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)

245 Summer St., Boston, Massachusetts 02210
 (Address of principal executive offices)       (Zip code)

Scott C. Goebel, Secretary

245 Summer St.

Boston, Massachusetts 02210
(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, 2013

Item 1. Reports to Stockholders

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

Semiannual Report

June 30, 2013

(Fidelity Cover Art)

Contents

Shareholder Expense Example

(Click Here)

An example of shareholder expenses.

Investment Changes

(Click Here)

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

Investments

(Click Here)

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

Financial Statements

(Click Here)

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

Notes

(Click Here)

Notes to the financial statements.

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2013 FMR LLC. All rights reserved.

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

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

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, 2013 to June 30, 2013).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

Annualized Expense RatioB

Beginning
Account Value
January 1, 2013

Ending
Account Value
June 30, 2013

Expenses Paid
During Period*
January 1, 2013
to June 30, 2013

Initial Class

.55%

 

 

 

Actual

 

$ 1,000.00

$ 1,146.60

$ 2.93

HypotheticalA

 

$ 1,000.00

$ 1,022.07

$ 2.76

Service Class

.65%

 

 

 

Actual

 

$ 1,000.00

$ 1,146.10

$ 3.46

HypotheticalA

 

$ 1,000.00

$ 1,021.57

$ 3.26

Service Class 2

.80%

 

 

 

Actual

 

$ 1,000.00

$ 1,144.90

$ 4.25

HypotheticalA

 

$ 1,000.00

$ 1,020.83

$ 4.01

Service Class 2R

.80%

 

 

 

Actual

 

$ 1,000.00

$ 1,144.50

$ 4.25

HypotheticalA

 

$ 1,000.00

$ 1,020.83

$ 4.01

Investor Class

.63%

 

 

 

Actual

 

$ 1,000.00

$ 1,145.40

$ 3.35

HypotheticalA

 

$ 1,000.00

$ 1,021.67

$ 3.16

A 5% return per year before expenses

B Annualized expense ratio reflects expenses net of applicable fee waivers.

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

JPMorgan Chase & Co.

3.9

3.8

Wells Fargo & Co.

2.9

2.6

Chevron Corp.

2.9

3.0

Comcast Corp. Class A

2.5

2.9

Procter & Gamble Co.

2.5

2.8

Johnson & Johnson

2.4

2.1

Cisco Systems, Inc.

2.3

1.6

Exxon Mobil Corp.

2.3

1.9

General Electric Co.

2.2

2.1

Paychex, Inc.

2.2

2.0

 

26.1

Top Five Market Sectors as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

22.3

19.8

Health Care

13.5

13.9

Energy

12.3

13.6

Information Technology

11.1

10.3

Industrials

10.4

10.4

Asset Allocation (% of fund's net assets)

As of June 30, 2013 *

As of December 31, 2012 **

vvv1266428

Stocks 93.2%

 

vvv1266428

Stocks 94.1%

 

vvv1266431

Bonds 3.5%

 

vvv1266431

Bonds 4.0%

 

vvv1266434

Short-Term
Investments and
Net Other Assets (Liabilities) 3.3%

 

vvv1266434

Short-Term
Investments and
Net Other Assets (Liabilities) 1.9%

 

* Foreign investments

9.7%

 

** Foreign investments

13.2%

 

vvv1266437

Semiannual Report

Investments June 30, 2013 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 90.9%

Shares

Value

CONSUMER DISCRETIONARY - 9.5%

Auto Components - 0.2%

Gentex Corp.

576,928

$ 13,298,190

Diversified Consumer Services - 0.1%

Strayer Education, Inc. (e)

141,476

6,908,273

Hotels, Restaurants & Leisure - 1.6%

McDonald's Corp.

533,000

52,767,000

Texas Roadhouse, Inc. Class A

582,297

14,569,071

Wynn Resorts Ltd.

21,450

2,745,600

Yum! Brands, Inc.

336,700

23,346,778

 

93,428,449

Leisure Equipment & Products - 0.4%

New Academy Holding Co. LLC unit (a)(i)(j)

127,200

21,316,176

Media - 4.2%

Comcast Corp. Class A

3,643,273

152,580,273

DIRECTV (a)

110,600

6,815,172

Sinclair Broadcast Group, Inc. Class A

104,000

3,055,520

Time Warner, Inc.

1,550,706

89,661,821

 

252,112,786

Multiline Retail - 1.8%

Kohl's Corp.

457,500

23,108,325

Target Corp.

1,276,203

87,879,339

 

110,987,664

Specialty Retail - 1.0%

Foot Locker, Inc.

337,485

11,855,848

Lowe's Companies, Inc.

792,643

32,419,099

Point, Inc.

77,930

3,722,824

Staples, Inc.

854,036

13,545,011

 

61,542,782

Textiles, Apparel & Luxury Goods - 0.2%

Coach, Inc.

174,394

9,956,153

TOTAL CONSUMER DISCRETIONARY

569,550,473

CONSUMER STAPLES - 9.7%

Beverages - 2.1%

Molson Coors Brewing Co. Class B

460,600

22,044,316

PepsiCo, Inc.

781,255

63,898,846

The Coca-Cola Co.

954,666

38,291,653

 

124,234,815

Food & Staples Retailing - 2.4%

CVS Caremark Corp.

421,200

24,084,216

Safeway, Inc. (e)

1,043,616

24,691,955

Sysco Corp.

282,600

9,653,616

Wal-Mart Stores, Inc.

389,578

29,019,665

Walgreen Co.

1,246,246

55,084,073

 

142,533,525

Food Products - 1.0%

Kellogg Co.

901,057

57,874,891

 

Shares

Value

Household Products - 2.5%

Procter & Gamble Co.

1,966,354

$ 151,389,594

Tobacco - 1.7%

Altria Group, Inc.

1,164,996

40,763,210

British American Tobacco PLC sponsored ADR

138,097

14,215,705

Lorillard, Inc.

794,873

34,720,053

Philip Morris International, Inc.

189,244

16,392,315

 

106,091,283

TOTAL CONSUMER STAPLES

582,124,108

ENERGY - 11.8%

Energy Equipment & Services - 1.5%

Ensco PLC Class A

349,923

20,337,525

Halliburton Co.

233,285

9,732,650

National Oilwell Varco, Inc.

182,550

12,577,695

Noble Corp.

626,302

23,536,429

Schlumberger Ltd.

176,002

12,612,303

Trinidad Drilling Ltd.

1,191,800

8,748,404

 

87,545,006

Oil, Gas & Consumable Fuels - 10.3%

Apache Corp.

390,272

32,716,502

BG Group PLC

160,400

2,728,697

Canadian Natural Resources Ltd.

801,500

22,596,249

Chevron Corp.

1,484,780

175,708,865

EV Energy Partners LP

332,951

12,442,379

Exxon Mobil Corp.

1,559,269

140,879,954

Holly Energy Partners LP

290,744

11,059,902

HollyFrontier Corp.

193,144

8,262,700

Legacy Reserves LP

289,401

7,698,067

Markwest Energy Partners LP

438,647

29,323,552

Occidental Petroleum Corp.

527,487

47,067,665

Penn West Petroleum Ltd. (e)

823,555

8,692,080

Royal Dutch Shell PLC Class A sponsored ADR

442,229

28,214,210

Scorpio Tankers, Inc.

327,173

2,938,014

Suncor Energy, Inc.

1,027,500

30,286,679

The Williams Companies, Inc.

1,487,949

48,313,704

Tsakos Energy Navigation Ltd.

771,108

3,678,185

Western Gas Equity Partners LP

43,077

1,773,480

Williams Partners LP

155,800

8,039,280

 

622,420,164

TOTAL ENERGY

709,965,170

FINANCIALS - 21.1%

Capital Markets - 3.4%

Apollo Investment Corp.

1,837,163

14,219,642

Ashmore Group PLC

2,360,743

12,340,796

BlackRock, Inc. Class A

101,500

26,070,275

Carlyle Group LP

215,500

5,538,350

Charles Schwab Corp.

1,355,100

28,768,773

Common Stocks - continued

Shares

Value

FINANCIALS - continued

Capital Markets - continued

Greenhill & Co., Inc.

124,803

$ 5,708,489

KKR & Co. LP

2,021,557

39,743,811

Morgan Stanley

1,632,593

39,884,247

The Blackstone Group LP

1,406,796

29,627,124

 

201,901,507

Commercial Banks - 5.7%

Comerica, Inc.

331,820

13,216,391

Cullen/Frost Bankers, Inc.

234,034

15,626,450

M&T Bank Corp.

329,891

36,865,319

PNC Financial Services Group, Inc.

176,200

12,848,504

Standard Chartered PLC (United Kingdom)

888,470

19,283,314

SunTrust Banks, Inc.

611,480

19,304,424

U.S. Bancorp

1,417,438

51,240,384

Wells Fargo & Co.

4,267,886

176,135,655

 

344,520,441

Diversified Financial Services - 4.8%

Bank of America Corp.

1,228,300

15,795,938

JPMorgan Chase & Co.

4,466,231

235,772,338

KKR Financial Holdings LLC

3,684,860

38,875,273

 

290,443,549

Insurance - 4.8%

ACE Ltd.

512,811

45,886,328

AFLAC, Inc.

401,700

23,346,804

esure Group PLC

1,874,500

9,262,966

Hanover Insurance Group, Inc.

240,728

11,778,821

MetLife, Inc.

2,768,607

126,691,456

MetLife, Inc. unit

341,615

18,676,092

Prudential Financial, Inc.

398,300

29,087,849

Validus Holdings Ltd.

745,935

26,943,172

 

291,673,488

Real Estate Investment Trusts - 2.2%

American Capital Agency Corp.

1,223,848

28,136,266

Annaly Capital Management, Inc.

1,897,277

23,848,772

CommonWealth REIT

264,400

6,112,928

Coresite Realty Corp.

150,847

4,798,443

First Potomac Realty Trust

569,215

7,433,948

Home Properties, Inc.

173,794

11,360,914

Rayonier, Inc.

297,781

16,494,090

Retail Properties America, Inc.

1,038,232

14,825,953

Two Harbors Investment Corp.

1,411,934

14,472,324

Ventas, Inc.

104,790

7,278,713

 

134,762,351

Real Estate Management & Development - 0.1%

Beazer Pre-Owned Rental Homes, Inc. (a)(j)

257,800

5,413,800

 

Shares

Value

Thrifts & Mortgage Finance - 0.1%

Radian Group, Inc.

301,008

$ 3,497,713

TOTAL FINANCIALS

1,272,212,849

HEALTH CARE - 12.5%

Biotechnology - 0.6%

Amgen, Inc.

