N-CSRS 1 main.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-3329

Variable Insurance Products Fund
 (Exact name of registrant as specified in charter)

82 Devonshire St., Boston, Massachusetts 02109
 (Address of principal executive offices)       (Zip code)

Scott C. Goebel, Secretary

82 Devonshire St.

Boston, Massachusetts 02109
(Name and address of agent for service)

Registrant's telephone number, including area code: 617-563-7000

Date of fiscal year end:

December 31

 

 

Date of reporting period:

June 30, 2008

This report on Form N-CSR relates solely to the Registrant's Equity-Income Portfolio, Growth Portfolio, Overseas Portfolio and Value Portfolio series (each, a "Fund" and collectively, the "Funds").

Item 1. Reports to Stockholders

Fidelity® Variable Insurance Products:
Equity-Income Portfolio

Semiannual Report

June 30, 2008
(2_fidelity_logos) (Registered_Trademark)

Contents

Shareholder Expense Example

3

An example of shareholder expenses.

Investment Changes

4

A summary of major shifts in the fund's investments over the past six months.

Investments

5

A complete list of the fund's investments with their
market values.

Financial Statements

11

Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights.

Notes

16

Notes to the financial statements.

Proxy Voting Results

22

 

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

Beginning
Account Value
January 1, 2008

Ending
Account Value
June 30, 2008

Expenses Paid
During Period*
January 1, 2008 to June 30, 2008

Initial Class

 

 

 

Actual

$ 1,000.00

$ 854.40

$ 2.58

Hypothetical A

$ 1,000.00

$ 1,022.08

$ 2.82

Service Class

 

 

 

Actual

$ 1,000.00

$ 853.90

$ 3.04

Hypothetical A

$ 1,000.00

$ 1,021.58

$ 3.32

Service Class 2

 

 

 

Actual

$ 1,000.00

$ 853.10

$ 3.73

Hypothetical A

$ 1,000.00

$ 1,020.84

$ 4.07

Service Class 2R

 

 

 

Actual

$ 1,000.00

$ 853.60

$ 3.73

Hypothetical A

$ 1,000.00

$ 1,020.84

$ 4.07

Investor Class

 

 

 

Actual

$ 1,000.00

$ 854.00

$ 3.00

Hypothetical A

$ 1,000.00

$ 1,021.63

$ 3.27

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Annualized
Expense Ratio

Initial Class

.56%

Service Class

.66%

Service Class 2

.81%

Service Class 2R

.81%

Investor Class

.65%

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Exxon Mobil Corp.

5.9

6.2

AT&T, Inc.

3.5

3.7

Chevron Corp.

2.2

1.9

ConocoPhillips

2.0

1.4

JPMorgan Chase & Co.

2.0

2.1

Bank of America Corp.

2.0

2.8

Schlumberger Ltd. (NY Shares)

1.8

1.5

General Electric Co.

1.8

1.7

Verizon Communications, Inc.

1.5

1.6

Citigroup, Inc.

1.5

1.6

 

24.2

 

Top Five Market Sectors as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

21.8

24.5

Energy

21.3

18.0

Consumer Discretionary

12.9

11.2

Industrials

10.0

10.1

Information Technology

9.2

10.0

Asset Allocation (% of fund's net assets)

As of June 30, 2008 *

As of December 31, 2007 **

fid95

Stocks 98.3%

 

fid95

Stocks 98.4%

 

fid98

Bonds 1.2%

 

fid98

Bonds 0.9%

 

fid101

Short-Term
Investments and
Net Other Assets 0.5%

 

fid101

Short-Term
Investments and
Net Other Assets 0.7%

 

* Foreign investments

11.1%

 

** Foreign investments

9.7%

 


fid104

Semiannual Report

Investments June 30, 2008 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 95.8%

Shares

Value

CONSUMER DISCRETIONARY - 12.2%

Auto Components - 0.7%

American Axle & Manufacturing Holdings, Inc.

749,853

$ 5,991,325

Johnson Controls, Inc.

1,025,852

29,421,435

The Goodyear Tire & Rubber Co. (a)

793,200

14,142,756

TRW Automotive Holdings Corp. (a)

418,600

7,731,542

 

57,287,058

Automobiles - 1.0%

Fiat SpA

383,700

6,246,650

Ford Motor Co. (a)

3,012,401

14,489,649

General Motors Corp. (d)

1,040,200

11,962,300

Harley-Davidson, Inc.

847,250

30,721,285

Renault SA

147,379

11,994,649

Toyota Motor Corp. sponsored ADR

43,500

4,089,000

Winnebago Industries, Inc. (d)

349,700

3,563,443

 

83,066,976

Diversified Consumer Services - 0.3%

H&R Block, Inc.

1,392,268

29,794,535

Hotels, Restaurants & Leisure - 0.6%

McDonald's Corp.

308,300

17,332,626

Starbucks Corp. (a)

1,590,800

25,039,192

Wyndham Worldwide Corp.

286,702

5,134,833

 

47,506,651

Household Durables - 1.5%

Beazer Homes USA, Inc. (d)

548,987

3,057,858

Black & Decker Corp.

318,300

18,305,433

Centex Corp.

1,082,900

14,478,373

KB Home

197,800

3,348,754

Lennar Corp. Class A (d)

674,700

8,325,798

Newell Rubbermaid, Inc.

952,600

15,994,154

Pulte Homes, Inc.

612,200

5,895,486

The Stanley Works

409,830

18,372,679

Whirlpool Corp.

649,734

40,108,080

 

127,886,615

Internet & Catalog Retail - 0.2%

Liberty Media Corp. - Interactive
Series A (a)

1,253,369

18,499,726

Leisure Equipment & Products - 0.5%

Brunswick Corp.

1,296,457

13,742,444

Eastman Kodak Co.

1,466,700

21,164,481

Polaris Industries, Inc. (d)

270,553

10,924,930

 

45,831,855

Media - 3.9%

Belo Corp. Series A

840,366

6,143,075

Citadel Broadcasting Corp.

1,986,704

2,423,779

Clear Channel Communications, Inc.

1,568,958

55,227,322

Comcast Corp. Class A

2,625,836

49,812,109

E.W. Scripps Co. Class A

524,760

21,798,530

Gannett Co., Inc.

479,800

10,397,266

Informa PLC

602,000

4,932,741

 

Shares

Value

McGraw-Hill Companies, Inc.

182,500

$ 7,321,900

News Corp. Class B

1,099,204

16,872,781

The McClatchy Co. Class A (d)

1,152,851

7,816,330

The New York Times Co. Class A (d)

551,808

8,492,325

The Walt Disney Co.

895,300

27,933,360

Time Warner Cable, Inc. (a)

622,300

16,478,504

Time Warner, Inc.

5,646,950

83,574,860

Virgin Media, Inc.

752,873

10,246,602

Vivendi

225,403

8,499,102

 

337,970,586

Multiline Retail - 1.8%

Family Dollar Stores, Inc.

658,300

13,126,502

JCPenney Co., Inc.

429,600

15,590,184

Kohl's Corp. (a)

1,166,353

46,700,774

Macy's, Inc. (d)

1,438,400

27,933,728

Sears Holdings Corp. (a)(d)

230,600

16,985,996

Target Corp. (d)

680,400

31,631,796

Tuesday Morning Corp. (a)(d)

555,523

2,283,200

 

154,252,180

Specialty Retail - 1.6%

Chico's FAS, Inc. (a)

781,597

4,197,176

Foot Locker, Inc. (d)

669,157

8,331,005

Home Depot, Inc.

2,691,900

63,044,298

OfficeMax, Inc.

513,300

7,134,870

PetSmart, Inc.

358,968

7,161,412

RadioShack Corp.

557,700

6,842,979

Staples, Inc.

958,945

22,774,944

Williams-Sonoma, Inc. (d)

776,100

15,397,824

 

134,884,508

Textiles, Apparel & Luxury Goods - 0.1%

Liz Claiborne, Inc.

729,615

10,324,052

TOTAL CONSUMER DISCRETIONARY

1,047,304,742

CONSUMER STAPLES - 4.7%

Beverages - 0.3%

Carlsberg AS Series B (d)

145,050

13,972,630

Heineken NV (Bearer)

243,454

12,397,548

 

26,370,178

Food & Staples Retailing - 1.3%

Rite Aid Corp. (a)(d)

2,693,868

4,283,250

Wal-Mart Stores, Inc.

1,889,713

106,201,871

Winn-Dixie Stores, Inc. (a)

237,142

3,799,015

 

114,284,136

Food Products - 0.9%

Hershey Co.

840,800

27,561,424

Kraft Foods, Inc. Class A

526,654

14,983,306

Marine Harvest ASA (a)

18,229,000

13,351,337

Nestle SA (Reg.)

400,970

18,071,351

Tyson Foods, Inc. Class A

400,800

5,987,952

 

79,955,370

Common Stocks - continued

Shares

Value

CONSUMER STAPLES - continued

Household Products - 0.9%

Energizer Holdings, Inc. (a)

113,000

$ 8,259,170

Kimberly-Clark Corp.

481,400

28,778,092

Procter & Gamble Co.

615,142

37,406,785

 

74,444,047

Personal Products - 0.3%

Avon Products, Inc.

479,270

17,263,305

Estee Lauder Companies, Inc. Class A

148,400

6,893,180

 

24,156,485

Tobacco - 1.0%

Altria Group, Inc.

1,270,705

26,125,695

Philip Morris International, Inc.

1,249,705

61,722,930

 

87,848,625

TOTAL CONSUMER STAPLES

407,058,841

ENERGY - 21.3%

Energy Equipment & Services - 4.6%

BJ Services Co.

452,324

14,447,229

Halliburton Co.

1,000,995

53,122,805

Nabors Industries Ltd. (a)

1,144,413

56,339,452

Noble Corp.

1,587,668

103,134,913

Pride International, Inc. (a)

374,500

17,710,105

Schlumberger Ltd. (NY Shares)

1,407,857

151,246,078

 

396,000,582

Oil, Gas & Consumable Fuels - 16.7%

Apache Corp.

456,780

63,492,420

Boardwalk Pipeline Partners, LP

310,500

7,293,645

Chevron Corp.

1,951,542

193,456,358

ConocoPhillips

1,867,500

176,273,325

CONSOL Energy, Inc.

43,799

4,921,694

EOG Resources, Inc.

569,400

74,705,280

Exxon Mobil Corp.

5,726,793

504,702,263

Hess Corp.

584,200

73,720,198

Occidental Petroleum Corp.

909,300

81,709,698

Peabody Energy Corp.

297,861

26,226,661

Repsol YPF SA

101,300

3,975,451

Repsol YPF SA sponsored ADR

1,328,174

52,157,393

Royal Dutch Shell PLC:

Class A sponsored ADR

732,100

59,819,891

Class B ADR

92,000

7,370,120

Total SA sponsored ADR

760,133

64,816,541

Valero Energy Corp.

715,614

29,468,985

Williams Companies, Inc.

464,600

18,728,026

 

1,442,837,949

TOTAL ENERGY

1,838,838,531

 

Shares

Value

FINANCIALS - 20.1%

Capital Markets - 3.4%

Bank of New York Mellon Corp.

2,696,095

$ 101,993,274

Goldman Sachs Group, Inc.

281,179

49,178,207

KKR Private Equity Investors, LP

266,500

3,424,525

KKR Private Equity Investors, LP Restricted Depositary Units (e)

601,500

7,729,275

Legg Mason, Inc.

329,950

14,375,922

Lehman Brothers Holdings, Inc.

724,046

14,343,351

Merrill Lynch & Co., Inc. (d)

818,600

25,957,806

Morgan Stanley

1,658,800

59,832,916

State Street Corp.

175,280

11,216,167

 

288,051,443

Commercial Banks - 4.4%

Associated Banc-Corp. (d)

1,194,855

23,048,753

HSBC Holdings PLC sponsored ADR

611,992

46,939,786

KeyCorp

1,335,100

14,659,398

Lloyds TSB Group PLC

2,265,900

13,901,982

Mitsubishi UFJ Financial Group, Inc. sponsored ADR

524,200

4,612,960

PNC Financial Services Group, Inc.

1,047,039

59,785,927

Royal Bank of Scotland Group PLC

1,695,536

7,218,177

Societe Generale Series A

99,147

8,595,934

Sterling Financial Corp., Washington

750,427

3,106,768

U.S. Bancorp, Delaware

1,153,838

32,180,542

Wachovia Corp.

4,237,757

65,812,366

Wells Fargo & Co.

4,025,100

95,596,125

 

375,458,718

Consumer Finance - 0.6%

Capital One Financial Corp.

144,399

5,488,606

Discover Financial Services

2,610,969

34,386,462

SLM Corp. (a)

696,432

13,475,959

 

53,351,027

Diversified Financial Services - 5.5%

Bank of America Corp.

7,169,377

171,133,029

CIT Group, Inc.

439,900

2,995,719

Citigroup, Inc. (d)

7,505,619

125,794,174

JPMorgan Chase & Co.

5,090,712

174,662,329

 

474,585,251

Insurance - 3.7%

ACE Ltd.

753,096

41,488,059

American International Group, Inc.

4,537,750

120,068,865

Hartford Financial Services Group, Inc.

692,900

44,740,553

MetLife, Inc. unit

722,300

18,931,483

Montpelier Re Holdings Ltd.

1,305,000

19,248,750

PartnerRe Ltd.

403,824

27,916,353

The Travelers Companies, Inc.

884,196

38,374,106

XL Capital Ltd. Class A

262,271

5,392,292

 

316,160,461

Real Estate Investment Trusts - 0.8%

Annaly Capital Management, Inc.

637,700

9,890,727

Common Stocks - continued

Shares

Value

FINANCIALS - continued

Real Estate Investment Trusts - continued

Developers Diversified Realty Corp.

667,347

$ 23,163,614

General Growth Properties, Inc.

52,000

1,821,560

HCP, Inc.

671,500

21,360,415

LaSalle Hotel Properties (SBI)

200,481

5,038,088

Senior Housing Properties Trust (SBI)

559,556

10,928,129

 

72,202,533

Real Estate Management & Development - 0.3%

CB Richard Ellis Group, Inc. Class A (a)

1,506,641

28,927,507

Thrifts & Mortgage Finance - 1.4%

Countrywide Financial Corp.

724,710

3,080,018

Fannie Mae

2,848,075

55,565,943

Freddie Mac

1,539,300

25,244,520

MGIC Investment Corp. (d)

722,352

4,413,571

New York Community Bancorp, Inc.

929,120

16,575,501

People's United Financial, Inc.

214,000

3,338,400

Washington Mutual, Inc.

2,951,442

14,550,609

 

122,768,562

TOTAL FINANCIALS

1,731,505,502

HEALTH CARE - 6.4%

Biotechnology - 0.4%

Amgen, Inc. (a)

700,022

33,013,038

Cubist Pharmaceuticals, Inc. (a)

157,102

2,805,842

 

35,818,880

Health Care Equipment & Supplies - 0.8%

Boston Scientific Corp. (a)

856,500

10,526,385

Covidien Ltd.

825,436

39,530,130

Medtronic, Inc.

315,400

16,321,950

 

66,378,465

Health Care Providers & Services - 0.1%

Brookdale Senior Living, Inc. (d)

510,193

10,387,529

Pharmaceuticals - 5.1%

Bristol-Myers Squibb Co.

1,254,600

25,756,938

Johnson & Johnson

1,485,400

95,570,636

Merck & Co., Inc.

1,543,300

58,166,977

Pfizer, Inc.

6,922,000

120,927,340

Schering-Plough Corp.

2,563,936

50,483,900

Wyeth

1,843,600

88,419,056

 

439,324,847

TOTAL HEALTH CARE

551,909,721

INDUSTRIALS - 10.0%

Aerospace & Defense - 3.0%

General Dynamics Corp.

257,200

21,656,240

Goodrich Corp.

306,600

14,551,236

Honeywell International, Inc.

1,854,425

93,240,489

 

Shares

Value

Lockheed Martin Corp.

319,500

$ 31,521,870

Northrop Grumman Corp.

37,500

2,508,750

Spirit AeroSystems Holdings, Inc.
Class A (a)

658,082

12,622,013

The Boeing Co.

410,584

26,983,580

United Technologies Corp.

935,640

57,728,988

 

260,813,166

Building Products - 0.2%

Masco Corp.

1,425,400

22,421,542

Commercial Services & Supplies - 0.7%

Avery Dennison Corp.

602,279

26,458,116

Equifax, Inc.

370,134

12,443,905

Waste Management, Inc.

564,300

21,279,753

 

60,181,774

Industrial Conglomerates - 3.4%

3M Co.

823,500

57,307,365

General Electric Co.

5,664,290

151,179,900

Siemens AG sponsored ADR

426,400

46,959,432

Tyco International Ltd.

872,236

34,924,329

 

290,371,026

Machinery - 1.7%

Briggs & Stratton Corp. (d)

1,147,588

14,551,416

Caterpillar, Inc.

276,700

20,425,994

Eaton Corp.

203,900

17,325,383

Illinois Tool Works, Inc.

292,100

13,877,671

Ingersoll-Rand Co. Ltd. Class A

702,488

26,294,126

Kennametal, Inc.

252,200

8,209,110

SPX Corp.

363,210

47,845,653

 

148,529,353

Marine - 0.1%

Alexander & Baldwin, Inc.

136,800

6,231,240

Road & Rail - 0.9%

Burlington Northern Santa Fe Corp.

521,800

52,122,602

Union Pacific Corp.

311,000

23,480,500

 

75,603,102

TOTAL INDUSTRIALS

864,151,203

INFORMATION TECHNOLOGY - 9.0%

Communications Equipment - 0.9%

Cisco Systems, Inc. (a)

1,815,700

42,233,182

Harris Corp.

241,400

12,188,286

Motorola, Inc.

2,489,712

18,274,486

 

72,695,954

Computers & Peripherals - 2.5%

EMC Corp. (a)

1,303,200

19,144,008

Hewlett-Packard Co.

2,250,611

99,499,512

International Business Machines Corp.

799,700

94,788,441

 

213,431,961

Electronic Equipment & Instruments - 0.8%

Arrow Electronics, Inc. (a)

642,600

19,740,672

Common Stocks - continued

Shares

Value

INFORMATION TECHNOLOGY - continued

Electronic Equipment & Instruments - continued

Avnet, Inc. (a)

638,230

$ 17,410,914

Tyco Electronics Ltd.

986,536

35,337,720

 

72,489,306

Internet Software & Services - 0.1%

Google, Inc. Class A (sub. vtg.) (a)

21,692

11,419,103

IT Services - 0.6%

Electronic Data Systems Corp.

691,200

17,031,168

MoneyGram International, Inc.

895,100

814,541

The Western Union Co.

831,400

20,552,208

Unisys Corp. (a)

2,098,000

8,287,100

Visa, Inc.

59,443

4,833,310

 

51,518,327

Office Electronics - 0.3%

Xerox Corp.

1,763,635

23,914,891

Semiconductors & Semiconductor Equipment - 3.0%

Analog Devices, Inc.

1,025,500

32,580,135

Applied Materials, Inc.

2,149,400

41,032,046

Atmel Corp. (a)

940,400

3,272,592

Intel Corp.

4,124,600

88,596,408

Micron Technology, Inc. (a)

941,000

5,646,000

National Semiconductor Corp.

1,854,547

38,092,395

Novellus Systems, Inc. (a)

831,039

17,609,716

Teradyne, Inc. (a)

2,076,900

22,991,283

Varian Semiconductor Equipment Associates, Inc. (a)

347,400

12,096,468

 

261,917,043

Software - 0.8%

Microsoft Corp.

1,598,800

43,982,988

Symantec Corp. (a)

1,227,933

23,760,504

 

67,743,492

TOTAL INFORMATION TECHNOLOGY

775,130,077

MATERIALS - 2.4%

Chemicals - 1.5%

Celanese Corp. Class A

620,800

28,345,728

Chemtura Corp.

2,415,964

14,109,230

Dow Chemical Co.

542,200

18,928,202

E.I. du Pont de Nemours & Co.

549,000

23,546,610

Georgia Gulf Corp. (d)

617,292

1,790,147

H.B. Fuller Co.

389,950

8,750,478

Hercules, Inc.

560,816

9,494,615

Linde AG

194,300

27,291,412

 

132,256,422

Containers & Packaging - 0.1%

Smurfit-Stone Container Corp. (a)

2,442,972

9,942,896

 

Shares

Value

Metals & Mining - 0.8%

Alcoa, Inc.

1,576,371

$ 56,150,335

Nucor Corp.

133,800

9,990,846

 

66,141,181

TOTAL MATERIALS

208,340,499

TELECOMMUNICATION SERVICES - 6.1%

Diversified Telecommunication Services - 5.4%

AT&T, Inc.

8,847,269

298,064,493

Qwest Communications International, Inc.

8,250,900

32,426,037

Verizon Communications, Inc.

3,689,602

130,611,911

 

461,102,441

Wireless Telecommunication Services - 0.7%

Sprint Nextel Corp.

3,175,700

30,169,150

Vodafone Group PLC sponsored ADR

1,043,587

30,744,073

 

60,913,223

TOTAL TELECOMMUNICATION SERVICES

522,015,664

UTILITIES - 3.6%

Electric Utilities - 2.0%

Allegheny Energy, Inc.

463,300

23,215,963

Entergy Corp.

535,600

64,529,088

Exelon Corp.

572,700

51,520,092

PPL Corp.

562,400

29,396,648

 

168,661,791

Independent Power Producers & Energy Traders - 0.4%

AES Corp. (a)

1,755,658

33,726,190

Multi-Utilities - 1.2%

Public Service Enterprise Group, Inc.

1,555,900

71,462,487

Wisconsin Energy Corp.

782,600

35,389,172

 

106,851,659

TOTAL UTILITIES

309,239,640

TOTAL COMMON STOCKS

(Cost $7,485,036,944)

8,255,494,420

Convertible Preferred Stocks - 2.5%

 

 

 

 

CONSUMER DISCRETIONARY - 0.2%

Automobiles - 0.1%

General Motors Corp. Series C, 6.25%

659,300

8,748,911

Hotels, Restaurants & Leisure - 0.1%

Six Flags, Inc. 7.25% PIERS

404,400

4,246,200

TOTAL CONSUMER DISCRETIONARY

12,995,111

Convertible Preferred Stocks - continued

Shares

Value

FINANCIALS - 1.6%

Capital Markets - 0.4%

Legg Mason, Inc. 7.00%

230,600

$ 9,649,918

Lehman Brothers Holdings, Inc. 7.25%

32,400

26,063,532

 

35,713,450

Commercial Banks - 0.1%

Huntington Bancshares, Inc. 8.50%

9,000

6,300,000

Diversified Financial Services - 0.5%

Bank of America Corp. Series L, 7.25%

17,700

15,642,375

CIT Group, Inc.:

7.75%

406,600

4,013,142

Series C, 8.75%

81,800

3,343,984

Citigroup, Inc. Series T, 6.50%

432,849

18,828,932

 

41,828,433

Insurance - 0.3%

American International Group, Inc.
Series A, 8.50%

510,400

30,451,995

Thrifts & Mortgage Finance - 0.3%

Fannie Mae 8.75%

541,300

20,840,050

Washington Mutual, Inc. Series R, 7.75%

11,800

6,882,350

 

27,722,400

TOTAL FINANCIALS

142,016,278

HEALTH CARE - 0.2%

Pharmaceuticals - 0.2%

Schering-Plough Corp. 6.00%

93,000

17,703,480

MATERIALS - 0.5%

Chemicals - 0.0%

Celanese Corp. 4.25%

67,100

3,901,865

Metals & Mining - 0.5%

Freeport-McMoRan Copper & Gold, Inc. 6.75%

232,700

39,051,249

TOTAL MATERIALS

42,953,114

TOTAL CONVERTIBLE PREFERRED STOCKS

(Cost $256,918,678)

215,667,983

Investment Companies - 0.0%

 

 

 

 

Ares Capital Corp.
(Cost $10,607,570)

604,054

6,088,864

Corporate Bonds - 1.2%

 

Principal Amount

 

Convertible Bonds - 1.1%

CONSUMER DISCRETIONARY - 0.5%

Automobiles - 0.1%

Ford Motor Co. 4.25% 12/15/36

$ 10,280,000

7,388,236

 

 

Principal Amount

Value

Hotels, Restaurants & Leisure - 0.0%

Six Flags, Inc. 4.5% 5/15/15

$ 3,650,000

$ 2,080,500

Media - 0.4%

Liberty Media Corp.:

3.5% 1/15/31

259,098

164,931

4% 11/15/29 (e)

4,750,000

2,565,000

3.5% 1/15/31 (e)

9,480,719

6,035,027

News America, Inc. liquid yield option note:

0% 2/28/21 (e)

22,670,000

13,233,613

0% 2/28/21

3,490,000

2,037,288

Virgin Media, Inc. 6.5% 11/15/16 (e)

9,500,000

9,788,800

 

33,824,659

TOTAL CONSUMER DISCRETIONARY

43,293,395

CONSUMER STAPLES - 0.1%

Food & Staples Retailing - 0.1%

Rite Aid Corp. 8.5% 5/15/15

6,360,000

5,798,412

FINANCIALS - 0.1%

Thrifts & Mortgage Finance - 0.1%

MGIC Investment Corp. 9% 4/1/63 (e)

5,740,000

4,328,069

INDUSTRIALS - 0.0%

Airlines - 0.0%

UAL Corp.:

4.5% 6/30/21 (e)

8,490,000

3,207,522

4.5% 6/30/21

280,000

105,784

 

3,313,306

INFORMATION TECHNOLOGY - 0.2%

Semiconductors & Semiconductor Equipment - 0.2%

Advanced Micro Devices, Inc.:

6% 5/1/15 (e)

14,340,000

9,095,862

6% 5/1/15

4,780,000

3,031,954

Micron Technology, Inc. 1.875% 6/1/14

2,570,000

1,829,532

 

13,957,348

TELECOMMUNICATION SERVICES - 0.2%

Diversified Telecommunication Services - 0.2%

Level 3 Communications, Inc.:

3.5% 6/15/12

6,320,000

5,033,627

5.25% 12/15/11 (e)

11,850,000

10,740,129

5.25% 12/15/11

4,290,000

3,888,199

 

19,661,955

TOTAL CONVERTIBLE BONDS

90,352,485

Corporate Bonds - continued

 

Principal Amount

Value

Nonconvertible Bonds - 0.1%

MATERIALS - 0.1%

Chemicals - 0.1%

Hercules, Inc. 6.5% 6/30/29 unit

$ 15,700,000

$ 11,243,335

TOTAL CORPORATE BONDS

(Cost $133,000,489)

101,595,820

Money Market Funds - 2.3%

Shares

 

Fidelity Cash Central Fund, 2.38% (b)

23,908,917

23,908,917

Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c)

172,583,116

172,583,116

TOTAL MONEY MARKET FUNDS

(Cost $196,492,033)

196,492,033

TOTAL INVESTMENT PORTFOLIO - 101.8%

(Cost $8,082,055,714)

8,775,339,120

NET OTHER ASSETS - (1.8)%

(155,815,817)

NET ASSETS - 100%

$ 8,619,523,303

Security Type Abbreviation

PIERS

-

Preferred Income Equity Redeemable Securities

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request.

(c) Investment made with cash collateral received from securities on loan.

(d) Security or a portion of the security is on loan at period end.

(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $66,723,297 or 0.8% of net assets.

Affiliated Central Funds

Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:

Fund

Income earned

Fidelity Cash Central Fund

$ 214,452

Fidelity Securities Lending Cash Central Fund

3,161,485

Total

$ 3,375,937

Other Information

The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

#Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities

$ 8,775,339,120

$ 8,307,626,353

$ 467,712,767

$ -

Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited)

United States of America

88.9%

United Kingdom

2.2%

Bermuda

2.1%

Netherlands Antilles

1.8%

Cayman Islands

1.7%

France

1.1%

Others (individually less than 1%)

2.2%

 

100.0%

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2008 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $161,966,591) - See accompanying schedule:

Unaffiliated issuers (cost $7,885,563,681)

$ 8,578,847,087

 

Fidelity Central Funds (cost $196,492,033)

196,492,033

 

Total Investments (cost $8,082,055,714)

 

$ 8,775,339,120

Cash

254,870

Receivable for investments sold

16,463,424

Receivable for fund shares sold

9,144,398

Dividends receivable

13,450,945

Interest receivable

760,649

Distributions receivable from Fidelity Central Funds

652,088

Prepaid expenses

17,353

Other receivables

329,069

Total assets

8,816,411,916

 

 

 

Liabilities

Payable for investments purchased

$ 5,053,920

Payable for fund shares redeemed

13,553,601

Accrued management fee

3,500,905

Distribution fees payable

534,981

Other affiliated payables

631,865

Other payables and accrued expenses

1,030,225

Collateral on securities loaned, at value

172,583,116

Total liabilities

196,888,613

 

 

 

Net Assets

$ 8,619,523,303

Net Assets consist of:

 

Paid in capital

$ 7,465,988,382

Undistributed net investment income

103,593,429

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

356,657,799

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

693,283,693

Net Assets

$ 8,619,523,303

Statement of Assets and Liabilities - continued

 

June 30, 2008 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($5,602,666,064 ÷ 274,510,254 shares)

$ 20.41

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($693,769,312 ÷ 34,133,832 shares)

$ 20.32

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($2,122,863,690 ÷ 105,657,667 shares)

$ 20.09

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($9,250,599 ÷ 462,803 shares)

$ 19.99

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($190,973,638 ÷ 9,382,576 shares)

$ 20.35

See accompanying notes which are an integral part of the financial statements.

Semiannual Report


Financial Statements - continued

Statement of Operations

Six months ended June 30, 2008 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 127,539,484

Interest

 

3,225,822

Income from Fidelity Central Funds

 

3,375,937

Total income

 

134,141,243

 

 

 

Expenses

Management fee

$ 22,235,162

Transfer agent fees

3,342,260

Distribution fees

3,358,008

Accounting and security lending fees

656,790

Custodian fees and expenses

85,219

Independent trustees' compensation

21,516

Depreciation in deferred trustee compensation account

(933)

Audit

41,207

Legal

18,784

Interest

121,154

Miscellaneous

902,077

Total expenses before reductions

30,781,244

Expense reductions

(26,890)

30,754,354

Net investment income (loss)

103,386,889

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

368,341,704

Investment not meeting investment restrictions

32,186

Foreign currency transactions

(18,217)

Total net realized gain (loss)

 

368,355,673

Change in net unrealized appreciation (depreciation) on:

Investment securities

(2,006,065,507)

Assets and liabilities in foreign currencies

(378)

Total change in net unrealized appreciation (depreciation)

 

(2,006,065,885)

Net gain (loss)

(1,637,710,212)

Net increase (decrease) in net assets resulting from operations

$ (1,534,323,323)

Statement of Changes in Net Assets

 

Six months ended June 30, 2008
(Unaudited)

Year ended
December 31,
2007

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 103,386,889

$ 197,428,237

Net realized gain (loss)

368,355,673

910,261,376

Change in net unrealized appreciation (depreciation)

(2,006,065,885)

(894,509,627)

Net increase (decrease) in net assets resulting from operations

(1,534,323,323)

213,179,986

Distributions to shareholders from net investment income

-

(201,405,100)

Distributions to shareholders from net realized gain

(8,981,541)

(921,452,556)

Total distributions

(8,981,541)

(1,122,857,656)

Share transactions - net increase (decrease)

(786,102,687)

(135,088,400)

Redemption fees

1,305

5,392

Total increase (decrease) in net assets

(2,329,406,246)

(1,044,760,678)

 

 

 

Net Assets

Beginning of period

10,948,929,549

11,993,690,227

End of period (including undistributed net investment income of $103,593,429 and undistributed net investment income of $206,540, respectively)

$ 8,619,523,303

$ 10,948,929,549

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 23.91

$ 26.20

$ 25.49

$ 25.37

$ 23.18

$ 18.16

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .24

.47

.45

.42

.40

.36

Net realized and unrealized gain (loss)

  (3.72)

(.05) H

4.37

1.00

2.24

5.01

Total from investment operations

  (3.48)

.42

4.82

1.42

2.64

5.37

Distributions from net investment income

  -

(.50)

(.89)

(.41)

(.36)

(.35)

Distributions from net realized gain

  (.02)

(2.21)

(3.22)

(.89)

(.09)

-

Total distributions

  (.02)

(2.71)

(4.11)

(1.30)

(.45)

(.35)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 20.41

$ 23.91

$ 26.20

$ 25.49

$ 25.37

$ 23.18

Total Return B, C, D

  (14.56)%

1.53%

20.19%

5.87%

11.53%

30.33%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .56% A

.55%

.57%

.56%

.58%

.57%

Expenses net of fee waivers, if any

  .56% A

.55%

.57%

.56%

.58%

.57%

Expenses net of all reductions

  .56% A

.54%

.56%

.55%

.57%

.56%

Net investment income (loss)

  2.20% A

1.71%

1.76%

1.71%

1.71%

1.83%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 5,602,666

$ 7,201,655

$ 8,315,159

$ 7,875,801

$ 8,689,829

$ 8,402,963

Portfolio turnover rate G

  30% A

20%

22%

19%

22%

26%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

Financial Highlights - Service Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 23.82

$ 26.11

$ 25.39

$ 25.28

$ 23.11

$ 18.10

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .23

.44

.43

.39

.38

.34

Net realized and unrealized gain (loss)

  (3.71)

(.05) H

4.35

1.00

2.22

5.00

Total from investment operations

  (3.48)

.39

4.78

1.39

2.60

5.34

Distributions from net investment income

  -

(.47)

(.84)

(.39)

(.34)

(.33)

Distributions from net realized gain

  (.02)

(2.21)

(3.22)

(.89)

(.09)

-

Total distributions

  (.02)

(2.68)

(4.06)

(1.28)

(.43)

(.33)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 20.32

$ 23.82

$ 26.11

$ 25.39

$ 25.28

$ 23.11

Total Return B, C, D

  (14.61)%

1.42%

20.08%

5.76%

11.38%

30.22%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .66% A

.65%

.67%

.66%

.68%

.67%

Expenses net of fee waivers, if any

  .66% A

.65%

.67%

.66%

.68%

.67%

Expenses net of all reductions

  .66% A

.64%

.66%

.65%

.67%

.66%

Net investment income (loss)

  2.10% A

1.61%

1.66%

1.61%

1.61%

1.73%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 693,769

$ 920,054

$ 1,118,333

$ 1,079,838

$ 1,170,778

$ 1,071,483

Portfolio turnover rate G

  30% A

20%

22%

19%

22%

26%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report


Financial Statements - continued

Financial Highlights - Service Class 2

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 23.57

$ 25.87

$ 25.17

$ 25.09

$ 22.96

$ 18.00

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .21

.39

.38

.35

.34

.31

Net realized and unrealized gain (loss)

  (3.67)

(.04) H

4.32

.98

2.21

4.97

Total from investment operations

  (3.46)

.35

4.70

1.33

2.55

5.28

Distributions from net investment income

  -

(.44)

(.78)

(.36)

(.33)

(.32)

Distributions from net realized gain

  (.02)

(2.21)

(3.22)

(.89)

(.09)

-

Total distributions

  (.02)

(2.65)

(4.00)

(1.25)

(.42)

(.32)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 20.09

$ 23.57

$ 25.87

$ 25.17

$ 25.09

$ 22.96

Total Return B, C, D

  (14.69)%

1.27%

19.93%

5.57%

11.23%

30.03%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .81% A

.80%

.82%

.81%

.83%

.82%

Expenses net of fee waivers, if any

  .81% A

.80%

.82%

.81%

.83%

.82%

Expenses net of all reductions

  .81% A

.80%

.82%

.80%

.82%

.81%

Net investment income (loss)

  1.94% A

1.46%

1.51%

1.46%

1.46%

1.58%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 2,122,864

$ 2,583,129

$ 2,373,059

$ 1,723,546

$ 1,420,999

$ 916,679

Portfolio turnover rate G

  30% A

20%

22%

19%

22%

26%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

Financial Highlights - Service Class 2R

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 23.44

$ 25.73

$ 25.08

$ 25.01

$ 22.91

$ 17.99

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .21

.39

.38

.35

.34

.31

Net realized and unrealized gain (loss)

  (3.64)

(.04) H

4.29

.99

2.20

4.96

Total from investment operations

  (3.43)

.35

4.67

1.34

2.54

5.27

Distributions from net investment income

  -

(.43)

(.80)

(.38)

(.35)

(.35)

Distributions from net realized gain

  (.02)

(2.21)

(3.22)

(.89)

(.09)

-

Total distributions

  (.02)

(2.64)

(4.02)

(1.27)

(.44)

(.35)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 19.99

$ 23.44

$ 25.73

$ 25.08

$ 25.01

$ 22.91

Total Return B, C, D

  (14.64)%

1.27%

19.89%

5.61%

11.22%

30.05%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .81% A

.80%

.82%

.81%

.83%

.82%

Expenses net of fee waivers, if any

  .81% A

.80%

.82%

.81%

.83%

.82%

Expenses net of all reductions

  .81% A

.79%

.81%

.80%

.82%

.81%

Net investment income (loss)

  1.95% A

1.46%

1.51%

1.46%

1.46%

1.57%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 9,251

$ 13,558

$ 17,089

$ 9,651

$ 5,617

$ 1,891

Portfolio turnover rate G

  30% A

20%

22%

19%

22%

26%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005 I

Selected Per-Share Data

 

 

 

 

Net asset value, beginning of period

$ 23.85

$ 26.15

$ 25.48

$ 24.46

Income from Investment Operations

 

 

 

 

Net investment income (loss) E

  .23

.44

.42

.17

Net realized and unrealized gain (loss)

  (3.71)

(.05) H

4.36

.85

Total from investment operations

  (3.48)

.39

4.78

1.02

Distributions from net investment income

  -

(.48)

(.89)

-

Distributions from net realized gain

  (.02)

(2.21)

(3.22)

-

Total distributions

  (.02)

(2.69)

(4.11)

-

Redemption fees added to paid in capital E, K

  -

-

-

-

Net asset value, end of period

$ 20.35

$ 23.85

$ 26.15

$ 25.48

Total Return B, C, D

  (14.60)%

1.39%

20.04%

4.17%

Ratios to Average Net Assets F, J

 

 

 

 

Expenses before reductions

  .65% A

.66%

.69%

.74% A

Expenses net of fee waivers, if any

  .65% A

.66%

.69%

.74% A

Expenses net of all reductions

  .65% A

.66%

.69%

.73% A

Net investment income (loss)

  2.10% A

1.60%

1.63%

1.54% A

Supplemental Data

 

 

 

 

Net assets, end of period (000 omitted)

$ 190,974

$ 230,534

$ 170,050

$ 37,500

Portfolio turnover rate G

  30% A

20%

22%

19%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2008 (Unaudited)

1. Organization.

VIP Equity-Income Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Service Class 2R shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.

