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 811-3759
Variable Insurance Products Fund IV
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Eric D. Roiter, 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, 2006 |
Item 1. Reports to Stockholders
Fidelity® Variable Insurance Products:
Freedom Funds -
Income, 2005, 2010, 2015, 2020, 2025, 2030
Semiannual Report
June 30, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.advisor.fidelity.com.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Annual Report
Notes to Shareholders:
- In order to better accommodate investors' increasing life expectancies and high inflation pressures due to rising health care and other costs, the "roll-down" into the VIP Freedom Income Fund - previously expected to occur between five and 10 years after an investor's target retirement date - - has been extended to approximately 10 to 15 years after the target retirement date. This change will have the effect of increasing the equity exposure of the VIP Freedom Funds with target dates closest to retirement - currently VIP Freedom 2005 and 2010 - by up to five percentage points, allowing for the possibility of greater investment growth.
- Additionally, to help increase portfolio diversification and capitalize on investment opportunities presented by an increasingly global economy, the allocation to international equity funds will be increased by up to five percentage points. The allocation to domestic equity funds will be reduced by a corresponding amount.
- Lastly, the benchmark for the VIP Freedom Funds' underlying high-yield bond funds will change to the Merrill Lynch U.S. High Yield Master II Constrained Index, effective July 1, 2006, concurrent with the scheduled rebalancing of the Funds' composite indexes. In Fidelity's view, the Constrained index - which replaces the Merrill Lynch U.S. High Yield Master II Index - represents a better measure of the high-yield market, as it limits issuer allocations to no more than 2% of the index and thus is more diversified than the previous benchmark and less likely to be disrupted by rapid market changes.
If you have any questions, please call Fidelity or the insurance company that issued your policy.
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including 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 Funds 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, 2006 to June 30, 2006).
Actual Expenses
The first line of the accompanying table for each class of each 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, each fund, as a shareholder in underlying Fidelity funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity funds. These fees and expenses are not included in each fund's annualized expense ratio used to calculate the expense estimates in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of each 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, each fund, as a shareholder in underlying Fidelity funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity funds. These fees and expenses are not included in each fund's annualized expense ratio used to calculate the expense estimates in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning
Account Value
January 1, 2006 | Ending
Account Value
June 30, 2006 | Expenses Paid
During Period*
January 1, 2006
to June 30, 2006 |
VIP Freedom Income | | | |
Initial Class | | | |
Actual | $ 1,000.00 | $ 1,015.00 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
Service Class | | | |
Actual | $ 1,000.00 | $ 1,015.00 | $ .50 |
HypotheticalA | $ 1,000.00 | $ 1,024.30 | $ .50 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 1,014.00 | $ 1.25 |
HypotheticalA | $ 1,000.00 | $ 1,023.55 | $ 1.25 |
VIP Freedom 2005 | | | |
Initial Class | | | |
Actual | $ 1,000.00 | $ 1,016.90 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
Service Class | | | |
Actual | $ 1,000.00 | $ 1,016.00 | $ .50 |
HypotheticalA | $ 1,000.00 | $ 1,024.30 | $ .50 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 1,016.00 | $ 1.25 |
HypotheticalA | $ 1,000.00 | $ 1,023.55 | $ 1.25 |
VIP Freedom 2010 | | | |
Initial Class | | | |
Actual | $ 1,000.00 | $ 1,017.60 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
Service Class | | | |
Actual | $ 1,000.00 | $ 1,017.60 | $ .50 |
HypotheticalA | $ 1,000.00 | $ 1,024.30 | $ .50 |
| Beginning
Account Value
January 1, 2006 | Ending
Account Value
June 30, 2006 | Expenses Paid
During Period*
January 1, 2006
to June 30, 2006 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 1,016.70 | $ 1.25 |
HypotheticalA | $ 1,000.00 | $ 1,023.55 | $ 1.25 |
VIP Freedom 2015 | | | |
Initial Class | | | |
Actual | $ 1,000.00 | $ 1,023.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
Service Class | | | |
Actual | $ 1,000.00 | $ 1,023.70 | $ .50 |
HypotheticalA | $ 1,000.00 | $ 1,024.30 | $ .50 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 1,022.90 | $ 1.25 |
HypotheticalA | $ 1,000.00 | $ 1,023.55 | $ 1.25 |
VIP Freedom 2020 | | | |
Initial Class | | | |
Actual | $ 1,000.00 | $ 1,026.20 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
Service Class | | | |
Actual | $ 1,000.00 | $ 1,025.30 | $ .50 |
HypotheticalA | $ 1,000.00 | $ 1,024.30 | $ .50 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 1,024.40 | $ 1.25 |
HypotheticalA | $ 1,000.00 | $ 1,023.55 | $ 1.25 |
VIP Freedom 2025 | | | |
Initial Class | | | |
Actual | $ 1,000.00 | $ 1,028.70 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
Service Class | | | |
Actual | $ 1,000.00 | $ 1,028.70 | $ .50 |
HypotheticalA | $ 1,000.00 | $ 1,024.30 | $ .50 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 1,027.80 | $ 1.26 |
HypotheticalA | $ 1,000.00 | $ 1,023.55 | $ 1.25 |
VIP Freedom 2030 | | | |
Initial Class | | | |
Actual | $ 1,000.00 | $ 1,030.20 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
Service Class | | | |
Actual | $ 1,000.00 | $ 1,030.20 | $ .50 |
HypotheticalA | $ 1,000.00 | $ 1,024.30 | $ .50 |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 1,029.30 | $ 1.26 |
HypotheticalA | $ 1,000.00 | $ 1,023.55 | $ 1.25 |
A 5% return per year before expenses
* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of the underlying Fidelity funds in which the fund invests are not included in each class' annualized expense ratio.
| Annualized
Expense Ratio |
VIP Freedom Income | |
Initial Class | .00% |
Service Class | .10% |
Service Class 2 | .25% |
VIP Freedom 2005 | |
Initial Class | .00% |
Service Class | .10% |
Service Class 2 | .25% |
| Annualized
Expense Ratio |
VIP Freedom 2010 | |
Initial Class | .00% |
Service Class | .10% |
Service Class 2 | .25% |
VIP Freedom 2015 | |
Initial Class | .00% |
Service Class | .10% |
Service Class 2 | .25% |
VIP Freedom 2020 | |
Initial Class | .00% |
Service Class | .10% |
Service Class 2 | .25% |
VIP Freedom 2025 | |
Initial Class | .00% |
Service Class | .10% |
Service Class 2 | .25% |
VIP Freedom 2030 | |
Initial Class | .00% |
Service Class | .10% |
Service Class 2 | .25% |
Semiannual Report
VIP Freedom Income Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's
investments | % of fund's investments
6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Initial Class | 3.0 | 3.4 |
VIP Equity-Income Portfolio Initial Class | 3.6 | 3.8 |
VIP Growth & Income Portfolio Initial Class | 3.5 | 3.8 |
VIP Growth Portfolio Initial Class | 3.5 | 3.8 |
VIP Mid Cap Portfolio Initial Class | 1.2 | 1.4 |
VIP Value Portfolio Initial Class | 3.0 | 3.2 |
VIP Value Strategies Portfolio Initial Class | 1.3 | 1.4 |
| 19.1 | 20.8 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Initial Class | 5.0 | 5.0 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Initial Class | 35.3 | 34.5 |
Short-Term Funds | | |
VIP Money Market Portfolio Initial Class | 40.6 | 39.7 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
 | Domestic Equity Funds | 19.1% | |
 | Investment Grade Fixed-Income Funds | 35.3% | |
 | High Yield Fixed-Income Funds | 5.0% | |
 | Short-Term Funds | 40.6% | |
Six months ago |
| Domestic Equity Funds | 20.8% | |
| Investment Grade Fixed-Income Funds | 34.5% | |
| High Yield Fixed-Income Funds | 5.0% | |
| Short-Term Funds | 39.7% | |
The six months ago allocation is based on the fund's holdings as of December 31, 2005. The current allocation is based on the fund's holdings as of June 30, 2006. |
Semiannual Report
VIP Freedom Income Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 19.1% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 19.1% |
VIP Contrafund Portfolio Initial Class | 8,313 | | $ 264,522 |
VIP Equity-Income Portfolio Initial Class | 12,408 | | 309,584 |
VIP Growth & Income Portfolio Initial Class | 21,227 | | 307,360 |
VIP Growth Portfolio Initial Class | 9,084 | | 304,945 |
VIP Mid Cap Portfolio Initial Class | 3,247 | | 106,973 |
VIP Value Portfolio Initial Class | 20,348 | | 264,120 |
VIP Value Strategies Portfolio Initial Class | 9,077 | | 109,111 |
TOTAL EQUITY FUNDS (Cost $1,590,892) | 1,666,615 |
Fixed-Income Funds - 40.3% |
| | | |
High Yield Fixed-Income Funds - 5.0% |
VIP High Income Portfolio Initial Class | 68,745 | | 436,528 |
Investment Grade Fixed-Income Funds - 35.3% |
VIP Investment Grade Bond Portfolio Initial Class | 252,844 | | 3,072,056 |
TOTAL FIXED-INCOME FUNDS (Cost $3,601,595) | 3,508,584 |
Short-Term Funds - 40.6% |
| | | |
VIP Money Market Portfolio Initial Class
(Cost $3,535,927) | 3,535,928 | | 3,535,927 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $8,728,414) | $ 8,711,126 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $1,115 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom Income Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (cost $8,728,414) - See accompanying schedule | | $ 8,711,126 |
Cash | | 9 |
Receivable for investments sold | | 16 |
Receivable for fund shares sold | | 6,383 |
Total assets | | 8,717,534 |
| | |
Liabilities | | |
Payable for investments purchased | $ 6,385 | |
Payable for fund shares redeemed | 26 | |
Distribution fees payable | 141 | |
Total liabilities | | 6,552 |
| | |
Net Assets | | $ 8,710,982 |
Net Assets consist of: | | |
Paid in capital | | $ 8,513,933 |
Undistributed net investment income | | 170,230 |
Accumulated undistributed net realized gain (loss) on investments | | 44,107 |
Net unrealized appreciation (depreciation) on investments | | (17,288) |
Net Assets | | $ 8,710,982 |
Calculation of Maximum Offering Price Initial Class:
Net Asset Value, offering price and redemption price per share ($7,805,268 ÷ 742,424 shares) | | $ 10.51 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($371,280 ÷ 35,325 shares) | | $ 10.51 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($534,434 ÷ 50,893 shares) | | $ 10.50 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 173,276 |
| | |
Expenses | | |
Distribution fees | $ 709 | |
Independent trustees' compensation | 14 | |
Total expenses before reductions | 723 | |
Expense reductions | (14) | 709 |
Net investment income (loss) | | 172,567 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of
underlying fund shares | (11,928) | |
Capital gain distributions from
underlying funds | 57,405 | 45,477 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (106,747) |
Net gain (loss) | | (61,270) |
Net increase (decrease) in net assets resulting from operations | | $ 111,297 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom Income Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
April 26, 2005
(commencement of
operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 172,567 | $ 62,848 |
Net realized gain (loss) | 45,477 | (1,370) |
Change in net unrealized appreciation (depreciation) | (106,747) | 89,459 |
Net increase (decrease) in net assets resulting from operations | 111,297 | 150,937 |
Distributions to shareholders from net investment income | (3,344) | (61,841) |
Share transactions - net increase (decrease) | 1,917,900 | 6,596,033 |
Total increase (decrease) in net assets | 2,025,853 | 6,685,129 |
| | |
Net Assets | | |
Beginning of period | 6,685,129 | - |
End of period (including undistributed net investment income of $170,230 and undistributed net investment income of $1,007, respectively) | $ 8,710,982 | $ 6,685,129 |
Financial Highlights - Initial Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.36 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .23 | .16 |
Net realized and unrealized gain (loss) | (.07) | .30 |
Total from investment operations | .16 | .46 |
Distributions from net investment income | (.01) | (.10) |
Net asset value, end of period | $ 10.51 | $ 10.36 |
Total Return B, C, D | 1.50% | 4.58% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 4.47% A | 2.34% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 7,805 | $ 5,954 |
Portfolio turnover rate | 53% A | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Freedom Funds Portfolio
Financial Highlights - Service Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.36 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .23 | .16 |
Net realized and unrealized gain (loss) | (.07) | .29 |
Total from investment operations | .16 | .45 |
Distributions from net investment income | (.01) | (.09) |
Net asset value, end of period | $ 10.51 | $ 10.36 |
Total Return B, C, D | 1.50% | 4.51% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .10% A | .10% A |
Expenses net of fee waivers, if any | .10% A | .10% A |
Expenses net of all reductions | .10% A | .10% A |
Net investment income (loss) | 4.37% A | 2.24% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 371 | $ 366 |
Portfolio turnover rate | 53% A | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
Financial Highlights - Service Class 2
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.36 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .22 | .15 |
Net realized and unrealized gain (loss) | (.07) | .29 |
Total from investment operations | .15 | .44 |
Distributions from net investment income | (.01) | (.08) |
Net asset value, end of period | $ 10.50 | $ 10.36 |
Total Return B, C, D | 1.40% | 4.41% |
Ratios to Average Net Assets F,H | | |
Expenses before reductions | .25% A | .25% A |
Expenses net of fee waivers, if any | .25% A | .25% A |
Expenses net of all reductions | .25% A | .25% A |
Net investment income (loss) | 4.22% A | 2.09% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 534 | $ 365 |
Portfolio turnover rate | 53% A | 12% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2005 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's
investments | % of fund's investments
6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Initial Class | 6.1 | 6.7 |
VIP Equity-Income Portfolio Initial Class | 7.2 | 7.5 |
VIP Growth & Income Portfolio Initial Class | 7.1 | 7.7 |
VIP Growth Portfolio Initial Class | 7.1 | 7.5 |
VIP Mid Cap Portfolio Initial Class | 2.5 | 2.8 |
VIP Value Portfolio Initial Class | 6.1 | 6.4 |
VIP Value Strategies Portfolio Initial Class | 2.5 | 2.7 |
| 38.6 | 41.3 |
International Equity Funds | | |
VIP Overseas Portfolio Initial Class | 7.5 | 5.6 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Initial Class | 5.1 | 4.9 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Initial Class | 36.5 | 38.6 |
Short-Term Funds | | |
VIP Money Market Portfolio Initial Class | 12.3 | 9.6 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 38.6% | |
| International Equity Funds | 7.5% | |
 | Investment Grade Fixed-Income Funds | 36.5% | |
 | High Yield Fixed-Income Funds | 5.1% | |
| Short-Term Funds | 12.3% | |
Six months ago |
| Domestic Equity Funds | 41.3% | |
| International Equity Funds | 5.6% | |
| Investment Grade Fixed-Income Funds | 38.6% | |
| High Yield Fixed-Income Funds | 4.9% | |
| Short-Term Funds | 9.6% | |
Expected |
| Domestic Equity Funds | 39.5% | |
| International Equity Funds | 9.6% | |
| Investment Grade Fixed-Income Funds | 34.6% | |
| High Yield Fixed-Income Funds | 5.0% | |
| Short-Term Funds | 11.3% | |
The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. In March 2006, the target date for combining the fund with the VIP Freedom Income Fund was extended by approximately five years resulting in a greater allocation to equity funds. Also, beginning in March 2006, the fund increased its allocation to international equity. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005, reflecting the prior allocation. |
Semiannual Report
VIP Freedom 2005 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 46.1% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 38.6% |
VIP Contrafund Portfolio Initial Class | 14,898 | | $ 474,064 |
VIP Equity-Income Portfolio Initial Class | 22,303 | | 556,470 |
VIP Growth & Income Portfolio Initial Class | 38,120 | | 551,975 |
VIP Growth Portfolio Initial Class | 16,305 | | 547,366 |
VIP Mid Cap Portfolio Initial Class | 5,813 | | 191,546 |
VIP Value Portfolio Initial Class | 36,529 | | 474,149 |
VIP Value Strategies Portfolio Initial Class | 16,301 | | 195,944 |
TOTAL DOMESTIC EQUITY FUNDS | | 2,991,514 |
International Equity Funds - 7.5% |
VIP Overseas Portfolio Initial Class | 27,186 | | 581,773 |
TOTAL EQUITY FUNDS (Cost $3,383,802) | 3,573,287 |
Fixed-Income Funds - 41.6% |
| | | |
High Yield Fixed-Income Funds - 5.1% |
VIP High Income Portfolio Initial Class | 62,437 | | 396,472 |
Investment Grade Fixed-Income Funds - 36.5% |
VIP Investment Grade Bond Portfolio Initial Class | 232,756 | | 2,827,980 |
TOTAL FIXED-INCOME FUNDS (Cost $3,310,085) | 3,224,452 |
Short-Term Funds - 12.3% |
| | | |
VIP Money Market Portfolio Initial Class
(Cost $957,335) | 957,335 | | 957,335 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $7,651,222) | $ 7,755,074 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $1,861 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2005 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (cost $7,651,222) - See accompanying schedule | | $ 7,755,074 |
Receivable for investments sold | | 140 |
Receivable for fund shares sold | | 988 |
Total assets | | 7,756,202 |
| | |
Liabilities | | |
Payable for investments purchased | $ 857 | |
Payable for fund shares redeemed | 271 | |
Distribution fees payable | 111 | |
Total liabilities | | 1,239 |
| | |
Net Assets | | $ 7,754,963 |
Net Assets consist of: | | |
Paid in capital | | $ 7,454,238 |
Undistributed net investment income | | 148,211 |
Accumulated undistributed net realized gain (loss) on investments | | 48,662 |
Net unrealized appreciation (depreciation) on investments | | 103,852 |
Net Assets | | $ 7,754,963 |
Calculation of Maximum Offering Price Initial Class:
Net Asset Value, offering price and redemption price per share ($6,987,839 ÷ 639,839 shares) | | $ 10.92 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($383,903 ÷ 35,173 shares) | | $ 10.91 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($383,221 ÷ 35,137 shares) | | $ 10.91 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 150,122 |
| | |
Expenses | | |
Distribution fees | $ 671 | |
Independent trustees' compensation | 14 | |
Total expenses before reductions | 685 | |
Expense reductions | (14) | 671 |
Net investment income (loss) | | 149,451 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (62,417) | |
Capital gain distributions from underlying funds | 112,940 | 50,523 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (108,648) |
Net gain (loss) | | (58,125) |
Net increase (decrease) in net assets resulting from operations | | $ 91,326 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
April 26, 2005
(commencement of
operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 149,451 | $ 31,641 |
Net realized gain (loss) | 50,523 | (1,861) |
Change in net unrealized appreciation (depreciation) | (108,648) | 212,500 |
Net increase (decrease) in net assets resulting from operations | 91,326 | 242,280 |
Distributions to shareholders from net investment income | (1,318) | (31,563) |
Share transactions - net increase (decrease) | 1,626,116 | 5,828,122 |
Total increase (decrease) in net assets | 1,716,124 | 6,038,839 |
| | |
Net Assets | | |
Beginning of period | 6,038,839 | - |
End of period (including undistributed net investment income of $148,211 and undistributed net investment income of $78, respectively) | $ 7,754,963 | $ 6,038,839 |
Financial Highlights - Initial Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.74 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .21 | .09 |
Net realized and unrealized gain (loss) | (.03) | .71 |
Total from investment operations | .18 | .80 |
Distributions from net investment income | - I | (.06) |
Net asset value, end of period | $ 10.92 | $ 10.74 |
Total Return B, C, D | 1.69% | 7.98% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 3.93% A | 1.24% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 6,988 | $ 5,284 |
Portfolio turnover rate | 70% A | 43% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
VIP Freedom Funds Portfolio
Financial Highlights - Service Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.74 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .21 | .08 |
Net realized and unrealized gain (loss) | (.04) | .71 |
Total from investment operations | .17 | .79 |
Distributions from net investment income | - I | (.05) |
Net asset value, end of period | $ 10.91 | $ 10.74 |
Total Return B, C, D | 1.60% | 7.91% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .10% A | .10% A |
Expenses net of fee waivers, if any | .10% A | .10% A |
Expenses net of all reductions | .10% A | .10% A |
Net investment income (loss) | 3.83% A | 1.14% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 384 | $ 378 |
Portfolio turnover rate | 70% A | 43% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
I Amount represents less than $.01 per share.