242,600

23,934,916

PDL BioPharma, Inc. (e)

1,315,269

10,153,877

 

34,088,793

Health Care Equipment & Supplies - 0.6%

Covidien PLC

298,200

18,738,888

St. Jude Medical, Inc.

358,461

16,356,575

 

35,095,463

Health Care Providers & Services - 2.8%

Aetna, Inc.

624,107

39,655,759

McKesson Corp.

89,550

10,253,475

Quest Diagnostics, Inc.

204,500

12,398,835

UnitedHealth Group, Inc.

649,323

42,517,670

WellPoint, Inc.

761,361

62,309,784

 

167,135,523

Health Care Technology - 0.1%

Quality Systems, Inc.

355,946

6,659,750

Pharmaceuticals - 8.4%

AbbVie, Inc.

543,240

22,457,542

AstraZeneca PLC sponsored ADR

826,500

39,093,450

Eli Lilly & Co.

565,977

27,800,790

Johnson & Johnson

1,700,268

145,985,010

Merck & Co., Inc.

2,765,689

128,466,254

Pfizer, Inc.

2,578,212

72,215,718

Sanofi SA

186,368

19,266,836

Teva Pharmaceutical Industries Ltd. sponsored ADR

636,222

24,939,902

Warner Chilcott PLC

1,459,064

29,006,192

 

509,231,694

TOTAL HEALTH CARE

752,211,223

INDUSTRIALS - 9.8%

Aerospace & Defense - 1.5%

Raytheon Co.

443,901

29,350,734

The Boeing Co.

29,678

3,040,214

United Technologies Corp.

625,776

58,159,621

 

90,550,569

Air Freight & Logistics - 1.8%

C.H. Robinson Worldwide, Inc.

523,000

29,450,130

United Parcel Service, Inc. Class B

924,845

79,980,596

 

109,430,726

Common Stocks - continued

Shares

Value

INDUSTRIALS - continued

Commercial Services & Supplies - 1.2%

Intrum Justitia AB

659,308

$ 13,518,267

Republic Services, Inc.

1,778,526

60,363,172

 

73,881,439

Electrical Equipment - 0.6%

Eaton Corp. PLC

131,400

8,647,434

Emerson Electric Co.

218,855

11,936,352

Hubbell, Inc. Class B

124,100

12,285,900

 

32,869,686

Industrial Conglomerates - 2.2%

General Electric Co.

5,780,476

134,049,238

Machinery - 1.4%

Cummins, Inc.

141,995

15,400,778

Douglas Dynamics, Inc.

587,191

7,621,739

Harsco Corp.

260,106

6,031,858

Illinois Tool Works, Inc.

163,921

11,338,416

Stanley Black & Decker, Inc.

566,206

43,767,724

 

84,160,515

Professional Services - 0.4%

Acacia Research Corp.

490,984

10,973,492

Michael Page International PLC

2,755,399

15,547,957

 

26,521,449

Road & Rail - 0.4%

Union Pacific Corp.

138,162

21,315,633

Trading Companies & Distributors - 0.3%

Watsco, Inc.

224,650

18,861,614

TOTAL INDUSTRIALS

591,640,869

INFORMATION TECHNOLOGY - 9.8%

Communications Equipment - 2.3%

Cisco Systems, Inc.

5,809,095

141,219,099

Computers & Peripherals - 0.5%

Apple, Inc.

75,025

29,715,902

IT Services - 4.4%

Accenture PLC Class A

525,471

37,812,893

Cognizant Technology Solutions Corp. Class A (a)

202,260

12,663,499

Fidelity National Information Services, Inc.

116,597

4,995,015

IBM Corp.

372,212

71,133,435

Paychex, Inc.

3,621,687

132,264,009

The Western Union Co.

354,100

6,058,651

 

264,927,502

Semiconductors & Semiconductor Equipment - 1.3%

Applied Materials, Inc.

3,139,100

46,803,981

 

Shares

Value

KLA-Tencor Corp.

227,491

$ 12,678,073

Siliconware Precision Industries Co. Ltd. sponsored ADR

2,523,619

15,823,091

 

75,305,145

Software - 1.3%

CA Technologies, Inc.

465,919

13,339,261

Microsoft Corp.

1,947,000

67,229,910

 

80,569,171

TOTAL INFORMATION TECHNOLOGY

591,736,819

MATERIALS - 0.4%

Chemicals - 0.2%

Eastman Chemical Co.

95,616

6,694,076

RPM International, Inc.

274,849

8,778,677

 

15,472,753

Metals & Mining - 0.2%

Commercial Metals Co.

650,927

9,614,192

TOTAL MATERIALS

25,086,945

TELECOMMUNICATION SERVICES - 3.8%

Diversified Telecommunication Services - 3.0%

AT&T, Inc.

1,834,759

64,950,469

CenturyLink, Inc.

554,602

19,605,181

Verizon Communications, Inc.

1,927,510

97,030,853

 

181,586,503

Wireless Telecommunication Services - 0.8%

Vodafone Group PLC

17,364,298

49,760,484

TOTAL TELECOMMUNICATION SERVICES

231,346,987

UTILITIES - 2.5%

Electric Utilities - 1.7%

FirstEnergy Corp.

464,210

17,333,601

Hawaiian Electric Industries, Inc.

459,800

11,637,538

Northeast Utilities

397,100

16,686,142

PPL Corp.

1,112,847

33,674,750

Southern Co.

542,934

23,959,677

 

103,291,708

Multi-Utilities - 0.8%

PG&E Corp.

367,105

16,787,712

Sempra Energy

382,700

31,289,552

 

48,077,264

TOTAL UTILITIES

151,368,972

TOTAL COMMON STOCKS

(Cost $4,377,666,437)


5,477,244,415

Preferred Stocks - 2.3%

Shares

Value

Convertible Preferred Stocks - 1.8%

CONSUMER DISCRETIONARY - 0.3%

Automobiles - 0.2%

General Motors Co. 4.75%

289,390

$ 13,937,022

Media - 0.1%

Interpublic Group of Companies, Inc. 5.25%

5,300

6,670,262

TOTAL CONSUMER DISCRETIONARY

20,607,284

ENERGY - 0.1%

Oil, Gas & Consumable Fuels - 0.1%

Apache Corp. 6.00%

125,300

5,981,822

FINANCIALS - 0.3%

Commercial Banks - 0.2%

Huntington Bancshares, Inc. 8.50%

8,100

9,882,081

Real Estate Investment Trusts - 0.1%

Health Care REIT, Inc. Series I, 6.50%

103,400

6,297,701

TOTAL FINANCIALS

16,179,782

HEALTH CARE - 0.3%

Health Care Equipment & Supplies - 0.1%

Alere, Inc. 3.00%

27,680

6,283,083

Health Care Providers & Services - 0.2%

HealthSouth Corp. Series A, 6.50%

9,800

11,551,750

TOTAL HEALTH CARE

17,834,833

INDUSTRIALS - 0.2%

Aerospace & Defense - 0.2%

United Technologies Corp. 7.50%

169,100

10,037,776

MATERIALS - 0.0%

Metals & Mining - 0.0%

Cliffs Natural Resources, Inc. 7.00%

40,900

718,613

TELECOMMUNICATION SERVICES - 0.0%

Diversified Telecommunication Services - 0.0%

Intelsat SA Series A, 5.75%

48,000

2,640,000

UTILITIES - 0.6%

Electric Utilities - 0.3%

NextEra Energy, Inc.:

5.889%

90,807

5,045,237

Series E, 5.599%

152,100

8,578,440

PPL Corp. 8.75%

111,500

6,033,265

 

19,656,942

Multi-Utilities - 0.3%

CenterPoint Energy, Inc. 2.00% ZENS 

167,100

7,979,025

 

Shares

Value

Dominion Resources, Inc.:

Series A, 6.125% (a)

70,000

$ 3,514,000

Series B, 6.00% (a)

70,000

3,503,500

 

14,996,525

TOTAL UTILITIES

34,653,467

TOTAL CONVERTIBLE PREFERRED STOCKS

108,653,577

Nonconvertible Preferred Stocks - 0.5%

CONSUMER DISCRETIONARY - 0.1%

Automobiles - 0.1%

Volkswagen AG

46,518

9,418,577

FINANCIALS - 0.4%

Consumer Finance - 0.4%

Ally Financial, Inc. 7.00% (f)

25,330

23,936,850

TOTAL NONCONVERTIBLE PREFERRED STOCKS

33,355,427

TOTAL PREFERRED STOCKS

(Cost $131,296,987)


142,009,004

Corporate Bonds - 3.5%

 

Principal Amount (d)

 

Convertible Bonds - 3.4%

CONSUMER DISCRETIONARY - 0.1%

Automobiles - 0.1%

Volkswagen International Finance NV 5.5% 11/9/15 (f)

EUR

6,400,000

8,544,655

ENERGY - 0.4%

Oil, Gas & Consumable Fuels - 0.4%

Alpha Natural Resources, Inc. 3.75% 12/15/17

9,490,000

8,161,400

Amyris, Inc. 3% 2/27/17

1,383,000

976,149

Chesapeake Energy Corp. 2.5% 5/15/37

7,300,000

6,890,470

Cobalt International Energy, Inc. 2.625% 12/1/19

3,220,000

3,397,100

Ship Finance International Ltd. 3.25% 2/1/18

6,920,000

6,609,984

 

26,035,103

FINANCIALS - 0.4%

Insurance - 0.2%

Fidelity National Financial, Inc. 4.25% 8/15/18

7,360,000

9,733,968

Thrifts & Mortgage Finance - 0.2%

MGIC Investment Corp. 9% 4/1/63 (f)

10,438,000

11,213,543

TOTAL FINANCIALS

20,947,511

Corporate Bonds - continued

 

Principal Amount (d)

Value

Convertible Bonds - continued

HEALTH CARE - 0.7%

Biotechnology - 0.1%

InterMune, Inc. 2.5% 12/15/17

$ 610,000

$ 646,478

Theravance, Inc. 2.125% 1/15/23

3,010,000

4,637,281

 

5,283,759

Health Care Equipment & Supplies - 0.1%

Teleflex, Inc. 3.875% 8/1/17

5,670,000

7,627,284

Health Care Providers & Services - 0.5%

Molina Healthcare, Inc. 1.125% 1/15/20 (f)

5,140,000

5,605,813

WellPoint, Inc. 2.75% 10/15/42 (f)

19,590,000

24,642,261

 

30,248,074

TOTAL HEALTH CARE

43,159,117

INDUSTRIALS - 0.4%

Commercial Services & Supplies - 0.2%

Covanta Holding Corp. 3.25% 6/1/14

11,970,000

15,441,300

Construction & Engineering - 0.2%

MasTec, Inc.:

4% 6/15/14

4,000,000

8,412,500

4.25% 12/15/14

1,190,000

2,564,450

 