2. Investments in Fidelity Central Funds.

The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.

When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:

Level 1

Quoted prices in active markets for identical securities.

Level 2

Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level 3

Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.

The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.

Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to short-term capital gains, foreign currency transactions, market discount, partnerships, deferred trustees compensation and losses deferred due to wash sales.

The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:

Unrealized appreciation

$ 2,338,236,470

 

Unrealized depreciation

(1,659,807,289)

 

Net unrealized appreciation (depreciation)

$ 678,429,181

 

Cost for federal income tax purposes

$ 8,096,909,939

 

Trading (Redemption) Fees. Service Class 2R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.

4. Operating Policies.

Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.

Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $1,473,791,925 and $2,129,352,315, respectively.

The Fund realized a gain on the sale of an investment not meeting the investment restrictions of the Fund.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .46% of the Fund's average net assets.

Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.

For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:

Service Class

$ 400,775

 

Service Class 2

2,943,837

 

Service Class 2R

13,396

 

 

$ 3,358,008

 

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class

$ 2,119,397

 

Service Class

266,537

 

Service Class 2

787,718

 

Service Class 2R

3,538

 

Investor Class

165,070

 

 

$ 3,342,260

 

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $10,727 for the period.

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:

Borrower or Lender

Average Daily Loan Balance

Weighted Average Interest Rate

Interest
Expense

Borrower

$ 12,847,901

2.91%

$84,225

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $10,322 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $3,161,485.

9. Bank Borrowings.

The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $18,460,150. The weighted average interest rate was 3.60%. The interest expense amounted to $36,929 under the bank borrowing program. At period end, there were no bank borrowings outstanding.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $24,967 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,923.

11. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

At the end of the period, FMR or its affiliates were the owners of record of 11% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 20% of the total outstanding shares of the Fund.

In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.

In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $441,909, which is recorded in the accompanying Statement of Operations.

In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.

12. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
June 30,
2008

Year ended
December 31,
2007

From net investment income

 

 

Initial Class

$ -

$ 137,272,719

Service Class

-

16,555,512

Service Class 2

-

43,201,505

Service Class 2R

-

237,361

Investor Class

-

4,138,003

Total

$ -

$ 201,405,100

From net realized gain

 

 

Initial Class

$ 5,879,386

$ 605,242,729

Service Class

748,441

77,757,239

Service Class 2

2,153,837

217,894,303

Service Class 2R

10,338

1,223,747

Investor Class

189,539

19,334,538

Total

$ 8,981,541

$ 921,452,556

Semiannual Report

13. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended June 30,
2008

Year ended
December 31,
2007

Six months ended June 30,
2008

Year ended
December 31,
2007

Initial Class

 

 

 

 

Shares sold

4,008,374

9,919,751

$ 88,119,819

$ 270,689,892

Reinvestment of distributions

269,692

30,642,204

5,879,386

742,515,448

Shares redeemed

(30,995,651)

(56,707,193)

(686,122,712)

(1,549,810,794)

Net increase (decrease)

(26,717,585)

(16,145,238)

$ (592,123,507)

$ (536,605,454)

Service Class

 

 

 

 

Shares sold

627,390

1,556,560

$ 13,859,050

$ 42,122,639

Reinvestment of distributions

34,474

3,906,238

748,441

94,312,751

Shares redeemed

(5,152,356)

(9,669,915)

(113,648,355)

(262,876,733)

Net increase (decrease)

(4,490,492)

(4,207,117)

$ (99,040,864)

$ (126,441,343)

Service Class 2

 

 

 

 

Shares sold

6,157,796

19,215,696

$ 134,555,746

$ 515,996,306

Reinvestment of distributions

100,318

10,936,330

2,153,837

261,095,808

Shares redeemed

(10,216,120)

(12,279,783)

(223,081,382)

(329,898,169)

Net increase (decrease)

(3,958,006)

17,872,243

$ (86,371,799)

$ 447,193,945

Service Class 2R

 

 

 

 

Shares sold

58,100

180,145

$ 1,290,211

$ 4,895,399

Reinvestment of distributions

484

61,484

10,338

1,461,108

Shares redeemed

(174,099)

(327,382)

(3,749,425)

(8,617,113)

Net increase (decrease)

(115,515)

(85,753)

$ (2,448,876)

$ (2,260,606)

Investor Class

 

 

 

 

Shares sold

710,087

3,383,207

$ 15,796,230

$ 92,001,453

Reinvestment of distributions

8,718

971,586

189,539

23,472,541

Shares redeemed

(1,000,797)

(1,193,211)

(22,103,410)

(32,448,936)

Net increase (decrease)

(281,992)

3,161,582

$ (6,117,641)

$ 83,025,058

Semiannual Report

Proxy Voting Results

A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.

PROPOSAL 1

To elect a Board of Trustees.A

 

# of
Votes

% of
Votes

James C. Curvey

Affirmative

821,220,039.81

95.845

Withheld

35,598,080.64

4.155

TOTAL

856,818,120.45

100.000

Dennis J. Dirks

Affirmative

822,124,493.63

95.951

Withheld

34,693,626.82

4.049

TOTAL

856,818,120.45

100.000

Edward C. Johnson 3d

Affirmative

820,473,313.05

95.758

Withheld

36,344,807.40

4.242

TOTAL

856,818,120.45

100.000

Alan J. Lacy

Affirmative

822,170,402.95

95.956

Withheld

34,647,717.50

4.044

TOTAL

856,818,120.45

100.000

Ned C. Lautenbach

Affirmative

821,435,006.18

95.870

Withheld

35,383,114.27

4.130

TOTAL

856,818,120.45

100.000

Joseph Mauriello

Affirmative

822,174,756.53

95.957

Withheld

34,643,363.92

4.043

TOTAL

856,818,120.45

100.000

Cornelia M. Small

Affirmative

822,263,792.20

95.967

Withheld

34,554,328.25

4.033

TOTAL

856,818,120.45

100.000

William S. Stavropoulos

Affirmative

821,014,987.67

95.821

Withheld

35,803,132.78

4.179

TOTAL

856,818,120.45

100.000

David M. Thomas

Affirmative

822,321,743.26

95.974

Withheld

34,496,377.19

4.026

TOTAL

856,818,120.45

100.000

Michael E. Wiley

Affirmative

822,218,346.41

95.962

Withheld

34,599,774.04

4.038

TOTAL

856,818,120.45

100.000

PROPOSAL 2

To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A

 

# of
Votes

% of
Votes

Affirmative

701,273,514.99

81.846

Against

103,131,328.05

12.037

Abstain

52,413,277.41

6.117

TOTAL

856,818,120.45

100.000

A Denotes trust-wide proposal and voting results.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research (U.K.) Inc.

Fidelity Research & Analysis Company

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

The Northern Trust Company
Chicago, IL 

VIPEI-SANN-0808
1.705693.110

Fidelity® Variable Insurance Products:
Equity-Income Portfolio - Service Class 2R

Semiannual Report

June 30, 2008
(2_fidelity_logos) (Registered_Trademark)

Contents

Shareholder Expense Example

3

An example of shareholder expenses.

Investment Changes

4

A summary of major shifts in the fund's investments over the past six months.

Investments

5

A complete list of the fund's investments with their
market values.

Financial Statements

11

Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights.

Notes

16

Notes to the financial statements.

Proxy Voting Results

22

 

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, or http://www.advisor.fidelity.com, as applicable.

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

Beginning
Account Value
January 1, 2008

Ending
Account Value
June 30, 2008

Expenses Paid
During Period*
January 1, 2008 to June 30, 2008

Initial Class

 

 

 

Actual

$ 1,000.00

$ 854.40

$ 2.58

Hypothetical A

$ 1,000.00

$ 1,022.08

$ 2.82

Service Class

 

 

 

Actual

$ 1,000.00

$ 853.90

$ 3.04

Hypothetical A

$ 1,000.00

$ 1,021.58

$ 3.32

Service Class 2

 

 

 

Actual

$ 1,000.00

$ 853.10

$ 3.73

Hypothetical A

$ 1,000.00

$ 1,020.84

$ 4.07

Service Class 2R

 

 

 

Actual

$ 1,000.00

$ 853.60

$ 3.73

Hypothetical A

$ 1,000.00

$ 1,020.84

$ 4.07

Investor Class

 

 

 

Actual

$ 1,000.00

$ 854.00

$ 3.00

Hypothetical A

$ 1,000.00

$ 1,021.63

$ 3.27

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Annualized
Expense Ratio

Initial Class

.56%

Service Class

.66%

Service Class 2

.81%

Service Class 2R

.81%

Investor Class

.65%

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Exxon Mobil Corp.

5.9

6.2

AT&T, Inc.

3.5

3.7

Chevron Corp.

2.2

1.9

ConocoPhillips

2.0

1.4

JPMorgan Chase & Co.

2.0

2.1

Bank of America Corp.

2.0

2.8

Schlumberger Ltd. (NY Shares)

1.8

1.5

General Electric Co.

1.8

1.7

Verizon Communications, Inc.

1.5

1.6

Citigroup, Inc.

1.5

1.6

 

24.2

 

Top Five Market Sectors as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

21.8

24.5

Energy

21.3

18.0

Consumer Discretionary

12.9

11.2

Industrials

10.0

10.1

Information Technology

9.2

10.0

Asset Allocation (% of fund's net assets)

As of June 30, 2008 *

As of December 31, 2007 **

fid95

Stocks 98.3%

 

fid95

Stocks 98.4%

 

fid98

Bonds 1.2%

 

fid98

Bonds 0.9%

 

fid101

Short-Term
Investments and
Net Other Assets 0.5%

 

fid101

Short-Term
Investments and
Net Other Assets 0.7%

 

* Foreign investments

11.1%

 

** Foreign investments

9.7%

 


fid116

Semiannual Report

Investments June 30, 2008 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 95.8%

Shares

Value

CONSUMER DISCRETIONARY - 12.2%

Auto Components - 0.7%

American Axle & Manufacturing Holdings, Inc.

749,853

$ 5,991,325

Johnson Controls, Inc.

1,025,852

29,421,435

The Goodyear Tire & Rubber Co. (a)

793,200

14,142,756

TRW Automotive Holdings Corp. (a)

418,600

7,731,542

 

57,287,058

Automobiles - 1.0%

Fiat SpA

383,700

6,246,650

Ford Motor Co. (a)

3,012,401

14,489,649

General Motors Corp. (d)

1,040,200

11,962,300

Harley-Davidson, Inc.

847,250

30,721,285

Renault SA

147,379

11,994,649

Toyota Motor Corp. sponsored ADR

43,500

4,089,000

Winnebago Industries, Inc. (d)

349,700

3,563,443

 

83,066,976

Diversified Consumer Services - 0.3%

H&R Block, Inc.

1,392,268

29,794,535

Hotels, Restaurants & Leisure - 0.6%

McDonald's Corp.

308,300

17,332,626

Starbucks Corp. (a)

1,590,800

25,039,192

Wyndham Worldwide Corp.

286,702

5,134,833

 

47,506,651

Household Durables - 1.5%

Beazer Homes USA, Inc. (d)

548,987

3,057,858

Black & Decker Corp.

318,300

18,305,433

Centex Corp.

1,082,900

14,478,373

KB Home

197,800

3,348,754

Lennar Corp. Class A (d)

674,700

8,325,798

Newell Rubbermaid, Inc.

952,600

15,994,154

Pulte Homes, Inc.

612,200

5,895,486

The Stanley Works

409,830

18,372,679

Whirlpool Corp.

649,734

40,108,080

 

127,886,615

Internet & Catalog Retail - 0.2%

Liberty Media Corp. - Interactive
Series A (a)

1,253,369

18,499,726

Leisure Equipment & Products - 0.5%

Brunswick Corp.

1,296,457

13,742,444

Eastman Kodak Co.

1,466,700

21,164,481

Polaris Industries, Inc. (d)

270,553

10,924,930

 

45,831,855

Media - 3.9%

Belo Corp. Series A

840,366

6,143,075

Citadel Broadcasting Corp.

1,986,704

2,423,779

Clear Channel Communications, Inc.

1,568,958

55,227,322

Comcast Corp. Class A

2,625,836

49,812,109

E.W. Scripps Co. Class A

524,760

21,798,530

Gannett Co., Inc.

479,800

10,397,266

Informa PLC

602,000

4,932,741

 

Shares

Value

McGraw-Hill Companies, Inc.

182,500

$ 7,321,900

News Corp. Class B

1,099,204

16,872,781

The McClatchy Co. Class A (d)

1,152,851

7,816,330

The New York Times Co. Class A (d)

551,808

8,492,325

The Walt Disney Co.

895,300

27,933,360

Time Warner Cable, Inc. (a)

622,300

16,478,504

Time Warner, Inc.

5,646,950

83,574,860

Virgin Media, Inc.

752,873

10,246,602

Vivendi

225,403

8,499,102

 

337,970,586

Multiline Retail - 1.8%

Family Dollar Stores, Inc.

658,300

13,126,502

JCPenney Co., Inc.

429,600

15,590,184

Kohl's Corp. (a)

1,166,353

46,700,774

Macy's, Inc. (d)

1,438,400

27,933,728

Sears Holdings Corp. (a)(d)

230,600

16,985,996

Target Corp. (d)

680,400

31,631,796

Tuesday Morning Corp. (a)(d)

555,523

2,283,200

 

154,252,180

Specialty Retail - 1.6%

Chico's FAS, Inc. (a)

781,597

4,197,176

Foot Locker, Inc. (d)

669,157

8,331,005

Home Depot, Inc.

2,691,900

63,044,298

OfficeMax, Inc.

513,300

7,134,870

PetSmart, Inc.

358,968

7,161,412

RadioShack Corp.

557,700

6,842,979

Staples, Inc.

958,945

22,774,944

Williams-Sonoma, Inc. (d)

776,100

15,397,824

 

134,884,508

Textiles, Apparel & Luxury Goods - 0.1%

Liz Claiborne, Inc.

729,615

10,324,052

TOTAL CONSUMER DISCRETIONARY

1,047,304,742

CONSUMER STAPLES - 4.7%

Beverages - 0.3%

Carlsberg AS Series B (d)

145,050

13,972,630

Heineken NV (Bearer)

243,454

12,397,548

 

26,370,178

Food & Staples Retailing - 1.3%

Rite Aid Corp. (a)(d)

2,693,868

4,283,250

Wal-Mart Stores, Inc.

1,889,713

106,201,871

Winn-Dixie Stores, Inc. (a)

237,142

3,799,015

 

114,284,136

Food Products - 0.9%

Hershey Co.

840,800

27,561,424

Kraft Foods, Inc. Class A

526,654

14,983,306

Marine Harvest ASA (a)

18,229,000

13,351,337

Nestle SA (Reg.)

400,970

18,071,351

Tyson Foods, Inc. Class A

400,800

5,987,952

 

79,955,370

Common Stocks - continued

Shares

Value

CONSUMER STAPLES - continued

Household Products - 0.9%

Energizer Holdings, Inc. (a)

113,000

$ 8,259,170

Kimberly-Clark Corp.

481,400

28,778,092

Procter & Gamble Co.

615,142

37,406,785

 

74,444,047

Personal Products - 0.3%

Avon Products, Inc.

479,270

17,263,305

Estee Lauder Companies, Inc. Class A

148,400

6,893,180

 

24,156,485

Tobacco - 1.0%

Altria Group, Inc.

1,270,705

26,125,695

Philip Morris International, Inc.

1,249,705

61,722,930

 

87,848,625

TOTAL CONSUMER STAPLES

407,058,841

ENERGY - 21.3%

Energy Equipment & Services - 4.6%

BJ Services Co.

452,324

14,447,229

Halliburton Co.

1,000,995

53,122,805

Nabors Industries Ltd. (a)

1,144,413

56,339,452

Noble Corp.

1,587,668

103,134,913

Pride International, Inc. (a)

374,500

17,710,105

Schlumberger Ltd. (NY Shares)

1,407,857

151,246,078

 

396,000,582

Oil, Gas & Consumable Fuels - 16.7%

Apache Corp.

456,780

63,492,420

Boardwalk Pipeline Partners, LP

310,500

7,293,645

Chevron Corp.

1,951,542

193,456,358

ConocoPhillips

1,867,500

176,273,325

CONSOL Energy, Inc.

43,799

4,921,694

EOG Resources, Inc.

569,400

74,705,280

Exxon Mobil Corp.

5,726,793

504,702,263

Hess Corp.

584,200

73,720,198

Occidental Petroleum Corp.

909,300

81,709,698

Peabody Energy Corp.

297,861

26,226,661

Repsol YPF SA

101,300

3,975,451

Repsol YPF SA sponsored ADR

1,328,174

52,157,393

Royal Dutch Shell PLC:

Class A sponsored ADR

732,100

59,819,891

Class B ADR

92,000

7,370,120

Total SA sponsored ADR

760,133

64,816,541

Valero Energy Corp.

715,614

29,468,985

Williams Companies, Inc.

464,600

18,728,026

 

1,442,837,949

TOTAL ENERGY

1,838,838,531

 

Shares

Value

FINANCIALS - 20.1%

Capital Markets - 3.4%

Bank of New York Mellon Corp.

2,696,095

$ 101,993,274

Goldman Sachs Group, Inc.

281,179

49,178,207

KKR Private Equity Investors, LP

266,500

3,424,525

KKR Private Equity Investors, LP Restricted Depositary Units (e)

601,500

7,729,275

Legg Mason, Inc.

329,950

14,375,922

Lehman Brothers Holdings, Inc.

724,046

14,343,351

Merrill Lynch & Co., Inc. (d)

818,600

25,957,806

Morgan Stanley

1,658,800

59,832,916

State Street Corp.

175,280

11,216,167

 

288,051,443

Commercial Banks - 4.4%

Associated Banc-Corp. (d)

1,194,855

23,048,753

HSBC Holdings PLC sponsored ADR

611,992

46,939,786

KeyCorp

1,335,100

14,659,398

Lloyds TSB Group PLC

2,265,900

13,901,982

Mitsubishi UFJ Financial Group, Inc. sponsored ADR

524,200

4,612,960

PNC Financial Services Group, Inc.

1,047,039

59,785,927

Royal Bank of Scotland Group PLC

1,695,536

7,218,177

Societe Generale Series A

99,147

8,595,934

Sterling Financial Corp., Washington

750,427

3,106,768

U.S. Bancorp, Delaware

1,153,838

32,180,542

Wachovia Corp.

4,237,757

65,812,366

Wells Fargo & Co.

4,025,100

95,596,125

 

375,458,718

Consumer Finance - 0.6%

Capital One Financial Corp.

144,399

5,488,606

Discover Financial Services

2,610,969

34,386,462

SLM Corp. (a)

696,432

13,475,959

 

53,351,027

Diversified Financial Services - 5.5%

Bank of America Corp.

7,169,377

171,133,029

CIT Group, Inc.

439,900

2,995,719

Citigroup, Inc. (d)

7,505,619

125,794,174

JPMorgan Chase & Co.

5,090,712

174,662,329

 

474,585,251

Insurance - 3.7%

ACE Ltd.

753,096

41,488,059

American International Group, Inc.

4,537,750

120,068,865

Hartford Financial Services Group, Inc.

692,900

44,740,553

MetLife, Inc. unit

722,300

18,931,483

Montpelier Re Holdings Ltd.

1,305,000

19,248,750

PartnerRe Ltd.

403,824

27,916,353

The Travelers Companies, Inc.

884,196

38,374,106

XL Capital Ltd. Class A

262,271

5,392,292

 

316,160,461

Real Estate Investment Trusts - 0.8%

Annaly Capital Management, Inc.

637,700

9,890,727

Common Stocks - continued

Shares

Value

FINANCIALS - continued

Real Estate Investment Trusts - continued

Developers Diversified Realty Corp.

667,347

$ 23,163,614

General Growth Properties, Inc.

52,000

1,821,560

HCP, Inc.

671,500

21,360,415

LaSalle Hotel Properties (SBI)

200,481

5,038,088

Senior Housing Properties Trust (SBI)

559,556

10,928,129

 

72,202,533

Real Estate Management & Development - 0.3%

CB Richard Ellis Group, Inc. Class A (a)

1,506,641

28,927,507

Thrifts & Mortgage Finance - 1.4%

Countrywide Financial Corp.

724,710

3,080,018

Fannie Mae

2,848,075

55,565,943

Freddie Mac

1,539,300

25,244,520

MGIC Investment Corp. (d)

722,352

4,413,571

New York Community Bancorp, Inc.

929,120

16,575,501

People's United Financial, Inc.

214,000

3,338,400

Washington Mutual, Inc.

2,951,442

14,550,609

 

122,768,562

TOTAL FINANCIALS

1,731,505,502

HEALTH CARE - 6.4%

Biotechnology - 0.4%

Amgen, Inc. (a)

700,022

33,013,038

Cubist Pharmaceuticals, Inc. (a)

157,102

2,805,842

 

35,818,880

Health Care Equipment & Supplies - 0.8%

Boston Scientific Corp. (a)

856,500

10,526,385

Covidien Ltd.

825,436

39,530,130

Medtronic, Inc.

315,400

16,321,950

 

66,378,465

Health Care Providers & Services - 0.1%

Brookdale Senior Living, Inc. (d)

510,193

10,387,529

Pharmaceuticals - 5.1%

Bristol-Myers Squibb Co.

1,254,600

25,756,938

Johnson & Johnson

1,485,400

95,570,636

Merck & Co., Inc.

1,543,300

58,166,977

Pfizer, Inc.

6,922,000

120,927,340

Schering-Plough Corp.

2,563,936

50,483,900

Wyeth

1,843,600

88,419,056

 

439,324,847

TOTAL HEALTH CARE

551,909,721

INDUSTRIALS - 10.0%

Aerospace & Defense - 3.0%

General Dynamics Corp.

257,200

21,656,240

Goodrich Corp.

306,600

14,551,236

Honeywell International, Inc.

1,854,425

93,240,489

 

Shares

Value

Lockheed Martin Corp.

319,500

$ 31,521,870

Northrop Grumman Corp.

37,500

2,508,750

Spirit AeroSystems Holdings, Inc.
Class A (a)

658,082

12,622,013

The Boeing Co.

410,584

26,983,580

United Technologies Corp.

935,640

57,728,988

 

260,813,166

Building Products - 0.2%

Masco Corp.

1,425,400

22,421,542

Commercial Services & Supplies - 0.7%

Avery Dennison Corp.

602,279

26,458,116

Equifax, Inc.

370,134

12,443,905

Waste Management, Inc.

564,300

21,279,753

 

60,181,774

Industrial Conglomerates - 3.4%

3M Co.

823,500

57,307,365

General Electric Co.

5,664,290

151,179,900

Siemens AG sponsored ADR

426,400

46,959,432

Tyco International Ltd.

872,236

34,924,329

 

290,371,026

Machinery - 1.7%

Briggs & Stratton Corp. (d)

1,147,588

14,551,416

Caterpillar, Inc.

276,700

20,425,994

Eaton Corp.

203,900

17,325,383

Illinois Tool Works, Inc.

292,100

13,877,671

Ingersoll-Rand Co. Ltd. Class A

702,488

26,294,126

Kennametal, Inc.

252,200

8,209,110

SPX Corp.

363,210

47,845,653

 

148,529,353

Marine - 0.1%

Alexander & Baldwin, Inc.

136,800

6,231,240

Road & Rail - 0.9%

Burlington Northern Santa Fe Corp.

521,800

52,122,602

Union Pacific Corp.

311,000

23,480,500

 

75,603,102

TOTAL INDUSTRIALS

864,151,203

INFORMATION TECHNOLOGY - 9.0%

Communications Equipment - 0.9%

Cisco Systems, Inc. (a)

1,815,700

42,233,182

Harris Corp.

241,400

12,188,286

Motorola, Inc.

2,489,712

18,274,486

 

72,695,954

Computers & Peripherals - 2.5%

EMC Corp. (a)

1,303,200

19,144,008

Hewlett-Packard Co.

2,250,611

99,499,512

International Business Machines Corp.

799,700

94,788,441

 

213,431,961

Electronic Equipment & Instruments - 0.8%

Arrow Electronics, Inc. (a)

642,600

19,740,672

Common Stocks - continued

Shares

Value

INFORMATION TECHNOLOGY - continued

Electronic Equipment & Instruments - continued

Avnet, Inc. (a)

638,230

$ 17,410,914

Tyco Electronics Ltd.

986,536

35,337,720

 

72,489,306

Internet Software & Services - 0.1%

Google, Inc. Class A (sub. vtg.) (a)

21,692

11,419,103

IT Services - 0.6%

Electronic Data Systems Corp.

691,200

17,031,168

MoneyGram International, Inc.

895,100

814,541

The Western Union Co.

831,400

20,552,208

Unisys Corp. (a)

2,098,000

8,287,100

Visa, Inc.

59,443

4,833,310

 

51,518,327

Office Electronics - 0.3%

Xerox Corp.

1,763,635

23,914,891

Semiconductors & Semiconductor Equipment - 3.0%

Analog Devices, Inc.

1,025,500

32,580,135

Applied Materials, Inc.

2,149,400

41,032,046

Atmel Corp. (a)

940,400

3,272,592

Intel Corp.

4,124,600

88,596,408

Micron Technology, Inc. (a)

941,000

5,646,000

National Semiconductor Corp.

1,854,547

38,092,395

Novellus Systems, Inc. (a)

831,039

17,609,716

Teradyne, Inc. (a)

2,076,900

22,991,283

Varian Semiconductor Equipment Associates, Inc. (a)

347,400

12,096,468

 

261,917,043

Software - 0.8%

Microsoft Corp.

1,598,800

43,982,988

Symantec Corp. (a)

1,227,933

23,760,504

 

67,743,492

TOTAL INFORMATION TECHNOLOGY

775,130,077

MATERIALS - 2.4%

Chemicals - 1.5%

Celanese Corp. Class A

620,800

28,345,728

Chemtura Corp.

2,415,964

14,109,230

Dow Chemical Co.

542,200

18,928,202

E.I. du Pont de Nemours & Co.

549,000

23,546,610

Georgia Gulf Corp. (d)

617,292

1,790,147

H.B. Fuller Co.

389,950

8,750,478

Hercules, Inc.

560,816

9,494,615

Linde AG

194,300

27,291,412

 

132,256,422

Containers & Packaging - 0.1%

Smurfit-Stone Container Corp. (a)

2,442,972

9,942,896

 

Shares

Value

Metals & Mining - 0.8%

Alcoa, Inc.

1,576,371

$ 56,150,335

Nucor Corp.

133,800

9,990,846

 

66,141,181

TOTAL MATERIALS

208,340,499

TELECOMMUNICATION SERVICES - 6.1%

Diversified Telecommunication Services - 5.4%

AT&T, Inc.

8,847,269

298,064,493

Qwest Communications International, Inc.

8,250,900

32,426,037

Verizon Communications, Inc.

3,689,602

130,611,911

 

461,102,441

Wireless Telecommunication Services - 0.7%

Sprint Nextel Corp.

3,175,700

30,169,150

Vodafone Group PLC sponsored ADR

1,043,587

30,744,073

 

60,913,223

TOTAL TELECOMMUNICATION SERVICES

522,015,664

UTILITIES - 3.6%

Electric Utilities - 2.0%

Allegheny Energy, Inc.

463,300

23,215,963

Entergy Corp.

535,600

64,529,088

Exelon Corp.

572,700

51,520,092

PPL Corp.

562,400

29,396,648

 

168,661,791

Independent Power Producers & Energy Traders - 0.4%

AES Corp. (a)

1,755,658

33,726,190

Multi-Utilities - 1.2%

Public Service Enterprise Group, Inc.

1,555,900

71,462,487

Wisconsin Energy Corp.

782,600

35,389,172

 

106,851,659

TOTAL UTILITIES

309,239,640

TOTAL COMMON STOCKS

(Cost $7,485,036,944)

8,255,494,420

Convertible Preferred Stocks - 2.5%

 

 

 

 

CONSUMER DISCRETIONARY - 0.2%

Automobiles - 0.1%

General Motors Corp. Series C, 6.25%

659,300

8,748,911

Hotels, Restaurants & Leisure - 0.1%

Six Flags, Inc. 7.25% PIERS

404,400

4,246,200

TOTAL CONSUMER DISCRETIONARY

12,995,111

Convertible Preferred Stocks - continued

Shares

Value

FINANCIALS - 1.6%

Capital Markets - 0.4%

Legg Mason, Inc. 7.00%

230,600

$ 9,649,918

Lehman Brothers Holdings, Inc. 7.25%

32,400

26,063,532

 

35,713,450

Commercial Banks - 0.1%

Huntington Bancshares, Inc. 8.50%

9,000

6,300,000

Diversified Financial Services - 0.5%

Bank of America Corp. Series L, 7.25%

17,700

15,642,375

CIT Group, Inc.:

7.75%

406,600

4,013,142

Series C, 8.75%

81,800

3,343,984

Citigroup, Inc. Series T, 6.50%

432,849

18,828,932

 

41,828,433

Insurance - 0.3%

American International Group, Inc.
Series A, 8.50%

510,400

30,451,995

Thrifts & Mortgage Finance - 0.3%

Fannie Mae 8.75%

541,300

20,840,050

Washington Mutual, Inc. Series R, 7.75%

11,800

6,882,350

 

27,722,400

TOTAL FINANCIALS

142,016,278

HEALTH CARE - 0.2%

Pharmaceuticals - 0.2%

Schering-Plough Corp. 6.00%

93,000

17,703,480

MATERIALS - 0.5%

Chemicals - 0.0%

Celanese Corp. 4.25%

67,100

3,901,865

Metals & Mining - 0.5%

Freeport-McMoRan Copper & Gold, Inc. 6.75%

232,700

39,051,249

TOTAL MATERIALS

42,953,114

TOTAL CONVERTIBLE PREFERRED STOCKS

(Cost $256,918,678)

215,667,983

Investment Companies - 0.0%

 

 

 

 

Ares Capital Corp.
(Cost $10,607,570)

604,054

6,088,864

Corporate Bonds - 1.2%

 

Principal Amount

 

Convertible Bonds - 1.1%

CONSUMER DISCRETIONARY - 0.5%

Automobiles - 0.1%

Ford Motor Co. 4.25% 12/15/36

$ 10,280,000

7,388,236

 

 

Principal Amount

Value

Hotels, Restaurants & Leisure - 0.0%

Six Flags, Inc. 4.5% 5/15/15

$ 3,650,000

$ 2,080,500

Media - 0.4%

Liberty Media Corp.:

3.5% 1/15/31

259,098

164,931

4% 11/15/29 (e)

4,750,000

2,565,000

3.5% 1/15/31 (e)

9,480,719

6,035,027

News America, Inc. liquid yield option note:

0% 2/28/21 (e)

22,670,000

13,233,613

0% 2/28/21

3,490,000

2,037,288

Virgin Media, Inc. 6.5% 11/15/16 (e)

9,500,000

9,788,800

 

33,824,659

TOTAL CONSUMER DISCRETIONARY

43,293,395

CONSUMER STAPLES - 0.1%

Food & Staples Retailing - 0.1%

Rite Aid Corp. 8.5% 5/15/15

6,360,000

5,798,412

FINANCIALS - 0.1%

Thrifts & Mortgage Finance - 0.1%

MGIC Investment Corp. 9% 4/1/63 (e)

5,740,000

4,328,069

INDUSTRIALS - 0.0%

Airlines - 0.0%

UAL Corp.:

4.5% 6/30/21 (e)

8,490,000

3,207,522

4.5% 6/30/21

280,000

105,784

 

3,313,306

INFORMATION TECHNOLOGY - 0.2%

Semiconductors & Semiconductor Equipment - 0.2%

Advanced Micro Devices, Inc.:

6% 5/1/15 (e)

14,340,000

9,095,862

6% 5/1/15

4,780,000

3,031,954

Micron Technology, Inc. 1.875% 6/1/14

2,570,000

1,829,532

 

13,957,348

TELECOMMUNICATION SERVICES - 0.2%

Diversified Telecommunication Services - 0.2%

Level 3 Communications, Inc.:

3.5% 6/15/12

6,320,000

5,033,627

5.25% 12/15/11 (e)

11,850,000

10,740,129

5.25% 12/15/11

4,290,000

3,888,199

 

19,661,955

TOTAL CONVERTIBLE BONDS

90,352,485

Corporate Bonds - continued

 

Principal Amount

Value

Nonconvertible Bonds - 0.1%

MATERIALS - 0.1%

Chemicals - 0.1%

Hercules, Inc. 6.5% 6/30/29 unit

$ 15,700,000

$ 11,243,335

TOTAL CORPORATE BONDS

(Cost $133,000,489)

101,595,820

Money Market Funds - 2.3%

Shares

 

Fidelity Cash Central Fund, 2.38% (b)

23,908,917

23,908,917

Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c)

172,583,116

172,583,116

TOTAL MONEY MARKET FUNDS

(Cost $196,492,033)

196,492,033

TOTAL INVESTMENT PORTFOLIO - 101.8%

(Cost $8,082,055,714)

8,775,339,120

NET OTHER ASSETS - (1.8)%

(155,815,817)

NET ASSETS - 100%

$ 8,619,523,303

Security Type Abbreviation

PIERS

-

Preferred Income Equity Redeemable Securities

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request.

(c) Investment made with cash collateral received from securities on loan.

(d) Security or a portion of the security is on loan at period end.

(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $66,723,297 or 0.8% of net assets.

Affiliated Central Funds

Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:

Fund

Income earned

Fidelity Cash Central Fund

$ 214,452

Fidelity Securities Lending Cash Central Fund

3,161,485

Total

$ 3,375,937

Other Information

The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

#Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities

$ 8,775,339,120

$ 8,307,626,353

$ 467,712,767

$ -

Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited)

United States of America

88.9%

United Kingdom

2.2%

Bermuda

2.1%

Netherlands Antilles

1.8%

Cayman Islands

1.7%

France

1.1%

Others (individually less than 1%)

2.2%

 

100.0%

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2008 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $161,966,591) - See accompanying schedule:

Unaffiliated issuers (cost $7,885,563,681)

$ 8,578,847,087

 

Fidelity Central Funds (cost $196,492,033)

196,492,033

 

Total Investments (cost $8,082,055,714)

 

$ 8,775,339,120

Cash

254,870

Receivable for investments sold

16,463,424

Receivable for fund shares sold

9,144,398

Dividends receivable

13,450,945

Interest receivable

760,649

Distributions receivable from Fidelity Central Funds

652,088

Prepaid expenses

17,353

Other receivables

329,069

Total assets

8,816,411,916

 

 

 

Liabilities

Payable for investments purchased

$ 5,053,920

Payable for fund shares redeemed

13,553,601

Accrued management fee

3,500,905

Distribution fees payable

534,981

Other affiliated payables

631,865

Other payables and accrued expenses

1,030,225

Collateral on securities loaned, at value

172,583,116

Total liabilities

196,888,613

 

 

 

Net Assets

$ 8,619,523,303

Net Assets consist of:

 

Paid in capital

$ 7,465,988,382

Undistributed net investment income

103,593,429

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

356,657,799

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

693,283,693

Net Assets

$ 8,619,523,303

Statement of Assets and Liabilities - continued

 

June 30, 2008 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($5,602,666,064 ÷ 274,510,254 shares)

$ 20.41

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($693,769,312 ÷ 34,133,832 shares)

$ 20.32

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($2,122,863,690 ÷ 105,657,667 shares)

$ 20.09

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($9,250,599 ÷ 462,803 shares)

$ 19.99

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($190,973,638 ÷ 9,382,576 shares)

$ 20.35

See accompanying notes which are an integral part of the financial statements.