Financial Highlights - Service Class 2
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.74 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .20 | .07 |
Net realized and unrealized gain (loss) | (.03) | .71 |
Total from investment operations | .17 | .78 |
Distributions from net investment income | - I | (.04) |
Net asset value, end of period | $ 10.91 | $ 10.74 |
Total Return B, C, D | 1.60% | 7.80% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .25% A | .25% A |
Expenses net of fee waivers, if any | .25% A | .25% A |
Expenses net of all reductions | .25% A | .25% A |
Net investment income (loss) | 3.68% A | 1.00% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 383 | $ 377 |
Portfolio turnover rate | 70% A | 43% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2010 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's
investments | % of fund's investments
6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Initial Class | 6.4 | 6.9 |
VIP Equity-Income Portfolio Initial Class | 7.4 | 7.8 |
VIP Growth & Income Portfolio Initial Class | 7.4 | 7.9 |
VIP Growth Portfolio Initial Class | 7.3 | 7.8 |
VIP Mid Cap Portfolio Initial Class | 2.6 | 2.9 |
VIP Value Portfolio Initial Class | 6.3 | 6.6 |
VIP Value Strategies Portfolio Initial Class | 2.6 | 2.8 |
| 40.0 | 42.7 |
International Equity Funds | | |
VIP Overseas Portfolio Initial Class | 7.2 | 5.9 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Initial Class | 5.2 | 5.2 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Initial Class | 37.9 | 37.7 |
Short-Term Funds | | |
VIP Money Market Portfolio Initial Class | 9.7 | 8.5 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 40.0% | |
| International Equity Funds | 7.2% | |
| Investment Grade Fixed-Income Funds | 37.9% | |
| High Yield Fixed-Income Funds | 5.2% | |
| Short-Term Funds | 9.7% | |
Six months ago |
| Domestic Equity Funds | 42.7% | |
| International Equity Funds | 5.9% | |
| Investment Grade Fixed-Income Funds | 37.7% | |
| High Yield Fixed-Income Funds | 5.2% | |
| Short-Term Funds | 8.5% | |
Expected |
| Domestic Equity Funds | 40.3% | |
| International Equity Funds | 10.1% | |
| Investment Grade Fixed-Income Funds | 34.8% | |
| High Yield Fixed-Income Funds | 5.0% | |
| Short-Term Funds | 9.8% | |
The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. In March 2006, the target date for combining the fund with the VIP Freedom Income Fund was extended by approximately five years resulting in a greater allocation to equity funds. Also, beginning in March 2006, the fund increased its allocation to international equity. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005, reflecting the prior allocation. |
Semiannual Report
VIP Freedom 2010 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 47.2% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 40.0% |
VIP Contrafund Portfolio Initial Class | 86,616 | | $ 2,756,108 |
VIP Equity-Income Portfolio Initial Class | 129,014 | | 3,218,907 |
VIP Growth & Income Portfolio Initial Class | 220,838 | | 3,197,731 |
VIP Growth Portfolio Initial Class | 94,568 | | 3,174,639 |
VIP Mid Cap Portfolio Initial Class | 33,893 | | 1,116,776 |
VIP Value Portfolio Initial Class | 211,684 | | 2,747,662 |
VIP Value Strategies Portfolio Initial Class | 94,453 | | 1,135,326 |
TOTAL DOMESTIC EQUITY FUNDS | | 17,347,149 |
International Equity Funds - 7.2% |
VIP Overseas Portfolio Initial Class | 146,787 | | 3,141,247 |
TOTAL EQUITY FUNDS (Cost $20,043,405) | 20,488,396 |
Fixed-Income Funds - 43.1% |
| | | |
High Yield Fixed-Income Funds - 5.2% |
VIP High Income Portfolio Initial Class | 352,963 | | 2,241,312 |
Investment Grade Fixed-Income Funds - 37.9% |
VIP Investment Grade Bond Portfolio Initial Class | 1,355,805 | | 16,473,034 |
TOTAL FIXED-INCOME FUNDS (Cost $19,155,172) | 18,714,346 |
Short-Term Funds - 9.7% |
| | | |
VIP Money Market Portfolio Initial Class
(Cost $4,234,439) | 4,234,439 | | 4,234,439 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $43,433,016) | $ 43,437,181 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $11,415 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2010 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (cost $43,433,016) - See accompanying schedule | | $ 43,437,181 |
Cash | | 6 |
Receivable for fund shares sold | | 53,432 |
Total assets | | 43,490,619 |
| | |
Liabilities | | |
Payable for investments purchased | $ 53,278 | |
Payable for fund shares redeemed | 154 | |
Distribution fees payable | 4,923 | |
Total liabilities | | 58,355 |
| | |
Net Assets | | $ 43,432,264 |
Net Assets consist of: | | |
Paid in capital | | $ 42,530,149 |
Undistributed net investment income | | 548,590 |
Accumulated undistributed net realized gain (loss) on investments | | 349,360 |
Net unrealized appreciation (depreciation) on investments | | 4,165 |
Net Assets | | $ 43,432,264 |
Calculation of Maximum Offering Price Initial Class:
Net Asset Value, offering price and redemption price per share ($16,820,349 ÷ 1,533,564 shares) | | $ 10.97 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($2,166,981 ÷ 197,671 shares) | | $ 10.96 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($24,444,934 ÷ 2,235,056 shares) | | $ 10.94 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 569,585 |
| | |
Expenses | | |
Distribution fees | $ 20,995 | |
Independent trustees' compensation | 57 | |
Total expenses before reductions | 21,052 | |
Expense reductions | (57) | 20,995 |
Net investment income (loss) | | 548,590 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of
underlying fund shares | (86,996) | |
Capital gain distributions from
underlying funds | 449,556 | 362,560 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (587,762) |
Net gain (loss) | | (225,202) |
Net increase (decrease) in net assets resulting from operations | | $ 323,388 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2010 Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
April 26, 2005
(commencement of
operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 548,590 | $ 108,050 |
Net realized gain (loss) | 362,560 | (13,200) |
Change in net unrealized appreciation (depreciation) | (587,762) | 591,927 |
Net increase (decrease) in net assets resulting from operations | 323,388 | 686,777 |
Distributions to shareholders from net investment income | - | (109,350) |
Share transactions - net increase (decrease) | 19,300,710 | 23,230,739 |
Total increase (decrease) in net assets | 19,624,098 | 23,808,166 |
| | |
Net Assets | | |
Beginning of period | 23,808,166 | - |
End of period (including undistributed net investment income of $548,590 and undistributed net investment income of $0, respectively) | $ 43,432,264 | $ 23,808,166 |
Financial Highlights - Initial Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.78 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .19 | .11 |
Net realized and unrealized gain (loss) | - I | .72 |
Total from investment operations | .19 | .83 |
Distributions from net investment income | - | (.05) |
Net asset value, end of period | $ 10.97 | $ 10.78 |
Total Return B. C, D | 1.76% | 8.33% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 3.43% A | 1.56% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 16,820 | $ 13,343 |
Portfolio turnover rate | 31% A | 24% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
VIP Freedom Funds Portfolio
Financial Highlights - Service Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.77 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .18 | .10 |
Net realized and unrealized gain (loss) | .01 | .72 |
Total from investment operations | .19 | .82 |
Distributions from net investment income | - | (.05) |
Net asset value, end of period | $ 10.96 | $ 10.77 |
Total Return B, C, D | 1.76% | 8.17% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .10% A | .10% A |
Expenses net of fee waivers, if any | .10% A | .10% A |
Expenses net of all reductions | .10% A | .10% A |
Net investment income (loss) | 3.33% A | 1.46% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 2,167 | $ 764 |
Portfolio turnover rate | 31% A | 24% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
Financial Highlights - Service Class 2
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.76 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .17 | .09 |
Net realized and unrealized gain (loss) | .01 | .72 |
Total from investment operations | .18 | .81 |
Distributions from net investment income | - | (.05) |
Net asset value, end of period | $ 10.94 | $ 10.76 |
Total Return B, C, D | 1.67% | 8.07% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .25% A | .25% A |
Expenses net of fee waivers, if any | .25% A | .25% A |
Expenses net of all reductions | .25% A | .25% A |
Net investment income (loss) | 3.18% A | 1.31% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 24,445 | $ 9,702 |
Portfolio turnover rate | 31% A | 24% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2015 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's
investments | % of fund's investments
6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Initial Class | 7.6 | 8.4 |
VIP Equity-Income Portfolio Initial Class | 8.9 | 9.4 |
VIP Growth & Income Portfolio Initial Class | 8.8 | 9.6 |
VIP Growth Portfolio Initial Class | 8.8 | 9.4 |
VIP Mid Cap Portfolio Initial Class | 3.1 | 3.5 |
VIP Value Portfolio Initial Class | 7.6 | 8.1 |
VIP Value Strategies Portfolio Initial Class | 3.1 | 3.4 |
| 47.9 | 51.8 |
International Equity Funds | | |
VIP Overseas Portfolio Initial Class | 9.6 | 9.4 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Initial Class | 6.7 | 6.5 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Initial Class | 31.6 | 29.1 |
Short-Term Funds | | |
VIP Money Market Portfolio Initial Class | 4.2 | 3.2 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 47.9% | |
| International Equity Funds | 9.6% | |
| Investment Grade Fixed-Income Funds | 31.6% | |
| High Yield Fixed-Income Funds | 6.7% | |
| Short-Term Funds | 4.2% | |
Six months ago |
| Domestic Equity Funds | 51.8% | |
| International Equity Funds | 9.4% | |
| Investment Grade Fixed-Income Funds | 29.1% | |
| High Yield Fixed-Income Funds | 6.5% | |
| Short-Term Funds | 3.2% | |
Expected |
| Domestic Equity Funds | 46.2% | |
| International Equity Funds | 11.5% | |
| Investment Grade Fixed-Income Funds | 30.9% | |
| High Yield Fixed-Income Funds | 6.2% | |
| Short-Term Funds | 5.2% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Freedom 2015 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 57.5% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 47.9% |
VIP Contrafund Portfolio Initial Class | 56,841 | | $ 1,808,674 |
VIP Equity-Income Portfolio Initial Class | 84,772 | | 2,115,073 |
VIP Growth & Income Portfolio Initial Class | 145,046 | | 2,100,271 |
VIP Growth Portfolio Initial Class | 62,095 | | 2,084,537 |
VIP Mid Cap Portfolio Initial Class | 22,264 | | 733,595 |
VIP Value Portfolio Initial Class | 138,973 | | 1,803,871 |
VIP Value Strategies Portfolio Initial Class | 62,094 | | 746,367 |
TOTAL DOMESTIC EQUITY FUNDS | | 11,392,388 |
International Equity Funds - 9.6% |
VIP Overseas Portfolio Initial Class | 107,386 | | 2,298,069 |
TOTAL EQUITY FUNDS (Cost $13,139,452) | 13,690,457 |
Fixed-Income Funds - 38.3% |
| | | |
High Yield Fixed-Income Funds - 6.7% |
VIP High Income Portfolio Initial Class | 250,828 | | 1,592,758 |
Investment Grade Fixed-Income Funds - 31.6% |
VIP Investment Grade Bond Portfolio Initial Class | 618,526 | | 7,515,091 |
TOTAL FIXED-INCOME FUNDS (Cost $9,337,446) | 9,107,849 |
Short-Term Funds - 4.2% |
| | | |
VIP Money Market Portfolio Initial Class
(Cost $1,007,230) | 1,007,230 | | 1,007,230 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $23,484,128) | $ 23,805,536 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $10,188 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2015 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (cost $23,484,128) - See accompanying schedule | | $ 23,805,536 |
Cash | | 14 |
Receivable for investments sold | | 2 |
Receivable for fund shares sold | | 74,862 |
Total assets | | 23,880,414 |
| | |
Liabilities | | |
Payable for investments purchased | $ 60,056 | |
Payable for fund shares redeemed | 14,807 | |
Distribution fees payable | 799 | |
Total liabilities | | 75,662 |
| | |
Net Assets | | $ 23,804,752 |
Net Assets consist of: | | |
Paid in capital | | $ 22,916,948 |
Undistributed net investment income | | 284,613 |
Accumulated undistributed net realized gain (loss) on investments | | 281,783 |
Net unrealized appreciation (depreciation) on investments | | 321,408 |
Net Assets | | $ 23,804,752 |
Calculation of Maximum Offering Price Initial Class:
Net Asset Value, offering price and redemption price per share ($19,335,748 ÷ 1,724,694 shares) | | $ 11.21 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($394,195 ÷ 35,173 shares) | | $ 11.21 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($4,074,809 ÷ 364,055 shares) | | $ 11.19 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 287,266 |
Interest | | 9 |
Total income | | 287,275 |
| | |
Expenses | | |
Distribution fees | $ 2,662 | |
Independent trustees' compensation | 35 | |
Total expenses before reductions | 2,697 | |
Expense reductions | (35) | 2,662 |
Net investment income (loss) | | 284,613 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of
underlying fund shares | (41,327) | |
Capital gain distributions from
underlying funds | 334,606 | 293,279 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (258,086) |
Net gain (loss) | | 35,193 |
Net increase (decrease) in net assets resulting from operations | | $ 319,806 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
April 26, 2005
(commencement of
operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 284,613 | $ 81,936 |
Net realized gain (loss) | 293,279 | (11,496) |
Change in net unrealized appreciation (depreciation) | (258,086) | 579,494 |
Net increase (decrease) in net assets resulting from operations | 319,806 | 649,934 |
Distributions to shareholders from net investment income | - | (82,427) |
Share transactions - net increase (decrease) | 8,516,510 | 14,400,929 |
Total increase (decrease) in net assets | 8,836,316 | 14,968,436 |
| | |
Net Assets | | |
Beginning of period | 14,968,436 | - |
End of period (including undistributed net investment income of $284,613 and undistributed net investment income of $0, respectively) | $ 23,804,752 | $ 14,968,436 |
Financial Highlights - Initial Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.95 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .17 | .11 |
Net realized and unrealized gain (loss) | .09 | .90 |
Total from investment operations | .26 | 1.01 |
Distributions from net investment income | - | (.06) |
Net asset value, end of period | $ 11.21 | $ 10.95 |
Total Return B, C, D | 2.37% | 10.11% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 2.94% A | 1.50% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 19,336 | $ 13,930 |
Portfolio turnover rate | 24% A | 38% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Freedom Funds Portfolio
Financial Highlights - Service Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.95 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .16 | .10 |
Net realized and unrealized gain (loss) | .10 | .90 |
Total from investment operations | .26 | 1.00 |
Distributions from net investment income | - | (.05) |
Net asset value, end of period | $ 11.21 | $ 10.95 |
Total Return B, C, D | 2.37% | 10.04% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .10% A | .10% A |
Expenses net of fee waivers, if any | .10% A | .10% A |
Expenses net of all reductions | .10% A | .10% A |
Net investment income (loss) | 2.84% A | 1.40% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 394 | $ 385 |
Portfolio turnover rate | 24% A | 38% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
Financial Highlights - Service Class 2
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.94 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .15 | .09 |
Net realized and unrealized gain (loss) | .10 | .90 |
Total from investment operations | .25 | .99 |
Distributions from net investment income | - | (.05) |
Net asset value, end of period | $ 11.19 | $ 10.94 |
Total Return B, C, D | 2.29% | 9.90% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .25% A | .25% A |
Expenses net of fee waivers, if any | .25% A | .25% A |
Expenses net of all reductions | .25% A | .25% A |
Net investment income (loss) | 2.70% A | 1.25% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 4,075 | $ 653 |
Portfolio turnover rate | 24% A | 38% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2020 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's
investments | % of fund's investments
6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Initial Class | 9.0 | 9.5 |
VIP Equity-Income Portfolio Initial Class | 10.5 | 10.8 |
VIP Growth & Income Portfolio Initial Class | 10.4 | 10.9 |
VIP Growth Portfolio Initial Class | 10.3 | 10.8 |
VIP Mid Cap Portfolio Initial Class | 3.6 | 4.0 |
VIP Value Portfolio Initial Class | 8.9 | 9.2 |
VIP Value Strategies Portfolio Initial Class | 3.7 | 3.9 |
| 56.4 | 59.1 |
International Equity Funds | | |
VIP Overseas Portfolio Initial Class | 11.5 | 10.7 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Initial Class | 7.7 | 7.3 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Initial Class | 24.2 | 22.7 |
Short-Term Funds | | |
VIP Money Market Portfolio Initial Class | 0.2 | 0.2 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 56.4% | |
| International Equity Funds | 11.5% | |
| Investment Grade Fixed-Income Funds | 24.2% | |
| High Yield Fixed-Income Funds | 7.7% | |
| Short-Term Funds | 0.2% | |
Six months ago |
| Domestic Equity Funds | 59.1% | |
| International Equity Funds | 10.7% | |
| Investment Grade Fixed-Income Funds | 22.7% | |
| High Yield Fixed-Income Funds | 7.3% | |
| Short-Term Funds | 0.2% | |
Expected |
| Domestic Equity Funds | 54.9% | |
| International Equity Funds | 13.7% | |
| Investment Grade Fixed-Income Funds | 23.6% | |
| High Yield Fixed-Income Funds | 7.5% | |
| Short-Term Funds | 0.3% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Freedom 2020 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 67.9% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 56.4% |
VIP Contrafund Portfolio Initial Class | 153,213 | | $ 4,875,231 |
VIP Equity-Income Portfolio Initial Class | 228,385 | | 5,698,199 |
VIP Growth & Income Portfolio Initial Class | 390,864 | | 5,659,712 |
VIP Growth Portfolio Initial Class | 167,330 | | 5,617,253 |
VIP Mid Cap Portfolio Initial Class | 59,891 | | 1,973,396 |
VIP Value Portfolio Initial Class | 374,524 | | 4,861,321 |
VIP Value Strategies Portfolio Initial Class | 166,912 | | 2,006,283 |
TOTAL DOMESTIC EQUITY FUNDS | | 30,691,395 |
International Equity Funds - 11.5% |
VIP Overseas Portfolio Initial Class | 293,376 | | 6,278,236 |
TOTAL EQUITY FUNDS (Cost $35,795,434) | 36,969,631 |
Fixed-Income Funds - 31.9% |
| | | |
High Yield Fixed-Income Funds - 7.7% |
VIP High Income Portfolio Initial Class | 661,778 | | 4,202,290 |
Investment Grade Fixed-Income Funds - 24.2% |
VIP Investment Grade Bond Portfolio Initial Class | 1,081,660 | | 13,142,163 |
TOTAL FIXED-INCOME FUNDS (Cost $17,767,259) | 17,344,453 |
Short-Term Funds - 0.2% |
| | | |
VIP Money Market Portfolio Initial Class
(Cost $89,266) | 89,266 | | 89,266 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $53,651,959) | $ 54,403,350 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $5,157 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2020 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (cost $53,651,959) - See accompanying schedule | | $ 54,403,350 |
Cash | | 39 |
Receivable for investments sold | | 176,669 |
Receivable for fund shares sold | | 92,763 |
Total assets | | 54,672,821 |
| | |
Liabilities | | |
Payable for investments purchased | $ 72,858 | |
Payable for fund shares redeemed | 196,572 | |
Distribution fees payable | 6,586 | |
Total liabilities | | 276,016 |
| | |
Net Assets | | $ 54,396,805 |
Net Assets consist of: | | |
Paid in capital | | $ 52,358,931 |
Undistributed net investment income | | 513,774 |
Accumulated undistributed net realized gain (loss) on investments | | 772,709 |
Net unrealized appreciation (depreciation) on investments | | 751,391 |
Net Assets | | $ 54,396,805 |
Calculation of Maximum Offering Price Initial Class:
Net Asset Value, offering price and redemption price per share ($17,913,847 ÷ 1,577,389 shares) | | $ 11.36 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($3,062,098 ÷ 269,826 shares) | | $ 11.35 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($33,420,860 ÷ 2,949,136 shares) | | $ 11.33 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 545,269 |
Interest | | 40 |
Total income | | 545,309 |
| | |
Expenses | | |
Distribution fees | $ 31,535 | |
Independent trustees' compensation | 79 | |
Total expenses before reductions | 31,614 | |
Expense reductions | (79) | 31,535 |
Net investment income (loss) | | 513,774 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of
underlying fund shares | (78,146) | |
Capital gain distributions from
underlying funds | 856,734 | 778,588 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (494,357) |
Net gain (loss) | | 284,231 |
Net increase (decrease) in net assets resulting from operations | | $ 798,005 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2020 Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
April 26, 2005
(commencement of
operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 513,774 | $ 181,643 |
Net realized gain (loss) | 778,588 | (5,878) |
Change in net unrealized appreciation (depreciation) | (494,357) | 1,245,748 |
Net increase (decrease) in net assets resulting from operations | 798,005 | 1,421,513 |
Distributions to shareholders from net investment income | - | (183,754) |
Share transactions - net increase (decrease) | 19,513,138 | 32,847,903 |
Total increase (decrease) in net assets | 20,311,143 | 34,085,662 |
| | |
Net Assets | | |
Beginning of period | 34,085,662 | - |
End of period (including undistributed net investment income of $513,774 and undistributed net investment income of $0, respectively) | $ 54,396,805 | $ 34,085,662 |
Financial Highlights - Initial Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 11.07 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .14 | .13 |
Net realized and unrealized gain (loss) | .15 | 1.00 |
Total from investment operations | .29 | 1.13 |
Distributions from net investment income | - | (.06) |
Net asset value, end of period | $ 11.36 | $ 11.07 |
Total Return B, C, D | 2.62% | 11.34% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 2.44% A | 1.80% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 17,914 | $ 16,085 |
Portfolio turnover rate | 24% A | 14% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Freedom Funds Portfolio
Financial Highlights - Service Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 11.07 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .13 | .12 |
Net realized and unrealized gain (loss) | .15 | 1.01 |
Total from investment operations | .28 | 1.13 |
Distributions from net investment income | - | (.06) |
Net asset value, end of period | $ 11.35 | $ 11.07 |
Total Return B, C, D | 2.53% | 11.30% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .10% A | .10% A |
Expenses net of fee waivers, if any | .10% A | .10% A |
Expenses net of all reductions | .10% A | .10% A |
Net investment income (loss) | 2.34% A | 1.70% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 3,062 | $ 1,586 |
Portfolio turnover rate | 24% A | 14% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
Financial Highlights - Service Class 2
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 11.06 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .12 | .11 |
Net realized and unrealized gain (loss) | .15 | 1.01 |
Total from investment operations | .27 | 1.12 |
Distributions from net investment income | - | (.06) |
Net asset value, end of period | $ 11.33 | $ 11.06 |
Total Return B, C, D | 2.44% | 11.17% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .25% A | .25% A |
Expenses net of fee waivers, if any | .25% A | .25% A |
Expenses net of all reductions | .25% A | .25% A |
Net investment income (loss) | 2.20% A | 1.55% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 33,421 | $ 16,414 |
Portfolio turnover rate | 24% A | 14% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2025 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's
investments | % of fund's investments
6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Initial Class | 9.4 | 10.4 |
VIP Equity-Income Portfolio Initial Class | 11.0 | 11.6 |
VIP Growth & Income Portfolio Initial Class | 11.0 | 11.8 |
VIP Growth Portfolio Initial Class | 10.9 | 11.7 |
VIP Mid Cap Portfolio Initial Class | 3.8 | 4.4 |
VIP Value Portfolio Initial Class | 9.4 | 9.9 |
VIP Value Strategies Portfolio Initial Class | 3.9 | 4.2 |
| 59.4 | 64.0 |
International Equity Funds | | |
VIP Overseas Portfolio Initial Class | 12.5 | 11.8 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Initial Class | 7.8 | 7.2 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Initial Class | 20.3 | 16.9 |
Short-Term Funds | | |
VIP Money Market Portfolio Initial Class | 0.0 | 0.1 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 59.4% | |
| International Equity Funds | 12.5% | |
| Investment Grade Fixed-Income Funds | 20.3% | |
| High Yield Fixed-Income Funds | 7.8% | |
| Short-Term Funds | 0.0% | |
Six months ago |
| Domestic Equity Funds | 64.0% | |
| International Equity Funds | 11.8% | |
| Investment Grade Fixed-Income Funds | 16.9% | |
| High Yield Fixed-Income Funds | 7.2% | |
| Short-Term Funds | 0.1% | |
Expected |
| Domestic Equity Funds | 57.3% | |
| International Equity Funds | 14.4% | |
| Investment Grade Fixed-Income Funds | 20.8% | |
| High Yield Fixed-Income Funds | 7.5% | |
| Short-Term Funds | 0.0% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Freedom 2025 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 71.9% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 59.4% |
VIP Contrafund Portfolio Initial Class | 21,888 | | $ 696,491 |
VIP Equity-Income Portfolio Initial Class | 32,672 | | 815,177 |
VIP Growth & Income Portfolio Initial Class | 55,886 | | 809,227 |
VIP Growth Portfolio Initial Class | 23,901 | | 802,350 |
VIP Mid Cap Portfolio Initial Class | 8,542 | | 281,454 |
VIP Value Portfolio Initial Class | 53,590 | | 695,595 |
VIP Value Strategies Portfolio Initial Class | 23,896 | | 287,229 |
TOTAL DOMESTIC EQUITY FUNDS | | 4,387,523 |
International Equity Funds - 12.5% |
VIP Overseas Portfolio Initial Class | 43,029 | | 920,819 |
TOTAL EQUITY FUNDS (Cost $4,998,387) | 5,308,342 |
Fixed-Income Funds - 28.1% |
| | | |
High Yield Fixed-Income Funds - 7.8% |
VIP High Income Portfolio Initial Class | 90,861 | | 576,966 |
Investment Grade Fixed-Income Funds - 20.3% |
VIP Investment Grade Bond Portfolio Initial Class | 123,483 | | 1,500,324 |
TOTAL FIXED-INCOME FUNDS (Cost $2,121,508) | 2,077,290 |
Short-Term Funds - 0.0% |
| | | |
VIP Money Market Portfolio Initial Class
(Cost $236) | 236 | | 236 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $7,120,131) | $ 7,385,868 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $1,012 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2025 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (cost $7,120,131) - See accompanying schedule | | $ 7,385,868 |
Cash | | 10 |
Receivable for investments sold | | 43 |
Receivable for fund shares sold | | 836 |
Total assets | | 7,386,757 |
| | |
Liabilities | | |
Payable for investments purchased | $ 820 | |
Payable for fund shares redeemed | 59 | |
Distribution fees payable | 116 | |
Total liabilities | | 995 |
| | |
Net Assets | | $ 7,385,762 |
Net Assets consist of: | | |
Paid in capital | | $ 6,918,860 |
Undistributed net investment income | | 69,987 |
Accumulated undistributed net realized gain (loss) on investments | | 131,178 |
Net unrealized appreciation (depreciation) on investments | | 265,737 |
Net Assets | | $ 7,385,762 |
Calculation of Maximum Offering Price Initial Class:
Net Asset Value, offering price and redemption price per share ($6,578,949 ÷ 572,862 shares) | | $ 11.48 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($403,765 ÷ 35,182 shares) | | $ 11.48 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($403,048 ÷ 35,148 shares) | | $ 11.47 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 70,690 |
Interest | | 5 |
Total income | | 70,695 |
| | |
Expenses | | |
Distribution fees | $ 708 | |
Independent trustees' compensation | 13 | |
Total expenses before reductions | 721 | |
Expense reductions | (13) | 708 |
Net investment income (loss) | | 69,987 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of
underlying fund shares | (5,070) | |
Capital gain distributions from
underlying funds | 138,273 | 133,203 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (30,645) |
Net gain (loss) | | 102,558 |
Net increase (decrease) in net assets resulting from operations | | $ 172,545 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
April 26, 2005
(commencement of
operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 69,987 | $ 31,400 |
Net realized gain (loss) | 133,203 | (2,025) |
Change in net unrealized appreciation (depreciation) | (30,645) | 296,382 |
Net increase (decrease) in net assets resulting from operations | 172,545 | 325,757 |
Distributions to shareholders from net investment income | - | (31,744) |
Share transactions - net increase (decrease) | 1,603,494 | 5,315,710 |
Total increase (decrease) in net assets | 1,776,039 | 5,609,723 |
| | |
Net Assets | | |
Beginning of period | 5,609,723 | - |
End of period (including undistributed net investment income of $69,987 and undistributed net investment income of $0, respectively) | $ 7,385,762 | $ 5,609,723 |
Financial Highlights - Initial Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 11.16 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .12 | .11 |
Net realized and unrealized gain (loss) | .20 | 1.12 |
Total from investment operations | .32 | 1.23 |
Distributions from net investment income | - | (.07) |
Net asset value, end of period | $ 11.48 | $ 11.16 |
Total Return B, C, D | 2.87% | 12.25% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 2.03% A | 1.44% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 6,579 | $ 4,825 |
Portfolio turnover rate | 51% A | 9% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Freedom Funds Portfolio
Financial Highlights - Service Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 11.16 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .11 | .10 |
Net realized and unrealized gain (loss) | .21 | 1.12 |
Total from investment operations | .32 | 1.22 |
Distributions from net investment income | - | (.06) |
Net asset value, end of period | $ 11.48 | $ 11.16 |
Total Return B, C, D | 2.87% | 12.18% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .10% A | .10% A |
Expenses net of fee waivers, if any | .10% A | .10% A |
Expenses net of all reductions | .10% A | .10% A |
Net investment income (loss) | 1.93% A | 1.34% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 404 | $ 393 |
Portfolio turnover rate | 51% A | 9% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
Financial Highlights - Service Class 2
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 11.16 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .10 | .09 |
Net realized and unrealized gain (loss) | .21 | 1.12 |
Total from investment operations | .31 | 1.21 |
Distributions from net investment income | - | (.05) |
Net asset value, end of period | $ 11.47 | $ 11.16 |
Total Return B, C, D | 2.78% | 12.07% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .25% A | .25% A |
Expenses net of fee waivers, if any | .25% A | .25% A |
Expenses net of all reductions | .25% A | .25% A |
Net investment income (loss) | 1.78% A | 1.19% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 403 | $ 392 |
Portfolio turnover rate | 51% A | 9% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2030 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's
investments | % of fund's investments
6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Initial Class | 10.7 | 11.2 |
VIP Equity-Income Portfolio Initial Class | 12.5 | 12.7 |
VIP Growth & Income Portfolio Initial Class | 12.4 | 12.9 |
VIP Growth Portfolio Initial Class | 12.3 | 12.7 |
VIP Mid Cap Portfolio Initial Class | 4.3 | 4.7 |
VIP Value Portfolio Initial Class | 10.7 | 10.9 |
VIP Value Strategies Portfolio Initial Class | 4.4 | 4.6 |
| 67.3 | 69.7 |
International Equity Funds | | |
VIP Overseas Portfolio Initial Class | 14.3 | 13.3 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Initial Class | 7.8 | 7.2 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Initial Class | 10.6 | 9.7 |
Short-Term Funds | | |
VIP Money Market Portfolio Initial Class | 0.0 | 0.1 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 67.3% | |
| International Equity Funds | 14.3% | |
| Investment Grade Fixed-Income Funds | 10.6% | |
| High Yield Fixed-Income Funds | 7.8% | |
| Short-Term Funds | 0.0% | |
Six months ago |
| Domestic Equity Funds | 69.7% | |
| International Equity Funds | 13.3% | |
| Investment Grade Fixed-Income Funds | 9.7% | |
| High Yield Fixed-Income Funds | 7.2% | |
| Short-Term Funds | 0.1% | |
Expected |
| Domestic Equity Funds | 65.8% | |
| International Equity Funds | 16.5% | |
| Investment Grade Fixed-Income Funds | 10.2% | |
| High Yield Fixed-Income Funds | 7.5% | |
| Short-Term Funds | 0.0% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Freedom 2030 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 81.6% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 67.3% |
VIP Contrafund Portfolio Initial Class | 72,731 | | $ 2,314,315 |
VIP Equity-Income Portfolio Initial Class | 108,651 | | 2,710,832 |
VIP Growth & Income Portfolio Initial Class | 185,809 | | 2,690,510 |
VIP Growth Portfolio Initial Class | 79,483 | | 2,668,258 |
VIP Mid Cap Portfolio Initial Class | 28,359 | | 934,434 |
VIP Value Portfolio Initial Class | 178,084 | | 2,311,535 |
VIP Value Strategies Portfolio Initial Class | 79,356 | | 953,861 |
TOTAL DOMESTIC EQUITY FUNDS | | 14,583,745 |
International Equity Funds - 14.3% |
VIP Overseas Portfolio Initial Class | 144,621 | | 3,094,891 |
TOTAL EQUITY FUNDS (Cost $16,872,870) | 17,678,636 |
Fixed-Income Funds - 18.4% |
| | | |
High Yield Fixed-Income Funds - 7.8% |
VIP High Income Portfolio Initial Class | 267,226 | | 1,696,886 |
Investment Grade Fixed-Income Funds - 10.6% |
VIP Investment Grade Bond Portfolio Initial Class | 189,465 | | 2,301,998 |
TOTAL FIXED-INCOME FUNDS (Cost $4,082,131) | 3,998,884 |
Short-Term Funds - 0.0% |
| | | |
VIP Money Market Portfolio Initial Class
(Cost $396) | 396 | | 396 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $20,955,397) | $ 21,677,916 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $14,782 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2030 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (cost $20,955,397) - See accompanying schedule | | $ 21,677,916 |
Receivable for investments sold | | 179,156 |
Receivable for fund shares sold | | 25,348 |
Total assets | | 21,882,420 |
| | |
Liabilities | | |
Payable for investments purchased | $ 21,877 | |
Payable for fund shares redeemed | 182,625 | |
Distribution fees payable | 2,196 | |
Total liabilities | | 206,698 |
| | |
Net Assets | | $ 21,675,722 |
Net Assets consist of: | | |
Paid in capital | | $ 20,432,499 |
Undistributed net investment income | | 162,925 |
Accumulated undistributed net realized gain (loss) on investments | | 357,779 |
Net unrealized appreciation (depreciation) on investments | | 722,519 |
Net Assets | | $ 21,675,722 |
Calculation of Maximum Offering Price Initial Class:
Net Asset Value, offering price and redemption price per share ($9,887,328 ÷ 851,267 shares) | | $ 11.61 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($1,382,228 ÷ 119,075 shares) | | $ 11.61 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($10,406,166 ÷ 898,109 shares) | | $ 11.59 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 174,945 |
Interest | | 60 |
Total income | | 175,005 |
| | |
Expenses | | |
Distribution fees | $ 12,080 | |
Independent trustees' compensation | 36 | |
Total expenses before reductions | 12,116 | |
Expense reductions | (36) | 12,080 |
Net investment income (loss) | | 162,925 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of
underlying fund shares | (81,146) | |
Capital gain distributions from
underlying funds | 454,237 | 373,091 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (96,124) |
Net gain (loss) | | 276,967 |
Net increase (decrease) in net assets resulting from operations | | $ 439,892 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom 2030 Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
April 26, 2005
(commencement of
operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 162,925 | $ 87,397 |
Net realized gain (loss) | 373,091 | (15,312) |
Change in net unrealized appreciation (depreciation) | (96,124) | 818,643 |
Net increase (decrease) in net assets resulting from operations | 439,892 | 890,728 |
Distributions to shareholders from net investment income | - | (87,912) |
Share transactions - net increase (decrease) | 4,619,291 | 15,813,723 |
Total increase (decrease) in net assets | 5,059,183 | 16,616,539 |
| | |
| | |
Net Assets | | |
Beginning of period | 16,616,539 | - |
End of period (including undistributed net investment income of $162,925 and undistributed net investment income of $0, respectively) | $ 21,675,722 | $ 16,616,539 |
Financial Highlights - Initial Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 11.27 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .10 | .13 |
Net realized and unrealized gain (loss) | .24 | 1.21 |
Total from investment operations | .34 | 1.34 |
Distributions from net investment income | - | (.07) |
Net asset value, end of period | $ 11.61 | $ 11.27 |
Total Return B, C, D | 3.02% | 13.35% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 1.75% A | 1.71% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 9,887 | $ 8,262 |
Portfolio turnover rate | 52% A | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Freedom Funds Portfolio
Financial Highlights - Service Class
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 11.27 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .10 | .12 |
Net realized and unrealized gain (loss) | .24 | 1.21 |
Total from investment operations | .34 | 1.33 |
Distributions from net investment income | - | (.06) |
Net asset value, end of period | $ 11.61 | $ 11.27 |
Total Return B, C, D | 3.02% | 13.30% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .10% A | .10% A |
Expenses net of fee waivers, if any | .10% A | .10% A |
Expenses net of all reductions | .10% A | .10% A |
Net investment income (loss) | 1.65% A | 1.62% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 1,382 | $ 958 |
Portfolio turnover rate | 52% A | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
Financial Highlights - Service Class 2
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 11.26 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .09 | .11 |
Net realized and unrealized gain (loss) | .24 | 1.21 |
Total from investment operations | .33 | 1.32 |
Distributions from net investment income | - | (.06) |
Net asset value, end of period | $ 11.59 | $ 11.26 |
Total Return B, C, D | 2.93% | 13.16% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .25% A | .25% A |
Expenses net of fee waivers, if any | .25% A | .25% A |
Expenses net of all reductions | .25% A | .25% A |
Net investment income (loss) | 1.50% A | 1.47% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 10,406 | $ 7,396 |
Portfolio turnover rate | 52% A | 33% A |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period April 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2006 (Unaudited)