10,976,950

TOTAL INDUSTRIALS

26,418,250

INFORMATION TECHNOLOGY - 1.3%

Communications Equipment - 0.2%

InterDigital, Inc. 2.5% 3/15/16

8,920,000

9,578,296

Liberty Interactive LLC 0.75% 3/30/43 (f)

2,100,000

2,294,355

 

11,872,651

Computers & Peripherals - 0.4%

EMC Corp. 1.75% 12/1/13

10,050,000

14,843,850

SanDisk Corp. 1.5% 8/15/17

5,220,000

7,004,614

 

21,848,464

Semiconductors & Semiconductor Equipment - 0.6%

GT Advanced Technologies, Inc. 3% 10/1/17

11,430,000

9,701,213

Intel Corp. 3.25% 8/1/39

8,400,000

10,657,920

Micron Technology, Inc.:

1.625% 2/15/33 (f)

770,000

1,111,688

2.125% 2/15/33 (f)

400,000

581,000

3.125% 5/1/32 (f)

8,110,000

12,940,519

 

34,992,340

 

 

Principal Amount (d)

Value

Software - 0.1%

Nuance Communications, Inc. 2.75% 11/1/31

$ 9,380,000

$ 9,661,400

TOTAL INFORMATION TECHNOLOGY

78,374,855

TELECOMMUNICATION SERVICES - 0.1%

Wireless Telecommunication Services - 0.1%

Clearwire Communications LLC/Clearwire Finance, Inc. 8.25% 12/1/40 (f)

3,750,000

4,120,313

TOTAL CONVERTIBLE BONDS

207,599,804

Nonconvertible Bonds - 0.1%

FINANCIALS - 0.1%

Diversified Financial Services - 0.1%

Goldman Sachs Capital II 4% (g)(h)

3,970,000

3,156,150

TOTAL CORPORATE BONDS

(Cost $188,555,937)


210,755,954

Money Market Funds - 3.0%

Shares

 

Fidelity Cash Central Fund, 0.13% (b)

127,887,071

127,887,071

Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c)

51,453,347

51,453,347

TOTAL MONEY MARKET FUNDS

(Cost $179,340,418)


179,340,418

TOTAL INVESTMENT PORTFOLIO - 99.7%

(Cost $4,876,859,779)

6,009,349,791

NET OTHER ASSETS (LIABILITIES) - 0.3%

19,049,514

NET ASSETS - 100%

$ 6,028,399,305

Currency Abbreviations

EUR

-

European Monetary Unit

Legend

(a) Non-income producing

(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.

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

(d) Amount is stated in United States dollars unless otherwise noted.

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

(f) 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 $94,990,997 or 1.6% of net assets.

(g) Security is perpetual in nature with no stated maturity date.

(h) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end.

(i) Investment is owned by an entity that is treated as a corporation for U.S. tax purposes and is owned by the Fund.

(j) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $26,729,976 or 0.4% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost

Beazer Pre-Owned Rental Homes, Inc.

5/3/12 - 10/23/12

$ 5,156,000

New Academy Holding Co. LLC unit

8/1/11

$ 13,406,880

Affiliated Central Funds

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

Fund

Income earned

Fidelity Cash Central Fund

$ 151,842

Fidelity Securities Lending Cash Central Fund

827,399

Total

$ 979,241

Other Information

The following is a summary of the inputs used, as of June 30, 2013, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 599,576,334

$ 567,867,072

$ 10,393,086

$ 21,316,176

Consumer Staples

582,124,108

582,124,108

-

-

Energy

715,946,992

715,946,992

-

-

Financials

1,312,329,481

1,258,005,038

48,910,643

5,413,800

Health Care

770,046,056

739,227,470

30,818,586

-

Industrials

601,678,645

601,678,645

-

-

Information Technology

591,736,819

591,736,819

-

-

Materials

25,805,558

25,086,945

718,613

-

Telecommunication Services

233,986,987

184,226,503

49,760,484

-

Utilities

186,022,439

166,964,912

19,057,527

-

Corporate Bonds

210,755,954

-

210,755,954

-

Money Market Funds

179,340,418

179,340,418

-

-

Total Investments in Securities:

$ 6,009,349,791

$ 5,612,204,922

$ 370,414,893

$ 26,729,976

The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2013. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:

Transfers

Total

Level 1 to Level 2

$ 0

Level 2 to Level 1

$ 70,127,828

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2013 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $49,905,533) - See accompanying schedule:

Unaffiliated issuers (cost $4,697,519,361)

$ 5,830,009,373

 

Fidelity Central Funds (cost $179,340,418)

179,340,418

 

Total Investments (cost $4,876,859,779)

 

$ 6,009,349,791

Cash

 

25,055

Receivable for investments sold

93,419,368

Receivable for fund shares sold

1,955,633

Dividends receivable

11,834,068

Interest receivable

1,250,828

Distributions receivable from Fidelity Central Funds

50,638

Other receivables

371,801

Total assets

6,118,257,182

 

 

 

Liabilities

Payable for investments purchased

$ 31,188,330

Payable for fund shares redeemed

3,595,045

Accrued management fee

2,292,450

Distribution and service plan fees payable

380,661

Other affiliated payables

563,681

Other payables and accrued expenses

384,363

Collateral on securities loaned, at value

51,453,347

Total liabilities

89,857,877

 

 

 

Net Assets

$ 6,028,399,305

Net Assets consist of:

 

Paid in capital

$ 4,674,112,255

Undistributed net investment income

74,340,048

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

147,187,785

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

1,132,759,217

Net Assets

$ 6,028,399,305

Statement of Assets and Liabilities - continued

 

June 30, 2013 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($3,702,221,496 ÷ 162,390,809 shares)

$ 22.80

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($375,309,299 ÷ 16,528,365 shares)

$ 22.71

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($1,655,190,960 ÷ 73,885,907 shares)

$ 22.40

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($8,653,315 ÷ 388,198 shares)

$ 22.29

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($287,024,235 ÷ 12,631,765 shares)

$ 22.72

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

Semiannual Report

Statement of Operations

 

Six months ended June 30, 2013 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 87,556,601

Interest

 

4,668,895

Income from Fidelity Central Funds

 

979,241

Total income

 

93,204,737

 

 

 

Expenses

Management fee

$ 13,663,978

Transfer agent fees

2,211,074

Distribution and service plan fees

2,280,114

Accounting and security lending fees

568,300

Custodian fees and expenses

51,216

Independent trustees' compensation

18,476

Appreciation in deferred trustee compensation account

293

Audit

47,940

Legal

5,369

Miscellaneous

31,356

Total expenses before reductions

18,878,116

Expense reductions

(144,944)

18,733,172

Net investment income (loss)

74,471,565

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

194,596,343

Foreign currency transactions

(367,134)

Total net realized gain (loss)

 

194,229,209

Change in net unrealized appreciation (depreciation) on:

Investment securities

539,762,675

Assets and liabilities in foreign currencies

248,049

Total change in net unrealized appreciation (depreciation)

 

540,010,724

Net gain (loss)

734,239,933

Net increase (decrease) in net assets resulting from operations

$ 808,711,498

Statement of Changes in Net Assets

 

Six months ended
June 30, 2013
(Unaudited)

Year ended
December 31,
2012

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 74,471,565

$ 160,196,451

Net realized gain (loss)

194,229,209

225,861,427

Change in net unrealized appreciation (depreciation)

540,010,724

499,587,896

Net increase (decrease) in net assets resulting from operations

808,711,498

885,645,774

Distributions to shareholders from net investment income

-

(160,836,253)

Distributions to shareholders from net realized gain

(16,221,018)

(361,842,958)

Total distributions

(16,221,018)

(522,679,211)

Share transactions - net increase (decrease)

(362,475,634)

(98,030,068)

Redemption fees

35

2,080

Total increase (decrease) in net assets

430,014,881

264,938,575

 

 

 

Net Assets

Beginning of period

5,598,384,424

5,333,445,849

End of period (including undistributed net investment income of $74,340,048 and distributions in excess of net investment income of $131,517, respectively)

$ 6,028,399,305

$ 5,598,384,424

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 19.94

$ 18.69

$ 19.02

$ 16.81

$ 13.18

$ 23.91

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .28

.59

.48

.30

.33

.47

Net realized and unrealized gain (loss)

  2.64

2.59

(.31)

2.24

3.64

(10.67)

Total from investment operations

  2.92

3.18

.17

2.54

3.97

(10.20)

Distributions from net investment income

  -

(.63) H

(.50)

(.33)

(.34)

(.51)

Distributions from net realized gain

  (.06)

(1.30) H

-

-

-

(.02)

Total distributions

  (.06)

(1.93)

(.50)

(.33)

(.34)

(.53)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 22.80

$ 19.94

$ 18.69

$ 19.02

$ 16.81

$ 13.18

Total Return B, C, D

  14.66%

17.31%

.97%

15.15%

30.21%

(42.65)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .55% A

.55%

.56%

.56%

.58%

.57%

Expenses net of fee waivers, if any

  .55% A

.55%

.55%

.55%

.58%

.57%

Expenses net of all reductions

  .54% A

.54%

.54%

.55%

.58%

.57%

Net investment income (loss)

  2.55% A

2.94%

2.48%

1.71%

2.29%

2.37%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 3,702,221

$ 3,461,083

$ 3,345,762

$ 3,798,310

$ 3,771,733

$ 3,322,799

Portfolio turnover rate G

  32% A

48%

96%

29%

29%

34%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

J Amount represents less than $.01 per share.

Financial Highlights - Service Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 19.87

$ 18.63

$ 18.96

$ 16.75

$ 13.14

$ 23.82

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .27

.57

.46

.28

.31

.44

Net realized and unrealized gain (loss)

  2.63

2.57

(.31)

2.24

3.63

(10.62)

Total from investment operations

  2.90

3.14

.15

2.52

3.94

(10.18)

Distributions from net investment income

  -

(.60) H

(.48)

(.31)

(.33)

(.48)

Distributions from net realized gain

  (.06)

(1.30) H

-

-

-

(.02)

Total distributions

  (.06)

(1.90)

(.48)

(.31)

(.33)

(.50)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 22.71

$ 19.87

$ 18.63

$ 18.96

$ 16.75

$ 13.14

Total Return B, C, D

  14.61%

17.19%

.86%

15.09%

30.03%

(42.70)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .65% A

.65%

.66%

.66%

.68%

.67%

Expenses net of fee waivers, if any

  .65% A

.65%

.66%

.65%

.68%

.67%

Expenses net of all reductions

  .64% A

.64%

.64%

.65%

.68%

.67%

Net investment income (loss)

  2.45% A

2.84%

2.38%

1.61%

2.19%

2.27%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 375,309

$ 350,493

$ 347,999

$ 414,431

$ 430,383

$ 405,082

Portfolio turnover rate G

  32% A

48%

96%

29%

29%

34%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

J Amount represents less than $.01 per share.