Semiannual Report


Financial Statements - continued

Statement of Operations

Six months ended June 30, 2008 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 127,539,484

Interest

 

3,225,822

Income from Fidelity Central Funds

 

3,375,937

Total income

 

134,141,243

 

 

 

Expenses

Management fee

$ 22,235,162

Transfer agent fees

3,342,260

Distribution fees

3,358,008

Accounting and security lending fees

656,790

Custodian fees and expenses

85,219

Independent trustees' compensation

21,516

Depreciation in deferred trustee compensation account

(933)

Audit

41,207

Legal

18,784

Interest

121,154

Miscellaneous

902,077

Total expenses before reductions

30,781,244

Expense reductions

(26,890)

30,754,354

Net investment income (loss)

103,386,889

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

368,341,704

Investment not meeting investment restrictions

32,186

Foreign currency transactions

(18,217)

Total net realized gain (loss)

 

368,355,673

Change in net unrealized appreciation (depreciation) on:

Investment securities

(2,006,065,507)

Assets and liabilities in foreign currencies

(378)

Total change in net unrealized appreciation (depreciation)

 

(2,006,065,885)

Net gain (loss)

(1,637,710,212)

Net increase (decrease) in net assets resulting from operations

$ (1,534,323,323)

Statement of Changes in Net Assets

 

Six months ended June 30, 2008
(Unaudited)

Year ended
December 31,
2007

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 103,386,889

$ 197,428,237

Net realized gain (loss)

368,355,673

910,261,376

Change in net unrealized appreciation (depreciation)

(2,006,065,885)

(894,509,627)

Net increase (decrease) in net assets resulting from operations

(1,534,323,323)

213,179,986

Distributions to shareholders from net investment income

-

(201,405,100)

Distributions to shareholders from net realized gain

(8,981,541)

(921,452,556)

Total distributions

(8,981,541)

(1,122,857,656)

Share transactions - net increase (decrease)

(786,102,687)

(135,088,400)

Redemption fees

1,305

5,392

Total increase (decrease) in net assets

(2,329,406,246)

(1,044,760,678)

 

 

 

Net Assets

Beginning of period

10,948,929,549

11,993,690,227

End of period (including undistributed net investment income of $103,593,429 and undistributed net investment income of $206,540, respectively)

$ 8,619,523,303

$ 10,948,929,549

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 23.91

$ 26.20

$ 25.49

$ 25.37

$ 23.18

$ 18.16

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .24

.47

.45

.42

.40

.36

Net realized and unrealized gain (loss)

  (3.72)

(.05) H

4.37

1.00

2.24

5.01

Total from investment operations

  (3.48)

.42

4.82

1.42

2.64

5.37

Distributions from net investment income

  -

(.50)

(.89)

(.41)

(.36)

(.35)

Distributions from net realized gain

  (.02)

(2.21)

(3.22)

(.89)

(.09)

-

Total distributions

  (.02)

(2.71)

(4.11)

(1.30)

(.45)

(.35)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 20.41

$ 23.91

$ 26.20

$ 25.49

$ 25.37

$ 23.18

Total Return B, C, D

  (14.56)%

1.53%

20.19%

5.87%

11.53%

30.33%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .56% A

.55%

.57%

.56%

.58%

.57%

Expenses net of fee waivers, if any

  .56% A

.55%

.57%

.56%

.58%

.57%

Expenses net of all reductions

  .56% A

.54%

.56%

.55%

.57%

.56%

Net investment income (loss)

  2.20% A

1.71%

1.76%

1.71%

1.71%

1.83%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 5,602,666

$ 7,201,655

$ 8,315,159

$ 7,875,801

$ 8,689,829

$ 8,402,963

Portfolio turnover rate G

  30% A

20%

22%

19%

22%

26%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

Financial Highlights - Service Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 23.82

$ 26.11

$ 25.39

$ 25.28

$ 23.11

$ 18.10

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .23

.44

.43

.39

.38

.34

Net realized and unrealized gain (loss)

  (3.71)

(.05) H

4.35

1.00

2.22

5.00

Total from investment operations

  (3.48)

.39

4.78

1.39

2.60

5.34

Distributions from net investment income

  -

(.47)

(.84)

(.39)

(.34)

(.33)

Distributions from net realized gain

  (.02)

(2.21)

(3.22)

(.89)

(.09)

-

Total distributions

  (.02)

(2.68)

(4.06)

(1.28)

(.43)

(.33)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 20.32

$ 23.82

$ 26.11

$ 25.39

$ 25.28

$ 23.11

Total Return B, C, D

  (14.61)%

1.42%

20.08%

5.76%

11.38%

30.22%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .66% A

.65%

.67%

.66%

.68%

.67%

Expenses net of fee waivers, if any

  .66% A

.65%

.67%

.66%

.68%

.67%

Expenses net of all reductions

  .66% A

.64%

.66%

.65%

.67%

.66%

Net investment income (loss)

  2.10% A

1.61%

1.66%

1.61%

1.61%

1.73%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 693,769

$ 920,054

$ 1,118,333

$ 1,079,838

$ 1,170,778

$ 1,071,483

Portfolio turnover rate G

  30% A

20%

22%

19%

22%

26%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report


Financial Statements - continued

Financial Highlights - Service Class 2

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 23.57

$ 25.87

$ 25.17

$ 25.09

$ 22.96

$ 18.00

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .21

.39

.38

.35

.34

.31

Net realized and unrealized gain (loss)

  (3.67)

(.04) H

4.32

.98

2.21

4.97

Total from investment operations

  (3.46)

.35

4.70

1.33

2.55

5.28

Distributions from net investment income

  -

(.44)

(.78)

(.36)

(.33)

(.32)

Distributions from net realized gain

  (.02)

(2.21)

(3.22)

(.89)

(.09)

-

Total distributions

  (.02)

(2.65)

(4.00)

(1.25)

(.42)

(.32)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 20.09

$ 23.57

$ 25.87

$ 25.17

$ 25.09

$ 22.96

Total Return B, C, D

  (14.69)%

1.27%

19.93%

5.57%

11.23%

30.03%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .81% A

.80%

.82%

.81%

.83%

.82%

Expenses net of fee waivers, if any

  .81% A

.80%

.82%

.81%

.83%

.82%

Expenses net of all reductions

  .81% A

.80%

.82%

.80%

.82%

.81%

Net investment income (loss)

  1.94% A

1.46%

1.51%

1.46%

1.46%

1.58%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 2,122,864

$ 2,583,129

$ 2,373,059

$ 1,723,546

$ 1,420,999

$ 916,679

Portfolio turnover rate G

  30% A

20%

22%

19%

22%

26%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

Financial Highlights - Service Class 2R

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 23.44

$ 25.73

$ 25.08

$ 25.01

$ 22.91

$ 17.99

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .21

.39

.38

.35

.34

.31

Net realized and unrealized gain (loss)

  (3.64)

(.04) H

4.29

.99

2.20

4.96

Total from investment operations

  (3.43)

.35

4.67

1.34

2.54

5.27

Distributions from net investment income

  -

(.43)

(.80)

(.38)

(.35)

(.35)

Distributions from net realized gain

  (.02)

(2.21)

(3.22)

(.89)

(.09)

-

Total distributions

  (.02)

(2.64)

(4.02)

(1.27)

(.44)

(.35)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 19.99

$ 23.44

$ 25.73

$ 25.08

$ 25.01

$ 22.91

Total Return B, C, D

  (14.64)%

1.27%

19.89%

5.61%

11.22%

30.05%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .81% A

.80%

.82%

.81%

.83%

.82%

Expenses net of fee waivers, if any

  .81% A

.80%

.82%

.81%

.83%

.82%

Expenses net of all reductions

  .81% A

.79%

.81%

.80%

.82%

.81%

Net investment income (loss)

  1.95% A

1.46%

1.51%

1.46%

1.46%

1.57%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 9,251

$ 13,558

$ 17,089

$ 9,651

$ 5,617

$ 1,891

Portfolio turnover rate G

  30% A

20%

22%

19%

22%

26%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005 I

Selected Per-Share Data

 

 

 

 

Net asset value, beginning of period

$ 23.85

$ 26.15

$ 25.48

$ 24.46

Income from Investment Operations

 

 

 

 

Net investment income (loss) E

  .23

.44

.42

.17

Net realized and unrealized gain (loss)

  (3.71)

(.05) H

4.36

.85

Total from investment operations

  (3.48)

.39

4.78

1.02

Distributions from net investment income

  -

(.48)

(.89)

-

Distributions from net realized gain

  (.02)

(2.21)

(3.22)

-

Total distributions

  (.02)

(2.69)

(4.11)

-

Redemption fees added to paid in capital E, K

  -

-

-

-

Net asset value, end of period

$ 20.35

$ 23.85

$ 26.15

$ 25.48

Total Return B, C, D

  (14.60)%

1.39%

20.04%

4.17%

Ratios to Average Net Assets F, J

 

 

 

 

Expenses before reductions

  .65% A

.66%

.69%

.74% A

Expenses net of fee waivers, if any

  .65% A

.66%

.69%

.74% A

Expenses net of all reductions

  .65% A

.66%

.69%

.73% A

Net investment income (loss)

  2.10% A

1.60%

1.63%

1.54% A

Supplemental Data

 

 

 

 

Net assets, end of period (000 omitted)

$ 190,974

$ 230,534

$ 170,050

$ 37,500

Portfolio turnover rate G

  30% A

20%

22%

19%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2008 (Unaudited)

1. Organization.

VIP Equity-Income Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Service Class 2R shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.

2. Investments in Fidelity Central Funds.

The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Debt securities, including restricted securities, are valued by independent pricing services or by dealers who make markets in such securities. Pricing services consider yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.

When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:

Level 1

Quoted prices in active markets for identical securities.

Level 2

Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level 3

Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.

The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.

Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to short-term capital gains, foreign currency transactions, market discount, partnerships, deferred trustees compensation and losses deferred due to wash sales.

The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:

Unrealized appreciation

$ 2,338,236,470

 

Unrealized depreciation

(1,659,807,289)

 

Net unrealized appreciation (depreciation)

$ 678,429,181

 

Cost for federal income tax purposes

$ 8,096,909,939

 

Trading (Redemption) Fees. Service Class 2R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.

4. Operating Policies.

Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.

Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $1,473,791,925 and $2,129,352,315, respectively.

The Fund realized a gain on the sale of an investment not meeting the investment restrictions of the Fund.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .46% of the Fund's average net assets.

Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.

For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:

Service Class

$ 400,775

 

Service Class 2

2,943,837

 

Service Class 2R

13,396

 

 

$ 3,358,008

 

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class

$ 2,119,397

 

Service Class

266,537

 

Service Class 2

787,718

 

Service Class 2R

3,538

 

Investor Class

165,070

 

 

$ 3,342,260

 

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $10,727 for the period.

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:

Borrower or Lender

Average Daily Loan Balance

Weighted Average Interest Rate

Interest
Expense

Borrower

$ 12,847,901

2.91%

$84,225

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $10,322 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $3,161,485.

9. Bank Borrowings.

The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average daily loan balance during the period for which loans were outstanding amounted to $18,460,150. The weighted average interest rate was 3.60%. The interest expense amounted to $36,929 under the bank borrowing program. At period end, there were no bank borrowings outstanding.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $24,967 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,923.

11. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

At the end of the period, FMR or its affiliates were the owners of record of 11% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 20% of the total outstanding shares of the Fund.

In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.

In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $441,909, which is recorded in the accompanying Statement of Operations.

In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.

12. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
June 30,
2008

Year ended
December 31,
2007

From net investment income

 

 

Initial Class

$ -

$ 137,272,719

Service Class

-

16,555,512

Service Class 2

-

43,201,505

Service Class 2R

-

237,361

Investor Class

-

4,138,003

Total

$ -

$ 201,405,100

From net realized gain

 

 

Initial Class

$ 5,879,386

$ 605,242,729

Service Class

748,441

77,757,239

Service Class 2

2,153,837

217,894,303

Service Class 2R

10,338

1,223,747

Investor Class

189,539

19,334,538

Total

$ 8,981,541

$ 921,452,556

Semiannual Report

13. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended June 30,
2008

Year ended
December 31,
2007

Six months ended June 30,
2008

Year ended
December 31,
2007

Initial Class

 

 

 

 

Shares sold

4,008,374

9,919,751

$ 88,119,819

$ 270,689,892

Reinvestment of distributions

269,692

30,642,204

5,879,386

742,515,448

Shares redeemed

(30,995,651)

(56,707,193)

(686,122,712)

(1,549,810,794)

Net increase (decrease)

(26,717,585)

(16,145,238)

$ (592,123,507)

$ (536,605,454)

Service Class

 

 

 

 

Shares sold

627,390

1,556,560

$ 13,859,050

$ 42,122,639

Reinvestment of distributions

34,474

3,906,238

748,441

94,312,751

Shares redeemed

(5,152,356)

(9,669,915)

(113,648,355)

(262,876,733)

Net increase (decrease)

(4,490,492)

(4,207,117)

$ (99,040,864)

$ (126,441,343)

Service Class 2

 

 

 

 

Shares sold

6,157,796

19,215,696

$ 134,555,746

$ 515,996,306

Reinvestment of distributions

100,318

10,936,330

2,153,837

261,095,808

Shares redeemed

(10,216,120)

(12,279,783)

(223,081,382)

(329,898,169)

Net increase (decrease)

(3,958,006)

17,872,243

$ (86,371,799)

$ 447,193,945

Service Class 2R

 

 

 

 

Shares sold

58,100

180,145

$ 1,290,211

$ 4,895,399

Reinvestment of distributions

484

61,484

10,338

1,461,108

Shares redeemed

(174,099)

(327,382)

(3,749,425)

(8,617,113)

Net increase (decrease)

(115,515)

(85,753)

$ (2,448,876)

$ (2,260,606)

Investor Class

 

 

 

 

Shares sold

710,087

3,383,207

$ 15,796,230

$ 92,001,453

Reinvestment of distributions

8,718

971,586

189,539

23,472,541

Shares redeemed

(1,000,797)

(1,193,211)

(22,103,410)

(32,448,936)

Net increase (decrease)

(281,992)

3,161,582

$ (6,117,641)

$ 83,025,058

Semiannual Report

Proxy Voting Results

A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.

PROPOSAL 1

To elect a Board of Trustees.A

 

# of
Votes

% of
Votes

James C. Curvey

Affirmative

821,220,039.81

95.845

Withheld

35,598,080.64

4.155

TOTAL

856,818,120.45

100.000

Dennis J. Dirks

Affirmative

822,124,493.63

95.951

Withheld

34,693,626.82

4.049

TOTAL

856,818,120.45

100.000

Edward C. Johnson 3d

Affirmative

820,473,313.05

95.758

Withheld

36,344,807.40

4.242

TOTAL

856,818,120.45

100.000

Alan J. Lacy

Affirmative

822,170,402.95

95.956

Withheld

34,647,717.50

4.044

TOTAL

856,818,120.45

100.000

Ned C. Lautenbach

Affirmative

821,435,006.18

95.870

Withheld

35,383,114.27

4.130

TOTAL

856,818,120.45

100.000

Joseph Mauriello

Affirmative

822,174,756.53

95.957

Withheld

34,643,363.92

4.043

TOTAL

856,818,120.45

100.000

Cornelia M. Small

Affirmative

822,263,792.20

95.967

Withheld

34,554,328.25

4.033

TOTAL

856,818,120.45

100.000

William S. Stavropoulos

Affirmative

821,014,987.67

95.821

Withheld

35,803,132.78

4.179

TOTAL

856,818,120.45

100.000

David M. Thomas

Affirmative

822,321,743.26

95.974

Withheld

34,496,377.19

4.026

TOTAL

856,818,120.45

100.000

Michael E. Wiley

Affirmative

822,218,346.41

95.962

Withheld

34,599,774.04

4.038

TOTAL

856,818,120.45

100.000

PROPOSAL 2

To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A

 

# of
Votes

% of
Votes

Affirmative

701,273,514.99

81.846

Against

103,131,328.05

12.037

Abstain

52,413,277.41

6.117

TOTAL

856,818,120.45

100.000

A Denotes trust-wide proposal and voting results.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Adviser

FMR Co., Inc.

Fidelity Management & Research (U.K.) Inc.

Fidelity Research & Analysis Company

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

The Northern Trust Company
Chicago, IL 

VIPEI2R-SANN-0808
1.833447.102

Fidelity® Variable Insurance Products:
Growth Portfolio

Semiannual Report

June 30, 2008
(2_fidelity_logos) (Registered_Trademark)

Contents

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their
market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

Proxy Voting Results

<Click Here>

 

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

Beginning
Account Value
January 1, 2008

Ending
Account Value
June 30, 2008

Expenses Paid
During Period*
January 1, 2008
to June 30, 2008

Initial Class

 

 

 

Actual

$ 1,000.00

$ 898.00

$ 3.16

HypotheticalA

$ 1,000.00

$ 1,021.53

$ 3.37

Service Class

 

 

 

Actual

$ 1,000.00

$ 897.50

$ 3.63

HypotheticalA

$ 1,000.00

$ 1,021.03

$ 3.87

Service Class 2

 

 

 

Actual

$ 1,000.00

$ 897.00

$ 4.34

HypotheticalA

$ 1,000.00

$ 1,020.29

$ 4.62

Service Class 2R

 

 

 

Actual

$ 1,000.00

$ 896.90

$ 4.34

HypotheticalA

$ 1,000.00

$ 1,020.29

$ 4.62

Investor Class

 

 

 

Actual

$ 1,000.00

$ 897.80

$ 3.59

HypotheticalA

$ 1,000.00

$ 1,021.08

$ 3.82

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Annualized
Expense Ratio

Initial Class

.67%

Service Class

.77%

Service Class 2

.92%

Service Class 2R

.92%

Investor Class

.76%

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Berkshire Hathaway, Inc. Class B

3.7

4.4

Applied Materials, Inc.

3.2

2.4

The Mosaic Co.

3.1

1.2

Nokia Corp. sponsored ADR

2.4

5.3

Medco Health Solutions, Inc.

2.3

0.5

Annaly Capital Management, Inc.

2.2

0.0

VeriSign, Inc.

2.0

1.1

Fording Canadian Coal Trust

1.9

0.0

Denbury Resources, Inc.

1.9

0.9

CVS Caremark Corp.

1.7

0.7

 

24.4

Top Five Market Sectors as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Information Technology

25.2

37.1

Materials

13.9

2.7

Financials

13.8

11.0

Energy

13.3

10.4

Health Care

12.4

12.4

Asset Allocation (% of fund's net assets)

As of June 30, 2008*

As of December 31, 2007**

fid95

Stocks 98.6%

 

fid95

Stocks 99.8%

 

fid101

Short-Term
Investments and
Net Other Assets 1.4%

 

fid101

Short-Term
Investments and
Net Other Assets 0.2%

 

* Foreign investments

27.8%

 

** Foreign investments

25.5%

 


fid128

Semiannual Report

Investments June 30, 2008 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 98.6%

Shares

Value

CONSUMER DISCRETIONARY - 4.6%

Automobiles - 0.2%

Harley-Davidson, Inc.

325,700

$ 11,809,882

Diversified Consumer Services - 1.0%

Strayer Education, Inc.

288,471

60,310,632

Hotels, Restaurants & Leisure - 0.9%

BJ's Restaurants, Inc. (a)

171,492

1,668,617

McDonald's Corp.

783,476

44,047,021

Starwood Hotels & Resorts Worldwide, Inc.

245,700

9,845,199

 

55,560,837

Leisure Equipment & Products - 0.7%

Nikon Corp.

1,582,000

46,194,131

Media - 1.0%

Focus Media Holding Ltd. ADR (a)(d)

852,290

23,625,479

National CineMedia, Inc.

819,490

8,735,763

The DIRECTV Group, Inc. (a)

1,049,600

27,195,136

 

59,556,378

Specialty Retail - 0.4%

DSW, Inc. Class A (a)(d)

1,242,052

14,631,373

Gamestop Corp. Class A (a)

285,600

11,538,240

 

26,169,613

Textiles, Apparel & Luxury Goods - 0.4%

Lululemon Athletica, Inc.

578,800

16,819,928

LVMH Moet Hennessy - Louis Vuitton

57,700

6,019,072

 

22,839,000

TOTAL CONSUMER DISCRETIONARY

282,440,473

CONSUMER STAPLES - 4.8%

Food & Staples Retailing - 2.0%

CVS Caremark Corp.

2,668,206

105,580,911

Whole Foods Market, Inc. (d)

824,118

19,523,355

 

125,104,266

Food Products - 1.2%

Green Mountain Coffee Roasters, Inc. (a)

215,952

8,113,317

Nestle SA sponsored ADR

573,500

64,862,850

 

72,976,167

Household Products - 1.6%

Procter & Gamble Co.

1,590,917

96,743,663

TOTAL CONSUMER STAPLES

294,824,096

ENERGY - 13.3%

Energy Equipment & Services - 3.8%

Atwood Oceanics, Inc. (a)

74,000

9,201,160

ENSCO International, Inc.

222,501

17,964,731

FMC Technologies, Inc. (a)

179,900

13,839,707

Helmerich & Payne, Inc.

199,000

14,331,980

National Oilwell Varco, Inc. (a)

783,348

69,498,635

 

Shares

Value

Smith International, Inc.

659,994

$ 54,871,901

Transocean, Inc. (a)

351,600

53,580,324

 

233,288,438

Oil, Gas & Consumable Fuels - 9.5%

Chesapeake Energy Corp.

305,808

20,171,096

Denbury Resources, Inc. (a)

3,213,050

117,276,325

EOG Resources, Inc.

299,231

39,259,107

Galp Energia SGPS SA Class B

1,015,441

22,521,912

Hess Corp.

215,000

27,130,850

OAO Gazprom sponsored ADR

910,675

52,819,150

Occidental Petroleum Corp.

85,700

7,701,002

Petroleo Brasileiro SA - Petrobras sponsored ADR

1,127,600

79,867,908

Reliance Industries Ltd.

316,559

15,449,303

Southwestern Energy Co. (a)

1,197,900

57,032,019

Ultra Petroleum Corp. (a)

988,526

97,073,253

Williams Companies, Inc.

1,251,547

50,449,860

 

586,751,785

TOTAL ENERGY

820,040,223

FINANCIALS - 13.8%

Capital Markets - 2.3%

Bank of New York Mellon Corp.

401,700

15,196,311

Charles Schwab Corp.

3,070,572

63,069,549

Franklin Resources, Inc.

260,974

23,918,267

JMP Group, Inc.

98,900

653,729

Northern Trust Corp.

186,179

12,766,294

State Street Corp.

377,700

24,169,023

 

139,773,173

Commercial Banks - 0.4%

UCBH Holdings, Inc.

937,700

2,109,825

Wachovia Corp.

1,492,400

23,176,972

 

25,286,797

Diversified Financial Services - 1.3%

JPMorgan Chase & Co.

709,014

24,326,270

KKR Financial Holdings LLC

3,594,966

37,747,143

MSCI, Inc. Class A

559,320

20,297,723

 

82,371,136

Insurance - 6.8%

AFLAC, Inc.

574,620

36,086,136

American International Group, Inc.

1,148,408

30,386,876

Assurant, Inc.

508,556

33,544,354

Berkshire Hathaway, Inc.:

Class A (a)

358

43,228,500

Class B (a)

56,481

226,601,771

Principal Financial Group, Inc.

423,275

17,764,852

Prudential Financial, Inc.

470,764

28,123,441

 

415,735,930

Real Estate Investment Trusts - 3.0%

Annaly Capital Management, Inc.

8,741,881

135,586,574

Common Stocks - continued

Shares

Value

FINANCIALS - continued

Real Estate Investment Trusts - continued

CapitalSource, Inc. (d)

1,340,178

$ 14,849,172

MFA Mortgage Investments, Inc.

5,174,464

33,737,505

 

184,173,251

Thrifts & Mortgage Finance - 0.0%

New York Community Bancorp, Inc. (d)

124,078

2,213,552

TOTAL FINANCIALS

849,553,839

HEALTH CARE - 12.4%

Biotechnology - 4.4%

Biogen Idec, Inc. (a)

1,227,524

68,606,316

CSL Ltd.

3,003,761

102,810,854

Genentech, Inc. (a)

450,185

34,169,042

Gilead Sciences, Inc. (a)

1,243,703

65,854,074

 

271,440,286

Health Care Equipment & Supplies - 3.9%

Alcon, Inc.

192,700

31,369,633

Baxter International, Inc.

784,051

50,132,221

Becton, Dickinson & Co.

405,880

32,998,044

C.R. Bard, Inc.

355,400

31,257,430

China Medical Technologies, Inc. sponsored ADR (d)

499,030

24,652,082

Cochlear Ltd.

280,980

11,758,855

Covidien Ltd.

268,100

12,839,309

DENTSPLY International, Inc.

736,814

27,114,755

Mindray Medical International Ltd. sponsored ADR

523,970

19,554,560

 

241,676,889

Health Care Providers & Services - 3.0%

Henry Schein, Inc. (a)

811,075

41,827,138

Medco Health Solutions, Inc. (a)

3,015,051

142,310,407

 

184,137,545

Life Sciences Tools & Services - 0.9%

Covance, Inc. (a)(d)

532,076

45,769,178

Pharmaceutical Product Development, Inc.

304,099

13,045,847

 

58,815,025

Pharmaceuticals - 0.2%

Novo Nordisk AS Series B

196,600

12,942,279

TOTAL HEALTH CARE

769,012,024

INDUSTRIALS - 6.4%

Aerospace & Defense - 1.7%

General Dynamics Corp.

630,500

53,088,100

Rockwell Collins, Inc.

1,070,506

51,341,468

 

104,429,568

Commercial Services & Supplies - 0.4%

Copart, Inc. (a)

146,873

6,289,102

 

Shares

Value

Corrections Corp. of America (a)

435,145

$ 11,953,433

Robert Half International, Inc.

229,800

5,508,306

 

23,750,841

Electrical Equipment - 1.9%

Alstom SA (d)

210,127

48,183,248

Vestas Wind Systems AS (a)

548,400

71,400,015

 

119,583,263

Industrial Conglomerates - 1.6%

Global Consumer Acquisition Corp. unit

501,100

4,935,835

McDermott International, Inc. (a)

1,561,375

96,633,499

 

101,569,334

Machinery - 0.6%

Danaher Corp.

287,700

22,239,210

Hansen Transmission International NV

2,291,597

12,218,935

 

34,458,145

Trading Companies & Distributors - 0.2%

Fastenal Co.

312,900

13,504,764

TOTAL INDUSTRIALS

397,295,915

INFORMATION TECHNOLOGY - 25.2%

Communications Equipment - 6.7%

Cisco Systems, Inc. (a)

3,615,457

84,095,530

Corning, Inc.

1,004,500

23,153,725

Juniper Networks, Inc. (a)

1,589,863

35,263,161

Nokia Corp. sponsored ADR

6,040,841

148,000,605

QUALCOMM, Inc.

2,147,853

95,300,238

Research In Motion Ltd. (a)

262,900

30,733,011

 

416,546,270

Computers & Peripherals - 2.2%

Apple, Inc. (a)

415,469

69,566,129

SanDisk Corp. (a)

3,552,808

66,437,510

 

136,003,639

Electronic Equipment & Instruments - 1.0%

Amphenol Corp. Class A

1,340,564

60,164,512

Internet Software & Services - 3.8%

Baidu.com, Inc. sponsored ADR (a)

17,200

5,382,912

Google, Inc. Class A (sub. vtg.) (a)

180,151

94,835,089

The Knot, Inc. (a)(d)

881,115

8,617,305

VeriSign, Inc. (a)(d)

3,301,872

124,810,762

 

233,646,068

IT Services - 6.2%

Cognizant Technology Solutions Corp. Class A (a)

2,521,662

81,979,232

ExlService Holdings, Inc. (a)

918,112

12,881,111

Infosys Technologies Ltd.

920,800

37,252,398

Infosys Technologies Ltd. sponsored ADR

952,600

41,399,996

The Western Union Co.

4,020,525

99,387,378

Visa, Inc.

1,161,109

94,409,773

WNS Holdings Ltd. ADR (a)

872,100

14,694,885

 

382,004,773

Common Stocks - continued

Shares

Value

INFORMATION TECHNOLOGY - continued

Semiconductors & Semiconductor Equipment - 3.2%

Applied Materials, Inc.

10,282,913

$ 196,300,809

Software - 2.1%

Nintendo Co. Ltd.

114,700

64,094,359

Ubisoft Entertainment SA (a)

350,289

30,633,399

VMware, Inc. Class A

680,861

36,671,173

 

131,398,931

TOTAL INFORMATION TECHNOLOGY

1,556,065,002

MATERIALS - 13.9%

Chemicals - 5.3%

FMC Corp.

430,105

33,307,331

Israel Chemicals Ltd.

1,384,700

32,300,556

Monsanto Co.

406,342

51,377,882

Novozymes AS Series B

200,100

18,014,382

The Mosaic Co. (a)

1,304,604

188,776,199

W.R. Grace & Co. (a)

256,061

6,014,873

 

329,791,223

Metals & Mining - 8.6%

ArcelorMittal SA (NY Shares) Class A

823,300

81,564,331

BHP Billiton PLC

853,500

32,731,984

Compass Minerals International, Inc.

1,155,645

93,098,761

Evraz Group SA GDR

322,800

37,606,200

Fording Canadian Coal Trust (d)

1,233,900

118,021,533

Freeport-McMoRan Copper & Gold, Inc. Class B

55,300

6,480,607

Goldcorp, Inc.

2,225,200

102,620,937

JSW Steel Ltd.

445,352

9,342,744

Rio Tinto PLC sponsored ADR

71,200

35,244,000

Vedanta Resources PLC

284,400

12,282,122

 

528,993,219

TOTAL MATERIALS

858,784,442

 

Shares

Value

UTILITIES - 4.2%

Electric Utilities - 2.7%

Entergy Corp.

594,214

$ 71,590,903

Exelon Corp.

1,058,503

95,222,930

 

166,813,833

Independent Power Producers & Energy Traders - 0.9%

Constellation Energy Group, Inc.

684,801

56,222,162

Multi-Utilities - 0.6%

Public Service Enterprise Group, Inc.

801,500

36,812,895

TOTAL UTILITIES

259,848,890

TOTAL COMMON STOCKS

(Cost $5,631,253,739)

6,087,864,904

Money Market Funds - 4.0%

 

 

 

 

Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c) (Cost $243,826,463)

243,826,463

243,826,463

TOTAL INVESTMENT PORTFOLIO - 102.6%

(Cost $5,875,080,202)

6,331,691,367

NET OTHER ASSETS - (2.6)%

(159,976,488)

NET ASSETS - 100%

$ 6,171,714,879

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request.

(c) Investment made with cash collateral received from securities on loan.

(d) Security or a portion of the security is on loan at period end.

Affiliated Central Funds

Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:

Fund

Income earned

Fidelity Cash Central Fund

$ 549,116

Fidelity Securities Lending Cash Central Fund

1,365,797

Total

$ 1,914,913

Other Affiliated Issuers

An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:

Affiliate

Value,
beginning of
period

Purchases

Sales
Proceeds

Dividend
Income

Value,
end of
period

Compass Minerals International, Inc.

$ 16,984,537

$ 69,815,635

$ 48,481,661

$ 972,305

$ -

Other Information

The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

#Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities

$ 6,331,691,367

$ 6,000,649,660

$ 331,041,707

$ -

Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited)

United States of America

72.2%

Canada

5.7%

Finland

2.4%

Luxembourg

1.9%

Australia

1.9%

India

1.8%

Japan

1.7%

Denmark

1.6%

Switzerland

1.6%

United Kingdom

1.6%

Panama

1.5%

France

1.4%

Brazil

1.3%

Others (individually less than 1%)

3.4%

 

100.0%

Income Tax Information

At December 31, 2007, the fund had a capital loss carryforward of approximately $394,129,722 of which $349,421,868 and $44,707,854 will expire on December 31, 2010 and 2011, respectively.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2008 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $237,979,606) - See accompanying schedule:

Unaffiliated issuers (cost $5,631,253,739)

$ 6,087,864,904

 

Fidelity Central Funds (cost $243,826,463)

243,826,463

 

Total Investments (cost $5,875,080,202)

 

$ 6,331,691,367

Foreign currency held at value (cost $2,089,658)

2,088,370

Receivable for investments sold

152,931,091

Receivable for fund shares sold

528,310

Dividends receivable

9,661,424

Distributions receivable from Fidelity Central Funds

321,238

Prepaid expenses

11,867

Other receivables

1,713,993

Total assets

6,498,947,660

 

 

 

Liabilities

Payable to custodian bank

$ 1,453,810

Payable for investments purchased

53,525,591

Payable for fund shares redeemed

8,986,663

Accrued management fee

3,001,714

Distribution fees payable

237,036

Notes payable to affiliates

14,813,186

Other affiliated payables

473,283

Other payables and accrued expenses

915,035

Collateral on securities loaned, at value

243,826,463

Total liabilities

327,232,781

 

 

 

Net Assets

$ 6,171,714,879

Net Assets consist of:

 

Paid in capital

$ 6,067,383,088

Undistributed net investment income

31,276,649

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

(383,523,699)

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

456,578,841

Net Assets

$ 6,171,714,879

Statement of Assets and Liabilities - continued

 

June 30, 2008 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($4,464,135,556 ÷ 110,162,080 shares)

$ 40.52

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($735,823,090 ÷ 18,221,246 shares)

$ 40.38

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($795,701,538 ÷ 19,866,393 shares)

$ 40.05

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($7,698,329 ÷ 193,210 shares)

$ 39.84

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($168,356,366 ÷ 4,167,424 shares)

$ 40.40

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Operations

Six months ended June 30, 2008 (Unaudited)

 

 

 

Investment Income

 

 

Dividends (including $972,305 earned from other affiliated issuers)

 

$ 53,803,092

Interest

 

255,372

Income from Fidelity Central Funds

 

1,914,913

Total income

 

55,973,377

 

 

 

Expenses

Management fee

$ 19,113,259

Transfer agent fees

2,389,732

Distribution fees

1,418,687

Accounting and security lending fees

585,818

Custodian fees and expenses

162,676

Independent trustees' compensation

15,249

Depreciation in deferred trustee compensation account

(633)

Audit

34,394

Legal

14,232

Interest

103,290

Miscellaneous

639,662

Total expenses before reductions

24,476,366

Expense reductions

(198,192)

24,278,174

Net investment income (loss)

31,695,203

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

777,154

Other affiliated issuers

15,733,677

 

Foreign currency transactions

(599,238)

Futures contracts

3,114,497

Total net realized gain (loss)

 

19,026,090

Change in net unrealized appreciation (depreciation) on:

Investment securities

(847,282,929)

Assets and liabilities in foreign currencies

(33,881)

Total change in net unrealized appreciation (depreciation)

 

(847,316,810)

Net gain (loss)

(828,290,720)

Net increase (decrease) in net assets resulting from operations

$ (796,595,517)

Statement of Changes in Net Assets

 

Six months ended
June 30, 2008
(Unaudited)

Year ended
December 31,
2007

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 31,695,203

$ 12,923,642

Net realized gain (loss)

19,026,090

1,400,632,701

Change in net unrealized appreciation (depreciation)

(847,316,810)

354,436,797

Net increase (decrease) in net assets resulting from operations

(796,595,517)

1,767,993,140

Distributions to shareholders from net investment income

-

(57,202,897)

Distributions to shareholders from net realized gain

-

(6,419,893)

Total distributions

-

(63,622,790)

Share transactions - net increase (decrease)

(1,064,171,025)

(869,609,806)

Redemption fees

17,491

13,352

Total increase (decrease) in net assets

(1,860,749,051)

834,773,896

 

 

 

Net Assets

Beginning of period

8,032,463,930

7,197,690,034

End of period (including undistributed net investment income of $31,276,649 and distributions in excess of net investment income of $418,554, respectively)

$ 6,171,714,879

$ 8,032,463,930

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 45.12

$ 35.87

$ 33.70

$ 32.01

$ 31.04

$ 23.44

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .20

.09

.21

.11

.15 H, K

.07

Net realized and unrealized gain (loss)

  (4.80)

9.53

2.09

1.74

.90

7.60

Total from investment operations

  (4.60)

9.62

2.30

1.85

1.05

7.67

Distributions from net investment income

  -

(.33)

(.13)

(.16)

(.08)

(.07)

Distributions from net realized gain

  -

(.04)

-

-

-

-

Total distributions

  -

(.37)

(.13)

(.16)

(.08)

(.07)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.52

$ 45.12

$ 35.87

$ 33.70

$ 32.01

$ 31.04

Total Return B, C , D

  (10.20)%

26.96%

6.85%

5.80%

3.38%

32.85%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .67% A

.65%

.68%

.67%

.68%

.67%

Expenses net of fee waivers, if any

  .67% A

.65%

.68%

.67%

.68%

.67%

Expenses net of all reductions

  .66% A

.64%

.67%

.63%

.65%

.64%

Net investment income (loss)

  .97% A

.21%

.61%

.36%

.47% K

.28%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 4,464,136

$ 6,002,656

$ 5,610,629

$ 6,726,655

$ 7,796,888

$ 8,594,509

Portfolio turnover rate G

  156% A

109%

114%

79%

72%

61%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class.

