMON STOCKS (Cost $1,314,654,134) |
1,348,128,021
|
Nonconvertible Preferred Stocks - 1.7% |
| | | |
Germany - 1.7% |
Volkswagen AG
(Cost $17,285,452) | 149,047 | |
23,501,925
|
Money Market Funds - 7.7% |
| Shares | | Value |
Fidelity Cash Central Fund, 0.17% (b) | 29,738,464 | | $ 29,738,464 |
Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c) | 77,947,755 | | 77,947,755 |
TOTAL MONEY MARKET FUNDS (Cost $107,686,219) |
107,686,219
|
TOTAL INVESTMENT PORTFOLIO - 105.3% (Cost $1,439,625,805) | 1,479,316,165 |
NET OTHER ASSETS (LIABILITIES) - (5.3)% | (74,236,888) |
NET ASSETS - 100% | $ 1,405,079,277 |
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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or 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 $223,674 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 | $ 13,270 |
Fidelity Securities Lending Cash Central Fund | 873,291 |
Total | $ 886,561 |
Other Information |
Categorizations in the Schedule of Investments are based on country or territory of incorporation. |
The following is a summary of the inputs used, as of June 30, 2012, involving the Fund's assets and liabilities carried at fair 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 286,429,593 | $ 174,878,391 | $ 111,551,202 | $ - |
Consumer Staples | 214,586,595 | 160,208,088 | 54,378,507 | - |
Energy | 98,133,008 | 35,015,357 | 63,117,651 | - |
Financials | 215,991,277 | 93,930,212 | 122,061,065 | - |
Health Care | 104,859,237 | 86,783,825 | 18,075,412 | - |
Industrials | 90,769,078 | 56,903,990 | 33,865,088 | - |
Information Technology | 154,944,686 | 96,310,390 | 58,634,296 | - |
Materials | 138,544,176 | 71,589,013 | 66,955,163 | - |
Telecommunication Services | 59,156,213 | 7,782,921 | 51,373,292 | - |
Utilities | 8,216,083 | 8,216,083 | - | - |
Money Market Funds | 107,686,219 | 107,686,219 | - | - |
Total Investments in Securities: | $ 1,479,316,165 | $ 899,304,489 | $ 580,011,676 | $ - |
The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2012. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements: |
Transfers | Total |
Level 1 to Level 2 | $ 251,573,173 |
Level 2 to Level 1 | $ - |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2012 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $77,746,336) - See accompanying schedule: Unaffiliated issuers (cost $1,331,939,586) | $ 1,371,629,946 | |
Fidelity Central Funds (cost $107,686,219) | 107,686,219 | |
Total Investments (cost $1,439,625,805) | | $ 1,479,316,165 |
Foreign currency held at value (cost $9,871) | | 9,871 |
Receivable for investments sold
Regular delivery | | 11,683,391 |
Delayed delivery | | 44,559 |
Receivable for fund shares sold | | 1,415,073 |
Dividends receivable | | 3,472,867 |
Distributions receivable from Fidelity Central Funds | | 104,868 |
Other receivables | | 320,845 |
Total assets | | 1,496,367,639 |
| | |
Liabilities | | |
Payable to custodian bank | $ 16,585 | |
Payable for investments purchased | 9,734,974 | |
Payable for fund shares redeemed | 1,795,611 | |
Accrued management fee | 797,415 | |
Distribution and service plan fees payable | 92,393 | |
Other affiliated payables | 165,196 | |
Other payables and accrued expenses | 738,433 | |
Collateral on securities loaned, at value | 77,947,755 | |
Total liabilities | | 91,288,362 |
| | |
Net Assets | | $ 1,405,079,277 |
Net Assets consist of: | | |
Paid in capital | | $ 1,759,058,648 |
Undistributed net investment income | | 19,653,719 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (413,279,089) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 39,645,999 |
Net Assets | | $ 1,405,079,277 |
Statement of Assets and Liabilities - continued
| June 30, 2012 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($612,481,727 ÷ 42,119,935 shares) | | $ 14.54 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($106,859,017 ÷ 7,381,060 shares) | | $ 14.48 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($339,510,252 ÷ 23,574,179 shares) | | $ 14.40 |
| | |
Initial Class R:
Net Asset Value, offering price and redemption price per share ($84,344,573 ÷ 5,814,412 shares) | | $ 14.51 |
| | |
Service Class R:
Net Asset Value, offering price and redemption price per share ($43,481,515 ÷ 3,008,386 shares) | | $ 14.45 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($60,325,522 ÷ 4,226,743 shares) | | $ 14.27 |
| | |
Investor Class R:
Net Asset Value, offering price and redemption price per share ($158,076,671 ÷ 10,903,571 shares) | | $ 14.50 |
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, 2012 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 28,452,355 |
Income from Fidelity Central Funds | | 886,561 |
Income before foreign taxes withheld | | 29,338,916 |
Less foreign taxes withheld | | (2,225,875) |
Total income | | 27,113,041 |
| | |
Expenses | | |
Management fee | $ 5,199,208 | |
Transfer agent fees | 606,922 | |
Distribution and service plan fees | 608,327 | |
Accounting and security lending fees | 337,395 | |
Custodian fees and expenses | 83,271 | |
Independent trustees' compensation | 4,801 | |
Depreciation in deferred trustee compensation account | (10) | |
Audit | 32,729 | |
Legal | 3,820 | |
Interest | 197 | |
Miscellaneous | 9,718 | |
Total expenses before reductions | 6,886,378 | |
Expense reductions | (96,705) | 6,789,673 |
Net investment income (loss) | | 20,323,368 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (10,056,900) | |
Foreign currency transactions | (227,707) | |
Total net realized gain (loss) | | (10,284,607) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 85,841,926 | |
Assets and liabilities in foreign currencies | 40,827 | |
Total change in net unrealized appreciation (depreciation) | | 85,882,753 |
Net gain (loss) | | 75,598,146 |
Net increase (decrease) in net assets resulting from operations | | $ 95,921,514 |
Statement of Changes in Net Assets
| Six months ended June 30, 2012
(Unaudited) | Year ended
December 31,
2011 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 20,323,368 | $ 25,185,031 |
Net realized gain (loss) | (10,284,607) | 78,355,769 |
Change in net unrealized appreciation (depreciation) | 85,882,753 | (394,991,221) |
Net increase (decrease) in net assets resulting from operations | 95,921,514 | (291,450,421) |
Distributions to shareholders from net investment income | - | (21,660,010) |
Distributions to shareholders from net realized gain | - | (3,263,788) |
Total distributions | - | (24,923,798) |
Share transactions - net increase (decrease) | (81,950,772) | (126,132,361) |
Redemption fees | 6,820 | 31,905 |
Total increase (decrease) in net assets | 13,977,562 | (442,474,675) |
| | |
Net Assets | | |
Beginning of period | 1,391,101,715 | 1,833,576,390 |
End of period (including undistributed net investment income of $19,653,719 and distributions in excess of net investment income of $669,649, respectively) | $ 1,405,079,277 | $ 1,391,101,715 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.63 | $ 16.77 | $ 15.05 | $ 12.17 | $ 25.33 | $ 23.96 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .21 | .26 | .21 | .28 | .46 | .45 |
Net realized and unrealized gain (loss) | .70 | (3.14) | 1.76 | 2.93 | (10.67) | 3.42 |
Total from investment operations | .91 | (2.88) | 1.97 | 3.21 | (10.21) | 3.87 |
Distributions from net investment income | - | (.23) | (.22) | (.29) | (.49) | (.84) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.26) | (.25) | (.33) | (2.95) | (2.50) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.54 | $ 13.63 | $ 16.77 | $ 15.05 | $ 12.17 | $ 25.33 |
Total Return B,C,D | 6.68% | (17.16)% | 13.11% | 26.53% | (43.83)% | 17.41% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .85% A | .85% | .86% | .88% | .87% | .85% |
Expenses net of fee waivers, if any | .85% A | .85% | .85% | .88% | .87% | .85% |
Expenses net of all reductions | .83% A | .83% | .83% | .84% | .84% | .82% |
Net investment income (loss) | 2.86% A | 1.59% | 1.41% | 2.17% | 2.45% | 1.85% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 612,482 | $ 598,862 | $ 779,501 | $ 758,018 | $ 703,357 | $ 1,702,235 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.58 | $ 16.70 | $ 14.99 | $ 12.12 | $ 25.23 | $ 23.86 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .20 | .24 | .19 | .26 | .44 | .43 |
Net realized and unrealized gain (loss) | .70 | (3.12) | 1.75 | 2.93 | (10.61) | 3.39 |
Total from investment operations | .90 | (2.88) | 1.94 | 3.19 | (10.17) | 3.82 |
Distributions from net investment income | - | (.21) | (.20) | (.28) | (.48) | (.79) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.24) | (.23) | (.32) | (2.94) | (2.45) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.48 | $ 13.58 | $ 16.70 | $ 14.99 | $ 12.12 | $ 25.23 |
Total Return B,C,D | 6.63% | (17.23)% | 12.99% | 26.44% | (43.89)% | 17.25% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .95% A | .95% | .96% | .98% | .97% | .95% |
Expenses net of fee waivers, if any | .95% A | .95% | .95% | .98% | .97% | .95% |
Expenses net of all reductions | .93% A | .93% | .93% | .94% | .94% | .92% |
Net investment income (loss) | 2.76% A | 1.49% | 1.31% | 2.07% | 2.35% | 1.75% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 106,859 | $ 108,921 | $ 162,394 | $ 171,252 | $ 165,608 | $ 366,777 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.52 | $ 16.62 | $ 14.92 | $ 12.07 | $ 25.12 | $ 23.75 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .19 | .21 | .17 | .24 | .40 | .39 |
Net realized and unrealized gain (loss) | .69 | (3.09) | 1.74 | 2.91 | (10.54) | 3.37 |
Total from investment operations | .88 | (2.88) | 1.91 | 3.15 | (10.14) | 3.76 |
Distributions from net investment income | - | (.19) | (.18) | (.26) | (.45) | (.73) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.22) | (.21) | (.30) | (2.91) | (2.39) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.40 | $ 13.52 | $ 16.62 | $ 14.92 | $ 12.07 | $ 25.12 |
Total Return B,C,D | 6.51% | (17.34)% | 12.83% | 26.22% | (43.96)% | 17.05% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | 1.09% A | 1.10% | 1.11% | 1.12% | 1.12% | 1.10% |
Expenses net of fee waivers, if any | 1.09% A | 1.10% | 1.10% | 1.12% | 1.12% | 1.10% |
Expenses net of all reductions | 1.08% A | 1.08% | 1.08% | 1.09% | 1.09% | 1.07% |
Net investment income (loss) | 2.61% A | 1.34% | 1.16% | 1.93% | 2.21% | 1.60% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 339,510 | $ 342,206 | $ 461,033 | $ 457,971 | $ 414,492 | $ 821,943 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.60 | $ 16.73 | $ 15.02 | $ 12.14 | $ 25.28 | $ 23.92 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .21 | .26 | .21 | .28 | .46 | .45 |
Net realized and unrealized gain (loss) | .70 | (3.13) | 1.75 | 2.93 | (10.65) | 3.41 |
Total from investment operations | .91 | (2.87) | 1.96 | 3.21 | (10.19) | 3.86 |
Distributions from net investment income | - | (.23) | (.22) | (.29) | (.49) | (.84) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.26) | (.25) | (.33) | (2.95) | (2.50) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.51 | $ 13.60 | $ 16.73 | $ 15.02 | $ 12.14 | $ 25.28 |