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

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 19.62

$ 18.41

$ 18.75

$ 16.57

$ 13.00

$ 23.57

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .25

.53

.42

.25

.29

.41

Net realized and unrealized gain (loss)

  2.59

2.55

(.31)

2.21

3.58

(10.50)

Total from investment operations

  2.84

3.08

.11

2.46

3.87

(10.09)

Distributions from net investment income

  -

(.57) H

(.45)

(.28)

(.30)

(.46)

Distributions from net realized gain

  (.06)

(1.30) H

-

-

-

(.02)

Total distributions

  (.06)

(1.87)

(.45)

(.28)

(.30)

(.48)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 22.40

$ 19.62

$ 18.41

$ 18.75

$ 16.57

$ 13.00

Total Return B, C, D

  14.49%

17.05%

.66%

14.92%

29.88%

(42.81)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .80% A

.80%

.81%

.81%

.83%

.82%

Expenses net of fee waivers, if any

  .80% A

.80%

.81%

.80%

.83%

.82%

Expenses net of all reductions

  .79% A

.79%

.80%

.80%

.83%

.82%

Net investment income (loss)

  2.30% A

2.69%

2.23%

1.46%

2.04%

2.12%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 1,655,191

$ 1,560,856

$ 1,457,230

$ 1,619,356

$ 1,558,421

$ 1,321,569

Portfolio turnover rate G

  32% A

48%

96%

29%

29%

34%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

J Amount represents less than $.01 per share.

Financial Highlights - Service Class 2R

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 19.53

$ 18.34

$ 18.66

$ 16.49

$ 12.93

$ 23.44

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .25

.53

.42

.25

.28

.41

Net realized and unrealized gain (loss)

  2.57

2.54

(.30)

2.20

3.58

(10.45)

Total from investment operations

  2.82

3.07

.12

2.45

3.86

(10.04)

Distributions from net investment income

  -

(.58) H

(.44)

(.28)

(.30)

(.45)

Distributions from net realized gain

  (.06)

(1.30) H

-

-

-

(.02)

Total distributions

  (.06)

(1.88)

(.44)

(.28)

(.30)

(.47)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 22.29

$ 19.53

$ 18.34

$ 18.66

$ 16.49

$ 12.93

Total Return B, C, D

  14.45%

17.05%

.70%

14.90%

29.95%

(42.82)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .80% A

.80%

.81%

.81%

.83%

.82%

Expenses net of fee waivers, if any

  .80% A

.80%

.80%

.80%

.83%

.82%

Expenses net of all reductions

  .79% A

.79%

.79%

.80%

.83%

.81%

Net investment income (loss)

  2.31% A

2.69%

2.23%

1.46%

2.04%

2.12%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 8,653

$ 5,640

$ 3,956

$ 5,405

$ 5,259

$ 5,339

Portfolio turnover rate G

  32% A

48%

96%

29%

29%

34%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

J Amount represents less than $.01 per share.

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

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 19.89

$ 18.64

$ 18.97

$ 16.77

$ 13.15

$ 23.85

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .27

.57

.46

.28

.31

.44

Net realized and unrealized gain (loss)

  2.62

2.59

(.31)

2.23

3.64

(10.63)

Total from investment operations

  2.89

3.16

.15

2.51

3.95

(10.19)

Distributions from net investment income

  -

(.61) H

(.48)

(.31)

(.33)

(.49)

Distributions from net realized gain

  (.06)

(1.30) H

-

-

-

(.02)

Total distributions

  (.06)

(1.91)

(.48)

(.31)

(.33)

(.51)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 22.72

$ 19.89

$ 18.64

$ 18.97

$ 16.77

$ 13.15

Total Return B, C, D

  14.54%

17.27%

.89%

15.04%

30.09%

(42.71)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .63% A

.64%

.64%

.65%

.68%

.66%

Expenses net of fee waivers, if any

  .63% A

.64%

.64%

.64%

.68%

.66%

Expenses net of all reductions

  .63% A

.63%

.63%

.64%

.68%

.66%

Net investment income (loss)

  2.47% A

2.85%

2.39%

1.62%

2.19%

2.28%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 287,024

$ 220,311

$ 178,499

$ 165,946

$ 147,358

$ 122,483

Portfolio turnover rate G

  32% A

48%

96%

29%

29%

34%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

J Amount represents less than $.01 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2013 (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.

2. Investments in Fidelity Central Funds.

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

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

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:

Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are generally categorized as Level 3 in the hierarchy.

Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For corporate bonds, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Investment Valuation - continued

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2013, including information on transfers between Levels 1 and 2, is included at the end of the Fund's Schedule of Investments.

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

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

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

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.

Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

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

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences resulted in distribution reclassifications.

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, market discount, partnerships, deferred trustees compensation, equity-debt classifications and losses deferred due to wash sales and excise tax regulations.

Semiannual Report

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

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

Gross unrealized appreciation

$ 1,385,954,076

Gross unrealized depreciation

(257,627,419)

Net unrealized appreciation (depreciation) on securities and other investments

$ 1,128,326,657

 

 

Tax cost

$ 4,881,023,134

Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days may be subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.

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.

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $915,335,772 and $1,326,613,335, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and an annualized group fee rate that averaged .25% 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 .45% of the Fund's average net assets.

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

For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:

Service Class

$ 186,383

Service Class 2

2,084,717

Service Class 2R

9,014

 

$ 2,280,114

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. In addition, FIIOC receives an asset-based fee of .0035% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:

Initial Class

$ 1,294,976

Service Class

130,245

Service Class 2

583,321

Service Class 2R

2,503

Investor Class

200,029

 

$ 2,211,074

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

5. Fees and Other Transactions with Affiliates - continued

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

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $19,946 for the period.

6. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $7,515 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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 rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $827,399, including $43,766 from securities loaned to FCM.

8. 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 $142,658 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 $2,286.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30, 2013

Year ended
December 31, 2012

From net investment income

 

 

Initial Class

$ -

$ 101,791,140

Service Class

-

9,989,279

Service Class 2

-

42,628,835

Service Class 2R

-

156,403

Investor Class

-

6,270,596

Total

$ -

$ 160,836,253

From net realized gain

 

 

Initial Class

$ 9,960,461

$ 222,187,565

Service Class

1,005,392

22,886,320

Service Class 2

4,574,622

103,060,364

Service Class 2R

16,498

339,927

Investor Class

664,045

13,368,782

Total

$ 16,221,018

$ 361,842,958

Semiannual Report

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended June 30, 2013

Year ended
December 31, 2012

Six months ended June 30, 2013

Year ended
December 31, 2012

Initial Class

 

 

 

 

Shares sold

2,740,631

3,870,932

$ 60,148,018

$ 77,988,279

Reinvestment of distributions

470,055

16,250,583

9,960,461

323,978,705

Shares redeemed

(14,365,044)

(25,610,108)

(319,745,752)

(515,027,646)

Net increase (decrease)

(11,154,358)

(5,488,593)

$ (249,637,273)

$ (113,060,662)

Service Class

 

 

 

 

Shares sold

288,720

779,349

$ 6,309,807

$ 15,549,373

Reinvestment of distributions

47,626

1,655,419

1,005,392

32,875,599

Shares redeemed

(1,444,012)

(3,480,467)

(31,429,784)

(69,732,701)

Net increase (decrease)

(1,107,666)

(1,045,699)

$ (24,114,585)

$ (21,307,729)

Service Class 2

 

 

 

 

Shares sold

2,884,176

9,943,946

$ 62,278,377

$ 192,585,015

Reinvestment of distributions

219,512

7,428,210

4,574,622

145,689,199

Shares redeemed

(8,763,199)

(16,965,629)

(191,739,996)

(333,504,543)

Net increase (decrease)

(5,659,511)

406,527

$ (124,886,997)

$ 4,769,671

Service Class 2R

 

 

 

 

Shares sold

132,339

121,840

$ 2,860,906

$ 2,390,089

Reinvestment of distributions

795

25,375

16,498

496,330

Shares redeemed

(33,811)

(74,064)

(720,302)

(1,477,846)

Net increase (decrease)

99,323

73,151

$ 2,157,102

$ 1,408,573

Investor Class

 

 

 

 

Shares sold

1,869,239

1,569,001

$ 41,066,328

$ 31,601,024

Reinvestment of distributions

31,442

986,760

664,045

19,639,378

Shares redeemed

(347,852)

(1,052,779)

(7,724,254)

(21,080,323)

Net increase (decrease)

1,552,829

1,502,982

$ 34,006,119

$ 30,160,079

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 12% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 18% of the total outstanding shares of the Fund.

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Hong Kong) Limited

Fidelity Management & Research (Japan) Inc.

General Distributor

Fidelity Distributors Corporation
Smithfield, RI

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

The Northern Trust Company
Chicago, IL 

VIPEI2R-SANN-0813
1.833447.107

Fidelity® Variable Insurance Products:
Equity-Income Portfolio

Semiannual Report

June 30, 2013

(Fidelity Cover Art)

Contents

Shareholder Expense Example

(Click Here)

An example of shareholder expenses.

Investment Changes

(Click Here)

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

Investments

(Click Here)

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

Financial Statements

(Click Here)

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

Notes

(Click Here)

Notes to the financial statements.

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2013 FMR LLC. All rights reserved.

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

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

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, 2013 to June 30, 2013).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

Annualized Expense RatioB

Beginning
Account Value
January 1, 2013

Ending
Account Value
June 30, 2013

Expenses Paid
During Period*
January 1, 2013
to June 30, 2013

Initial Class

.55%

 

 

 

Actual

 

$ 1,000.00

$ 1,146.60

$ 2.93

HypotheticalA

 

$ 1,000.00

$ 1,022.07

$ 2.76

Service Class

.65%

 

 

 

Actual

 

$ 1,000.00

$ 1,146.10

$ 3.46

HypotheticalA

 

$ 1,000.00

$ 1,021.57

$ 3.26

Service Class 2

.80%

 

 

 

Actual

 

$ 1,000.00

$ 1,144.90

$ 4.25

HypotheticalA

 

$ 1,000.00

$ 1,020.83

$ 4.01

Service Class 2R

.80%

 

 

 

Actual

 

$ 1,000.00

$ 1,144.50

$ 4.25

HypotheticalA

 

$ 1,000.00

$ 1,020.83

$ 4.01

Investor Class

.63%

 

 

 

Actual

 

$ 1,000.00

$ 1,145.40

$ 3.35

HypotheticalA

 

$ 1,000.00

$ 1,021.67

$ 3.16

A 5% return per year before expenses

B Annualized expense ratio reflects expenses net of applicable fee waivers.

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

JPMorgan Chase & Co.