Financial Highlights - Service Class

 

Six months ended
June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 44.99

$ 35.72

$ 33.56

$ 31.88

$ 30.92

$ 23.34

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .18

.04

.18

.08

.11 H, K

.05

Net realized and unrealized gain (loss)

  (4.79)

9.51

2.07

1.72

.90

7.58

Total from investment operations

  (4.61)

9.55

2.25

1.80

1.01

7.63

Distributions from net investment income

  -

(.24)

(.09)

(.12)

(.05)

(.05)

Distributions from net realized gain

  -

(.04)

-

-

-

-

Total distributions

  -

(.28)

(.09)

(.12)

(.05)

(.05)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.38

$ 44.99

$ 35.72

$ 33.56

$ 31.88

$ 30.92

Total Return B, C , D

  (10.25)%

26.87%

6.73%

5.67%

3.26%

32.78%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .77% A

.75%

.78%

.77%

.78%

.77%

Expenses net of fee waivers, if any

  .77% A

.75%

.78%

.77%

.78%

.77%

Expenses net of all reductions

  .76% A

.74%

.77%

.73%

.75%

.74%

Net investment income (loss)

  .87% A

.11%

.51%

.26%

.37% K

.18%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 735,823

$ 929,848

$ 877,279

$ 1,086,172

$ 1,326,262

$ 1,401,298

Portfolio turnover rate G

  156% A

109%

114%

79%

72%

61%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended
June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 44.65

$ 35.42

$ 33.29

$ 31.64

$ 30.72

$ 23.21

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .15

(.02)

.12

.03

.07 H, K

.01

Net realized and unrealized gain (loss)

  (4.75)

9.43

2.07

1.71

.89

7.53

Total from investment operations

  (4.60)

9.41

2.19

1.74

.96

7.54

Distributions from net investment income

  -

(.15)

(.06)

(.09)

(.04)

(.03)

Distributions from net realized gain

  -

(.03)

-

-

-

-

Total distributions

  -

(.18)

(.06)

(.09)

(.04)

(.03)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.05

$ 44.65

$ 35.42

$ 33.29

$ 31.64

$ 30.72

Total Return B, C , D

  (10.30)%

26.66%

6.57%

5.50%

3.12%

32.54%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .92% A

.90%

.94%

.92%

.93%

.92%

Expenses net of fee waivers, if any

  .92% A

.90%

.94%

.92%

.93%

.92%

Expenses net of all reductions

  .91% A

.89%

.92%

.88%

.90%

.89%

Net investment income (loss)

  .72% A

(.04)%

.36%

.11%

.22% K

.02%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 795,702

$ 898,204

$ 627,754

$ 858,587

$ 811,126

$ 609,798

Portfolio turnover rate G

  156% A

109%

114%

79%

72%

61%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class.

Financial Highlights - Service Class 2R

 

Six months ended
June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 44.42

$ 35.28

$ 33.18

$ 31.54

$ 30.65

$ 23.20

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .15

(.01)

.12

.04

.07 H, K

.01

Net realized and unrealized gain (loss)

  (4.73)

9.38

2.06

1.70

.88

7.51

Total from investment operations

  (4.58)

9.37

2.18

1.74

.95

7.52

Distributions from net investment income

  -

(.19)

(.08)

(.10)

(.06)

(.07)

Distributions from net realized gain

  -

(.04)

-

-

-

-

Total distributions

  -

(.23)

(.08)

(.10)

(.06)

(.07)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 39.84

$ 44.42

$ 35.28

$ 33.18

$ 31.54

$ 30.65

Total Return B, C , D

  (10.31)%

26.66%

6.58%

5.52%

3.10%

32.54%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .92% A

.89%

.93%

.92%

.93%

.92%

Expenses net of fee waivers, if any

  .92% A

.89%

.93%

.92%

.93%

.92%

Expenses net of all reductions

  .91% A

.89%

.92%

.88%

.90%

.90%

Net investment income (loss)

  .72% A

(.04)%

.36%

.12%

.22% K

.02%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 7,698

$ 20,051

$ 5,063

$ 5,409

$ 2,667

$ 1,369

Portfolio turnover rate G

  156% A

109%

114%

79%

72%

61%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended
June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005 H

Selected Per-Share Data

 

 

 

 

Net asset value, beginning of period

$ 45.00

$ 35.78

$ 33.67

$ 32.60

Income from Investment Operations

 

 

 

 

Net investment income (loss) E

  .18

.04

.17

.03

Net realized and unrealized gain (loss)

  (4.78)

9.50

2.08

1.04

Total from investment operations

  (4.60)

9.54

2.25

1.07

Distributions from net investment income

  -

(.28)

(.14)

-

Distributions from net realized gain

  -

(.04)

-

-

Total distributions

  -

(.32)

(.14)

-

Redemption fees added to paid in capital E, J

  -

-

-

-

Net asset value, end of period

$ 40.40

$ 45.00

$ 35.78

$ 33.67

Total Return B, C , D

  (10.22)%

26.81%

6.72%

3.28%

Ratios to Average Net Assets F, I

 

 

 

 

Expenses before reductions

  .76% A

.76%

.81%

.83% A

Expenses net of fee waivers, if any

  .76% A

.76%

.81%

.83% A

Expenses net of all reductions

  .75% A

.76%

.80%

.79% A

Net investment income (loss)

  .88% A

.09%

.49%

.23% A

Supplemental Data

 

 

 

 

Net assets, end of period (000 omitted)

$ 168,356

$ 181,705

$ 76,965

$ 24,166

Portfolio turnover rate G

  156% A

109%

114%

79%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2008 (Unaudited)

1. Organization.

VIP Growth Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Service Class 2R shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.

2. Investments in Fidelity Central Funds.

The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.

When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:

Level 1

Quoted prices in active markets for identical securities.

Level 2

Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level 3

Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.

The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships (including allocations from Fidelity Central Funds), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.

The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:

Unrealized appreciation

$ 975,364,226

 

Unrealized depreciation

(540,847,191)

 

Net unrealized appreciation (depreciation)

$ 434,517,035

 

Cost for federal income tax purposes

$ 5,897,174,332

 

Trading (Redemption) Fees. Service Class 2R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.

Semiannual Report

3. Significant Accounting Policies - continued

New Accounting Pronouncement. In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.

4. Operating Policies.

Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.

Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $5,328,174,579 and $6,427,355,578, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% of the Fund's average net assets.

Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.

For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:

Service Class

$ 394,460

 

Service Class 2

1,010,743

 

Service Class 2R

13,484

 

 

$ 1,418,687

 

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class

$ 1,688,802

 

Service Class

264,239

 

Service Class 2

275,163

 

Service Class 2R

3,562

 

Investor Class

157,966

 

 

$ 2,389,732

 

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $68,045 for the period.

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans, including accrued interest, at period end are presented under the caption "Notes Payable to Affiliates" in the Fund's Statement of Assets and Liabilities. The Fund's activity in this program during the period for which loans were outstanding was as follows:

Borrower or Lender

Average Daily
Loan Balance

Weighted Average
Interest Rate

Interest
Expense

Borrower

$ 39,211,237

2.50%

$ 103,290

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $7,403 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $1,365,797.

Semiannual Report

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $194,001 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $4,191.

10. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.

In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $1,601,267, which is recorded in the accompanying Statement of Operations.

In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.

At the end of the period, FMR or its affiliates were the owners of record of 13% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 35% of the total outstanding shares of the Fund.

11. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2008

Year ended
December 31,
2007

From net investment income

 

 

Initial Class

$ -

$ 48,163,694

Service Class

-

5,568,863

Service Class 2

-

2,694,835

Service Class 2R

-

42,158

Investor Class

-

733,347

Total

$ -

$ 57,202,897

From net realized gain

 

 

Initial Class

$ -

$ 4,929,899

Service Class

-

762,636

Service Class 2

-

563,891

Service Class 2R

-

17,112

Investor Class

-

146,355

Total

$ -

$ 6,419,893

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

12. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30,
2008

Year ended
December 31,
2007

Six months ended
June 30,
2008

Year ended
December 31,
2007

Initial Class

 

 

 

 

Shares sold

2,029,413

6,352,261

$ 82,900,824

$ 263,603,689

Reinvestment of distributions

-

1,365,559

-

53,093,593

Shares redeemed

(24,902,820)

(31,109,602)

(1,028,770,968)

(1,235,111,333)

Net increase (decrease)

(22,873,407)

(23,391,782)

$ (945,870,144)

$ (918,414,051)

Service Class

 

 

 

 

Shares sold

662,030

2,661,654

$ 26,989,623

$ 112,874,994

Reinvestment of distributions

-

164,792

-

6,331,499

Shares redeemed

(3,110,211)

(6,714,602)

(126,602,430)

(264,599,886)

Net increase (decrease)

(2,448,181)

(3,888,156)

$ (99,612,807)

$ (145,393,393)

Service Class 2

 

 

 

 

Shares sold

2,605,941

6,700,657

$ 104,951,849

$ 277,901,012

Reinvestment of distributions

-

86,329

-

3,258,726

Shares redeemed

(2,854,916)

(4,393,246)

(115,775,231)

(178,974,484)

Net increase (decrease)

(248,975)

2,393,740

$ (10,823,382)

$ 102,185,254

Service Class 2R

 

 

 

 

Shares sold

85,115

452,190

$ 3,431,462

$ 18,759,040

Reinvestment of distributions

-

1,458

-

59,270

Shares redeemed

(343,294)

(145,771)

(13,860,353)

(6,009,422)

Net increase (decrease)

(258,179)

307,877

$ (10,428,891)

$ 12,808,888

Investor Class

 

 

 

 

Shares sold

1,904,920

2,273,784

$ 74,496,361

$ 95,486,744

Reinvestment of distributions

-

22,125

-

879,702

Shares redeemed

(1,775,216)

(409,459)

(71,932,162)

(17,162,950)

Net increase (decrease)

129,704

1,886,450

$ 2,564,199

$ 79,203,496

Semiannual Report

Proxy Voting Results

A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.

PROPOSAL 1

To elect a Board of Trustees.A

 

# of
Votes

% of
Votes

James C. Curvey

Affirmative

821,220,039.81

95.845

Withheld

35,598,080.64

4.155

TOTAL

856,818,120.45

100.000

Dennis J. Dirks

Affirmative

822,124,493.63

95.951

Withheld

34,693,626.82

4.049

TOTAL

856,818,120.45

100.000

Edward C. Johnson 3d

Affirmative

820,473,313.05

95.758

Withheld

36,344,807.40

4.242

TOTAL

856,818,120.45

100.000

Alan J. Lacy

Affirmative

822,170,402.95

95.956

Withheld

34,647,717.50

4.044

TOTAL

856,818,120.45

100.000

Ned C. Lautenbach

Affirmative

821,435,006.18

95.870

Withheld

35,383,114.27

4.130

TOTAL

856,818,120.45

100.000

Joseph Mauriello

Affirmative

822,174,756.53

95.957

Withheld

34,643,363.92

4.043

TOTAL

856,818,120.45

100.000

Cornelia M. Small

Affirmative

822,263,792.20

95.967

Withheld

34,554,328.25

4.033

TOTAL

856,818,120.45

100.000

William S. Stavropoulos

Affirmative

821,014,987.67

95.821

Withheld

35,803,132.78

4.179

TOTAL

856,818,120.45

100.000

David M. Thomas

Affirmative

822,321,743.26

95.974

Withheld

34,496,377.19

4.026

TOTAL

856,818,120.45

100.000

Michael E. Wiley

Affirmative

822,218,346.41

95.962

Withheld

34,599,774.04

4.038

TOTAL

856,818,120.45

100.000

PROPOSAL 2

To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A

 

# of
Votes

% of
Votes

Affirmative

701,273,514.99

81.846

Against

103,131,328.05

12.037

Abstain

52,413,277.41

6.117

TOTAL

856,818,120.45

100.000

A Denotes trust-wide proposal and voting results.

Semiannual Report

Investments

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Adviser

FMR Co., Inc.

Fidelity Management & Research (U.K.) Inc.

Fidelity Research & Analysis Company

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

Fidelity Investments Japan Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

Mellon Bank, N.A.
Pittsburgh, PA 

VIPGRWT-SANN-0808
1.705692.110

Fidelity® Variable Insurance Products:
Growth Portfolio - Service Class 2R

Semiannual Report

June 30, 2008
(2_fidelity_logos) (Registered_Trademark)

Contents

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their
market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

Proxy Voting Results

<Click Here>

 

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

Beginning
Account Value
January 1, 2008

Ending
Account Value
June 30, 2008

Expenses Paid
During Period*
January 1, 2008
to June 30, 2008

Initial Class

 

 

 

Actual

$ 1,000.00

$ 898.00

$ 3.16

HypotheticalA

$ 1,000.00

$ 1,021.53

$ 3.37

Service Class

 

 

 

Actual

$ 1,000.00

$ 897.50

$ 3.63

HypotheticalA

$ 1,000.00

$ 1,021.03

$ 3.87

Service Class 2

 

 

 

Actual

$ 1,000.00

$ 897.00

$ 4.34

HypotheticalA

$ 1,000.00

$ 1,020.29

$ 4.62

Service Class 2R

 

 

 

Actual

$ 1,000.00

$ 896.90

$ 4.34

HypotheticalA

$ 1,000.00

$ 1,020.29

$ 4.62

Investor Class

 

 

 

Actual

$ 1,000.00

$ 897.80

$ 3.59

HypotheticalA

$ 1,000.00

$ 1,021.08

$ 3.82

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Annualized
Expense Ratio

Initial Class

.67%

Service Class

.77%

Service Class 2

.92%

Service Class 2R

.92%

Investor Class

.76%

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Berkshire Hathaway, Inc. Class B

3.7

4.4

Applied Materials, Inc.

3.2

2.4

The Mosaic Co.

3.1

1.2

Nokia Corp. sponsored ADR

2.4

5.3

Medco Health Solutions, Inc.

2.3

0.5

Annaly Capital Management, Inc.

2.2

0.0

VeriSign, Inc.

2.0

1.1

Fording Canadian Coal Trust

1.9

0.0

Denbury Resources, Inc.

1.9

0.9

CVS Caremark Corp.

1.7

0.7

 

24.4

Top Five Market Sectors as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Information Technology

25.2

37.1

Materials

13.9

2.7

Financials

13.8

11.0

Energy

13.3

10.4

Health Care

12.4

12.4

Asset Allocation (% of fund's net assets)

As of June 30, 2008*

As of December 31, 2007**

fid95

Stocks 98.6%

 

fid95

Stocks 99.8%

 

fid101

Short-Term
Investments and
Net Other Assets 1.4%

 

fid101

Short-Term
Investments and
Net Other Assets 0.2%

 

* Foreign investments

27.8%

 

** Foreign investments

25.5%

 


fid140

Semiannual Report

Investments June 30, 2008 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 98.6%

Shares

Value

CONSUMER DISCRETIONARY - 4.6%

Automobiles - 0.2%

Harley-Davidson, Inc.

325,700

$ 11,809,882

Diversified Consumer Services - 1.0%

Strayer Education, Inc.

288,471

60,310,632

Hotels, Restaurants & Leisure - 0.9%

BJ's Restaurants, Inc. (a)

171,492

1,668,617

McDonald's Corp.

783,476

44,047,021

Starwood Hotels & Resorts Worldwide, Inc.

245,700

9,845,199

 

55,560,837

Leisure Equipment & Products - 0.7%

Nikon Corp.

1,582,000

46,194,131

Media - 1.0%

Focus Media Holding Ltd. ADR (a)(d)

852,290

23,625,479

National CineMedia, Inc.

819,490

8,735,763

The DIRECTV Group, Inc. (a)

1,049,600

27,195,136

 

59,556,378

Specialty Retail - 0.4%

DSW, Inc. Class A (a)(d)

1,242,052

14,631,373

Gamestop Corp. Class A (a)

285,600

11,538,240

 

26,169,613

Textiles, Apparel & Luxury Goods - 0.4%

Lululemon Athletica, Inc.

578,800

16,819,928

LVMH Moet Hennessy - Louis Vuitton

57,700

6,019,072

 

22,839,000

TOTAL CONSUMER DISCRETIONARY

282,440,473

CONSUMER STAPLES - 4.8%

Food & Staples Retailing - 2.0%

CVS Caremark Corp.

2,668,206

105,580,911

Whole Foods Market, Inc. (d)

824,118

19,523,355

 

125,104,266

Food Products - 1.2%

Green Mountain Coffee Roasters, Inc. (a)

215,952

8,113,317

Nestle SA sponsored ADR

573,500

64,862,850

 

72,976,167

Household Products - 1.6%

Procter & Gamble Co.

1,590,917

96,743,663

TOTAL CONSUMER STAPLES

294,824,096

ENERGY - 13.3%

Energy Equipment & Services - 3.8%

Atwood Oceanics, Inc. (a)

74,000

9,201,160

ENSCO International, Inc.

222,501

17,964,731

FMC Technologies, Inc. (a)

179,900

13,839,707

Helmerich & Payne, Inc.

199,000

14,331,980

National Oilwell Varco, Inc. (a)

783,348

69,498,635

 

Shares

Value

Smith International, Inc.

659,994

$ 54,871,901

Transocean, Inc. (a)

351,600

53,580,324

 

233,288,438

Oil, Gas & Consumable Fuels - 9.5%

Chesapeake Energy Corp.

305,808

20,171,096

Denbury Resources, Inc. (a)

3,213,050

117,276,325

EOG Resources, Inc.

299,231

39,259,107

Galp Energia SGPS SA Class B

1,015,441

22,521,912

Hess Corp.

215,000

27,130,850

OAO Gazprom sponsored ADR

910,675

52,819,150

Occidental Petroleum Corp.

85,700

7,701,002

Petroleo Brasileiro SA - Petrobras sponsored ADR

1,127,600

79,867,908

Reliance Industries Ltd.

316,559

15,449,303

Southwestern Energy Co. (a)

1,197,900

57,032,019

Ultra Petroleum Corp. (a)

988,526

97,073,253

Williams Companies, Inc.

1,251,547

50,449,860

 

586,751,785

TOTAL ENERGY

820,040,223

FINANCIALS - 13.8%

Capital Markets - 2.3%

Bank of New York Mellon Corp.

401,700

15,196,311

Charles Schwab Corp.

3,070,572

63,069,549

Franklin Resources, Inc.

260,974

23,918,267

JMP Group, Inc.

98,900

653,729

Northern Trust Corp.

186,179

12,766,294

State Street Corp.

377,700

24,169,023

 

139,773,173

Commercial Banks - 0.4%

UCBH Holdings, Inc.

937,700

2,109,825

Wachovia Corp.

1,492,400

23,176,972

 

25,286,797

Diversified Financial Services - 1.3%

JPMorgan Chase & Co.

709,014

24,326,270

KKR Financial Holdings LLC

3,594,966

37,747,143

MSCI, Inc. Class A

559,320

20,297,723

 

82,371,136

Insurance - 6.8%

AFLAC, Inc.

574,620

36,086,136

American International Group, Inc.

1,148,408

30,386,876

Assurant, Inc.

508,556

33,544,354

Berkshire Hathaway, Inc.:

Class A (a)

358

43,228,500

Class B (a)

56,481

226,601,771

Principal Financial Group, Inc.

423,275

17,764,852

Prudential Financial, Inc.

470,764

28,123,441

 

415,735,930

Real Estate Investment Trusts - 3.0%

Annaly Capital Management, Inc.

8,741,881

135,586,574

Common Stocks - continued

Shares

Value

FINANCIALS - continued

Real Estate Investment Trusts - continued

CapitalSource, Inc. (d)

1,340,178

$ 14,849,172

MFA Mortgage Investments, Inc.

5,174,464

33,737,505

 

184,173,251

Thrifts & Mortgage Finance - 0.0%

New York Community Bancorp, Inc. (d)

124,078

2,213,552

TOTAL FINANCIALS

849,553,839

HEALTH CARE - 12.4%

Biotechnology - 4.4%

Biogen Idec, Inc. (a)

1,227,524

68,606,316

CSL Ltd.

3,003,761

102,810,854

Genentech, Inc. (a)

450,185

34,169,042

Gilead Sciences, Inc. (a)

1,243,703

65,854,074

 

271,440,286

Health Care Equipment & Supplies - 3.9%

Alcon, Inc.

192,700

31,369,633

Baxter International, Inc.

784,051

50,132,221

Becton, Dickinson & Co.

405,880

32,998,044

C.R. Bard, Inc.

355,400

31,257,430

China Medical Technologies, Inc. sponsored ADR (d)

499,030

24,652,082

Cochlear Ltd.

280,980

11,758,855

Covidien Ltd.

268,100

12,839,309

DENTSPLY International, Inc.

736,814

27,114,755

Mindray Medical International Ltd. sponsored ADR

523,970

19,554,560

 

241,676,889

Health Care Providers & Services - 3.0%

Henry Schein, Inc. (a)

811,075

41,827,138

Medco Health Solutions, Inc. (a)

3,015,051

142,310,407

 

184,137,545

Life Sciences Tools & Services - 0.9%

Covance, Inc. (a)(d)

532,076

45,769,178

Pharmaceutical Product Development, Inc.

304,099

13,045,847

 

58,815,025

Pharmaceuticals - 0.2%

Novo Nordisk AS Series B

196,600

12,942,279

TOTAL HEALTH CARE

769,012,024

INDUSTRIALS - 6.4%

Aerospace & Defense - 1.7%

General Dynamics Corp.

630,500

53,088,100

Rockwell Collins, Inc.

1,070,506

51,341,468

 

104,429,568

Commercial Services & Supplies - 0.4%

Copart, Inc. (a)

146,873

6,289,102

 

Shares

Value

Corrections Corp. of America (a)

435,145

$ 11,953,433

Robert Half International, Inc.

229,800

5,508,306

 

23,750,841

Electrical Equipment - 1.9%

Alstom SA (d)

210,127

48,183,248

Vestas Wind Systems AS (a)

548,400

71,400,015

 

119,583,263

Industrial Conglomerates - 1.6%

Global Consumer Acquisition Corp. unit

501,100

4,935,835

McDermott International, Inc. (a)

1,561,375

96,633,499

 

101,569,334

Machinery - 0.6%

Danaher Corp.

287,700

22,239,210

Hansen Transmission International NV

2,291,597

12,218,935

 

34,458,145

Trading Companies & Distributors - 0.2%

Fastenal Co.

312,900

13,504,764

TOTAL INDUSTRIALS

397,295,915

INFORMATION TECHNOLOGY - 25.2%

Communications Equipment - 6.7%

Cisco Systems, Inc. (a)

3,615,457

84,095,530

Corning, Inc.

1,004,500

23,153,725

Juniper Networks, Inc. (a)

1,589,863

35,263,161

Nokia Corp. sponsored ADR

6,040,841

148,000,605

QUALCOMM, Inc.

2,147,853

95,300,238

Research In Motion Ltd. (a)

262,900

30,733,011

 

416,546,270

Computers & Peripherals - 2.2%

Apple, Inc. (a)

415,469

69,566,129

SanDisk Corp. (a)

3,552,808

66,437,510

 

136,003,639

Electronic Equipment & Instruments - 1.0%

Amphenol Corp. Class A

1,340,564

60,164,512

Internet Software & Services - 3.8%

Baidu.com, Inc. sponsored ADR (a)

17,200

5,382,912

Google, Inc. Class A (sub. vtg.) (a)

180,151

94,835,089

The Knot, Inc. (a)(d)

881,115

8,617,305

VeriSign, Inc. (a)(d)

3,301,872

124,810,762

 

233,646,068

IT Services - 6.2%

Cognizant Technology Solutions Corp. Class A (a)

2,521,662

81,979,232

ExlService Holdings, Inc. (a)

918,112

12,881,111

Infosys Technologies Ltd.

920,800

37,252,398

Infosys Technologies Ltd. sponsored ADR

952,600

41,399,996

The Western Union Co.

4,020,525

99,387,378

Visa, Inc.

1,161,109

94,409,773

WNS Holdings Ltd. ADR (a)

872,100

14,694,885

 

382,004,773

Common Stocks - continued

Shares

Value

INFORMATION TECHNOLOGY - continued

Semiconductors & Semiconductor Equipment - 3.2%

Applied Materials, Inc.

10,282,913

$ 196,300,809

Software - 2.1%

Nintendo Co. Ltd.

114,700

64,094,359

Ubisoft Entertainment SA (a)

350,289

30,633,399

VMware, Inc. Class A

680,861

36,671,173

 

131,398,931

TOTAL INFORMATION TECHNOLOGY

1,556,065,002

MATERIALS - 13.9%

Chemicals - 5.3%

FMC Corp.

430,105

33,307,331

Israel Chemicals Ltd.

1,384,700

32,300,556

Monsanto Co.

406,342

51,377,882

Novozymes AS Series B

200,100

18,014,382

The Mosaic Co. (a)

1,304,604

188,776,199

W.R. Grace & Co. (a)

256,061

6,014,873

 

329,791,223

Metals & Mining - 8.6%

ArcelorMittal SA (NY Shares) Class A

823,300

81,564,331

BHP Billiton PLC

853,500

32,731,984

Compass Minerals International, Inc.

1,155,645

93,098,761

Evraz Group SA GDR

322,800

37,606,200

Fording Canadian Coal Trust (d)

1,233,900

118,021,533

Freeport-McMoRan Copper & Gold, Inc. Class B

55,300

6,480,607

Goldcorp, Inc.

2,225,200

102,620,937

JSW Steel Ltd.

445,352

9,342,744

Rio Tinto PLC sponsored ADR

71,200

35,244,000

Vedanta Resources PLC

284,400

12,282,122

 

528,993,219

TOTAL MATERIALS

858,784,442

 

Shares

Value

UTILITIES - 4.2%

Electric Utilities - 2.7%

Entergy Corp.

594,214

$ 71,590,903

Exelon Corp.

1,058,503

95,222,930

 

166,813,833

Independent Power Producers & Energy Traders - 0.9%

Constellation Energy Group, Inc.

684,801

56,222,162

Multi-Utilities - 0.6%

Public Service Enterprise Group, Inc.

801,500

36,812,895

TOTAL UTILITIES

259,848,890

TOTAL COMMON STOCKS

(Cost $5,631,253,739)

6,087,864,904

Money Market Funds - 4.0%

 

 

 

 

Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c) (Cost $243,826,463)

243,826,463

243,826,463

TOTAL INVESTMENT PORTFOLIO - 102.6%

(Cost $5,875,080,202)

6,331,691,367

NET OTHER ASSETS - (2.6)%

(159,976,488)

NET ASSETS - 100%

$ 6,171,714,879

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request.

(c) Investment made with cash collateral received from securities on loan.

(d) Security or a portion of the security is on loan at period end.

Affiliated Central Funds

Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:

Fund

Income earned

Fidelity Cash Central Fund

$ 549,116

Fidelity Securities Lending Cash Central Fund

1,365,797

Total

$ 1,914,913

Other Affiliated Issuers

An affiliated company is a company in which the fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:

Affiliate

Value,
beginning of
period

Purchases

Sales
Proceeds

Dividend
Income

Value,
end of
period

Compass Minerals International, Inc.

$ 16,984,537

$ 69,815,635

$ 48,481,661

$ 972,305

$ -

Other Information

The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

#Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities

$ 6,331,691,367

$ 6,000,649,660

$ 331,041,707

$ -

Distribution of investments by country of issue, as a percentage of total net assets, is as follows: (Unaudited)

United States of America

72.2%

Canada

5.7%

Finland

2.4%

Luxembourg

1.9%

Australia

1.9%

India

1.8%

Japan

1.7%

Denmark

1.6%

Switzerland

1.6%

United Kingdom

1.6%

Panama

1.5%

France

1.4%

Brazil

1.3%

Others (individually less than 1%)

3.4%

 

100.0%

Income Tax Information

At December 31, 2007, the fund had a capital loss carryforward of approximately $394,129,722 of which $349,421,868 and $44,707,854 will expire on December 31, 2010 and 2011, respectively.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2008 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $237,979,606) - See accompanying schedule:

Unaffiliated issuers (cost $5,631,253,739)

$ 6,087,864,904

 

Fidelity Central Funds (cost $243,826,463)

243,826,463

 

Total Investments (cost $5,875,080,202)

 

$ 6,331,691,367

Foreign currency held at value (cost $2,089,658)

2,088,370

Receivable for investments sold

152,931,091

Receivable for fund shares sold

528,310

Dividends receivable

9,661,424

Distributions receivable from Fidelity Central Funds

321,238

Prepaid expenses

11,867

Other receivables

1,713,993

Total assets

6,498,947,660

 

 

 

Liabilities

Payable to custodian bank

$ 1,453,810

Payable for investments purchased

53,525,591

Payable for fund shares redeemed

8,986,663

Accrued management fee

3,001,714

Distribution fees payable

237,036

Notes payable to affiliates

14,813,186

Other affiliated payables

473,283

Other payables and accrued expenses

915,035

Collateral on securities loaned, at value

243,826,463

Total liabilities

327,232,781

 

 

 

Net Assets

$ 6,171,714,879

Net Assets consist of:

 

Paid in capital

$ 6,067,383,088

Undistributed net investment income

31,276,649

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

(383,523,699)

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

456,578,841

Net Assets

$ 6,171,714,879

Statement of Assets and Liabilities - continued

 

June 30, 2008 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($4,464,135,556 ÷ 110,162,080 shares)

$ 40.52

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($735,823,090 ÷ 18,221,246 shares)

$ 40.38

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($795,701,538 ÷ 19,866,393 shares)

$ 40.05

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($7,698,329 ÷ 193,210 shares)

$ 39.84

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($168,356,366 ÷ 4,167,424 shares)

$ 40.40

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements - continued

Statement of Operations

Six months ended June 30, 2008 (Unaudited)

 

 

 

Investment Income

 

 

Dividends (including $972,305 earned from other affiliated issuers)

 

$ 53,803,092

Interest

 

255,372

Income from Fidelity Central Funds

 

1,914,913

Total income

 

55,973,377

 

 

 

Expenses

Management fee

$ 19,113,259

Transfer agent fees

2,389,732

Distribution fees

1,418,687

Accounting and security lending fees

585,818

Custodian fees and expenses

162,676

Independent trustees' compensation

15,249

Depreciation in deferred trustee compensation account

(633)

Audit

34,394

Legal

14,232

Interest

103,290

Miscellaneous

639,662

Total expenses before reductions

24,476,366

Expense reductions

(198,192)

24,278,174

Net investment income (loss)

31,695,203

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

777,154

Other affiliated issuers

15,733,677

 

Foreign currency transactions

(599,238)

Futures contracts

3,114,497

Total net realized gain (loss)

 

19,026,090

Change in net unrealized appreciation (depreciation) on:

Investment securities

(847,282,929)

Assets and liabilities in foreign currencies

(33,881)

Total change in net unrealized appreciation (depreciation)

 

(847,316,810)

Net gain (loss)

(828,290,720)

Net increase (decrease) in net assets resulting from operations

$ (796,595,517)

Statement of Changes in Net Assets

 

Six months ended
June 30, 2008
(Unaudited)

Year ended
December 31,
2007

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 31,695,203

$ 12,923,642

Net realized gain (loss)

19,026,090

1,400,632,701

Change in net unrealized appreciation (depreciation)

(847,316,810)

354,436,797

Net increase (decrease) in net assets resulting from operations

(796,595,517)

1,767,993,140

Distributions to shareholders from net investment income

-

(57,202,897)

Distributions to shareholders from net realized gain

-

(6,419,893)

Total distributions

-

(63,622,790)

Share transactions - net increase (decrease)

(1,064,171,025)

(869,609,806)

Redemption fees

17,491

13,352

Total increase (decrease) in net assets

(1,860,749,051)

834,773,896

 

 

 

Net Assets

Beginning of period

8,032,463,930

7,197,690,034

End of period (including undistributed net investment income of $31,276,649 and distributions in excess of net investment income of $418,554, respectively)

$ 6,171,714,879

$ 8,032,463,930

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 45.12

$ 35.87

$ 33.70

$ 32.01

$ 31.04

$ 23.44

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .20

.09

.21

.11

.15 H, K

.07

Net realized and unrealized gain (loss)

  (4.80)

9.53

2.09

1.74

.90

7.60

Total from investment operations

  (4.60)

9.62

2.30

1.85

1.05

7.67

Distributions from net investment income

  -

(.33)

(.13)

(.16)

(.08)

(.07)

Distributions from net realized gain

  -

(.04)

-

-

-

-

Total distributions

  -

(.37)

(.13)

(.16)

(.08)

(.07)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.52

$ 45.12

$ 35.87

$ 33.70

$ 32.01

$ 31.04

Total Return B, C , D

  (10.20)%

26.96%

6.85%

5.80%

3.38%

32.85%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .67% A

.65%

.68%

.67%

.68%

.67%

Expenses net of fee waivers, if any

  .67% A

.65%

.68%

.67%

.68%

.67%

Expenses net of all reductions

  .66% A

.64%

.67%

.63%

.65%

.64%

Net investment income (loss)

  .97% A

.21%

.61%

.36%

.47% K

.28%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 4,464,136

$ 6,002,656

$ 5,610,629

$ 6,726,655

$ 7,796,888

$ 8,594,509

Portfolio turnover rate G

  156% A

109%

114%

79%

72%

61%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class.

Financial Highlights - Service Class

 

Six months ended
June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 44.99

$ 35.72

$ 33.56

$ 31.88

$ 30.92

$ 23.34

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .18

.04

.18

.08

.11 H, K

.05

Net realized and unrealized gain (loss)

  (4.79)

9.51

2.07

1.72

.90

7.58

Total from investment operations

  (4.61)

9.55

2.25

1.80

1.01

7.63

Distributions from net investment income

  -

(.24)

(.09)

(.12)

(.05)

(.05)

Distributions from net realized gain

  -

(.04)

-

-

-

-

Total distributions

  -

(.28)

(.09)

(.12)

(.05)

(.05)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.38

$ 44.99

$ 35.72

$ 33.56

$ 31.88

$ 30.92

Total Return B, C , D

  (10.25)%

26.87%

6.73%

5.67%

3.26%

32.78%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .77% A

.75%

.78%

.77%

.78%

.77%

Expenses net of fee waivers, if any

  .77% A

.75%

.78%

.77%

.78%

.77%

Expenses net of all reductions

  .76% A

.74%

.77%

.73%

.75%

.74%

Net investment income (loss)

  .87% A

.11%

.51%

.26%

.37% K

.18%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 735,823

$ 929,848

$ 877,279

$ 1,086,172

$ 1,326,262

$ 1,401,298

Portfolio turnover rate G

  156% A

109%

114%

79%

72%

61%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended
June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 44.65

$ 35.42

$ 33.29

$ 31.64

$ 30.72

$ 23.21

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .15

(.02)

.12

.03

.07 H, K

.01

Net realized and unrealized gain (loss)

  (4.75)

9.43

2.07

1.71

.89

7.53

Total from investment operations

  (4.60)

9.41

2.19

1.74

.96

7.54

Distributions from net investment income

  -

(.15)

(.06)

(.09)

(.04)

(.03)

Distributions from net realized gain

  -

(.03)

-

-

-

-

Total distributions

  -

(.18)

(.06)

(.09)

(.04)

(.03)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.05

$ 44.65

$ 35.42

$ 33.29

$ 31.64

$ 30.72

Total Return B, C , D

  (10.30)%

26.66%

6.57%

5.50%

3.12%

32.54%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .92% A

.90%

.94%

.92%

.93%

.92%

Expenses net of fee waivers, if any

  .92% A

.90%

.94%

.92%

.93%

.92%

Expenses net of all reductions

  .91% A

.89%

.92%

.88%

.90%

.89%

Net investment income (loss)

  .72% A

(.04)%

.36%

.11%

.22% K

.02%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 795,702

$ 898,204

$ 627,754

$ 858,587

$ 811,126

$ 609,798

Portfolio turnover rate G

  156% A

109%

114%

79%

72%

61%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class.