Total Return B,C,D | 6.69% | (17.14)% | 13.07% | 26.60% | (43.84)% | 17.40% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .85% A | .85% | .86% | .88% | .87% | .85% |
Expenses net of fee waivers, if any | .85% A | .85% | .85% | .88% | .87% | .85% |
Expenses net of all reductions | .83% A | .83% | .83% | .84% | .84% | .82% |
Net investment income (loss) | 2.86% A | 1.59% | 1.41% | 2.17% | 2.46% | 1.85% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 84,345 | $ 85,922 | $ 122,655 | $ 128,689 | $ 118,749 | $ 275,678 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.56 | $ 16.68 | $ 14.97 | $ 12.10 | $ 25.19 | $ 23.83 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .20 | .24 | .19 | .27 | .43 | .43 |
Net realized and unrealized gain (loss) | .69 | (3.12) | 1.75 | 2.92 | (10.58) | 3.38 |
Total from investment operations | .89 | (2.88) | 1.94 | 3.19 | (10.15) | 3.81 |
Distributions from net investment income | - | (.21) | (.20) | (.28) | (.48) | (.79) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.24) | (.23) | (.32) | (2.94) | (2.45) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.45 | $ 13.56 | $ 16.68 | $ 14.97 | $ 12.10 | $ 25.19 |
Total Return B,C,D | 6.56% | (17.24)% | 13.01% | 26.49% | (43.88)% | 17.23% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .94% A | .95% | .96% | .97% | .96% | .94% |
Expenses net of fee waivers, if any | .94% A | .94% | .95% | .97% | .96% | .94% |
Expenses net of all reductions | .93% A | .93% | .93% | .94% | .94% | .92% |
Net investment income (loss) | 2.76% A | 1.49% | 1.31% | 2.08% | 2.36% | 1.75% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 43,482 | $ 43,414 | $ 60,617 | $ 66,014 | $ 61,825 | $ 135,038 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.40 | $ 16.48 | $ 14.80 | $ 11.98 | $ 24.95 | $ 23.61 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .19 | .21 | .17 | .25 | .40 | .39 |
Net realized and unrealized gain (loss) | .68 | (3.07) | 1.73 | 2.87 | (10.46) | 3.35 |
Total from investment operations | .87 | (2.86) | 1.90 | 3.12 | (10.06) | 3.74 |
Distributions from net investment income | - | (.19) | (.19) | (.26) | (.45) | (.74) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.22) | (.22) | (.30) | (2.91) | (2.40) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.27 | $ 13.40 | $ 16.48 | $ 14.80 | $ 11.98 | $ 24.95 |
Total Return B,C,D | 6.49% | (17.33)% | 12.82% | 26.20% | (43.94)% | 17.06% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | 1.09% A | 1.10% | 1.11% | 1.12% | 1.11% | 1.09% |
Expenses net of fee waivers, if any | 1.09% A | 1.09% | 1.10% | 1.12% | 1.11% | 1.09% |
Expenses net of all reductions | 1.08% A | 1.08% | 1.08% | 1.09% | 1.09% | 1.07% |
Net investment income (loss) | 2.61% A | 1.34% | 1.16% | 1.93% | 2.21% | 1.60% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 60,326 | $ 58,968 | $ 69,393 | $ 64,200 | $ 46,323 | $ 95,871 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.60 | $ 16.73 | $ 15.01 | $ 12.14 | $ 25.27 | $ 23.91 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .21 | .24 | .20 | .27 | .43 | .42 |
Net realized and unrealized gain (loss) | .69 | (3.12) | 1.76 | 2.92 | (10.62) | 3.41 |
Total from investment operations | .90 | (2.88) | 1.96 | 3.19 | (10.19) | 3.83 |
Distributions from net investment income | - | (.22) | (.21) | (.28) | (.48) | (.81) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.25) | (.24) | (.32) | (2.94) | (2.47) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.50 | $ 13.60 | $ 16.73 | $ 15.01 | $ 12.14 | $ 25.27 |
Total Return B,C,D | 6.62% | (17.22)% | 13.07% | 26.42% | (43.89)% | 17.25% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .93% A | .93% | .95% | .97% | .96% | .96% |
Expenses net of fee waivers, if any | .93% A | .93% | .94% | .97% | .96% | .96% |
Expenses net of all reductions | .92% A | .91% | .92% | .94% | .93% | .94% |
Net investment income (loss) | 2.77% A | 1.51% | 1.32% | 2.08% | 2.36% | 1.74% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 158,077 | $ 152,810 | $ 177,984 | $ 148,806 | $ 124,111 | $ 229,829 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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
Notes to Financial Statements
For the period ended June 30, 2012 (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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
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 a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are categorized as Level 3 in the hierarchy.
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2012, including information on transfers between Levels 1 and 2, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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 p.m. 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. 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 may elect to defer receipt of a 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 215,996,873 |
Gross unrealized depreciation | (192,858,385) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 23,138,488 |
| |
Tax cost | $ 1,456,177,677 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. At December 31, 2011, capital loss carryforwards were as follows:
Fiscal year of expiration | |
2016 | $ (104,621,946) |
2017 | (280,447,470) |
Total capital loss carryforward | $ (385,069,416) |
Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class R shares held by investors less than 60 days are subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
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 $276,757,349 and $348,318,391, 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 an annualized 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.
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees. 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, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:
Service Class | $ 56,791 |
Service Class 2 | 449,695 |
Service Class R | 22,901 |
Service Class 2R | 78,940 |
| $ 608,327 |
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. In addition, FIIOC receives an asset-based fee of .0038% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:
Initial Class | $ 235,948 |
Service Class | 41,871 |
Service Class 2 | 130,319 |
Initial Class R | 33,021 |
Service Class R | 16,110 |
Service Class 2R | 22,205 |
Investor Class R | 127,448 |
| $ 606,922 |
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 each 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 $620 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
Loan Balance | Weighted Average Interest Rate | Interest
Expense |
Borrower | $ 6,189,333 | .38% | $ 197 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 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 $2,215 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $873,291, including $127 from securities loaned to FCM.
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 $96,705 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
From net investment income | | |
Initial Class | $ - | $ 9,935,133 |
Service Class | - | 1,687,320 |
Service Class 2 | - | 4,694,383 |
Initial Class R | - | 1,431,302 |
Service Class R | - | 672,673 |
Service Class 2R | - | 834,608 |
Investor Class R | - | 2,404,591 |
Total | $ - | $ 21,660,010 |
From net realized gain | | |
Initial Class | $ - | $ 1,379,086 |
Service Class | - | 286,878 |
Service Class 2 | - | 827,775 |
Initial Class R | - | 215,214 |
Service Class R | - | 108,589 |
Service Class 2R | - | 125,027 |
Investor Class R | - | 321,219 |
Total | $ - | $ 3,263,788 |
Semiannual Report
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended June 30,
2012 | Year ended
December 31,
2011 | Six months ended June 30,
2012 | Year ended
December 31,
2011 |
Initial Class | | | | |
Shares sold | 2,995,261 | 5,097,862 | $ 43,926,376 | $ 81,025,708 |
Reinvestment of distributions | - | 832,902 | - | 11,314,219 |
Shares redeemed | (4,808,992) | (8,473,195) | (71,987,134) | (137,488,847) |
Net increase (decrease) | (1,813,731) | (2,542,431) | $ (28,060,758) | $ (45,148,920) |
Service Class | | | | |
Shares sold | 138,334 | 534,926 | $ 2,029,573 | $ 8,440,397 |
Reinvestment of distributions | - | 145,051 | - | 1,974,198 |
Shares redeemed | (779,175) | (2,381,130) | (11,515,515) | (38,838,120) |
Net increase (decrease) | (640,841) | (1,701,153) | $ (9,485,942) | $ (28,423,525) |
Service Class 2 | | | | |
Shares sold | 779,499 | 3,042,278 | $ 11,231,181 | $ 47,105,875 |
Reinvestment of distributions | - | 407,165 | - | 5,522,158 |
Shares redeemed | (2,522,113) | (5,867,222) | (37,510,849) | (93,897,989) |
Net increase (decrease) | (1,742,614) | (2,417,779) | $ (26,279,668) | $ (41,269,956) |
Initial Class R | | | | |
Shares sold | 109,939 | 381,782 | $ 1,624,106 | $ 6,067,099 |
Reinvestment of distributions | - | 121,223 | - | 1,646,516 |
Shares redeemed | (614,238) | (1,514,903) | (9,105,044) | (24,431,217) |
Net increase (decrease) | (504,299) | (1,011,898) | $ (7,480,938) | $ (16,717,602) |
Service Class R | | | | |
Shares sold | 73,960 | 254,650 | $ 1,086,025 | $ 4,119,851 |
Reinvestment of distributions | - | 57,620 | - | 781,262 |
Shares redeemed | (268,333) | (744,662) | (3,993,666) | (11,887,713) |
Net increase (decrease) | (194,373) | (432,392) | $ (2,907,641) | $ (6,986,600) |
Service Class 2R | | | | |
Shares sold | 159,830 | 782,450 | $ 2,341,248 | $ 11,400,821 |
Reinvestment of distributions | - | 71,749 | - | 959,635 |
Shares redeemed | (335,194) | (662,036) | (4,928,393) | (10,765,925) |
Net increase (decrease) | (175,364) | 192,163 | $ (2,587,145) | $ 1,594,531 |
Investor Class R | | | | |
Shares sold | 683,675 | 2,014,152 | $ 9,919,450 | $ 33,125,698 |
Reinvestment of distributions | - | 201,469 | - | 2,725,810 |
Shares redeemed | (1,019,644) | (1,616,453) | (15,068,130) | (25,031,797) |
Net increase (decrease) | (335,969) | 599,168 | $ (5,148,680) | $ 10,819,711 |
12. 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 16% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 30% of the total outstanding shares of the Fund.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Japan) Inc.
Fidelity Management & Research (Hong Kong) Limited
FIL Investment Advisors
FIL Investment Advisors (UK) Limited
FIL Investments (Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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-0812
1.705696.114
Fidelity® Variable Insurance Products:
Overseas Portfolio - Class R
Semiannual Report
June 30, 2012
(Fidelity Cover Art)
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. |
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/proxyvotingresults 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. © 2012 FMR LLC. All rights reserved.
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, http://www.advisor.fidelity.com, or http://www.401k.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, 2012 to June 30, 2012).
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.