1. Significant Accounting Policies.
VIP Freedom Income Portfolio, VIP Freedom 2005 Portfolio, VIP Freedom 2010 Portfolio, VIP Freedom 2015 Portfolio, VIP Freedom 2020 Portfolio, VIP Freedom 2025 Portfolio and VIP Freedom 2030 Portfolio (the Funds) are funds of Variable Insurance Products Fund IV. The Variable Insurance Products Fund IV (the trust) (referred to in this report as Fidelity Variable Insurance Products) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as Massachusetts business trust. Each Fund is authorized to issue an unlimited number of shares. The Funds invest primarily in a combination of other VIP equity, fixed income, and money market funds (the Underlying Funds) managed by Fidelity Management & Research Company (FMR). Shares of each Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. Each Fund offers three classes of shares: Initial Class shares, Service Class shares and Service Class 2 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Net asset value per share is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Investments in the Underlying Funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost, which approximates value.
Investment Transactions and Income. Security transactions, normally shares of the Underlying Funds, are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Income and capital gain distributions from the Underlying Funds, if any, are recorded on the ex-dividend date. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each fund in the trust. Expenses included in the accompanying financial statements reflect the expenses of each Fund and do not include any expenses associated with the Underlying Funds.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Cost for Federal
Income Tax Purposes | Unrealized
Appreciation | Unrealized
Depreciation | Net Unrealized
Appreciation/
(Depreciation) |
VIP Freedom Income | $ 8,728,432 | $ 85,522 | $ (102,828) | $ (17,306) |
VIP Freedom 2005 | 7,651,222 | 217,989 | (114,137) | 103,852 |
VIP Freedom 2010 | 43,433,054 | 708,350 | (704,223) | 4,127 |
VIP Freedom 2015 | 23,484,128 | 664,683 | (343,275) | 321,408 |
VIP Freedom 2020 | 53,651,974 | 1,542,757 | (791,381) | 751,376 |
VIP Freedom 2025 | 7,120,132 | 332,119 | (66,383) | 265,736 |
VIP Freedom 2030 | 20,955,397 | 950,818 | (228,299) | 722,519 |
New Accounting Pronouncement. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48) was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Funds' net assets and results of operations.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
3. Purchases and Sales of Investments.
Purchases and redemptions of the underlying fund shares are noted in the table below.
| Purchases ($) | Redemptions ($) |
VIP Freedom Income | 4,210,196 | 2,065,315 |
VIP Freedom 2005 | 4,503,925 | 2,616,669 |
VIP Freedom 2010 | 25,545,345 | 5,243,045 |
VIP Freedom 2015 | 11,485,168 | 2,348,733 |
VIP Freedom 2020 | 26,200,213 | 5,313,177 |
VIP Freedom 2025 | 3,580,476 | 1,768,726 |
VIP Freedom 2030 | 10,441,372 | 5,204,110 |
4. Fees and Other Transactions with Affiliates.
Management Fee. Strategic Advisers, Inc. (Strategic Advisers), an affiliate of FMR, provides the Funds with investment management related services. The Funds do not pay any fees for these services.
Other Transactions. Strategic Advisers has entered into an administration agreement with FMR under which FMR provides management and administrative services (other than investment advisory services) necessary for the operation of each Fund. Pursuant to this agreement, FMR pays all expenses of each Fund, excluding the distribution and service fees, the compensation of the independent Trustees and certain other expenses such as interest expense. FMR also contracts with other Fidelity companies to perform the services necessary for the operation of each Fund. The Funds do not pay any fees for these services.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Funds have adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's average net assets.
For the period, each class paid FDC the following amounts, all of which were reallowed to insurance companies for the distribution of shares and providing shareholder support services:
| Service
Class | Service
Class 2 | Total |
VIP Freedom Income | $ 185 | $ 524 | $ 709 |
VIP Freedom 2005 | 191 | 480 | 671 |
VIP Freedom 2010 | 597 | 20,398 | 20,995 |
VIP Freedom 2015 | 197 | 2,465 | 2,662 |
VIP Freedom 2020 | 984 | 30,551 | 31,535 |
VIP Freedom 2025 | 202 | 506 | 708 |
VIP Freedom 2030 | 567 | 11,513 | 12,080 |
5. Expense Reductions.
FMR voluntarily agreed to reimburse funds to the extent annual operating expenses exceeded certain levels of average net assets. Total expenses for each class are limited to 0.00% of average net assets plus the distribution and service fees applicable to each class. Some expenses, for example interest expense, are excluded from this reimbursement.
VIP Freedom Funds Portfolio
5. Expense Reductions - continued
The following classes of each applicable Fund were in reimbursement during the period:
| Reimbursement
from adviser |
VIP Freedom Income | |
Initial Class | $ 12 |
Service Class | 1 |
Service Class 2 | 1 |
VIP Freedom 2005 | |
Initial Class | 12 |
Service Class | 1 |
Service Class 2 | 1 |
VIP Freedom 2010 | |
Initial Class | 22 |
Service Class | 3 |
Service Class 2 | 32 |
VIP Freedom 2015 | |
Initial Class | 28 |
Service Class | 1 |
Service Class 2 | 6 |
VIP Freedom 2020 | |
Initial Class | 26 |
Service Class | 4 |
Service Class 2 | 49 |
VIP Freedom 2025 | |
Initial Class | 11 |
Service Class | 1 |
Service Class 2 | 1 |
VIP Freedom 2030 | |
Initial Class | 17 |
Service Class | 2 |
Service Class 2 | 17 |
6. Other.
The Funds' 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 Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
The Funds do not invest in the Underlying Funds for the purpose of exercising management or control; however, investments by the Funds within their principal investment strategies may represent a significant portion of the Underlying Fund's net assets.
At the end of the period, FMR or its affiliates and certain otherwise unaffiliated shareholders each were owners of record of more than 10% of the outstanding shares of the following funds:
| Affiliated % | Number of
Unaffiliated
Shareholders | Unaffiliated
Shareholders % |
VIP Freedom Income | 92% | - | - |
VIP Freedom 2005 | 98% | - | - |
VIP Freedom 2010 | 40% | 1 | 54% |
VIP Freedom 2015 | 85% | 1 | 15% |
VIP Freedom 2020 | 34% | 1 | 57% |
VIP Freedom 2025 | 97% | - | - |
VIP Freedom 2030 | 50% | 1 | 50% |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
7. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Six months ended
June 30,
2006 | Year ended
December 31,
2005 A |
VIP Freedom Income | | |
From net investment income | | |
Initial Class | $ 2,991 | $ 55,821 |
Service Class | 177 | 3,185 |
Service Class 2 | 176 | 2,835 |
Total | $ 3,344 | $ 61,841 |
VIP Freedom 2005 | | |
From net investment income | | |
Initial Class | $ 1,177 | $ 28,378 |
Service Class | 71 | 1,785 |
Service Class 2 | 70 | 1,400 |
Total | $ 1,318 | $ 31,563 |
VIP Freedom 2010 | | |
From net investment income | | |
Initial Class | $ - | $ 64,854 |
Service Class | - | 3,317 |
Service Class 2 | - | 41,179 |
Total | $ - | $ 109,350 |
VIP Freedom 2015 | | |
From net investment income | | |
Initial Class | $ - | $ 77,678 |
Service Class | - | 1,890 |
Service Class 2 | - | 2,859 |
Total | $ - | $ 82,427 |
VIP Freedom 2020 | | |
From net investment income | | |
Initial Class | $ - | $ 92,441 |
Service Class | - | 8,472 |
Service Class 2 | - | 82,841 |
Total | $ - | $ 183,754 |
VIP Freedom 2025 | | |
From net investment income | | |
Initial Class | $ - | $ 28,069 |
Service Class | - | 2,030 |
Service Class 2 | - | 1,645 |
Total | $ - | $ 31,744 |
VIP Freedom 2030 | | |
From net investment income | | |
Initial Class | $ - | $ 46,470 |
Service Class | - | 4,989 |
Service Class 2 | - | 36,453 |
Total | $ - | $ 87,912 |
A For the period April 26, 2005 (commencement of operations) to December 31, 2005.
VIP Freedom Funds Portfolio
8. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Six months ended
June 30,
2006 | Year ended
December 31,
2005 A | Six months ended
June 30,
2006 | Year ended
December 31,
2005 A |
VIP Freedom Income | | | | |
Initial Class | | | | |
Shares sold | 357,629 | 606,283 | $ 3,751,290 | $ 6,212,950 |
Reinvestment of distributions | 287 | 5,388 | 2,991 | 55,821 |
Shares redeemed | (190,460) | (36,703) | (2,000,998) | (378,778) |
Net increase (decrease) | 167,456 | 574,968 | $ 1,753,283 | $ 5,889,993 |
Service Class | | | | |
Shares sold | - | 35,001 | $ - | $ 350,010 |
Reinvestment of distributions | 17 | 307 | 177 | 3,185 |
Shares redeemed | - | - | - | - |
Net increase (decrease) | 17 | 35,308 | $ 177 | $ 353,195 |
Service Class 2 | | | | |
Shares sold | 19,717 | 35,001 | $ 207,431 | $ 350,010 |
Reinvestment of distributions | 17 | 273 | 176 | 2,835 |
Shares redeemed | (4,115) | - | (43,167) | - |
Net increase (decrease) | 15,619 | 35,274 | $ 164,440 | $ 352,845 |
VIP Freedom 2005 | | | | |
Initial Class | | | | |
Shares sold | 356,528 | 596,639 | $ 3,907,751 | $ 6,232,781 |
Reinvestment of distributions | 108 | 2,637 | 1,177 | 28,378 |
Shares redeemed | (208,712) | (107,361) | (2,282,952) | (1,136,242) |
Net increase (decrease) | 147,924 | 491,915 | $ 1,625,976 | $ 5,124,917 |
Service Class | | | | |
Shares sold | - | 35,001 | $ - | $ 350,010 |
Reinvestment of distributions | 6 | 166 | 70 | 1,785 |
Shares redeemed | - | - | - | - |
Net increase (decrease) | 6 | 35,167 | $ 70 | $ 351,795 |
Service Class 2 | | | | |
Shares sold | - | 35,001 | $ - | $ 350,010 |
Reinvestment of distributions | 6 | 130 | 70 | 1,400 |
Shares redeemed | - | - | - | - |
Net increase (decrease) | 6 | 35,131 | $ 70 | $ 351,410 |
VIP Freedom 2010 | | | | |
Initial Class | | | | |
Shares sold | 595,069 | 1,396,144 | $ 6,534,268 | $ 14,664,567 |
Reinvestment of distributions | - | 6,005 | - | 64,854 |
Shares redeemed | (299,749) | (163,905) | (3,296,569) | (1,740,697) |
Net increase (decrease) | 295,320 | 1,238,244 | $ 3,237,699 | $ 12,988,724 |
Service Class | | | | |
Shares sold | 138,634 | 84,421 | $ 1,533,436 | $ 862,130 |
Reinvestment of distributions | - | 307 | - | 3,317 |
Shares redeemed | (11,839) | (13,852) | (129,180) | (143,657) |
Net increase (decrease) | 126,795 | 70,876 | $ 1,404,256 | $ 721,790 |
Service Class 2 | | | | |
Shares sold | 1,457,573 | 922,623 | $ 16,016,002 | $ 9,735,562 |
Reinvestment of distributions | - | 3,820 | - | 41,179 |
Shares redeemed | (124,345) | (24,615) | (1,357,247) | (256,516) |
Net increase (decrease) | 1,333,228 | 901,828 | $ 14,658,755 | $ 9,520,225 |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
8. Share Transactions - continued
| Shares | Dollars |
| Six months ended
June 30,
2006 | Year ended
December 31,
2005 A | Six months ended
June 30,
2006 | Year ended
December 31,
2005 A |
VIP Freedom 2015 | | | | |
Initial Class | | | | |
Shares sold | 614,700 | 1,472,595 | $ 6,922,623 | $ 15,572,982 |
Reinvestment of distributions | - | 7,074 | - | 77,678 |
Shares redeemed | (162,383) | (207,292) | (1,819,575) | (2,223,649) |
Net increase (decrease) | 452,317 | 1,272,377 | $ 5,103,048 | $ 13,427,011 |
Service Class | | | | |
Shares sold | - | 35,001 | $ - | $ 350,010 |
Reinvestment of distributions | - | 172 | - | 1,890 |
Shares redeemed | - | - | - | - |
Net increase (decrease) | - | 35,173 | $ - | $ 351,900 |
Service Class 2 | | | | |
Shares sold | 327,503 | 59,460 | $ 3,671,711 | $ 619,300 |
Reinvestment of distributions | - | 261 | - | 2,859 |
Shares redeemed | (23,156) | (13) | (258,249) | (141) |
Net increase (decrease) | 304,347 | 59,708 | $ 3,413,462 | $ 622,018 |
VIP Freedom 2020 | | | | |
Initial Class | | | | |
Shares sold | 476,246 | 1,564,154 | $ 5,438,713 | $ 16,654,069 |
Reinvestment of distributions | - | 8,320 | - | 92,441 |
Shares redeemed | (351,505) | (119,826) | (4,015,918) | (1,315,072) |
Net increase (decrease) | 124,741 | 1,452,648 | $ 1,422,795 | $ 15,431,438 |
Service Class | | | | |
Shares sold | 129,195 | 143,748 | $ 1,476,734 | $ 1,505,055 |
Reinvestment of distributions | - | 763 | - | 8,472 |
Shares redeemed | (2,661) | (1,219) | (30,256) | (13,120) |
Net increase (decrease) | 126,534 | 143,292 | $ 1,446,478 | $ 1,500,407 |
Service Class 2 | | | | |
Shares sold | 1,528,525 | 1,501,452 | $ 17,365,220 | $ 16,109,143 |
Reinvestment of distributions | - | 7,463 | - | 82,841 |
Shares redeemed | (63,101) | (25,203) | (721,355) | (275,926) |
Net increase (decrease) | 1,465,424 | 1,483,712 | $ 16,643,865 | $ 15,916,058 |
VIP Freedom 2025 | | | | |
Initial Class | | | | |
Shares sold | 269,626 | 453,648 | $ 3,095,387 | $ 4,845,340 |
Reinvestment of distributions | - | 2,506 | - | 28,069 |
Shares redeemed | (129,144) | (23,774) | (1,491,893) | (261,394) |
Shares redeemed | - | - | - | - |
Net increase (decrease) | 140,482 | 432,380 | $ 1,603,494 | $ 4,612,015 |
Service Class | | | | |
Shares sold | - | 35,001 | $ - | $ 350,010 |
Reinvestment of distributions | - | 181 | - | 2,030 |
Shares redeemed | - | - | - | - |
Net increase (decrease) | - | 35,182 | $ - | $ 352,040 |
Service Class 2 | | | | |
Shares sold | - | 35,001 | $ - | $ 350,010 |
Reinvestment of distributions | - | 147 | - | 1,645 |
Shares redeemed | - | - | - | - |
Net increase (decrease) | - | 35,148 | $ - | $ 351,655 |
VIP Freedom Funds Portfolio
8. Share Transactions - continued
| Shares | Dollars |
| Six months ended
June 30,
2006 | Year ended
December 31,
2005 A | Six months ended
June 30,
2006 | Year ended
December 31,
2005 A |
VIP Freedom 2030 | | | | |
Initial Class | | | | |
Shares sold | 336,888 | 890,212 | $ 3,943,707 | $ 9,562,775 |
Reinvestment of distributions | - | 4,109 | - | 46,470 |
Shares redeemed | (218,809) | (161,133) | (2,531,809) | (1,749,772) |
Net increase (decrease) | 118,079 | 733,188 | $ 1,411,898 | $ 7,859,473 |
Service Class | | | | |
Shares sold | 40,656 | 91,941 | $ 474,399 | $ 959,711 |
Reinvestment of distributions | - | 441 | - | 4,989 |
Shares redeemed | (6,621) | (7,342) | (77,051) | (78,548) |
Net increase (decrease) | 34,035 | 85,040 | $ 397,348 | $ 886,152 |
Service Class 2 | | | | |
Shares sold | 437,462 | 684,652 | $ 5,107,121 | $ 7,360,607 |
Reinvestment of distributions | - | 3,226 | - | 36,453 |
Shares redeemed | (196,506) | (30,725) | (2,297,076) | (328,962) |
Net increase (decrease) | 240,956 | 657,153 | $ 2,810,045 | $ 7,068,098 |
A For the period April 26, 2005 (commencement of operations) to December 31, 2005.
Semiannual Report
Semiannual Report
VIP Freedom Funds Portfolio
Semiannual Report
Investment Adviser
Strategic Advisers, Inc.
Boston, MA
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank, N.A.
Pittsburgh, PA
VIPFF2K-SANN-0806
1.819548.102
Fidelity® Variable Insurance Products:
Freedom Lifetime Income Funds -
Portfolios I, II, & III
Semiannual Report
June 30, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.advisor.fidelity.com.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds 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, 2006 to June 30, 2006).
