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 811-5511

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

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

Eric D. Roiter, Secretary

82 Devonshire St.

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

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

Date of fiscal year end:

December 31

Date of reporting period:

June 30, 2006

Item 1. Reports to Stockholders

Fidelity® Variable Insurance Products:

Asset ManagerSM Portfolio

Semiannual Report

June 30, 2006

(2_fidelity_logos) (Registered_Trademark)

Contents

Notes to Shareholders

<Click Here>

An explanation of the changes to the fund.

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.

Board Approval of Investment Advisory Contracts and Management Fees

<Click Here>

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

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

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

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

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

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

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

NOT FDIC INSURED · MAY LOSE VALUE · NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Portfolio

Notes to Shareholders:

  • Effective July 1, 2006, the equity component of the fund's Composite benchmark will change from the Standard & Poor's 500SM Index to a mix of the Dow Jones Wilshire 5000 Composite IndexSM and the Morgan Stanley Capital InternationalSM Europe, Australasia, Far East (MSCI® EAFE®) Index to better reflect the fund's investments in U.S. and foreign stocks.
  • Fidelity has recently changed the way the VIP Asset Manager Portfolios invest in investment-grade debt securities and certain other types of investments. Rather than investing in investment-grade debt securities through a subportfolio, the VIP Asset Manager Portfolios will now gain exposure to the investment-grade sector through their investments in a central fund.

A central fund is a mutual fund used by this fund and other Fidelity funds as an investment vehicle to gain exposure to a particular market sector - in this case, investment-grade debt. Instead of multiple funds each investing in investment-grade debt securities individually, they can now take advantage of consolidating investments in a single, larger pool of investment-grade debt securities by investing directly in a central fund.

Shares of the central funds are offered only to other Fidelity mutual funds and accounts; investors cannot directly invest in them. It is important to note that this new investment structure does not change the investment strategy of any of the VIP Portfolios.

If you have any questions, please call Fidelity or the insurance company that issued your policy.

Semiannual Report

VIP Asset Manager Portfolio

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, 2006 to June 30, 2006).

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 affiliated central funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying affiliated 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 affiliated central funds, will indirectly bear its pro rata share of the fees and expenses incurred by the underlying affiliated 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, 2006

Ending
Account Value
June 30, 2006

Expenses Paid
During Period *
January 1, 2006
to June 30, 2006

Initial Class

Actual

$ 1,000.00

$ 1,002.80

$ 3.18

HypotheticalA

$ 1,000.00

$ 1,021.62

$ 3.21

Service Class

Actual

$ 1,000.00

$ 1,002.30

$ 3.72

HypotheticalA

$ 1,000.00

$ 1,021.08

$ 3.76

Service Class 2

Actual

$ 1,000.00

$ 1,001.40

$ 4.47

HypotheticalA

$ 1,000.00

$ 1,020.33

$ 4.51

Investor Class

Actual

$ 1,000.00

$ 1,001.90

$ 3.82

HypotheticalA

$ 1,000.00

$ 1,020.98

$ 3.86

A 5% return per year before expenses

* Expenses are equal to each Class' annualized expense ratio (shown in the table below); multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). The fees and expenses of the underlying affiliated central funds in which the fund invests are not included in the fund's annualized expense ratio.

Annualized
Expense Ratio

Initial Class

.64%

Service Class

.75%

Service Class 2

.90%

Investor Class

.77%

Semiannual Report

VIP Asset Manager Portfolio

Investment Changes

Top Five Stocks as of June 30, 2006

% of fund's
net assets

% of fund's net assets
6 months ago

Johnson & Johnson

1.6

1.1

General Electric Co.

1.3

1.3

Exxon Mobil Corp.

1.2

0.4

Valero Energy Corp.

1.0

0.0

Bank of America Corp.

1.0

1.3

6.1

Top Five Bond Issuers as of June 30, 2006

(with maturities greater than one year)

% of fund's
net assets

% of fund's net assets
6 months ago

Fannie Mae

11.6

8.9

U.S. Treasury Obligations

7.6

4.7

Freddie Mac

1.7

1.0

CS First Boston Mortgage Securities Corp.

0.4

0.1

Wells Fargo Mortgage Backed Securities Trust

0.3

0.2

21.6

Top Five Market Sectors as of June 30, 2006

% of fund'
net assets

% of fund's net assets
6 months ago

Financials

17.6

13.7

Health Care

9.1

8.7

Consumer Staples

6.7

4.3

Energy

6.4

4.1

Consumer Discretionary

6.2

8.8

Asset Allocation (% of fund's net assets)

As of June 30, 2006 *

As of December 31, 2005 **

Stock Class and
Equity Futures 50.4%

Stock Class and
Equity Futures 52.8%

Bond Class 40.6%

Bond Class 34.6%

Short-Term Class 9.0%

Short-Term Class 12.6%

* Foreign investments

9.2%

** Foreign investments

10.4%



Asset allocations in the pie charts reflect the categorization of assets as defined in the fund's prospectus in effect as of the time periods indicated above. Financial Statement categorizations conform to accounting standards and will differ from the pie chart. Percentages are adjusted for the effect of futures contracts and swap contracts, if applicable.

The information in the above tables is based on the combined investments of the fund and its pro-rata share of the investments of Fidelity's fixed-income central funds.

For an unaudited list of holdings for each fixed-income central fund, visit advisor.fidelity.com.

Semiannual Report

VIP Asset Manager Portfolio

Investments June 30, 2006 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 43.1%

Shares

Value (Note 1)

CONSUMER DISCRETIONARY - 3.8%

Automobiles - 0.5%

Fiat Spa (a)

135,300

$ 1,797,565

Renault SA

11,100

1,192,726

Toyota Motor Corp.

170,400

8,911,068

11,901,359

Hotels, Restaurants & Leisure - 0.6%

Accor SA

11,400

693,999

Greek Organization of Football Prognostics SA

125,000

4,525,170

International Game Technology

190,100

7,212,394

12,431,563

Household Durables - 0.2%

Koninklijke Philips Electronics NV (NY Shares)

45,700

1,423,098

Nexity

16,400

952,861

Sony Corp.

23,300

1,026,132

Steinhoff International Holdings Ltd.