| Annualized Expense Ratio | Beginning
Account Value
January 1, 2012 | Ending
Account Value
June 30, 2012 | Expenses Paid
During Period*
January 1, 2012
to June 30, 2012 |
Initial Class | .85% | | | |
Actual | | $ 1,000.00 | $ 1,066.80 | $ 4.37 |
HypotheticalA | | $ 1,000.00 | $ 1,020.64 | $ 4.27 |
Service Class | .95% | | | |
Actual | | $ 1,000.00 | $ 1,066.30 | $ 4.88 |
HypotheticalA | | $ 1,000.00 | $ 1,020.14 | $ 4.77 |
Service Class 2 | 1.09% | | | |
Actual | | $ 1,000.00 | $ 1,065.10 | $ 5.60 |
HypotheticalA | | $ 1,000.00 | $ 1,019.44 | $ 5.47 |
Initial Class R | .85% | | | |
Actual | | $ 1,000.00 | $ 1,066.90 | $ 4.37 |
HypotheticalA | | $ 1,000.00 | $ 1,020.64 | $ 4.27 |
Service Class R | .94% | | | |
Actual | | $ 1,000.00 | $ 1,065.60 | $ 4.83 |
HypotheticalA | | $ 1,000.00 | $ 1,020.19 | $ 4.72 |
Service Class 2R | 1.09% | | | |
Actual | | $ 1,000.00 | $ 1,064.90 | $ 5.60 |
HypotheticalA | | $ 1,000.00 | $ 1,019.44 | $ 5.47 |
Investor Class R | .93% | | | |
Actual | | $ 1,000.00 | $ 1,066.20 | $ 4.78 |
HypotheticalA | | $ 1,000.00 | $ 1,020.24 | $ 4.67 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Geographic Diversification (% of fund's net assets) |
As of June 30, 2012 |
| United Kingdom | 21.4% | |
| Japan | 15.9% | |
| France | 12.2% | |
| Switzerland | 8.7% | |
| Germany | 8.4% | |
| United States of America | 7.4% | |
| Cayman Islands | 4.4% | |
| Denmark | 2.9% | |
| Ireland | 2.7% | |
| Other | 16.0% | |
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable. |
As of December 31, 2011 |
| United Kingdom | 18.8% | |
| Japan | 16.7% | |
| France | 12.3% | |
| Germany | 10.8% | |
| Switzerland | 7.9% | |
| Ireland | 4.2% | |
| United States of America | 4.0% | |
| Cayman Islands | 4.0% | |
| Denmark | 3.0% | |
| Other | 18.3% | |
Percentages are based on country or territory of incorporation and 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 | 97.6 | 98.3 |
Short-Term Investments and Net Other Assets (Liabilities) | 2.4 | 1.7 |
Top Ten Stocks as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Novo Nordisk A/S Series B (Denmark, Pharmaceuticals) | 2.8 | 2.3 |
Sanofi SA (France, Pharmaceuticals) | 2.5 | 2.1 |
Rakuten, Inc. (Japan, Internet & Catalog Retail) | 2.4 | 2.2 |
Nestle SA (Switzerland, Food Products) | 2.3 | 0.0 |
Diageo PLC (United Kingdom, Beverages) | 1.8 | 1.3 |
Softbank Corp. (Japan, Wireless Telecommunication Services) | 1.8 | 0.9 |
Imperial Tobacco Group PLC (United Kingdom, Tobacco) | 1.7 | 1.7 |
LVMH Moet Hennessy - Louis Vuitton SA (France, Textiles, Apparel & Luxury Goods) | 1.7 | 1.6 |
Paddy Power PLC (Ireland) (Ireland, Hotels, Restaurants & Leisure) | 1.7 | 1.5 |
HSBC Holdings PLC (United Kingdom, Commercial Banks) | 1.7 | 1.7 |
| 20.4 | |
Market Sectors as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Consumer Discretionary | 20.3 | 23.4 |
Financials | 15.5 | 16.0 |
Consumer Staples | 15.1 | 9.0 |
Information Technology | 10.9 | 9.4 |
Materials | 9.8 | 12.2 |
Health Care | 7.6 | 6.6 |
Energy | 7.1 | 8.0 |
Industrials | 6.4 | 7.0 |
Telecommunication Services | 4.3 | 5.1 |
Utilities | 0.6 | 1.6 |
Semiannual Report
Investments June 30, 2012 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 95.9% |
| Shares | | Value |
Australia - 2.4% |
Aristocrat Leisure Ltd. | 1,050,218 | | $ 2,994,092 |
BHP Billiton Ltd. | 318,002 | | 10,358,067 |
Fortescue Metals Group Ltd. | 258,379 | | 1,320,222 |
Macquarie Group Ltd. | 105,682 | | 2,853,825 |
Newcrest Mining Ltd. | 304,955 | | 7,096,639 |
Rio Tinto Ltd. | 24,301 | | 1,426,637 |
Westfield Group unit | 811,159 | | 7,942,374 |
TOTAL AUSTRALIA | | 33,991,856 |
Bailiwick of Jersey - 1.0% |
Informa PLC | 903,074 | | 5,375,942 |
Wolseley PLC | 43,800 | | 1,630,559 |
WPP PLC | 583,107 | | 7,078,772 |
TOTAL BAILIWICK OF JERSEY | | 14,085,273 |
Belgium - 0.4% |
Ageas | 743,600 | | 1,468,000 |
Anheuser-Busch InBev SA NV | 33,577 | | 2,647,253 |
Hamon & Compagnie International SA | 73,974 | | 1,465,061 |
TOTAL BELGIUM | | 5,580,314 |
Bermuda - 0.9% |
Clear Media Ltd. | 2,035,000 | | 1,053,539 |
Oriental Watch Holdings Ltd. | 10,492,000 | | 2,813,795 |
Petra Diamonds Ltd. (a) | 809,300 | | 1,529,855 |
Signet Jewelers Ltd. | 161,500 | | 7,107,615 |
TOTAL BERMUDA | | 12,504,804 |
Brazil - 0.4% |
Drogasil SA | 66,000 | | 665,422 |
Souza Cruz SA | 351,900 | | 5,165,055 |
TOTAL BRAZIL | | 5,830,477 |
British Virgin Islands - 0.7% |
Gem Diamonds Ltd. (a) | 796,100 | | 2,443,752 |
Mail.ru Group Ltd.: | | | |
GDR (a)(e) | 6,600 | | 223,674 |
GDR (Reg. S) (a) | 235,300 | | 7,974,317 |
TOTAL BRITISH VIRGIN ISLANDS | | 10,641,743 |
Canada - 1.0% |
Barrick Gold Corp. | 90,000 | | 3,390,138 |
Potash Corp. of Saskatchewan, Inc. | 167,900 | | 7,338,719 |
Yamana Gold, Inc. | 196,700 | | 3,035,220 |
TOTAL CANADA | | 13,764,077 |
Cayman Islands - 4.4% |
Baidu.com, Inc. sponsored ADR (a) | 114,300 | | 13,142,214 |
Biostime International Holdings Ltd. | 1,325,000 | | 3,473,297 |
Hengdeli Holdings Ltd. | 47,490,000 | | 15,171,842 |
Natural Beauty Bio-Technology Ltd. | 8,580,000 | | 1,377,230 |
Noah Holdings Ltd. sponsored ADR (d) | 348,200 | | 1,713,144 |
|
| Shares | | Value |
Perfect World Co. Ltd. sponsored ADR Class B | 237,700 | | $ 2,381,754 |
Renren, Inc. ADR (a)(d) | 25,900 | | 116,809 |
Shenguan Holdings Group Ltd. | 5,328,000 | | 3,075,042 |
SINA Corp. (a)(d) | 18,800 | | 974,028 |
Tencent Holdings Ltd. | 624,400 | | 18,439,335 |
YouKu.com, Inc. ADR (a)(d) | 96,000 | | 2,081,280 |
TOTAL CAYMAN ISLANDS | | 61,945,975 |
Denmark - 2.9% |
Danske Bank A/S (a) | 96,100 | | 1,331,519 |
Novo Nordisk A/S: | | | |
Series B | 51,925 | | 7,531,039 |
Series B sponsored ADR | 222,000 | | 32,265,480 |
TOTAL DENMARK | | 41,128,038 |
France - 12.2% |
Alstom SA (d) | 287,302 | | 9,064,066 |
Atos Origin SA | 72,705 | | 4,335,425 |
AXA SA | 67,020 | | 888,849 |
AXA SA sponsored ADR | 158,600 | | 2,114,138 |
Beneteau SA | 196,900 | | 1,893,745 |
BNP Paribas SA | 142,299 | | 5,462,708 |
Club Mediterranee SA (a) | 85,000 | | 1,452,161 |
Danone SA | 305,612 | | 18,956,649 |
Gameloft (a) | 537,900 | | 3,335,491 |
GDF Suez | 185,600 | | 4,405,114 |
Iliad SA | 28,200 | | 4,077,251 |
Ingenico SA | 106,367 | | 5,158,157 |
Ipsos SA (d) | 149,292 | | 4,385,043 |
Lafarge SA (Bearer) (d) | 85,200 | | 3,790,433 |
LVMH Moet Hennessy - Louis Vuitton SA | 159,541 | | 24,197,611 |
Pernod Ricard SA (d) | 163,500 | | 17,434,173 |
Safran SA | 118,400 | | 4,375,188 |
Sanofi SA | 139,290 | | 10,544,373 |
Sanofi SA sponsored ADR | 620,600 | | 23,446,268 |
Societe Generale Series A | 45,643 | | 1,063,384 |
Total SA | 307,200 | | 13,826,747 |
Total SA sponsored ADR | 31,400 | | 1,411,430 |
Unibail-Rodamco | 32,400 | | 5,949,419 |
TOTAL FRANCE | | 171,567,823 |
Germany - 6.7% |
adidas AG | 102,600 | | 7,330,783 |
Allianz AG | 77,600 | | 7,768,824 |
Bayer AG | 131,478 | | 9,447,364 |
Beiersdorf AG | 214,700 | | 13,897,601 |
Commerzbank AG (a) | 555,200 | | 938,681 |
Deutsche Bank AG | 77,046 | | 2,780,841 |
Deutsche Boerse AG | 180,720 | | 9,726,660 |
Deutsche Post AG | 273,501 | | 4,824,850 |
GSW Immobilien AG | 59,000 | | 2,014,448 |
K&S AG | 37,600 | | 1,712,981 |
Linde AG | 51,987 | | 8,069,088 |
Common Stocks - continued |
| Shares | | Value |
Germany - continued |
Munich Re Group AG | 23,549 | | $ 3,312,410 |
Puma AG | 20,483 | | 5,903,562 |
SAP AG | 189,513 | | 11,222,095 |
SAP AG sponsored ADR (d) | 84,700 | | 5,027,792 |
Tom Tailor Holding AG | 45,300 | | 737,514 |
TOTAL GERMANY | | 94,715,494 |
Hong Kong - 1.7% |
AIA Group Ltd. | 1,274,400 | | 4,401,853 |
Cheung Kong Holdings Ltd. | 334,000 | | 4,123,665 |
Henderson Land Development Co. Ltd. | 814,919 | | 4,530,486 |
Hutchison Whampoa Ltd. | 278,000 | | 2,411,346 |
Television Broadcasts Ltd. | 1,125,000 | | 7,842,436 |
TOTAL HONG KONG | | 23,309,786 |
Ireland - 2.7% |
CRH PLC | 505,756 | | 9,689,342 |
Kingspan Group PLC (United Kingdom) | 623,100 | | 5,046,612 |
Paddy Power PLC (Ireland) | 363,800 | | 23,733,048 |
TOTAL IRELAND | | 38,469,002 |
Israel - 0.1% |
Israel Chemicals Ltd. | 116,100 | | 1,247,030 |
Italy - 1.5% |
Assicurazioni Generali SpA | 158,500 | | 2,138,201 |
Brunello Cucinelli SpA | 11,600 | | 165,001 |
ENI SpA | 200,700 | | 4,263,903 |
ENI SpA sponsored ADR (d) | 67,900 | | 2,887,108 |
Intesa Sanpaolo SpA | 685,202 | | 969,444 |
Saipem SpA | 207,303 | | 9,179,345 |
UniCredit SpA (a) | 276,159 | | 1,041,448 |
TOTAL ITALY | | 20,644,450 |
Japan - 15.9% |
Calbee, Inc. | 48,500 | | 3,045,591 |
Canon, Inc. sponsored ADR | 53,200 | | 2,124,808 |
Dai-ichi Mutual Life Insurance Co. | 1,893 | | 2,192,355 |
Denso Corp. | 87,400 | | 2,986,547 |
East Japan Railway Co. | 43,300 | | 2,718,859 |
Fanuc Corp. | 42,500 | | 6,986,198 |
Fuji Media Holdings, Inc. | 1,691 | | 2,906,914 |
Honda Motor Co. Ltd. | 250,400 | | 8,737,846 |
Japan Retail Fund Investment Corp. | 2,795 | | 4,433,583 |
Japan Tobacco, Inc. | 323,400 | | 9,580,934 |
Kakaku.com, Inc. (d) | 104,400 | | 3,542,651 |
KDDI Corp. | 1,087 | | 7,012,141 |
Keyence Corp. | 33,220 | | 8,217,734 |
Mitsubishi Corp. | 461,800 | | 9,334,960 |
Mitsubishi Estate Co. Ltd. | 223,000 | | 4,000,799 |
Mitsubishi UFJ Financial Group, Inc. (d) | 2,944,500 | | 14,106,744 |
|
| Shares | | Value |
Mitsubishi UFJ Financial Group, Inc. sponsored ADR (d) | 489,200 | | $ 2,323,700 |
Mitsui & Co. Ltd. | 431,700 | | 6,414,999 |
MS&AD Insurance Group Holdings, Inc. | 141,900 | | 2,482,582 |
NKSJ Holdings, Inc. | 95,000 | | 2,022,345 |
Nomura Holdings, Inc. | 505,000 | | 1,887,963 |
ORIX Corp. | 83,930 | | 7,821,927 |
Rakuten, Inc. | 3,282,300 | | 33,934,614 |
Softbank Corp. | 665,200 | | 24,761,194 |
Start Today Co. Ltd. (d) | 617,300 | | 8,626,455 |
Sumitomo Mitsui Financial Group, Inc. | 324,200 | | 10,709,925 |
Tokio Marine Holdings, Inc. | 158,300 | | 3,972,238 |
Tokyo Electron Ltd. | 35,700 | | 1,674,148 |
Toshiba Corp. | 672,000 | | 2,557,873 |
Toyota Motor Corp. | 314,000 | | 12,673,738 |
Unicharm Corp. | 107,300 | | 6,107,651 |
Yahoo! Japan Corp. | 12,647 | | 4,094,632 |
TOTAL JAPAN | | 223,994,648 |
Korea (South) - 0.5% |
Samsung Electronics Co. Ltd. | 6,722 | | 7,143,645 |
Luxembourg - 0.4% |
ArcelorMittal SA Class A unit (d) | 117,100 | | 1,788,117 |
L'Occitane Ltd. | 1,209,500 | | 3,356,720 |
TOTAL LUXEMBOURG | | 5,144,837 |
Netherlands - 1.6% |
AEGON NV (d) | 259,400 | | 1,202,990 |