Financial Highlights - Service Class 2R

 

Six months ended
June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 44.42

$ 35.28

$ 33.18

$ 31.54

$ 30.65

$ 23.20

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .15

(.01)

.12

.04

.07 H, K

.01

Net realized and unrealized gain (loss)

  (4.73)

9.38

2.06

1.70

.88

7.51

Total from investment operations

  (4.58)

9.37

2.18

1.74

.95

7.52

Distributions from net investment income

  -

(.19)

(.08)

(.10)

(.06)

(.07)

Distributions from net realized gain

  -

(.04)

-

-

-

-

Total distributions

  -

(.23)

(.08)

(.10)

(.06)

(.07)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 39.84

$ 44.42

$ 35.28

$ 33.18

$ 31.54

$ 30.65

Total Return B, C , D

  (10.31)%

26.66%

6.58%

5.52%

3.10%

32.54%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .92% A

.89%

.93%

.92%

.93%

.92%

Expenses net of fee waivers, if any

  .92% A

.89%

.93%

.92%

.93%

.92%

Expenses net of all reductions

  .91% A

.89%

.92%

.88%

.90%

.90%

Net investment income (loss)

  .72% A

(.04)%

.36%

.12%

.22% K

.02%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 7,698

$ 20,051

$ 5,063

$ 5,409

$ 2,667

$ 1,369

Portfolio turnover rate G

  156% A

109%

114%

79%

72%

61%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.08 per share. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K As a result in the change in the estimate of the return of capital components of dividend income realized in the year ended December 31, 2003, net investment income per share and the ratio of net investment income to average net assets for the year ended December 31, 2004 have been reduced by $.01 per share and .02%, respectively. The change in estimate has no impact on total net assets or total return of the class.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended
June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005 H

Selected Per-Share Data

 

 

 

 

Net asset value, beginning of period

$ 45.00

$ 35.78

$ 33.67

$ 32.60

Income from Investment Operations

 

 

 

 

Net investment income (loss) E

  .18

.04

.17

.03

Net realized and unrealized gain (loss)

  (4.78)

9.50

2.08

1.04

Total from investment operations

  (4.60)

9.54

2.25

1.07

Distributions from net investment income

  -

(.28)

(.14)

-

Distributions from net realized gain

  -

(.04)

-

-

Total distributions

  -

(.32)

(.14)

-

Redemption fees added to paid in capital E, J

  -

-

-

-

Net asset value, end of period

$ 40.40

$ 45.00

$ 35.78

$ 33.67

Total Return B, C , D

  (10.22)%

26.81%

6.72%

3.28%

Ratios to Average Net Assets F, I

 

 

 

 

Expenses before reductions

  .76% A

.76%

.81%

.83% A

Expenses net of fee waivers, if any

  .76% A

.76%

.81%

.83% A

Expenses net of all reductions

  .75% A

.76%

.80%

.79% A

Net investment income (loss)

  .88% A

.09%

.49%

.23% A

Supplemental Data

 

 

 

 

Net assets, end of period (000 omitted)

$ 168,356

$ 181,705

$ 76,965

$ 24,166

Portfolio turnover rate G

  156% A

109%

114%

79%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2008 (Unaudited)

1. Organization.

VIP Growth Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Service Class 2R shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.

2. Investments in Fidelity Central Funds.

The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.

When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:

Level 1

Quoted prices in active markets for identical securities.

Level 2

Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level 3

Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.

The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships (including allocations from Fidelity Central Funds), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.

The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:

Unrealized appreciation

$ 975,364,226

 

Unrealized depreciation

(540,847,191)

 

Net unrealized appreciation (depreciation)

$ 434,517,035

 

Cost for federal income tax purposes

$ 5,897,174,332

 

Trading (Redemption) Fees. Service Class 2R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.

Semiannual Report

3. Significant Accounting Policies - continued

New Accounting Pronouncement. In March 2008, Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), was issued and is effective for fiscal years beginning after November 15, 2008. SFAS 161 requires enhanced disclosures to provide information about the reasons the Fund invests in derivative instruments, the accounting treatment and the effect derivatives have on financial performance. Management is currently evaluating the impact the adoption of SFAS 161 will have on the Fund's financial statement disclosures.

4. Operating Policies.

Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.

Futures Contracts. The Fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Upon entering into a futures contract, a fund is required to deposit with a clearing broker, no later than the following business day, an amount ("initial margin") equal to a certain percentage of the face value of the contract. The initial margin may be in the form of cash or securities and is transferred to a segregated account on settlement date. Subsequent payments ("variation margin") are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses. Realized gains (losses) are recorded upon the expiration or closing of the futures contract. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $5,328,174,579 and $6,427,355,578, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% of the Fund's average net assets.

Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.

For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:

Service Class

$ 394,460

 

Service Class 2

1,010,743

 

Service Class 2R

13,484

 

 

$ 1,418,687

 

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class

$ 1,688,802

 

Service Class

264,239

 

Service Class 2

275,163

 

Service Class 2R

3,562

 

Investor Class

157,966

 

 

$ 2,389,732

 

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $68,045 for the period.

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans, including accrued interest, at period end are presented under the caption "Notes Payable to Affiliates" in the Fund's Statement of Assets and Liabilities. The Fund's activity in this program during the period for which loans were outstanding was as follows:

Borrower or Lender

Average Daily
Loan Balance

Weighted Average
Interest Rate

Interest
Expense

Borrower

$ 39,211,237

2.50%

$ 103,290

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $7,403 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $1,365,797.

Semiannual Report

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $194,001 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $4,191.

10. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.

In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $1,601,267, which is recorded in the accompanying Statement of Operations.

In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.

At the end of the period, FMR or its affiliates were the owners of record of 13% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 35% of the total outstanding shares of the Fund.

11. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2008

Year ended
December 31,
2007

From net investment income

 

 

Initial Class

$ -

$ 48,163,694

Service Class

-

5,568,863

Service Class 2

-

2,694,835

Service Class 2R

-

42,158

Investor Class

-

733,347

Total

$ -

$ 57,202,897

From net realized gain

 

 

Initial Class

$ -

$ 4,929,899

Service Class

-

762,636

Service Class 2

-

563,891

Service Class 2R

-

17,112

Investor Class

-

146,355

Total

$ -

$ 6,419,893

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

12. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30,
2008

Year ended
December 31,
2007

Six months ended
June 30,
2008

Year ended
December 31,
2007

Initial Class

 

 

 

 

Shares sold

2,029,413

6,352,261

$ 82,900,824

$ 263,603,689

Reinvestment of distributions

-

1,365,559

-

53,093,593

Shares redeemed

(24,902,820)

(31,109,602)

(1,028,770,968)

(1,235,111,333)

Net increase (decrease)

(22,873,407)

(23,391,782)

$ (945,870,144)

$ (918,414,051)

Service Class

 

 

 

 

Shares sold

662,030

2,661,654

$ 26,989,623

$ 112,874,994

Reinvestment of distributions

-

164,792

-

6,331,499

Shares redeemed

(3,110,211)

(6,714,602)

(126,602,430)

(264,599,886)

Net increase (decrease)

(2,448,181)

(3,888,156)

$ (99,612,807)

$ (145,393,393)

Service Class 2

 

 

 

 

Shares sold

2,605,941

6,700,657

$ 104,951,849

$ 277,901,012

Reinvestment of distributions

-

86,329

-

3,258,726

Shares redeemed

(2,854,916)

(4,393,246)

(115,775,231)

(178,974,484)

Net increase (decrease)

(248,975)

2,393,740

$ (10,823,382)

$ 102,185,254

Service Class 2R

 

 

 

 

Shares sold

85,115

452,190

$ 3,431,462

$ 18,759,040

Reinvestment of distributions

-

1,458

-

59,270

Shares redeemed

(343,294)

(145,771)

(13,860,353)

(6,009,422)

Net increase (decrease)

(258,179)

307,877

$ (10,428,891)

$ 12,808,888

Investor Class

 

 

 

 

Shares sold

1,904,920

2,273,784

$ 74,496,361

$ 95,486,744

Reinvestment of distributions

-

22,125

-

879,702

Shares redeemed

(1,775,216)

(409,459)

(71,932,162)

(17,162,950)

Net increase (decrease)

129,704

1,886,450

$ 2,564,199

$ 79,203,496

Semiannual Report

Proxy Voting Results

A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.

PROPOSAL 1

To elect a Board of Trustees.A

 

# of
Votes

% of
Votes

James C. Curvey

Affirmative

821,220,039.81

95.845

Withheld

35,598,080.64

4.155

TOTAL

856,818,120.45

100.000

Dennis J. Dirks

Affirmative

822,124,493.63

95.951

Withheld

34,693,626.82

4.049

TOTAL

856,818,120.45

100.000

Edward C. Johnson 3d

Affirmative

820,473,313.05

95.758

Withheld

36,344,807.40

4.242

TOTAL

856,818,120.45

100.000

Alan J. Lacy

Affirmative

822,170,402.95

95.956

Withheld

34,647,717.50

4.044

TOTAL

856,818,120.45

100.000

Ned C. Lautenbach

Affirmative

821,435,006.18

95.870

Withheld

35,383,114.27

4.130

TOTAL

856,818,120.45

100.000

Joseph Mauriello

Affirmative

822,174,756.53

95.957

Withheld

34,643,363.92

4.043

TOTAL

856,818,120.45

100.000

Cornelia M. Small

Affirmative

822,263,792.20

95.967

Withheld

34,554,328.25

4.033

TOTAL

856,818,120.45

100.000

William S. Stavropoulos

Affirmative

821,014,987.67

95.821

Withheld

35,803,132.78

4.179

TOTAL

856,818,120.45

100.000

David M. Thomas

Affirmative

822,321,743.26

95.974

Withheld

34,496,377.19

4.026

TOTAL

856,818,120.45

100.000

Michael E. Wiley

Affirmative

822,218,346.41

95.962

Withheld

34,599,774.04

4.038

TOTAL

856,818,120.45

100.000

PROPOSAL 2

To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A

 

# of
Votes

% of
Votes

Affirmative

701,273,514.99

81.846

Against

103,131,328.05

12.037

Abstain

52,413,277.41

6.117

TOTAL

856,818,120.45

100.000

A Denotes trust-wide proposal and voting results.

Semiannual Report

Investments

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Adviser

FMR Co., Inc.

Fidelity Management & Research (U.K.) Inc.

Fidelity Research & Analysis Company

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

Fidelity Investments Japan Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

Mellon Bank, N.A.
Pittsburgh, PA 

VIPGRWTR-SANN-0808
1.833448.102

Fidelity® Variable Insurance Products:

Overseas Portfolio

Semiannual Report

June 30, 2008
(2_fidelity_logos) (Registered_Trademark)

Contents

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their
market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

Proxy Voting Results

<Click Here>

 

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

Beginning
Account Value
January 1, 2008

Ending
Account Value
June 30, 2008

Expenses Paid
During Period*
January 1, 2008 to June 30, 2008

Initial Class

 

 

 

Actual

$ 1,000.00

$ 895.00

$ 4.05

HypotheticalA

$ 1,000.00

$ 1,020.59

$ 4.32

Service Class

 

 

 

Actual

$ 1,000.00

$ 894.50

$ 4.52

HypotheticalA

$ 1,000.00

$ 1,020.09

$ 4.82

Service Class 2

 

 

 

Actual

$ 1,000.00

$ 894.00

$ 5.23

HypotheticalA

$ 1,000.00

$ 1,019.34

$ 5.57

Initial Class R

 

 

 

Actual

$ 1,000.00

$ 894.70

$ 4.05

HypotheticalA

$ 1,000.00

$ 1,020.59

$ 4.32

Service Class R

 

 

 

Actual

$ 1,000.00

$ 894.80

$ 4.52

HypotheticalA

$ 1,000.00

$ 1,020.09

$ 4.82

Service Class 2R

 

 

 

Actual

$ 1,000.00

$ 894.10

$ 5.23

HypotheticalA

$ 1,000.00

$ 1,019.34

$ 5.57

Investor Class R

 

 

 

Actual

$ 1,000.00

$ 894.70

$ 4.48

HypotheticalA

$ 1,000.00

$ 1,020.14

$ 4.77

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

Semiannual Report

Investments

Shareholder Expense Example - continued

 

Annualized
Expense Ratio

Initial Class

.86%

Service Class

.96%

Service Class 2

1.11%

Initial Class R

.86%

Service Class R

.96%

Service Class 2R

1.11%

Investor Class R

.95%

Semiannual Report

Investment Changes (Unaudited)

Geographic Diversification (% of fund's net assets)

As of June 30, 2008

fid148

United Kingdom

26.6%

 

fid150

Japan

12.8%

 

fid152

France

12.2%

 

fid154

Germany

7.9%

 

fid156

Australia

6.0%

 

fid158

Switzerland

4.7%

 

fid160

Italy

4.0%

 

fid162

United States of America

3.9%

 

fid164

Denmark

2.3%

 

fid166

Other

19.6%

 

fid168

Percentages are adjusted for the effect of futures contracts, if applicable.

As of December 31, 2007

fid148

United Kingdom

21.4%

 

fid150

France

14.8%

 

fid152

Germany

11.4%

 

fid154

Japan

11.4%

 

fid156

Switzerland

6.5%

 

fid158

Australia

5.9%

 

fid160

United States of America

5.9%

 

fid162

Italy

3.6%

 

fid164

Norway

2.3%

 

fid166

Other

16.8%

 

fid180

Percentages are adjusted for the effect of futures contracts, if applicable.

Asset Allocation

 

% of fund's
net assets

% of fund's net assets
6 months ago

Stocks

99.4

96.2

Short-Term Investments and Net Other Assets

0.6

3.8

Top Ten Stocks as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Alstom SA (France, Electrical Equipment)

3.8

3.1

Man Group PLC (United Kingdom, Capital Markets)

2.2

1.7

CSL Ltd. (Australia, Biotechnology)

2.0

1.6

Vodafone Group PLC (United Kingdom, Wireless Telecommunication Services)

1.9

1.7

Royal Dutch Shell PLC Class A (United Kingdom, Oil, Gas & Consumable Fuels)

1.8

1.8

E.On AG (Germany, Electric Utilities)

1.6

1.7

Telefonica SA (Spain, Diversified Telecommunication Services)

1.6

1.5

Sumitomo Mitsui Financial Group, Inc. (Japan, Commercial Banks)

1.6

1.1

BP PLC (United Kingdom, Oil, Gas & Consumable Fuels)

1.4

1.5

BG Group PLC (United Kingdom, Oil, Gas & Consumable Fuels)

1.4

1.0

 

19.3

Market Sectors as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

22.0

20.6

Industrials

13.0

18.3

Materials

11.3

7.4

Energy

10.9

8.7

Consumer Staples

10.4

9.1

Consumer Discretionary

8.3

8.3

Telecommunication Services

7.6

6.8

Health Care

6.0

4.6

Utilities

5.1

7.5

Information Technology

4.8

4.9

Semiannual Report

Investments June 30, 2008 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 99.4%

Shares

Value

Argentina - 0.2%

Cresud S.A.C.I.F. y A. sponsored ADR

430,600

$ 6,398,716

Australia - 6.0%

AMP Ltd.

859,100

5,510,300

Australian Wealth Management Ltd.

2,494,900

3,097,621

BHP Billiton Ltd.

900,617

38,334,519

Commonwealth Bank of Australia

367,933

14,170,199

Computershare Ltd.

1,203,606

10,627,946

CSL Ltd.

1,666,466

57,038,757

Energy Resources of Australia Ltd.

270,330

5,955,931

HFA Holdings Ltd.

1,251,777

1,392,164

Lion Nathan Ltd.

1,266,655

10,383,167

National Australia Bank Ltd.

173,073

4,397,244

Rio Tinto Ltd.

79,200

10,288,922

Seek Ltd.

593,800

2,846,529

Telstra Corp. Ltd.

2,084,657

8,474,339

TOTAL AUSTRALIA

172,517,638

Austria - 0.7%

Strabag SE

247,400

19,221,342

Belgium - 0.2%

Hamon & Compagnie International SA (a)

73,974

3,469,132

KBC Groupe SA

26,700

2,951,451

TOTAL BELGIUM

6,420,583

Bermuda - 0.5%

Aquarius Platinum Ltd. (United Kingdom)

547,000

8,716,180

Clear Media Ltd. (a)

249,000

217,153

Covidien Ltd.

125,700

6,019,773

TOTAL BERMUDA

14,953,106

Brazil - 1.7%

Banco do Brasil SA

324,800

5,285,699

Bolsa de Mercadorias & Futuros - BM&F SA

408,800

3,521,412

Gafisa SA sponsored ADR

107,100

3,681,027

MRV Engenharia e Participacoes SA

601,500

13,394,180

TIM Participacoes SA sponsored ADR (non-vtg.)

244,400

6,948,292

Uniao de Bancos Brasileiros SA (Unibanco) GDR

43,600

5,534,148

Vivo Participacoes SA (PN) sponsored ADR (d)

1,092,500

6,948,300

Votorantim Celulose e Papel SA sponsored ADR (non-vtg.)

96,100

2,566,831

TOTAL BRAZIL

47,879,889

British Virgin Islands - 0.0%

Indochina Capital Vietnam Holdings Ltd. (a)

192,800

964,000

Canada - 1.2%

Canadian Natural Resources Ltd.

39,900

3,947,139

Nexen, Inc.

115,200

4,595,117

Nortel Networks Corp. (a)

40,149

328,880

 

Shares

Value

OPTI Canada, Inc. (a)

156,100

$ 3,537,460

Petrobank Energy & Resources Ltd. (a)

86,200

4,498,788

Potash Corp. of Saskatchewan, Inc.

28,500

6,514,245

Suncor Energy, Inc.

68,800

3,995,644

Talisman Energy, Inc.

205,700

4,556,537

TimberWest Forest Corp.

175,300

2,364,620

TOTAL CANADA

34,338,430

China - 0.3%

Global Bio-Chem Technology Group Co. Ltd.

6,534,000

2,715,080

Home Inns & Hotels Management, Inc. sponsored ADR (a)(d)

259,817

4,939,121

TOTAL CHINA

7,654,201

Denmark - 2.3%

Carlsberg AS Series B (d)

155,725

15,000,951

Novo Nordisk AS Series B

224,400

14,772,368

Novozymes AS Series B (d)

105,600

9,506,840

Vestas Wind Systems AS (a)

199,400

25,961,274

TOTAL DENMARK

65,241,433

Finland - 1.5%

Fortum Oyj

216,800

10,973,430

Nokia Corp. sponsored ADR

684,700

16,775,150

Nokian Tyres Ltd.

299,912

14,225,405

TOTAL FINLAND

41,973,985

France - 12.2%

Alstom SA (d)

473,700

108,621,948

AXA SA

247,415

7,290,283

AXA SA sponsored ADR

168,900

4,969,038

BNP Paribas SA

288,302

25,952,028

Bouygues SA

181,900

12,001,160

Carrefour SA

244,200

13,764,998

CNP Assurances

64,600

7,283,424

Compagnie Generale de Geophysique SA (a)

154,000

7,270,808

France Telecom SA

110,361

3,236,557

Groupe Danone

182,700

12,784,249

Ingenico SA

319,400

11,152,305

L'Air Liquide SA

182,578

24,036,476

L'Oreal SA

134,295

14,566,453

Sanofi-Aventis sponsored ADR

85,100

2,827,873

Sodexho Alliance SA

206,500

13,509,136

Suez SA (France)

136,000

9,219,090

Total SA:

Series B

340,200

28,957,246

sponsored ADR

187,400

15,979,598

Unibail-Rodamco

67,800

15,642,256

Vilmorin & Cie

28,200

5,313,550

Vivendi

201,380

7,593,285

TOTAL FRANCE

351,971,761

Common Stocks - continued

Shares

Value

Germany - 7.9%

Allianz AG (Reg.)

90,400

$ 15,901,628

Bayer AG

72,000

6,057,945

Beiersdorf AG

239,400

17,575,642

Commerzbank AG

276,800

8,223,111

Daimler AG (Reg.)

82,200

5,098,516

Deutsche Bank AG

70,200

6,059,995

Deutsche Bank AG (NY Shares)

29,800

2,543,430

Deutsche Boerse AG

91,300

10,320,555

Deutsche Postbank AG

145,600

12,800,253

E.ON AG

231,144

46,585,669

Fresenius AG

132,100

11,437,705

GFK AG

111,269

4,984,389

K&S AG

21,100

12,148,517

MLP AG (d)

990,500

17,811,840

Q-Cells AG (a)(d)

90,100

9,127,219

RWE AG

170,300

21,501,356

SAP AG sponsored ADR (d)

158,100

8,238,591

Vossloh AG

73,300

9,541,866

TOTAL GERMANY

225,958,227

Hong Kong - 0.9%

China Unicom Ltd.

10,572,000

19,621,473

China Unicom Ltd. sponsored ADR

214,700

3,976,244

Dynasty Fine Wines Group Ltd.

7,224,000

1,269,278

TOTAL HONG KONG

24,866,995

India - 0.5%

Satyam Computer Services Ltd. sponsored ADR

301,200

7,385,424

Suzlon Energy Ltd.

1,400,000

7,042,395

TOTAL INDIA

14,427,819

Indonesia - 0.7%

PT Bumi Resources Tbk

9,391,000

8,346,625

PT Indosat Tbk sponsored ADR (d)

298,400

10,811,032

TOTAL INDONESIA

19,157,657

Ireland - 1.0%

C&C Group PLC

1,314,700

7,261,745

Irish Life & Permanent PLC

2,027,100

20,951,358

TOTAL IRELAND

28,213,103

Israel - 0.6%

Israel Chemicals Ltd.

271,700

6,337,879

Teva Pharmaceutical Industries Ltd. sponsored ADR

239,200

10,955,360

TOTAL ISRAEL

17,293,239

Italy - 4.0%

A2A SpA

1,154,100

4,214,676

Alleanza Assicurazioni SpA

948,700

10,261,716

Assicurazioni Generali SpA

376,200

14,377,758

Buzzi Unicem SpA

172,800

4,304,641

 

Shares

Value

Edison SpA

2,559,300

$ 5,682,525

ENI SpA

464,586

17,259,495

Finmeccanica SpA

625,900

16,356,895

Intesa Sanpaolo SpA

1,018,700

5,791,940

Mariella Burani Fashion Group SpA (d)

105,600

2,555,907

Saipem SpA

336,100

15,708,502

UniCredit SpA

2,840,000

17,277,489

TOTAL ITALY

113,791,544

Japan - 12.8%

ACOM Co. Ltd.

409,250

12,682,452

Aeon Co. Ltd.

528,100

6,521,350

Canon, Inc.

186,200

9,586,622

Canon, Inc. sponsored ADR

309,100

15,829,011

Honda Motor Co. Ltd.

97,400

3,324,564

Ibiden Co. Ltd.

180,500

6,562,709

Japan Steel Works Ltd.

783,000

15,230,019

Konica Minolta Holdings, Inc.

368,000

6,215,080

Matsui Securities Co. Ltd. (d)

659,000

3,960,269

Mitsubishi Corp.

254,100

8,377,054

Mitsubishi Electric Corp.

287,000

3,095,323

Mitsubishi Estate Co. Ltd.

344,000

7,873,781

Mitsubishi UFJ Financial Group, Inc.

2,404,800

21,256,290

Mitsui & Co. Ltd.

384,000

8,481,891

Mizuho Financial Group, Inc.

2,247

10,497,923

Murata Manufacturing Co. Ltd.

58,900

2,773,984

Nafco Co. Ltd.

147,900

2,298,639

NGK Insulators Ltd.

585,000

11,378,750

Nidec Corp.

86,400

5,753,761

Nikon Corp.

275,000

8,029,953

Nomura Holdings, Inc.

1,323,200

19,598,127

Nomura Holdings, Inc. sponsored ADR

303,100

4,470,725

NSK Ltd.

1,575,000

13,782,084

NTT DoCoMo, Inc.

4,310

6,322,840

ORIX Corp.

17,270

2,470,977

Point, Inc.

125,450

3,592,220

Rakuten, Inc.

15,243

7,695,802

Ricoh Co. Ltd.

528,000

9,529,016

Sharp Corp.

261,000

4,250,638

Sony Corp.

98,600

4,322,814

Sony Corp. sponsored ADR

214,100

9,364,734

Sumitomo Metal Industries Ltd.

975,000

4,288,843

Sumitomo Mitsui Financial Group, Inc.

6,003

45,178,702

Sumitomo Trust & Banking Co. Ltd.

1,477,000

10,322,931

T&D Holdings, Inc.

291,400

17,923,440

Tokai Carbon Co. Ltd.

259,000

2,637,206

Tokyo Electric Power Co.

115,000

2,957,189

Tokyo Electron Ltd.

47,500

2,738,191

Toyo Tanso Co. Ltd. (d)

29,800

1,917,148

Toyota Motor Corp.

370,900

17,511,265

USS Co. Ltd.

128,860

8,508,535

TOTAL JAPAN

369,112,852

Common Stocks - continued

Shares

Value

Korea (South) - 0.3%

Doosan Heavy Industries & Construction Co. Ltd.

100,250

$ 9,483,754

Luxembourg - 1.5%

ArcelorMittal SA:

(France)

147,900

14,534,820

(NY Shares) Class A

112,800

11,175,096

Evraz Group SA GDR

54,900

6,395,850

SES SA (A Shares) FDR unit

442,747

11,061,542

TOTAL LUXEMBOURG

43,167,308

Malaysia - 0.1%

Gamuda Bhd

5,333,900

3,819,840

Mexico - 0.1%

America Movil SAB de CV Series L sponsored ADR

67,600

3,565,900

Netherlands - 1.2%

Advanced Metallurgical Group NV

40,500

3,427,729

ASML Holding NV (NY Shares)

113,200

2,762,080

ING Groep NV (Certificaten Van Aandelen)

125,724

3,975,092

Koninklijke KPN NV

919,900

15,727,336

Unilever NV (NY Shares)

336,700

9,562,280

TOTAL NETHERLANDS

35,454,517

Norway - 1.8%

Acta Holding ASA (d)

787,000

895,586

Lighthouse Caledonia ASA

60,299

70,922

Marine Harvest ASA (a)

7,094,000

5,195,808

Orkla ASA (A Shares)

651,150

8,342,997

Petroleum Geo-Services ASA

645,800

15,813,756

Pronova BioPharma ASA

586,838

2,000,866

ProSafe ASA

274,300

2,715,545

StatoilHydro ASA

320,900

11,971,997

StatoilHydro ASA sponsored ADR

163,600

6,115,368

TOTAL NORWAY

53,122,845

Panama - 0.1%

McDermott International, Inc. (a)

63,300

3,917,637

Russia - 0.9%

Mobile TeleSystems OJSC sponsored ADR

111,900

8,572,659

OAO Gazprom sponsored ADR

140,000

8,120,000

Vimpel Communications sponsored ADR

276,200

8,197,616

TOTAL RUSSIA

24,890,275

South Africa - 0.7%

Exxaro Resources Ltd.

540,500

9,969,765

Impala Platinum Holdings Ltd.

229,100

9,039,726

TOTAL SOUTH AFRICA

19,009,491

Spain - 2.2%

Banco Santander SA

469,300

8,561,940

Repsol YPF SA sponsored ADR

183,600

7,209,972

 

Shares

Value

Telefonica SA

1,417,480

$ 37,511,805

Telefonica SA sponsored ADR

111,200

8,849,296

TOTAL SPAIN

62,133,013

Sweden - 0.6%

Swedish Match Co.

627,600

12,790,152

Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR (d)

306,400

3,186,560

TOTAL SWEDEN

15,976,712

Switzerland - 4.7%

Compagnie Financiere Richemont unit

218,644

12,135,008

Credit Suisse Group sponsored ADR

62,400

2,827,344

Credit Suisse Group (Reg.)

122,288

5,566,728

EFG International

148,600

4,044,532

Julius Baer Holding AG

114,046

7,649,013

Nestle SA (Reg.)

756,840

34,110,086

Novartis AG sponsored ADR

101,800

5,603,072

Roche Holding AG (participation certificate)

35,466

6,376,429

SGS Societe Generale de Surveillance Holding SA (Reg.)

18,982

27,071,912

Sonova Holding AG

92,538

7,637,908

Swisscom AG (Reg.)

30,718

10,232,055

UBS AG:

(For. Reg.)

275,307

5,737,475

(NY Shares)

201,943

4,172,142

Zurich Financial Services AG (Reg.)

10,571

2,694,333

TOTAL SWITZERLAND

135,858,037

Thailand - 0.1%

Total Access Communication PCL:

unit

1,175,700

1,776,301

(For. Reg.)

1,779,300

2,688,247

TOTAL THAILAND

4,464,548

United Kingdom - 26.6%

Anglo American PLC:

ADR

354,534

12,568,230

(United Kingdom)

317,408

22,292,912

Barclays PLC

355,800

2,018,636

Barclays PLC rights 7/17/08 (a)

355,800

14,427

BG Group PLC

1,523,200

39,584,400

BHP Billiton PLC

797,195

30,572,670

BlueBay Asset Management (d)

484,200

2,151,726

BP PLC

3,602,306

41,753,155

British American Tobacco PLC

402,800

13,894,221

Cadbury PLC ADR

89,408

4,499,011

Centrica PLC

2,597,000

15,972,937

Climate Exchange PLC (a)

110,500

4,184,524

Compass Group PLC

1,771,300

13,323,706

Diageo PLC

1,382,900

25,336,542

DSG International PLC

3,010,000

2,651,153

GlaxoSmithKline PLC

1,214,900

26,856,503

GlaxoSmithKline PLC sponsored ADR

35,900

1,587,498

Common Stocks - continued

Shares

Value

United Kingdom - continued

Gottex Fund Management Holdings Ltd.

73,770

$ 2,133,121

Hammerson PLC

289,300

5,124,226

HBOS PLC

529,400

2,898,386

HBOS PLC rights 7/18/08 (a)

211,760

45,116

HSBC Holdings PLC:

(Hong Kong) (Reg.)

382,000

5,888,082

(United Kingdom) (Reg.)

1,150,426

17,713,857

sponsored ADR

110,800

8,498,360

Icap PLC

536,400

5,745,553

Informa PLC

571,800

4,685,284

International Power PLC

1,803,200

15,447,576

Intertek Group PLC

413,400

8,097,517

Jardine Lloyd Thompson Group PLC

2,703,273

20,251,583

Lloyds TSB Group PLC

548,500

3,365,213

Man Group PLC

5,088,625

62,861,906

Misys PLC

759,700

2,248,040

NDS Group PLC sponsored ADR (a)

63,200

3,741,440

New Star Asset Management Group PLC

770,200

1,555,063

Prudential PLC

1,867,700

19,700,166

QinetiQ Group PLC

1,705,000

6,978,943

Reed Elsevier PLC

2,257,014

25,719,988

Rio Tinto PLC:

(Reg.)

145,506

17,522,983

sponsored ADR

21,500

10,642,500

Royal Bank of Scotland Group PLC

3,869,375

16,472,570

Royal Dutch Shell PLC:

Class A (United Kingdom)

665,900

27,296,433

Class A sponsored ADR

308,600

25,215,706

Class B

153,800

6,158,676

Scottish & Southern Energy PLC

553,200

15,413,801

Shanks Group PLC

2,572,200

11,929,009

Signet Group PLC

7,353,100

7,255,362

Smith & Nephew PLC sponsored ADR

75,000

4,106,250

SSL International PLC

472,100

4,186,910

Standard Chartered PLC (United Kingdom)

94,500

2,676,208

Taylor Nelson Sofres PLC

5,050,400

23,291,597

Tesco PLC

3,870,100

28,307,306

Vodafone Group PLC

15,586,462

45,922,922

Vodafone Group PLC sponsored ADR

255,800

7,535,868

William Morrison Supermarkets PLC

3,097,500

16,329,061

Xstrata PLC

140,400

11,184,403

TOTAL UNITED KINGDOM

763,409,236

 

Shares

Value

United States of America - 3.3%

Apple, Inc. (a)

42,000

$ 7,032,480

Becton, Dickinson & Co.

54,700

4,447,110

Calgon Carbon Corp. (a)(d)

1,353,417

20,923,827

Copart, Inc. (a)

105,500

4,517,510

Dr Pepper Snapple Group, Inc. (a)

67,056

1,406,835

Estee Lauder Companies, Inc. Class A (d)

600,300

27,883,935

Fuel Tech, Inc. (a)(d)

271,800

4,789,116

Hypercom Corp. (a)

171,800

755,920

Monsanto Co.

38,800

4,905,872

Stryker Corp.

92,200

5,797,536

Sunpower Corp. Class A (a)(d)

90,300

6,499,794

Visa, Inc.

81,200

6,602,372

TOTAL UNITED STATES OF AMERICA

95,562,307

TOTAL COMMON STOCKS

(Cost $2,540,143,053)

2,856,191,940

Money Market Funds - 7.2%

 

 

 

 

Fidelity Cash Central Fund, 2.38% (b)

15,959,095

15,959,095

Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c)

189,087,782

189,087,782

TOTAL MONEY MARKET FUNDS

(Cost $205,046,877)

205,046,877

TOTAL INVESTMENT PORTFOLIO - 106.6%

(Cost $2,745,189,930)

3,061,238,817

NET OTHER ASSETS - (6.6)%

(188,439,094)

NET ASSETS - 100%

$ 2,872,799,723

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request.

(c) Investment made with cash collateral received from securities on loan.

(d) Security or a portion of the security is on loan at period end.