3.9

3.8

Wells Fargo & Co.

2.9

2.6

Chevron Corp.

2.9

3.0

Comcast Corp. Class A

2.5

2.9

Procter & Gamble Co.

2.5

2.8

Johnson & Johnson

2.4

2.1

Cisco Systems, Inc.

2.3

1.6

Exxon Mobil Corp.

2.3

1.9

General Electric Co.

2.2

2.1

Paychex, Inc.

2.2

2.0

 

26.1

Top Five Market Sectors as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

22.3

19.8

Health Care

13.5

13.9

Energy

12.3

13.6

Information Technology

11.1

10.3

Industrials

10.4

10.4

Asset Allocation (% of fund's net assets)

As of June 30, 2013 *

As of December 31, 2012 **

vvv1266428

Stocks 93.2%

 

vvv1266428

Stocks 94.1%

 

vvv1266431

Bonds 3.5%

 

vvv1266431

Bonds 4.0%

 

vvv1266434

Short-Term
Investments and
Net Other Assets (Liabilities) 3.3%

 

vvv1266434

Short-Term
Investments and
Net Other Assets (Liabilities) 1.9%

 

* Foreign investments

9.7%

 

** Foreign investments

13.2%

 

vvv1266450

Semiannual Report

Investments June 30, 2013 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 90.9%

Shares

Value

CONSUMER DISCRETIONARY - 9.5%

Auto Components - 0.2%

Gentex Corp.

576,928

$ 13,298,190

Diversified Consumer Services - 0.1%

Strayer Education, Inc. (e)

141,476

6,908,273

Hotels, Restaurants & Leisure - 1.6%

McDonald's Corp.

533,000

52,767,000

Texas Roadhouse, Inc. Class A

582,297

14,569,071

Wynn Resorts Ltd.

21,450

2,745,600

Yum! Brands, Inc.

336,700

23,346,778

 

93,428,449

Leisure Equipment & Products - 0.4%

New Academy Holding Co. LLC unit (a)(i)(j)

127,200

21,316,176

Media - 4.2%

Comcast Corp. Class A

3,643,273

152,580,273

DIRECTV (a)

110,600

6,815,172

Sinclair Broadcast Group, Inc. Class A

104,000

3,055,520

Time Warner, Inc.

1,550,706

89,661,821

 

252,112,786

Multiline Retail - 1.8%

Kohl's Corp.

457,500

23,108,325

Target Corp.

1,276,203

87,879,339

 

110,987,664

Specialty Retail - 1.0%

Foot Locker, Inc.

337,485

11,855,848

Lowe's Companies, Inc.

792,643

32,419,099

Point, Inc.

77,930

3,722,824

Staples, Inc.

854,036

13,545,011

 

61,542,782

Textiles, Apparel & Luxury Goods - 0.2%

Coach, Inc.

174,394

9,956,153

TOTAL CONSUMER DISCRETIONARY

569,550,473

CONSUMER STAPLES - 9.7%

Beverages - 2.1%

Molson Coors Brewing Co. Class B

460,600

22,044,316

PepsiCo, Inc.

781,255

63,898,846

The Coca-Cola Co.

954,666

38,291,653

 

124,234,815

Food & Staples Retailing - 2.4%

CVS Caremark Corp.

421,200

24,084,216

Safeway, Inc. (e)

1,043,616

24,691,955

Sysco Corp.

282,600

9,653,616

Wal-Mart Stores, Inc.

389,578

29,019,665

Walgreen Co.

1,246,246

55,084,073

 

142,533,525

Food Products - 1.0%

Kellogg Co.

901,057

57,874,891

 

Shares

Value

Household Products - 2.5%

Procter & Gamble Co.

1,966,354

$ 151,389,594

Tobacco - 1.7%

Altria Group, Inc.

1,164,996

40,763,210

British American Tobacco PLC sponsored ADR

138,097

14,215,705

Lorillard, Inc.

794,873

34,720,053

Philip Morris International, Inc.

189,244

16,392,315

 

106,091,283

TOTAL CONSUMER STAPLES

582,124,108

ENERGY - 11.8%

Energy Equipment & Services - 1.5%

Ensco PLC Class A

349,923

20,337,525

Halliburton Co.

233,285

9,732,650

National Oilwell Varco, Inc.

182,550

12,577,695

Noble Corp.

626,302

23,536,429

Schlumberger Ltd.

176,002

12,612,303

Trinidad Drilling Ltd.

1,191,800

8,748,404

 

87,545,006

Oil, Gas & Consumable Fuels - 10.3%

Apache Corp.

390,272

32,716,502

BG Group PLC

160,400

2,728,697

Canadian Natural Resources Ltd.

801,500

22,596,249

Chevron Corp.

1,484,780

175,708,865

EV Energy Partners LP

332,951

12,442,379

Exxon Mobil Corp.

1,559,269

140,879,954

Holly Energy Partners LP

290,744

11,059,902

HollyFrontier Corp.

193,144

8,262,700

Legacy Reserves LP

289,401

7,698,067

Markwest Energy Partners LP

438,647

29,323,552

Occidental Petroleum Corp.

527,487

47,067,665

Penn West Petroleum Ltd. (e)

823,555

8,692,080

Royal Dutch Shell PLC Class A sponsored ADR

442,229

28,214,210

Scorpio Tankers, Inc.

327,173

2,938,014

Suncor Energy, Inc.

1,027,500

30,286,679

The Williams Companies, Inc.

1,487,949

48,313,704

Tsakos Energy Navigation Ltd.

771,108

3,678,185

Western Gas Equity Partners LP

43,077

1,773,480

Williams Partners LP

155,800

8,039,280

 

622,420,164

TOTAL ENERGY

709,965,170

FINANCIALS - 21.1%

Capital Markets - 3.4%

Apollo Investment Corp.

1,837,163

14,219,642

Ashmore Group PLC

2,360,743

12,340,796

BlackRock, Inc. Class A

101,500

26,070,275

Carlyle Group LP

215,500

5,538,350

Charles Schwab Corp.

1,355,100

28,768,773

Common Stocks - continued

Shares

Value

FINANCIALS - continued

Capital Markets - continued

Greenhill & Co., Inc.

124,803

$ 5,708,489

KKR & Co. LP

2,021,557

39,743,811

Morgan Stanley

1,632,593

39,884,247

The Blackstone Group LP

1,406,796

29,627,124

 

201,901,507

Commercial Banks - 5.7%

Comerica, Inc.

331,820

13,216,391

Cullen/Frost Bankers, Inc.

234,034

15,626,450

M&T Bank Corp.

329,891

36,865,319

PNC Financial Services Group, Inc.

176,200

12,848,504

Standard Chartered PLC (United Kingdom)

888,470

19,283,314

SunTrust Banks, Inc.

611,480

19,304,424

U.S. Bancorp

1,417,438

51,240,384

Wells Fargo & Co.

4,267,886

176,135,655

 

344,520,441

Diversified Financial Services - 4.8%

Bank of America Corp.

1,228,300

15,795,938

JPMorgan Chase & Co.

4,466,231

235,772,338

KKR Financial Holdings LLC

3,684,860

38,875,273

 

290,443,549

Insurance - 4.8%

ACE Ltd.

512,811

45,886,328

AFLAC, Inc.

401,700

23,346,804

esure Group PLC

1,874,500

9,262,966

Hanover Insurance Group, Inc.

240,728

11,778,821

MetLife, Inc.

2,768,607

126,691,456

MetLife, Inc. unit

341,615

18,676,092

Prudential Financial, Inc.

398,300

29,087,849

Validus Holdings Ltd.

745,935

26,943,172

 

291,673,488

Real Estate Investment Trusts - 2.2%

American Capital Agency Corp.

1,223,848

28,136,266

Annaly Capital Management, Inc.

1,897,277

23,848,772

CommonWealth REIT

264,400

6,112,928

Coresite Realty Corp.

150,847

4,798,443

First Potomac Realty Trust

569,215

7,433,948

Home Properties, Inc.

173,794

11,360,914

Rayonier, Inc.

297,781

16,494,090

Retail Properties America, Inc.

1,038,232

14,825,953

Two Harbors Investment Corp.

1,411,934

14,472,324

Ventas, Inc.

104,790

7,278,713

 

134,762,351

Real Estate Management & Development - 0.1%

Beazer Pre-Owned Rental Homes, Inc. (a)(j)

257,800

5,413,800

 

Shares

Value

Thrifts & Mortgage Finance - 0.1%

Radian Group, Inc.

301,008

$ 3,497,713

TOTAL FINANCIALS

1,272,212,849

HEALTH CARE - 12.5%

Biotechnology - 0.6%

Amgen, Inc.

242,600

23,934,916

PDL BioPharma, Inc. (e)

1,315,269

10,153,877

 

34,088,793

Health Care Equipment & Supplies - 0.6%

Covidien PLC

298,200

18,738,888

St. Jude Medical, Inc.

358,461

16,356,575

 

35,095,463

Health Care Providers & Services - 2.8%

Aetna, Inc.

624,107

39,655,759

McKesson Corp.

89,550

10,253,475

Quest Diagnostics, Inc.

204,500

12,398,835

UnitedHealth Group, Inc.

649,323

42,517,670

WellPoint, Inc.

761,361

62,309,784

 

167,135,523

Health Care Technology - 0.1%

Quality Systems, Inc.

355,946

6,659,750

Pharmaceuticals - 8.4%

AbbVie, Inc.

543,240

22,457,542

AstraZeneca PLC sponsored ADR

826,500

39,093,450

Eli Lilly & Co.

565,977

27,800,790

Johnson & Johnson

1,700,268

145,985,010

Merck & Co., Inc.

2,765,689

128,466,254

Pfizer, Inc.

2,578,212

72,215,718

Sanofi SA

186,368

19,266,836

Teva Pharmaceutical Industries Ltd. sponsored ADR

636,222

24,939,902

Warner Chilcott PLC

1,459,064

29,006,192

 

509,231,694

TOTAL HEALTH CARE

752,211,223

INDUSTRIALS - 9.8%

Aerospace & Defense - 1.5%

Raytheon Co.

443,901

29,350,734

The Boeing Co.

29,678

3,040,214

United Technologies Corp.

625,776

58,159,621

 

90,550,569

Air Freight & Logistics - 1.8%

C.H. Robinson Worldwide, Inc.

523,000

29,450,130

United Parcel Service, Inc. Class B

924,845

79,980,596

 

109,430,726

Common Stocks - continued

Shares

Value

INDUSTRIALS - continued

Commercial Services & Supplies - 1.2%

Intrum Justitia AB

659,308

$ 13,518,267

Republic Services, Inc.

1,778,526

60,363,172

 

73,881,439

Electrical Equipment - 0.6%

Eaton Corp. PLC

131,400

8,647,434

Emerson Electric Co.