ASML Holding NV | 44,300 | | 2,277,906 |
Gemalto NV | 48,009 | | 3,438,148 |
ING Groep NV (Certificaten Van Aandelen) (a) | 558,084 | | 3,741,453 |
Koninklijke Philips Electronics NV | 304,416 | | 5,998,726 |
Koninklijke Philips Electronics NV (depositary receipt) (NY Reg.) | 173,900 | | 3,420,613 |
Yandex NV (a) | 124,400 | | 2,369,820 |
TOTAL NETHERLANDS | | 22,449,656 |
Nigeria - 0.2% |
Guinness Nigeria PLC | 728,214 | | 1,020,171 |
Nigerian Breweries PLC | 2,274,042 | | 1,414,447 |
TOTAL NIGERIA | | 2,434,618 |
Norway - 0.9% |
DnB NOR ASA | 294,800 | | 2,921,412 |
Schibsted ASA (B Shares) | 210,200 | | 6,805,665 |
StatoilHydro ASA | 14,100 | | 336,264 |
StatoilHydro ASA sponsored ADR (d) | 103,300 | | 2,464,738 |
TOTAL NORWAY | | 12,528,079 |
Singapore - 0.2% |
United Overseas Bank Ltd. | 180,973 | | 2,687,365 |
Common Stocks - continued |
| Shares | | Value |
South Africa - 0.3% |
City Lodge Hotels Ltd. | 73,400 | | $ 762,736 |
Life Healthcare Group Holdings Ltd. | 905,400 | | 3,447,740 |
TOTAL SOUTH AFRICA | | 4,210,476 |
Spain - 0.5% |
Banco Bilbao Vizcaya Argentaria SA | 574,666 | | 4,103,896 |
Banco Santander SA (Spain) | 469,908 | | 3,108,562 |
TOTAL SPAIN | | 7,212,458 |
Sweden - 1.2% |
Nordea Bank AB | 417,800 | | 3,587,640 |
Swedbank AB (A Shares) | 102,432 | | 1,608,124 |
Swedish Match Co. AB | 278,200 | | 11,208,515 |
TOTAL SWEDEN | | 16,404,279 |
Switzerland - 8.7% |
Adecco SA (Reg.) | 200,790 | | 8,884,981 |
Compagnie Financiere Richemont SA Series A | 289,809 | | 15,831,635 |
Credit Suisse Group | 71,082 | | 1,300,591 |
Credit Suisse Group sponsored ADR (d) | 95,368 | | 1,748,095 |
Nestle SA | 532,300 | | 31,714,234 |
Roche Holding AG (participation certificate) | 93,528 | | 16,120,930 |
Sika AG (Bearer) | 2,710 | | 5,219,280 |
Swatch Group AG (Bearer) | 36,070 | | 14,193,905 |
Swiss Re Ltd. | 50,606 | | 3,175,038 |
Syngenta AG (Switzerland) | 38,450 | | 13,162,404 |
UBS AG | 504,997 | | 5,909,564 |
Zurich Financial Services AG | 25,658 | | 5,771,462 |
TOTAL SWITZERLAND | | 123,032,119 |
Taiwan - 0.1% |
Wowprime Corp. | 92,000 | | 1,373,892 |
United Kingdom - 21.4% |
Anglo American PLC: | | | |
ADR | 238,400 | | 3,940,752 |
(United Kingdom) | 262,580 | | 8,588,741 |
ARM Holdings PLC | 219,900 | | 1,742,183 |
Aviva PLC | 431,600 | | 1,848,091 |
Barclays PLC | 1,821,577 | | 4,654,588 |
BG Group PLC | 745,038 | | 15,168,937 |
BHP Billiton PLC | 545,809 | | 15,513,215 |
BP PLC | 1,601,793 | | 10,697,091 |
BP PLC sponsored ADR | 96,295 | | 3,903,799 |
Brammer PLC | 488,700 | | 1,995,722 |
|
| Shares | | Value |
Centrica PLC | 765,200 | | $ 3,810,969 |
Diageo PLC | 972,707 | | 25,071,509 |
Hays PLC | 6,757,500 | | 7,794,570 |
HSBC Holdings PLC: | | | |
(United Kingdom) | 767,422 | | 6,762,397 |
sponsored ADR | 382,370 | | 16,873,988 |
Imperial Tobacco Group PLC | 633,283 | | 24,349,087 |
Johnson Matthey PLC | 181,970 | | 6,292,630 |
Legal & General Group PLC | 1,128,633 | | 2,250,166 |
Lloyds Banking Group PLC (a) | 5,811,344 | | 2,838,895 |
Prudential PLC | 239,221 | | 2,773,771 |
Reckitt Benckiser Group PLC | 272,400 | | 14,355,738 |
Rio Tinto PLC | 176,515 | | 8,388,637 |
Rio Tinto PLC sponsored ADR (d) | 103,200 | | 4,933,992 |
Rolls-Royce Group PLC | 268,408 | | 3,606,751 |
Royal Bank of Scotland Group PLC (a) | 255,480 | | 865,397 |
Royal Dutch Shell PLC: | | | |
Class A (United Kingdom) | 549,741 | | 18,522,401 |
Class B (United Kingdom) | 443,001 | | 15,471,245 |
SABMiller PLC | 428,600 | | 17,150,486 |
Standard Chartered PLC (United Kingdom) | 266,071 | | 5,769,310 |
Sthree PLC | 229,400 | | 955,671 |
Vodafone Group PLC | 6,973,198 | | 19,599,957 |
Vodafone Group PLC sponsored ADR | 131,500 | | 3,705,670 |
William Hill PLC | 3,273,400 | | 14,498,125 |
Xstrata PLC | 433,400 | | 5,420,653 |
TOTAL UNITED KINGDOM | | 300,115,134 |
United States of America - 5.0% |
Apple, Inc. (a) | 23,500 | | 13,724,000 |
Deckers Outdoor Corp. (a)(d) | 279,900 | | 12,318,399 |
Dunkin' Brands Group, Inc. | 136,400 | | 4,683,976 |
Google, Inc. Class A (a) | 24,100 | | 13,979,687 |
Life Technologies Corp. (a) | 45,700 | | 2,056,043 |
Lorillard, Inc. | 21,800 | | 2,876,510 |
MercadoLibre, Inc. | 26,700 | | 2,023,860 |
Monsanto Co. | 34,400 | | 2,847,632 |
Republic Services, Inc. | 145,100 | | 3,839,346 |
Visa, Inc. Class A | 94,000 | | 11,621,220 |
TOTAL UNITED STATES OF AMERICA | | 69,970,673 |
TOTAL COMMON STOCKS (Cost $1,314,654,134) |
1,348,128,021
|
Nonconvertible Preferred Stocks - 1.7% |
| | | |
Germany - 1.7% |
Volkswagen AG
(Cost $17,285,452) | 149,047 | |
23,501,925
|
Money Market Funds - 7.7% |
| Shares | | Value |
Fidelity Cash Central Fund, 0.17% (b) | 29,738,464 | | $ 29,738,464 |
Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c) | 77,947,755 | | 77,947,755 |
TOTAL MONEY MARKET FUNDS (Cost $107,686,219) |
107,686,219
|
TOTAL INVESTMENT PORTFOLIO - 105.3% (Cost $1,439,625,805) | 1,479,316,165 |
NET OTHER ASSETS (LIABILITIES) - (5.3)% | (74,236,888) |
NET ASSETS - 100% | $ 1,405,079,277 |
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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or 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 $223,674 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 | $ 13,270 |
Fidelity Securities Lending Cash Central Fund | 873,291 |
Total | $ 886,561 |
Other Information |
Categorizations in the Schedule of Investments are based on country or territory of incorporation. |
The following is a summary of the inputs used, as of June 30, 2012, involving the Fund's assets and liabilities carried at fair 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 286,429,593 | $ 174,878,391 | $ 111,551,202 | $ - |
Consumer Staples | 214,586,595 | 160,208,088 | 54,378,507 | - |
Energy | 98,133,008 | 35,015,357 | 63,117,651 | - |
Financials | 215,991,277 | 93,930,212 | 122,061,065 | - |
Health Care | 104,859,237 | 86,783,825 | 18,075,412 | - |
Industrials | 90,769,078 | 56,903,990 | 33,865,088 | - |
Information Technology | 154,944,686 | 96,310,390 | 58,634,296 | - |
Materials | 138,544,176 | 71,589,013 | 66,955,163 | - |
Telecommunication Services | 59,156,213 | 7,782,921 | 51,373,292 | - |
Utilities | 8,216,083 | 8,216,083 | - | - |
Money Market Funds | 107,686,219 | 107,686,219 | - | - |
Total Investments in Securities: | $ 1,479,316,165 | $ 899,304,489 | $ 580,011,676 | $ - |
The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2012. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements: |
Transfers | Total |
Level 1 to Level 2 | $ 251,573,173 |
Level 2 to Level 1 | $ - |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2012 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including securities loaned of $77,746,336) - See accompanying schedule: Unaffiliated issuers (cost $1,331,939,586) | $ 1,371,629,946 | |
Fidelity Central Funds (cost $107,686,219) | 107,686,219 | |
Total Investments (cost $1,439,625,805) | | $ 1,479,316,165 |
Foreign currency held at value (cost $9,871) | | 9,871 |
Receivable for investments sold
Regular delivery | | 11,683,391 |
Delayed delivery | | 44,559 |
Receivable for fund shares sold | | 1,415,073 |
Dividends receivable | | 3,472,867 |
Distributions receivable from Fidelity Central Funds | | 104,868 |
Other receivables | | 320,845 |
Total assets | | 1,496,367,639 |
| | |
Liabilities | | |
Payable to custodian bank | $ 16,585 | |
Payable for investments purchased | 9,734,974 | |
Payable for fund shares redeemed | 1,795,611 | |
Accrued management fee | 797,415 | |
Distribution and service plan fees payable | 92,393 | |
Other affiliated payables | 165,196 | |
Other payables and accrued expenses | 738,433 | |
Collateral on securities loaned, at value | 77,947,755 | |
Total liabilities | | 91,288,362 |
| | |
Net Assets | | $ 1,405,079,277 |
Net Assets consist of: | | |
Paid in capital | | $ 1,759,058,648 |
Undistributed net investment income | | 19,653,719 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (413,279,089) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 39,645,999 |
Net Assets | | $ 1,405,079,277 |
Statement of Assets and Liabilities - continued
| June 30, 2012 (Unaudited) |
| | |
Initial Class:
Net Asset Value, offering price and redemption price per share ($612,481,727 ÷ 42,119,935 shares) | | $ 14.54 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($106,859,017 ÷ 7,381,060 shares) | | $ 14.48 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($339,510,252 ÷ 23,574,179 shares) | | $ 14.40 |
| | |
Initial Class R:
Net Asset Value, offering price and redemption price per share ($84,344,573 ÷ 5,814,412 shares) | | $ 14.51 |
| | |
Service Class R:
Net Asset Value, offering price and redemption price per share ($43,481,515 ÷ 3,008,386 shares) | | $ 14.45 |
| | |
Service Class 2R:
Net Asset Value, offering price and redemption price per share ($60,325,522 ÷ 4,226,743 shares) | | $ 14.27 |
| | |
Investor Class R:
Net Asset Value, offering price and redemption price per share ($158,076,671 ÷ 10,903,571 shares) | | $ 14.50 |
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, 2012 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 28,452,355 |
Income from Fidelity Central Funds | | 886,561 |
Income before foreign taxes withheld | | 29,338,916 |
Less foreign taxes withheld | | (2,225,875) |
Total income | | 27,113,041 |
| | |
Expenses | | |
Management fee | $ 5,199,208 | |
Transfer agent fees | 606,922 | |
Distribution and service plan fees | 608,327 | |
Accounting and security lending fees | 337,395 | |
Custodian fees and expenses | 83,271 | |
Independent trustees' compensation | 4,801 | |
Depreciation in deferred trustee compensation account | (10) | |
Audit | 32,729 | |
Legal | 3,820 | |
Interest | 197 | |
Miscellaneous | 9,718 | |
Total expenses before reductions | 6,886,378 | |
Expense reductions | (96,705) | 6,789,673 |
Net investment income (loss) | | 20,323,368 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | (10,056,900) | |
Foreign currency transactions | (227,707) | |
Total net realized gain (loss) | | (10,284,607) |
Change in net unrealized appreciation (depreciation) on: Investment securities | 85,841,926 | |
Assets and liabilities in foreign currencies | 40,827 | |
Total change in net unrealized appreciation (depreciation) | | 85,882,753 |
Net gain (loss) | | 75,598,146 |
Net increase (decrease) in net assets resulting from operations | | $ 95,921,514 |