Actual Expenses
The first line of the accompanying table for each 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 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, each fund, as a shareholder in underlying Fidelity funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity funds. These fees and expenses are not included in each fund's annualized expense ratio used to calculate the expense estimates in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's 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, each fund, as a shareholder in underlying Fidelity funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity funds. These fees and expenses are not included in each fund's annualized expense ratio used to calculate the expense estimates in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning
Account Value
January 1, 2006 | Ending
Account Value
June 30, 2006 | Expenses Paid
During Period*
January 1, 2006
to June 30, 2006 |
VIP Freedom Lifetime Income I | | | |
Actual | $ 1,000.00 | $ 1,016.60 | $ - |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ - |
VIP Freedom Lifetime Income II | | | |
Actual | $ 1,000.00 | $ 1,025.10 | $ - |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ - |
VIP Freedom Lifetime Income III | | | |
Actual | $ 1,000.00 | $ 1,029.60 | $ - |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ - |
A 5% return per year before expenses
* Expenses are equal to each Fund's annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The fees and expenses of the underlying Fidelity funds in which the fund invests are not included in the fund's annualized expense ratio.
| Annualized
Expense Ratio |
VIP Freedom Lifetime Income I | 0% |
VIP Freedom Lifetime Income II | 0% |
VIP Freedom Lifetime Income III | 0% |
Semiannual Report
VIP Freedom Lifetime Income I Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Investor Class | 5.6 | 6.4 |
VIP Equity-Income Portfolio Investor Class | 6.6 | 7.3 |
VIP Growth & Income Portfolio Investor Class | 6.5 | 7.4 |
VIP Growth Portfolio Investor Class | 6.4 | 7.3 |
VIP Mid Cap Portfolio Investor Class | 2.3 | 2.7 |
VIP Value Portfolio Investor Class | 5.6 | 6.3 |
VIP Value Strategies Portfolio Investor Class | 2.3 | 2.7 |
| 35.3 | 40.1 |
International Equity Funds | | |
VIP Overseas Portfolio Investor Class R | 8.2 | 5.4 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Investor Class | 5.1 | 5.0 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Investor Class | 40.6 | 39.6 |
Short-Term Funds | | |
VIP Money Market Portfolio Investor Class | 10.8 | 9.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
 | Domestic Equity Funds | 35.3% | |
 | International Equity Funds | 8.2% | |
 | Investment Grade Fixed-Income Funds | 40.6% | |
 | High Yield Fixed-Income Funds | 5.1% | |
 | Short-Term Funds | 10.8% | |
Six months ago |
| Domestic Equity Funds | 40.1% | |
| International Equity Funds | 5.4% | |
| Investment Grade Fixed-Income Funds | 39.6% | |
| High Yield Fixed-Income Funds | 5.0% | |
| Short-Term Funds | 9.9% | |
Expected |
| Domestic Equity Funds | 36.0% | |
| International Equity Funds | 9.0% | |
| Investment Grade Fixed-Income Funds | 39.1% | |
| High Yield Fixed-Income Funds | 5.0% | |
| Short-Term Funds | 10.9% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Freedom Lifetime Income I Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 43.5% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 35.3% |
VIP Contrafund Portfolio Investor Class | 9,691 | | $ 307,791 |
VIP Equity-Income Portfolio Investor Class | 14,471 | | 360,627 |
VIP Growth & Income Portfolio Investor Class | 24,773 | | 357,975 |
VIP Growth Portfolio Investor Class | 10,595 | | 354,940 |
VIP Mid Cap Portfolio Investor Class | 3,780 | | 124,271 |
VIP Value Portfolio Investor Class | 23,715 | | 307,344 |
VIP Value Strategies Portfolio Investor Class | 10,577 | | 126,815 |
TOTAL DOMESTIC EQUITY FUNDS | | 1,939,763 |
International Equity Funds - 8.2% |
VIP Overseas Portfolio Investor Class R | 21,094 | | 450,561 |
TOTAL EQUITY FUNDS (Cost $2,390,690) | 2,390,324 |
Fixed-Income Funds - 45.7% |
| | | |
High Yield Fixed-Income Funds - 5.1% |
VIP High Income Portfolio Investor Class | 44,405 | | 281,525 |
Investment Grade Fixed-Income Funds - 40.6% |
VIP Investment Grade Bond Portfolio Investor Class | 183,914 | | 2,230,872 |
TOTAL FIXED-INCOME FUNDS (Cost $2,570,073) | 2,512,397 |
Short-Term Funds - 10.8% |
| | | |
VIP Money Market Portfolio Investor Class
(Cost $594,836) | 594,836 | | 594,836 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $5,555,599) | $ 5,497,557 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom Lifetime Income I Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $5,555,599) - See accompanying schedule | | $ 5,497,557 |
Cash | | 88 |
Receivable for investments sold | | 4,073 |
Total assets | | 5,501,718 |
| | |
Liabilities | | |
Payable for fund shares redeemed | $ 4,073 | |
Total liabilities | | 4,073 |
| | |
Net Assets | | $ 5,497,645 |
Net Assets consist of: | | |
Paid in capital | | $ 5,432,016 |
Undistributed net investment income | | 81,887 |
Accumulated undistributed net realized gain (loss) on investments | | 41,784 |
Net unrealized appreciation (depreciation) on investments | | (58,042) |
Net Assets, for 526,770 shares outstanding | | $ 5,497,645 |
Net Asset Value, offering price and redemption price per share ($5,497,645 ÷ 526,770 shares) | | $ 10.44 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 81,885 |
Interest | | 2 |
Total income | | 81,887 |
| | |
Expenses | | |
Independent trustees' compensation | $ 8 | |
Total expenses before reductions | 8 | |
Expense reductions | (8) | 0 |
Net investment income (loss) | | 81,887 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (15,842) | |
Capital gain distributions from underlying funds | 57,626 | 41,784 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (87,670) |
Net gain (loss) | | (45,886) |
Net increase (decrease) in net assets resulting from operations | | $ 36,001 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Increase (Decrease) in Net Assets | Six months ended
June 30, 2006
(Unaudited) | For the period
July 26, 2005
(commencement
of operations) to
December 31, 2005 |
Operations | | |
Net investment income (loss) | $ 81,887 | $ 13,358 |
Net realized gain (loss) | 41,784 | 9,938 |
Change in net unrealized appreciation (depreciation) | (87,670) | 29,628 |
Net increase (decrease) in net assets resulting from operations | 36,001 | 52,924 |
Distributions to shareholders from net investment income | - | (14,034) |
Distributions to shareholders from net realized gain | - | (9,824) |
Total distributions | - | (23,858) |
Share transactions
Proceeds from sales of shares | 2,967,292 | 2,908,474 |
Reinvestment of distributions | - | 23,858 |
Cost of shares redeemed | (411,690) | (55,356) |
Net increase (decrease) in net assets resulting from share transactions | 2,555,602 | 2,876,976 |
Total increase (decrease) in net assets | 2,591,603 | 2,906,042 |
| | |
Net Assets | | |
Beginning of period | 2,906,042 | - |
End of period (including undistributed net investment income of $81,887 and undistributed net investment income of $0, respectively) | $ 5,497,645 | $ 2,906,042 |
Other Information Shares | | |
Sold | 282,980 | 286,018 |
Issued in reinvestment of distributions | - | 2,319 |
Redeemed | (39,211) | (5,336) |
Net increase (decrease) | 243,769 | 283,001 |
Financial Highlights
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 F |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.27 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) D | .19 | .10 |
Net realized and unrealized gain (loss) | (.02) | .26 |
Total from investment operations | .17 | .36 |
Distributions from net investment income | - | (.05) |
Distributions from net realized gain | - | (.04) |
Total distributions | - | (.09) |
Net asset value, end of period | $ 10.44 | $ 10.27 |
Total Return B, C | 1.66% | 3.55% |
Ratios to Average Net Assets E, G | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 3.59% A | 2.23% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 5,498 | $ 2,906 |
Portfolio turnover rate | 40% A | 71% |
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 Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F For the period July 26, 2005 (commencement of operations) to December 31, 2005.
G Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Lifetime Income Funds Portfolio
VIP Freedom Lifetime Income II Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Investor Class | 8.2 | 9.1 |
VIP Equity-Income Portfolio Investor Class | 9.6 | 10.3 |
VIP Growth & Income Portfolio Investor Class | 9.5 | 10.5 |
VIP Growth Portfolio Investor Class | 9.5 | 10.3 |
VIP Mid Cap Portfolio Investor Class | 3.3 | 3.8 |
VIP Value Portfolio Investor Class | 8.2 | 8.9 |
VIP Value Strategies Portfolio Investor Class | 3.4 | 3.7 |
| 51.7 | 56.6 |
International Equity Funds | | |
VIP Overseas Portfolio Investor Class R | 11.8 | 10.5 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Investor Class | 7.4 | 7.2 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Investor Class | 27.5 | 24.8 |
Short-Term Funds | | |
VIP Money Market Portfolio Investor Class | 1.6 | 0.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 51.7% | |
| International Equity Funds | 11.8% | |
| Investment Grade Fixed-Income Funds | 27.5% | |
| High Yield Fixed-Income Funds | 7.4% | |
| Short-Term Funds | 1.6% | |
Six months ago |
| Domestic Equity Funds | 56.6% | |
| International Equity Funds | 10.5% | |
| Investment Grade Fixed-Income Funds | 24.8% | |
| High Yield Fixed-Income Funds | 7.2% | |
| Short-Term Funds | 0.9% | |
Expected |
| Domestic Equity Funds | 50.0% | |
| International Equity Funds | 12.5% | |
| Investment Grade Fixed-Income Funds | 28.2% | |
| High Yield Fixed-Income Funds | 7.1% | |
| Short-Term Funds | 2.2% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Freedom Lifetime Income II Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 63.5% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 51.7% |
VIP Contrafund Portfolio Investor Class | 27,558 | | $ 875,257 |
VIP Equity-Income Portfolio Investor Class | 41,039 | | 1,022,697 |
VIP Growth & Income Portfolio Investor Class | 70,299 | | 1,015,821 |
VIP Growth Portfolio Investor Class | 30,119 | | 1,008,972 |
VIP Mid Cap Portfolio Investor Class | 10,815 | | 355,606 |
VIP Value Portfolio Investor Class | 67,299 | | 872,189 |
VIP Value Strategies Portfolio Investor Class | 30,093 | | 360,814 |
TOTAL DOMESTIC EQUITY FUNDS | | 5,511,356 |
International Equity Funds - 11.8% |
VIP Overseas Portfolio Investor Class R | 58,683 | | 1,253,479 |
TOTAL EQUITY FUNDS (Cost $6,798,747) | 6,764,835 |
Fixed-Income Funds - 34.9% |
| | | |
High Yield Fixed-Income Funds - 7.4% |
VIP High Income Portfolio Investor Class | 124,808 | | 791,281 |
Investment Grade Fixed-Income Funds - 27.5% |
VIP Investment Grade Bond Portfolio Investor Class | 241,499 | | 2,929,379 |
TOTAL FIXED-INCOME FUNDS (Cost $3,768,368) | 3,720,660 |
Short-Term Funds - 1.6% |
| | | |
VIP Money Market Portfolio Investor Class
(Cost $164,460) | 164,460 | | 164,460 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $10,731,575) | $ 10,649,955 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom Lifetime Income II Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $10,731,575) - See accompanying schedule | | $ 10,649,955 |
Cash | | 89 |
Receivable for investments sold | | 157 |
Total assets | | 10,650,201 |
| | |
Liabilities | | |
Payable for fund shares redeemed | $ 157 | |
Total liabilities | | 157 |
| | |
Net Assets | | $ 10,650,044 |
Net Assets consist of: | | |
Paid in capital | | $ 10,598,929 |
Undistributed net investment income | | 63,624 |
Accumulated undistributed net realized gain (loss) on investments | | 69,111 |
Net unrealized appreciation (depreciation) on investments | | (81,620) |
Net Assets, for 1,001,878 shares outstanding | | $ 10,650,044 |
Net Asset Value, offering price
and redemption price
per share ($10,650,044 ÷ 1,001,878 shares) | | $ 10.63 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 63,622 |
Interest | | 2 |
Total income | | 63,624 |
| | |
Expenses | | |
Independent trustees' compensation | $ 10 | |
Total expenses before reductions | 10 | |
Expense reductions | (10) | 0 |
Net investment income (loss) | | 63,624 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (17,528) | |
Capital gain distributions from underlying funds | 86,661 | 69,133 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (128,960) |
Net gain (loss) | | (59,827) |
Net increase (decrease) in net assets resulting from operations | | $ 3,797 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Increase (Decrease) in Net Assets | Six months ended
June 30, 2006
(Unaudited) | For the period
July 26, 2005
(commencement
of operations) to
December 31, 2005 |
Operations | | |
Net investment income (loss) | $ 63,624 | $ 13,748 |
Net realized gain (loss) | 69,133 | 14,608 |
Change in net unrealized appreciation (depreciation) | (128,960) | 47,340 |
Net increase (decrease) in net assets resulting from operations | 3,797 | 75,696 |
Distributions to shareholders from net investment income | - | (13,519) |
Distributions to shareholders from net realized gain | - | (15,772) |
Total distributions | - | (29,291) |
Share transactions
Proceeds from sales of shares | 8,594,543 | 2,296,292 |
Reinvestment of distributions | - | 29,291 |
Cost of shares redeemed | (314,684) | (5,600) |
Net increase (decrease) in net assets resulting from share transactions | 8,279,859 | 2,319,983 |
Total increase (decrease) in net assets | 8,283,656 | 2,366,388 |
| | |
Net Assets | | |
Beginning of period | 2,366,388 | - |
End of period (including undistributed net investment income of $63,624 and undistributed net investment income of $0, respectively) | $ 10,650,044 | $ 2,366,388 |
Other Information Shares | | |
Sold | 803,286 | 225,850 |
Issued in reinvestment of distributions | - | 2,814 |
Redeemed | (29,531) | (541) |
Net increase (decrease) | 773,755 | 228,123 |
Financial Highlights
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.37 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) D | .10 | .10 |
Net realized and unrealized gain (loss) | .16 F | .40 |
Total from investment operations | .26 | .50 |
Distributions from net investment income | - | (.06) |
Distributions from net realized gain | - | (.07) |
Total distributions | - | (.13) |
Net asset value, end of period | $ 10.63 | $ 10.37 |
Total Return B, C | 2.51% | 5.00% |
Ratios to Average Net Assets E, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 1.94% A | 2.18% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 10,650 | $ 2,366 |
Portfolio turnover rate | 25% A | 69% |
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 Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F 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.
G For the period July 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Lifetime Income Funds Portfolio
VIP Freedom Lifetime Income III Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Investor Class | 10.2 | 11.0 |
VIP Equity-Income Portfolio Investor Class | 11.9 | 12.5 |
VIP Growth & Income Portfolio Investor Class | 11.8 | 12.6 |
VIP Growth Portfolio Investor Class | 11.8 | 12.5 |
VIP Mid Cap Portfolio Investor Class | 4.1 | 4.6 |
VIP Value Portfolio Investor Class | 10.2 | 10.7 |
VIP Value Strategies Portfolio Investor Class | 4.2 | 4.5 |
| 64.2 | 68.4 |
International Equity Funds | | |
VIP Overseas Portfolio Investor Class R | 14.6 | 13.1 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Investor Class | 7.8 | 7.3 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Investor Class | 13.4 | 11.2 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 64.2% | |
| International Equity Funds | 14.6% | |
| Investment Grade Fixed-Income Funds | 13.4% | |
| High Yield Fixed-Income Funds | 7.8% | |
| Short-Term Funds | 0.0% | |
Six months ago |
| Domestic Equity Funds | 68.4% | |
| International Equity Funds | 13.1% | |
 | Investment Grade Fixed-Income Funds | 11.2% | |
| High Yield Fixed-Income Funds | 7.3% | |
Expected |
| Domestic Equity Funds | 61.8% | |
| International Equity Funds | 15.5% | |
| Investment Grade Fixed-Income Funds | 15.2% | |
| High Yield Fixed-Income Funds | 7.5% | |
| Short-Term Funds | 0.0% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Freedom Lifetime Income III Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 78.8% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 64.2% |
VIP Contrafund Portfolio Investor Class | 22,752 | | $ 722,593 |
VIP Equity-Income Portfolio Investor Class | 33,860 | | 843,783 |
VIP Growth & Income Portfolio Investor Class | 57,999 | | 838,079 |
VIP Growth Portfolio Investor Class | 24,832 | | 831,886 |
VIP Mid Cap Portfolio Investor Class | 8,911 | | 292,997 |
VIP Value Portfolio Investor Class | 55,529 | | 719,660 |
VIP Value Strategies Portfolio Investor Class | 24,812 | | 297,495 |
TOTAL DOMESTIC EQUITY FUNDS | | 4,546,493 |
International Equity Funds - 14.6% |
VIP Overseas Portfolio Investor Class R | 48,250 | | 1,030,615 |
TOTAL EQUITY FUNDS (Cost $5,549,131) | 5,577,108 |
Fixed-Income Funds - 21.2% |
| | | |
High Yield Fixed-Income Funds - 7.8% |
VIP High Income Portfolio Investor Class | 86,741 | | 549,940 |
Investment Grade Fixed-Income Funds - 13.4% |
VIP Investment Grade Bond Portfolio Investor Class | 78,532 | | 952,591 |
TOTAL FIXED-INCOME FUNDS (Cost $1,523,430) | 1,502,531 |
Short-Term Funds - 0.0% |
| | | |
VIP Money Market Portfolio Investor Class
(Cost $1,159) | 1,159 | | 1,159 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $7,073,720) | $ 7,080,798 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Freedom Lifetime Income III Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $7,073,720) - See accompanying schedule | | $ 7,080,798 |
Cash | | 90 |
Receivable for investments sold | | 97 |
Total assets | | 7,080,985 |
| | |
Liabilities | | |
Payable for fund shares redeemed | $ 97 | |
Total liabilities | | 97 |
| | |
Net Assets | | $ 7,080,888 |
Net Assets consist of: | | |
Paid in capital | | $ 6,955,852 |
Undistributed net investment income | | 35,356 |
Accumulated undistributed net realized gain (loss) on investments | | 82,602 |
Net unrealized appreciation (depreciation) on investments | | 7,078 |
Net Assets, for 656,251 shares outstanding | | $ 7,080,888 |
Net Asset Value, offering price and redemption price per share ($7,080,888 ÷ 656,251 shares) | | $ 10.79 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 35,354 |
Interest | | 2 |
Total income | | 35,356 |
| | |
Expenses | | |
Independent trustees' compensation | $ 7 | |
Total expenses before reductions | 7 | |
Expense reductions | (7) | 0 |
Net investment income (loss) | | 35,356 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (620) | |
Capital gain distributions from underlying funds | 83,469 | 82,849 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (90,220) |
Net gain (loss) | | (7,371) |
Net increase (decrease) in net assets resulting from operations | | $ 27,985 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
Increase (Decrease) in Net Assets | Six months ended
June 30, 2006
(Unaudited) | For the period
July 26, 2005
(commencement
of operations) to
December 31, 2005 |
Operations | | |
Net investment income (loss) | $ 35,356 | $ 17,298 |
Net realized gain (loss) | 82,849 | 17,826 |
Change in net unrealized appreciation (depreciation) | (90,220) | 97,298 |
Net increase (decrease) in net assets resulting from operations | 27,985 | 132,422 |
Distributions to shareholders from net investment income | - | (16,737) |
Distributions to shareholders from net realized gain | - | (19,527) |
Total distributions | - | (36,264) |
Share transactions
Proceeds from sales of shares | 4,147,139 | 2,909,912 |
Reinvestment of distributions | - | 36,264 |
Cost of shares redeemed | (52,506) | (84,064) |
Net increase (decrease) in net assets resulting from share transactions | 4,094,633 | 2,862,112 |
Total increase (decrease) in net assets | 4,122,618 | 2,958,270 |
| | |
Net Assets | | |
Beginning of period | 2,958,270 | - |
End of period (including undistributed net investment income of $35,356 and undistributed net investment income of $0, respectively) | $ 7,080,888 | $ 2,958,270 |
Other Information Shares | | |
Sold | 378,627 | 287,287 |
Issued in reinvestment of distributions | - | 3,450 |
Redeemed | (4,776) | (8,337) |
Net increase (decrease) | 373,851 | 282,400 |
Financial Highlights
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.48 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) D | .08 | .11 |
Net realized and unrealized gain (loss) | .23 F | .50 |
Total from investment operations | .31 | .61 |
Distributions from net investment income | - | (.06) |
Distributions from net realized gain | - | (.07) |
Total distributions | - | (.13) |
Net asset value, end of period | $ 10.79 | $ 10.48 |
Total Return B, C | 2.96% | 6.10% |
Ratios to Average Net Assets E, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 1.53% A | 2.39% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 7,081 | $ 2,958 |
Portfolio turnover rate | 16% A | 59% |
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 Calculated based on average shares outstanding during the period.
E Amounts do not include the activity of the underlying funds.
F 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.
G For the period July 26, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Lifetime Income Funds Portfolio
Notes to Financial Statements
For the period ended June 30, 2006 (Unaudited)
1. Significant Accounting Policies.
VIP Freedom Lifetime Income I Portfolio, VIP Freedom Lifetime Income II Portfolio, and VIP Freedom Lifetime Income III Portfolio (the Funds) are funds of Variable Insurance Products Fund IV. The Variable Insurance Products Fund IV (the trust) (referred to in this report as Fidelity Variable Insurance Products) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as Massachusetts business trust. Each Fund is authorized to issue an unlimited number of shares. The Funds invest primarily in a combination of other VIP equity, fixed income, and money market funds (the Underlying Funds) managed by Fidelity Management & Research Company (FMR). Shares of each Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Net asset value per share is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Investments in the Underlying Funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost, which approximates value.
Investment Transactions and Income. Security transactions, normally shares of the Underlying Funds, are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Income and capital gain distributions from the Underlying Funds, if any, are recorded on the ex-dividend date. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each fund in the trust. Expenses included in the accompanying financial statements reflect the expenses of each Fund and do not include any expenses associated with the Underlying Funds.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to wash sales.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Cost for Federal
Income Tax Purposes | Unrealized
Appreciation | Unrealized
Depreciation | Net Unrealized
Appreciation/
(Depreciation) |
VIP Freedom Lifetime Income I | $ 5,555,599 | $ 44,001 | $ (102,043) | $ (58,042) |
VIP Freedom Lifetime Income II | 10,731,575 | 93,091 | (174,711) | (81,620) |
VIP Freedom Lifetime Income III | 7,073,925 | 125,975 | (119,102) | 6,873 |
New Accounting Pronouncement. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48) was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Funds' net assets and results of operations.
Semiannual Report
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
3. Purchases and Sales of Investments.
Purchases and redemptions of the Underlying Fund shares are noted in the table below.
| Purchases ($) | Redemptions ($) |
VIP Freedom Lifetime Income I | 3,616,435 | 921,278 |
VIP Freedom Lifetime Income II | 9,260,999 | 830,853 |
VIP Freedom Lifetime Income III | 4,576,832 | 363,376 |
4. Fees and Other Transactions with Affiliates.
Management Fee. Strategic Advisers, Inc. (Strategic Advisers), an affiliate of FMR, provides the Funds with investment management related services. The Funds do not pay any fees for these services.
Other Transactions. Strategic Advisers has entered into an administration agreement with FMR under which FMR provides management and administrative services (other than investment advisory services) necessary for the operation of each Fund. Pursuant to this agreement, FMR pays all expenses of each Fund, excluding the compensation of the independent Trustees and certain other expenses such as interest expense. FMR also contracts with other Fidelity companies to perform the services necessary for the operation of each Fund. The Funds do not pay any fees for these services.
5. Expense Reductions.
FMR voluntarily agreed to reimburse funds to the extent annual operating expenses exceeded certain levels of average net assets. Total expenses are limited to 0.00% of average net assets. Some expenses, for example interest expense, are excluded from this reimbursement.
The following funds were in reimbursement during the period:
| Reimbursement
from adviser |
| |
VIP Freedom Lifetime Income I | $ 8 |
VIP Freedom Lifetime Income II | 10 |
VIP Freedom Lifetime Income III | 7 |
6. Other.
The Funds' 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 Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period mutual funds managed by FMR or an FMR affiliate were the owners of record of all of the outstanding shares of the Fund.
VIP Lifetime Income Funds Portfolio
Semiannual Report
VIP Lifetime Income Funds Portfolio
Investment Adviser
Strategic Advisers, Inc.
Boston, MA
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank, N.A.
Pittsburgh, PA
VIPFLI-SANN-0806
1.816202.100
Fidelity® Variable Insurance Products:
FundsManager - 20%, 50%, 70%, 85% Portfolio
Semiannual Report
June 30, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds 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 quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.advisor.fidelity.com.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including 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 Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The actual expense Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (April 13, 2006 to June 30, 2006). The hypothetical expense Example is based on an investment of $1,000 invested for the one-half year period (January 1, 2006 to June 30, 2006).
Actual Expenses
The first line of the accompanying table for each class of each 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, each fund, as a shareholder in underlying Fidelity funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity funds. These fees and expenses are not included in each fund's annualized expense ratio used to calculate the expense estimates in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of each 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, each fund, as a shareholder in underlying Fidelity funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity funds. These fees and expenses are not included in each fund's annualized expense ratio used to calculate the expense estimates in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning
Account Value | Ending
Account Value
June 30, 2006 | Expenses Paid
During Period |
VIP FundsManager 20% Portfolio | | | |
Service Class | | | |
Actual | $ 1,000.00 | $ 999.00 | $ .43 B |
Hypothetical A | $ 1,000.00 | $ 1,023.80 | $ 1.00 C |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 998.00 | $ .76 B |
Hypothetical A | $ 1,000.00 | $ 1,023.06 | $ 1.76 C |
Investor Class | | | |
Actual | $ 1,000.00 | $ 998.00 | $ .43 B |
Hypothetical A | $ 1,000.00 | $ 1,023.80 | $ 1.00 C |
VIP FundsManager 50% Portfolio | | | |
Service Class | | | |
Actual | $ 1,000.00 | $ 990.00 | $ .43 B |
Hypothetical A | $ 1,000.00 | $ 1,023.80 | $ 1.00 C |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 991.00 | $ .75 B |
Hypothetical A | $ 1,000.00 | $ 1,023.06 | $ 1.76 C |
Investor Class | | | |
Actual | $ 1,000.00 | $ 990.00 | $ .43 B |
Hypothetical A | $ 1,000.00 | $ 1,023.80 | $ 1.00 C |
| Beginning
Account Value | Ending
Account Value
June 30, 2006 | Expenses Paid
During Period |
VIP FundsManager 70% Portfolio | | | |
Service Class | | | |
Actual | $ 1,000.00 | $ 985.00 | $ .43 B |
Hypothetical A | $ 1,000.00 | $ 1,023.80 | $ 1.00 C |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 984.00 | $ .75 B |
Hypothetical A | $ 1,000.00 | $ 1,023.06 | $ 1.76 C |
Investor Class | | | |
Actual | $ 1,000.00 | $ 985.00 | $ .43 B |
Hypothetical A | $ 1,000.00 | $ 1,023.80 | $ 1.00 C |
VIP FundsManager 85% Portfolio | | | |
Service Class | | | |
Actual | $ 1,000.00 | $ 981.00 | $ .43 B |
Hypothetical A | $ 1,000.00 | $ 1,023.80 | $ 1.00 C |
Service Class 2 | | | |
Actual | $ 1,000.00 | $ 981.00 | $ .75 B |
Hypothetical A | $ 1,000.00 | $ 1,023.06 | $ 1.76 C |
Investor Class | | | |
Actual | $ 1,000.00 | $ 981.00 | $ .43 B |
Hypothetical A | $ 1,000.00 | $ 1,023.80 | $ 1.00 C |
A 5% return per year before expenses
B Actual expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over
the period, multiplied by 79/365 (to reflect the period April 13, 2006 to June 30, 2006.
C Hypothetical expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account
value over the period, multiplied by 181/365 (to reflect the one-half year period).