Affiliated Central Funds

Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:

Fund

Income earned

Fidelity Cash Central Fund

$ 1,480,349

Fidelity Securities Lending Cash Central Fund

3,185,393

Total

$ 4,665,742

Other Information

The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

#Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities

$ 3,061,238,817

$ 1,148,318,080

$ 1,912,920,737

$ -

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2008 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $181,563,989) - See accompanying schedule:

Unaffiliated issuers (cost $2,540,143,053)

$ 2,856,191,940

 

Fidelity Central Funds (cost $205,046,877)

205,046,877

 

Total Investments (cost $2,745,189,930)

 

$ 3,061,238,817

Cash

356,151

Foreign currency held at value (cost $8)

8

Receivable for fund shares sold

882,886

Dividends receivable

8,964,910

Distributions receivable from Fidelity Central Funds

426,869

Prepaid expenses

5,316

Other receivables

379,820

Total assets

3,072,254,777

 

 

 

Liabilities

Payable for investments purchased

$ 1,853,627

Payable for fund shares redeemed

5,145,177

Accrued management fee

1,771,221

Distribution fees payable

207,842

Other affiliated payables

291,920

Other payables and accrued expenses

1,097,485

Collateral on securities loaned, at value

189,087,782

Total liabilities

199,455,054

 

 

 

Net Assets

$ 2,872,799,723

Net Assets consist of:

 

Paid in capital

$ 2,428,079,953

Undistributed net investment income

50,381,070

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

78,218,634

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

316,120,066

Net Assets

$ 2,872,799,723

Statement of Assets and Liabilities - continued

 

June 30, 2008 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($1,231,326,194 ÷ 60,932,192 shares)

$ 20.21

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($296,829,829 ÷ 14,760,225 shares)

$ 20.11

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($708,971,802 ÷ 35,451,968 shares)

$ 20.00

 

 

 

Initial Class R:
Net Asset Value, offering price and redemption price per share ($225,924,482 ÷ 11,204,213 shares)

$ 20.16

 

 

 

Service Class R:
Net Asset Value, offering price and redemption price per share ($113,990,593 ÷ 5,676,775 shares)

$ 20.08

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($80,789,752 ÷ 4,070,700 shares)

$ 19.85

 

 

 

Investor Class R:
Net Asset Value, offering price and redemption price per share ($214,967,071 ÷ 10,670,172 shares)

$ 20.15

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

Six months ended June 30, 2008 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 66,839,951

Interest

 

13,113

Income from Fidelity Central Funds

 

4,665,742

 

 

71,518,806

Less foreign taxes withheld

 

(6,390,616)

Total income

 

65,128,190

 

 

 

Expenses

Management fee

$ 11,312,778

Transfer agent fees

1,182,637

Distribution fees

1,268,535

Accounting and security lending fees

705,996

Custodian fees and expenses

313,043

Independent trustees' compensation

6,848

Audit

34,401

Legal

5,231

Interest

9,994

Miscellaneous

299,973

Total expenses before reductions

15,139,436

Expense reductions

(347,302)

14,792,134

Net investment income (loss)

50,336,056

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers (net of foreign taxes of $617,988)

88,037,134

Foreign currency transactions

161,578

Total net realized gain (loss)

 

88,198,712

Change in net unrealized appreciation (depreciation) on:

Investment securities (net of decrease in deferred foreign taxes of $124,985)

(503,427,086)

Assets and liabilities in foreign currencies

72,648

Total change in net unrealized appreciation (depreciation)

 

(503,354,438)

Net gain (loss)

(415,155,726)

Net increase (decrease) in net assets resulting from operations

$ (364,819,670)

Statement of Changes in Net Assets

 

Six months ended
June 30, 2008
(Unaudited)

Year ended
December 31,
2007

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 50,336,056

$ 61,989,857

Net realized gain (loss)

88,198,712

352,592,480

Change in net unrealized appreciation (depreciation)

(503,354,438)

134,088,793

Net increase (decrease) in net assets resulting from operations

(364,819,670)

548,671,130

Distributions to shareholders from net investment income

-

(111,357,133)

Distributions to shareholders from net realized gain

(348,490,470)

(225,173,068)

Total distributions

(348,490,470)

(336,530,201)

Share transactions - net increase (decrease)

(41,302,848)

159,355,663

Redemption fees

41,761

118,790

Total increase (decrease) in net assets

(754,571,227)

371,615,382

 

 

 

Net Assets

Beginning of period

3,627,370,950

3,255,755,568

End of period (including undistributed net investment income of $50,381,070 and undistributed net investment income of $45,014, respectively)

$ 2,872,799,723

$ 3,627,370,950

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 25.33

$ 23.96

$ 20.60

$ 17.51

$ 15.59

$ 10.98

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .35

.45

.38

.20

.13

.11

Net realized and unrealized gain (loss)

  (3.01)

3.42

3.30

3.10

1.97

4.60

Total from investment operations

  (2.66)

3.87

3.68

3.30

2.10

4.71

Distributions from net investment income

  -

(.84)

(.19)

(.12)

(.18)

(.10)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.50)

(.32)

(.21)

(.18)

(.10)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 20.21

$ 25.33

$ 23.96

$ 20.60

$ 17.51

$ 15.59

Total Return B, C, D

  (10.50)%

17.41%

18.09%

19.06%

13.57%

43.37%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .86% A

.85%

.88%

.89%

.91%

.90%

Expenses net of fee waivers, if any

  .86% A

.85%

.88%

.89%

.91%

.90%

Expenses net of all reductions

  .84% A

.82%

.81%

.82%

.87%

.86%

Net investment income (loss)

  3.23% A

1.85%

1.76%

1.11%

.80%

.87%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 1,231,326

$ 1,702,235

$ 1,624,901

$ 1,549,179

$ 1,491,485

$ 1,436,137

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

Financial Highlights - Service Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 25.23

$ 23.86

$ 20.52

$ 17.44

$ 15.53

$ 10.94

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .33

.43

.36

.18

.11

.09

Net realized and unrealized gain (loss)

  (2.99)

3.39

3.28

3.09

1.97

4.59

Total from investment operations

  (2.66)

3.82

3.64

3.27

2.08

4.68

Distributions from net investment income

  -

(.79)

(.17)

(.10)

(.17)

(.09)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.45)

(.30)

(.19)

(.17)

(.09)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 20.11

$ 25.23

$ 23.86

$ 20.52

$ 17.44

$ 15.53

Total Return B, C, D

  (10.55)%

17.25%

17.95%

18.97%

13.49%

43.20%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .96% A

.95%

.98%

.99%

1.01%

1.00%

Expenses net of fee waivers, if any

  .96% A

.95%

.98%

.99%

1.01%

1.00%

Expenses net of all reductions

  .94% A

.92%

.91%

.92%

.97%

.96%

Net investment income (loss)

  3.13% A

1.75%

1.66%

1.02%

.69%

.77%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 296,830

$ 366,777

$ 362,060

$ 329,759

$ 322,649

$ 246,632

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 25.12

$ 23.75

$ 20.43

$ 17.39

$ 15.50

$ 10.90

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .32

.39

.33

.14

.08

.08

Net realized and unrealized gain (loss)

  (2.98)

3.37

3.27

3.08

1.97

4.58

Total from investment operations

  (2.66)

3.76

3.60

3.22

2.05

4.66

Distributions from net investment income

  -

(.73)

(.15)

(.09)

(.16)

(.06)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.39)

(.28)

(.18)

(.16)

(.06)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 20.00

$ 25.12

$ 23.75

$ 20.43

$ 17.39

$ 15.50

Total Return B, C, D

  (10.60)%

17.05%

17.83%

18.72%

13.31%

43.04%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  1.11% A

1.10%

1.13%

1.14%

1.16%

1.16%

Expenses net of fee waivers, if any

  1.11% A

1.10%

1.13%

1.14%

1.16%

1.16%

Expenses net of all reductions

  1.09% A

1.07%

1.06%

1.07%

1.12%

1.12%

Net investment income (loss)

  2.98% A

1.60%

1.51%

.79%

.54%

.61%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 708,972

$ 821,943

$ 703,421

$ 502,801

$ 319,708

$ 140,822

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

Financial Highlights - Initial Class R

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 25.28

$ 23.92

$ 20.57

$ 17.49

$ 15.57

$ 10.98

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .35

.45

.38

.19

.12

.11

Net realized and unrealized gain (loss)

  (3.01)

3.41

3.29

3.10

1.98

4.59

Total from investment operations

  (2.66)

3.86

3.67

3.29

2.10

4.70

Distributions from net investment income

  -

(.84)

(.19)

(.12)

(.18)

(.11)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.50)

(.32)

(.21)

(.18)

(.11)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 20.16

$ 25.28

$ 23.92

$ 20.57

$ 17.49

$ 15.57

Total Return B, C, D

  (10.53)%

17.40%

18.08%

19.05%

13.59%

43.32%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .86% A

.85%

.88%

.89%

.91%

.90%

Expenses net of fee waivers, if any

  .86% A

.85%

.88%

.89%

.91%

.90%

Expenses net of all reductions

  .84% A

.82%

.81%

.82%

.87%

.86%

Net investment income (loss)

  3.23% A

1.85%

1.76%

1.08%

.79%

.87%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 225,924

$ 275,678

$ 240,693

$ 184,245

$ 132,064

$ 39,466

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Service Class R

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 25.19

$ 23.83

$ 20.50

$ 17.43

$ 15.52

$ 10.94

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .33

.43

.36

.17

.11

.10

Net realized and unrealized gain (loss)

  (2.98)

3.38

3.27

3.09

1.97

4.58

Total from investment operations

  (2.65)

3.81

3.63

3.26

2.08

4.68

Distributions from net investment income

  -

(.79)

(.17)

(.10)

(.17)

(.10)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.45)

(.30)

(.19)

(.17)

(.10)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 20.08

$ 25.19

$ 23.83

$ 20.50

$ 17.43

$ 15.52

Total Return B, C, D

  (10.52)%

17.23%

17.95%

18.92%

13.50%

43.25%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .96% A

.94%

.98%

.99%

1.01%

1.00%

Expenses net of fee waivers, if any

  .96% A

.94%

.98%

.99%

1.01%

1.00%

Expenses net of all reductions

  .94% A

.92%

.91%

.92%

.96%

.96%

Net investment income (loss)

  3.13% A

1.75%

1.66%

.96%

.70%

.77%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 113,991

$ 135,038

$ 133,934

$ 115,449

$ 86,509

$ 56,141

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

Financial Highlights - Service Class 2R

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 24.95

$ 23.61

$ 20.32

$ 17.30

$ 15.42

$ 10.90

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .31

.39

.32

.14

.08

.08

Net realized and unrealized gain (loss)

  (2.95)

3.35

3.26

3.07

1.96

4.55

Total from investment operations

  (2.64)

3.74

3.58

3.21

2.04

4.63

Distributions from net investment income

  -

(.74)

(.16)

(.10)

(.16)

(.11)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.40)

(.29)

(.19)

(.16)

(.11)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.85

$ 24.95

$ 23.61

$ 20.32

$ 17.30

$ 15.42

Total Return B, C, D

  (10.59)%

17.06%

17.81%

18.74%

13.32%

43.00%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  1.11% A

1.09%

1.13%

1.14%

1.16%

1.15%

Expenses net of fee waivers, if any

  1.11% A

1.09%

1.13%

1.14%

1.16%

1.15%

Expenses net of all reductions

  1.09% A

1.07%

1.06%

1.07%

1.11%

1.11%

Net investment income (loss)

  2.98% A

1.60%

1.51%

.77%

.55%

.62%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 80,790

$ 95,871

$ 68,729

$ 49,373

$ 27,562

$ 7,072

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Investor Class R

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005 H

Selected Per-Share Data

 

 

 

 

Net asset value, beginning of period

$ 25.27

$ 23.91

$ 20.59

$ 17.69

Income from Investment Operations

 

 

 

 

Net investment income (loss) E

  .34

.42

.36

.02

Net realized and unrealized gain (loss)

  (3.00)

3.41

3.29

2.88

Total from investment operations

  (2.66)

3.83

3.65

2.90

Distributions from net investment income

  -

(.81)

(.20)

-

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

-

Total distributions

  (2.46)

(2.47)

(.33)

-

Redemption fees added to paid in capital E, J

  -

-

-

-

Net asset value, end of period

$ 20.15

$ 25.27

$ 23.91

$ 20.59

Total Return B, C, D

  (10.53)%

17.25%

17.94%

16.39%

Ratios to Average Net Assets F, I

 

 

 

 

Expenses before reductions

  .95% A

.96%

1.01%

1.07% A

Expenses net of fee waivers, if any

  .95% A

.96%

1.01%

1.07% A

Expenses net of all reductions

  .93% A

.94%

.93%

1.00% A

Net investment income (loss)

  3.14% A

1.74%

1.64%

.23% A

Supplemental Data

 

 

 

 

Net assets, end of period (000 omitted)

$ 214,967

$ 229,829

$ 122,018

$ 29,544

Portfolio turnover rate G

  72% A

62%

123%

92%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2008 (Unaudited)

1. Organization.

VIP Overseas Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Initial Class R shares, Service Class R shares, Service Class 2R shares, and Investor Class R shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.

2. Investments in Fidelity Central Funds.

The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.

When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:

Level 1

Quoted prices in active markets for identical securities.

Level 2

Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level 3

Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

Semiannual Report

3. Significant Accounting Policies. - continued

Security Valuation - continued

Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.

The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.

Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), deferred trustees compensation and losses deferred due to wash sales.

The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:

Unrealized appreciation

$ 550,219,358

Unrealized depreciation

(241,148,633)

Net unrealized appreciation (depreciation)

$ 309,070,725

Cost for federal income tax purposes

$ 2,752,168,092

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.

4. Operating Policies.

Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $1,128,009,914 and $1,344,611,363, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .71% of the Fund's average net assets.

Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' and Service Class R's average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.

For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:

Service Class

$ 162,191

Service Class 2

936,560

Service Class R

60,711

Service Class 2R

109,073

 

$ 1,268,535

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class with the exception of Investor Class R pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class R pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class R paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class

$ 497,077

Service Class

109,907

Service Class 2

252,329

Initial Class R

81,770

Service Class R

40,106

Service Class 2R

28,822

Investor Class R

172,626

 

$ 1,182,637

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $381 for the period.

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:

Borrower or Lender

Average Daily
Loan Balance

Weighted Average Interest Rate

Interest
Expense

Borrower

$ 10,743,533

2.23%

$ 9,994

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $3,364 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $3,185,393.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $346,142 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,160.

10. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

At the end of the period, FMR or its affiliates were the owners of record of 17% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 37% of the total outstanding shares of the Fund.

In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Other - continued

In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $27,232, which is recorded in the accompanying Statement of Operations.

In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.

11. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2008

Year ended
December 31,
2007

From net investment income

 

 

Initial Class

$ -

$ 55,739,563

Service Class

-

11,576,654

Service Class 2

-

22,633,556

Initial Class R

-

8,762,292

Service Class R

-

4,244,546

Service Class 2R

-

2,489,770

Investor Class R

-

5,910,752

Total

$ -

$ 111,357,133

 

From net realized gain

 

 

Initial Class

$ 163,022,999

$ 111,097,557

Service Class

34,891,161

25,082,728

Service Class 2

79,417,694

49,162,218

Initial Class R

26,045,726

16,729,732

Service Class R

12,931,868

9,169,613

Service Class 2R

9,495,528

4,853,334

Investor Class R

22,685,494

9,077,886

Total

$ 348,490,470

$ 225,173,068

12. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30,
2008

Year ended
December 31,
2007

Six months ended
June 30,
2008

Year ended
December 31,
2007

Initial Class

 

 

 

 

Shares sold

3,010,669

8,581,542

$ 65,052,508

$ 209,859,014

Reinvestment of distributions

8,066,452

7,280,031

163,022,999

166,837,120

Shares redeemed

(17,358,827)

(16,452,957)

(371,867,409)

(401,808,271)

Net increase (decrease)

(6,281,706)

(591,384)

$ (143,791,902)

$ (25,112,137)

Service Class

 

 

 

 

Shares sold

614,372

1,382,854

$ 13,143,095

$ 33,724,214

Reinvestment of distributions

1,734,153

1,608,100

34,891,161

36,659,382

Shares redeemed

(2,127,027)

(3,627,586)

(45,581,308)

(88,845,433)

Net increase (decrease)

221,498

(636,632)

$ 2,452,948

$ (18,461,837)

Service Class 2

 

 

 

 

Shares sold

2,746,903

4,978,892

$ 57,818,849

$ 121,295,683

Reinvestment of distributions

3,966,918

3,159,253

79,417,694

71,795,774

Shares redeemed

(3,983,225)

(5,039,553)

(84,949,748)

(122,533,831)

Net increase (decrease)

2,730,596

3,098,592

$ 52,286,795

$ 70,557,626

Semiannual Report

12. Share Transactions. - continued

 

Shares

Dollars

Six months ended
June 30,
2008

Year ended
December 31,
2007

Six months ended
June 30,
2008

Year ended
December 31,
2007

Initial Class R

 

 

 

 

Shares sold

393,440

1,573,581

$ 8,505,191

$ 38,800,759

Reinvestment of distributions

1,291,310

1,112,826

26,045,726

25,492,024

Shares redeemed

(1,387,260)

(1,840,544)

(29,696,863)

(44,022,123)

Net increase (decrease)

297,490

845,863

$ 4,854,054

$ 20,270,660

Service Class R

 

 

 

 

Shares sold

347,452

794,023

$ 7,316,088

$ 19,027,863

Reinvestment of distributions

643,697

589,118

12,931,868

13,414,159

Shares redeemed

(674,330)

(1,643,900)

(14,373,183)

(39,376,291)

Net increase (decrease)

316,819

(260,759)

$ 5,874,773

$ (6,934,269)

Service Class 2R

 

 

 

 

Shares sold

453,302

1,154,726

$ 9,521,978

$ 28,069,168

Reinvestment of distributions

477,883

324,060

9,495,528

7,343,104

Shares redeemed

(703,065)

(547,588)

(14,463,758)

(13,063,580)

Net increase (decrease)

228,120

931,198

$ 4,553,748

$ 22,348,692

Investor Class R

 

 

 

 

Shares sold

1,025,868

3,876,633

$ 22,122,615

$ 95,023,834

Reinvestment of distributions

1,125,273

648,994

22,685,494

14,988,638

Shares redeemed

(577,169)

(532,623)

(12,341,373)

(13,325,544)

Net increase (decrease)

1,573,972

3,993,004

$ 32,466,736

$ 96,686,928

Semiannual Report

Proxy Voting Results

A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.

PROPOSAL 1

To elect a Board of Trustees.A

 

# of
Votes

% of
Votes

James C. Curvey

Affirmative

821,220,039.81

95.845

Withheld

35,598,080.64

4.155

TOTAL

856,818,120.45

100.000

Dennis J. Dirks

Affirmative

822,124,493.63

95.951

Withheld

34,693,626.82

4.049

TOTAL

856,818,120.45

100.000

Edward C. Johnson 3d

Affirmative

820,473,313.05

95.758

Withheld

36,344,807.40

4.242

TOTAL

856,818,120.45

100.000

Alan J. Lacy

Affirmative

822,170,402.95

95.956

Withheld

34,647,717.50

4.044

TOTAL

856,818,120.45

100.000

Ned C. Lautenbach

Affirmative

821,435,006.18

95.870

Withheld

35,383,114.27

4.130

TOTAL

856,818,120.45

100.000

Joseph Mauriello

Affirmative

822,174,756.53

95.957

Withheld

34,643,363.92

4.043

TOTAL

856,818,120.45

100.000

Cornelia M. Small

Affirmative

822,263,792.20

95.967

Withheld

34,554,328.25

4.033

TOTAL

856,818,120.45

100.000

William S. Stavropoulos

Affirmative

821,014,987.67

95.821

Withheld

35,803,132.78

4.179

TOTAL

856,818,120.45

100.000

David M. Thomas

Affirmative

822,321,743.26

95.974

Withheld

34,496,377.19

4.026

TOTAL

856,818,120.45

100.000

Michael E. Wiley

Affirmative

822,218,346.41

95.962

Withheld

34,599,774.04

4.038

TOTAL

856,818,120.45

100.000

PROPOSAL 2

To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A

 

# of
Votes

% of
Votes

Affirmative

701,273,514.99

81.846

Against

103,131,328.05

12.037

Abstain

52,413,277.41

6.117

TOTAL

856,818,120.45

100.000

A Denotes trust-wide proposal and voting results.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research (U.K.) Inc.

Fidelity Research & Analysis Company

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

Fidelity Investments Japan Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

JPMorgan Chase Bank
New York, NY 

VIPOVRS-SANN-0808
1.705696.110

Fidelity® Variable Insurance Products:

Overseas Portfolio - Class R

Semiannual Report

June 30, 2008
(2_fidelity_logos) (Registered_Trademark)

Contents

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their
market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

Proxy Voting Results

<Click Here>

 

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting guidelines") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

Beginning
Account Value
January 1, 2008

Ending
Account Value
June 30, 2008

Expenses Paid
During Period*
January 1, 2008 to June 30, 2008

Initial Class

 

 

 

Actual

$ 1,000.00

$ 895.00

$ 4.05

HypotheticalA

$ 1,000.00

$ 1,020.59

$ 4.32

Service Class

 

 

 

Actual

$ 1,000.00

$ 894.50

$ 4.52

HypotheticalA

$ 1,000.00

$ 1,020.09

$ 4.82

Service Class 2

 

 

 

Actual

$ 1,000.00

$ 894.00

$ 5.23

HypotheticalA

$ 1,000.00

$ 1,019.34

$ 5.57

Initial Class R

 

 

 

Actual

$ 1,000.00

$ 894.70

$ 4.05

HypotheticalA

$ 1,000.00

$ 1,020.59

$ 4.32

Service Class R

 

 

 

Actual

$ 1,000.00

$ 894.80

$ 4.52

HypotheticalA

$ 1,000.00

$ 1,020.09

$ 4.82

Service Class 2R

 

 

 

Actual

$ 1,000.00

$ 894.10

$ 5.23

HypotheticalA

$ 1,000.00

$ 1,019.34

$ 5.57

Investor Class R

 

 

 

Actual

$ 1,000.00

$ 894.70

$ 4.48

HypotheticalA

$ 1,000.00

$ 1,020.14

$ 4.77

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

Semiannual Report

Investments

Shareholder Expense Example - continued

 

Annualized
Expense Ratio

Initial Class

.86%

Service Class

.96%

Service Class 2

1.11%

Initial Class R

.86%

Service Class R

.96%

Service Class 2R

1.11%

Investor Class R

.95%

Semiannual Report

Investment Changes (Unaudited)

Geographic Diversification (% of fund's net assets)

As of June 30, 2008

fid148

United Kingdom

26.6%

 

fid150

Japan

12.8%

 

fid152

France

12.2%

 

fid154

Germany

7.9%

 

fid156

Australia

6.0%

 

fid158

Switzerland

4.7%

 

fid160

Italy

4.0%

 

fid162

United States of America

3.9%

 

fid164

Denmark

2.3%

 

fid166

Other

19.6%

 

fid198

Percentages are adjusted for the effect of futures contracts, if applicable.

As of December 31, 2007

fid148

United Kingdom

21.4%

 

fid150

France

14.8%

 

fid152

Germany

11.4%

 

fid154

Japan

11.4%

 

fid156

Switzerland

6.5%

 

fid158

Australia

5.9%

 

fid160

United States of America

5.9%

 

fid162

Italy

3.6%

 

fid164

Norway

2.3%

 

fid166

Other

16.8%

 

fid210

Percentages are adjusted for the effect of futures contracts, if applicable.

Asset Allocation

 

% of fund's
net assets

% of fund's net assets
6 months ago

Stocks

99.4

96.2

Short-Term Investments and Net Other Assets

0.6

3.8

Top Ten Stocks as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Alstom SA (France, Electrical Equipment)

3.8

3.1

Man Group PLC (United Kingdom, Capital Markets)

2.2

1.7

CSL Ltd. (Australia, Biotechnology)

2.0

1.6

Vodafone Group PLC (United Kingdom, Wireless Telecommunication Services)

1.9

1.7

Royal Dutch Shell PLC Class A (United Kingdom, Oil, Gas & Consumable Fuels)

1.8

1.8

E.On AG (Germany, Electric Utilities)

1.6

1.7

Telefonica SA (Spain, Diversified Telecommunication Services)

1.6

1.5

Sumitomo Mitsui Financial Group, Inc. (Japan, Commercial Banks)

1.6

1.1

BP PLC (United Kingdom, Oil, Gas & Consumable Fuels)

1.4

1.5

BG Group PLC (United Kingdom, Oil, Gas & Consumable Fuels)

1.4

1.0

 

19.3

Market Sectors as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

22.0

20.6

Industrials

13.0

18.3

Materials

11.3

7.4

Energy

10.9

8.7

Consumer Staples

10.4

9.1

Consumer Discretionary

8.3

8.3

Telecommunication Services

7.6

6.8

Health Care

6.0

4.6

Utilities

5.1

7.5

Information Technology

4.8

4.9

Semiannual Report

Investments June 30, 2008 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 99.4%

Shares

Value

Argentina - 0.2%

Cresud S.A.C.I.F. y A. sponsored ADR

430,600

$ 6,398,716

Australia - 6.0%

AMP Ltd.

859,100

5,510,300

Australian Wealth Management Ltd.

2,494,900

3,097,621

BHP Billiton Ltd.

900,617

38,334,519

Commonwealth Bank of Australia

367,933

14,170,199

Computershare Ltd.

1,203,606

10,627,946

CSL Ltd.

1,666,466

57,038,757

Energy Resources of Australia Ltd.

270,330

5,955,931

HFA Holdings Ltd.

1,251,777

1,392,164

Lion Nathan Ltd.

1,266,655

10,383,167

National Australia Bank Ltd.

173,073

4,397,244

Rio Tinto Ltd.

79,200

10,288,922

Seek Ltd.

593,800

2,846,529

Telstra Corp. Ltd.

2,084,657

8,474,339

TOTAL AUSTRALIA

172,517,638

Austria - 0.7%

Strabag SE

247,400

19,221,342

Belgium - 0.2%

Hamon & Compagnie International SA (a)

73,974

3,469,132

KBC Groupe SA

26,700

2,951,451

TOTAL BELGIUM

6,420,583

Bermuda - 0.5%

Aquarius Platinum Ltd. (United Kingdom)

547,000

8,716,180

Clear Media Ltd. (a)

249,000

217,153

Covidien Ltd.

125,700

6,019,773

TOTAL BERMUDA

14,953,106

Brazil - 1.7%

Banco do Brasil SA

324,800

5,285,699

Bolsa de Mercadorias & Futuros - BM&F SA

408,800

3,521,412

Gafisa SA sponsored ADR

107,100

3,681,027

MRV Engenharia e Participacoes SA

601,500

13,394,180

TIM Participacoes SA sponsored ADR (non-vtg.)

244,400

6,948,292

Uniao de Bancos Brasileiros SA (Unibanco) GDR

43,600

5,534,148

Vivo Participacoes SA (PN) sponsored ADR (d)

1,092,500

6,948,300

Votorantim Celulose e Papel SA sponsored ADR (non-vtg.)

96,100

2,566,831

TOTAL BRAZIL

47,879,889

British Virgin Islands - 0.0%

Indochina Capital Vietnam Holdings Ltd. (a)

192,800

964,000

Canada - 1.2%

Canadian Natural Resources Ltd.

39,900

3,947,139

Nexen, Inc.

115,200

4,595,117

Nortel Networks Corp. (a)

40,149

328,880

 

Shares

Value

OPTI Canada, Inc. (a)

156,100

$ 3,537,460

Petrobank Energy & Resources Ltd. (a)

86,200

4,498,788

Potash Corp. of Saskatchewan, Inc.

28,500

6,514,245

Suncor Energy, Inc.

68,800

3,995,644

Talisman Energy, Inc.

205,700

4,556,537

TimberWest Forest Corp.

175,300

2,364,620

TOTAL CANADA

34,338,430

China - 0.3%

Global Bio-Chem Technology Group Co. Ltd.

6,534,000

2,715,080

Home Inns & Hotels Management, Inc. sponsored ADR (a)(d)

259,817

4,939,121

TOTAL CHINA

7,654,201

Denmark - 2.3%

Carlsberg AS Series B (d)

155,725

15,000,951

Novo Nordisk AS Series B

224,400

14,772,368

Novozymes AS Series B (d)

105,600

9,506,840

Vestas Wind Systems AS (a)

199,400

25,961,274

TOTAL DENMARK

65,241,433

Finland - 1.5%

Fortum Oyj

216,800

10,973,430

Nokia Corp. sponsored ADR

684,700

16,775,150

Nokian Tyres Ltd.

299,912

14,225,405

TOTAL FINLAND

41,973,985

France - 12.2%

Alstom SA (d)

473,700

108,621,948

AXA SA

247,415

7,290,283

AXA SA sponsored ADR

168,900

4,969,038

BNP Paribas SA

288,302

25,952,028

Bouygues SA

181,900

12,001,160

Carrefour SA

244,200

13,764,998

CNP Assurances

64,600

7,283,424

Compagnie Generale de Geophysique SA (a)

154,000

7,270,808

France Telecom SA

110,361

3,236,557

Groupe Danone

182,700

12,784,249

Ingenico SA

319,400

11,152,305

L'Air Liquide SA

182,578

24,036,476

L'Oreal SA

134,295

14,566,453

Sanofi-Aventis sponsored ADR

85,100

2,827,873

Sodexho Alliance SA

206,500

13,509,136

Suez SA (France)

136,000

9,219,090

Total SA:

Series B

340,200

28,957,246

sponsored ADR

187,400

15,979,598

Unibail-Rodamco

67,800

15,642,256

Vilmorin & Cie

28,200

5,313,550

Vivendi

201,380

7,593,285

TOTAL FRANCE

351,971,761

Common Stocks - continued

Shares

Value

Germany - 7.9%

Allianz AG (Reg.)

90,400

$ 15,901,628

Bayer AG

72,000

6,057,945

Beiersdorf AG

239,400

17,575,642

Commerzbank AG

276,800

8,223,111

Daimler AG (Reg.)

82,200

5,098,516

Deutsche Bank AG

70,200

6,059,995

Deutsche Bank AG (NY Shares)

29,800

2,543,430

Deutsche Boerse AG

91,300

10,320,555

Deutsche Postbank AG

145,600

12,800,253

E.ON AG

231,144

46,585,669

Fresenius AG

132,100

11,437,705

GFK AG

111,269

4,984,389

K&S AG

21,100

12,148,517

MLP AG (d)

990,500

17,811,840

Q-Cells AG (a)(d)

90,100

9,127,219

RWE AG

170,300

21,501,356

SAP AG sponsored ADR (d)

158,100

8,238,591

Vossloh AG

73,300

9,541,866

TOTAL GERMANY

225,958,227

Hong Kong - 0.9%

China Unicom Ltd.

10,572,000

19,621,473

China Unicom Ltd. sponsored ADR

214,700

3,976,244

Dynasty Fine Wines Group Ltd.

7,224,000

1,269,278

TOTAL HONG KONG

24,866,995

India - 0.5%

Satyam Computer Services Ltd. sponsored ADR

301,200

7,385,424

Suzlon Energy Ltd.

1,400,000

7,042,395

TOTAL INDIA

14,427,819

Indonesia - 0.7%

PT Bumi Resources Tbk

9,391,000

8,346,625

PT Indosat Tbk sponsored ADR (d)

298,400

10,811,032

TOTAL INDONESIA

19,157,657

Ireland - 1.0%

C&C Group PLC

1,314,700

7,261,745

Irish Life & Permanent PLC

2,027,100

20,951,358

TOTAL IRELAND

28,213,103

Israel - 0.6%

Israel Chemicals Ltd.

271,700

6,337,879

Teva Pharmaceutical Industries Ltd. sponsored ADR

239,200

10,955,360

TOTAL ISRAEL

17,293,239

Italy - 4.0%

A2A SpA

1,154,100

4,214,676

Alleanza Assicurazioni SpA

948,700

10,261,716

Assicurazioni Generali SpA

376,200

14,377,758

Buzzi Unicem SpA

172,800

4,304,641

 

Shares

Value

Edison SpA

2,559,300

$ 5,682,525

ENI SpA

464,586

17,259,495

Finmeccanica SpA

625,900

16,356,895

Intesa Sanpaolo SpA

1,018,700

5,791,940

Mariella Burani Fashion Group SpA (d)

105,600

2,555,907

Saipem SpA

336,100

15,708,502

UniCredit SpA

2,840,000

17,277,489

TOTAL ITALY

113,791,544

Japan - 12.8%

ACOM Co. Ltd.

409,250

12,682,452

Aeon Co. Ltd.

528,100

6,521,350

Canon, Inc.

186,200

9,586,622

Canon, Inc. sponsored ADR

309,100

15,829,011

Honda Motor Co. Ltd.

97,400

3,324,564

Ibiden Co. Ltd.

180,500

6,562,709

Japan Steel Works Ltd.

783,000

15,230,019

Konica Minolta Holdings, Inc.

368,000

6,215,080

Matsui Securities Co. Ltd. (d)

659,000

3,960,269

Mitsubishi Corp.

254,100

8,377,054

Mitsubishi Electric Corp.

287,000

3,095,323

Mitsubishi Estate Co. Ltd.

344,000

7,873,781

Mitsubishi UFJ Financial Group, Inc.

2,404,800

21,256,290

Mitsui & Co. Ltd.

384,000

8,481,891

Mizuho Financial Group, Inc.

2,247

10,497,923

Murata Manufacturing Co. Ltd.

58,900

2,773,984

Nafco Co. Ltd.

147,900

2,298,639

NGK Insulators Ltd.

585,000

11,378,750

Nidec Corp.

86,400

5,753,761

Nikon Corp.

275,000

8,029,953

Nomura Holdings, Inc.

1,323,200

19,598,127

Nomura Holdings, Inc. sponsored ADR

303,100

4,470,725

NSK Ltd.

1,575,000

13,782,084

NTT DoCoMo, Inc.

4,310

6,322,840

ORIX Corp.

17,270

2,470,977

Point, Inc.

125,450

3,592,220

Rakuten, Inc.

15,243

7,695,802

Ricoh Co. Ltd.

528,000

9,529,016

Sharp Corp.

261,000

4,250,638

Sony Corp.

98,600

4,322,814

Sony Corp. sponsored ADR

214,100

9,364,734

Sumitomo Metal Industries Ltd.

975,000

4,288,843

Sumitomo Mitsui Financial Group, Inc.

6,003

45,178,702

Sumitomo Trust & Banking Co. Ltd.

1,477,000

10,322,931

T&D Holdings, Inc.

291,400

17,923,440

Tokai Carbon Co. Ltd.

259,000

2,637,206

Tokyo Electric Power Co.

115,000

2,957,189

Tokyo Electron Ltd.

47,500

2,738,191

Toyo Tanso Co. Ltd. (d)

29,800

1,917,148

Toyota Motor Corp.

370,900

17,511,265

USS Co. Ltd.

128,860

8,508,535

TOTAL JAPAN

369,112,852

Common Stocks - continued

Shares

Value

Korea (South) - 0.3%

Doosan Heavy Industries & Construction Co. Ltd.

100,250

$ 9,483,754

Luxembourg - 1.5%

ArcelorMittal SA:

(France)

147,900

14,534,820

(NY Shares) Class A

112,800

11,175,096

Evraz Group SA GDR

54,900

6,395,850

SES SA (A Shares) FDR unit

442,747

11,061,542

TOTAL LUXEMBOURG

43,167,308

Malaysia - 0.1%

Gamuda Bhd

5,333,900

3,819,840

Mexico - 0.1%

America Movil SAB de CV Series L sponsored ADR

67,600

3,565,900

Netherlands - 1.2%

Advanced Metallurgical Group NV

40,500

3,427,729

ASML Holding NV (NY Shares)

113,200

2,762,080

ING Groep NV (Certificaten Van Aandelen)

125,724

3,975,092

Koninklijke KPN NV

919,900

15,727,336

Unilever NV (NY Shares)

336,700

9,562,280

TOTAL NETHERLANDS

35,454,517

Norway - 1.8%

Acta Holding ASA (d)

787,000

895,586

Lighthouse Caledonia ASA

60,299

70,922

Marine Harvest ASA (a)

7,094,000

5,195,808

Orkla ASA (A Shares)

651,150

8,342,997

Petroleum Geo-Services ASA

645,800

15,813,756

Pronova BioPharma ASA

586,838

2,000,866

ProSafe ASA

274,300

2,715,545

StatoilHydro ASA

320,900

11,971,997

StatoilHydro ASA sponsored ADR

163,600

6,115,368

TOTAL NORWAY

53,122,845

Panama - 0.1%

McDermott International, Inc. (a)

63,300

3,917,637

Russia - 0.9%

Mobile TeleSystems OJSC sponsored ADR

111,900

8,572,659

OAO Gazprom sponsored ADR

140,000

8,120,000

Vimpel Communications sponsored ADR

276,200

8,197,616

TOTAL RUSSIA

24,890,275

South Africa - 0.7%

Exxaro Resources Ltd.

540,500

9,969,765

Impala Platinum Holdings Ltd.

229,100

9,039,726

TOTAL SOUTH AFRICA

19,009,491

Spain - 2.2%

Banco Santander SA

469,300

8,561,940

Repsol YPF SA sponsored ADR

183,600

7,209,972

 

Shares

Value

Telefonica SA

1,417,480

$ 37,511,805

Telefonica SA sponsored ADR

111,200

8,849,296

TOTAL SPAIN

62,133,013

Sweden - 0.6%

Swedish Match Co.

627,600

12,790,152

Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR (d)

306,400

3,186,560

TOTAL SWEDEN

15,976,712

Switzerland - 4.7%

Compagnie Financiere Richemont unit

218,644

12,135,008

Credit Suisse Group sponsored ADR

62,400

2,827,344

Credit Suisse Group (Reg.)

122,288

5,566,728

EFG International

148,600

4,044,532

Julius Baer Holding AG

114,046

7,649,013

Nestle SA (Reg.)

756,840

34,110,086

Novartis AG sponsored ADR

101,800

5,603,072

Roche Holding AG (participation certificate)

35,466

6,376,429

SGS Societe Generale de Surveillance Holding SA (Reg.)

18,982

27,071,912

Sonova Holding AG

92,538

7,637,908

Swisscom AG (Reg.)

30,718

10,232,055

UBS AG:

(For. Reg.)

275,307

5,737,475

(NY Shares)

201,943

4,172,142

Zurich Financial Services AG (Reg.)

10,571

2,694,333

TOTAL SWITZERLAND

135,858,037

Thailand - 0.1%

Total Access Communication PCL:

unit

1,175,700

1,776,301

(For. Reg.)

1,779,300

2,688,247

TOTAL THAILAND

4,464,548

United Kingdom - 26.6%

Anglo American PLC:

ADR

354,534

12,568,230

(United Kingdom)

317,408

22,292,912

Barclays PLC

355,800

2,018,636

Barclays PLC rights 7/17/08 (a)

355,800

14,427

BG Group PLC

1,523,200

39,584,400

BHP Billiton PLC

797,195

30,572,670

BlueBay Asset Management (d)

484,200

2,151,726

BP PLC

3,602,306

41,753,155

British American Tobacco PLC

402,800

13,894,221

Cadbury PLC ADR

89,408

4,499,011

Centrica PLC

2,597,000

15,972,937

Climate Exchange PLC (a)

110,500

4,184,524

Compass Group PLC

1,771,300

13,323,706

Diageo PLC

1,382,900

25,336,542

DSG International PLC

3,010,000

2,651,153

GlaxoSmithKline PLC

1,214,900

26,856,503

GlaxoSmithKline PLC sponsored ADR

35,900

1,587,498

Common Stocks - continued

Shares

Value

United Kingdom - continued

Gottex Fund Management Holdings Ltd.