218,855

11,936,352

Hubbell, Inc. Class B

124,100

12,285,900

 

32,869,686

Industrial Conglomerates - 2.2%

General Electric Co.

5,780,476

134,049,238

Machinery - 1.4%

Cummins, Inc.

141,995

15,400,778

Douglas Dynamics, Inc.

587,191

7,621,739

Harsco Corp.

260,106

6,031,858

Illinois Tool Works, Inc.

163,921

11,338,416

Stanley Black & Decker, Inc.

566,206

43,767,724

 

84,160,515

Professional Services - 0.4%

Acacia Research Corp.

490,984

10,973,492

Michael Page International PLC

2,755,399

15,547,957

 

26,521,449

Road & Rail - 0.4%

Union Pacific Corp.

138,162

21,315,633

Trading Companies & Distributors - 0.3%

Watsco, Inc.

224,650

18,861,614

TOTAL INDUSTRIALS

591,640,869

INFORMATION TECHNOLOGY - 9.8%

Communications Equipment - 2.3%

Cisco Systems, Inc.

5,809,095

141,219,099

Computers & Peripherals - 0.5%

Apple, Inc.

75,025

29,715,902

IT Services - 4.4%

Accenture PLC Class A

525,471

37,812,893

Cognizant Technology Solutions Corp. Class A (a)

202,260

12,663,499

Fidelity National Information Services, Inc.

116,597

4,995,015

IBM Corp.

372,212

71,133,435

Paychex, Inc.

3,621,687

132,264,009

The Western Union Co.

354,100

6,058,651

 

264,927,502

Semiconductors & Semiconductor Equipment - 1.3%

Applied Materials, Inc.

3,139,100

46,803,981

 

Shares

Value

KLA-Tencor Corp.

227,491

$ 12,678,073

Siliconware Precision Industries Co. Ltd. sponsored ADR

2,523,619

15,823,091

 

75,305,145

Software - 1.3%

CA Technologies, Inc.

465,919

13,339,261

Microsoft Corp.

1,947,000

67,229,910

 

80,569,171

TOTAL INFORMATION TECHNOLOGY

591,736,819

MATERIALS - 0.4%

Chemicals - 0.2%

Eastman Chemical Co.

95,616

6,694,076

RPM International, Inc.

274,849

8,778,677

 

15,472,753

Metals & Mining - 0.2%

Commercial Metals Co.

650,927

9,614,192

TOTAL MATERIALS

25,086,945

TELECOMMUNICATION SERVICES - 3.8%

Diversified Telecommunication Services - 3.0%

AT&T, Inc.

1,834,759

64,950,469

CenturyLink, Inc.

554,602

19,605,181

Verizon Communications, Inc.

1,927,510

97,030,853

 

181,586,503

Wireless Telecommunication Services - 0.8%

Vodafone Group PLC

17,364,298

49,760,484

TOTAL TELECOMMUNICATION SERVICES

231,346,987

UTILITIES - 2.5%

Electric Utilities - 1.7%

FirstEnergy Corp.

464,210

17,333,601

Hawaiian Electric Industries, Inc.

459,800

11,637,538

Northeast Utilities

397,100

16,686,142

PPL Corp.

1,112,847

33,674,750

Southern Co.

542,934

23,959,677

 

103,291,708

Multi-Utilities - 0.8%

PG&E Corp.

367,105

16,787,712

Sempra Energy

382,700

31,289,552

 

48,077,264

TOTAL UTILITIES

151,368,972

TOTAL COMMON STOCKS

(Cost $4,377,666,437)


5,477,244,415

Preferred Stocks - 2.3%

Shares

Value

Convertible Preferred Stocks - 1.8%

CONSUMER DISCRETIONARY - 0.3%

Automobiles - 0.2%

General Motors Co. 4.75%

289,390

$ 13,937,022

Media - 0.1%

Interpublic Group of Companies, Inc. 5.25%

5,300

6,670,262

TOTAL CONSUMER DISCRETIONARY

20,607,284

ENERGY - 0.1%

Oil, Gas & Consumable Fuels - 0.1%

Apache Corp. 6.00%

125,300

5,981,822

FINANCIALS - 0.3%

Commercial Banks - 0.2%

Huntington Bancshares, Inc. 8.50%

8,100

9,882,081

Real Estate Investment Trusts - 0.1%

Health Care REIT, Inc. Series I, 6.50%

103,400

6,297,701

TOTAL FINANCIALS

16,179,782

HEALTH CARE - 0.3%

Health Care Equipment & Supplies - 0.1%

Alere, Inc. 3.00%

27,680

6,283,083

Health Care Providers & Services - 0.2%

HealthSouth Corp. Series A, 6.50%

9,800

11,551,750

TOTAL HEALTH CARE

17,834,833

INDUSTRIALS - 0.2%

Aerospace & Defense - 0.2%

United Technologies Corp. 7.50%

169,100

10,037,776

MATERIALS - 0.0%

Metals & Mining - 0.0%

Cliffs Natural Resources, Inc. 7.00%

40,900

718,613

TELECOMMUNICATION SERVICES - 0.0%

Diversified Telecommunication Services - 0.0%

Intelsat SA Series A, 5.75%

48,000

2,640,000

UTILITIES - 0.6%

Electric Utilities - 0.3%

NextEra Energy, Inc.:

5.889%

90,807

5,045,237

Series E, 5.599%

152,100

8,578,440

PPL Corp. 8.75%

111,500

6,033,265

 

19,656,942

Multi-Utilities - 0.3%

CenterPoint Energy, Inc. 2.00% ZENS 

167,100

7,979,025

 

Shares

Value

Dominion Resources, Inc.:

Series A, 6.125% (a)

70,000

$ 3,514,000

Series B, 6.00% (a)

70,000

3,503,500

 

14,996,525

TOTAL UTILITIES

34,653,467

TOTAL CONVERTIBLE PREFERRED STOCKS

108,653,577

Nonconvertible Preferred Stocks - 0.5%

CONSUMER DISCRETIONARY - 0.1%

Automobiles - 0.1%

Volkswagen AG

46,518

9,418,577

FINANCIALS - 0.4%

Consumer Finance - 0.4%

Ally Financial, Inc. 7.00% (f)

25,330

23,936,850

TOTAL NONCONVERTIBLE PREFERRED STOCKS

33,355,427

TOTAL PREFERRED STOCKS

(Cost $131,296,987)


142,009,004

Corporate Bonds - 3.5%

 

Principal Amount (d)

 

Convertible Bonds - 3.4%

CONSUMER DISCRETIONARY - 0.1%

Automobiles - 0.1%

Volkswagen International Finance NV 5.5% 11/9/15 (f)

EUR

6,400,000

8,544,655

ENERGY - 0.4%

Oil, Gas & Consumable Fuels - 0.4%

Alpha Natural Resources, Inc. 3.75% 12/15/17

9,490,000

8,161,400

Amyris, Inc. 3% 2/27/17

1,383,000

976,149

Chesapeake Energy Corp. 2.5% 5/15/37

7,300,000

6,890,470

Cobalt International Energy, Inc. 2.625% 12/1/19

3,220,000

3,397,100

Ship Finance International Ltd. 3.25% 2/1/18

6,920,000

6,609,984

 

26,035,103

FINANCIALS - 0.4%

Insurance - 0.2%

Fidelity National Financial, Inc. 4.25% 8/15/18

7,360,000

9,733,968

Thrifts & Mortgage Finance - 0.2%

MGIC Investment Corp. 9% 4/1/63 (f)

10,438,000

11,213,543

TOTAL FINANCIALS

20,947,511

Corporate Bonds - continued

 

Principal Amount (d)

Value

Convertible Bonds - continued

HEALTH CARE - 0.7%

Biotechnology - 0.1%

InterMune, Inc. 2.5% 12/15/17

$ 610,000

$ 646,478

Theravance, Inc. 2.125% 1/15/23

3,010,000

4,637,281

 

5,283,759

Health Care Equipment & Supplies - 0.1%

Teleflex, Inc. 3.875% 8/1/17

5,670,000

7,627,284

Health Care Providers & Services - 0.5%

Molina Healthcare, Inc. 1.125% 1/15/20 (f)

5,140,000

5,605,813

WellPoint, Inc. 2.75% 10/15/42 (f)

19,590,000

24,642,261

 

30,248,074

TOTAL HEALTH CARE

43,159,117

INDUSTRIALS - 0.4%

Commercial Services & Supplies - 0.2%

Covanta Holding Corp. 3.25% 6/1/14

11,970,000

15,441,300

Construction & Engineering - 0.2%

MasTec, Inc.:

4% 6/15/14

4,000,000

8,412,500

4.25% 12/15/14

1,190,000

2,564,450

 

10,976,950

TOTAL INDUSTRIALS

26,418,250

INFORMATION TECHNOLOGY - 1.3%

Communications Equipment - 0.2%

InterDigital, Inc. 2.5% 3/15/16

8,920,000

9,578,296

Liberty Interactive LLC 0.75% 3/30/43 (f)

2,100,000

2,294,355

 

11,872,651

Computers & Peripherals - 0.4%

EMC Corp. 1.75% 12/1/13

10,050,000

14,843,850

SanDisk Corp. 1.5% 8/15/17

5,220,000

7,004,614

 

21,848,464

Semiconductors & Semiconductor Equipment - 0.6%

GT Advanced Technologies, Inc. 3% 10/1/17

11,430,000

9,701,213

Intel Corp. 3.25% 8/1/39

8,400,000

10,657,920

Micron Technology, Inc.:

1.625% 2/15/33 (f)

770,000

1,111,688

2.125% 2/15/33 (f)

400,000

581,000

3.125% 5/1/32 (f)

8,110,000

12,940,519

 

34,992,340

 

 

Principal Amount (d)

Value

Software - 0.1%

Nuance Communications, Inc. 2.75% 11/1/31

$ 9,380,000

$ 9,661,400

TOTAL INFORMATION TECHNOLOGY

78,374,855

TELECOMMUNICATION SERVICES - 0.1%

Wireless Telecommunication Services - 0.1%

Clearwire Communications LLC/Clearwire Finance, Inc. 8.25% 12/1/40 (f)

3,750,000

4,120,313

TOTAL CONVERTIBLE BONDS

207,599,804

Nonconvertible Bonds - 0.1%

FINANCIALS - 0.1%

Diversified Financial Services - 0.1%

Goldman Sachs Capital II 4% (g)(h)

3,970,000

3,156,150

TOTAL CORPORATE BONDS

(Cost $188,555,937)


210,755,954

Money Market Funds - 3.0%

Shares

 

Fidelity Cash Central Fund, 0.13% (b)

127,887,071

127,887,071

Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c)

51,453,347

51,453,347

TOTAL MONEY MARKET FUNDS

(Cost $179,340,418)


179,340,418

TOTAL INVESTMENT PORTFOLIO - 99.7%

(Cost $4,876,859,779)

6,009,349,791

NET OTHER ASSETS (LIABILITIES) - 0.3%

19,049,514

NET ASSETS - 100%

$ 6,028,399,305

Currency Abbreviations

EUR

-

European Monetary Unit

Legend

(a) Non-income producing

(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.