The fees and expenses of the underlying Fidelity funds in which the fund invests are not included in each class' annualized expense ratio.
| Annualized
Expense Ratio |
VIP FundsManager 20% Portfolio | |
Service Class | .20% |
Service Class 2 | .35% |
Investor Class | .20% |
VIP FundsManager 50% Portfolio | |
Service Class | .20% |
Service Class 2 | .35% |
Investor Class | .20% |
VIP FundsManager 70% Portfolio | |
Service Class | .20% |
Service Class 2 | .35% |
Investor Class | .20% |
VIP FundsManager 85% Portfolio | |
Service Class | .20% |
Service Class 2 | .35% |
Investor Class | .20% |
VIP FundsManager Portfolio
VIP FundsManager 20% Portfolio
Investment Summary
Fund Holdings as of June 30, 2006 |
| % of fund's investments |
Domestic Equity Funds | |
Fidelity Blue Chip Value Fund | 2.3 |
Fidelity Contrafund | 0.5 |
Fidelity Growth and Income Fund II | 0.9 |
Fidelity Growth Company Fund | 2.3 |
Fidelity Large Cap Stock Fund | 0.5 |
Fidelity Mid-Cap Stock Fund | 2.5 |
Fidelity Real Estate Investment Portfolio | 0.8 |
Fidelity Small Cap Stock Fund | 0.3 |
Fidelity Small Cap Value Fund | 0.3 |
Fidelity Stock Selector Fund | 2.2 |
Fidelity Trend Fund | 1.2 |
Fidelity Value Discovery Fund | 0.7 |
Fidelity Value Fund | 1.5 |
VIP Dynamic Capital Appreciation Portfolio -
Investor Class | 2.6 |
VIP Growth & Income Portfolio Investor Class | 1.8 |
| 20.4 |
International Equity Funds | |
Fidelity International Discovery Fund | 0.6 |
Fidelity International Real Estate Fund | 0.2 |
Fidelity International Small Capital Opportunities Fund | 0.6 |
Fidelity Overseas Fund | 0.9 |
| 2.3 |
Fixed-Income Funds | |
Fidelity Capital & Income Fund | 1.8 |
Fidelity Floating Rate High Income Fund | 5.0 |
Fidelity High Income Fund | 5.1 |
Fidelity New Markets Income Fund | 3.0 |
Fidelity U.S. Bond Index Fund | 34.5 |
| 49.4 |
Money Market Funds | |
Fidelity Institutional Prime Money Market Portfolio: Class I | 27.9 |
| 100.0 |
Asset Allocation (% of fund's investments) |
As of June 30, 2006 |
 | Domestic Equity Funds | 20.4% | |
 | International Equity Funds | 2.3% | |
 | Fixed Income Funds | 49.4% | |
 | Money Market Funds | 27.9% | |
Semiannual Report
VIP FundsManager 20% Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 22.7% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 20.4% |
Fidelity Blue Chip Value Fund | 6,943 | | $ 96,651 |
Fidelity Contrafund | 316 | | 20,846 |
Fidelity Growth and Income Fund II | 3,543 | | 36,529 |
Fidelity Growth Company Fund (a) | 1,486 | | 95,212 |
Fidelity Large Cap Stock Fund | 1,371 | | 21,693 |
Fidelity Mid-Cap Stock Fund | 3,647 | | 103,570 |
Fidelity Real Estate Investment Portfolio | 903 | | 31,458 |
Fidelity Small Cap Stock Fund | 701 | | 12,737 |
Fidelity Small Cap Value Fund | 960 | | 13,168 |
Fidelity Stock Selector Fund | 3,705 | | 93,557 |
Fidelity Trend Fund | 831 | | 48,370 |
Fidelity Value Discovery Fund | 1,804 | | 29,906 |
Fidelity Value Fund | 805 | | 63,236 |
VIP Dynamic Capital Appreciation Portfolio - Investor Class | 11,783 | | 108,052 |
VIP Growth & Income Portfolio Investor Class | 5,159 | | 74,546 |
TOTAL DOMESTIC EQUITY FUNDS | | 849,531 |
International Equity Funds - 2.3% |
Fidelity International Discovery Fund | 679 | | 23,201 |
Fidelity International Real Estate Fund | 728 | | 10,468 |
Fidelity International Small Capital Opportunities Fund | 1,654 | | 23,002 |
Fidelity Overseas Fund | 860 | | 38,069 |
TOTAL INTERNATIONAL EQUITY FUNDS | | 94,740 |
TOTAL EQUITY FUNDS (Cost $930,012) | 944,271 |
Fixed-Income Funds - 49.4% |
| | | |
Fidelity Capital & Income Fund | 9,008 | | 75,755 |
Fidelity Floating Rate High Income Fund | 20,925 | | 207,157 |
Fidelity High Income Fund | 24,485 | | 213,755 |
Fidelity New Markets Income Fund | 8,720 | | 123,646 |
Fidelity U.S. Bond Index Fund | 135,276 | | 1,432,575 |
TOTAL FIXED-INCOME FUNDS (Cost $2,058,325) | 2,052,888 |
Money Market Funds - 27.9% |
| | | |
Fidelity Institutional Prime Money Market Portfolio: Class I
(Cost $1,158,249) | 1,158,249 | | 1,158,249 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $4,146,586) | $ 4,155,408 |
Legend |
(a) Non-income producing |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP FundsManager 20% Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $4,146,586) -
See accompanying schedule | | $ 4,155,408 |
Cash | | 40 |
Receivable for fund shares sold | | 995 |
Total assets | | 4,156,443 |
| | |
Liabilities | | |
Payable for investments purchased | $ 956 | |
Payable for fund shares redeemed | 38 | |
Accrued management fee | 442 | |
Distribution fees payable | 12 | |
Total liabilities | | 1,448 |
| | |
Net Assets | | $ 4,154,995 |
Net Assets consist of: | | |
Paid in capital | | $ 4,137,626 |
Undistributed net investment income | | 10,530 |
Accumulated undistributed net realized gain (loss) on investments | | (1,983) |
Net unrealized appreciation (depreciation) on investments | | 8,822 |
Net Assets | | $ 4,154,995 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($99,871 ÷ 10,001 shares) | | $ 9.99 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($99,839 ÷ 10,001 shares) | | $ 9.98 |
| | |
Investor Class:
Net Asset Value, offering price and redemption price per share ($3,955,285 ÷ 396,207 shares) | | $ 9.98 |
Statement of Operations
| For the period April 13, 2006
commencement of operations) to June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 10,922 |
Interest | | 199 |
Total income | | 11,121 |
| | |
Expenses | | |
Management fee | $ 707 | |
Distribution fees | 76 | |
Independent trustees' compensation | 1 | |
Total expenses before reductions | 784 | |
Expense reductions | (193) | 591 |
Net investment income (loss) | | 10,530 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (2,626) | |
Capital gain distributions from underlying funds | 643 | (1,983) |
Change in net unrealized appreciation (depreciation) on underlying funds | | 8,822 |
Net gain (loss) | | 6,839 |
Net increase (decrease) in net assets resulting from operations | | $ 17,369 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP FundsManager 20% Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| For the period
April 13, 2006
(commencement
of operations) to
June 30, 2006
(Unaudited) |
Increase (Decrease) in Net Assets | |
Operations | |
Net investment income (loss) | $ 10,530 |
Net realized gain (loss) | (1,983) |
Change in net unrealized appreciation (depreciation) | 8,822 |
Net increase (decrease) in net assets resulting from operations | 17,369 |
Share transactions - net increase (decrease) | 4,137,626 |
Total increase (decrease) in net assets | 4,154,995 |
| |
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $10,530) | $ 4,154,995 |
Financial Highlights - Service Class
| Period ended
June 30, 2006 |
| (Unaudited) H |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .08 |
Net realized and unrealized gain (loss) | (.09) G |
Total from investment operations | (.01) |
Net asset value, end of period | $ 9.99 |
Total Return B, C, D | (.10)% |
Ratios to Average Net Assets F, I | |
Expenses before reductions | .35% A |
Expenses net of fee waivers, if any | .20% A |
Expenses net of all reductions | .20% A |
Net investment income (loss) | 3.55% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 100 |
Portfolio turnover rate | 10% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G 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. H For the period April 13, 2006 (commencement of operations) to June 30, 2006. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
See accompanying notes which are an integral part of the financial statements.
VIP FundsManager Portfolio
Financial Highlights - Service Class 2
| Period ended June 30, 2006 |
| (Unaudited) H |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .07 |
Net realized and unrealized gain (loss) | (.09) G |
Total from investment operations | (.02) |
Net asset value, end of period | $ 9.98 |
Total Return B, C, D | (.20)% |
Ratios to Average Net Assets F, I | |
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .35% A |
Expenses net of all reductions | .35% A |
Net investment income (loss) | 3.40% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 100 |
Portfolio turnover rate | 10% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G 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. H For the period April 13, 2006 (commencement of operations) to June 30, 2006. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
Financial Highlights - Investor Class
| Period ended June 30, 2006 |
| (Unaudited) H |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .07 |
Net realized and unrealized gain (loss) | (.09) G |
Total from investment operations | (.02) |
Net asset value, end of period | $ 9.98 |
Total Return B, C, D | (.20)% |
Ratios to Average Net Assets F, I | |
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .20% A |
Expenses net of all reductions | .20% A |
Net investment income (loss) | 3.55% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 3,955 |
Portfolio turnover rate | 10% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G 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. H For the period April 13, 2006 (commencement of operations) to June 30, 2006. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP FundsManager 50% Portfolio
Investment Summary
Fund Holdings as of June 30, 2006 |
| % of fund's investments |
Domestic Equity Funds | |
Fidelity Blue Chip Value Fund | 3.7 |
Fidelity Contrafund | 0.5 |
Fidelity Dividend Growth Fund | 2.8 |
Fidelity Equity-Income Fund | 1.9 |
Fidelity Growth and Income Fund II | 1.8 |
Fidelity Growth Company Fund | 2.7 |
Fidelity Large Cap Stock Fund | 4.5 |
Fidelity Mid-Cap Stock Fund | 2.3 |
Fidelity Real Estate Investment Portfolio | 1.3 |
Fidelity Small Cap Stock Fund | 0.3 |
Fidelity Stock Selector Fund | 3.6 |
Fidelity Structured Large Capital Value Fund | 1.7 |
Fidelity Trend Fund | 2.8 |
Fidelity Value Discovery Fund | 2.1 |
Fidelity Value Fund | 2.8 |
VIP Dynamic Capital Appreciation Portfolio -
Investor Class | 5.7 |
VIP Growth & Income Portfolio Investor Class | 5.7 |
| 46.2 |
International Equity Funds | |
Fidelity International Discovery Fund | 1.5 |
Fidelity International Real Estate Fund | 0.8 |
Fidelity International Small Capital Opportunities Fund | 1.4 |
Fidelity Overseas Fund | 2.1 |
| 5.8 |
Fixed-Income Funds | |
Fidelity Capital & Income Fund | 1.8 |
Fidelity Floating Rate High Income Fund | 2.0 |
Fidelity High Income Fund | 5.2 |
Fidelity New Markets Income Fund | 2.0 |
Fidelity U.S. Bond Index Fund | 27.8 |
| 38.8 |
Money Market Funds | |
Fidelity Institutional Prime Money Market Portfolio: Class I | 9.2 |
| 100.0 |
Asset Allocation (% of fund's investments) |
As of June 30, 2006 |
| Domestic Equity Funds | 46.2% | |
| International Equity Funds | 5.8% | |
| Fixed Income Funds | 38.8% | |
| Money Market Funds | 9.2% | |
Semiannual Report
VIP FundsManager 50% Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 52.0% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 46.2% |
Fidelity Blue Chip Value Fund | 77,741 | | $ 1,082,160 |
Fidelity Contrafund | 2,219 | | 146,526 |
Fidelity Dividend Growth Fund | 28,346 | | 826,012 |
Fidelity Equity-Income Fund | 10,207 | | 555,286 |
Fidelity Growth and Income Fund II | 51,162 | | 527,485 |
Fidelity Growth Company Fund (a) | 12,185 | | 780,821 |
Fidelity Large Cap Stock Fund | 82,142 | | 1,299,491 |
Fidelity Mid-Cap Stock Fund | 23,759 | | 674,751 |
Fidelity Real Estate Investment Portfolio | 10,785 | | 375,531 |
Fidelity Small Cap Stock Fund | 4,661 | | 84,695 |
Fidelity Stock Selector Fund | 41,224 | | 1,040,917 |
Fidelity Structured Large Capital Value Fund | 35,911 | | 488,753 |
Fidelity Trend Fund | 13,841 | | 806,071 |
Fidelity Value Discovery Fund | 36,501 | | 605,186 |
Fidelity Value Fund | 10,548 | | 829,051 |
VIP Dynamic Capital Appreciation Portfolio - Investor Class | 179,882 | | 1,649,520 |
VIP Growth & Income Portfolio Investor Class | 114,259 | | 1,651,050 |
TOTAL DOMESTIC EQUITY FUNDS | | 13,423,306 |
International Equity Funds - 5.8% |
Fidelity International Discovery Fund | 12,502 | | 427,440 |
Fidelity International Real Estate Fund | 15,329 | | 220,437 |
Fidelity International Small Capital Opportunities Fund | 30,332 | | 421,913 |
Fidelity Overseas Fund | 13,578 | | 601,243 |
TOTAL INTERNATIONAL EQUITY FUNDS | | 1,671,033 |
TOTAL EQUITY FUNDS (Cost $15,056,197) | 15,094,339 |
Fixed-Income Funds - 38.8% |
| | | |
Fidelity Capital & Income Fund | 62,976 | | 529,630 |
Fidelity Floating Rate High Income Fund | 58,620 | | 580,337 |
Fidelity High Income Fund | 171,397 | | 1,496,293 |
Fidelity New Markets Income Fund | 40,632 | | 576,160 |
Fidelity U.S. Bond Index Fund | 763,224 | | 8,082,540 |
TOTAL FIXED-INCOME FUNDS (Cost $11,303,255) | 11,264,960 |
Money Market Funds - 9.2% |
| | | |
Fidelity Institutional Prime Money Market Portfolio: Class I
(Cost $2,675,838) | 2,675,838 | | 2,675,838 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $29,035,290) | $ 29,035,137 |
Legend |
(a) Non-income producing |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP FundsManager 50% Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $29,035,290) -
See accompanying schedule | | $ 29,035,137 |
Cash | | 59 |
Receivable for fund shares sold | | 993,158 |
Total assets | | 30,028,354 |
| | |
Liabilities | | |
Payable for investments purchased | $ 993,159 | |
Accrued management fee | 3,256 | |
Distribution fees payable | 12 | |
Total liabilities | | 996,427 |
| | |
Net Assets | | $ 29,031,927 |
Net Assets consist of: | | |
Paid in capital | | $ 28,979,415 |
Undistributed net investment income | | 49,931 |
Accumulated undistributed net realized gain (loss) on investments | | 2,734 |
Net unrealized appreciation (depreciation) on investments | | (153) |
Net Assets | | $ 29,031,927 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($99,040 ÷ 10,001 shares) | | $ 9.90 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($99,072 ÷ 10,001 shares) | | $ 9.91 |
| | |
Investor Class:
Net Asset Value, offering price
and redemption price
per share ($28,833,815 ÷ 2,911,599 shares) | | $ 9.90 |
Statement of Operations
| For the period April 13, 2006
commencement of operations) to June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 53,980 |
Interest | | 219 |
Total income | | 54,199 |
| | |
Expenses | | |
Management fee | $ 5,364 | |
Distribution fees | 76 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 5,442 | |
Expense reductions | (1,174) | 4,268 |
Net investment income (loss) | | 49,931 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (4,835) | |
Capital gain distributions from underlying funds | 7,569 | 2,734 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (153) |
Net gain (loss) | | 2,581 |
Net increase (decrease) in net assets resulting from operations | | $ 52,512 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| For the period
April 13, 2006
(commencement
of operations) to
June 30, 2006
(Unaudited) |
Increase (Decrease) in Net Assets | |
Operations | |
Net investment income (loss) | $ 49,931 |
Net realized gain (loss) | 2,734 |
Change in net unrealized appreciation (depreciation) | (153) |
Net increase (decrease) in net assets resulting from operations | 52,512 |
Share transactions - net increase (decrease) | 28,979,415 |
Total increase (decrease) in net assets | 29,031,927 |
| |
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $49,931) | $ 29,031,927 |
Financial Highlights - Service Class
| Period ended June 30, 2006 |
| (Unaudited) H |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .05 |
Net realized and unrealized gain (loss) | (.15) G |
Total from investment operations | (.10) |
Net asset value, end of period | $ 9.90 |
Total Return B, C, D | (1.00)% |
Ratios to Average Net Assets F, I | |
Expenses before reductions | .35% A |
Expenses net of fee waivers, if any | .20% A |
Expenses net of all reductions | .20% A |
Net investment income (loss) | 2.21% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 99 |
Portfolio turnover rate | 1% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G 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. H For the period April 13, 2006 (commencement of operations) to June 30, 2006. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
See accompanying notes which are an integral part of the financial statements.
VIP FundsManager Portfolio
Financial Highlights - Service Class 2
| Period ended June 30, 2006 |
| (Unaudited) H |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .05 |
Net realized and unrealized gain (loss) | (.14) G |
Total from investment operations | (.09) |
Net asset value, end of period | $ 9.91 |
Total Return B, C, D | (.90)% |
Ratios to Average Net Assets F, I | |
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .35% A |
Expenses net of all reductions | .35% A |
Net investment income (loss) | 2.06% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 99 |
Portfolio turnover rate | 1% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G 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. H For the period April 13, 2006 (commencement of operations) to June 30, 2006. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
Financial Highlights - Investor Class
| Period ended June 30, 2006 |
| (Unaudited) H |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .04 |
Net realized and unrealized gain (loss) | (.14) G |
Total from investment operations | (.10) |
Net asset value, end of period | $ 9.90 |
Total Return B, C, D | (1.00)% |
Ratios to Average Net Assets F, I | |
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .20% A |
Expenses net of all reductions | .20% A |
Net investment income (loss) | 2.21% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 28,834 |
Portfolio turnover rate | 1% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G 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. H For the period April 13, 2006 (commencement of operations) to June 30, 2006. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP FundsManager 70% Portfolio
Investment Summary
Fund Holdings as of June 30, 2006 |
| % of fund's investments |
Domestic Equity Funds | |
Fidelity Blue Chip Value Fund | 4.2 |
Fidelity Contrafund | 0.5 |
Fidelity Dividend Growth Fund | 5.0 |
Fidelity Equity-Income Fund | 3.6 |
Fidelity Growth and Income Fund II | 2.2 |
Fidelity Growth Company Fund | 2.9 |
Fidelity Large Cap Stock Fund | 6.7 |
Fidelity Mid-Cap Stock Fund | 2.3 |
Fidelity Real Estate Investment Portfolio | 2.1 |
Fidelity Small Cap Stock Fund | 0.3 |
Fidelity Stock Selector Fund | 4.0 |
Fidelity Structured Large Capital Value Fund | 2.6 |
Fidelity Trend Fund | 3.6 |
Fidelity Value Discovery Fund | 2.8 |
Fidelity Value Fund | 3.6 |
VIP Dynamic Capital Appreciation Portfolio -
Investor Class | 7.6 |
VIP Growth & Income Portfolio Investor Class | 7.6 |
| 61.6 |
International Equity Funds | |
Fidelity Emerging Markets Fund | 2.0 |
Fidelity International Discovery Fund | 1.9 |
Fidelity International Real Estate Fund | 1.0 |
Fidelity International Small Capital Opportunities Fund | 1.9 |
Fidelity Overseas Fund | 4.2 |
| 11.0 |
Fixed-Income Funds | |
Fidelity Capital & Income Fund | 1.3 |
Fidelity Floating Rate High Income Fund | 2.0 |
Fidelity High Income Fund | 4.7 |
Fidelity New Markets Income Fund | 2.0 |
Fidelity U.S. Bond Index Fund | 13.6 |
| 23.6 |
Money Market Funds | |
Fidelity Institutional Prime Money Market Portfolio: Class I | 3.8 |
| 100.0 |
Asset Allocation (% of fund's investments) |
As of June 30, 2006 |
| Domestic Equity Funds | 61.6% | |
| International Equity Funds | 11.0% | |
| Fixed Income Funds | 23.6% | |
| Money Market Funds | 3.8% | |
Semiannual Report
VIP FundsManager 70% Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 72.6% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 61.6% |
Fidelity Blue Chip Value Fund | 115,018 | | $ 1,601,053 |
Fidelity Contrafund | 2,930 | | 193,467 |
Fidelity Dividend Growth Fund | 65,793 | | 1,917,205 |
Fidelity Equity-Income Fund | 25,538 | | 1,389,274 |
Fidelity Growth and Income Fund II | 83,134 | | 857,113 |
Fidelity Growth Company Fund (a) | 17,171 | | 1,100,322 |
Fidelity Large Cap Stock Fund | 162,675 | | 2,573,522 |
Fidelity Mid-Cap Stock Fund | 30,904 | | 877,667 |
Fidelity Real Estate Investment Portfolio | 22,752 | | 792,210 |
Fidelity Small Cap Stock Fund | 5,832 | | 105,959 |
Fidelity Stock Selector Fund | 61,556 | | 1,554,292 |
Fidelity Structured Large Capital Value Fund | 74,588 | | 1,015,141 |
Fidelity Trend Fund | 23,594 | | 1,374,122 |
Fidelity Value Discovery Fund | 65,189 | | 1,080,825 |
Fidelity Value Fund | 17,380 | | 1,366,054 |
VIP Dynamic Capital Appreciation Portfolio - Investor Class | 317,406 | | 2,910,612 |
VIP Growth & Income Portfolio Investor Class | 201,663 | | 2,914,026 |
TOTAL DOMESTIC EQUITY FUNDS | | 23,622,864 |
International Equity Funds - 11.0% |
Fidelity Emerging Markets Fund | 38,206 | | 762,972 |
Fidelity International Discovery Fund | 21,766 | | 744,177 |
Fidelity International Real Estate Fund | 26,953 | | 387,588 |
Fidelity International Small Capital Opportunities Fund | 52,544 | | 730,881 |
Fidelity Overseas Fund | 35,927 | | 1,590,862 |
TOTAL INTERNATIONAL EQUITY FUNDS | | 4,216,480 |
TOTAL EQUITY FUNDS (Cost $27,760,605) | 27,839,344 |
Fixed-Income Funds - 23.6% |
| | | |
Fidelity Capital & Income Fund | 60,391 | | 507,885 |
Fidelity Floating Rate High Income Fund | 77,384 | | 766,104 |
Fidelity High Income Fund | 204,285 | | 1,783,404 |
Fidelity New Markets Income Fund | 53,562 | | 759,515 |
Fidelity U.S. Bond Index Fund | 492,804 | | 5,218,792 |
TOTAL FIXED-INCOME FUNDS (Cost $9,074,976) | 9,035,700 |
Money Market Funds - 3.8% |
| | | |
Fidelity Institutional Prime Money Market Portfolio: Class I
(Cost $1,459,123) | 1,459,123 | | 1,459,123 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $38,294,704) | $ 38,334,167 |
Legend |
(a) Non-income producing |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP FundsManager 70% Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $38,294,704) -
See accompanying schedule | | $ 38,334,167 |
Cash | | 59 |
Receivable for fund shares sold | | 486,897 |
Total assets | | 38,821,123 |
| | |
Liabilities | | |
Payable for investments purchased | $ 486,898 | |
Accrued management fee | 4,357 | |
Distribution fees payable | 12 | |
Total liabilities | | 491,267 |
| | |
Net Assets | | $ 38,329,856 |
Net Assets consist of: | | |
Paid in capital | | $ 38,255,735 |
Undistributed net investment income | | 39,573 |
Accumulated undistributed net realized gain (loss) on investments | | (4,915) |
Net unrealized appreciation (depreciation) on investments | | 39,463 |
Net Assets | | $ 38,329,856 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($98,486 ÷ 10,001 shares) | | $ 9.85 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($98,454 ÷ 10,001 shares) | | $ 9.84 |
| | |
Investor Class:
Net Asset Value, offering price
and redemption price
per share ($38,132,916 ÷ 3,873,296 shares) | | $ 9.85 |
Statement of Operations
| For the period April 13, 2006
(commencement of operations) to June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 45,044 |
Interest | | 218 |
Total income | | 45,262 |
| | |
Expenses | | |
Management fee | $ 7,165 | |
Distribution fees | 76 | |
Independent trustees' compensation | 2 | |
Total expenses before reductions | 7,243 | |
Expense reductions | (1,554) | 5,689 |
Net investment income (loss) | | 39,573 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (15,346) | |
Capital gain distributions from underlying funds | 10,431 | (4,915) |
Change in net unrealized appreciation (depreciation) on underlying funds | | 39,463 |
Net gain (loss) | | 34,548 |
Net increase (decrease) in net assets resulting from operations | | $ 74,121 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP FundsManager 70% Portfolio
Financial Statements - continued
Statement of Changes in Net Assets
| For the period
April 13, 2006
(commencement
of operations) to
June 30, 2006
(Unaudited) |
Increase (Decrease) in Net Assets | |
Operations | |
Net investment income (loss) | $ 39,573 |
Net realized gain (loss) | (4,915) |
Change in net unrealized appreciation (depreciation) | 39,463 |
Net increase (decrease) in net assets resulting from operations | 74,121 |
Share transactions - net increase (decrease) | 38,255,735 |
Total increase (decrease) in net assets | 38,329,856 |
| |
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $39,573 | $ 38,329,856 |
Financial Highlights - Service Class
| Period ended June 30, 2006 |
| (Unaudited) H |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .03 |
Net realized and unrealized gain (loss) | (.18) G |
Total from investment operations | (.15) |
Net asset value, end of period | $ 9.85 |
Total Return B, C, D | (1.50)% |
Ratios to Average Net Assets F, I | |
Expenses before reductions | .35% A |
Expenses net of fee waivers, if any | .20% A |
Expenses net of all reductions | .20% A |
Net investment income (loss) | 1.31% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 98 |
Portfolio turnover rate | 2% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G 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. H For the period April 13, 2006 (commencement of operations) to June 30, 2006. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
See accompanying notes which are an integral part of the financial statements.
