0001413032 2011-05-02 2012-05-01 0001413032 cfvst7:S000019839Member 2011-05-02 2012-05-01 Columbia Funds Variable Series Trust II Other 2011-12-31 0001413032 2012-10-22 false 2012-10-22 2012-05-01 Columbia Variable Portfolio-Global Inflation-Protected Securities Fund Supplement dated October 22, 2012 to the Prospectus dated May 1, 2012   The following changes are hereby made to the Funds prospectus: The name of the Fund is changed to Variable Portfolio-BlackRock Global Inflation-Protected Securities Fund. The Principal Investment Strategies of the Fund in the Summary of the Fund is superseded and replaced as follows: The Fund is a non-diversified fund that, under normal market conditions, invests at least 80% of its net assets (including the amount of any borrowings for investment purposes) in inflation-protected debt securities. These securities include inflation-indexed bonds of varying maturities issued by the U.S. Government and non-U.S. governments, their agencies or instrumentalities, and U.S. and non-U.S. corporations. At the time of purchase, the Fund invests only in securities rated investment grade, by a third party rating agency or, if unrated, deemed to be of comparable quality. Split-rated securities are considered to have the higher credit rating. Split-rated securities are those that receive different credit ratings from two or more rating agencies. Inflation-protected securities are designed to protect the future purchasing power of the money invested in them. The value of the bonds principal or the interest income paid on the bond is adjusted to track changes in an official inflation measure. Up to 20% of the Funds net assets may be invested in sectors outside the Funds benchmark index, the Barclays World Government Inflation-Linked Bond Index USD hedged (the Index). The Fund seeks to maintain an average duration that is within +/- 20% of the duration of the Index. Under normal market conditions, the Fund generally will invest at least 40% of its net assets in debt obligations of foreign governments, and companies that (a) maintain their principal place of business or conduct their principal business activities outside the U.S., (b) have their securities traded on non-U.S. exchanges or (c) have been formed under the laws of non-U.S. countries. The Investment Manager or Subadviser may reduce this 40% minimum investment amount to 30% if it believes that market conditions for these securities or specific foreign markets are unfavorable. The Fund considers a company to conduct its principal business activities outside the U.S. if it derives at least 50% of its revenue from business outside the U.S. or had at least 50% of its assets outside the U.S. The Subadviser may hedge any portion of the non-U.S. dollar denominated securities in the Fund to the U.S. dollar. The Fund may invest in derivatives such as futures, options, interest rate and inflation rate swaps, caps and floors and forward contracts, including forward foreign currency contracts. The Fund may enter into derivatives for investment purposes, for risk management (hedging) purposes, and to increase flexibility. The Fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. The Principal Risks of Investing in the Fund in the Summary of the Fund is hereby revised to add the following risks: Derivatives Risk/Inflation Rate Swaps Risk. An inflation rate swap is a derivative instrument used to transfer inflation risk from one party to another through an exchange of cash flows. In an inflation rate swap, one party pays a fixed rate on a notional principal amount, while the other party pays a floating rate linked to an inflation index, such as the Consumer Price Index (CPI). Investments in inflation rate swaps subject the Fund (and, therefore, shareholders) to risks, including hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset, and may offset gains, which may lead to losses within the Fund), counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), and inflation risk (the risk that inflation rates may change drastically as a result of unexpected shifts in the global economy, resulting in losses to the Fund). Derivatives Risk/Interest Rate Swaps Risk. Interest rate swaps can be based on various measures of interest rates, including LIBOR, swap rates, treasury rates and other foreign interest rates. A swap agreement can increase or decrease the volatility of the Funds investments and its net asset value. The value of swaps, like many other derivatives, may move in unexpected ways and may result in losses for the Fund. Swaps can involve greater risks than direct investment in securities, because swaps may be leverage, and are, among other factors, subject to counterparty risk (i.e., the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), hedging risk (i.e., a hedging strategy may not eliminate the risk that it is intended to offset, and may offset gains, which may lead to losses within the Fund), pricing risk (i.e., swaps may be difficult to value), liquidity risk (i.e., it may not be possible to liquidate a swap position at an advantageous time or price, which may result in significant losses) and interest rate risk (i.e., risk of losses attributable to changes in interest rates). Derivatives Risk/Options Risk. The Fund may buy and sell call and put options, including options on currencies, interest rates and swap agreements (commonly referred to as swaptions). If the