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

(d) Amount is stated in United States dollars unless otherwise noted.

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

(f) 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 $94,990,997 or 1.6% of net assets.

(g) Security is perpetual in nature with no stated maturity date.

(h) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end.

(i) Investment is owned by an entity that is treated as a corporation for U.S. tax purposes and is owned by the Fund.

(j) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $26,729,976 or 0.4% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost

Beazer Pre-Owned Rental Homes, Inc.

5/3/12 - 10/23/12

$ 5,156,000

New Academy Holding Co. LLC unit

8/1/11

$ 13,406,880

Affiliated Central Funds

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

Fund

Income earned

Fidelity Cash Central Fund

$ 151,842

Fidelity Securities Lending Cash Central Fund

827,399

Total

$ 979,241

Other Information

The following is a summary of the inputs used, as of June 30, 2013, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 599,576,334

$ 567,867,072

$ 10,393,086

$ 21,316,176

Consumer Staples

582,124,108

582,124,108

-

-

Energy

715,946,992

715,946,992

-

-

Financials

1,312,329,481

1,258,005,038

48,910,643

5,413,800

Health Care

770,046,056

739,227,470

30,818,586

-

Industrials

601,678,645

601,678,645

-

-

Information Technology

591,736,819

591,736,819

-

-

Materials

25,805,558

25,086,945

718,613

-

Telecommunication Services

233,986,987

184,226,503

49,760,484

-

Utilities

186,022,439

166,964,912

19,057,527

-

Corporate Bonds

210,755,954

-

210,755,954

-

Money Market Funds

179,340,418

179,340,418

-

-

Total Investments in Securities:

$ 6,009,349,791

$ 5,612,204,922

$ 370,414,893

$ 26,729,976

The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2013. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:

Transfers

Total

Level 1 to Level 2

$ 0

Level 2 to Level 1

$ 70,127,828

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2013 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $49,905,533) - See accompanying schedule:

Unaffiliated issuers (cost $4,697,519,361)

$ 5,830,009,373

 

Fidelity Central Funds (cost $179,340,418)

179,340,418

 

Total Investments (cost $4,876,859,779)

 

$ 6,009,349,791

Cash

 

25,055

Receivable for investments sold

93,419,368

Receivable for fund shares sold

1,955,633

Dividends receivable

11,834,068

Interest receivable

1,250,828

Distributions receivable from Fidelity Central Funds

50,638

Other receivables

371,801

Total assets

6,118,257,182

 

 

 

Liabilities

Payable for investments purchased

$ 31,188,330

Payable for fund shares redeemed

3,595,045

Accrued management fee

2,292,450

Distribution and service plan fees payable

380,661

Other affiliated payables

563,681

Other payables and accrued expenses

384,363

Collateral on securities loaned, at value

51,453,347

Total liabilities

89,857,877

 

 

 

Net Assets

$ 6,028,399,305

Net Assets consist of:

 

Paid in capital

$ 4,674,112,255

Undistributed net investment income

74,340,048

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

147,187,785

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

1,132,759,217

Net Assets

$ 6,028,399,305

Statement of Assets and Liabilities - continued

 

June 30, 2013 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($3,702,221,496 ÷ 162,390,809 shares)

$ 22.80

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($375,309,299 ÷ 16,528,365 shares)

$ 22.71

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($1,655,190,960 ÷ 73,885,907 shares)

$ 22.40

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($8,653,315 ÷ 388,198 shares)

$ 22.29

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($287,024,235 ÷ 12,631,765 shares)

$ 22.72

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

Semiannual Report

Statement of Operations

 

Six months ended June 30, 2013 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 87,556,601

Interest

 

4,668,895

Income from Fidelity Central Funds

 

979,241

Total income

 

93,204,737

 

 

 

Expenses

Management fee

$ 13,663,978

Transfer agent fees

2,211,074

Distribution and service plan fees

2,280,114

Accounting and security lending fees

568,300

Custodian fees and expenses

51,216

Independent trustees' compensation

18,476

Appreciation in deferred trustee compensation account

293

Audit

47,940

Legal

5,369

Miscellaneous

31,356

Total expenses before reductions

18,878,116

Expense reductions

(144,944)

18,733,172

Net investment income (loss)

74,471,565

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

194,596,343

Foreign currency transactions

(367,134)

Total net realized gain (loss)

 

194,229,209

Change in net unrealized appreciation (depreciation) on:

Investment securities

539,762,675

Assets and liabilities in foreign currencies

248,049

Total change in net unrealized appreciation (depreciation)

 

540,010,724

Net gain (loss)

734,239,933

Net increase (decrease) in net assets resulting from operations

$ 808,711,498

Statement of Changes in Net Assets

 

Six months ended
June 30, 2013
(Unaudited)

Year ended
December 31,
2012

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 74,471,565

$ 160,196,451

Net realized gain (loss)

194,229,209

225,861,427

Change in net unrealized appreciation (depreciation)

540,010,724

499,587,896

Net increase (decrease) in net assets resulting from operations

808,711,498

885,645,774

Distributions to shareholders from net investment income

-

(160,836,253)

Distributions to shareholders from net realized gain

(16,221,018)

(361,842,958)

Total distributions

(16,221,018)

(522,679,211)

Share transactions - net increase (decrease)

(362,475,634)

(98,030,068)

Redemption fees

35

2,080

Total increase (decrease) in net assets

430,014,881

264,938,575

 

 

 

Net Assets

Beginning of period

5,598,384,424

5,333,445,849

End of period (including undistributed net investment income of $74,340,048 and distributions in excess of net investment income of $131,517, respectively)

$ 6,028,399,305

$ 5,598,384,424

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 19.94

$ 18.69

$ 19.02

$ 16.81

$ 13.18

$ 23.91

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .28

.59

.48

.30

.33

.47

Net realized and unrealized gain (loss)

  2.64

2.59

(.31)

2.24

3.64

(10.67)

Total from investment operations

  2.92

3.18

.17

2.54

3.97

(10.20)

Distributions from net investment income

  -

(.63) H

(.50)

(.33)

(.34)

(.51)

Distributions from net realized gain

  (.06)

(1.30) H

-

-

-

(.02)

Total distributions

  (.06)

(1.93)

(.50)

(.33)

(.34)

(.53)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 22.80

$ 19.94

$ 18.69

$ 19.02

$ 16.81

$ 13.18

Total Return B, C, D

  14.66%

17.31%

.97%

15.15%

30.21%

(42.65)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .55% A

.55%

.56%

.56%

.58%

.57%

Expenses net of fee waivers, if any

  .55% A

.55%

.55%

.55%

.58%

.57%

Expenses net of all reductions

  .54% A

.54%

.54%

.55%

.58%

.57%

Net investment income (loss)

  2.55% A

2.94%

2.48%

1.71%

2.29%

2.37%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 3,702,221

$ 3,461,083

$ 3,345,762

$ 3,798,310

$ 3,771,733

$ 3,322,799

Portfolio turnover rate G

  32% A

48%

96%

29%

29%

34%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

J Amount represents less than $.01 per share.

Financial Highlights - Service Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 19.87

$ 18.63

$ 18.96

$ 16.75

$ 13.14

$ 23.82

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .27

.57

.46

.28

.31

.44

Net realized and unrealized gain (loss)

  2.63

2.57

(.31)

2.24

3.63

(10.62)

Total from investment operations

  2.90

3.14

.15

2.52

3.94

(10.18)

Distributions from net investment income

  -

(.60) H

(.48)

(.31)

(.33)

(.48)

Distributions from net realized gain

  (.06)

(1.30) H

-

-

-

(.02)

Total distributions

  (.06)

(1.90)

(.48)

(.31)

(.33)

(.50)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 22.71

$ 19.87

$ 18.63

$ 18.96

$ 16.75

$ 13.14

Total Return B, C, D

  14.61%

17.19%

.86%

15.09%

30.03%

(42.70)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .65% A

.65%

.66%

.66%

.68%

.67%

Expenses net of fee waivers, if any

  .65% A

.65%

.66%

.65%

.68%

.67%

Expenses net of all reductions

  .64% A

.64%

.64%

.65%

.68%

.67%

Net investment income (loss)

  2.45% A

2.84%

2.38%

1.61%

2.19%

2.27%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 375,309

$ 350,493

$ 347,999

$ 414,431

$ 430,383

$ 405,082

Portfolio turnover rate G

  32% A

48%

96%

29%

29%

34%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

J Amount represents less than $.01 per share.

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

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 19.62

$ 18.41

$ 18.75

$ 16.57

$ 13.00

$ 23.57

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .25

.53

.42

.25

.29

.41

Net realized and unrealized gain (loss)

  2.59

2.55

(.31)

2.21

3.58

(10.50)

Total from investment operations

  2.84

3.08

.11

2.46

3.87

(10.09)

Distributions from net investment income

  -

(.57) H

(.45)

(.28)

(.30)

(.46)

Distributions from net realized gain

  (.06)

(1.30) H

-

-

-

(.02)

Total distributions

  (.06)

(1.87)

(.45)

(.28)

(.30)

(.48)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 22.40

$ 19.62

$ 18.41

$ 18.75

$ 16.57

$ 13.00

Total Return B, C, D

  14.49%

17.05%

.66%

14.92%

29.88%

(42.81)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .80% A

.80%

.81%

.81%

.83%

.82%

Expenses net of fee waivers, if any

  .80% A

.80%

.81%

.80%

.83%

.82%

Expenses net of all reductions

  .79% A

.79%

.80%

.80%

.83%

.82%

Net investment income (loss)

  2.30% A

2.69%

2.23%

1.46%

2.04%

2.12%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 1,655,191

$ 1,560,856

$ 1,457,230

$ 1,619,356

$ 1,558,421

$ 1,321,569

Portfolio turnover rate G

  32% A

48%

96%

29%

29%

34%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

J Amount represents less than $.01 per share.