107,400

319,803

3,721,894

Internet & Catalog Retail - 0.3%

Submarino SA

293,000

5,884,621

Media - 1.1%

Comcast Corp. Class A (special) (a)(d)

524,800

17,202,944

News Corp. Class B

342,600

6,913,668

NTL, Inc.

66,450

1,654,605

25,771,217

Multiline Retail - 0.8%

Federated Department Stores, Inc.

242,400

8,871,840

Kohl's Corp. (a)(d)

169,800

10,038,576

18,910,416

Specialty Retail - 0.3%

Best Buy Co., Inc.

33,200

1,820,688

Circuit City Stores, Inc.

168,500

4,586,570

6,407,258

TOTAL CONSUMER DISCRETIONARY

85,028,328

CONSUMER STAPLES - 6.4%

Beverages - 0.8%

PepsiCo, Inc.

253,000

15,190,120

Pernod Ricard SA

9,700

1,923,277

17,113,397

Food & Staples Retailing - 1.2%

Aeon Co. Ltd.

97,200

2,132,156

Costco Wholesale Corp.

76,700

4,381,871

Shinsegae Co. Ltd.

1,167

584,300

Wal-Mart Stores, Inc.

424,200

20,433,714

27,532,041

Food Products - 1.7%

Archer-Daniels-Midland Co.

274,000

11,310,720

Shares

Value (Note 1)

Hershey Co.

78,900

$ 4,345,023

Kellogg Co.

277,000

13,415,110

Koninklijke Numico NV

32,200

1,445,366

Nestle SA sponsored ADR

88,300

6,878,570

37,394,789

Household Products - 0.5%

Clorox Co.

179,200

10,925,824

Reckitt Benckiser PLC

34,200

1,277,743

12,203,567

Personal Products - 1.0%

Avon Products, Inc.

582,600

18,060,600

Estee Lauder Companies, Inc. Class A

108,700

4,203,429

22,264,029

Tobacco - 1.2%

Altria Group, Inc.

182,300

13,386,289

Reynolds American, Inc.

119,200

13,743,760

27,130,049

TOTAL CONSUMER STAPLES

143,637,872

ENERGY - 5.0%

Energy Equipment & Services - 1.4%

Baker Hughes, Inc.

68,900

5,639,465

Compagnie Generale de Geophysique SA (a)

8,400

1,449,538

GlobalSantaFe Corp.

76,000

4,389,000

Noble Corp.

44,700

3,326,574

Schlumberger Ltd. (NY Shares)

173,100

11,270,541

Transocean, Inc. (a)

53,200

4,273,024

30,348,142

Oil, Gas & Consumable Fuels - 3.6%

Canadian Natural Resources Ltd.

43,400

2,399,577

EOG Resources, Inc.

49,200

3,411,528

Exxon Mobil Corp.

433,700

26,607,495

Hess Corp.

264,300

13,968,255

Norsk Hydro ASA

53,600

1,431,656

OMV AG

26,100

1,554,170

Quicksilver Resources, Inc. (a)

19,700

725,157

Talisman Energy, Inc.

123,100

2,148,157

Total SA sponsored ADR

31,700

2,076,984

Ultra Petroleum Corp. (a)

59,800

3,544,346

Valero Energy Corp.

333,600

22,191,072

80,058,397

TOTAL ENERGY

110,406,539

FINANCIALS - 7.8%

Capital Markets - 0.6%

Daiwa Securities Group, Inc.

77,000

917,876

Greenhill & Co., Inc. (d)

129,700

7,880,572

Legg Mason, Inc.

5,700

567,264

Merrill Lynch & Co., Inc.

100

6,956

Common Stocks - continued

Shares

Value (Note 1)

FINANCIALS - continued

Capital Markets - continued

Nikko Cordial Corp.

128,500

$ 1,644,081

UBS AG (NY Shares)

26,300

2,885,110

13,901,859

Commercial Banks - 1.6%

Banca Intesa Spa

181,220

1,061,254

Bank of China Ltd. (H Shares)

1,792,000

813,366

BNP Paribas SA

20,300

1,943,687

Compass Bancshares, Inc.

76,800

4,270,080

Daegu Bank Co. Ltd.

43,620

781,638

Deutsche Postbank AG

13,300

957,172

Finansbank AS

160,000

778,515

HSBC Holdings PLC (Hong Kong) (Reg.)

58,800

1,038,996

Kookmin Bank sponsored ADR

12,500

1,038,250

Nedbank Group Ltd.

32,900

518,508

Raiffeisen International Bank Holding AG

26,600

2,310,414

Societe Generale Series A

16,500

2,427,282

Unicredito Italiano Spa

219,800

1,721,593

Wells Fargo & Co.

252,100

16,910,868

36,571,623

Consumer Finance - 0.7%

Credit Saison Co. Ltd.

27,900

1,321,547

ORIX Corp.

7,520

1,836,871

SLM Corp.

239,900

12,695,508

15,853,926

Diversified Financial Services - 2.0%

Bank of America Corp.

447,500

21,524,750

Citigroup, Inc.

425,800

20,540,592

FirstRand Ltd.

213,800

503,936

ING Groep NV (Certificaten Van Aandelen)

43,200

1,698,624

44,267,902

Insurance - 2.8%

Allianz AG (Reg.)

10,900

1,722,200

American International Group, Inc.

231,000

13,640,550

AXA SA

53,200

1,746,251

AXA SA rights 6/30/06 (a)

53,200

44,915

Benfield Group PLC

123,800

789,389

Hartford Financial Services Group, Inc.

152,600

12,909,960

MetLife, Inc.

246,600

12,628,386

Muenchener Rueckversicherungs-Gesellschaft AG (Reg.)

12,600

1,721,555

Prudential Financial, Inc.

211,900

16,464,630

T&D Holdings, Inc.

10,450

844,767

62,512,603

Real Estate Management & Development - 0.1%

Mitsui Fudosan Co. Ltd.

50,000

1,085,864

TOTAL FINANCIALS

174,193,777

Shares

Value (Note 1)

HEALTH CARE - 8.7%

Biotechnology - 1.7%

Celgene Corp. (a)

372,500

$ 17,667,675

Gilead Sciences, Inc. (a)

219,500

12,985,620

ImClone Systems, Inc. (a)

68,700

2,654,568

Neurocrine Biosciences, Inc. (a)

279,100

2,958,460

Theravance, Inc. (a)

21,100

482,768

36,749,091

Health Care Equipment & Supplies - 0.4%

Hologic, Inc. (a)

113,700

5,612,232

Synthes, Inc.