Fund sells a put option, there is a risk that the Fund may be required to buy the underlying asset at a disadvantageous price. If the Fund sells a call option, there is a risk that the Fund may be required to sell the underlying asset at a disadvantageous price, and if the call option sold is not covered (for example, by owning the underlying asset), the Funds losses are potentially unlimited. These transactions involve other risks, including counterparty risk and hedging risk. Frequent Trading Risk. The portfolio managers may actively and frequently trade investments in the Funds portfolio to carry out its investment strategies. Frequent trading of investments increases the possibility that the Fund, as relevant, will realize taxable capital gains (including short-term capital gains, which are generally taxable to shareholders at higher rates than long-term capital gains for U.S. federal income tax purposes), which could reduce the Funds after-tax return. Frequent trading can also mean higher brokerage and other transaction costs, which could reduce the Funds return. The trading costs and tax effects associated with portfolio turnover may adversely affect the Funds performance. Reinvestment Risk. Reinvestment risk is the risk that the Fund will not be able to reinvest income or principal at the same return it is currently earning. The table showing the Funds average annual total returns in the section titled Past Performance in the prospectus is superseded and replaced as follows:   <table cellspacing="0" cellpadding="0" width="100%" border="0" style="border-collapse:collapse" align="center"> <tr> <td width="79%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td></tr> <tr> <td valign="bottom" colspan="12">Average Annual Total Returns</td> <td valign="bottom"> </td></tr> <tr> <td height="5"></td> <td height="5" colspan="4"></td> <td height="5" colspan="4"></td> <td height="5" colspan="4"></td></tr> <tr> <td valign="bottom">(for periods ended December 31, 2011)</td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center">1 year</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="2" align="center">5 years</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="2" align="center">Since inception (9/13/04)</td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"> <td valign="top"> Variable Portfolio-BlackRock Inflation Protected Securities Fund</td> <td valign="bottom">  </td> <td valign="top"></td> <td valign="top"></td> <td valign="top"></td> <td valign="bottom"> </td> <td valign="top"></td> <td valign="top"></td> <td valign="top"></td> <td valign="bottom"> </td> <td valign="top"></td> <td valign="top"></td> <td valign="top"></td></tr> <tr> <td valign="top"> Class 1</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+10.08</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+5.80</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+4.90</td> <td>% </td></tr> <tr bgcolor="#cceeff"> <td valign="top"> Class 2</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+9.91</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+5.63</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+4.75</td> <td>% </td></tr> <tr> <td valign="top"> Class 3</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+10.03</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+5.75</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+4.87</td> <td>% </td></tr> <tr bgcolor="#cceeff"> <td valign="top"> Barclays World Government Inflation-Linked Bond Index (fully hedged to the U.S. dollar) (reflects no deduction for fees, expenses or taxes)</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+11.08</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+6.68</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+6.04</td> <td>% </td></tr> <tr> <td valign="top"> Barclays U.S. Government Inflation-Linked Bond Index (reflects no deduction for fees, expenses or taxes)*</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+13.98</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+8.03</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+6.33</td> <td>% </td></tr> <tr bgcolor="#cceeff"> <td valign="top"> Blended Index (consists of 50% Barclays World Government Inflation-Linked Bond Index, excluding U.S. fully hedged to the U.S. dollar, and 50% Barclays U.S. Government Inflation-Linked Bond Index) (reflects no deduction for fees, expenses or taxes)*</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+11.63</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+6.93</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+6.12</td> <td>% </td></tr> </table>   <table style="border-collapse:collapse" border="0" cellpadding="0" cellspacing="0" width="100%"> <tr> <td width="1%" valign="top" align="left">*</td> <td align="left" valign="top">On October 19, 2012, the Barclays U.S. Government Inflation-Linked Bond Index and the Blended Index (consists of 50% Barclays World Government Inflation-Linked Bond Index, excluding U.S. fully hedged to the U.S. dollar, and 50% Barclays U.S. Government Inflation-Linked Bond Index) were eliminated as secondary benchmarks. The Funds investment manager made this recommendation to the Funds Board because the investment manager believes that the secondary benchmarks are not an appropriate basis for comparing the Funds performance. Information on Barclays U.S. Government Inflation-Linked Bond Index and the Blended Index will