Statement of Changes in Net Assets
| Six months ended June 30, 2012
(Unaudited) | Year ended
December 31,
2011 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 20,323,368 | $ 25,185,031 |
Net realized gain (loss) | (10,284,607) | 78,355,769 |
Change in net unrealized appreciation (depreciation) | 85,882,753 | (394,991,221) |
Net increase (decrease) in net assets resulting from operations | 95,921,514 | (291,450,421) |
Distributions to shareholders from net investment income | - | (21,660,010) |
Distributions to shareholders from net realized gain | - | (3,263,788) |
Total distributions | - | (24,923,798) |
Share transactions - net increase (decrease) | (81,950,772) | (126,132,361) |
Redemption fees | 6,820 | 31,905 |
Total increase (decrease) in net assets | 13,977,562 | (442,474,675) |
| | |
Net Assets | | |
Beginning of period | 1,391,101,715 | 1,833,576,390 |
End of period (including undistributed net investment income of $19,653,719 and distributions in excess of net investment income of $669,649, respectively) | $ 1,405,079,277 | $ 1,391,101,715 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.63 | $ 16.77 | $ 15.05 | $ 12.17 | $ 25.33 | $ 23.96 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .21 | .26 | .21 | .28 | .46 | .45 |
Net realized and unrealized gain (loss) | .70 | (3.14) | 1.76 | 2.93 | (10.67) | 3.42 |
Total from investment operations | .91 | (2.88) | 1.97 | 3.21 | (10.21) | 3.87 |
Distributions from net investment income | - | (.23) | (.22) | (.29) | (.49) | (.84) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.26) | (.25) | (.33) | (2.95) | (2.50) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.54 | $ 13.63 | $ 16.77 | $ 15.05 | $ 12.17 | $ 25.33 |
Total Return B,C,D | 6.68% | (17.16)% | 13.11% | 26.53% | (43.83)% | 17.41% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .85% A | .85% | .86% | .88% | .87% | .85% |
Expenses net of fee waivers, if any | .85% A | .85% | .85% | .88% | .87% | .85% |
Expenses net of all reductions | .83% A | .83% | .83% | .84% | .84% | .82% |
Net investment income (loss) | 2.86% A | 1.59% | 1.41% | 2.17% | 2.45% | 1.85% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 612,482 | $ 598,862 | $ 779,501 | $ 758,018 | $ 703,357 | $ 1,702,235 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.58 | $ 16.70 | $ 14.99 | $ 12.12 | $ 25.23 | $ 23.86 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .20 | .24 | .19 | .26 | .44 | .43 |
Net realized and unrealized gain (loss) | .70 | (3.12) | 1.75 | 2.93 | (10.61) | 3.39 |
Total from investment operations | .90 | (2.88) | 1.94 | 3.19 | (10.17) | 3.82 |
Distributions from net investment income | - | (.21) | (.20) | (.28) | (.48) | (.79) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.24) | (.23) | (.32) | (2.94) | (2.45) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.48 | $ 13.58 | $ 16.70 | $ 14.99 | $ 12.12 | $ 25.23 |
Total Return B,C,D | 6.63% | (17.23)% | 12.99% | 26.44% | (43.89)% | 17.25% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .95% A | .95% | .96% | .98% | .97% | .95% |
Expenses net of fee waivers, if any | .95% A | .95% | .95% | .98% | .97% | .95% |
Expenses net of all reductions | .93% A | .93% | .93% | .94% | .94% | .92% |
Net investment income (loss) | 2.76% A | 1.49% | 1.31% | 2.07% | 2.35% | 1.75% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 106,859 | $ 108,921 | $ 162,394 | $ 171,252 | $ 165,608 | $ 366,777 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.52 | $ 16.62 | $ 14.92 | $ 12.07 | $ 25.12 | $ 23.75 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .19 | .21 | .17 | .24 | .40 | .39 |
Net realized and unrealized gain (loss) | .69 | (3.09) | 1.74 | 2.91 | (10.54) | 3.37 |
Total from investment operations | .88 | (2.88) | 1.91 | 3.15 | (10.14) | 3.76 |
Distributions from net investment income | - | (.19) | (.18) | (.26) | (.45) | (.73) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.22) | (.21) | (.30) | (2.91) | (2.39) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.40 | $ 13.52 | $ 16.62 | $ 14.92 | $ 12.07 | $ 25.12 |
Total Return B,C,D | 6.51% | (17.34)% | 12.83% | 26.22% | (43.96)% | 17.05% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | 1.09% A | 1.10% | 1.11% | 1.12% | 1.12% | 1.10% |
Expenses net of fee waivers, if any | 1.09% A | 1.10% | 1.10% | 1.12% | 1.12% | 1.10% |
Expenses net of all reductions | 1.08% A | 1.08% | 1.08% | 1.09% | 1.09% | 1.07% |
Net investment income (loss) | 2.61% A | 1.34% | 1.16% | 1.93% | 2.21% | 1.60% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 339,510 | $ 342,206 | $ 461,033 | $ 457,971 | $ 414,492 | $ 821,943 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.60 | $ 16.73 | $ 15.02 | $ 12.14 | $ 25.28 | $ 23.92 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .21 | .26 | .21 | .28 | .46 | .45 |
Net realized and unrealized gain (loss) | .70 | (3.13) | 1.75 | 2.93 | (10.65) | 3.41 |
Total from investment operations | .91 | (2.87) | 1.96 | 3.21 | (10.19) | 3.86 |
Distributions from net investment income | - | (.23) | (.22) | (.29) | (.49) | (.84) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.26) | (.25) | (.33) | (2.95) | (2.50) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.51 | $ 13.60 | $ 16.73 | $ 15.02 | $ 12.14 | $ 25.28 |
Total Return B,C,D | 6.69% | (17.14)% | 13.07% | 26.60% | (43.84)% | 17.40% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .85% A | .85% | .86% | .88% | .87% | .85% |
Expenses net of fee waivers, if any | .85% A | .85% | .85% | .88% | .87% | .85% |
Expenses net of all reductions | .83% A | .83% | .83% | .84% | .84% | .82% |
Net investment income (loss) | 2.86% A | 1.59% | 1.41% | 2.17% | 2.46% | 1.85% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 84,345 | $ 85,922 | $ 122,655 | $ 128,689 | $ 118,749 | $ 275,678 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.56 | $ 16.68 | $ 14.97 | $ 12.10 | $ 25.19 | $ 23.83 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .20 | .24 | .19 | .27 | .43 | .43 |
Net realized and unrealized gain (loss) | .69 | (3.12) | 1.75 | 2.92 | (10.58) | 3.38 |
Total from investment operations | .89 | (2.88) | 1.94 | 3.19 | (10.15) | 3.81 |
Distributions from net investment income | - | (.21) | (.20) | (.28) | (.48) | (.79) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.24) | (.23) | (.32) | (2.94) | (2.45) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.45 | $ 13.56 | $ 16.68 | $ 14.97 | $ 12.10 | $ 25.19 |
Total Return B,C,D | 6.56% | (17.24)% | 13.01% | 26.49% | (43.88)% | 17.23% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .94% A | .95% | .96% | .97% | .96% | .94% |
Expenses net of fee waivers, if any | .94% A | .94% | .95% | .97% | .96% | .94% |
Expenses net of all reductions | .93% A | .93% | .93% | .94% | .94% | .92% |
Net investment income (loss) | 2.76% A | 1.49% | 1.31% | 2.08% | 2.36% | 1.75% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 43,482 | $ 43,414 | $ 60,617 | $ 66,014 | $ 61,825 | $ 135,038 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.40 | $ 16.48 | $ 14.80 | $ 11.98 | $ 24.95 | $ 23.61 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .19 | .21 | .17 | .25 | .40 | .39 |
Net realized and unrealized gain (loss) | .68 | (3.07) | 1.73 | 2.87 | (10.46) | 3.35 |
Total from investment operations | .87 | (2.86) | 1.90 | 3.12 | (10.06) | 3.74 |
Distributions from net investment income | - | (.19) | (.19) | (.26) | (.45) | (.74) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.22) | (.22) | (.30) | (2.91) | (2.40) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.27 | $ 13.40 | $ 16.48 | $ 14.80 | $ 11.98 | $ 24.95 |
Total Return B,C,D | 6.49% | (17.33)% | 12.82% | 26.20% | (43.94)% | 17.06% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | 1.09% A | 1.10% | 1.11% | 1.12% | 1.11% | 1.09% |
Expenses net of fee waivers, if any | 1.09% A | 1.09% | 1.10% | 1.12% | 1.11% | 1.09% |
Expenses net of all reductions | 1.08% A | 1.08% | 1.08% | 1.09% | 1.09% | 1.07% |
Net investment income (loss) | 2.61% A | 1.34% | 1.16% | 1.93% | 2.21% | 1.60% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 60,326 | $ 58,968 | $ 69,393 | $ 64,200 | $ 46,323 | $ 95,871 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 13.60 | $ 16.73 | $ 15.01 | $ 12.14 | $ 25.27 | $ 23.91 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .21 | .24 | .20 | .27 | .43 | .42 |
Net realized and unrealized gain (loss) | .69 | (3.12) | 1.76 | 2.92 | (10.62) | 3.41 |
Total from investment operations | .90 | (2.88) | 1.96 | 3.19 | (10.19) | 3.83 |
Distributions from net investment income | - | (.22) | (.21) | (.28) | (.48) | (.81) |
Distributions from net realized gain | - | (.03) | (.03) | (.04) | (2.46) | (1.66) |
Total distributions | - | (.25) | (.24) | (.32) | (2.94) | (2.47) |
Redemption fees added to paid in capital E,I | - | - | - | - | - | - |
Net asset value, end of period | $ 14.50 | $ 13.60 | $ 16.73 | $ 15.01 | $ 12.14 | $ 25.27 |
Total Return B,C,D | 6.62% | (17.22)% | 13.07% | 26.42% | (43.89)% | 17.25% |
Ratios to Average Net Assets F,H | | | | | | |
Expenses before reductions | .93% A | .93% | .95% | .97% | .96% | .96% |
Expenses net of fee waivers, if any | .93% A | .93% | .94% | .97% | .96% | .96% |
Expenses net of all reductions | .92% A | .91% | .92% | .94% | .93% | .94% |
Net investment income (loss) | 2.77% A | 1.51% | 1.32% | 2.08% | 2.36% | 1.74% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 158,077 | $ 152,810 | $ 177,984 | $ 148,806 | $ 124,111 | $ 229,829 |
Portfolio turnover rate G | 38% A | 45% | 50% | 78% | 77% | 62% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 reductions from 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
Notes to Financial Statements
For the period ended June 30, 2012 (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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
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 a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are categorized as Level 3 in the hierarchy.
Semiannual Report
3. Significant Accounting Policies - continued
Security Valuation - continued
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2012, including information on transfers between Levels 1 and 2, is included at the end of the Fund's Schedule of Investments.