18,413

2,221,609

7,833,841

Health Care Providers & Services - 1.9%

Aetna, Inc.

189,400

7,562,742

Laboratory Corp. of America Holdings (a)

68,500

4,262,755

Medco Health Solutions, Inc. (a)

191,500

10,969,120

Quest Diagnostics, Inc.

72,900

4,368,168

UnitedHealth Group, Inc.

353,500

15,829,730

42,992,515

Life Sciences Tools & Services - 0.2%

Applera Corp. - Applied Biosystems Group

135,500

4,383,425

Pharmaceuticals - 4.5%

Allergan, Inc.

91,300

9,792,838

Elan Corp. PLC sponsored ADR (a)

636,400

10,627,880

Johnson & Johnson

589,400

35,316,848

Merck & Co., Inc.

511,000

18,615,730

New River Pharmaceuticals, Inc. (a)

83,000

2,365,500

Novartis AG:

(Reg.)

41,637

2,245,067

sponsored ADR

233,800

12,606,496

Roche Holding AG (participation certificate)

22,421

3,706,572

Sanofi-Aventis sponsored ADR

30,100

1,465,870

Teva Pharmaceutical Industries Ltd. sponsored ADR

141,000

4,454,190

101,196,991

TOTAL HEALTH CARE

193,155,863

INDUSTRIALS - 4.4%

Aerospace & Defense - 0.7%

BAE Systems PLC

246,900

1,688,478

Hexcel Corp. (a)

103,300

1,622,843

L-3 Communications Holdings, Inc.

166,100

12,527,262

15,838,583

Airlines - 0.6%

Alaska Air Group, Inc. (a)

80,600

3,177,252

AMR Corp. (a)

133,100

3,383,402

Common Stocks - continued

Shares

Value (Note 1)

INDUSTRIALS - continued

Airlines - continued

JetBlue Airways Corp. (a)

213,600

$ 2,593,104

US Airways Group, Inc. (a)

88,200

4,457,628

13,611,386

Building Products - 0.1%

Pfleiderer AG

48,900

1,373,036

Commercial Services & Supplies - 0.5%

Citiraya Industries Ltd. (a)

181,000

1

Techem AG

21,000

972,448

Waste Management, Inc.

290,100

10,408,788

11,381,237

Electrical Equipment - 0.1%

Schneider Electric SA

11,600

1,209,356

Sumitomo Electric Industries Ltd.

86,100

1,261,120

2,470,476

Industrial Conglomerates - 1.3%

General Electric Co.

848,400

27,963,264

Machinery - 0.4%

Atlas Copco AB (A Shares)

50,500

1,403,636

Caterpillar, Inc.

61,800

4,602,864

Fanuc Ltd.

12,200

1,096,054

Heidelberger Druckmaschinen AG

40,700

1,850,855

Metso Corp. sponsored ADR

18,500

669,145

9,622,554

Marine - 0.2%

Kuehne & Nagel International AG

67,980

4,949,055

Road & Rail - 0.5%

Norfolk Southern Corp.

217,100

11,554,062

TOTAL INDUSTRIALS

98,763,653

INFORMATION TECHNOLOGY - 3.5%

Communications Equipment - 0.5%

Corning, Inc. (a)

76,300

1,845,697

QUALCOMM, Inc.

127,700

5,116,939

Sandvine Corp. (e)

1,569,000

3,293,706

10,256,342

Computers & Peripherals - 0.1%

M-Systems Flash Disk Pioneers Ltd. (a)

85,000

2,518,550

Electronic Equipment & Instruments - 0.3%

Hon Hai Precision Industry Co. Ltd. (Foxconn)

704,000

4,348,565

Hoya Corp.

35,800

1,273,376

5,621,941

Internet Software & Services - 0.2%

Google, Inc. Class A (sub. vtg.) (a)

12,600

5,283,558

LoopNet, Inc. (a)

4,300

80,023

5,363,581

Shares

Value (Note 1)

IT Services - 0.5%

Infosys Technologies Ltd.

20,662

$ 1,386,601

MoneyGram International, Inc.

302,500

10,269,875

11,656,476

Office Electronics - 0.1%

Neopost SA

15,500

1,766,639

Semiconductors & Semiconductor Equipment - 1.5%

Advanced Semiconductor Engineering, Inc.

1,482,000

1,464,676

ATI Technologies, Inc. (a)

71,200

1,038,030

Atmel Corp. (a)

499,900

2,774,445

Broadcom Corp. Class A (a)

124,600

3,744,230

Hittite Microwave Corp.

74,900

2,708,384

Marvell Technology Group Ltd. (a)

93,500

4,144,855

Samsung Electronics Co. Ltd.

3,720

2,364,457

Spansion, Inc.

805,000

12,831,700

Trident Microsystems, Inc. (a)

171,600

3,256,968

34,327,745

Software - 0.3%

BEA Systems, Inc. (a)

431,400

5,647,026

TOTAL INFORMATION TECHNOLOGY

77,158,300

MATERIALS - 1.5%

Chemicals - 0.8%

Monsanto Co.

159,200

13,403,048

Nitto Denko Corp.

25,200

1,794,888

Shin-Etsu Chemical Co. Ltd.

21,100

1,146,970

Syngenta AG (Switzerland)

10,693

1,420,030

Tokuyama Corp.

14,000

207,997

17,972,933

Metals & Mining - 0.7%

AUR Resources, Inc.

196,100

3,126,919

BHP Billiton Ltd.

44,000

947,540

Titanium Metals Corp. (a)(d)

319,500

10,984,410

15,058,869

TOTAL MATERIALS

33,031,802

TELECOMMUNICATION SERVICES - 1.9%

Diversified Telecommunication Services - 0.8%

AT&T, Inc.