VIP FundsManager Portfolio
Financial Highlights - Service Class 2
| Period ended June 30, 2006 |
| (Unaudited) H |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .03 |
Net realized and unrealized gain (loss) | (.19) G |
Total from investment operations | (.16) |
Net asset value, end of period | $ 9.84 |
Total Return B, C, D | (1.60)% |
Ratios to Average Net Assets F, I | |
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .35% A |
Expenses net of all reductions | .35% A |
Net investment income (loss) | 1.16% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 98 |
Portfolio turnover rate | 2% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G 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. H For the period April 13, 2006 (commencement of operations) to June 30, 2006. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
Financial Highlights - Investor Class
| Period ended June 30, 2006 |
| (Unaudited) H |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .03 |
Net realized and unrealized gain (loss) | (.18) G |
Total from investment operations | (.15) |
Net asset value, end of period | $ 9.85 |
Total Return B, C, D | (1.50)% |
Ratios to Average Net Assets F, I | |
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .20% A |
Expenses net of all reductions | .20% A |
Net investment income (loss) | 1.31% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 38,133 |
Portfolio turnover rate | 2% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G 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. H For the period April 13, 2006 (commencement of operations) to June 30, 2006. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP FundsManager 85% Portfolio
Investment Summary
Fund Holdings as of June 30, 2006 |
| % of fund's investments |
Domestic Equity Funds | |
Fidelity Blue Chip Value Fund | 4.8 |
Fidelity Contrafund | 0.5 |
Fidelity Dividend Growth Fund | 4.0 |
Fidelity Equity-Income Fund | 3.2 |
Fidelity Growth and Income Fund II | 2.7 |
Fidelity Growth Company Fund | 4.0 |
Fidelity Large Cap Stock Fund | 6.2 |
Fidelity Mid-Cap Stock Fund | 4.4 |
Fidelity Real Estate Investment Portfolio | 3.1 |
Fidelity Small Cap Stock Fund | 0.3 |
Fidelity Small Cap Value Fund | 0.8 |
Fidelity Stock Selector Fund | 4.4 |
Fidelity Structured Large Capital Value Fund | 2.9 |
Fidelity Trend Fund | 3.7 |
Fidelity Value Discovery Fund | 4.2 |
Fidelity Value Fund | 4.9 |
VIP Dynamic Capital Appreciation Portfolio - Investor Class | 9.0 |
VIP Growth & Income Portfolio Investor Class | 9.0 |
| 72.1 |
International Equity Funds | |
Fidelity Emerging Markets Fund | 1.9 |
Fidelity International Discovery Fund | 5.8 |
Fidelity International Real Estate Fund | 1.0 |
Fidelity International Small Capital Opportunities Fund | 0.9 |
Fidelity Overseas Fund | 6.2 |
| 15.8 |
Fixed-Income Funds | |
Fidelity High Income Fund | 3.0 |
Fidelity New Markets Income Fund | 2.0 |
Fidelity U.S. Bond Index Fund | 7.1 |
| 12.1 |
| 100.0 |
Asset Allocation (% of fund's investments) |
As of June 30, 2006 |
| Domestic Equity Funds | 72.1% | |
 | International Equity Funds | 15.8% | |
| Fixed Income Funds | 12.1% | |
Semiannual Report
VIP FundsManager 85% Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 87.9% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 72.1% |
Fidelity Blue Chip Value Fund | 53,337 | | $ 742,456 |
Fidelity Contrafund | 1,187 | | 78,353 |
Fidelity Dividend Growth Fund | 21,410 | | 623,885 |
Fidelity Equity-Income Fund | 9,126 | | 496,481 |
Fidelity Growth and Income Fund II | 40,155 | | 413,998 |
Fidelity Growth Company Fund (a) | 9,751 | | 624,824 |
Fidelity Large Cap Stock Fund | 60,583 | | 958,427 |
Fidelity Mid-Cap Stock Fund | 24,245 | | 688,561 |
Fidelity Real Estate Investment Portfolio | 13,909 | | 484,317 |
Fidelity Small Cap Stock Fund | 2,803 | | 50,939 |
Fidelity Small Cap Value Fund | 8,952 | | 122,824 |
Fidelity Stock Selector Fund | 27,340 | | 690,342 |
Fidelity Structured Large Capital Value Fund | 32,559 | | 443,129 |
Fidelity Trend Fund | 9,853 | | 573,861 |
Fidelity Value Discovery Fund | 39,124 | | 648,670 |
Fidelity Value Fund | 9,742 | | 765,689 |
VIP Dynamic Capital Appreciation Portfolio - Investor Class | 151,802 | | 1,392,025 |
VIP Growth & Income Portfolio Investor Class | 96,753 | | 1,398,075 |
TOTAL DOMESTIC EQUITY FUNDS | | 11,196,856 |
International Equity Funds - 15.8% |
Fidelity Emerging Markets Fund | 15,143 | | 302,405 |
Fidelity International Discovery Fund | 26,448 | | 904,273 |
Fidelity International Real Estate Fund | 10,856 | | 156,106 |
Fidelity International Small Capital Opportunities Fund | 9,986 | | 138,909 |
Fidelity Overseas Fund | 21,685 | | 960,218 |
TOTAL INTERNATIONAL EQUITY FUNDS | | 2,461,911 |
TOTAL EQUITY FUNDS (Cost $13,750,319) | 13,658,767 |
Fixed-Income Funds - 12.1% |
| | | |
Fidelity High Income Fund | 53,567 | | 467,637 |
Fidelity New Markets Income Fund | 21,832 | | 309,574 |
Fidelity U.S. Bond Index Fund | 103,460 | | 1,095,646 |
TOTAL FIXED-INCOME FUNDS (Cost $1,885,486) | 1,872,857 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $15,635,805) | $ 15,531,624 |
Legend |
(a) Non-income producing |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP FundsManager 85% Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $15,635,805) -
See accompanying schedule | | $ 15,531,624 |
Cash | | 45 |
Receivable for fund shares sold | | 180,731 |
Total assets | | 15,712,400 |
| | |
Liabilities | | |
Payable for investments purchased | $ 180,731 | |
Accrued management fee | 2,024 | |
Distribution fees payable | 12 | |
Total liabilities | | 182,767 |
| | |
Net Assets | | $ 15,529,633 |
Net Assets consist of: | | |
Paid in capital | | $ 15,636,411 |
Undistributed net investment income | | 8,379 |
Accumulated undistributed net realized gain (loss) on investments | | (10,976) |
Net unrealized appreciation (depreciation) on investments | | (104,181) |
Net Assets | | $ 15,529,633 |
| | |
Service Class:
Net Asset Value, offering price and redemption price per share ($98,111 ÷ 10,001 shares) | | $ 9.81 |
| | |
Service Class 2:
Net Asset Value, offering price and redemption price per share ($98,079 ÷ 10,001 shares) | | $ 9.81 |
| | |
Investor Class:
Net Asset Value, offering price
and redemption price
per share ($15,333,443 ÷ 1,562,479 shares) | | $ 9.81 |
Statement of Operations
| For the period April 13, 2006
(commencement of operations) to June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 11,026 |
Interest | | 204 |
Total income | | 11,230 |
| | |
Expenses | | |
Management fee | $ 3,564 | |
Distribution fees | 76 | |
Independent trustees' compensation | 1 | |
Total expenses before reductions | 3,641 | |
Expense reductions | (790) | 2,851 |
Net investment income (loss) | | 8,379 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (20,049) | |
Capital gain distributions from underlying funds | 9,073 | (10,976) |
Change in net unrealized appreciation (depreciation) on underlying funds | | (104,181) |
Net gain (loss) | | (115,157) |
Net increase (decrease) in net assets resulting from operations | | $ (106,778) |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| For the period
April 13, 2006
(commencement
of operations) to
June 30, 2006
(Unaudited) |
Increase (Decrease) in Net Assets | |
Operations | |
Net investment income (loss) | $ 8,379 |
Net realized gain (loss) | (10,976) |
Change in net unrealized appreciation (depreciation) | (104,181) |
Net increase (decrease) in net assets resulting from operations | (106,778) |
Share transactions - net increase (decrease) | 15,636,411 |
Total increase (decrease) in net assets | 15,529,633 |
| |
Net Assets | |
Beginning of period | - |
End of period (including undistributed net investment income of $8,379) | $ 15,529,633 |
Financial Highlights - Service Class
| Period ended June 30, 2006 |
| (Unaudited) G |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .01 |
Net realized and unrealized gain (loss) | (.20) |
Total from investment operations | (.19) |
Net asset value, end of period | $ 9.81 |
Total Return B, C, D | (1.90)% |
Ratios to Average Net Assets F, H | |
Expenses before reductions | .35% A |
Expenses net of fee waivers, if any | .20% A |
Expenses net of all reductions | .20% A |
Net investment income (loss) | .56% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 98 |
Portfolio turnover rate | 4% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G For the period April 13, 2006 (commencement of operations) to June 30, 2006. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
See accompanying notes which are an integral part of the financial statements.
VIP FundsManager Portfolio
Financial Highlights - Service Class 2
| Period ended June 30, 2006 |
| (Unaudited) G |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .01 |
Net realized and unrealized gain (loss) | (.20) |
Total from investment operations | (.19) |
Net asset value, end of period | $ 9.81 |
Total Return B, C, D | (1.90)% |
Ratios to Average Net Assets F, H | |
Expenses before reductions | .50% A |
Expenses net of fee waivers, if any | .35% A |
Expenses net of all reductions | .35% A |
Net investment income (loss) | .42% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 98 |
Portfolio turnover rate | 4% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G For the period April 13, 2006 (commencement of operations) to June 30, 2006. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
Financial Highlights - Investor Class
| Period ended June 30, 2006 |
| (Unaudited) G |
Selected Per-Share Data | |
Net asset value, beginning of period | $ 10.00 |
Income from Investment Operations | |
Net investment income (loss) E | .01 |
Net realized and unrealized gain (loss) | (.20) |
Total from investment operations | (.19) |
Net asset value, end of period | $ 9.81 |
Total Return B, C, D | (1.90)% |
Ratios to Average Net Assets F, H | |
Expenses before reductions | .25% A |
Expenses net of fee waivers, if any | .20% A |
Expenses net of all reductions | .20% A |
Net investment income (loss) | .56% A |
Supplemental Data | |
Net assets, end of period (000 omitted) | $ 15,333 |
Portfolio turnover rate | 4% |
A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the underlying funds. G For the period April 13, 2006 (commencement of operations) toJune 30, 2006. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class but do not include expenses of the investment companies in which the fund invests. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2006 (Unaudited)
1. Significant Accounting Policies.
VIP FundsManager 20% Portfolio, VIP FundsManager 50% Portfolio, VIP FundsManager 70% Portfolio, and VIP FundsManager 85% Portfolio (the Funds) are funds of Variable Insurance Products Fund IV (the trust) (referred to in this report as Fidelity Variable Insurance Products). 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 Massachusetts business trust. Each Fund is authorized to issue an unlimited number of shares. The Funds invest primarily in a combination of other VIP and Fidelity retail equity, fixed income, and money market funds (the Underlying Funds) managed by Fidelity Management & Research Company (FMR) and its affiliates. Shares of each Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. Each Fund offers three classes of shares: Investor Class shares, Service Class shares and Service Class 2 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 each 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 each Fund. Each class differs with respect to distribution and service plan fees incurred. Certain expense reductions also differ by class.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Net asset value per share is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Investments in the Underlying Funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost, which approximates value.
Investment Transactions and Income. Security transactions, normally shares of the Underlying Funds, are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Income and capital gain distributions from the Underlying Funds, if any, are recorded on the ex-dividend date. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each fund in the trust. Expenses included in the accompanying financial statements reflect the expenses of each Fund and do not include any expenses associated with the Underlying Funds.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.
Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Cost for Federal
Income Tax Purposes | Unrealized
Appreciation | Unrealized
Depreciation | Net Unrealized
Appreciation/
(Depreciation) |
| | | | |
VIP FundsManager 20% Portfolio | $ 4,146,586 | $ 22,359 | $ (13,537) | $ 8,822 |
VIP FundsManager 50% Portfolio | 29,035,290 | 214,553 | (214,706) | (153) |
VIP FundsManager 70% Portfolio | 38,294,704 | 436,650 | (397,187) | 39,463 |
VIP FundsManager 85% Portfolio | 15,635,805 | 159,230 | (263,411) | (104,181) |
New Accounting Pronouncement. In June 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48) was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Funds' net assets and results of operations.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
2. Operating Policies.
Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
3. Purchases and Sales of Investments.
Purchases and redemptions of the underlying fund shares are noted in the table below.
| Purchases ($) | Redemptions ($) |
| | |
VIP FundsManager 20% Portfolio | 4,333,209 | 183,998 |
VIP FundsManager 50% Portfolio | 29,135,316 | 95,192 |
VIP FundsManager 70% Portfolio | 38,677,732 | 367,683 |
VIP FundsManager 85% Portfolio | 15,951,907 | 296,053 |
4. Fees and Other Transactions with Affiliates.
Management Fee. Strategic Advisers, Inc. (Strategic Advisers), an affiliate of FMR, provides the Funds with investment management related services. For these services each Fund pays a monthly management fee to Strategic Advisers. The management fee is based on an annual rate of .25% of each Fund's average net assets. The management fee is reduced by an amount equal to the fees and expenses paid by each Fund to the independent Trustees.
Strategic Advisers has contractually agreed to waive 0.05% of its management fee, thereby limiting each Fund's management fee to an annual rate of 0.20% of average net assets, until July 31, 2007.
Other Transactions. Strategic Advisers has entered into an administration agreement with FMR under which FMR provides management and administrative services (other than investment advisory services) necessary for the operation of each Fund. Pursuant to this agreement, FMR pays all expenses of each Fund, excluding the distribution and service fees, the compensation of the independent Trustees and certain other expenses such as interest expense. FMR also contracts with other Fidelity companies to perform the services necessary for the operation of each Fund. The Funds do not pay any fees for these services.
Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Funds have adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's average net assets.
For the period, each class paid FDC the following amounts, all of which were reallowed to insurance companies for the distribution of shares and providing shareholder support services:
| Service
Class | Service
Class 2 | Total |
| | | |
VIP FundsManager 20% Portfolio | $ 22 | $ 54 | $ 76 |
VIP FundsManager 50% Portfolio | 22 | 54 | 76 |
VIP FundsManager 70% Portfolio | 22 | 54 | 76 |
VIP FundsManager 85% Portfolio | 22 | 54 | 76 |
VIP FundsManager Portfolio
5. Expense Reductions.
Strategic Advisers contractually agreed to limit each Funds' management fee to an annual rate of 0.20% of each Funds' average net assets until July 31, 2007. For the period, each Fund's management fees were reduced by the following amounts:
| Management Fee
Waiver |
| |
VIP FundsManager 20% Portfolio | $ 149 |
VIP FundsManager 50% Portfolio | 1,130 |
VIP FundsManager 70% Portfolio | 1,510 |
VIP FundsManager 85% Portfolio | 746 |
In addition, FMR has contractually agreed to reimburse 0.10% of class-level expenses for each Fund's Service Class and Service Class 2. During the period, this reimbursement reduced each Fund's Service Class and Service Class 2's expenses by the following amounts:
| Reimbursement |
| |
VIP FundsManager 20% Portfolio | |
Service Class | $ 22 |
Service Class 2 | 22 |
VIP FundsManager 50% Portfolio | |
Service Class | 22 |
Service Class 2 | 22 |
VIP FundsManager 70% Portfolio | |
Service Class | 22 |
Service Class 2 | 22 |
VIP FundsManager 85% Portfolio | |
Service Class | 22 |
Service Class 2 | 22 |
6. Other.
The Funds' 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 Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
The Funds do not invest in the Underlying Funds for the purpose of exercising management or control; however, investments by the Funds within their principal investment strategies may represent a significant portion of the Underlying Fund's net assets. At the end of the period, FMR or its affiliates were owners of record of more than 10% of the outstanding shares of the following funds:
| Affiliated % |
| |
VIP FundsManager 20% Portfolio | 100% |
VIP FundsManager 50% Portfolio | 100% |
VIP FundsManager 70% Portfolio | 100% |
VIP FundsManager 85% Portfolio | 100% |
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
7. Share Transactions.
Transactions for each class of shares were as follows:
| Shares | Dollars |
| Period ended
June 30,
2006 A | | Period ended
June 30,
2006 A |
VIP FundsManager 20% Portfolio | | | |
Service Class | | | |
Shares sold | 10,001 | | $ 100,010 |
Net increase (decrease) | 10,001 | | $ 100,010 |
Service Class 2 | | | |
Shares sold | 10,001 | | $ 100,010 |
Net increase (decrease) | 10,001 | | $ 100,010 |
Investor Class | | | |
Shares sold | 415,731 | | $ 4,130,865 |
Shares redeemed | (19,524) | | (193,259) |
Net increase (decrease) | 396,207 | | $ 3,937,606 |
VIP FundsManager 50% Portfolio | | | |
Service Class | | | |
Shares sold | 10,001 | | $ 100,010 |
Net increase (decrease) | 10,001 | | $ 100,010 |
Service Class 2 | | | |
Shares sold | 10,001 | | $ 100,010 |
Net increase (decrease) | 10,001 | | $ 100,010 |
Investor Class | | | |
Shares sold | 2,973,252 | | $ 29,377,989 |
Shares redeemed | (61,653) | | (598,594) |
Net increase (decrease) | 2,911,599 | | $ 28,779,395 |
VIP FundsManager 70% Portfolio | | | |
Service Class | | | |
Shares sold | 10,001 | | $ 100,010 |
Net increase (decrease) | 10,001 | | $ 100,010 |
Service Class 2 | | | |
Shares sold | 10,001 | | $ 100,010 |
Net increase (decrease) | 10,001 | | $ 100,010 |
Investor Class | | | |
Shares sold | 3,907,845 | | $ 38,388,290 |
Shares redeemed | (34,549) | | (332,575) |
Net increase (decrease) | 3,873,296 | | $ 38,055,715 |
VIP FundsManager 85% Portfolio | | | |
Service Class | | | |
Shares sold | 10,001 | | $ 100,010 |
Net increase (decrease) | 10,001 | | $ 100,010 |
Service Class 2 | | | |
Shares sold | 10,001 | | $ 100,010 |
Net increase (decrease) | 10,001 | | $ 100,010 |
Investor Class | | | |
Shares sold | 1,596,651 | | $ 15,763,440 |
Shares redeemed | (34,172) | | (327,049) |
Net increase (decrease) | 1,562,479 | | $ 15,436,391 |
A For the period April 13, 2006 (commencement of operations) to June 30, 2006.
VIP FundsManager Portfolio
Board Approval of Investment Advisory Contracts and Management Fees
VIP FundsManager 20% Portfolio / VIP FundsManager 50% Portfolio / VIP FundsManager 70% Portfolio / VIP FundsManager 85% Portfolio
On March 16, 2006, the Board of Trustees, including the independent Trustees (together, the Board), voted to approve the management contract and administration agreement (together, the Advisory Contracts) for each fund. The Board, assisted by the advice of fund counsel and independent Trustees' counsel, considered a broad range of information.
In determining whether to approve the Advisory Contracts for each fund, the Board was aware that shareholders have a broad range of investment choices available to them, including a wide choice among mutual funds offered by competitors to Fidelity, and that shareholders, with the opportunity to review and weigh the disclosure provided by each fund in its prospectus and other public disclosures, may choose to invest in that fund, managed by Fidelity.
Nature, Extent, and Quality of Services Provided. The Board considered staffing within the investment adviser, Strategic Advisers, Inc., and FMR (together, the Investment Advisers), including the background of the funds' portfolio manager and the funds' investment objectives and disciplines.
Resources Dedicated to Investment Management and Support Services. The Board reviewed the size, education, and experience of the Investment Advisers' investment staff, their use of technology, and the Investment Advisers' approach to recruiting, training, and retaining portfolio managers and other research, advisory, and management personnel. The Board noted that Fidelity's analysts have access to a variety of technological tools that enable them to perform both fundamental and quantitative analysis and to specialize in various disciplines.
Shareholder and Administrative Services. The Board considered the nature, extent, quality, and cost of administrative, distribution, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund. The Board also considered the nature and extent of the Investment Advisers' supervision of third party service providers, principally custodians and subcustodians.
The Board noted that the growth of fund assets across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through phone representatives and over the Internet, and investor education materials and asset allocation tools.
Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing for a large variety of mutual fund investor services.
Investment Performance. VIP FundsManager 20% Portfolio, VIP FundsManager 50% Portfolio, VIP FundsManager 70% Portfolio, and VIP FundsManager 85% Portfolio are new funds and therefore had no historical performance for the Board to review at the time it approved each fund's Advisory Contracts. Once each fund has been in operation for at least one calendar year, the Board will review each fund's absolute investment performance, as well as each fund's relative investment performance measured against (i) a broad based securities market index and (ii) a peer group of mutual funds deemed appropriate by the Board.
Based on its review, the Board concluded that the nature, extent, and quality of the services provided by Fidelity will benefit each fund's shareholders, particularly in light of the Board's view that each fund's shareholders benefit from investing in a fund that is part of a large family of funds offering a variety of investment disciplines and services.
Competitiveness of Management Fee and Total Fund Expenses. The Board considered each fund's proposed management fee and projected operating expenses in reviewing the Advisory Contracts. The Board noted that each fund's proposed management fee rate would rank above the median of competitive funds with similar Lipper investment objective categories and comparable management fee characteristics. The Board noted, however, that the proposed management fee would cover substantially all fund expenses other than transfer agency fees and 12b-1 fees. The Board considered that Strategic Advisers contractually agreed to waive 0.05% of its management fee until July 31, 2007. The Board also considered that each fund will be fully actively managed and invest in a mix of underlying Fidelity retail and VIP funds. The Board noted FMR's assertion that very few competitor funds of funds have the ability to invest in both insurance- and non-insurance dedicated funds.
In its review of each fund's total expenses, the Board noted that each fund invests in retail underlying funds and classes and in Investor Class of the VIP underlying funds to avoid charging fund-paid 12b-1 fees at both fund levels. The Board considered that the funds do not pay transfer agency fees. Instead, each retail underlying fund or class and Investor Class of each VIP underlying fund bears its pro rata portion of the VIP transfer agency fee according to the percentage of each fund's assets invested in that underlying fund. The Board also considered that FMR has contractually agreed to reimburse 0.10% of class-level expenses for Service Class and Service Class 2 of each fund. Based on its review, the Board concluded that each fund's management fee and the total expenses for each class of each fund were fair and reasonable in light of the services that each fund and its shareholders receive and the other factors considered.
Semiannual Report
Board Approval of Investment Advisory Contracts and Management Fees - continued
Costs of the Services and Profitability. Each of the funds is a new fund and therefore no revenue, cost, or profitability data was available for the Board to review in respect of each fund at the time it approved the Advisory Contracts. In connection with its future renewal of each fund's management contract and administration agreement, the Board will consider the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing each fund and its shareholders.
Economies of Scale. The Board considered the extent to which each fund will benefit from economies of scale through increased services to each fund, through waivers or reimbursements, or through fee or expense reductions.
Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Advisory Contracts, the Board received additional information regarding (i) competitor fund of funds, (ii) Strategic Advisers' mutual fund wrap fee programs, and (iii) a fund of fund managed by Strategic Advisers for its clients.
Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the advisory fee structures are fair and reasonable, and that each fund's Advisory Contracts should be approved.
VIP FundsManager Portfolio
Semiannual Report
Investment Adviser
Strategic Advisers, Inc.
Boston, MA
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
The Bank of New York
New York, NY
VIPFM-SANN-0806
1.833444.100
Fidelity® Variable Insurance Products:
Investor Freedom Funds -
Income, 2005, 2010, 2015, 2020, 2025, 2030
Semiannual Report
June 30, 2006
(2_fidelity_logos) (Registered_Trademark)
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at 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 Corp. or an affiliated company.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent quarterly holdings report, semiannual report, or annual report on Fidelity's web site at http://www.advisor.fidelity.com.
NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE
Neither the fund nor Fidelity Distributors Corporation is a bank.
Semiannual Report
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds 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, 2006 to June 30, 2006).
Actual Expenses
The first line of the accompanying table for each 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 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, each fund, as a shareholder in underlying Fidelity funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity funds. These fees and expenses are not included in each fund's annualized expense ratio used to calculate the expense estimates in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's 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, each fund, as a shareholder in underlying Fidelity funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity funds. These fees and expenses are not included in each fund's annualized expense ratio used to calculate the expense estimates in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
| Beginning
Account Value
January 1, 2006 | Ending
Account Value
June 30, 2006 | Expenses Paid
During Period*
January 1, 2006
to June 30, 2006 |
VIP Investor Freedom Income | | | |
Actual | $ 1,000.00 | $ 1,014.80 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
VIP Investor Freedom 2005 | | | |
Actual | $ 1,000.00 | $ 1,016.60 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
VIP Investor Freedom 2010 | | | |
Actual | $ 1,000.00 | $ 1,015.60 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
VIP Investor Freedom 2015 | | | |
Actual | $ 1,000.00 | $ 1,023.30 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
VIP Investor Freedom 2020 | | | |
Actual | $ 1,000.00 | $ 1,025.10 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
VIP Investor Freedom 2025 | | | |
Actual | $ 1,000.00 | $ 1,028.00 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
VIP Investor Freedom 2030 | | | |
Actual | $ 1,000.00 | $ 1,029.80 | $ .00 |
HypotheticalA | $ 1,000.00 | $ 1,024.79 | $ .00 |
A 5% return per year before expenses
* Expenses are equal to each Funds' annualized expense ratio of .0%; multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The fees and expenses of the underlying Fidelity funds in which the fund invests are not included in the fund's annualized expense ratio.