be included for a one-year transition period. </td></tr></table> Columbia Variable Portfolio-Global Inflation-Protected Securities Fund Supplement dated October 22, 2012 to the Prospectus dated May 1, 2012   The following changes are hereby made to the Funds prospectus: The name of the Fund is changed to Variable Portfolio-BlackRock Global Inflation-Protected Securities Fund. The Principal Investment Strategies of the Fund in the Summary of the Fund is superseded and replaced as follows: The Fund is a non-diversified fund that, under normal market conditions, invests at least 80% of its net assets (including the amount of any borrowings for investment purposes) in inflation-protected debt securities. These securities include inflation-indexed bonds of varying maturities issued by the U.S. Government and non-U.S. governments, their agencies or instrumentalities, and U.S. and non-U.S. corporations. At the time of purchase, the Fund invests only in securities rated investment grade, by a third party rating agency or, if unrated, deemed to be of comparable quality. Split-rated securities are considered to have the higher credit rating. Split-rated securities are those that receive different credit ratings from two or more rating agencies. Inflation-protected securities are designed to protect the future purchasing power of the money invested in them. The value of the bonds principal or the interest income paid on the bond is adjusted to track changes in an official inflation measure. Up to 20% of the Funds net assets may be invested in sectors outside the Funds benchmark index, the Barclays World Government Inflation-Linked Bond Index USD hedged (the Index). The Fund seeks to maintain an average duration that is within +/- 20% of the duration of the Index. Under normal market conditions, the Fund generally will invest at least 40% of its net assets in debt obligations of foreign governments, and companies that (a) maintain their principal place of business or conduct their principal business activities outside the U.S., (b) have their securities traded on non-U.S. exchanges or (c) have been formed under the laws of non-U.S. countries. The Investment Manager or Subadviser may reduce this 40% minimum investment amount to 30% if it believes that market conditions for these securities or specific foreign markets are unfavorable. The Fund considers a company to conduct its principal business activities outside the U.S. if it derives at least 50% of its revenue from business outside the U.S. or had at least 50% of its assets outside the U.S. The Subadviser may hedge any portion of the non-U.S. dollar denominated securities in the Fund to the U.S. dollar. The Fund may invest in derivatives such as futures, options, interest rate and inflation rate swaps, caps and floors and forward contracts, including forward foreign currency contracts. The Fund may enter into derivatives for investment purposes, for risk management (hedging) purposes, and to increase flexibility. The Fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. The Principal Risks of Investing in the Fund in the Summary of the Fund is hereby revised to add the following risks: Derivatives Risk/Inflation Rate Swaps Risk. An inflation rate swap is a derivative instrument used to transfer inflation risk from one party to another through an exchange of cash flows. In an inflation rate swap, one party pays a fixed rate on a notional principal amount, while the other party pays a floating rate linked to an inflation index, such as the Consumer Price Index (CPI). Investments in inflation rate swaps subject the Fund (and, therefore, shareholders) to risks, including hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset, and may offset gains, which may lead to losses within the Fund), counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), and inflation risk (the risk that inflation rates may change drastically as a result of unexpected shifts in the global economy, resulting in losses to the Fund). Derivatives Risk/Interest Rate Swaps Risk. Interest rate swaps can be based on various measures of interest rates, including LIBOR, swap rates, treasury rates and other foreign interest rates. A swap agreement can increase or decrease the volatility of the Funds investments and its net asset value. The value of swaps, like many other derivatives, may move in unexpected ways and may result in losses for the Fund. Swaps can involve greater risks than direct investment in securities, because swaps may be leverage, and are, among other factors, subject to counterparty risk (i.e., the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), hedging risk (i.e., a hedging strategy may not eliminate the risk that it is intended to offset, and may offset gains, which may lead to losses within the Fund), pricing risk (i.e., swaps may be difficult to value), liquidity risk (i.e., it may not be possible to liquidate a swap position at an advantageous time or price, which may result in significant losses) and interest rate risk (i.e., risk of losses attributable to changes in interest rates). Derivatives Risk/Options Risk. The Fund may buy and sell call and put options, including options on currencies, interest rates and swap agreements (commonly referred to as swaptions). If the Fund sells a put option, there is a risk that the Fund may be required to buy the underlying asset at a disadvantageous price. If