644,200

17,966,738

Wireless Telecommunication Services - 1.1%

America Movil SA de CV Series L sponsored ADR

205,300

6,828,278

American Tower Corp. Class A (a)

293,900

9,146,168

NII Holdings, Inc. (a)

148,500

8,372,430

24,346,876

TOTAL TELECOMMUNICATION SERVICES

42,313,614

Common Stocks - continued

Shares

Value (Note 1)

UTILITIES - 0.1%

Electric Utilities - 0.1%

E.ON AG

23,200

$ 2,669,160

TOTAL COMMON STOCKS

(Cost $936,893,410)

960,358,908

U.S. Treasury Obligations - 0.4%

Principal Amount

U.S. Treasury Bills, yield at date of purchase 4.61% to 4.83% 7/6/06 to 9/7/06 (f)
(Cost $8,855,150)

$ 8,910,000

8,858,274

Fixed-Income Funds - 42.0%

Shares

Fidelity Floating Rate Central Investment Portfolio (g)

703,100

70,429,527

Fidelity High Income Central Investment Portfolio 1 (g)

870,370

84,008,149

Fidelity VIP Investment Grade Central Investment Portfolio (g)

7,778,751

782,386,753

TOTAL FIXED-INCOME FUNDS

(Cost $950,532,269)

936,824,429

Money Market Funds - 16.1%

Fidelity Cash Central Fund, 5.11% (b)

203,698,887

203,698,887

Fidelity Money Market Central Fund, 5.23% (b)

123,860,162

123,860,162

Fidelity Securities Lending Cash Central Fund, 5.14% (b)(c)

31,473,050

31,473,050

TOTAL MONEY MARKET FUNDS

(Cost $359,032,099)

359,032,099

TOTAL INVESTMENT PORTFOLIO - 101.6%

(Cost $2,255,312,928)

2,265,073,710

NET OTHER ASSETS - (1.6)%

(36,169,822)

NET ASSETS - 100%

$ 2,228,903,888

Futures Contracts

Expiration Date

Underlying
Face Amount
at Value

Unrealized
Appreciation/
(Depreciation)

Purchased

Equity Index Contracts

128 Dow Jones Euro Stoxx 50 Index Contracts (Germany)

Sept. 2006

$ 5,668,138

$ 327,932

55 FTSE 100 Index Contracts (United Kingdom)

Sept. 2006

5,683,824

241,672

481 S&P 500 Index Contracts

Sept. 2006

153,847,850

339,038

43 TOPIX 150 Index Contracts (Japan)

Sept. 2006

5,576,082

397,132

TOTAL EQUITY INDEX CONTRACTS

$ 170,775,894

$ 1,305,774

The face value of futures purchased as a percentage of net assets - 7.8%

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 period end, the value of these securities amounted to $3,293,706 or 0.1% of net assets.

(f) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $8,858,274.

(g) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. A complete unaudited list of holdings for each fixed-income central fund, as of the investing fund's report date, is available upon request or at advisor.fidelity.com. The reports are located just after the fund's financial statements and quarterly reports but are not part of the financial statements or quarterly reports. In addition, the fixed-income central fund's financial statements are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.

Affiliated Central Funds

Information regarding fiscal year to date income earned by the fund from the affiliated Central funds is as follows:

Fund

Income earned

Fidelity Cash Central Fund

$ 5,849,182

Fidelity Floating Rate Central Investment Portfolio

1,867,396

Fidelity High Income Central Investment Portfolio 1

5,062,872

Fidelity Money Market Central Fund

2,947,066

Fidelity Securities Lending Cash Central Fund

145,570

Fidelity Ultra-Short Central Fund

2,416,641

Fidelity VIP Investment Grade Central Investment Portfolio

706,352

Total

$ 18,995,079

Additional information regarding the fund's fiscal year to date purchases and sales, including the ownership percentage, of the following fixed income Central Funds is as follows:

Fund

Value, beginning
of period

Purchases

Sales
Proceeds

Value, end
of period

% ownership,
end of period

Fidelity Floating Rate Central Investment Portfolio

$ 46,624,748

$ 23,999,102

$ -

$ 70,429,527

5.6%

Fidelity High Income Central Investment Portfolio 1

144,892,045

-

60,972,296

84,008,149

12.4%

Fidelity Ultra-Short Central Fund

91,970,264

25,002,507

116,954,780

-

0.0%

Fidelity VIP Investment Grade Central Investment Portfolio

-

777,981,226 *

-

782,386,753

29.5%

Total

$ 283,487,057

$ 826,982,835

$ 177,927,076

$ 936,824,429

* $652,127,185 represents the value of shares received through in-kind contributions.

Other Information

The composition of credit quality ratings as a percentage of net assets is as follows (ratings are unaudited):

U.S. Government and U.S. Government Agency Obligations

21.1%

AAA, AA, A

6.7%

BBB

5.2%

BB

3.1%

B

2.8%

CCC, CC, C

0.4%

Not Rated

0.7%

Equities

50.9%

Short-Term Investments and Net Other Assets

9.1%

100.0%

We have used ratings from Moody's Investors Services, Inc. Where Moody's ratings are not available, we have used S&P ratings. Percentages are adjusted for the effect of futures contracts, if applicable.

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

United States of America

90.8%

Switzerland

1.5%

Japan

1.2%

France

0.9%

Others (individually less than 1%)

5.6%

100.0%

The information in the above tables is based on the combined investments of the fund and it's pro-rata share of the investments of Fidelity's fixed-income central funds.

Income Tax Information

At December 31, 2005, the fund had a capital loss carryforward of approximately $98,979,772 of which $24,358,272, $33,903,363 and $40,718,137 will expire on December 31, 2009, 2010 and 2011, respectively.

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

Semiannual Report

VIP Asset Manager Portfolio

Financial Statements

Statement of Assets and Liabilities

June 30, 2006 (Unaudited)

Assets

Investment in securities, at value (including securities loaned of $31,173,492) - See accompanying schedule:

Unaffiliated issuers (cost $945,748,560)

$ 969,217,182

Affiliated Central Funds (cost $1,309,564,368)

1,295,856,528

Total Investments (cost $2,255,312,928)

$ 2,265,073,710

Foreign currency held at value (cost $63)

64

Receivable for investments sold

9,677,954

Receivable for fund shares sold

174,191

Dividends receivable

997,492

Interest receivable

3,638,275

Prepaid expenses

5,189

Other receivables

144,005

Total assets

2,279,710,880

Liabilities

Payable for fund shares redeemed

$ 17,847,080

Accrued management fee

963,864

Distribution fees payable

14,287

Payable for daily variation on futures contracts

59,669

Other affiliated payables

278,888

Other payables and accrued expenses

170,154

Collateral on securities loaned, at value

31,473,050

Total liabilities

50,806,992

Net Assets

$ 2,228,903,888

Net Assets consist of:

Paid in capital

$ 2,149,532,981

Undistributed net investment income

29,891,761

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

38,422,622

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

11,056,524

Net Assets

$ 2,228,903,888

Statement of Assets and Liabilities - continued

June 30, 2006 (Unaudited)

Initial Class:
Net Asset Value, offering price and redemption price per share ($2,133,327,234 ÷ 145,286,374 shares)

$ 14.68

Service Class:
Net Asset Value, offering price and redemption price per share ($24,228,260 ÷ 1,660,146 shares)

$ 14.59

Service Class 2:
Net Asset Value, offering price and redemption price per share ($50,004,201 ÷ 3,454,678 shares)

$ 14.47

Investor Class:
Net Asset Value, offering price and redemption price per share ($21,344,193 ÷ 1,456,562 shares)

$ 14.65

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

Semiannual Report

VIP Asset Manager Portfolio
Financial Statements - continued

Statement of Operations

Six months ended June 30, 2006 (Unaudited)

Investment Income

Dividends

$ 6,374,478

Interest

15,022,332

Income from affiliated Central Funds

18,995,079

Total income

40,391,889

Expenses

Management fee

$ 6,247,631

Transfer agent fees

823,725

Distribution fees

85,301

Accounting and security lending fees

385,236

Independent trustees' compensation

4,711

Appreciation in deferred trustee compensation account

2,854

Custodian fees and expenses

134,480

Audit

45,193

Legal

14,966

Miscellaneous

89,561

Total expenses before reductions

7,833,658

Expense reductions

(355,270)

7,478,388

Net investment income (loss)

32,913,501

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

Unaffiliated issuers

146,004,578

Affiliated Central Funds

2,479,218

Foreign currency transactions

(215,152)

Futures contracts

(1,466,722)

Swap agreements

(283,195)

Total net realized gain (loss)

146,518,727

Change in net unrealized appreciation (depreciation) on:

Investment securities (net of increase in deferred foreign taxes of $11,602)

(169,147,135)

Assets and liabilities in foreign currencies

8,864

Futures contracts

2,642,458

Swap agreements

(461,547)

Total change in net unrealized appreciation (depreciation)

(166,957,360)

Net gain (loss)

(20,438,633)

Net increase (decrease) in net assets resulting from operations

$ 12,474,868

Statement of Changes in Net Assets

Six months ended
June 30, 2006
(Unaudited)

Year ended
December 31,
2005

Increase (Decrease) in Net Assets

Operations

Net investment income (loss)

$ 32,913,501

$ 67,685,100

Net realized gain (loss)

146,518,727

73,859,634

Change in net unrealized appreciation (depreciation)

(166,957,360)

(43,876,379)

Net increase (decrease) in net assets resulting from operations

12,474,868

97,668,355

Distributions to shareholders from net investment income

(65,774,370)

(72,542,784)

Distributions to shareholders from net realized gain

-

(931,463)

Total distributions

(65,774,370)

(73,474,247)

Share transactions - net increase (decrease)

(215,186,983)

(347,778,441)

Total increase (decrease) in net assets

(268,486,485)

(323,584,333)

Net Assets

Beginning of period

2,497,390,373

2,820,974,706

End of period (including undistributed net investment income of $29,891,761 and undistributed net investment income of $63,399,938, respectively)

$ 2,228,903,888

$ 2,497,390,373

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

VIP Asset Manager Portfolio

Financial Highlights - Initial Class

Six months ended
June 30, 2006

Years ended December 31,

(Unaudited)

2005

2004

2003

2002

2001

Selected Per-Share Data

Net asset value, beginning of period

$ 15.04

$ 14.85

$ 14.46

$ 12.75

$ 14.51

$ 16.01

Income from Investment Operations

Net investment income (loss) E

.21

.38

.36 H

.36

.46

.51

Net realized and unrealized gain (loss)

(.16)

.21

.42

1.83

(1.69)

(1.13)

Total from investment operations

.05

.59

.78

2.19

(1.23)

(.62)

Distributions from net investment income

(.41)

(.39)

(.39)

(.48)

(.53)

(.64)

Distributions from net realized gain

-

(.01)

-

-

-

(.24)

Total distributions

(.41)

(.40) J

(.39)

(.48)

(.53)

(.88)

Net asset value, end of period

$ 14.68

$ 15.04

$ 14.85

$ 14.46

$ 12.75

$ 14.51

Total Return B, C, D

.28%

4.04%

5.47%

17.97%

(8.73)%

(4.15)%

Ratios to Average Net Assets F, I

Expenses before reductions

.64% A

.64%

.66%

.63%

.63%

.64%

Expenses net of fee waivers, if any

.64% A

.64%

.66%

.63%

.63%

.64%

Expenses net of all reductions

.61% A

.63%

.65%

.62%

.61%

.63%

Net investment income (loss)

2.73% A

2.60%

2.53%

2.71%

3.49%

3.53%

Supplemental Data

Net assets, end of period (000 omitted)

$ 2,133,327

$ 2,407,113

$ 2,751,094

$ 3,011,837

$ 2,784,945

$ 3,547,730

Portfolio turnover rate G

121%

44%

66%

82%

140%

108%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the affiliated central funds. G Amounts do not include the portfolio activity of the affiliated central funds. H Investment income per share reflects a special dividend which amounted to $.04 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 Total distribution of $.40 per share is comprised of distributions from net investment income of $.39 and distributions from net realized gain of $.005 per share.