73,770

$ 2,133,121

Hammerson PLC

289,300

5,124,226

HBOS PLC

529,400

2,898,386

HBOS PLC rights 7/18/08 (a)

211,760

45,116

HSBC Holdings PLC:

(Hong Kong) (Reg.)

382,000

5,888,082

(United Kingdom) (Reg.)

1,150,426

17,713,857

sponsored ADR

110,800

8,498,360

Icap PLC

536,400

5,745,553

Informa PLC

571,800

4,685,284

International Power PLC

1,803,200

15,447,576

Intertek Group PLC

413,400

8,097,517

Jardine Lloyd Thompson Group PLC

2,703,273

20,251,583

Lloyds TSB Group PLC

548,500

3,365,213

Man Group PLC

5,088,625

62,861,906

Misys PLC

759,700

2,248,040

NDS Group PLC sponsored ADR (a)

63,200

3,741,440

New Star Asset Management Group PLC

770,200

1,555,063

Prudential PLC

1,867,700

19,700,166

QinetiQ Group PLC

1,705,000

6,978,943

Reed Elsevier PLC

2,257,014

25,719,988

Rio Tinto PLC:

(Reg.)

145,506

17,522,983

sponsored ADR

21,500

10,642,500

Royal Bank of Scotland Group PLC

3,869,375

16,472,570

Royal Dutch Shell PLC:

Class A (United Kingdom)

665,900

27,296,433

Class A sponsored ADR

308,600

25,215,706

Class B

153,800

6,158,676

Scottish & Southern Energy PLC

553,200

15,413,801

Shanks Group PLC

2,572,200

11,929,009

Signet Group PLC

7,353,100

7,255,362

Smith & Nephew PLC sponsored ADR

75,000

4,106,250

SSL International PLC

472,100

4,186,910

Standard Chartered PLC (United Kingdom)

94,500

2,676,208

Taylor Nelson Sofres PLC

5,050,400

23,291,597

Tesco PLC

3,870,100

28,307,306

Vodafone Group PLC

15,586,462

45,922,922

Vodafone Group PLC sponsored ADR

255,800

7,535,868

William Morrison Supermarkets PLC

3,097,500

16,329,061

Xstrata PLC

140,400

11,184,403

TOTAL UNITED KINGDOM

763,409,236

 

Shares

Value

United States of America - 3.3%

Apple, Inc. (a)

42,000

$ 7,032,480

Becton, Dickinson & Co.

54,700

4,447,110

Calgon Carbon Corp. (a)(d)

1,353,417

20,923,827

Copart, Inc. (a)

105,500

4,517,510

Dr Pepper Snapple Group, Inc. (a)

67,056

1,406,835

Estee Lauder Companies, Inc. Class A (d)

600,300

27,883,935

Fuel Tech, Inc. (a)(d)

271,800

4,789,116

Hypercom Corp. (a)

171,800

755,920

Monsanto Co.

38,800

4,905,872

Stryker Corp.

92,200

5,797,536

Sunpower Corp. Class A (a)(d)

90,300

6,499,794

Visa, Inc.

81,200

6,602,372

TOTAL UNITED STATES OF AMERICA

95,562,307

TOTAL COMMON STOCKS

(Cost $2,540,143,053)

2,856,191,940

Money Market Funds - 7.2%

 

 

 

 

Fidelity Cash Central Fund, 2.38% (b)

15,959,095

15,959,095

Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c)

189,087,782

189,087,782

TOTAL MONEY MARKET FUNDS

(Cost $205,046,877)

205,046,877

TOTAL INVESTMENT PORTFOLIO - 106.6%

(Cost $2,745,189,930)

3,061,238,817

NET OTHER ASSETS - (6.6)%

(188,439,094)

NET ASSETS - 100%

$ 2,872,799,723

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request.

(c) Investment made with cash collateral received from securities on loan.

(d) Security or a portion of the security is on loan at period end.

Affiliated Central Funds

Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:

Fund

Income earned

Fidelity Cash Central Fund

$ 1,480,349

Fidelity Securities Lending Cash Central Fund

3,185,393

Total

$ 4,665,742

Other Information

The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

#Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities

$ 3,061,238,817

$ 1,148,318,080

$ 1,912,920,737

$ -

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2008 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $181,563,989) - See accompanying schedule:

Unaffiliated issuers (cost $2,540,143,053)

$ 2,856,191,940

 

Fidelity Central Funds (cost $205,046,877)

205,046,877

 

Total Investments (cost $2,745,189,930)

 

$ 3,061,238,817

Cash

356,151

Foreign currency held at value (cost $8)

8

Receivable for fund shares sold

882,886

Dividends receivable

8,964,910

Distributions receivable from Fidelity Central Funds

426,869

Prepaid expenses

5,316

Other receivables

379,820

Total assets

3,072,254,777

 

 

 

Liabilities

Payable for investments purchased

$ 1,853,627

Payable for fund shares redeemed

5,145,177

Accrued management fee

1,771,221

Distribution fees payable

207,842

Other affiliated payables

291,920

Other payables and accrued expenses

1,097,485

Collateral on securities loaned, at value

189,087,782

Total liabilities

199,455,054

 

 

 

Net Assets

$ 2,872,799,723

Net Assets consist of:

 

Paid in capital

$ 2,428,079,953

Undistributed net investment income

50,381,070

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

78,218,634

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

316,120,066

Net Assets

$ 2,872,799,723

Statement of Assets and Liabilities - continued

 

June 30, 2008 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($1,231,326,194 ÷ 60,932,192 shares)

$ 20.21

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($296,829,829 ÷ 14,760,225 shares)

$ 20.11

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($708,971,802 ÷ 35,451,968 shares)

$ 20.00

 

 

 

Initial Class R:
Net Asset Value, offering price and redemption price per share ($225,924,482 ÷ 11,204,213 shares)

$ 20.16

 

 

 

Service Class R:
Net Asset Value, offering price and redemption price per share ($113,990,593 ÷ 5,676,775 shares)

$ 20.08

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($80,789,752 ÷ 4,070,700 shares)

$ 19.85

 

 

 

Investor Class R:
Net Asset Value, offering price and redemption price per share ($214,967,071 ÷ 10,670,172 shares)

$ 20.15

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

Six months ended June 30, 2008 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 66,839,951

Interest

 

13,113

Income from Fidelity Central Funds

 

4,665,742

 

 

71,518,806

Less foreign taxes withheld

 

(6,390,616)

Total income

 

65,128,190

 

 

 

Expenses

Management fee

$ 11,312,778

Transfer agent fees

1,182,637

Distribution fees

1,268,535

Accounting and security lending fees

705,996

Custodian fees and expenses

313,043

Independent trustees' compensation

6,848

Audit

34,401

Legal

5,231

Interest

9,994

Miscellaneous

299,973

Total expenses before reductions

15,139,436

Expense reductions

(347,302)

14,792,134

Net investment income (loss)

50,336,056

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers (net of foreign taxes of $617,988)

88,037,134

Foreign currency transactions

161,578

Total net realized gain (loss)

 

88,198,712

Change in net unrealized appreciation (depreciation) on:

Investment securities (net of decrease in deferred foreign taxes of $124,985)

(503,427,086)

Assets and liabilities in foreign currencies

72,648

Total change in net unrealized appreciation (depreciation)

 

(503,354,438)

Net gain (loss)

(415,155,726)

Net increase (decrease) in net assets resulting from operations

$ (364,819,670)

Statement of Changes in Net Assets

 

Six months ended
June 30, 2008
(Unaudited)

Year ended
December 31,
2007

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 50,336,056

$ 61,989,857

Net realized gain (loss)

88,198,712

352,592,480

Change in net unrealized appreciation (depreciation)

(503,354,438)

134,088,793

Net increase (decrease) in net assets resulting from operations

(364,819,670)

548,671,130

Distributions to shareholders from net investment income

-

(111,357,133)

Distributions to shareholders from net realized gain

(348,490,470)

(225,173,068)

Total distributions

(348,490,470)

(336,530,201)

Share transactions - net increase (decrease)

(41,302,848)

159,355,663

Redemption fees

41,761

118,790

Total increase (decrease) in net assets

(754,571,227)

371,615,382

 

 

 

Net Assets

Beginning of period

3,627,370,950

3,255,755,568

End of period (including undistributed net investment income of $50,381,070 and undistributed net investment income of $45,014, respectively)

$ 2,872,799,723

$ 3,627,370,950

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 25.33

$ 23.96

$ 20.60

$ 17.51

$ 15.59

$ 10.98

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .35

.45

.38

.20

.13

.11

Net realized and unrealized gain (loss)

  (3.01)

3.42

3.30

3.10

1.97

4.60

Total from investment operations

  (2.66)

3.87

3.68

3.30

2.10

4.71

Distributions from net investment income

  -

(.84)

(.19)

(.12)

(.18)

(.10)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.50)

(.32)

(.21)

(.18)

(.10)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 20.21

$ 25.33

$ 23.96

$ 20.60

$ 17.51

$ 15.59

Total Return B, C, D

  (10.50)%

17.41%

18.09%

19.06%

13.57%

43.37%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .86% A

.85%

.88%

.89%

.91%

.90%

Expenses net of fee waivers, if any

  .86% A

.85%

.88%

.89%

.91%

.90%

Expenses net of all reductions

  .84% A

.82%

.81%

.82%

.87%

.86%

Net investment income (loss)

  3.23% A

1.85%

1.76%

1.11%

.80%

.87%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 1,231,326

$ 1,702,235

$ 1,624,901

$ 1,549,179

$ 1,491,485

$ 1,436,137

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

Financial Highlights - Service Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 25.23

$ 23.86

$ 20.52

$ 17.44

$ 15.53

$ 10.94

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .33

.43

.36

.18

.11

.09

Net realized and unrealized gain (loss)

  (2.99)

3.39

3.28

3.09

1.97

4.59

Total from investment operations

  (2.66)

3.82

3.64

3.27

2.08

4.68

Distributions from net investment income

  -

(.79)

(.17)

(.10)

(.17)

(.09)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.45)

(.30)

(.19)

(.17)

(.09)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 20.11

$ 25.23

$ 23.86

$ 20.52

$ 17.44

$ 15.53

Total Return B, C, D

  (10.55)%

17.25%

17.95%

18.97%

13.49%

43.20%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .96% A

.95%

.98%

.99%

1.01%

1.00%

Expenses net of fee waivers, if any

  .96% A

.95%

.98%

.99%

1.01%

1.00%

Expenses net of all reductions

  .94% A

.92%

.91%

.92%

.97%

.96%

Net investment income (loss)

  3.13% A

1.75%

1.66%

1.02%

.69%

.77%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 296,830

$ 366,777

$ 362,060

$ 329,759

$ 322,649

$ 246,632

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 25.12

$ 23.75

$ 20.43

$ 17.39

$ 15.50

$ 10.90

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .32

.39

.33

.14

.08

.08

Net realized and unrealized gain (loss)

  (2.98)

3.37

3.27

3.08

1.97

4.58

Total from investment operations

  (2.66)

3.76

3.60

3.22

2.05

4.66

Distributions from net investment income

  -

(.73)

(.15)

(.09)

(.16)

(.06)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.39)

(.28)

(.18)

(.16)

(.06)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 20.00

$ 25.12

$ 23.75

$ 20.43

$ 17.39

$ 15.50

Total Return B, C, D

  (10.60)%

17.05%

17.83%

18.72%

13.31%

43.04%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  1.11% A

1.10%

1.13%

1.14%

1.16%

1.16%

Expenses net of fee waivers, if any

  1.11% A

1.10%

1.13%

1.14%

1.16%

1.16%

Expenses net of all reductions

  1.09% A

1.07%

1.06%

1.07%

1.12%

1.12%

Net investment income (loss)

  2.98% A

1.60%

1.51%

.79%

.54%

.61%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 708,972

$ 821,943

$ 703,421

$ 502,801

$ 319,708

$ 140,822

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

Financial Highlights - Initial Class R

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 25.28

$ 23.92

$ 20.57

$ 17.49

$ 15.57

$ 10.98

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .35

.45

.38

.19

.12

.11

Net realized and unrealized gain (loss)

  (3.01)

3.41

3.29

3.10

1.98

4.59

Total from investment operations

  (2.66)

3.86

3.67

3.29

2.10

4.70

Distributions from net investment income

  -

(.84)

(.19)

(.12)

(.18)

(.11)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.50)

(.32)

(.21)

(.18)

(.11)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 20.16

$ 25.28

$ 23.92

$ 20.57

$ 17.49

$ 15.57

Total Return B, C, D

  (10.53)%

17.40%

18.08%

19.05%

13.59%

43.32%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .86% A

.85%

.88%

.89%

.91%

.90%

Expenses net of fee waivers, if any

  .86% A

.85%

.88%

.89%

.91%

.90%

Expenses net of all reductions

  .84% A

.82%

.81%

.82%

.87%

.86%

Net investment income (loss)

  3.23% A

1.85%

1.76%

1.08%

.79%

.87%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 225,924

$ 275,678

$ 240,693

$ 184,245

$ 132,064

$ 39,466

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Service Class R

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 25.19

$ 23.83

$ 20.50

$ 17.43

$ 15.52

$ 10.94

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .33

.43

.36

.17

.11

.10

Net realized and unrealized gain (loss)

  (2.98)

3.38

3.27

3.09

1.97

4.58

Total from investment operations

  (2.65)

3.81

3.63

3.26

2.08

4.68

Distributions from net investment income

  -

(.79)

(.17)

(.10)

(.17)

(.10)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.45)

(.30)

(.19)

(.17)

(.10)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 20.08

$ 25.19

$ 23.83

$ 20.50

$ 17.43

$ 15.52

Total Return B, C, D

  (10.52)%

17.23%

17.95%

18.92%

13.50%

43.25%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .96% A

.94%

.98%

.99%

1.01%

1.00%

Expenses net of fee waivers, if any

  .96% A

.94%

.98%

.99%

1.01%

1.00%

Expenses net of all reductions

  .94% A

.92%

.91%

.92%

.96%

.96%

Net investment income (loss)

  3.13% A

1.75%

1.66%

.96%

.70%

.77%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 113,991

$ 135,038

$ 133,934

$ 115,449

$ 86,509

$ 56,141

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

Financial Highlights - Service Class 2R

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 24.95

$ 23.61

$ 20.32

$ 17.30

$ 15.42

$ 10.90

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .31

.39

.32

.14

.08

.08

Net realized and unrealized gain (loss)

  (2.95)

3.35

3.26

3.07

1.96

4.55

Total from investment operations

  (2.64)

3.74

3.58

3.21

2.04

4.63

Distributions from net investment income

  -

(.74)

(.16)

(.10)

(.16)

(.11)

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

(.09)

-

-

Total distributions

  (2.46)

(2.40)

(.29)

(.19)

(.16)

(.11)

Redemption fees added to paid in capital E, I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.85

$ 24.95

$ 23.61

$ 20.32

$ 17.30

$ 15.42

Total Return B, C, D

  (10.59)%

17.06%

17.81%

18.74%

13.32%

43.00%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  1.11% A

1.09%

1.13%

1.14%

1.16%

1.15%

Expenses net of fee waivers, if any

  1.11% A

1.09%

1.13%

1.14%

1.16%

1.15%

Expenses net of all reductions

  1.09% A

1.07%

1.06%

1.07%

1.11%

1.11%

Net investment income (loss)

  2.98% A

1.60%

1.51%

.77%

.55%

.62%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 80,790

$ 95,871

$ 68,729

$ 49,373

$ 27,562

$ 7,072

Portfolio turnover rate G

  72% A

62%

123%

92%

84%

99%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. I Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Investor Class R

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005 H

Selected Per-Share Data

 

 

 

 

Net asset value, beginning of period

$ 25.27

$ 23.91

$ 20.59

$ 17.69

Income from Investment Operations

 

 

 

 

Net investment income (loss) E

  .34

.42

.36

.02

Net realized and unrealized gain (loss)

  (3.00)

3.41

3.29

2.88

Total from investment operations

  (2.66)

3.83

3.65

2.90

Distributions from net investment income

  -

(.81)

(.20)

-

Distributions from net realized gain

  (2.46)

(1.66)

(.13)

-

Total distributions

  (2.46)

(2.47)

(.33)

-

Redemption fees added to paid in capital E, J

  -

-

-

-

Net asset value, end of period

$ 20.15

$ 25.27

$ 23.91

$ 20.59

Total Return B, C, D

  (10.53)%

17.25%

17.94%

16.39%

Ratios to Average Net Assets F, I

 

 

 

 

Expenses before reductions

  .95% A

.96%

1.01%

1.07% A

Expenses net of fee waivers, if any

  .95% A

.96%

1.01%

1.07% A

Expenses net of all reductions

  .93% A

.94%

.93%

1.00% A

Net investment income (loss)

  3.14% A

1.74%

1.64%

.23% A

Supplemental Data

 

 

 

 

Net assets, end of period (000 omitted)

$ 214,967

$ 229,829

$ 122,018

$ 29,544

Portfolio turnover rate G

  72% A

62%

123%

92%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2008 (Unaudited)

1. Organization.

VIP Overseas Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Initial Class R shares, Service Class R shares, Service Class 2R shares, and Investor Class R shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.

2. Investments in Fidelity Central Funds.

The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.

When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:

Level 1

Quoted prices in active markets for identical securities.

Level 2

Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level 3

Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

Semiannual Report

3. Significant Accounting Policies. - continued

Security Valuation - continued

Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.

The aggregate value by input level, as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.

Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees must defer receipt of a portion of, and may elect to defer receipt of an additional portion of, their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), deferred trustees compensation and losses deferred due to wash sales.

The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:

Unrealized appreciation

$ 550,219,358

Unrealized depreciation

(241,148,633)

Net unrealized appreciation (depreciation)

$ 309,070,725

Cost for federal income tax purposes

$ 2,752,168,092

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class R shares held less than 60 days are subject to a redemption fee equal to 1% of the proceeds of the redeemed shares. All redemption fees, including any estimated redemption fees paid by FMR, are retained by the Fund and accounted for as an addition to paid in capital.

4. Operating Policies.

Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $1,128,009,914 and $1,344,611,363, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .71% of the Fund's average net assets.

Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' and Service Class R's average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.

For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:

Service Class

$ 162,191

Service Class 2

936,560

Service Class R

60,711

Service Class 2R

109,073

 

$ 1,268,535

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class with the exception of Investor Class R pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class R pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class R paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class

$ 497,077

Service Class

109,907

Service Class 2

252,329

Initial Class R

81,770

Service Class R

40,106

Service Class 2R

28,822

Investor Class R

172,626

 

$ 1,182,637

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $381 for the period.

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:

Borrower or Lender

Average Daily
Loan Balance

Weighted Average Interest Rate

Interest
Expense

Borrower

$ 10,743,533

2.23%

$ 9,994

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $3,364 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $3,185,393.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $346,142 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $1,160.

10. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

At the end of the period, FMR or its affiliates were the owners of record of 17% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 37% of the total outstanding shares of the Fund.

In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Other - continued

In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $27,232, which is recorded in the accompanying Statement of Operations.

In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.

11. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2008

Year ended
December 31,
2007

From net investment income

 

 

Initial Class

$ -

$ 55,739,563

Service Class

-

11,576,654

Service Class 2

-

22,633,556

Initial Class R

-

8,762,292

Service Class R

-

4,244,546

Service Class 2R

-

2,489,770

Investor Class R

-

5,910,752

Total

$ -

$ 111,357,133

 

From net realized gain

 

 

Initial Class

$ 163,022,999

$ 111,097,557

Service Class

34,891,161

25,082,728

Service Class 2

79,417,694

49,162,218

Initial Class R

26,045,726

16,729,732

Service Class R

12,931,868

9,169,613

Service Class 2R

9,495,528

4,853,334

Investor Class R

22,685,494

9,077,886

Total

$ 348,490,470

$ 225,173,068

12. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30,
2008

Year ended
December 31,
2007

Six months ended
June 30,
2008

Year ended
December 31,
2007

Initial Class

 

 

 

 

Shares sold

3,010,669

8,581,542

$ 65,052,508

$ 209,859,014

Reinvestment of distributions

8,066,452

7,280,031

163,022,999

166,837,120

Shares redeemed

(17,358,827)

(16,452,957)

(371,867,409)

(401,808,271)

Net increase (decrease)

(6,281,706)

(591,384)

$ (143,791,902)

$ (25,112,137)

Service Class

 

 

 

 

Shares sold

614,372

1,382,854

$ 13,143,095

$ 33,724,214

Reinvestment of distributions

1,734,153

1,608,100

34,891,161

36,659,382

Shares redeemed

(2,127,027)

(3,627,586)

(45,581,308)

(88,845,433)

Net increase (decrease)

221,498

(636,632)

$ 2,452,948

$ (18,461,837)

Service Class 2

 

 

 

 

Shares sold

2,746,903

4,978,892

$ 57,818,849

$ 121,295,683

Reinvestment of distributions

3,966,918

3,159,253

79,417,694

71,795,774

Shares redeemed

(3,983,225)

(5,039,553)

(84,949,748)

(122,533,831)

Net increase (decrease)

2,730,596

3,098,592

$ 52,286,795

$ 70,557,626

Semiannual Report

12. Share Transactions. - continued

 

Shares

Dollars

Six months ended
June 30,
2008

Year ended
December 31,
2007

Six months ended
June 30,
2008

Year ended
December 31,
2007

Initial Class R

 

 

 

 

Shares sold

393,440

1,573,581

$ 8,505,191

$ 38,800,759

Reinvestment of distributions

1,291,310

1,112,826

26,045,726

25,492,024

Shares redeemed

(1,387,260)

(1,840,544)

(29,696,863)

(44,022,123)

Net increase (decrease)

297,490

845,863

$ 4,854,054

$ 20,270,660

Service Class R

 

 

 

 

Shares sold

347,452

794,023

$ 7,316,088

$ 19,027,863

Reinvestment of distributions

643,697

589,118

12,931,868

13,414,159

Shares redeemed

(674,330)

(1,643,900)

(14,373,183)

(39,376,291)

Net increase (decrease)

316,819

(260,759)

$ 5,874,773

$ (6,934,269)

Service Class 2R

 

 

 

 

Shares sold

453,302

1,154,726

$ 9,521,978

$ 28,069,168

Reinvestment of distributions

477,883

324,060

9,495,528

7,343,104

Shares redeemed

(703,065)

(547,588)

(14,463,758)

(13,063,580)

Net increase (decrease)

228,120

931,198

$ 4,553,748

$ 22,348,692

Investor Class R

 

 

 

 

Shares sold

1,025,868

3,876,633

$ 22,122,615

$ 95,023,834

Reinvestment of distributions

1,125,273

648,994

22,685,494

14,988,638

Shares redeemed

(577,169)

(532,623)

(12,341,373)

(13,325,544)

Net increase (decrease)

1,573,972

3,993,004

$ 32,466,736

$ 96,686,928

Semiannual Report

Proxy Voting Results

A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.

PROPOSAL 1

To elect a Board of Trustees.A

 

# of
Votes

% of
Votes

James C. Curvey

Affirmative

821,220,039.81

95.845

Withheld

35,598,080.64

4.155

TOTAL

856,818,120.45

100.000

Dennis J. Dirks

Affirmative

822,124,493.63

95.951

Withheld

34,693,626.82

4.049

TOTAL

856,818,120.45

100.000

Edward C. Johnson 3d

Affirmative

820,473,313.05

95.758

Withheld

36,344,807.40

4.242

TOTAL

856,818,120.45

100.000

Alan J. Lacy

Affirmative

822,170,402.95

95.956

Withheld

34,647,717.50

4.044

TOTAL

856,818,120.45

100.000

Ned C. Lautenbach

Affirmative

821,435,006.18

95.870

Withheld

35,383,114.27

4.130

TOTAL

856,818,120.45

100.000

Joseph Mauriello

Affirmative

822,174,756.53

95.957

Withheld

34,643,363.92

4.043

TOTAL

856,818,120.45

100.000

Cornelia M. Small

Affirmative

822,263,792.20

95.967

Withheld

34,554,328.25

4.033

TOTAL

856,818,120.45

100.000

William S. Stavropoulos

Affirmative

821,014,987.67

95.821

Withheld

35,803,132.78

4.179

TOTAL

856,818,120.45

100.000

David M. Thomas

Affirmative

822,321,743.26

95.974

Withheld

34,496,377.19

4.026

TOTAL

856,818,120.45

100.000

Michael E. Wiley

Affirmative

822,218,346.41

95.962

Withheld

34,599,774.04

4.038

TOTAL

856,818,120.45

100.000

PROPOSAL 2

To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A

 

# of
Votes

% of
Votes

Affirmative

701,273,514.99

81.846

Against

103,131,328.05

12.037

Abstain

52,413,277.41

6.117

TOTAL

856,818,120.45

100.000

A Denotes trust-wide proposal and voting results.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research (U.K.) Inc.

Fidelity Research & Analysis Company

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

Fidelity Investments Japan Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

JPMorgan Chase Bank
New York, NY 

VIPOVRSR-SANN-0808
1.774855.106

Fidelity® Variable Insurance Products:
Value Portfolio

Semiannual Report

June 30, 2008
(2_fidelity_logos) (Registered_Trademark)

Contents

Shareholder Expense Example

<Click Here>

An example of shareholder expenses.

Investment Changes

<Click Here>

A summary of major shifts in the fund's investments over the past six months.

Investments

<Click Here>

A complete list of the fund's investments with their
market values.

Financial Statements

<Click Here>

Statements of assets and liabilities, operations, and
changes in net assets, as well as financial highlights.

Notes

<Click Here>

Notes to the financial statements.

Proxy Voting Results

<Click Here>

 

 

 

 

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com (search for "proxy voting results") or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov. You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

Fidelity Variable Insurance Products are separate account options which are purchased through a variable insurance contract.

Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.

Other third party marks appearing herein are the property of their respective owners.

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company.

This report and the financial statements contained herein are submitted for the general information of the shareholders of the fund. This report is not authorized for distribution to prospective investors in the fund unless preceded or accompanied by an effective prospectus.

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com or http://www.advisor.fidelity.com, as applicable.

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

Shareholder Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2008 to June 30, 2008).

Actual Expenses

The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Hypothetical Example for Comparison Purposes

The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.

 

Beginning
Account Value
January 1, 2008

Ending
Account Value
June 30, 2008

Expenses Paid
During Period*
January 1, 2008 to June 30, 2008

Initial Class

 

 

 

Actual

$ 1,000.00

$ 886.60

$ 3.66

HypotheticalA

$ 1,000.00

$ 1,020.98

$ 3.92

Service Class

 

 

 

Actual

$ 1,000.00

$ 886.30

$ 4.08

HypotheticalA

$ 1,000.00

$ 1,020.54

$ 4.37

Service Class 2

 

 

 

Actual

$ 1,000.00

$ 884.70

$ 4.83

HypotheticalA

$ 1,000.00

$ 1,019.74

$ 5.17

Investor Class

 

 

 

Actual

$ 1,000.00

$ 885.80

$ 4.08

HypotheticalA

$ 1,000.00

$ 1,020.54

$ 4.37

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Annualized
Expense Ratio

Initial Class

.78%

Service Class

.87%

Service Class 2

1.03%

Investor Class

.87%

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Allied Waste Industries, Inc.

1.3

0.9

Avon Products, Inc.

1.3

1.1

Xerox Corp.

1.2

1.2

National Semiconductor Corp.

1.1

0.9

PPL Corp.

1.0

0.7

Arrow Electronics, Inc.

1.0

0.9

Entergy Corp.

1.0

0.8

National Oilwell Varco, Inc.

1.0

0.9

Sysco Corp.

0.9

0.8

Avnet, Inc.

0.9

0.9

 

10.7

Top Five Market Sectors as of June 30, 2008

 

% of fund's
net assets

% of fund's net assets
6 months ago

Consumer Discretionary

18.5

17.4

Financials

16.9

15.3

Information Technology

16.5

19.3

Energy

11.8

10.8

Industrials

10.7

9.2

Asset Allocation (% of fund's net assets)

As of June 30, 2008 *

As of December 31, 2007 **

fid95

Stocks 99.2%

 

fid95

Stocks 97.6%

 

fid101

Short-Term
Investments and
Net Other Assets 0.8%

 

fid101

Short-Term
Investments and
Net Other Assets 2.4%

 

* Foreign investments

9.6%

 

* *Foreign investments

10.2%

 


fid222

Semiannual Report

Investments June 30, 2008 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 97.8%

Shares

Value

CONSUMER DISCRETIONARY - 18.5%

Auto Components - 0.8%

ArvinMeritor, Inc.

9,777

$ 122,017

Gentex Corp.

7,640

110,322

Johnson Controls, Inc.

11,600

332,688

The Goodyear Tire & Rubber Co. (a)

17,000

303,110

 

868,137

Automobiles - 1.2%

Fiat SpA

8,400

136,752

Ford Motor Co. (a)

82,200

395,382

Harley-Davidson, Inc.

3,000

108,780

Nissan Motor Co. Ltd.

18,300

152,019

Renault SA

5,300

431,348

Winnebago Industries, Inc.

11,453

116,706

 

1,340,987

Diversified Consumer Services - 1.0%

H&R Block, Inc.

32,100

686,940

Hillenbrand, Inc.

15,018

321,385

Regis Corp.

2,600

68,510

Service Corp. International

8,400

82,824

 

1,159,659

Hotels, Restaurants & Leisure - 1.8%

Brinker International, Inc.

30,200

570,780

Carnival Corp. unit

19,100

629,536

DineEquity, Inc.

1,000

37,360

Pinnacle Entertainment, Inc. (a)

4,200

44,058

Royal Caribbean Cruises Ltd.

29,500

662,865

Starwood Hotels & Resorts Worldwide, Inc.

600

24,042

Vail Resorts, Inc. (a)

2,700

115,641

 

2,084,282

Household Durables - 4.1%

Black & Decker Corp.

14,485

833,032

Centex Corp.

23,600

315,532

Ethan Allen Interiors, Inc.

17,243

424,178

Jarden Corp. (a)

14,940

272,506

KB Home

4,700

79,571

La-Z-Boy, Inc.

10,200

78,030

Leggett & Platt, Inc.

33,600

563,472

Newell Rubbermaid, Inc.

13,700

230,023

Pulte Homes, Inc.

14,100

135,783

Sealy Corp., Inc.

22,456

128,897

Tempur-Pedic International, Inc.

11,200

87,472

The Stanley Works

21,000

941,430

Whirlpool Corp.

9,900

611,127

 

4,701,053

Leisure Equipment & Products - 1.3%

Brunswick Corp.

34,292

363,495

Eastman Kodak Co.

66,700

962,481

 

Shares

Value

Polaris Industries, Inc.

2,581

$ 104,221

Pool Corp.

5,002

88,836

 

1,519,033

Media - 2.7%

Cinemark Holdings, Inc.

28,856

376,859

E.W. Scripps Co. Class A

25,206

1,047,057

Gannett Co., Inc.

15,400

333,718

Informa PLC

15,500

127,006

Lamar Advertising Co. Class A (a)

6,699

241,365

Live Nation, Inc. (a)

10,500

111,090

Omnicom Group, Inc.

9,500

426,360

R.H. Donnelley Corp. (a)

17,400

52,200

Regal Entertainment Group Class A

24,764

378,394

 

3,094,049

Multiline Retail - 0.7%

Family Dollar Stores, Inc.

26,000

518,440

Sears Holdings Corp. (a)(d)

3,459

254,790

 

773,230

Specialty Retail - 4.4%

Advance Auto Parts, Inc.

4,600

178,618

AnnTaylor Stores Corp. (a)

16,977

406,769

Asbury Automotive Group, Inc.

12,714

163,375

AutoNation, Inc. (a)

6,300

63,126

AutoZone, Inc. (a)

5,000

605,050

Chico's FAS, Inc. (a)

12,000

64,440

Foot Locker, Inc.

10,300

128,235

Group 1 Automotive, Inc.

10,432

207,284

OfficeMax, Inc.

29,774

413,859

PetSmart, Inc.

36,053

719,257

Pier 1 Imports, Inc. (a)

28,600

98,384

Select Comfort Corp. (a)

11,566

18,968

Sherwin-Williams Co.

4,200

192,906

Staples, Inc.

22,843

542,521

Talbots, Inc.

1,600

18,544

The Children's Place Retail Stores, Inc. (a)

8,487

306,381

The Men's Wearhouse, Inc.

5,200

84,708

Williams-Sonoma, Inc. (d)

40,400

801,536

 

5,013,961

Textiles, Apparel & Luxury Goods - 0.5%

Liz Claiborne, Inc.

36,736

519,814

VF Corp.

400

28,472

 

548,286

TOTAL CONSUMER DISCRETIONARY

21,102,677

CONSUMER STAPLES - 4.7%

Beverages - 0.4%

Carlsberg AS:

Series A

900

86,688

Series B

1,400

134,862

SABMiller PLC

11,600

265,025

 

486,575

Common Stocks - continued

Shares

Value

CONSUMER STAPLES - continued

Food & Staples Retailing - 1.7%

Rite Aid Corp. (a)

123,800

$ 196,842

SUPERVALU, Inc.

16,700

515,863

Sysco Corp.

38,900

1,070,139

Winn-Dixie Stores, Inc. (a)

8,187

131,156

 

1,914,000

Food Products - 0.9%

Cermaq ASA

8,000

95,280

Leroy Seafood Group ASA

7,200

136,710

Marine Harvest ASA (a)

365,000

267,334

Tyson Foods, Inc. Class A

36,000

537,840

 

1,037,164

Household Products - 0.4%

Energizer Holdings, Inc. (a)

6,974

509,730

Personal Products - 1.3%

Avon Products, Inc.

40,200

1,448,004

TOTAL CONSUMER STAPLES

5,395,473

ENERGY - 11.8%

Energy Equipment & Services - 4.4%

BJ Services Co.

14,100

450,354

Calfrac Well Services Ltd.

3,800

119,776

Cameron International Corp. (a)

2,900

160,515

ENSCO International, Inc.

1,500

121,110

FMC Technologies, Inc. (a)

3,225

248,099

Nabors Industries Ltd. (a)

7,100

349,533

National Oilwell Varco, Inc. (a)

12,328

1,093,740

Noble Corp.

5,300

344,288

Patterson-UTI Energy, Inc.

6,426

231,593

Smith International, Inc.

9,800

814,772

Transocean, Inc. (a)

1,124

171,286

Weatherford International Ltd. (a)

18,366

910,770

 

5,015,836

Oil, Gas & Consumable Fuels - 7.4%

Arch Coal, Inc.

4,000

300,120

Boardwalk Pipeline Partners, LP

11,142

261,726

Cabot Oil & Gas Corp.

14,800

1,002,404

Canadian Natural Resources Ltd.

5,000

494,629

CONSOL Energy, Inc.

800

89,896

Copano Energy LLC

4,994

168,548

El Paso Pipeline Partners LP

4,000

82,600

Energy Transfer Equity LP

7,220

209,308

EOG Resources, Inc.

5,400

708,480

EXCO Resources, Inc. (a)

14,500

535,195

Foundation Coal Holdings, Inc.

8,725

772,861

Hess Corp.

6,350

801,307

NuStar Energy LP

3,100

146,909

Petrohawk Energy Corp. (a)

5,900

273,229

Plains Exploration & Production Co. (a)

2,400

175,128

Southwestern Energy Co. (a)

3,400

161,874

 

Shares

Value

Suncor Energy, Inc.

12,000

$ 696,915

Talisman Energy, Inc.

4,500

99,681

Ultra Petroleum Corp. (a)

6,100

599,020

Valero Energy Corp.

19,700

811,246

Western Gas Partners LP

3,700

62,345

 

8,453,421

TOTAL ENERGY

13,469,257

FINANCIALS - 15.7%

Capital Markets - 1.9%

Bank of New York Mellon Corp.

6,090

230,385

Fortress Investment Group LLC

12,740

156,957

Greenhill & Co., Inc.

400

21,544

Janus Capital Group, Inc.

7,800

206,466

Legg Mason, Inc.

10,830

471,863

Lehman Brothers Holdings, Inc.

16,200

320,922

State Street Corp.

2,800

179,172

T. Rowe Price Group, Inc.

5,459

308,270

TD Ameritrade Holding Corp. (a)

14,900

269,541

 

2,165,120

Commercial Banks - 2.4%

Associated Banc-Corp.

9,451

182,310

Boston Private Financial Holdings, Inc.

8,663

49,119

KeyCorp

30,300

332,694

PNC Financial Services Group, Inc.

3,800

216,980

Prosperity Bancshares, Inc.

1,700

45,441

Sterling Financial Corp., Washington

3,115

12,896

Susquehanna Bancshares, Inc., Pennsylvania

6,700

91,723

U.S. Bancorp, Delaware

9,600

267,744

UCBH Holdings, Inc.