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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 p.m. 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. 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 may elect to defer receipt of a 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 215,996,873 |
Gross unrealized depreciation | (192,858,385) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 23,138,488 |
| |
Tax cost | $ 1,456,177,677 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. At December 31, 2011, capital loss carryforwards were as follows:
Fiscal year of expiration | |
2016 | $ (104,621,946) |
2017 | (280,447,470) |
Total capital loss carryforward | $ (385,069,416) |
Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class R shares held by investors less than 60 days are subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Operating Policies.
Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
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 $276,757,349 and $348,318,391, 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 an annualized 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.
Semiannual Report
6. Fees and Other Transactions with Affiliates - continued
Distribution and Service Plan Fees. 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, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:
Service Class | $ 56,791 |
Service Class 2 | 449,695 |
Service Class R | 22,901 |
Service Class 2R | 78,940 |
| $ 608,327 |
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. In addition, FIIOC receives an asset-based fee of .0038% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:
Initial Class | $ 235,948 |
Service Class | 41,871 |
Service Class 2 | 130,319 |
Initial Class R | 33,021 |
Service Class R | 16,110 |
Service Class 2R | 22,205 |
Investor Class R | 127,448 |
| $ 606,922 |
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 each 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 $620 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
Loan Balance | Weighted Average Interest Rate | Interest
Expense |
Borrower | $ 6,189,333 | .38% | $ 197 |
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 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 $2,215 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $873,291, including $127 from securities loaned to FCM.
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 $96,705 for the period.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
From net investment income | | |
Initial Class | $ - | $ 9,935,133 |
Service Class | - | 1,687,320 |
Service Class 2 | - | 4,694,383 |
Initial Class R | - | 1,431,302 |
Service Class R | - | 672,673 |
Service Class 2R | - | 834,608 |
Investor Class R | - | 2,404,591 |
Total | $ - | $ 21,660,010 |
From net realized gain | | |
Initial Class | $ - | $ 1,379,086 |
Service Class | - | 286,878 |
Service Class 2 | - | 827,775 |
Initial Class R | - | 215,214 |
Service Class R | - | 108,589 |
Service Class 2R | - | 125,027 |
Investor Class R | - | 321,219 |
Total | $ - | $ 3,263,788 |
Semiannual Report
11. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended June 30,
2012 | Year ended
December 31,
2011 | Six months ended June 30,
2012 | Year ended
December 31,
2011 |
Initial Class | | | | |
Shares sold | 2,995,261 | 5,097,862 | $ 43,926,376 | $ 81,025,708 |
Reinvestment of distributions | - | 832,902 | - | 11,314,219 |
Shares redeemed | (4,808,992) | (8,473,195) | (71,987,134) | (137,488,847) |
Net increase (decrease) | (1,813,731) | (2,542,431) | $ (28,060,758) | $ (45,148,920) |
Service Class | | | | |
Shares sold | 138,334 | 534,926 | $ 2,029,573 | $ 8,440,397 |
Reinvestment of distributions | - | 145,051 | - | 1,974,198 |
Shares redeemed | (779,175) | (2,381,130) | (11,515,515) | (38,838,120) |
Net increase (decrease) | (640,841) | (1,701,153) | $ (9,485,942) | $ (28,423,525) |
Service Class 2 | | | | |
Shares sold | 779,499 | 3,042,278 | $ 11,231,181 | $ 47,105,875 |
Reinvestment of distributions | - | 407,165 | - | 5,522,158 |
Shares redeemed | (2,522,113) | (5,867,222) | (37,510,849) | (93,897,989) |
Net increase (decrease) | (1,742,614) | (2,417,779) | $ (26,279,668) | $ (41,269,956) |
Initial Class R | | | | |
Shares sold | 109,939 | 381,782 | $ 1,624,106 | $ 6,067,099 |
Reinvestment of distributions | - | 121,223 | - | 1,646,516 |
Shares redeemed | (614,238) | (1,514,903) | (9,105,044) | (24,431,217) |
Net increase (decrease) | (504,299) | (1,011,898) | $ (7,480,938) | $ (16,717,602) |
Service Class R | | | | |
Shares sold | 73,960 | 254,650 | $ 1,086,025 | $ 4,119,851 |
Reinvestment of distributions | - | 57,620 | - | 781,262 |
Shares redeemed | (268,333) | (744,662) | (3,993,666) | (11,887,713) |
Net increase (decrease) | (194,373) | (432,392) | $ (2,907,641) | $ (6,986,600) |
Service Class 2R | | | | |
Shares sold | 159,830 | 782,450 | $ 2,341,248 | $ 11,400,821 |
Reinvestment of distributions | - | 71,749 | - | 959,635 |
Shares redeemed | (335,194) | (662,036) | (4,928,393) | (10,765,925) |
Net increase (decrease) | (175,364) | 192,163 | $ (2,587,145) | $ 1,594,531 |
Investor Class R | | | | |
Shares sold | 683,675 | 2,014,152 | $ 9,919,450 | $ 33,125,698 |
Reinvestment of distributions | - | 201,469 | - | 2,725,810 |
Shares redeemed | (1,019,644) | (1,616,453) | (15,068,130) | (25,031,797) |
Net increase (decrease) | (335,969) | 599,168 | $ (5,148,680) | $ 10,819,711 |
12. 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 16% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 30% of the total outstanding shares of the Fund.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Japan) Inc.
Fidelity Management & Research (Hong Kong) Limited
FIL Investment Advisors
FIL Investment Advisors (UK) Limited
FIL Investments (Japan) Limited
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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-0812
1.774855.110
Fidelity® Variable Insurance Products:
Value Portfolio
Semiannual Report
June 30, 2012
(Fidelity Cover Art)
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. |
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/proxyvotingresults 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. © 2012 FMR LLC. All rights reserved.
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, http://www.advisor.fidelity.com, or http://www.401k.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, 2012 to June 30, 2012).
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.
| Annualized Expense Ratio | Beginning
Account Value
January 1, 2012 | Ending
Account Value
June 30, 2012 | Expenses Paid
During Period*
January 1, 2012 to June 30, 2012 |
Initial Class | .72% | | | |
Actual | | $ 1,000.00 | $ 1,090.60 | $ 3.74 |
HypotheticalA | | $ 1,000.00 | $ 1,021.28 | $ 3.62 |
Service Class | .81% | | | |
Actual | | $ 1,000.00 | $ 1,089.60 | $ 4.21 |
HypotheticalA | | $ 1,000.00 | $ 1,020.84 | $ 4.07 |
Service Class 2 | .98% | | | |
Actual | | $ 1,000.00 | $ 1,088.40 | $ 5.09 |
HypotheticalA | | $ 1,000.00 | $ 1,019.99 | $ 4.92 |
Investor Class | .80% | | | |
Actual | | $ 1,000.00 | $ 1,089.70 | $ 4.16 |
HypotheticalA | | $ 1,000.00 | $ 1,020.89 | $ 4.02 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).
Semiannual Report
Investment Changes (Unaudited)
Top Ten Stocks as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Chevron Corp. | 4.9 | 3.0 |
Wells Fargo & Co. | 2.8 | 2.7 |
General Electric Co. | 2.6 | 3.0 |
JPMorgan Chase & Co. | 2.5 | 2.8 |
Berkshire Hathaway, Inc. Class B | 2.2 | 0.7 |
Occidental Petroleum Corp. | 2.2 | 1.1 |
Merck & Co., Inc. | 2.2 | 2.0 |
Royal Dutch Shell PLC Class A sponsored ADR | 2.1 | 2.2 |
UnitedHealth Group, Inc. | 1.7 | 1.0 |
McKesson Corp. | 1.7 | 0.3 |
| 24.9 | |
Top Five Market Sectors as of June 30, 2012 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Financials | 26.4 | 23.1 |
Energy | 15.7 | 14.3 |
Health Care | 11.9 | 12.2 |
Consumer Discretionary | 9.3 | 10.0 |
Industrials | 8.9 | 8.6 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2012 * | As of December 31, 2011 ** |
| Stocks 99.9% | | | Stocks 99.3% | |
| Short-Term Investments
and Net Other
Assets (Liabilities) 0.1% | | | Short-Term Investments
and Net Other
Assets (Liabilities) 0.7% | |
* Foreign investments | 19.4% | | ** Foreign investments | 9.9% | |
Semiannual Report
Investments June 30, 2012 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.9% |
| Shares | | Value |
CONSUMER DISCRETIONARY - 9.3% |
Auto Components - 1.1% |
Johnson Controls, Inc. | 22,300 | | $ 617,933 |
Tenneco, Inc. (a) | 32,700 | | 877,014 |
| | 1,494,947 |
Hotels, Restaurants & Leisure - 0.5% |
Carnival Corp. unit | 19,600 | | 671,692 |
Household Durables - 0.9% |
Lennar Corp. Class A (d) | 39,100 | | 1,208,581 |
Media - 4.2% |
Cablevision Systems Corp. - NY Group Class A | 89,000 | | 1,182,810 |
Comcast Corp. Class A | 44,300 | | 1,416,271 |
The Walt Disney Co. | 40,134 | | 1,946,499 |
Time Warner, Inc. | 36,400 | | 1,401,400 |
| | 5,946,980 |
Multiline Retail - 0.8% |
Target Corp. | 19,500 | | 1,134,705 |
Specialty Retail - 1.8% |
Advance Auto Parts, Inc. | 15,200 | | 1,036,944 |
Lowe's Companies, Inc. | 54,300 | | 1,544,292 |
| | 2,581,236 |
TOTAL CONSUMER DISCRETIONARY | | 13,038,141 |
CONSUMER STAPLES - 7.7% |
Beverages - 0.9% |
Anheuser-Busch InBev SA NV | 15,631 | | 1,232,368 |
Food & Staples Retailing - 0.8% |
CVS Caremark Corp. | 25,400 | | 1,186,942 |
Food Products - 2.6% |
Bunge Ltd. | 16,000 | | 1,003,840 |
Flowers Foods, Inc. | 37,000 | | 859,510 |
The J.M. Smucker Co. | 23,300 | | 1,759,616 |
| | 3,622,966 |
Household Products - 2.3% |
Procter & Gamble Co. | 23,600 | | 1,445,500 |
Reckitt Benckiser Group PLC | 34,300 | | 1,807,643 |
| | 3,253,143 |
Tobacco - 1.1% |
British American Tobacco PLC sponsored ADR | 14,900 | | 1,521,588 |
TOTAL CONSUMER STAPLES | | 10,817,007 |
ENERGY - 15.7% |
Energy Equipment & Services - 1.6% |
Halliburton Co. | 49,100 | | 1,393,949 |
National Oilwell Varco, Inc. | 13,500 | | 869,940 |
| | 2,263,889 |
|
| Shares | | Value |
Oil, Gas & Consumable Fuels - 14.1% |
Anadarko Petroleum Corp. | 16,800 | | $ 1,112,160 |
Apache Corp. | 9,900 | | 870,111 |
Chesapeake Energy Corp. | 37,500 | | 697,500 |
Chevron Corp. | 65,722 | | 6,933,670 |
Energen Corp. | 14,500 | | 654,385 |
Marathon Petroleum Corp. | 27,900 | | 1,253,268 |
Nexen, Inc. | 36,600 | | 619,766 |
Occidental Petroleum Corp. | 35,998 | | 3,087,548 |
Royal Dutch Shell PLC Class A sponsored ADR (d) | 43,647 | | 2,943,117 |
Williams Companies, Inc. | 55,900 | | 1,611,038 |
| | 19,782,563 |
TOTAL ENERGY | | 22,046,452 |
FINANCIALS - 26.4% |
Capital Markets - 3.0% |
Ameriprise Financial, Inc. | 16,400 | | 857,064 |
Goldman Sachs Group, Inc. | 7,708 | | 738,889 |
Morgan Stanley | 77,860 | | 1,135,977 |
State Street Corp. | 33,200 | | 1,482,048 |
| | 4,213,978 |
Commercial Banks - 5.7% |
CIT Group, Inc. (a) | 21,070 | | 750,935 |
Comerica, Inc. | 33,000 | | 1,013,430 |
U.S. Bancorp | 71,534 | | 2,300,533 |
Wells Fargo & Co. | 115,526 | | 3,863,189 |
| | 7,928,087 |
Consumer Finance - 1.2% |
Capital One Financial Corp. | 31,000 | | 1,694,460 |
Diversified Financial Services - 4.1% |
Citigroup, Inc. | 84,447 | | 2,314,692 |