Financial Highlights - Service Class

Six months ended
June 30, 2006

Years ended December 31,

(Unaudited)

2005

2004

2003

2002

2001

Selected Per-Share Data

Net asset value, beginning of period

$ 14.94

$ 14.75

$ 14.37

$ 12.66

$ 14.41

$ 15.91

Income from Investment Operations

Net investment income (loss) E

.20

.36

.34 H

.34

.44

.49

Net realized and unrealized gain (loss)

(.16)

.21

.42

1.83

(1.68)

(1.12)

Total from investment operations

.04

.57

.76

2.17

(1.24)

(.63)

Distributions from net investment income

(.39)

(.37)

(.38)

(.46)

(.51)

(.63)

Distributions from net realized gain

-

(.01)

-

-

-

(.24)

Total distributions

(.39)

(.38) J

(.38)

(.46)

(.51)

(.87)

Net asset value, end of period

$ 14.59

$ 14.94

$ 14.75

$ 14.37

$ 12.66

$ 14.41

Total Return B, C, D

.23%

3.93%

5.36%

17.91%

(8.85)%

(4.24)%

Ratios to Average Net Assets F, I

Expenses before reductions

.75% A

.74%

.77%

.74%

.74%

.74%

Expenses net of fee waivers, if any

.75% A

.74%

.77%

.74%

.74%

.74%

Expenses net of all reductions

.72% A

.73%

.76%

.73%

.72%

.73%

Net investment income (loss)

2.62% A

2.50%

2.41%

2.59%

3.38%

3.43%

Supplemental Data

Net assets, end of period (000 omitted)

$ 24,228

$ 29,382

$ 33,118

$ 32,087

$ 25,692

$ 31,324

Portfolio turnover rate G

121%

44%

66%

82%

140%

108%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the affiliated central funds. G Amounts do not include the portfolio activity of the affiliated central funds. H Investment income per share reflects a special dividend which amounted to $.04 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 Total distribution of $.38 per share is comprised of distributions from net investment income of $.37 and distributions from net realized gain of $.005 per share.

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

Semiannual Report

VIP Asset Manager Portfolio
Financial Statements - continued

Financial Highlights - Service Class 2

Six months ended
June 30, 2006

Years ended December 31,

(Unaudited)

2005

2004

2003

2002

2001

Selected Per-Share Data

Net asset value, beginning of period

$ 14.82

$ 14.64

$ 14.27

$ 12.59

$ 14.36

$ 15.89

Income from Investment Operations

Net investment income (loss) E

.18

.34

.32 H

.32

.41

.46

Net realized and unrealized gain (loss)

(.16)

.21

.41

1.81

(1.67)

(1.11)

Total from investment operations

.02

.55

.73

2.13

(1.26)

(.65)

Distributions from net investment income

(.37)

(.37)

(.36)

(.45)

(.51)

(.64)

Distributions from net realized gain

-

(.01)

-

-

-

(.24)

Total distributions

(.37)

(.37) J

(.36)

(.45)

(.51)

(.88)

Net asset value, end of period

$ 14.47

$ 14.82

$ 14.64

$ 14.27

$ 12.59

$ 14.36

Total Return B, C, D

.14%

3.85%

5.18%

17.66%

(9.03)%

(4.38)%

Ratios to Average Net Assets F, I

Expenses before reductions

.90% A

.90%

.93%

.91%

.90%

.90%

Expenses net of fee waivers, if any

.90% A

.90%

.93%

.91%

.90%

.90%

Expenses net of all reductions

.87% A

.89%

.92%

.89%

.88%

.89%

Net investment income (loss)

2.47% A

2.34%

2.25%

2.43%

3.22%

3.27%

Supplemental Data

Net assets, end of period (000 omitted)

$ 50,004

$ 51,574

$ 36,763

$ 22,456

$ 16,367

$ 11,993

Portfolio turnover rate G

121%

44%

66%

82%

140%

108%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the affiliated central funds. G Amounts do not include the portfolio activity of the affiliated central funds. H Investment income per share reflects a special dividend which amounted to $.04 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 Total distribution of $.37 per share is comprised of distributions from net investment income of $.365 and distributions from net realized gain of $.005 per share.

Financial Highlights - Investor Class

Six months ended
June 30, 2006

Year ended
December 31,

(Unaudited)

2005 H

Selected Per-Share Data

Net asset value, beginning of period

$ 15.03

$ 14.63

Income from Investment Operations

Net investment income (loss) E

.19

.16

Net realized and unrealized gain (loss)

(.16)

.24

Total from investment operations

.03

.40

Distributions from net investment income

(.41)

-

Net asset value, end of period

$ 14.65

$ 15.03

Total Return B, C, D

.19%

2.73%

Ratios to Average Net Assets F, I

Expenses before reductions

.77% A

.82% A

Expenses net of fee waivers, if any

.77% A

.82% A

Expenses net of all reductions

.74% A

.81% A

Net investment income (loss)

2.60% A

2.52% A

Supplemental Data

Net assets, end of period (000 omitted)

$ 21,344

$ 9,322

Portfolio turnover rate G

121%

44%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower had certain expenses not been reduced during the periods shown. E Calculated based on average shares outstanding during the period. F Amounts do not include the activity of the affiliated central funds. G Amounts do not include the portfolio activity of the affiliated 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.

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

VIP Asset Manager Portfolio

Notes to Financial Statements

For the period ended June 30, 2006 (Unaudited)

1. Significant Accounting Policies.

VIP Asset Manager Portfolio (the Fund) is a fund of Variable Insurance Products Fund II (the trust) (referred to in this report as VIP Asset Manager Portfolio) 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.

The Fund may invest in Fidelity Ultra-Short Central Fund (Ultra-Short Central Fund) and fixed-income Central Investment Portfolios (CIPs), collectively referred to as the Central Funds, and affiliated money market central funds (Money Market Central Funds), which are open-end investment companies available to investment companies and other accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Fund, which are also consistently followed by the Central Funds:

Security Valuation. Investments are valued and net asset value (NAV) per share is calculated (NAV calculation) as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time. 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 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 do not accurately reflect fair value, valuations may be determined in accordance with procedures adopted by the Board of Trustees. For example, when developments occur between the close of a market and the close of the NYSE that may materially affect the value of some or all of the securities, or when trading in a security is halted, those securities may be fair valued. Factors used in the determination of fair value may include monitoring news to identify significant market or security specific events such as changes in the value of U.S. securities markets, reviewing developments in foreign markets and evaluating the performance of ADRs, futures contracts and exchange-traded funds. Because the Fund's utilization of fair value pricing depends on market activity, the frequency with which fair value pricing is used can not be predicted and may be utilized to a significant extent. The value of securities used for NAV calculation under fair value pricing may differ from published prices for the same securities.

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. Security transactions, including the Fund's investment activity in the Central Funds, are accounted for as of trade date. 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 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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

1. Significant Accounting Policies - continued

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.