23,149

52,085

UnionBanCal Corp.

9,300

375,906

Wachovia Corp.

40,400

627,412

Zions Bancorp

15,504

488,221

 

2,742,531

Consumer Finance - 0.8%

Capital One Financial Corp.

19,900

756,399

Discover Financial Services

11,986

157,856

 

914,255

Diversified Financial Services - 1.2%

Bank of America Corp.

15,620

372,849

Bolsa de Mercadorias & Futuros - BM&F SA

2,900

24,981

CIT Group, Inc.

5,500

37,455

Citigroup, Inc.

7,600

127,376

Deutsche Boerse AG

500

56,520

JPMorgan Chase & Co.

20,686

709,737

KKR Financial Holdings LLC

8,620

90,510

 

1,419,428

Insurance - 1.7%

AMBAC Financial Group, Inc.

15,400

20,636

Common Stocks - continued

Shares

Value

FINANCIALS - continued

Insurance - continued

American International Group, Inc.

13,400

$ 354,564

LandAmerica Financial Group, Inc.

300

6,657

Maiden Holdings Ltd. (e)

4,900

31,360

Marsh & McLennan Companies, Inc.

27,700

735,435

MBIA, Inc.

12,200

53,558

Principal Financial Group, Inc.

9,284

389,649

Willis Group Holdings Ltd.

10,400

326,248

 

1,918,107

Real Estate Investment Trusts - 4.9%

Alexandria Real Estate Equities, Inc.

3,300

321,222

Annaly Capital Management, Inc.

4,200

65,142

British Land Co. PLC

3,359

47,236

CapitalSource, Inc.

15,000

166,200

Chimera Investment Corp.

4,600

41,446

Developers Diversified Realty Corp.

9,582

332,591

Digital Realty Trust, Inc.

9,508

388,972

General Growth Properties, Inc.

19,323

676,885

HCP, Inc.

15,600

496,236

Highwoods Properties, Inc. (SBI)

10,070

316,399

Kimco Realty Corp.

9,700

334,844

MFA Mortgage Investments, Inc.

2,600

16,952

Public Storage

8,200

662,478

Simon Property Group, Inc.

3,800

341,582

SL Green Realty Corp.

3,200

264,704

Tanger Factory Outlet Centers, Inc.

3,000

107,790

UDR, Inc.

17,154

383,907

Vornado Realty Trust

6,900

607,200

 

5,571,786

Real Estate Management & Development - 0.9%

Brookfield Properties Corp.

16,900

300,651

CB Richard Ellis Group, Inc. Class A (a)

34,422

660,902

The St. Joe Co.

2,500

85,800

 

1,047,353

Thrifts & Mortgage Finance - 1.9%

Fannie Mae

26,500

517,015

Freddie Mac

19,500

319,800

Hudson City Bancorp, Inc.

27,300

455,364

MGIC Investment Corp.

3,900

23,829

New York Community Bancorp, Inc.

27,900

497,736

People's United Financial, Inc.

6,000

93,600

Washington Federal, Inc.

12,041

217,942

 

2,125,286

TOTAL FINANCIALS

17,903,866

HEALTH CARE - 5.5%

Biotechnology - 0.5%

Cephalon, Inc. (a)

6,600

440,154

 

Shares

Value

Cubist Pharmaceuticals, Inc. (a)

6,045

$ 107,964

Molecular Insight Pharmaceuticals, Inc. (a)

1,100

6,061

 

554,179

Health Care Equipment & Supplies - 0.3%

American Medical Systems Holdings, Inc. (a)

6,100

91,195

Boston Scientific Corp. (a)

9,900

121,671

Hill-Rom Holdings, Inc.

6,502

175,424

 

388,290

Health Care Providers & Services - 2.8%

AmerisourceBergen Corp.

5,800

231,942

Brookdale Senior Living, Inc.

13,747

279,889

Community Health Systems, Inc. (a)

22,700

748,646

Emeritus Corp. (a)

3,010

44,006

HealthSouth Corp. (a)

20,180

335,593

McKesson Corp.

4,900

273,959

Quest Diagnostics, Inc.

2,600

126,022

Universal Health Services, Inc. Class B

15,500

979,910

VCA Antech, Inc. (a)

4,231

117,537

 

3,137,504

Health Care Technology - 0.4%

IMS Health, Inc.

20,780

484,174

Pharmaceuticals - 1.5%

Alpharma, Inc. Class A (a)

16,800

378,504

Barr Pharmaceuticals, Inc. (a)

16,085

725,112

Mylan, Inc.

12,056

145,516

Schering-Plough Corp.

18,000

354,420

Sepracor, Inc. (a)

5,300

105,576

 

1,709,128

TOTAL HEALTH CARE

6,273,275

INDUSTRIALS - 10.7%

Aerospace & Defense - 0.4%

Heico Corp. Class A

2,639

70,145

Honeywell International, Inc.

7,200

362,016

 

432,161

Air Freight & Logistics - 0.7%

United Parcel Service, Inc. Class B

13,200

811,404

Airlines - 0.1%

Delta Air Lines, Inc. (a)

11,300

64,410

Building Products - 0.7%

Masco Corp.

41,500

652,795

Owens Corning (a)

7,275

165,506

 

818,301

Commercial Services & Supplies - 3.2%

ACCO Brands Corp. (a)

29,010

325,782

Allied Waste Industries, Inc. (a)

118,278

1,492,666

Consolidated Graphics, Inc. (a)

4,888

240,832

Copart, Inc. (a)

1,500

64,230

Manpower, Inc.

800

46,592

Common Stocks - continued

Shares

Value

INDUSTRIALS - continued

Commercial Services & Supplies - continued

Monster Worldwide, Inc. (a)

2,300

$ 47,403

R.R. Donnelley & Sons Co.

21,117

626,964

The Brink's Co.

12,549

820,956

 

3,665,425

Construction & Engineering - 0.5%

Dycom Industries, Inc. (a)

26,500

384,780

URS Corp. (a)

4,798

201,372

 

586,152

Electrical Equipment - 0.1%

Cooper Industries Ltd. Class A

2,900

114,550

Zumtobel AG

1,400

31,797

 

146,347

Machinery - 2.9%

Albany International Corp. Class A

11,465

332,485

Briggs & Stratton Corp.

16,400

207,952

Eaton Corp.

1,500

127,455

Illinois Tool Works, Inc.

18,100

859,931

Ingersoll-Rand Co. Ltd. Class A

6,400

239,552

Navistar International Corp. (a)

5,600

368,592

Pentair, Inc.

22,900

801,958

Sulzer AG (Reg.)

2,260

285,553

Wabash National Corp.

7,900

59,724

 

3,283,202

Marine - 0.1%

Alexander & Baldwin, Inc.

1,100

50,105

Safe Bulkers, Inc.

700

13,188

 

63,293

Road & Rail - 1.4%

Canadian National Railway Co.

5,900

283,496

Con-way, Inc.

17,650

834,139

J.B. Hunt Transport Services, Inc.

2,300

76,544

Ryder System, Inc.

6,302

434,082

 

1,628,261

Trading Companies & Distributors - 0.4%

Beacon Roofing Supply, Inc. (a)

7,699

81,686

W.W. Grainger, Inc.

2,100

171,780

WESCO International, Inc. (a)

4,900

196,196

 

449,662

Transportation Infrastructure - 0.2%

Macquarie Infrastructure Co. LLC

10,600

268,074

TOTAL INDUSTRIALS

12,216,692

INFORMATION TECHNOLOGY - 16.5%

Communications Equipment - 0.9%

Alcatel-Lucent SA sponsored ADR

74,221

448,295

Avocent Corp. (a)

6,429

119,579

 

Shares

Value

Motorola, Inc.

54,600

$ 400,764

Powerwave Technologies, Inc. (a)

27,500

116,875

 

1,085,513

Computers & Peripherals - 1.2%

Gemalto NV (a)

1,500

54,426

NCR Corp. (a)

24,300

612,360

NetApp, Inc. (a)

24,985

541,175

SanDisk Corp. (a)

1,300

24,310

Western Digital Corp. (a)

4,400

151,932

 

1,384,203

Electronic Equipment & Instruments - 5.0%

Agilent Technologies, Inc. (a)

29,249

1,039,509

Arrow Electronics, Inc. (a)

36,555

1,122,970

Avnet, Inc. (a)

38,677

1,055,109

Cogent, Inc. (a)

1,400

15,918

Flextronics International Ltd. (a)

110,300

1,036,820

Ingram Micro, Inc. Class A (a)

14,900

264,475

Itron, Inc. (a)

3,116

306,459

Tyco Electronics Ltd.

22,600

809,532

 

5,650,792

Internet Software & Services - 1.0%

Google, Inc. Class A (sub. vtg.) (a)

100

52,642

VeriSign, Inc. (a)

13,500

510,300

Yahoo!, Inc. (a)

25,900

535,094

 

1,098,036

IT Services - 1.8%

Accenture Ltd. Class A

3,600

146,592

NeuStar, Inc. Class A (a)

3,800

81,928

The Western Union Co.

42,400

1,048,128

Unisys Corp. (a)

88,100

347,995

Visa, Inc.

4,800

390,288

 

2,014,931

Office Electronics - 1.2%

Xerox Corp.

101,900

1,381,764

Semiconductors & Semiconductor Equipment - 4.4%

Advanced Micro Devices, Inc. (a)

6,400

37,312

Applied Materials, Inc.

37,600

717,784

ASML Holding NV (NY Shares)

18,144

442,714

Atmel Corp. (a)

56,100

195,228

Fairchild Semiconductor International, Inc. (a)

80,100

939,573

Integrated Device Technology, Inc. (a)

26,400

262,416

Lam Research Corp. (a)

2,100

75,915

LSI Corp. (a)

22,700

139,378

Maxim Integrated Products, Inc.

14,200

300,330

MKS Instruments, Inc. (a)

11,200

245,280

National Semiconductor Corp.

58,400

1,199,536

Standard Microsystems Corp. (a)

8,554

232,241

Varian Semiconductor Equipment Associates, Inc. (a)

7,351

255,962

 

5,043,669

Common Stocks - continued

Shares

Value

INFORMATION TECHNOLOGY - continued

Software - 1.0%

Electronic Arts, Inc. (a)

15,594

$ 692,841

Fair Isaac Corp.

5,300

110,081

Misys PLC

35,300

104,457

Parametric Technology Corp. (a)

8,600

143,362

THQ, Inc. (a)

4,468

90,522

 

1,141,263

TOTAL INFORMATION TECHNOLOGY

18,800,171

MATERIALS - 3.2%

Chemicals - 1.4%

Albemarle Corp.

9,826

392,156

Arkema sponsored ADR

2,000

112,900

Ashland, Inc.

1,200

57,840

Chemtura Corp.

75,700

442,088

FMC Corp.

600

46,464

Georgia Gulf Corp.

3,417

9,909

H.B. Fuller Co.

10,100

226,644

Rohm & Haas Co.

5,500

255,420

W.R. Grace & Co. (a)

3,900

91,611

 

1,635,032

Containers & Packaging - 0.7%

Ball Corp.

6,900

329,406

Owens-Illinois, Inc. (a)

7,152

298,167

Rock-Tenn Co. Class A

4,690

140,653

 

768,226

Metals & Mining - 1.1%

Alcoa, Inc.

16,900

601,978

Barrick Gold Corp.

2,200

100,595

Goldcorp, Inc.

700

32,282

Kinross Gold Corp.

5,800

137,127

Lihir Gold Ltd. (a)

29,160

91,979

Newcrest Mining Ltd.

4,791

134,586

Randgold Resources Ltd. sponsored ADR

2,934

135,492

 

1,234,039

TOTAL MATERIALS

3,637,297

TELECOMMUNICATION SERVICES - 2.2%

Diversified Telecommunication Services - 1.6%

AT&T, Inc.

9,115

307,084

Cbeyond, Inc. (a)

1,300

20,826

Cincinnati Bell, Inc. (a)

38,318

152,506

Embarq Corp.

5,500

259,985

Qwest Communications International, Inc.

124,266

488,365

Telefonica SA sponsored ADR

600

47,748

 

Shares

Value

Verizon Communications, Inc.

14,400

$ 509,760

Vimpel Communications sponsored ADR

1,500

44,520

 

1,830,794

Wireless Telecommunication Services - 0.6%

Crown Castle International Corp. (a)

6,600

255,618

Sprint Nextel Corp.

48,400

459,800

 

715,418

TOTAL TELECOMMUNICATION SERVICES

2,546,212

UTILITIES - 9.0%

Electric Utilities - 5.4%

Allegheny Energy, Inc.

19,500

977,145

American Electric Power Co., Inc.

10,600

426,438

DPL, Inc.

3,904

102,988

Edison International

13,500

693,630

Entergy Corp.

9,200

1,108,416

Exelon Corp.

3,900

350,844

FirstEnergy Corp.

8,900

732,737

FPL Group, Inc.

8,500

557,430

PPL Corp.

21,900

1,144,713

 

6,094,341

Gas Utilities - 0.1%

Energen Corp.

1,100

85,833

Equitable Resources, Inc.

500

34,530

 

120,363

Independent Power Producers & Energy Traders - 2.5%

AES Corp. (a)

21,500

413,015

Constellation Energy Group, Inc.

9,300

763,530

NRG Energy, Inc. (a)

23,500

1,008,150

Reliant Energy, Inc. (a)

33,407

710,567

 

2,895,262

Multi-Utilities - 1.0%

CMS Energy Corp.

11,100

165,390

Public Service Enterprise Group, Inc.

17,900

822,147

Sempra Energy

600

33,870

Wisconsin Energy Corp.

1,988

89,897

 

1,111,304

TOTAL UTILITIES

10,221,270

TOTAL COMMON STOCKS

(Cost $133,228,759)

111,566,190

Preferred Stocks - 1.2%

Shares

Value

Convertible Preferred Stocks - 1.1%

FINANCIALS - 1.1%

Capital Markets - 0.5%

Legg Mason, Inc. 7.00%

2,900

$ 121,356

Lehman Brothers Holdings, Inc.:

7.25%

300

241,329

Series Q, 8.75%

320

244,832

 

607,517

Commercial Banks - 0.2%

Huntington Bancshares, Inc. 8.50%

300

210,000

Diversified Financial Services - 0.1%

CIT Group, Inc. Series C, 8.75%

1,000

40,880

Citigroup, Inc. Series T, 6.50%

2,435

105,923

 

146,803

Thrifts & Mortgage Finance - 0.3%

Fannie Mae 8.75%

6,900

265,650

TOTAL FINANCIALS

1,229,970

Nonconvertible Preferred Stocks - 0.1%

FINANCIALS - 0.1%

Thrifts & Mortgage Finance - 0.1%

Fannie Mae Series S, 8.25%

3,586

82,299

Freddie Mac Series Z, 8.375%

3,530

85,779

 

168,078

TOTAL PREFERRED STOCKS

(Cost $1,729,969)

1,398,048

Investment Companies - 0.2%

 

 

 

 

Ares Capital Corp.
(Cost $384,654)

24,787

249,853

Money Market Funds - 1.6%

Shares

Value

Fidelity Cash Central Fund, 2.38% (b)

729,885

$ 729,885

Fidelity Securities Lending Cash Central Fund, 2.39% (b)(c)

1,017,150

1,017,150

TOTAL MONEY MARKET FUNDS

(Cost $1,747,035)

1,747,035

TOTAL INVESTMENT PORTFOLIO - 100.8%

(Cost $137,090,417)

114,961,126

NET OTHER ASSETS - (0.8)%

(882,556)

NET ASSETS - 100%

$ 114,078,570

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request.

(c) Investment made with cash collateral received from securities on loan.

(d) Security or a portion of the security is on loan at period end.

(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $31,360 or 0.0% of net assets.

Affiliated Central Funds

Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:

Fund

Income earned

Fidelity Cash Central Fund

$ 31,302

Fidelity Securities Lending Cash Central Fund

23,085

Total

$ 54,387

Other Information

The following is a summary of the inputs used, as of June 30, 2008, involving the Fund's assets carried at value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Security Valuation section in the accompanying Notes to Financial Statements.

#Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities

$ 114,961,126

$ 111,318,143

$ 3,642,983

$ -

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2008 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $956,474) - See accompanying schedule:

Unaffiliated issuers (cost $135,343,382)

$ 113,214,091

 

Fidelity Central Funds (cost $1,747,035)

1,747,035

 

Total Investments (cost $137,090,417)

 

$ 114,961,126

Cash

8,864

Foreign currency held at value (cost $711)

711

Receivable for investments sold

941,941

Receivable for fund shares sold

69,600

Dividends receivable

133,755

Distributions receivable from Fidelity Central Funds

7,922

Prepaid expenses

259

Other receivables

240

Total assets

116,124,418

 

 

 

Liabilities

Payable for investments purchased

$ 778,000

Payable for fund shares redeemed

136,205

Accrued management fee

56,869

Distribution fees payable

2,199

Other affiliated payables

14,816

Other payables and accrued expenses

40,609

Collateral on securities loaned, at value

1,017,150

Total liabilities

2,045,848

 

 

 

Net Assets

$ 114,078,570

Net Assets consist of:

 

Paid in capital

$ 134,426,774

Undistributed net investment income

634,880

Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions

1,146,212

Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies

(22,129,296)

Net Assets

$ 114,078,570

Statement of Assets and Liabilities - continued

 

June 30, 2008 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($50,456,163 ÷ 4,481,447 shares)

$ 11.26

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($783,689 ÷ 69,848 shares)

$ 11.22

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($9,006,329 ÷ 809,609 shares)

$ 11.12

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($53,832,389 ÷ 4,788,532 shares)

$ 11.24

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Statement of Operations

Six months ended June 30, 2008 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 1,083,929

Interest

 

241

Income from Fidelity Central Funds

 

54,387

Total income

 

1,138,557

 

 

 

Expenses

Management fee

$ 335,919

Transfer agent fees

72,763

Distribution fees

13,402

Accounting and security lending fees

26,023

Custodian fees and expenses

28,300

Independent trustees' compensation

260

Audit

22,244

Legal

172

Miscellaneous

10,914

Total expenses before reductions

509,997

Expense reductions

(467)

509,530

Net investment income (loss)

629,027

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

1,315,350

Investment not meeting investment restrictions

457

Foreign currency transactions

(274)

Total net realized gain (loss)

 

1,315,533

Change in net unrealized appreciation (depreciation) on:

Investment securities

(16,413,425)

Assets and liabilities in foreign currencies

(20)

Total change in net unrealized appreciation (depreciation)

 

(16,413,445)

Net gain (loss)

(15,097,912)

Net increase (decrease) in net assets resulting from operations

$ (14,468,885)

Statement of Changes in Net Assets

 

Six months ended June 30, 2008
(Unaudited)

Year ended
December 31, 2007

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 629,027

$ 737,354

Net realized gain (loss)

1,315,533

7,462,819

Change in net unrealized appreciation (depreciation)

(16,413,445)

(8,712,995)

Net increase (decrease) in net assets resulting from operations

(14,468,885)

(512,822)

Distributions to shareholders from net investment income

-

(758,002)

Distributions to shareholders from net realized gain

(3,606,092)

(9,838,231)

Total distributions

(3,606,092)

(10,596,233)

Share transactions - net increase (decrease)

6,518,628

55,267,994

Total increase (decrease) in net assets

(11,556,349)

44,158,939

 

 

 

Net Assets

Beginning of period

125,634,919

81,475,980

End of period (including undistributed net investment income of $634,880 and undistributed net investment income of $5,853, respectively)

$ 114,078,570

$ 125,634,919

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.10

$ 14.28

$ 12.63

$ 11.97

$ 10.86

$ 8.12

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .07

.10

.16

.15

.14 H

.05

Net realized and unrealized gain (loss)

  (1.54)

.22 I

1.70

.58

1.08

2.72

Total from investment operations

  (1.47)

.32

1.86

.73

1.22

2.77

Distributions from net investment income

  -

(.09)

(.13)

(.07)

(.11)

(.03)

Distributions from net realized gain

  (.37)

(1.41)

(.08)

-

-

-

Total distributions

  (.37)

(1.50) K

(.21)

(.07)

(.11)

(.03)

Net asset value, end of period

$ 11.26

$ 13.10

$ 14.28

$ 12.63

$ 11.97

$ 10.86

Total Return B, C, D

  (11.34)%

2.02%

14.75%

6.09%

11.24%

34.16%

Ratios to Average Net Assets F, J

 

 

 

 

 

 

Expenses before reductions

  .78% A

.77%

.88%

1.19%

2.65%

4.32%

Expenses net of fee waivers, if any

  .78% A

.77%

.85%

.85%

1.00%

1.28%

Expenses net of all reductions

  .78% A

.77%

.84%

.78%

.95%

1.22%

Net investment income (loss)

  1.10% A

.68%

1.16%

1.21%

1.26%

.57%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 50,456

$ 52,544

$ 35,416

$ 18,478

$ 583

$ 413

Portfolio turnover rate G

  42% A

52%

263%

181%

155%

164%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total return shown
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.03 per share. I The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Total distributions of $1.50 per share is comprised of distributions from net investment income of $.092 and distributions from net realized gain of $1.405 per share.

Financial Highlights - Service Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.06

$ 14.24

$ 12.60

$ 11.93

$ 10.84

$ 8.12

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .06

.09

.14

.13

.13 H

.05

Net realized and unrealized gain (loss)

  (1.53)

.21 I

1.69

.60

1.07

2.70

Total from investment operations

  (1.47)

.30

1.83

.73

1.20

2.75

Distributions from net investment income

  -

(.08)

(.11)

(.06)

(.11)

(.03)

Distributions from net realized gain

  (.37)

(1.41)

(.08)

-

-

-

Total distributions

  (.37)

(1.48) K

(.19)

(.06)

(.11)

(.03)

Net asset value, end of period

$ 11.22

$ 13.06

$ 14.24

$ 12.60

$ 11.93

$ 10.84

Total Return B, C, D

  (11.37)%

1.92%

14.56%

6.08%

11.07%

33.91%

Ratios to Average Net Assets F, J

 

 

 

 

 

 

Expenses before reductions

  .87% A

.86%

.96%

1.60%

2.75%

4.35%

Expenses net of fee waivers, if any

  .87% A

.86%

.95%

.97%

1.10%

1.35%

Expenses net of all reductions

  .87% A

.86%

.94%

.90%

1.04%

1.29%

Net investment income (loss)

  1.02% A

.60%

1.06%

1.09%

1.17%

.50%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 784

$ 958

$ 1,017

$ 1,232

$ 1,225

$ 972

Portfolio turnover rate G

  42% A

52%

263%

181%

155%

164%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.03 per share. I The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Total distributions of $1.48 per share is comprised of distributions from net investment income of $.077 and distributions from net realized gain of $1.405 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005
2004
2003

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 12.97

$ 14.14

$ 12.53

$ 11.87

$ 10.80

$ 8.10

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .05

.06

.12

.11

.11 H

.03

Net realized and unrealized gain (loss)

  (1.53)

.23 I

1.67

.59

1.07

2.70

Total from investment operations

  (1.48)

.29

1.79

.70

1.18

2.73

Distributions from net investment income

  -

(.06)

(.10)

(.04)

(.11)

(.03)

Distributions from net realized gain

  (.37)

(1.41)

(.08)

-

-

-

Total distributions

  (.37)

(1.46) K

(.18)

(.04)

(.11)

(.03)

Net asset value, end of period

$ 11.12

$ 12.97

$ 14.14

$ 12.53

$ 11.87

$ 10.80

Total Return B, C, D

  (11.53)%

1.86%

14.32%

5.92%

10.93%

33.75%

Ratios to Average Net Assets F, J

 

 

 

 

 

 

Expenses before reductions

  1.03% A

1.02%

1.15%

1.76%

2.93%

4.50%

Expenses net of fee waivers, if any

  1.03% A

1.02%

1.10%

1.11%

1.25%

1.51%

Expenses net of all reductions

  1.03% A

1.02%

1.09%

1.05%

1.20%

1.45%

Net investment income (loss)

  .86% A

.43%

.91%

.94%

1.01%

.34%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 9,006

$ 11,081

$ 7,803

$ 5,262

$ 3,575

$ 2,865

Portfolio turnover rate G

  42% A

52%

263%

181%

155%

164%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H Investment income per share reflects a special dividend which amounted to $.03 per share. I The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Total distributions of $1.46 per share is comprised of distributions from net investment income of $.058 and distributions from net realized gain of $1.405 per share.

Financial Highlights - Investor Class

 

Six months ended June 30, 2008
Years ended December 31,
 
(Unaudited)
2007
2006
2005 I

Selected Per-Share Data

 

 

 

 

Net asset value, beginning of period

$ 13.09

$ 14.26

$ 12.63

$ 12.23

Income from Investment Operations

 

 

 

 

Net investment income (loss) E

  .06

.08

.14

.06

Net realized and unrealized gain (loss)

  (1.54)

.23 H

1.69

.40

Total from investment operations

  (1.48)

.31

1.83

.46

Distributions from net investment income

  -

(.08)

(.12)

(.06)

Distributions from net realized gain

  (.37)

(1.41)

(.08)

-

Total distributions

  (.37)

(1.48) K

(.20)

(.06)

Net asset value, end of period

$ 11.24

$ 13.09

$ 14.26

$ 12.63

Total Return B, C, D

  (11.42)%

1.99%

14.49%

3.77%

Ratios to Average Net Assets F, J

 

 

 

 

Expenses before reductions

  .87% A

.88%

.99%

1.27% A

Expenses net of fee waivers, if any

  .87% A

.88%

.99%

1.00% A

Expenses net of all reductions

  .87% A

.88%

.98%

.93% A

Net investment income (loss)

  1.02% A

.58%

1.01%

1.06% A

Supplemental Data

 

 

 

 

Net assets, end of period (000 omitted)

$ 53,832

$ 61,052

$ 37,239

$ 11,034

Portfolio turnover rate G

  42% A

52%

263%

181%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of the underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I For the period July 21, 2005 (commencement of sale of shares) to December 31, 2005. J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. K Total distributions of $1.48 per share is comprised of distributions from net investment income of $.078 and distributions from net realized gain of $1.405 per share.

See accompanying notes which are an integral part of the financial statements.

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2008 (Unaudited)

1. Organization.

VIP Value Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the trust) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions also differ by class.

2. Investments in Fidelity Central Funds.

The Fund may invest in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the SEC's web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC's web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following summarizes the significant accounting policies of the Fund:

Security Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. Wherever possible, the Fund uses independent pricing services approved by the Board of Trustees to value its investments.

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value each business day. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued at amortized cost, which approximates value.

When current market prices or quotations are not readily available or reliable, valuations may be determined in good faith in accordance with procedures adopted by the Board of Trustees. Factors used in determining value may include significant market or security specific events, changes in interest rates and credit quality, and developments in foreign markets which are monitored by evaluating the performance of ADRs, futures contracts and exchange-traded funds. The frequency with which these procedures are used cannot be predicted and may be utilized to a significant extent. The value of securities used for net asset value (NAV) calculation under these procedures may differ from published prices for the same securities.

The Fund is subject to the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation techniques giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements) when market prices are not readily available or reliable. The three levels of the hierarchy under SFAS 157 are described below:

Level 1

Quoted prices in active markets for identical securities.

Level 2

Prices determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level 3

Prices determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Security Valuation - continued

The aggregate value by input level as of June 30, 2008, for the Fund's investments is included at the end of the Fund's Schedule of Investments.

Foreign Currency. The Fund uses foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rate at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 pm Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among each Fund in the trust. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing substantially all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code and filing its U.S. federal tax return. As a result, no provision for income taxes is required. The Fund is subject to the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes (FIN 48). FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. Each of the Fund's federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles.

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.

Book-tax differences are primarily due to foreign currency transactions, partnerships and losses deferred due to wash sales.

The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:

Unrealized appreciation

$ 9,837,834

 

Unrealized depreciation

(32,149,644)

 

Net unrealized appreciation (depreciation)

$ (22,311,810)

 

Cost for federal income tax purposes

$ 137,272,936

 

4. Operating Policies.

Repurchase Agreements. FMR has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the Fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts which are then invested in repurchase agreements. The Fund may also invest directly with institutions in repurchase agreements. Repurchase agreements are collateralized by government or non-government securities. Upon settlement date, collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. The Fund monitors, on a daily basis, the value of the collateral to ensure it is at least equal to the principal amount of the repurchase agreement (including accrued interest). In the event of a default by the counterparty, realization of the collateral proceeds could be delayed, during which time the value of the collateral may decline.

Semiannual Report

4. Operating Policies - continued

Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $30,760,696 and $24,994,940, respectively.

The Fund realized a gain on the sale of an investment not meeting the investment restrictions of the Fund.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and a group fee rate that averaged .26% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% of the Fund's average net assets.

Distribution and Service Plan. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of FMR, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's average net assets.

For the period, each class paid FDC the following amounts, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services:

Service Class

$ 441

 

Service Class 2

12,961

 

 

$ 13,402

 

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. Prior to February 1, 2008, Investor Class paid a monthly asset-based transfer agent fee of .18% of average net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class

$ 21,311

 

Service Class

297

 

Service Class 2

4,088

 

Investor Class

47,067

 

 

$ 72,763

 

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for the month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms were $1,481 for the period.

7. Committed Line of Credit.

The Fund participates with other funds managed by FMR in a $4.2 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro rata portion of the line of credit, which amounted to $121 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Security Lending.

The Fund lends portfolio securities from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less fees and expenses associated with the loan, plus any premium payments that may be received on the loan of certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Net income from lending portfolio securities during the period amounted to $23,085.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $467 for the period.

10. Other.

The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.

At the end of the period, VIP Freedom 2020 Porfolio was the owner of record of approximately 13% of the total outstanding shares of the Fund. The VIP Freedom Funds were the owners of record, in the aggregate, of approximately 31% of the total outstanding shares of the Fund. FMR or its affiliates were the owners of record of 40% of the total outstanding shares of the fund.

In December 2006, the Independent Trustees, with the assistance of independent counsel, completed an investigation regarding gifts, gratuities and business entertainment provided by certain brokers to certain individuals who were employed on FMR's domestic equity trading desk during the period 2002 to 2004. The Independent Trustees and FMR agreed that, despite the absence of proof that the Fidelity mutual funds experienced diminished execution quality as a result of the improper receipt of gifts and business entertainment, the conduct at issue was serious and was worthy of redress. Accordingly, the Independent Trustees requested, and FMR agreed to make, a payment of $42 million plus accrued interest, which equaled approximately $7.3 million, to certain Fidelity mutual funds.

In March 2008, the Trustees approved a method for allocating this payment among the funds and, in total, FMR paid the fund $1,412, which is recorded in the accompanying Statement of Operations.

In a related administrative order dated March 5, 2008, the U.S. Securities and Exchange Commission ("SEC") announced a settlement with FMR and FMR Co., Inc. (an affiliate of FMR) involving the SEC's regulatory rules for investment advisers and the improper receipt of gifts, gratuities and business entertainment. Without admitting or denying the SEC's findings, FMR agreed to pay an $8 million civil penalty to the United States Treasury.

11. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
June 30,
2008

Year ended
December 31,
2007

From net investment income

 

 

Initial Class

$ -

$ 354,828

Service Class

-

5,442

Service Class 2

-

48,475

Investor Class

-

349,257

Total

$ -

$ 758,002

Semiannual Report

11. Distributions to Shareholders - continued

Distributions to shareholders of each class were as follows:

 

Six months ended
June 30,
2008

Year ended
December 31,
2007

From net realized gain

 

 

Initial Class

$ 1,550,219

$ 4,201,819

Service Class

27,064

99,826

Service Class 2

300,918

854,017

Investor Class

1,727,891

4,682,569

Total

$ 3,606,092

$ 9,838,231

12. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended June 30,
2008

Year ended
December 31,
2007

Six months ended June 30,
2008

Year ended
December 31,
2007

Initial Class

 

 

 

 

Shares sold

1,038,696

2,350,969

$ 12,392,942

$ 33,804,671

Reinvestment of distributions

132,046

334,365

1,550,219

4,556,647

Shares redeemed

(699,335)

(1,155,992)

(8,379,799)

(16,669,767)

Net increase (decrease)

471,407

1,529,342

$ 5,563,362

$ 21,691,551

Service Class

 

 

 

 

Shares sold

53

1,391

$ 652

$ 20,703

Reinvestment of distributions

2,313

7,711

27,064

105,268

Shares redeemed

(5,820)

(7,243)

(67,492)

(102,690)

Net increase (decrease)

(3,454)

1,859

$ (39,776)

$ 23,281

Service Class 2

 

 

 

 

Shares sold

238,895

627,391

$ 2,814,374

$ 8,911,215

Reinvestment of distributions

25,919

66,948

300,918

902,492

Shares redeemed

(309,775)

(391,453)

(3,635,959)

(5,568,414)

Net increase (decrease)

(44,961)

302,886

$ (520,667)

$ 4,245,293

Investor Class

 

 

 

 

Shares sold

700,392

2,580,718

$ 8,390,728

$ 37,026,404

Reinvestment of distributions

147,431

369,836

1,727,891

5,031,826

Shares redeemed

(723,444)

(897,132)

(8,602,910)

(12,750,361)

Net increase (decrease)

124,379

2,053,422

$ 1,515,709

$ 29,307,869

Semiannual Report

Proxy Voting Results

A special meeting of the fund's shareholders was held on May 14, 2008. The results of votes taken among shareholders on the proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.

PROPOSAL 1

To elect a Board of Trustees.A

 

# of
Votes

% of
Votes

James C. Curvey

Affirmative

821,220,039.81

95.845

Withheld

35,598,080.64

4.155

TOTAL

856,818,120.45

100.000

Dennis J. Dirks

Affirmative

822,124,493.63

95.951

Withheld

34,693,626.82

4.049

TOTAL

856,818,120.45

100.000

Edward C. Johnson 3d

Affirmative

820,473,313.05

95.758

Withheld

36,344,807.40

4.242

TOTAL

856,818,120.45

100.000

Alan J. Lacy

Affirmative

822,170,402.95

95.956

Withheld

34,647,717.50

4.044

TOTAL

856,818,120.45

100.000

Ned C. Lautenbach

Affirmative

821,435,006.18

95.870

Withheld

35,383,114.27

4.130

TOTAL

856,818,120.45

100.000

Joseph Mauriello

Affirmative

822,174,756.53

95.957

Withheld

34,643,363.92

4.043

TOTAL

856,818,120.45

100.000

Cornelia M. Small

Affirmative

822,263,792.20

95.967

Withheld

34,554,328.25

4.033

TOTAL

856,818,120.45

100.000

William S. Stavropoulos

Affirmative

821,014,987.67

95.821

Withheld

35,803,132.78

4.179

TOTAL

856,818,120.45

100.000

David M. Thomas

Affirmative

822,321,743.26

95.974

Withheld

34,496,377.19

4.026

TOTAL

856,818,120.45

100.000

Michael E. Wiley

Affirmative

822,218,346.41

95.962

Withheld

34,599,774.04

4.038

TOTAL

856,818,120.45

100.000

PROPOSAL 2

To amend the Declaration of Trust to reduce the required quorum for future shareholder meetings.A

 

# of
Votes

% of
Votes

Affirmative

701,273,514.99

81.846

Against

103,131,328.05

12.037

Abstain

52,413,277.41

6.117

TOTAL

856,818,120.45

100.000

A Denotes trust-wide proposal and voting results.

Semiannual Report

Investments

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Management & Research (U.K.) Inc.

Fidelity Research & Analysis Company

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

State Street Bank and Trust Company
Quincy, MA 

VIPVAL-SANN-0808
1.761034.107

Item 2. Code of Ethics

Not applicable.

Item 3. Audit Committee Financial Expert

Not applicable.

Item 4. Principal Accountant Fees and Services

Not applicable.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Investments

(a) Not applicable.

(b) Not applicable

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies

Not applicable.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Not applicable.

Item 9. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers

Not applicable.

Item 10. Submission of Matters to a Vote of Security Holders

There were no material changes to the procedures by which shareholders may recommend nominees to the Variable Insurance Products Fund's Board of Trustees.

Item 11. Controls and Procedures

(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) for each Fund provide reasonable assurances that material information relating to such Fund is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.

(a)(ii) There was no change in a Fund's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, a Fund's internal control over financial reporting.

Item 12. Exhibits

(a)

(1)

Not applicable.

(a)

(2)

Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

(a)

(3)

Not applicable.

(b)

 

Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Variable Insurance Products Fund

By:

/s/ Kenneth B. Robins

 

Kenneth B. Robins

 

President and Treasurer

 

 

Date:

August 25, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:

/s/ Kenneth B. Robins

 

Kenneth B. Robins

 

President and Treasurer

 

 

Date:

August 25, 2008

By:

/s/Christine Reynolds

 

Christine Reynolds

 

Chief Financial Officer

 

 

Date:

August 25, 2008