the Fund sells a call option, there is a risk that the Fund may be required to sell the underlying asset at a disadvantageous price, and if the call option sold is not covered (for example, by owning the underlying asset), the Funds losses are potentially unlimited. These transactions involve other risks, including counterparty risk and hedging risk. Frequent Trading Risk. The portfolio managers may actively and frequently trade investments in the Funds portfolio to carry out its investment strategies. Frequent trading of investments increases the possibility that the Fund, as relevant, will realize taxable capital gains (including short-term capital gains, which are generally taxable to shareholders at higher rates than long-term capital gains for U.S. federal income tax purposes), which could reduce the Funds after-tax return. Frequent trading can also mean higher brokerage and other transaction costs, which could reduce the Funds return. The trading costs and tax effects associated with portfolio turnover may adversely affect the Funds performance. Reinvestment Risk. Reinvestment risk is the risk that the Fund will not be able to reinvest income or principal at the same return it is currently earning. The table showing the Funds average annual total returns in the section titled Past Performance in the prospectus is superseded and replaced as follows:   <table cellspacing="0" cellpadding="0" width="100%" border="0" style="border-collapse:collapse" align="center"> <tr> <td width="79%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td></tr> <tr> <td valign="bottom" colspan="12">Average Annual Total Returns</td> <td valign="bottom"> </td></tr> <tr> <td height="5"></td> <td height="5" colspan="4"></td> <td height="5" colspan="4"></td> <td height="5" colspan="4"></td></tr> <tr> <td valign="bottom">(for periods ended December 31, 2011)</td> <td valign="bottom">  </td> <td valign="bottom" colspan="2" align="center">1 year</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="2" align="center">5 years</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="2" align="center">Since inception (9/13/04)</td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"> <td valign="top"> Variable Portfolio-BlackRock Inflation Protected Securities Fund</td> <td valign="bottom">  </td> <td valign="top"></td> <td valign="top"></td> <td valign="top"></td> <td valign="bottom"> </td> <td valign="top"></td> <td valign="top"></td> <td valign="top"></td> <td valign="bottom"> </td> <td valign="top"></td> <td valign="top"></td> <td valign="top"></td></tr> <tr> <td valign="top"> Class 1</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+10.08</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+5.80</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+4.90</td> <td>% </td></tr> <tr bgcolor="#cceeff"> <td valign="top"> Class 2</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+9.91</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+5.63</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+4.75</td> <td>% </td></tr> <tr> <td valign="top"> Class 3</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+10.03</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+5.75</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+4.87</td> <td>% </td></tr> <tr bgcolor="#cceeff"> <td valign="top"> Barclays World Government Inflation-Linked Bond Index (fully hedged to the U.S. dollar) (reflects no deduction for fees, expenses or taxes)</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+11.08</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+6.68</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+6.04</td> <td>% </td></tr> <tr> <td valign="top"> Barclays U.S. Government Inflation-Linked Bond Index (reflects no deduction for fees, expenses or taxes)*</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+13.98</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+8.03</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+6.33</td> <td>% </td></tr> <tr bgcolor="#cceeff"> <td valign="top"> Blended Index (consists of 50% Barclays World Government Inflation-Linked Bond Index, excluding U.S. fully hedged to the U.S. dollar, and 50% Barclays U.S. Government Inflation-Linked Bond Index) (reflects no deduction for fees, expenses or taxes)*</td> <td valign="bottom">  </td> <td valign="top"> </td> <td align="right">+11.63</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+6.93</td> <td>% </td> <td valign="bottom"> </td> <td valign="top"> </td> <td align="right">+6.12</td> <td>% </td></tr> </table>   <table style="border-collapse:collapse" border="0" cellpadding="0" cellspacing="0" width="100%"> <tr> <td width="1%" valign="top" align="left">*</td> <td align="left" valign="top">On October 19, 2012, the Barclays U.S. Government Inflation-Linked Bond Index and the Blended Index (consists of 50% Barclays World Government Inflation-Linked Bond Index, excluding U.S. fully hedged to the U.S. dollar, and 50% Barclays U.S. Government Inflation-Linked Bond Index) were eliminated as secondary benchmarks. The Funds investment manager made this recommendation to the Funds Board because the investment manager believes that the secondary benchmarks are not an appropriate basis for comparing the Funds performance. Information on Barclays U.S. Government Inflation-Linked Bond Index and the Blended Index will be included for a one-year transition period. </td></tr></table>