JPMorgan Chase & Co. | 97,619 | | 3,487,927 |
| | 5,802,619 |
Insurance - 8.1% |
AFLAC, Inc. | 35,840 | | 1,526,426 |
Aon PLC | 35,400 | | 1,656,012 |
Berkshire Hathaway, Inc. Class B (a) | 37,600 | | 3,133,208 |
MetLife, Inc. | 23,800 | | 734,230 |
Prudential Financial, Inc. | 23,200 | | 1,123,576 |
The Travelers Companies, Inc. | 26,100 | | 1,666,224 |
Validus Holdings Ltd. | 49,757 | | 1,593,717 |
| | 11,433,393 |
Real Estate Investment Trusts - 3.8% |
American Tower Corp. | 18,400 | | 1,286,344 |
Extra Space Storage, Inc. | 27,200 | | 832,320 |
Prologis, Inc. | 21,387 | | 710,690 |
SL Green Realty Corp. | 7,300 | | 585,752 |
Ventas, Inc. | 18,900 | | 1,192,968 |
Weyerhaeuser Co. | 34,200 | | 764,712 |
| | 5,372,786 |
Common Stocks - continued |
| Shares | | Value |
FINANCIALS - continued |
Real Estate Management & Development - 0.5% |
Forest City Enterprises, Inc. Class A (a) | 48,700 | | $ 711,020 |
TOTAL FINANCIALS | | 37,156,343 |
HEALTH CARE - 11.9% |
Health Care Equipment & Supplies - 1.6% |
Covidien PLC | 20,500 | | 1,096,750 |
Zimmer Holdings, Inc. | 18,057 | | 1,162,149 |
| | 2,258,899 |
Health Care Providers & Services - 3.4% |
McKesson Corp. | 24,839 | | 2,328,656 |
UnitedHealth Group, Inc. | 40,800 | | 2,386,800 |
| | 4,715,456 |
Pharmaceuticals - 6.9% |
GlaxoSmithKline PLC sponsored ADR | 38,000 | | 1,731,660 |
Johnson & Johnson | 27,000 | | 1,824,120 |
Merck & Co., Inc. | 72,170 | | 3,013,098 |
Novartis AG sponsored ADR | 18,700 | | 1,045,330 |
Sanofi SA sponsored ADR | 56,500 | | 2,134,570 |
| | 9,748,778 |
TOTAL HEALTH CARE | | 16,723,133 |
INDUSTRIALS - 8.9% |
Aerospace & Defense - 0.6% |
United Technologies Corp. | 11,768 | | 888,837 |
Building Products - 0.7% |
Owens Corning (a) | 33,375 | | 952,523 |
Electrical Equipment - 0.5% |
Regal-Beloit Corp. | 11,300 | | 703,538 |
Industrial Conglomerates - 2.6% |
General Electric Co. | 172,148 | | 3,587,564 |
Machinery - 4.5% |
Cummins, Inc. | 15,271 | | 1,479,913 |
Illinois Tool Works, Inc. | 22,800 | | 1,205,892 |
Ingersoll-Rand PLC | 31,400 | | 1,324,452 |
Parker Hannifin Corp. | 16,000 | | 1,230,080 |
Stanley Black & Decker, Inc. | 16,600 | | 1,068,376 |
| | 6,308,713 |
TOTAL INDUSTRIALS | | 12,441,175 |
INFORMATION TECHNOLOGY - 8.4% |
Communications Equipment - 2.2% |
Cisco Systems, Inc. | 119,200 | | 2,046,664 |
Motorola Solutions, Inc. | 20,000 | | 962,200 |
| | 3,008,864 |
|
| Shares | | Value |
Electronic Equipment & Components - 1.4% |
Arrow Electronics, Inc. (a) | 27,400 | | $ 898,994 |
TE Connectivity Ltd. | 34,300 | | 1,094,513 |
| | 1,993,507 |
IT Services - 2.6% |
Accenture PLC Class A | 28,800 | | 1,730,592 |
Amdocs Ltd. (a) | 34,500 | | 1,025,340 |
Fiserv, Inc. (a) | 12,800 | | 924,416 |
| | 3,680,348 |
Semiconductors & Semiconductor Equipment - 0.8% |
Analog Devices, Inc. | 28,300 | | 1,066,061 |
Software - 1.4% |
Microsoft Corp. | 33,776 | | 1,033,208 |
Oracle Corp. | 32,500 | | 965,250 |
| | 1,998,458 |
TOTAL INFORMATION TECHNOLOGY | | 11,747,238 |
MATERIALS - 4.2% |
Chemicals - 2.8% |
Air Products & Chemicals, Inc. | 19,200 | | 1,550,016 |
Ashland, Inc. | 15,200 | | 1,053,512 |
LyondellBasell Industries NV Class A | 34,600 | | 1,393,342 |
| | 3,996,870 |
Containers & Packaging - 1.4% |
Ball Corp. | 18,300 | | 751,215 |
Rock-Tenn Co. Class A | 22,400 | | 1,221,920 |
| | 1,973,135 |
TOTAL MATERIALS | | 5,970,005 |
TELECOMMUNICATION SERVICES - 1.3% |
Wireless Telecommunication Services - 1.3% |
America Movil SAB de CV Series L sponsored ADR | 25,900 | | 674,954 |
Vodafone Group PLC sponsored ADR | 39,700 | | 1,118,746 |
| | 1,793,700 |
UTILITIES - 6.1% |
Electric Utilities - 3.5% |
Edison International | 40,907 | | 1,889,903 |
ITC Holdings Corp. | 22,100 | | 1,522,911 |
NextEra Energy, Inc. | 22,100 | | 1,520,701 |
| | 4,933,515 |
Multi-Utilities - 2.6% |
PG&E Corp. | 41,600 | | 1,883,232 |
Sempra Energy | 26,000 | | 1,790,880 |
| | 3,674,112 |
TOTAL UTILITIES | | 8,607,627 |
TOTAL COMMON STOCKS (Cost $135,388,656) |
140,340,821
|
Money Market Funds - 1.4% |
| Shares | | Value |
Fidelity Cash Central Fund, 0.17% (b) | 698,539 | | $ 698,539 |
Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c) | 1,187,930 | | 1,187,930 |
TOTAL MONEY MARKET FUNDS (Cost $1,886,469) |
1,886,469
|
TOTAL INVESTMENT PORTFOLIO - 101.3% (Cost $137,275,125) | | 142,227,290 |
NET OTHER ASSETS (LIABILITIES) - (1.3)% | | (1,758,229) |
NET ASSETS - 100% | $ 140,469,061 |
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. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or 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 | $ 1,985 |
Fidelity Securities Lending Cash Central Fund | 11,806 |
Total | $ 13,791 |
Other Information |
The following is a summary of the inputs used, as of June 30, 2012, involving the Fund's assets and liabilities carried at fair 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: | | | | |
Equities: | | | | |
Consumer Discretionary | $ 13,038,141 | $ 13,038,141 | $ - | $ - |
Consumer Staples | 10,817,007 | 9,584,639 | 1,232,368 | - |
Energy | 22,046,452 | 22,046,452 | - | - |
Financials | 37,156,343 | 37,156,343 | - | - |
Health Care | 16,723,133 | 16,723,133 | - | - |
Industrials | 12,441,175 | 12,441,175 | - | - |
Information Technology | 11,747,238 | 11,747,238 | - | - |
Materials | 5,970,005 | 5,970,005 | - | - |
Telecommunication Services | 1,793,700 | 1,793,700 | - | - |
Utilities | 8,607,627 | 8,607,627 | - | - |
Money Market Funds | 1,886,469 | 1,886,469 | - | - |
Total Investments in Securities: | $ 142,227,290 | $ 140,994,922 | $ 1,232,368 | $ - |
Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited) |
United States of America | 80.6% |
United Kingdom | 7.7% |
Ireland | 2.9% |
Bermuda | 1.8% |
Switzerland | 1.5% |
France | 1.5% |
Netherlands | 1.0% |
Others (Individually Less Than 1%) | 3.0% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Assets and Liabilities
| June 30, 2012 (Unaudited) |
Assets | | |
Investment in securities, at value (including securities loaned of $1,223,550) - See accompanying schedule: Unaffiliated issuers (cost $135,388,656) | $ 140,340,821 | |
Fidelity Central Funds (cost $1,886,469) | 1,886,469 | |
Total Investments (cost $137,275,125) | | $ 142,227,290 |
Receivable for fund shares sold | | 42,084 |
Dividends receivable | | 242,572 |
Distributions receivable from Fidelity Central Funds | | 670 |
Other receivables | | 531 |
Total assets | | 142,513,147 |
| | |
Liabilities | | |
Payable for fund shares redeemed | $ 743,450 | |
Accrued management fee | 64,740 | |
Distribution and service plan fees payable | 844 | |
Other affiliated payables | 19,137 | |
Other payables and accrued expenses | 27,985 | |
Collateral on securities loaned, at value | 1,187,930 | |
Total liabilities | | 2,044,086 |
| | |
Net Assets | | $ 140,469,061 |
Net Assets consist of: | | |
Paid in capital | | $ 143,540,491 |
Undistributed net investment income | | 1,329,109 |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | (9,352,689) |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | | 4,952,150 |
Net Assets | | $ 140,469,061 |
Statement of Assets and Liabilities - continued
| June 30, 2012 (Unaudited) |
Initial Class:
Net Asset Value, offering price and redemption price per share ($78,174,650 ÷ 6,764,764 shares) | | $ 11.56 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($209,615 ÷ 18,151 shares) | | $ 11.55 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($3,678,162 ÷ 321,197 shares) | | $ 11.45 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($58,406,634 ÷ 5,059,446 shares) | | $ 11.54 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Operations
Six months ended June 30, 2012 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 1,927,923 |
Income from Fidelity Central Funds | | 13,791 |
Total income | | 1,941,714 |
| | |
Expenses | | |
Management fee | $ 419,742 | |
Transfer agent fees | 87,397 | |
Distribution and service plan fees | 5,021 | |
Accounting and security lending fees | 29,452 | |
Custodian fees and expenses | 4,853 | |
Independent trustees' compensation | 485 | |
Audit | 25,092 | |
Legal | 331 | |
Miscellaneous | 708 | |
Total expenses | | 573,081 |
Net investment income (loss) | | 1,368,633 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on: | | |
Investment securities: | | |
Unaffiliated issuers | 13,920,720 | |
Foreign currency transactions | (1,288) | |
Futures contracts | (33,520) | |
Total net realized gain (loss) | | 13,885,912 |
Change in net unrealized appreciation (depreciation) on: Investment securities | (2,590,782) | |
Assets and liabilities in foreign currencies | 115 | |
Total change in net unrealized appreciation (depreciation) | | (2,590,667) |
Net gain (loss) | | 11,295,245 |
Net increase (decrease) in net assets resulting from operations | | $ 12,663,878 |
Statement of Changes in Net Assets
| Six months ended June 30, 2012
(Unaudited) | Year ended
December 31,
2011 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 1,368,633 | $ 1,649,411 |
Net realized gain (loss) | 13,885,912 | 4,621,100 |
Change in net unrealized appreciation (depreciation) | (2,590,667) | (9,787,553) |
Net increase (decrease) in net assets resulting from operations | 12,663,878 | (3,517,042) |
Distributions to shareholders from net investment income | - | (1,578,080) |
Share transactions - net increase (decrease) | (16,595,624) | (1,789,127) |
Total increase (decrease) in net assets | (3,931,746) | (6,884,249) |
| | |
Net Assets | | |
Beginning of period | 144,400,807 | 151,285,056 |
End of period (including undistributed net investment income of $1,329,109 and distributions in excess of net investment income of $39,524, respectively) | $ 140,469,061 | $ 144,400,807 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights - Initial Class
| Six months ended June 30, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 10.60 | $ 11.00 | $ 9.47 | $ 6.69 | $ 13.10 | $ 14.28 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .11 | .12 | .13 H | .07 | .13 | .10 |
Net realized and unrealized gain (loss) | .85 | (.40) | 1.56 | 2.78 | (6.07) | .22 |
Total from investment operations | .96 | (.28) | 1.69 | 2.85 | (5.94) | .32 |
Distributions from net investment income | - | (.12) | (.15) | (.07) | (.10) | (.09) |
Distributions from net realized gain | - | - | (.01) | - | (.37) | (1.41) |
Total distributions | - | (.12) | (.16) | (.07) | (.47) | (1.50) J |
Net asset value, end of period | $ 11.56 | $ 10.60 | $ 11.00 | $ 9.47 | $ 6.69 | $ 13.10 |
Total Return B,C,D | 9.06% | (2.51)% | 17.82% | 42.66% | (46.50)% | 2.02% |
Ratios to Average Net Assets F,I | | | | | | |
Expenses before reductions | .72% A | .73% | .76% | .80% | .79% | .77% |
Expenses net of fee waivers, if any | .72% A | .72% | .75% | .80% | .79% | .77% |
Expenses net of all reductions | .72% A | .72% | .74% | .80% | .79% | .77% |
Net investment income (loss) | 1.86% A | 1.14% | 1.33% H | .95% | 1.25% | .68% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 78,175 | $ 82,980 | $ 78,133 | $ 64,198 | $ 41,306 | $ 52,544 |
Portfolio turnover rate G | 148% A | 79% | 160% | 73% | 53% | 52% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 large, non-recurring dividend which amounted to $.06 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .69%.