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. Prior to July 1, 2006, deferred amounts were treated as though equivalent dollar amounts had been invested in a cross-section of other Fidelity funds, and were marked-to-market. Effective July 1, 2006, deferred amounts will be directly invested in a cross-section of Fidelity funds. Deferred amounts remain in the fund until distributed in accordance with the Plan.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. 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 futures transactions, swap agreements, foreign currency transactions, passive foreign investment companies (PFIC), prior period premium and discount on debt securities, market discount, partnerships (including allocations from CIPs), deferred trustees compensation, financing transactions, 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

$ 65,662,265

Unrealized depreciation

(36,891,874)

Net unrealized appreciation (depreciation)

$ 28,770,391

Cost for federal income tax purposes

$ 2,236,303,319

New Accounting Pronouncement. In July 2006, Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement 109 (FIN 48) was issued and is effective for fiscal years beginning after December 15, 2006. FIN 48 sets forth a threshold for financial statement recognition, measurement and disclosure of a tax position taken or expected to be taken on a tax return. Management is currently evaluating the impact, if any, the adoption of FIN 48 will have on the Fund's net assets and results of operations.

2. 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. Securities deposited to meet margin requirements are identified in the Schedule of Investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contract's terms. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.

VIP Asset Manager Portfolio

2. 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.

Swap Agreements. The Fund may invest in swaps for the purpose of managing its exposure to interest rate, credit or market risk.

Interest rate swaps are agreements to exchange cash flows periodically based on a notional principal amount, for example, the exchange of fixed rate interest payments for floating rate interest payments. The primary risk associated with interest rate swaps is that unfavorable changes in the fluctuation of interest rates could adversely impact a fund.

Total return swaps are agreements to exchange the return generated by one instrument or index for the return generated by another instrument, for example, the agreement to pay interest in exchange for a market-linked return based on a notional amount. To the extent the total return of the index exceeds the offsetting interest obligation, a fund will receive a payment from the counterparty. To the extent it is less, a fund will make a payment to the counterparty.

Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying debt instrument in the event of a defined credit event (such as payment default or bankruptcy). Under the terms of the swap, one party acts as a "guarantor" receiving a periodic payment that is a fixed percentage applied to a notional principal amount. In return the party agrees to purchase the notional amount of the underlying instrument, at par, if a credit event occurs during the term of the swap. The Fund may enter into credit default swaps in which either it or its counterparty act as guarantors. By acting as the guarantor of a swap, a fund assumes the market and credit risk of the underlying instrument including liquidity and loss of value.

Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Gains or losses are realized upon early termination of the swap agreement. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with a fund's custodian in compliance with swap contracts.

Mortgage Dollar Rolls. To earn additional income, the Fund may employ trading strategies which involve the sale and simultaneous agreement to repurchase similar securities ("mortgage dollar rolls") or the purchase and simultaneous agreement to sell similar securities ("reverse mortgage dollar rolls"). The securities traded are mortgage securities and bear the same interest rate but may be collateralized by different pools of mortgages. During the period between the sale and repurchase in a mortgage dollar roll transaction, a fund will not be entitled to receive interest and principal payments on the securities sold but will invest the proceeds of the sale in other securities which may enhance the yield and total return. In addition, the difference between the sale price and the future purchase price is recorded as an adjustment to investment income. During the period between the purchase and subsequent sale in a reverse mortgage dollar roll transaction a fund is entitled to interest and principal payments on the securities purchased. The price differential between the purchase and sale is recorded as an adjustment to investment income. Losses may arise due to changes in the value of the securities or if the counterparty does not perform under the terms of the agreement. If the counterparty files for bankruptcy or becomes insolvent, a fund's right to repurchase or sell securities may be limited.

3. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, U.S. government securities and in-kind transactions, aggregated $2,230,143,543 and $2,451,478,391, respectively.

4. 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 .25% of the Fund's average net assets and a group fee rate that averaged .27% 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 .52% 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

$ 13,345

Service Class 2

71,956

$ 85,301

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

4. 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 their month end net assets. Investor Class pays a monthly asset-based transfer agent fee of .18% of its month end net assets. The total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class

$ 774,850

Service Class

9,792

Service Class 2

22,831

Investor Class

16,252

$ 823,725

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.

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

The Fund may also invest in Ultra-Short Central Fund, managed by FIMM, which seeks to obtain a high level of current income consistent with preservation of capital by investing in U.S. dollar denominated money market and investment-grade debt securities.

The Fund may also invest in CIPs managed by Fidelity Management & Research Company Inc. (FMRC), an affiliate of FMR.

The VIP Investment Grade CIP seeks a high level of income by normally investing in investment-grade debt securities. The High Income Central Investment Portfolio 1 seeks a high level of income and may also seek capital appreciation by investing primarily in debt securities, preferred stocks, and convertible securities, with an emphasis on lower-quality debt securities. The Floating Rate Central Investment Portfolio seeks a high level of income by normally investing in floating rate loans and other floating rate securities.

The Fund's Schedule of Investments lists the Central Funds as an investment of the Fund but does not include the underlying holdings of the Central Funds. Based on their investment objectives, the Central Funds may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. In addition, the Central Funds may also participate in delayed delivery and when-issued securities and loans and other direct debt instrument. These strategies are consistent with the investment objectives of the Fund and may involve certain economic risks, including the risk that a counterparty to one or more of these transactions may be unable or unwilling to comply with the terms of the governing agreement. This may result in a decline in value of the Central Funds and the Fund.

A complete unaudited list of holdings for the Central Funds, as of the Fund's report date, is available upon request or at advisor.fidelity.com. The reports are located just after the Fund's financial statements and quarterly reports but are not part of the financial statements or quarterly reports. In addition, the Central Funds financial statements are available on the EDGAR Database on the SEC's web site, www.sec.gov, or upon request.

The Central Funds do not pay a management fee.

On June 23, 2006 the Fund completed a non-taxable exchange of securities with a value, including accrued interest, of $652,127,185 (which included $20,726,447 of unrealized depreciation) for 6,521,272 shares (each then valued at $100.00 per share) of the VIP Investment Grade Central Investment Portfolio, an affiliated entity. This is considered a non-taxable exchange for federal income tax purposes, with no gain or loss recognized by the Fund or its shareholders.

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 $20,721 for the period.

5. 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 amounts to $3,738 and is reflected in Miscellaneous Expense on the Statement of Operations. During the period, there were no borrowings on this line of credit.