Semiannual Report
VIP Investor Freedom Income Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Investor Class | 3.1 | 3.3 |
VIP Equity-Income Portfolio Investor Class | 3.6 | 3.7 |
VIP Growth & Income Portfolio Investor Class | 3.6 | 3.7 |
VIP Growth Portfolio Investor Class | 3.5 | 3.7 |
VIP Mid Cap Portfolio Investor Class | 1.2 | 1.4 |
VIP Value Portfolio Investor Class | 3.0 | 3.2 |
VIP Value Strategies Portfolio Investor Class | 1.3 | 1.4 |
| 19.3 | 20.4 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Investor Class | 5.0 | 5.0 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Investor Class | 35.2 | 34.9 |
Short-Term Funds | | |
VIP Money Market Portfolio Investor Class | 40.5 | 39.7 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
 | Domestic Equity Funds | 19.3% | |
 | Investment Grade Fixed-Income Funds | 35.2% | |
 | High Yield Fixed-Income Funds | 5.0% | |
 | Short-Term Funds | 40.5% | |
Six months ago |
| Domestic Equity Funds | 20.4% | |
| Investment Grade Fixed-Income Funds | 34.9% | |
| High Yield Fixed-Income Funds | 5.0% | |
| Short-Term Funds | 39.7% | |
The six months ago allocation is based on the fund's holdings as of December 31, 2005. The current allocation is based on the fund's holdings as of June 30, 2006. |
Semiannual Report
VIP Investor Freedom Income Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 19.3% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 19.3% |
VIP Contrafund Portfolio Investor Class | 8,028 | | $ 254,976 |
VIP Equity-Income Portfolio Investor Class | 11,947 | | 297,713 |
VIP Growth & Income Portfolio Investor Class | 20,468 | | 295,761 |
VIP Growth Portfolio Investor Class | 8,766 | | 293,653 |
VIP Mid Cap Portfolio Investor Class | 3,148 | | 103,514 |
VIP Value Portfolio Investor Class | 19,603 | | 254,050 |
VIP Value Strategies Portfolio Investor Class | 8,766 | | 105,103 |
TOTAL EQUITY FUNDS (Cost $1,602,422) | 1,604,770 |
Fixed-Income Funds - 40.2% |
| | | |
High Yield Fixed-Income Funds - 5.0% |
VIP High Income Portfolio Investor Class | 65,773 | | 417,001 |
Investment Grade Fixed-Income Funds - 35.2% |
VIP Investment Grade Bond Portfolio Investor Class | 241,790 | | 2,932,909 |
TOTAL FIXED-INCOME FUNDS (Cost $3,404,452) | 3,349,910 |
Short-Term Funds - 40.5% |
| | | |
VIP Money Market Portfolio Investor Class
(Cost $3,373,814) | 3,373,814 | | 3,373,814 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $8,380,688) | $ 8,328,494 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $29 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Investor Freedom Income Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $8,380,688) - See accompanying schedule | | $ 8,328,494 |
Cash | | 25 |
Receivable for fund shares sold | | 73,306 |
Total assets | | 8,401,825 |
| | |
Liabilities | | |
Payable for investments purchased | $ 73,308 | |
Total liabilities | | 73,308 |
| | |
Net Assets | | $ 8,328,517 |
Net Assets consist of: | | |
Paid in capital | | $ 8,255,389 |
Undistributed net investment income | | 105,182 |
Accumulated undistributed net realized gain (loss) on investments | | 20,140 |
Net unrealized appreciation (depreciation) on investments | | (52,194) |
Net Assets, for 813,295 shares outstanding | | $ 8,328,517 |
Net Asset Value, offering price and redemption price per share ($8,328,517 ÷ 813,295 shares) | | $ 10.24 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 105,580 |
| | |
Expenses | | |
Independent trustees'
compensation | $ 9 | |
Total expenses before reductions | 9 | |
Expense reductions | (9) | 0 |
Net investment income (loss) | | 105,580 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (9,772) | |
Capital gain distributions from underlying funds | 29,941 | 20,169 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (71,303) |
Net gain (loss) | | (51,134) |
Net increase (decrease) in net assets resulting from operations | | $ 54,446 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
August 3, 2005
(commencement
of operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 105,580 | $ 17,826 |
Net realized gain (loss) | 20,169 | (29) |
Change in net unrealized appreciation (depreciation) | (71,303) | 19,109 |
Net increase (decrease) in net assets resulting from operations | 54,446 | 36,906 |
Distributions to shareholders from net investment income | (18,224) | - |
Share transactions
Proceeds from sales of shares | 6,245,098 | 2,914,583 |
Reinvestment of distributions | 18,224 | - |
Cost of shares redeemed | (906,818) | (15,698) |
Net increase (decrease) in net assets resulting from share transactions | 5,356,504 | 2,898,885 |
Total increase (decrease) in net assets | 5,392,726 | 2,935,791 |
| | |
Net Assets | | |
Beginning of period | 2,935,791 | - |
End of period (including undistributed net investment income of $105,182 and undistributed net investment income of $17,826, respectively) | $ 8,328,517 | $ 2,935,791 |
Other Information Shares | | |
Sold | 610,685 | 291,011 |
Issued in reinvestment of distributions | 1,794 | - |
Redeemed | (88,644) | (1,551) |
Net increase (decrease) | 523,835 | 289,460 |
Financial Highlights
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 H |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.14 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .20 | .16 |
Net realized and unrealized gain (loss) | (.05) | (.02) G |
Total from investment operations | .15 | .14 |
Distributions from net investment income | (.05) | - |
Net asset value, end of period | $ 10.24 | $ 10.14 |
Total Return B, C, D | 1.48% | 1.40% |
Ratios to Average Net Assets F, I | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 3.89% A | 4.04% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 8,329 | $ 2,936 |
Portfolio turnover rate | 36% A | 1% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G 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.
H For the period August 3, 2005 (commencement of operations) to December 31, 2005.
I Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Investor Freedom Portfolios
VIP Investor Freedom 2005 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Investor Class | 6.2 | 6.5 |
VIP Equity-Income Portfolio Investor Class | 7.2 | 7.4 |
VIP Growth & Income Portfolio Investor Class | 7.2 | 7.4 |
VIP Growth Portfolio Investor Class | 7.2 | 7.4 |
VIP Mid Cap Portfolio Investor Class | 2.5 | 2.7 |
VIP Value Portfolio Investor Class | 6.2 | 6.4 |
VIP Value Strategies Portfolio Investor Class | 2.6 | 2.7 |
| 39.1 | 40.5 |
International Equity Funds | | |
VIP Overseas Portfolio Investor Class R | 6.4 | 5.2 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Investor Class | 5.1 | 4.9 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Investor Class | 37.4 | 37.9 |
Short-Term Funds | | |
VIP Money Market Portfolio Investor Class | 12.0 | 11.5 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 39.1% | |
| International Equity Funds | 6.4% | |
 | Investment Grade Fixed-Income Funds | 37.4% | |
 | High Yield Fixed-Income Funds | 5.1% | |
| Short-Term Funds | 12.0% | |
Six months ago |
| Domestic Equity Funds | 40.5% | |
| International Equity Funds | 5.2% | |
| Investment Grade Fixed-Income Funds | 37.9% | |
| High Yield Fixed-Income Funds | 4.9% | |
| Short-Term Funds | 11.5% | |
Expected |
| Domestic Equity Funds | 39.5% | |
| International Equity Funds | 9.6% | |
| Investment Grade Fixed-Income Funds | 34.6% | |
| High Yield Fixed-Income Funds | 5.0% | |
| Short-Term Funds | 11.3% | |
The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. In March 2006, the target date for combining the fund with the VIP Investor Freedom Income Fund was extended by approximately five years resulting in a greater allocation to equity funds. Also, beginning in March 2006, the fund increased its allocation to international equity. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005, reflecting the prior allocation. |
Semiannual Report
VIP Investor Freedom 2005 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 45.5% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 39.1% |
VIP Contrafund Portfolio Investor Class | 6,614 | | $ 210,067 |
VIP Equity-Income Portfolio Investor Class | 9,838 | | 245,156 |
VIP Growth & Income Portfolio Investor Class | 16,867 | | 243,727 |
VIP Growth Portfolio Investor Class | 7,226 | | 242,061 |
VIP Mid Cap Portfolio Investor Class | 2,600 | | 85,503 |
VIP Value Portfolio Investor Class | 16,145 | | 209,239 |
VIP Value Strategies Portfolio Investor Class | 7,233 | | 86,718 |
TOTAL DOMESTIC EQUITY FUNDS | | 1,322,471 |
International Equity Funds - 6.4% |
VIP Overseas Portfolio Investor Class R | 10,103 | | 215,793 |
TOTAL EQUITY FUNDS (Cost $1,521,087) | 1,538,264 |
Fixed-Income Funds - 42.5% |
| | | |
High Yield Fixed-Income Funds - 5.1% |
VIP High Income Portfolio Investor Class | 27,017 | | 171,291 |
Investment Grade Fixed-Income Funds - 37.4% |
VIP Investment Grade Bond Portfolio Investor Class | 104,325 | | 1,265,461 |
TOTAL FIXED-INCOME FUNDS (Cost $1,465,768) | 1,436,752 |
Short-Term Funds - 12.0% |
| | | |
VIP Money Market Portfolio Investor Class
(Cost $405,161) | 405,161 | | 405,161 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $3,392,016) | $ 3,380,177 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $1,736 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Investor Freedom 2005 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $3,392,016) - See accompanying schedule | | $ 3,380,177 |
Receivable for fund shares sold | | 180,985 |
Total assets | | 3,561,162 |
| | |
Liabilities | | |
Payable for investments purchased | $ 180,983 | |
Payable for fund shares redeemed | 4 | |
Total liabilities | | 180,987 |
| | |
Net Assets | | $ 3,380,175 |
Net Assets consist of: | | |
Paid in capital | | $ 3,319,946 |
Undistributed net investment income | | 39,618 |
Accumulated undistributed net realized gain (loss) on investments | | 32,450 |
Net unrealized appreciation (depreciation) on investments | | (11,839) |
Net Assets, for 326,573 shares outstanding | | $ 3,380,175 |
Net Asset Value, offering price and redemption price per share ($3,380,175 ÷ 326,573 shares) | | $ 10.35 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 41,350 |
| | |
Expenses | | |
Independent trustees' compensation | $ 4 | |
Total expenses before reductions | 4 | |
Expense reductions | (4) | 0 |
Net investment income (loss) | | 41,350 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | 3,847 | |
Capital gain distributions from underlying funds | 30,339 | 34,186 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (51,146) |
Net gain (loss) | | (16,960) |
Net increase (decrease) in net assets resulting from operations | | $ 24,390 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
August 3, 2005
(commencement
of operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 41,350 | $ 9,490 |
Net realized gain (loss) | 34,186 | (1,736) |
Change in net unrealized appreciation (depreciation) | (51,146) | 39,307 |
Net increase (decrease) in net assets resulting from operations | 24,390 | 47,061 |
Distributions to shareholders from net investment income | (11,222) | - |
Share transactions
Proceeds from sales of shares | 2,040,672 | 2,399,461 |
Reinvestment of distributions | 11,222 | - |
Cost of shares redeemed | (704,303) | (427,106) |
Net increase (decrease) in net assets resulting from share transactions | 1,347,591 | 1,972,355 |
Total increase (decrease) in net assets | 1,360,759 | 2,019,416 |
| | |
Net Assets | | |
Beginning of period | 2,019,416 | - |
End of period (including undistributed net investment income of $39,618 and undistributed net investment income of $9,490, respectively) | $ 3,380,175 | $ 2,019,416 |
Other Information Shares | | |
Sold | 195,908 | 239,845 |
Issued in reinvestment of distributions | 1,091 | - |
Redeemed | (67,563) | (42,708) |
Net increase (decrease) | 129,436 | 197,137 |
Financial Highlights
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.24 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .19 | .10 |
Net realized and unrealized gain (loss) | (.02) | .14 |
Total from investment operations | .17 | .24 |
Distributions from net investment income | (.06) | - |
Net asset value, end of period | $ 10.35 | $ 10.24 |
Total Return B, C, D | 1.66% | 2.40% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 3.77% A | 2.45% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 3,380 | $ 2,019 |
Portfolio turnover rate | 66% A | 39% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 3, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Investor Freedom Portfolios
VIP Investor Freedom 2010 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Investor Class | 6.3 | 6.6 |
VIP Equity-Income Portfolio Investor Class | 7.4 | 7.6 |
VIP Growth & Income Portfolio Investor Class | 7.3 | 7.6 |
VIP Growth Portfolio Investor Class | 7.2 | 7.6 |
VIP Mid Cap Portfolio Investor Class | 2.5 | 2.8 |
VIP Value Portfolio Investor Class | 6.3 | 6.5 |
VIP Value Strategies Portfolio Investor Class | 2.6 | 2.7 |
| 39.6 | 41.4 |
International Equity Funds | | |
VIP Overseas Portfolio Investor Class R | 7.5 | 5.5 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Investor Class | 5.1 | 5.0 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Investor Class | 37.9 | 38.9 |
Short-Term Funds | | |
VIP Money Market Portfolio Investor Class | 9.9 | 9.2 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 39.6% | |
| International Equity Funds | 7.5% | |
| Investment Grade Fixed-Income Funds | 37.9% | |
| High Yield Fixed-Income Funds | 5.1% | |
| Short-Term Funds | 9.9% | |
Six months ago |
| Domestic Equity Funds | 41.4% | |
| International Equity Funds | 5.5% | |
| Investment Grade Fixed-Income Funds | 38.9% | |
| High Yield Fixed-Income Funds | 5.0% | |
| Short-Term Funds | 9.2% | |
Expected |
| Domestic Equity Funds | 40.3% | |
| International Equity Funds | 10.1% | |
| Investment Grade Fixed-Income Funds | 34.8% | |
| High Yield Fixed-Income Funds | 5.0% | |
| Short-Term Funds | 9.8% | |
The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. In March 2006, the target date for combining the fund with the VIP Investor Freedom Income Fund was extended by approximately five years resulting in a greater allocation to equity funds. Also, beginning in March 2006, the fund increased its allocation to international equity. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005, reflecting the prior allocation. |
Semiannual Report
VIP Investor Freedom 2010 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 47.1% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 39.6% |
VIP Contrafund Portfolio Investor Class | 46,083 | | $ 1,463,610 |
VIP Equity-Income Portfolio Investor Class | 68,733 | | 1,712,820 |
VIP Growth & Income Portfolio Investor Class | 117,628 | | 1,699,731 |
VIP Growth Portfolio Investor Class | 50,315 | | 1,685,539 |
VIP Mid Cap Portfolio Investor Class | 17,969 | | 590,815 |
VIP Value Portfolio Investor Class | 112,802 | | 1,461,911 |
VIP Value Strategies Portfolio Investor Class | 50,294 | | 603,021 |
TOTAL DOMESTIC EQUITY FUNDS | | 9,217,447 |
International Equity Funds - 7.5% |
VIP Overseas Portfolio Investor Class R | 81,798 | | 1,747,205 |
TOTAL EQUITY FUNDS (Cost $10,978,824) | 10,964,652 |
Fixed-Income Funds - 43.0% |
| | | |
High Yield Fixed-Income Funds - 5.1% |
VIP High Income Portfolio Investor Class | 189,147 | | 1,199,193 |
Investment Grade Fixed-Income Funds - 37.9% |
VIP Investment Grade Bond Portfolio Investor Class | 727,102 | | 8,819,744 |
TOTAL FIXED-INCOME FUNDS (Cost $10,215,652) | 10,018,937 |
Short-Term Funds - 9.9% |
| | | |
VIP Money Market Portfolio Investor Class
(Cost $2,313,356) | 2,313,356 | | 2,313,356 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $23,507,832) | $ 23,296,945 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $17 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Investor Freedom 2010 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $23,507,832) - See accompanying schedule | | $ 23,296,945 |
Receivable for fund shares sold | | 55,685 |
Total assets | | 23,352,630 |
| | |
Liabilities | | |
Payable for investments purchased | $ 55,680 | |
Payable for fund shares redeemed | 11 | |
Total liabilities | | 55,691 |
| | |
Net Assets | | $ 23,296,939 |
Net Assets consist of: | | |
Paid in capital | | $ 23,107,709 |
Undistributed net investment income | | 265,637 |
Accumulated undistributed net realized gain (loss) on investments | | 134,480 |
Net unrealized appreciation (depreciation) on investments | | (210,887) |
Net Assets, for 2,245,216 shares outstanding | | $ 23,296,939 |
Net Asset Value, offering price
and redemption price
per share ($23,296,939 ÷ 2,245,216 shares) | | $ 10.38 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 271,256 |
Interest | | 118 |
Total income | | 271,374 |
| | |
Expenses | | |
Independent trustees'
compensation | $ 29 | |
Total expenses before reductions | 29 | |
Expense reductions | (29) | 0 |
Net investment income (loss) | | 271,374 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (62,147) | |
Capital gain distributions from underlying funds | 196,644 | 134,497 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (346,312) |
Net gain (loss) | | (211,815) |
Net increase (decrease) in net assets resulting from operations | | $ 59,559 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
August 3, 2005
(commencement
of operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 271,374 | $ 41,821 |
Net realized gain (loss) | 134,497 | (17) |
Change in net unrealized appreciation (depreciation) | (346,312) | 135,425 |
Net increase (decrease) in net assets resulting from operations | 59,559 | 177,229 |
Distributions to shareholders from net investment income | (47,558) | - |
Share transactions
Proceeds from sales of shares | 16,091,618 | 9,818,002 |
Reinvestment of distributions | 47,558 | - |
Cost of shares redeemed | (2,846,355) | (3,114) |
Net increase (decrease) in net assets resulting from share transactions | 13,292,821 | 9,814,888 |
Total increase (decrease) in net assets | 13,304,822 | 9,992,117 |
| | |
Net Assets | | |
Beginning of period | 9,992,117 | - |
End of period (including undistributed net investment income of $265,637 and undistributed net investment income of $41,821, respectively) | $ 23,296,939 | $ 9,992,117 |
Other Information Shares | | |
Sold | 1,541,071 | 974,435 |
Issued in reinvestment of distributions | 4,604 | - |
Redeemed | (274,589) | (305) |
Net increase (decrease) | 1,271,086 | 974,130 |
Financial Highlights
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.26 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .16 | .13 |
Net realized and unrealized gain (loss) | - I | .13 |
Total from investment operations | .16 | .26 |
Distributions from net investment income | (.04) | - |
Net asset value, end of period | $ 10.38 | $ 10.26 |
Total Return B, C, D | 1.56% | 2.60% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 3.05% A | 3.14% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 23,297 | $ 9,992 |
Portfolio turnover rate | 38% A | 0% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 3, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund but do not include expenses of the investment companies in which the fund invests.
I Amount represents less than $.01 per share.
See accompanying notes which are an integral part of the financial statements.
VIP Investor Freedom Portfolios
VIP Investor Freedom 2015 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Investor Class | 7.6 | 8.2 |
VIP Equity-Income Portfolio Investor Class | 8.9 | 9.5 |
VIP Growth & Income Portfolio Investor Class | 8.8 | 9.5 |
VIP Growth Portfolio Investor Class | 8.8 | 9.5 |
VIP Mid Cap Portfolio Investor Class | 3.1 | 3.5 |
VIP Value Portfolio Investor Class | 7.6 | 8.2 |
VIP Value Strategies Portfolio Investor Class | 3.1 | 3.5 |
| 47.9 | 51.9 |
International Equity Funds | | |
VIP Overseas Portfolio Investor Class R | 9.7 | 9.1 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Investor Class | 6.7 | 6.7 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Investor Class | 31.5 | 29.3 |
Short-Term Funds | | |
VIP Money Market Portfolio Investor Class | 4.2 | 3.0 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 47.9% | |
| International Equity Funds | 9.7% | |
| Investment Grade Fixed-Income Funds | 31.5% | |
| High Yield Fixed-Income Funds | 6.7% | |
| Short-Term Funds | 4.2% | |
Six months ago |
| Domestic Equity Funds | 51.9% | |
| International Equity Funds | 9.1% | |
 | Investment Grade Fixed-Income Funds | 29.3% | |
| High Yield Fixed-Income Funds | 6.7% | |
| Short-Term Funds | 3.0% | |
Expected |
| Domestic Equity Funds | 46.2% | |
| International Equity Funds | 11.5% | |
| Investment Grade Fixed-Income Funds | 30.9% | |
| High Yield Fixed-Income Funds | 6.2% | |
| Short-Term Funds | 5.2% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Investor Freedom 2015 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 57.6% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 47.9% |
VIP Contrafund Portfolio Investor Class | 71,085 | | $ 2,257,663 |
VIP Equity-Income Portfolio Investor Class | 105,957 | | 2,640,458 |
VIP Growth & Income Portfolio Investor Class | 181,421 | | 2,621,534 |
VIP Growth Portfolio Investor Class | 77,662 | | 2,601,684 |
VIP Mid Cap Portfolio Investor Class | 27,860 | | 916,053 |
VIP Value Portfolio Investor Class | 173,740 | | 2,251,668 |
VIP Value Strategies Portfolio Investor Class | 77,721 | | 931,876 |
TOTAL DOMESTIC EQUITY FUNDS | | 14,220,936 |
International Equity Funds - 9.7% |
VIP Overseas Portfolio Investor Class R | 134,074 | | 2,863,822 |
TOTAL EQUITY FUNDS (Cost $17,068,020) | 17,084,758 |
Fixed-Income Funds - 38.2% |
| | | |
High Yield Fixed-Income Funds - 6.7% |
VIP High Income Portfolio Investor Class | 313,370 | | 1,986,764 |
Investment Grade Fixed-Income Funds - 31.5% |
VIP Investment Grade Bond Portfolio Investor Class | 770,084 | | 9,341,118 |
TOTAL FIXED-INCOME FUNDS (Cost $11,473,999) | 11,327,882 |
Short-Term Funds - 4.2% |
| | | |
VIP Money Market Portfolio Investor Class
(Cost $1,242,221) | 1,242,221 | | 1,242,221 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $29,784,240) | $ 29,654,861 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $4,013 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Investor Freedom 2015 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $29,784,240) - See accompanying schedule | | $ 29,654,861 |
Cash | | 60 |
Receivable for fund shares sold | | 116,836 |
Total assets | | 29,771,757 |
| | |
Liabilities | | |
Payable for investments purchased | $ 116,835 | |
Total liabilities | | 116,835 |
| | |
Net Assets | | $ 29,654,922 |
Net Assets consist of: | | |
Paid in capital | | $ 29,440,017 |
Undistributed net investment income | | 173,741 |
Accumulated undistributed net realized gain (loss) on investments | | 170,543 |
Net unrealized appreciation (depreciation) on investments | | (129,379) |
Net Assets, for 2,819,418 shares outstanding | | $ 29,654,922 |
Net Asset Value, offering price
and redemption price
per share ($29,654,922 ÷ 2,819,418 shares) | | $ 10.52 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 177,328 |
Interest | | 61 |
Total income | | 177,389 |
| | |
Expenses | | |
Independent trustees' compensation | $ 29 | |
Total expenses before reductions | 29 | |
Expense reductions | (29) | 0 |
Net investment income (loss) | | 177,389 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (19,569) | |
Capital gain distributions from underlying funds | 194,125 | 174,556 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (278,926) |
Net gain (loss) | | (104,370) |
Net increase (decrease) in net assets resulting from operations | | $ 73,019 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
August 3, 2005
(commencement
of operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 177,389 | $ 34,268 |
Net realized gain (loss) | 174,556 | (4,013) |
Change in net unrealized appreciation (depreciation) | (278,926) | 149,547 |
Net increase (decrease) in net assets resulting from operations | 73,019 | 179,802 |
Distributions to shareholders from net investment income | (37,916) | - |
Share transactions
Proceeds from sales of shares | 23,064,192 | 7,055,503 |
Reinvestment of distributions | 37,916 | - |
Cost of shares redeemed | (421,625) | (295,969) |
Net increase (decrease) in net assets resulting from share transactions | 22,680,483 | 6,759,534 |
Total increase (decrease) in net assets | 22,715,586 | 6,939,336 |
| | |
Net Assets | | |
Beginning of period | 6,939,336 | - |
End of period (including undistributed net investment income of $173,741 and undistributed net investment income of $34,268, respectively) | $ 29,654,922 | $ 6,939,336 |
Other Information Shares | | |
Sold | 2,183,719 | 701,801 |
Issued in reinvestment of distributions | 3,635 | - |
Redeemed | (40,168) | (29,569) |
Net increase (decrease) | 2,147,186 | 672,232 |
Financial Highlights
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 H |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.32 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .10 | .13 |
Net realized and unrealized gain (loss) | .14 G | .19 |
Total from investment operations | .24 | .32 |
Distributions from net investment income | (.04) | - |
Net asset value, end of period | $ 10.52 | $ 10.32 |
Total Return B, C, D | 2.33% | 3.20% |
Ratios to Average Net Assets F, I | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 1.82% A | 3.24% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 29,655 | $ 6,939 |
Portfolio turnover rate | 15% A | 9% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G 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.
H For the period August 3, 2005 (commencement of operations) to December 31, 2005.
I Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Investor Freedom Portfolios
VIP Investor Freedom 2020 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Investor Class | 9.0 | 9.5 |
VIP Equity-Income Portfolio Investor Class | 10.5 | 11.0 |
VIP Growth & Income Portfolio Investor Class | 10.5 | 11.0 |
VIP Growth Portfolio Investor Class | 10.4 | 11.0 |
VIP Mid Cap Portfolio Investor Class | 3.6 | 4.0 |
VIP Value Portfolio Investor Class | 9.0 | 9.4 |
VIP Value Strategies Portfolio Investor Class | 3.7 | 4.0 |
| 56.7 | 59.9 |
International Equity Funds | | |
VIP Overseas Portfolio Investor Class R | 11.4 | 10.5 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Investor Class | 7.8 | 7.4 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Investor Class | 24.0 | 22.2 |
Short-Term Funds | | |
VIP Money Market Portfolio Investor Class | 0.1 | 0.0 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 56.7% | |
| International Equity Funds | 11.4% | |
| Investment Grade Fixed-Income Funds | 24.0% | |
| High Yield Fixed-Income Funds | 7.8% | |
| Short-Term Funds | 0.1% | |
Six months ago |
| Domestic Equity Funds | 59.9% | |
| International Equity Funds | 10.5% | |
| Investment Grade Fixed-Income Funds | 22.2% | |
| High Yield Fixed-Income Funds | 7.4% | |
| Short-Term Funds | 0.0% | |
Expected |
| Domestic Equity Funds | 54.9% | |
| International Equity Funds | 13.7% | |
| Investment Grade Fixed-Income Funds | 23.6% | |
| High Yield Fixed-Income Funds | 7.5% | |
| Short-Term Funds | 0.3% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Investor Freedom 2020 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 68.1% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 56.7% |
VIP Contrafund Portfolio Investor Class | 87,963 | | $ 2,793,708 |
VIP Equity-Income Portfolio Investor Class | 131,172 | | 3,268,805 |
VIP Growth & Income Portfolio Investor Class | 224,581 | | 3,245,195 |
VIP Growth Portfolio Investor Class | 96,130 | | 3,220,355 |
VIP Mid Cap Portfolio Investor Class | 34,358 | | 1,129,683 |
VIP Value Portfolio Investor Class | 215,124 | | 2,788,007 |
VIP Value Strategies Portfolio Investor Class | 96,031 | | 1,151,411 |
TOTAL DOMESTIC EQUITY FUNDS | | 17,597,164 |
International Equity Funds - 11.4% |
VIP Overseas Portfolio Investor Class R | 165,039 | | 3,525,235 |
TOTAL EQUITY FUNDS (Cost $21,117,077) | 21,122,399 |
Fixed-Income Funds - 31.8% |
| | | |
High Yield Fixed-Income Funds - 7.8% |
VIP High Income Portfolio Investor Class | 377,618 | | 2,394,095 |
Investment Grade Fixed-Income Funds - 24.0% |
VIP Investment Grade Bond Portfolio Investor Class | 613,841 | | 7,445,897 |
TOTAL FIXED-INCOME FUNDS (Cost $9,992,586) | 9,839,992 |
Short-Term Funds - 0.1% |
| | | |
VIP Money Market Portfolio Investor Class
(Cost $41,288) | 41,288 | | 41,288 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $31,150,951) | $ 31,003,679 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $509 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Investor Freedom 2020 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $31,150,951) - See accompanying schedule | | $ 31,003,679 |
Cash | | 26 |
Receivable for fund shares sold | | 44,252 |
Total assets | | 31,047,957 |
| | |
Liabilities | | |
Payable for investments purchased | $ 44,240 | |
Payable for fund shares redeemed | 13 | |
Total liabilities | | 44,253 |
| | |
Net Assets | | $ 31,003,704 |
Net Assets consist of: | | |
Paid in capital | | $ 30,696,395 |
Undistributed net investment income | | 203,724 |
Accumulated undistributed net realized gain (loss) on investments | | 250,857 |
Net unrealized appreciation (depreciation) on investments | | (147,272) |
Net Assets, for 2,932,073 shares outstanding | | $ 31,003,704 |
Net Asset Value, offering price
and redemption price
per share ($31,003,704 ÷ 2,932,073 shares) | | $ 10.57 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 215,153 |
Interest | | 17 |
Total income | | 215,170 |
| | |
Expenses | | |
Independent trustees' compensation | $ 34 | |
Total expenses before reductions | 34 | |
Expense reductions | (34) | 0 |
Net investment income (loss) | | 215,170 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (85,356) | |
Capital gain distributions from underlying funds | 336,722 | 251,366 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (370,987) |
Net gain (loss) | | (119,621) |
Net increase (decrease) in net assets resulting from operations | | $ 95,549 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
August 3, 2005
(commencement
of operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 215,170 | $ 60,264 |
Net realized gain (loss) | 251,366 | (509) |
Change in net unrealized appreciation (depreciation) | (370,987) | 223,715 |
Net increase (decrease) in net assets resulting from operations | 95,549 | 283,470 |
Distributions to shareholders from net investment income | (71,710) | - |
Share transactions
Proceeds from sales of shares | 21,381,586 | 10,848,487 |
Reinvestment of distributions | 71,710 | - |
Cost of shares redeemed | (1,531,956) | (73,432) |
Net increase (decrease) in net assets resulting from share transactions | 19,921,340 | 10,775,055 |
Total increase (decrease) in net assets | 19,945,179 | 11,058,525 |
| | |
Net Assets | | |
Beginning of period | 11,058,525 | - |
End of period (including undistributed net investment income of $203,724 and undistributed net investment income of $60,264, respectively) | $ 31,003,704 | $ 11,058,525 |
Other Information Shares | | |
Sold | 2,005,015 | 1,074,181 |
Issued in reinvestment of distributions | 6,843 | - |
Redeemed | (146,871) | (7,095) |
Net increase (decrease) | 1,864,987 | 1,067,086 |
Financial Highlights
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 H |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.36 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .11 | .17 |
Net realized and unrealized gain (loss) | .15 G | .19 |
Total from investment operations | .26 | .36 |
Distributions from net investment income | (.05) | - |
Net asset value, end of period | $ 10.57 | $ 10.36 |
Total Return B, C, D | 2.51% | 3.60% |
Ratios to Average Net Assets F, I | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 1.99% A | 4.07% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 31,004 | $ 11,059 |
Portfolio turnover rate | 22% A | 2% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G 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.
H For the period August 3, 2005 (commencement of operations) to December 31, 2005.
I Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Investor Freedom Portfolios
VIP Investor Freedom 2025 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Investor Class | 9.6 | 10.2 |
VIP Equity-Income Portfolio Investor Class | 11.2 | 11.8 |
VIP Growth & Income Portfolio Investor Class | 11.1 | 11.8 |
VIP Growth Portfolio Investor Class | 11.0 | 11.7 |
VIP Mid Cap Portfolio Investor Class | 3.9 | 4.3 |
VIP Value Portfolio Investor Class | 9.5 | 10.1 |
VIP Value Strategies Portfolio Investor Class | 4.0 | 4.3 |
| 60.3 | 64.2 |
International Equity Funds | | |
VIP Overseas Portfolio Investor Class R | 12.2 | 11.6 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Investor Class | 7.7 | 7.3 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Investor Class | 19.8 | 16.9 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 60.3% | |
| International Equity Funds | 12.2% | |
| Investment Grade Fixed-Income Funds | 19.8% | |
| High Yield Fixed-Income Funds | 7.7% | |
Six months ago |
| Domestic Equity Funds | 64.2% | |
| International Equity Funds | 11.6% | |
| Investment Grade Fixed-Income Funds | 16.9% | |
| High Yield Fixed-Income Funds | 7.3% | |
Expected |
| Domestic Equity Funds | 57.3% | |
| International Equity Funds | 14.4% | |
| Investment Grade Fixed-Income Funds | 20.8% | |
| High Yield Fixed-Income Funds | 7.5% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Investor Freedom 2025 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 72.5% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 60.3% |
VIP Contrafund Portfolio Investor Class | 27,537 | | $ 874,579 |
VIP Equity-Income Portfolio Investor Class | 40,980 | | 1,021,230 |
VIP Growth & Income Portfolio Investor Class | 70,180 | | 1,014,100 |
VIP Growth Portfolio Investor Class | 30,055 | | 1,006,845 |
VIP Mid Cap Portfolio Investor Class | 10,803 | | 355,217 |
VIP Value Portfolio Investor Class | 67,232 | | 871,322 |
VIP Value Strategies Portfolio Investor Class | 30,077 | | 360,625 |
TOTAL DOMESTIC EQUITY FUNDS | | 5,503,918 |
International Equity Funds - 12.2% |
VIP Overseas Portfolio Investor Class R | 52,290 | | 1,116,906 |
TOTAL EQUITY FUNDS (Cost $6,613,421) | 6,620,824 |
Fixed-Income Funds - 27.5% |
| | | |
High Yield Fixed-Income Funds - 7.7% |
VIP High Income Portfolio Investor Class | 111,619 | | 707,663 |
Investment Grade Fixed-Income Funds - 19.8% |
VIP Investment Grade Bond Portfolio Investor Class | 148,880 | | 1,805,916 |
TOTAL FIXED-INCOME FUNDS (Cost $2,549,003) | 2,513,579 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $9,162,424) | $ 9,134,403 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $279 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Investor Freedom 2025 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $9,162,424) - See accompanying schedule | | $ 9,134,403 |
Cash | | 10 |
Receivable for investments sold | | 62 |
Total assets | | 9,134,475 |
| | |
Liabilities | | |
Payable for fund shares redeemed | $ 63 | |
Total liabilities | | 63 |
| | |
Net Assets | | $ 9,134,412 |
Net Assets consist of: | | |
Paid in capital | | $ 9,021,165 |
Undistributed net investment income | | 51,897 |
Accumulated undistributed net realized gain (loss) on investments | | 89,371 |
Net unrealized appreciation (depreciation) on investments | | (28,021) |
Net Assets, for 858,520 shares outstanding | | $ 9,134,412 |
Net Asset Value, offering price and redemption price per share ($9,134,412 ÷ 858,520 shares) | | $ 10.64 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 54,544 |
| | |
Expenses | | |
Independent trustees' compensation | $ 10 | |
Total expenses before reductions | 10 | |
Expense reductions | (10) | 0 |
Net investment income (loss) | | 54,544 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (13,383) | |
Capital gain distributions from underlying funds | 103,056 | 89,673 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (86,823) |
Net gain (loss) | | 2,850 |
Net increase (decrease) in net assets resulting from operations | | $ 57,394 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
August 3, 2005
(commencement
of operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 54,544 | $ 13,821 |
Net realized gain (loss) | 89,673 | (302) |
Change in net unrealized appreciation (depreciation) | (86,823) | 58,802 |
Net increase (decrease) in net assets resulting from operations | 57,394 | 72,321 |
Distributions to shareholders from net investment income | (16,468) | - |
Share transactions
Proceeds from sales of shares | 6,941,524 | 2,377,249 |
Reinvestment of distributions | 16,468 | - |
Cost of shares redeemed | (288,478) | (25,598) |
Net increase (decrease) in net assets resulting from share transactions | 6,669,514 | 2,351,651 |
Total increase (decrease) in net assets | 6,710,440 | 2,423,972 |
| | |
Net Assets | | |
Beginning of period | 2,423,972 | - |
End of period (including undistributed net investment income of $51,897 and undistributed net investment income of $13,821, respectively) | $ 9,134,412 | $ 2,423,972 |
Other Information Shares | | |
Sold | 650,750 | 235,917 |
Issued in reinvestment of distributions | 1,564 | - |
Redeemed | (27,153) | (2,558) |
Net increase (decrease) | 625,161 | 233,359 |
Financial Highlights
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.39 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .09 | .14 |
Net realized and unrealized gain (loss) | .20 | .25 |
Total from investment operations | .29 | .39 |
Distributions from net investment income | (.04) | - |
Net asset value, end of period | $ 10.64 | $ 10.39 |
Total Return B, C, D | 2.80% | 3.90% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 1.74% A | 3.47% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 9,134 | $ 2,424 |
Portfolio turnover rate | 20% A | 2% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 3, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Investor Freedom Portfolios
VIP Investor Freedom 2030 Portfolio
Investment Changes
Fund Holdings as of June 30, 2006 |
| % of fund's investments | % of fund's investments 6 months ago |
Domestic Equity Funds | | |
VIP Contrafund Portfolio Investor Class | 10.7 | 11.1 |
VIP Equity-Income Portfolio Investor Class | 12.6 | 12.8 |
VIP Growth & Income Portfolio Investor Class | 12.5 | 12.8 |
VIP Growth Portfolio Investor Class | 12.4 | 12.7 |
VIP Mid Cap Portfolio Investor Class | 4.3 | 4.7 |
VIP Value Portfolio Investor Class | 10.7 | 10.9 |
VIP Value Strategies Portfolio Investor Class | 4.4 | 4.7 |
| 67.6 | 69.7 |
International Equity Funds | | |
VIP Overseas Portfolio Investor Class R | 14.0 | 13.2 |
High Yield Fixed-Income Funds | | |
VIP High Income Portfolio Investor Class | 7.8 | 7.3 |
Investment Grade Fixed-Income Funds | | |
VIP Investment Grade Bond Portfolio Investor Class | 10.6 | 9.8 |
| 100.0 | 100.0 |
Asset Allocation (% of fund's investments) |
Current |
| Domestic Equity Funds | 67.6% | |
| International Equity Funds | 14.0% | |
| Investment Grade Fixed-Income Funds | 10.6% | |
| High Yield Fixed-Income Funds | 7.8% | |
Six months ago |
| Domestic Equity Funds | 69.7% | |
 | International Equity Funds | 13.2% | |
| Investment Grade Fixed-Income Funds | 9.8% | |
| High Yield Fixed-Income Funds | 7.3% | |
Expected |
| Domestic Equity Funds | 65.8% | |
| International Equity Funds | 16.5% | |
| Investment Grade Fixed-Income Funds | 10.2% | |
| High Yield Fixed-Income Funds | 7.5% | |
The fund invests according to an asset allocation strategy that becomes increasingly conservative over time. The "six months ago" allocation is based on the fund's holdings as of December 31, 2005. The "current" allocation is based on the fund's holdings as of June 30, 2006. The "expected" allocation represents the fund's anticipated allocation at December 31, 2006. Beginning in March 2006, the fund changed its asset allocation strategy, resulting in an increased emphasis on international equity. |
Semiannual Report
VIP Investor Freedom 2030 Portfolio
Investments June 30, 2006 (Unaudited)
Showing Percentage of Total Value of Investment in Securities
Equity Funds - 81.6% |
| Shares | | Value (Note 1) |
Domestic Equity Funds - 67.6% |
VIP Contrafund Portfolio Investor Class | 35,059 | | $ 1,113,480 |
VIP Equity-Income Portfolio Investor Class | 52,322 | | 1,303,859 |
VIP Growth & Income Portfolio Investor Class | 89,571 | | 1,294,308 |
VIP Growth Portfolio Investor Class | 38,317 | | 1,283,625 |
VIP Mid Cap Portfolio Investor Class | 13,698 | | 450,379 |
VIP Value Portfolio Investor Class | 85,764 | | 1,111,507 |
VIP Value Strategies Portfolio Investor Class | 38,282 | | 459,004 |
TOTAL DOMESTIC EQUITY FUNDS | | 7,016,162 |
International Equity Funds - 14.0% |
VIP Overseas Portfolio Investor Class R | 68,158 | | 1,455,850 |
TOTAL EQUITY FUNDS (Cost $8,438,375) | 8,472,012 |
Fixed-Income Funds - 18.4% |
| | | |
High Yield Fixed-Income Funds - 7.8% |
VIP High Income Portfolio Investor Class | 127,605 | | 809,016 |
Investment Grade Fixed-Income Funds - 10.6% |
VIP Investment Grade Bond Portfolio Investor Class | 90,341 | | 1,095,832 |
TOTAL FIXED-INCOME FUNDS (Cost $1,924,302) | 1,904,848 |
TOTAL INVESTMENT IN SECURITIES - 100% (Cost $10,362,677) | $ 10,376,860 |
Income Tax Information |
At December 31, 2005, the fund had a capital loss carryforward of approximately $146 all of which will expire on December 31, 2013. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
VIP Investor Freedom 2030 Portfolio
Financial Statements
Statement of Assets and Liabilities
| June 30, 2006 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value
(cost $10,362,677) - See accompanying schedule | | $ 10,376,860 |
Cash | | 48 |
Receivable for fund shares sold | | 30,290 |
Total assets | | 10,407,198 |
| | |
Liabilities | | |
Payable for investments purchased | $ 30,286 | |
Payable for fund shares redeemed | 4 | |
Total liabilities | | 30,290 |
| | |
Net Assets | | $ 10,376,908 |
Net Assets consist of: | | |
Paid in capital | | $ 10,202,897 |
Undistributed net investment income | | 49,190 |
Accumulated undistributed net realized gain (loss) on investments | | 110,638 |
Net unrealized appreciation (depreciation) on investments | | 14,183 |
Net Assets, for 972,208 shares outstanding | | $ 10,376,908 |
Net Asset Value, offering price and redemption price per share ($10,376,908 ÷ 972,208 shares) | | $ 10.67 |
Statement of Operations
| Six months ended June 30, 2006 (Unaudited) |
| | |
Investment Income | | |
Income distributions from underlying funds | | $ 49,609 |
Interest | | 33 |
Total income | | 49,642 |
| | |
Expenses | | |
Independent trustees'
compensation | $ 12 | |
Total expenses before reductions | 12 | |
Expense reductions | (12) | 0 |
Net investment income (loss) | | 49,642 |
Realized and Unrealized Gain (Loss) Realized gain (loss) on sale of underlying fund shares | (14,434) | |
Capital gain distributions from underlying funds | 125,290 | 110,856 |
Change in net unrealized appreciation (depreciation) on underlying funds | | (104,557) |
Net gain (loss) | | 6,299 |
Net increase (decrease) in net assets resulting from operations | | $ 55,941 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2006
(Unaudited) | For the period
August 3, 2005
(commencement
of operations) to
December 31, 2005 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 49,642 | $ 27,025 |
Net realized gain (loss) | 110,856 | (218) |
Change in net unrealized appreciation (depreciation) | (104,557) | 118,740 |
Net increase (decrease) in net assets resulting from operations | 55,941 | 145,547 |
Distributions to shareholders from net investment income | (27,477) | - |
Share transactions
Proceeds from sales of shares | 8,262,338 | 4,576,828 |
Reinvestment of distributions | 27,477 | - |
Cost of shares redeemed | (2,639,728) | (24,018) |
Net increase (decrease) in net assets resulting from share transactions | 5,650,087 | 4,552,810 |
Total increase (decrease) in net assets | 5,678,551 | 4,698,357 |
| | |
Net Assets | | |
Beginning of period | 4,698,357 | - |
End of period (including undistributed net investment income of $49,190 and undistributed net investment income of $27,025, respectively) | $ 10,376,908 | $ 4,698,357 |
Other Information Shares | | |
Sold | 764,193 | 453,189 |
Issued in reinvestment of distributions | 2,602 | - |
Redeemed | (245,381) | (2,395) |
Net increase (decrease) | 521,414 | 450,794 |
Financial Highlights
| Six months ended
June 30, 2006 | Year ended
December 31, |
| (Unaudited) | 2005 G |
Selected Per-Share Data | | |
Net asset value, beginning of period | $ 10.42 | $ 10.00 |
Income from Investment Operations | | |
Net investment income (loss) E | .07 | .15 |
Net realized and unrealized gain (loss) | .24 | .27 |
Total from investment operations | .31 | .42 |
Distributions from net investment income | (.06) | - |
Net asset value, end of period | $ 10.67 | $ 10.42 |
Total Return B, C, D | 2.98% | 4.20% |
Ratios to Average Net Assets F, H | | |
Expenses before reductions | .00% A | .00% A |
Expenses net of fee waivers, if any | .00% A | .00% A |
Expenses net of all reductions | .00% A | .00% A |
Net investment income (loss) | 1.35% A | 3.69% A |
Supplemental Data | | |
Net assets, end of period (000 omitted) | $ 10,377 | $ 4,698 |
Portfolio turnover rate | 73% A | 1% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown.
E Calculated based on average shares outstanding during the period.
F Amounts do not include the activity of the underlying funds.
G For the period August 3, 2005 (commencement of operations) to December 31, 2005.
H Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund but do not include expenses of the investment companies in which the fund invests.
See accompanying notes which are an integral part of the financial statements.
VIP Investor Freedom Portfolios
Notes to Financial Statements
For the period ended June 30, 2006 (Unaudited)
1. Significant Accounting Policies.
VIP Investor Freedom Income Portfolio, VIP Investor Freedom 2005 Portfolio, VIP Investor Freedom 2010 Portfolio, VIP Investor Freedom 2015 Portfolio, VIP Investor Freedom 2020 Portfolio, VIP Investor Freedom 2025 Portfolio and VIP Investor Freedom 2030 Portfolio (the Funds) are funds of are funds of Variable Insurance Products Fund IV. The Variable Insurance Products Fund IV (the trust) (referred to in this report as Fidelity Variable Insurance Products) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as Massachusetts business trust. Each Fund is authorized to issue an unlimited number of shares. The Funds invest primarily in a combination of other VIP equity, fixed income, and money market funds (the Underlying Funds) managed by Fidelity Management & Research Company (FMR). Shares of each Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Funds:
Security Valuation. Net asset value per share is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Investments in the Underlying Funds are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost, which approximates value.
Investment Transactions and Income. Security transactions, normally shares of the Underlying Funds, are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Income and capital gain distributions from the Underlying Funds, if any, are recorded on the ex-dividend date. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each fund in the trust. Expenses included in the accompanying financial statements reflect the expenses of each Fund and do not include any expenses associated with the Underlying Funds.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.
Distributions are recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Cost for Federal
Income Tax Purposes | Unrealized
Appreciation | Unrealized
Depreciation | Net Unrealized
Appreciation/
(Depreciation) |
| | | | |
VIP Investor Freedom Income | $ 8,380,699 | $ 25,472 | $ (77,677) | $ (52,205) |
VIP Investor Freedom 2005 | 3,392,053 | 38,236 | (50,112) | (11,876) |
VIP Investor Freedom 2010 | 23,507,829 | 187,771 | (398,655) | (210,884) |
VIP Investor Freedom 2015 | 29,784,222 | 280,572 | (409,933) | (129,361) |
VIP Investor Freedom 2020 | 31,151,238 | 370,815 | (518,374) | (147,559) |
VIP Investor Freedom 2025 | 9,162,419 | 113,093 | (141,109) | (28,016) |
VIP Investor Freedom 2030 | 10,362,751 | 172,418 | (158,309) | 14,109 |
New Accounting Pronouncement. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48) was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Fund's net assets and results of operations.
Semiannual Report
Notes to Financial Statements (Unaudited) - continued
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits certain Funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. Certain Funds may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Each applicable Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.
3. Purchases and Sales of Investments.
Purchases and redemptions of the underlying fund shares are noted in the table below.
| Purchases ($) | Redemptions ($) |
| | |
VIP Investor Freedom Income | 6,445,045 | 971,110 |
VIP Investor Freedom 2005 | 2,171,288 | 762,870 |
VIP Investor Freedom 2010 | 17,077,346 | 3,363,957 |
VIP Investor Freedom 2015 | 24,475,506 | 1,461,463 |
VIP Investor Freedom 2020 | 22,824,014 | 2,422,510 |
VIP Investor Freedom 2025 | 7,441,429 | 630,781 |
VIP Investor Freedom 2030 | 8,488,468 | 2,690,959 |
4. Fees and Other Transactions with Affiliates.
Management Fee. Strategic Advisers, Inc. (Strategic Advisers), an affiliate of FMR, provides the Funds with investment management related services. The Funds do not pay any fees for these services.
Other Transactions. Strategic Advisers has entered into an administration agreement with FMR under which FMR provides management and administrative services (other than investment advisory services) necessary for the operation of each Fund. Pursuant to this agreement, FMR pays all expenses of each Fund, excluding the compensation of the independent Trustees and certain other expenses such as interest expense. FMR also contracts with other Fidelity companies to perform the services necessary for the operation of each Fund. The Funds do not pay any fees for these services.
5. Expense Reductions.
FMR voluntarily agreed to reimburse funds to the extent annual operating expenses exceeded certain levels of average net assets. Total expenses are limited to 0.00% of average net assets. Some expenses, for example interest expense, are excluded from this reimbursement.
The following funds were in reimbursement during the period:
| Reimbursement
from adviser |
| |
VIP Investor Freedom Income | $ 9 |
VIP Investor Freedom 2005 | 4 |
VIP Investor Freedom 2010 | 29 |
VIP Investor Freedom 2015 | 29 |
VIP Investor Freedom 2020 | 34 |
VIP Investor Freedom 2025 | 10 |
VIP Investor Freedom 2030 | 12 |
VIP Investor Freedom Portfolios
6. Other.
The Funds' 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 Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, FMR or its affiliates were owners of record of more than 10% of the outstanding shares of the following funds:
| Affiliated % | | |
VIP Investor Freedom Income | 100% | | |
VIP Investor Freedom 2005 | 100% | | |
VIP Investor Freedom 2010 | 100% | | |
VIP Investor Freedom 2015 | 100% | | |
VIP Investor Freedom 2020 | 100% | | |
VIP Investor Freedom 2025 | 100% | | |
VIP Investor Freedom 2030 | 100% | | |
Semiannual Report
Semiannual Report
Investment Adviser
Strategic Advisers, Inc.
Boston, MA
General Distributor
Fidelity Distributors Corporation
Boston, MA
Transfer and Service Agents
Fidelity Investments Institutional Operations Company, Inc.
Boston, MA
Fidelity Service Company, Inc.
Boston, MA
Custodian
Mellon Bank, N.A.
Pittsburgh, PA
VIPIFF-SANN-0806
1.833440.100
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. Schedule of Investments
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 IV'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 IV'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 IV
By: | /s/Christine Reynolds |
| Christine Reynolds |
| President and Treasurer |
| |
Date: | August 22, 2006 |
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/Christine Reynolds |
| Christine Reynolds |
| President and Treasurer |
| |
Date: | August 22, 2006 |
By: | /s/Joseph B. Hollis |
| Joseph B. Hollis |
| Chief Financial Officer |
| |
Date: | August 22, 2006 |