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 reductions from 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 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 10.60 | $ 10.99 | $ 9.46 | $ 6.69 | $ 13.06 | $ 14.24 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .10 | .12 | .12 H | .06 | .13 | .09 |
Net realized and unrealized gain (loss) | .85 | (.40) | 1.56 | 2.77 | (6.05) | .21 |
Total from investment operations | .95 | (.28) | 1.68 | 2.83 | (5.92) | .30 |
Distributions from net investment income | - | (.11) | (.14) | (.06) | (.08) | (.08) |
Distributions from net realized gain | - | - | (.01) | - | (.37) | (1.41) |
Total distributions | - | (.11) | (.15) | (.06) | (.45) | (1.48) J |
Net asset value, end of period | $ 11.55 | $ 10.60 | $ 10.99 | $ 9.46 | $ 6.69 | $ 13.06 |
Total Return B,C,D | 8.96% | (2.55)% | 17.73% | 42.35% | (46.49)% | 1.92% |
Ratios to Average Net Assets F,I | | | | | | |
Expenses before reductions | .81% A | .81% | .84% | .91% | .88% | .86% |
Expenses net of fee waivers, if any | .81% A | .81% | .83% | .91% | .88% | .86% |
Expenses net of all reductions | .81% A | .81% | .83% | .90% | .88% | .86% |
Net investment income (loss) | 1.77% A | 1.05% | 1.24% H | .84% | 1.17% | .60% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 210 | $ 194 | $ 258 | $ 251 | $ 293 | $ 958 |
Portfolio turnover rate G | 148% A | 79% | 160% | 73% | 53% | 52% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 large, non-recurring dividend which amounted to $.06 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .61%.
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 reductions from 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 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 10.52 | $ 10.90 | $ 9.38 | $ 6.63 | $ 12.97 | $ 14.14 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .09 | .10 | .11 H | .05 | .11 | .06 |
Net realized and unrealized gain (loss) | .84 | (.39) | 1.53 | 2.75 | (6.01) | .23 |
Total from investment operations | .93 | (.29) | 1.64 | 2.80 | (5.90) | .29 |
Distributions from net investment income | - | (.09) | (.11) | (.05) | (.07) | (.06) |
Distributions from net realized gain | - | - | (.01) | - | (.37) | (1.41) |
Total distributions | - | (.09) | (.12) | (.05) | (.44) | (1.46) J |
Net asset value, end of period | $ 11.45 | $ 10.52 | $ 10.90 | $ 9.38 | $ 6.63 | $ 12.97 |
Total Return B,C,D | 8.84% | (2.68)% | 17.52% | 42.32% | (46.68)% | 1.86% |
Ratios to Average Net Assets F,I | | | | | | |
Expenses before reductions | .98% A | .98% | 1.00% | 1.05% | 1.04% | 1.02% |
Expenses net of fee waivers, if any | .98% A | .97% | 1.00% | 1.05% | 1.04% | 1.02% |
Expenses net of all reductions | .98% A | .97% | .99% | 1.05% | 1.04% | 1.02% |
Net investment income (loss) | 1.60% A | .89% | 1.08% H | .70% | 1.01% | .43% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 3,678 | $ 3,202 | $ 8,652 | $ 8,277 | $ 4,941 | $ 11,081 |
Portfolio turnover rate G | 148% A | 79% | 160% | 73% | 53% | 52% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 large, non-recurring dividend which amounted to $.06 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .45%.
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 reductions from 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 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, 2012 | Years ended December 31, |
| (Unaudited) | 2011 | 2010 | 2009 | 2008 | 2007 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 10.59 | $ 10.99 | $ 9.46 | $ 6.69 | $ 13.09 | $ 14.26 |
Income from Investment Operations | | | | | | |
Net investment income (loss) E | .10 | .12 | .12 H | .07 | .12 | .08 |
Net realized and unrealized gain (loss) | .85 | (.41) | 1.56 | 2.77 | (6.06) | .23 |
Total from investment operations | .95 | (.29) | 1.68 | 2.84 | (5.94) | .31 |
Distributions from net investment income | - | (.11) | (.14) | (.07) | (.09) | (.08) |
Distributions from net realized gain | - | - | (.01) | - | (.37) | (1.41) |
Total distributions | - | (.11) | (.15) | (.07) | (.46) | (1.48) J |
Net asset value, end of period | $ 11.54 | $ 10.59 | $ 10.99 | $ 9.46 | $ 6.69 | $ 13.09 |
Total Return B,C,D | 8.97% | (2.59)% | 17.74% | 42.41% | (46.53)% | 1.99% |
Ratios to Average Net Assets F,I | | | | | | |
Expenses before reductions | .80% A | .80% | .83% | .89% | .87% | .88% |
Expenses net of fee waivers, if any | .80% A | .80% | .83% | .89% | .87% | .88% |
Expenses net of all reductions | .80% A | .80% | .82% | .88% | .87% | .88% |
Net investment income (loss) | 1.78% A | 1.06% | 1.25% H | .86% | 1.17% | .58% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 58,407 | $ 58,025 | $ 64,242 | $ 56,380 | $ 36,199 | $ 61,052 |
Portfolio turnover rate G | 148% A | 79% | 160% | 73% | 53% | 52% |
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 if certain expenses had not been reduced during the applicable periods shown.
E Calculated based on average shares outstanding during the period.
F Fees and expenses of any 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 large, non-recurring dividend which amounted to $.06 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .61%.
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 reductions from 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 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, 2012 (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 may also differ by class.
2. Investments in Fidelity Central Funds.
The Fund invests 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 held as of period end, if any, 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 Securities and Exchange Commission (the SEC) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC 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 (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. 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. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
Level 1 - quoted prices in active markets for identical investments
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
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 a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. 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 or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when significant market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities are used and are categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
3. Significant Accounting Policies - continued
Foreign Currency Translation. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and 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 rates 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 p.m. 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. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. 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 under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. 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 declared and 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 GAAP.
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, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $ 11,782,467 |
Gross unrealized depreciation | (7,531,135) |
Net unrealized appreciation (depreciation) on securities and other investments | $ 4,251,332 |
| |
Tax cost | $ 137,975,958 |
Semiannual Report
3. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. At December 31, 2011, capital loss carryforwards were as follows:
Fiscal year of expiration | |
2016 | $ (4,706,288) |
2017 | (15,545,941) |
2018 | (2,066,509) |
Total with expiration | $ (22,318,738) |
New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund's investment objectives allow the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified instrument based on specified terms, or to exchange future cash flows at periodic intervals based on a notional principal amount. The Fund used derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, involves risk of loss in excess of the initial investment, if any, collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, for futures contracts, there is the risk that the change in value of the derivative contract may not correspond to the change in value of the underlying instrument.
Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market fluctuations.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
Any open futures contracts at period end are shown in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value reflects each contract's exposure to the underlying instrument at period end.
During the period the Fund recognized net realized gain (loss) of $(33,520) related to its investment in futures contracts. This amount is included in the Statement of Operations.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $109,033,350 and $123,373,766, 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 an annualized 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 Fees. 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, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:
Service Class | $ 104 |
Service Class 2 | 4,917 |
| $ 5,021 |
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. In addition, FIIOC receives an asset-based fee of .0038% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:
Initial Class | $ 36,042 |
Service Class | 78 |
Service Class 2 | 1,790 |
Investor Class | 49,487 |
| $ 87,397 |
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 each 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 $2,050 for the period.
7. Committed Line of Credit.
The Fund participates with other funds managed by FMR or an affiliate in a $4.25 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 $223 and is reflected in Miscellaneous expenses 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 through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. 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
Semiannual Report
8. Security Lending - continued
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 rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $11,806. During the period, there were no securities loaned to FCM.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2012 | Year ended
December 31,
2011 |
From net investment income | | |
Initial Class | $ - | $ 919,631 |
Service Class | - | 1,921 |
Service Class 2 | - | 50,543 |
Investor Class | - | 605,985 |
Total | $ - | $ 1,578,080 |
10. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended June 30,
2012 | Year ended
December 31,
2011 | Six months ended June 30,
2012 | Year ended
December 31,
2011 |
Initial Class | | | | |
Shares sold | 761,577 | 2,216,092 | $ 8,722,244 | $ 24,201,146 |
Reinvestment of distributions | - | 89,895 | - | 919,631 |
Shares redeemed | (1,826,461) | (1,580,332) | (20,742,042) | (17,459,004) |
Net increase (decrease) | (1,064,884) | 725,655 | $ (12,019,798) | $ 7,661,773 |
Service Class | | | | |
Shares sold | 13 | 3,437 | $ 160 | $ 37,751 |
Reinvestment of distributions | - | 188 | - | 1,921 |
Shares redeemed | (163) | (8,825) | (1,835) | (93,547) |
Net increase (decrease) | (150) | (5,200) | $ (1,675) | $ (53,875) |
Service Class 2 | | | | |
Shares sold | 100,962 | 257,288 | $ 1,135,921 | $ 2,756,545 |
Reinvestment of distributions | - | 4,980 | - | 50,543 |
Shares redeemed | (84,245) | (751,266) | (957,098) | (8,113,278) |
Net increase (decrease) | 16,717 | (488,998) | $ 178,823 | $ (5,306,190) |
Investor Class | | | | |
Shares sold | 487,716 | 1,105,876 | $ 5,524,035 | $ 12,075,704 |
Reinvestment of distributions | - | 59,236 | - | 605,985 |
Shares redeemed | (906,867) | (1,531,761) | (10,277,009) | (16,772,524) |
Net increase (decrease) | (419,151) | (366,649) | $ (4,752,974) | $ (4,090,835) |
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, VIP Freedom 2020 was the owner of record of approximately 24% of the total outstanding shares of the Fund. The VIP Freedom Funds were the owners of record, in the aggregate, of approximately 63% of the total outstanding shares of the Fund. In addition, FMR or its affiliates were the owners of record of 33% of the total outstanding shares of the Fund.
Semiannual Report
Investment Adviser
Fidelity Management & Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Fidelity Management & Research (U.K.) Inc.
Fidelity Management & Research (Hong Kong) Limited
Fidelity Management & Research (Japan) Inc.
General Distributor
Fidelity Distributors Corporation
Smithfield, RI
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-0812
1.761034.111
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 Variable Insurance Products Fund's (the "Trust") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the Trust 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 the Trust'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, the Trust'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 17, 2012 |
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 17, 2012 |
By: | /s/Christine Reynolds |
| Christine Reynolds |
| Chief Financial Officer |
| |
Date: | August 17, 2012 |