VIP Asset Manager Portfolio

6. 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 affiliated central funds. Net income from lending portfolio securities during the period amounted to $145,570.

7. 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 $353,676 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 $1,594.

8. 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 24% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 18% of the total outstanding shares of the Fund.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2006

Year ended
December 31,
2005 A

From net investment income

Initial Class

$ 63,434,414

$ 70,750,221

Service Class

706,426

792,593

Service Class 2

1,331,968

999,970

Investor Class

301,562

-

Total

$ 65,774,370

$ 72,542,784

From net realized gain

Initial Class

$ -

$ 907,054

Service Class

-

10,711

Service Class 2

-

13,698

Total

$ -

$ 931,463

A Distributions for Investor Class are for the period July 21, 2005 (commencement of sale of shares) to December 31, 2005.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Share Transactions.

Transactions for each class of shares were as follows:

Shares

Dollars

Six months ended
June 30,
2006

Year ended
December 31,
2005 A

Six months ended
June 30,
2006

Year ended
December 31,
2005 A

Initial Class

Shares sold

1,275,668

2,915,947

$ 19,098,952

$ 42,234,659

Reinvestment of distributions

4,291,909

4,952,127

63,434,414

71,657,275

Shares redeemed

(20,345,272)

(33,114,328)

(305,987,520)

(480,629,101)

Net increase (decrease)

(14,777,695)

(25,246,254)

$ (223,454,154)

$ (366,737,167)

Service Class

Shares sold

74,079

242,272

$ 1,102,698

$ 3,487,071

Reinvestment of distributions

48,056

55,824

706,426

803,304

Shares redeemed

(428,732)

(577,213)

(6,462,722)

(8,354,296)

Net increase (decrease)

(306,597)

(279,117)

$ (4,653,598)

$ (4,063,921)

Service Class 2

Shares sold

2,121,168

1,466,235

$ 31,232,630

$ 20,976,506

Reinvestment of distributions

91,356

70,935

1,331,968

1,013,668

Shares redeemed

(2,238,945)

(566,476)

(32,205,855)

(8,095,836)

Net increase (decrease)

(26,421)

970,694

$ 358,743

$ 13,894,338

Investor Class

Shares sold

855,333

630,233

$ 12,856,343

$ 9,272,918

Reinvestment of distributions

20,431

-

301,562

-

Shares redeemed

(39,598)

(9,837)

(595,879)

(144,609)

Net increase (decrease)

836,166

620,396

$ 12,562,026

$ 9,128,309

A Share transactions for Investor Class are for the period July 21, 2005 (commencement of sale of shares) to December 31, 2005.

VIP Asset Manager Portfolio

Board Approval of Investment Advisory Contracts and Management Fees

VIP Asset Manager Portfolio

On January 19, 2006, the Board of Trustees, including the Independent Trustees (together, the Board), voted to approve a general research services agreement (the Agreement) between FMR, FMR Co., Inc. (FMRC), Fidelity Investments Money Management, Inc. (FIMM), and Fidelity Research & Analysis Company (FRAC) (together, the Investment Advisers) for the fund, effective January 20, 2006, pursuant to which FRAC may provide general research and investment advisory support services to FMRC and FIMM. The Board considered that it has approved previously various sub-advisory agreements for the fund with affiliates of FMR that allow FMR to obtain research, non-discretionary advice, or discretionary portfolio management at no additional expense to the fund. The Board, assisted by the advice of fund counsel and independent Trustees' counsel, considered a broad range of information and determined that it would be beneficial for the fund to access the research and investment advisory support services supplied by FRAC at no additional expense to the fund.

The Board reached this determination in part because the new arrangement will involve no changes in (i) the contractual terms of and fees payable under the fund's management contract or sub-advisory agreements; (ii) the investment process or strategies employed in the management of the fund's assets; (iii) the nature or level of services provided under the fund's management contract or sub-advisory agreements; (iv) the day-to-day management of the fund or the persons primarily responsible for such management; or (v) the ultimate control or beneficial ownership of FMR, FMRC, or FIMM. The Board also considered that the establishment of the Agreement would not necessitate prior shareholder approval of the Agreement or result in an assignment and termination of the fund's management contract or sub-advisory agreements under the Investment Company Act of 1940.

Because the Board was approving an arrangement with FRAC under which the fund will not bear any additional management fees or expenses and under which the fund's portfolio manager would not change, it did not consider the fund's investment performance, competitiveness of management fee and total expenses, costs of services and profitability, or economies of scale to be significant factors in its decision.

In connection with its future renewal of the fund's management contract and sub-advisory agreements, the Board will consider: (i) the nature, extent, and quality of services provided to the fund, including shareholder and administrative services and investment performance; (ii) the competitiveness of the fund's management fee and total expenses; (iii) the costs of the services and profitability, including the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering, and servicing the fund and its shareholders; and (iv) whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies.

Based on its evaluation of all of the conclusions noted above, and after considering all material factors, the Board ultimately concluded that the fund's Agreement is fair and reasonable, and that the fund's Agreement should be approved.

Semiannual Report

Semiannual Report

VIP Asset Manager Portfolio

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Research & Analysis Company (formerly Fidelity
Management & Research (Far East) Inc.)

Fidelity Investments Money Management, Inc.

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 Co., Inc.
Boston, MA

Fidelity Service Company, Inc.
Boston, MA

Custodian

JPMorgan Chase Bank
New York, NY

VIPAM-SANN-0806
1.705701.108

Item 2. Code of Ethics

Not applicable.

Item 3. Audit Committee Financial Expert

Not applicable.

Item 4. Principal Accountant Fees and Services

Not applicable.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Schedule of Investments

Not applicable.

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

Not applicable.

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

Not applicable.

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

Not applicable.

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

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

Item 11. Controls and Procedures

(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the Variable Insurance Products Fund II: Asset Manager Portfolio's (the "Fund") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the 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 the 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, the 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 II

By:

/s/Christine Reynolds

Christine Reynolds

President and Treasurer

Date:

August 22, 2006

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

By:

/s/Christine Reynolds

Christine Reynolds

President and Treasurer

Date:

August 22, 2006

By:

/s/Joseph B. Hollis

Joseph B. Hollis

Chief Financial Officer

Date:

August 22, 2006