Financial Highlights - Service Class 2R

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 19.53

$ 18.34

$ 18.66

$ 16.49

$ 12.93

$ 23.44

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .25

.53

.42

.25

.28

.41

Net realized and unrealized gain (loss)

  2.57

2.54

(.30)

2.20

3.58

(10.45)

Total from investment operations

  2.82

3.07

.12

2.45

3.86

(10.04)

Distributions from net investment income

  -

(.58) H

(.44)

(.28)

(.30)

(.45)

Distributions from net realized gain

  (.06)

(1.30) H

-

-

-

(.02)

Total distributions

  (.06)

(1.88)

(.44)

(.28)

(.30)

(.47)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 22.29

$ 19.53

$ 18.34

$ 18.66

$ 16.49

$ 12.93

Total Return B, C, D

  14.45%

17.05%

.70%

14.90%

29.95%

(42.82)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .80% A

.80%

.81%

.81%

.83%

.82%

Expenses net of fee waivers, if any

  .80% A

.80%

.80%

.80%

.83%

.82%

Expenses net of all reductions

  .79% A

.79%

.79%

.80%

.83%

.81%

Net investment income (loss)

  2.31% A

2.69%

2.23%

1.46%

2.04%

2.12%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 8,653

$ 5,640

$ 3,956

$ 5,405

$ 5,259

$ 5,339

Portfolio turnover rate G

  32% A

48%

96%

29%

29%

34%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

J Amount represents less than $.01 per share.

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

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 19.89

$ 18.64

$ 18.97

$ 16.77

$ 13.15

$ 23.85

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .27

.57

.46

.28

.31

.44

Net realized and unrealized gain (loss)

  2.62

2.59

(.31)

2.23

3.64

(10.63)

Total from investment operations

  2.89

3.16

.15

2.51

3.95

(10.19)

Distributions from net investment income

  -

(.61) H

(.48)

(.31)

(.33)

(.49)

Distributions from net realized gain

  (.06)

(1.30) H

-

-

-

(.02)

Total distributions

  (.06)

(1.91)

(.48)

(.31)

(.33)

(.51)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 22.72

$ 19.89

$ 18.64

$ 18.97

$ 16.77

$ 13.15

Total Return B, C, D

  14.54%

17.27%

.89%

15.04%

30.09%

(42.71)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .63% A

.64%

.64%

.65%

.68%

.66%

Expenses net of fee waivers, if any

  .63% A

.64%

.64%

.64%

.68%

.66%

Expenses net of all reductions

  .63% A

.63%

.63%

.64%

.68%

.66%

Net investment income (loss)

  2.47% A

2.85%

2.39%

1.62%

2.19%

2.28%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 287,024

$ 220,311

$ 178,499

$ 165,946

$ 147,358

$ 122,483

Portfolio turnover rate G

  32% A

48%

96%

29%

29%

34%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

J Amount represents less than $.01 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2013 (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.

2. Investments in Fidelity Central Funds.

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

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

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:

Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are generally categorized as Level 3 in the hierarchy.

Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For corporate bonds, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Investment Valuation - continued

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2013, including information on transfers between Levels 1 and 2, is included at the end of the Fund's Schedule of Investments.

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

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

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

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.

Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

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

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences resulted in distribution reclassifications.

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, market discount, partnerships, deferred trustees compensation, equity-debt classifications and losses deferred due to wash sales and excise tax regulations.

Semiannual Report

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

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

Gross unrealized appreciation

$ 1,385,954,076

Gross unrealized depreciation

(257,627,419)

Net unrealized appreciation (depreciation) on securities and other investments

$ 1,128,326,657

 

 

Tax cost

$ 4,881,023,134

Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days may be subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.

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.

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $915,335,772 and $1,326,613,335, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and an annualized group fee rate that averaged .25% 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 .45% of the Fund's average net assets.

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

For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:

Service Class

$ 186,383

Service Class 2

2,084,717

Service Class 2R

9,014

 

$ 2,280,114

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. In addition, FIIOC receives an asset-based fee of .0035% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:

Initial Class

$ 1,294,976

Service Class

130,245

Service Class 2

583,321

Service Class 2R

2,503

Investor Class

200,029

 

$ 2,211,074

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

5. Fees and Other Transactions with Affiliates - continued

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

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $19,946 for the period.

6. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $7,515 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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 rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $827,399, including $43,766 from securities loaned to FCM.

8. 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 $142,658 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 $2,286.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30, 2013

Year ended
December 31, 2012

From net investment income

 

 

Initial Class

$ -

$ 101,791,140

Service Class

-

9,989,279

Service Class 2

-

42,628,835

Service Class 2R

-

156,403

Investor Class

-

6,270,596

Total

$ -

$ 160,836,253

From net realized gain

 

 

Initial Class

$ 9,960,461

$ 222,187,565

Service Class

1,005,392

22,886,320

Service Class 2

4,574,622

103,060,364

Service Class 2R

16,498

339,927

Investor Class

664,045

13,368,782

Total

$ 16,221,018

$ 361,842,958

Semiannual Report

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended June 30, 2013

Year ended
December 31, 2012

Six months ended June 30, 2013

Year ended
December 31, 2012

Initial Class

 

 

 

 

Shares sold

2,740,631

3,870,932

$ 60,148,018

$ 77,988,279

Reinvestment of distributions

470,055

16,250,583

9,960,461

323,978,705

Shares redeemed

(14,365,044)

(25,610,108)

(319,745,752)

(515,027,646)

Net increase (decrease)

(11,154,358)

(5,488,593)

$ (249,637,273)

$ (113,060,662)

Service Class

 

 

 

 

Shares sold

288,720

779,349

$ 6,309,807

$ 15,549,373

Reinvestment of distributions

47,626

1,655,419

1,005,392

32,875,599

Shares redeemed

(1,444,012)

(3,480,467)

(31,429,784)

(69,732,701)

Net increase (decrease)

(1,107,666)

(1,045,699)

$ (24,114,585)

$ (21,307,729)

Service Class 2

 

 

 

 

Shares sold

2,884,176

9,943,946

$ 62,278,377

$ 192,585,015

Reinvestment of distributions

219,512

7,428,210

4,574,622

145,689,199

Shares redeemed

(8,763,199)

(16,965,629)

(191,739,996)

(333,504,543)

Net increase (decrease)

(5,659,511)

406,527

$ (124,886,997)

$ 4,769,671

Service Class 2R

 

 

 

 

Shares sold

132,339

121,840

$ 2,860,906

$ 2,390,089

Reinvestment of distributions

795

25,375

16,498

496,330

Shares redeemed

(33,811)

(74,064)

(720,302)

(1,477,846)

Net increase (decrease)

99,323

73,151

$ 2,157,102

$ 1,408,573

Investor Class

 

 

 

 

Shares sold

1,869,239

1,569,001

$ 41,066,328

$ 31,601,024

Reinvestment of distributions

31,442

986,760

664,045

19,639,378

Shares redeemed

(347,852)

(1,052,779)

(7,724,254)

(21,080,323)

Net increase (decrease)

1,552,829

1,502,982

$ 34,006,119

$ 30,160,079

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 12% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 18% of the total outstanding shares of the Fund.

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Hong Kong) Limited

Fidelity Management & Research (Japan) Inc.

General Distributor

Fidelity Distributors Corporation
Smithfield, RI

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

The Northern Trust Company
Chicago, IL 

VIPEI-SANN-0813
1.705693.115

Fidelity® Variable Insurance Products:
Growth Portfolio

Semiannual Report

June 30, 2013

(Fidelity Cover Art)

Contents

Shareholder Expense Example

(Click Here)

An example of shareholder expenses.

Investment Changes

(Click Here)

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

Investments

(Click Here)

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

Financial Statements

(Click Here)

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

Notes

(Click Here)

Notes to the financial statements.

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2013 FMR LLC. All rights reserved.

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

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

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, 2013 to June 30, 2013).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

Annualized Expense RatioB

Beginning
Account Value
January 1, 2013

Ending
Account Value
June 30, 2013

Expenses Paid
During Period*
January 1, 2013 to June 30, 2013

Initial Class

.66%

 

 

 

Actual

 

$ 1,000.00

$ 1,117.20

$ 3.46

HypotheticalA

 

$ 1,000.00

$ 1,021.52

$ 3.31

Service Class

.76%

 

 

 

Actual

 

$ 1,000.00

$ 1,116.80

$ 3.99

HypotheticalA

 

$ 1,000.00

$ 1,021.03

$ 3.81

Service Class 2

.91%

 

 

 

Actual

 

$ 1,000.00

$ 1,116.00

$ 4.77

HypotheticalA

 

$ 1,000.00

$ 1,020.28

$ 4.56

Service Class 2R

.91%

 

 

 

Actual

 

$ 1,000.00

$ 1,115.80

$ 4.77

HypotheticalA

 

$ 1,000.00

$ 1,020.28

$ 4.56

Investor Class

.74%

 

 

 

Actual

 

$ 1,000.00

$ 1,116.80

$ 3.88

HypotheticalA

 

$ 1,000.00

$ 1,021.12

$ 3.71

A 5% return per year before expenses

B Annualized expense ratio reflects expenses net of applicable fee waivers.

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Express Scripts Holding Co.

3.5

3.1

Home Depot, Inc.

3.2

2.3

Google, Inc. Class A

3.1

1.9

Apple, Inc.

2.8

10.7

Harley-Davidson, Inc.

2.7

2.2

Green Mountain Coffee Roasters, Inc.

2.5

1.5

Broadcom Corp. Class A

2.5

0.0

Facebook, Inc. Class A

2.3

2.1

Visa, Inc. Class A

2.3

2.3

Gilead Sciences, Inc.

2.3

1.3

 

27.2

Top Five Market Sectors as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Information Technology

26.5

28.5

Consumer Discretionary

21.9

19.0

Health Care

16.6

12.3

Consumer Staples

10.2

12.2

Industrials

7.2

8.1

Asset Allocation (% of fund's net assets)

As of June 30, 2013 *

As of December 31, 2012 **

vvv1266428

Stocks 98.8%

 

vvv1266428

Stocks 97.6%

 

vvv1266434

Short-Term
Investments and
Net Other Assets
(Liabilities) 1.2%

 

vvv1266434

Short-Term
Investments and
Net Other Assets
(Liabilities) 2.4%

 

* Foreign investments

11.1%

 

** Foreign investments

11.8%

 

vvv1266461

Semiannual Report

Investments June 30, 2013 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 98.7%

Shares

Value

CONSUMER DISCRETIONARY - 21.8%

Automobiles - 4.1%

Harley-Davidson, Inc.

1,943,252

$ 106,529,075

Tesla Motors, Inc. (a)(d)

521,977

56,075,989

 

162,605,064

Diversified Consumer Services - 1.1%

Anhanguera Educacional Participacoes SA

3,325,600

19,464,600

Kroton Educacional SA

1,808,600

25,045,708

 

44,510,308

Hotels, Restaurants & Leisure - 4.6%

Bloomin' Brands, Inc.

149,000

3,707,120

Chipotle Mexican Grill, Inc. (a)

83,201

30,314,284

Dunkin' Brands Group, Inc.

582,595

24,946,718

Noodles & Co.

29,700

1,091,475

Panera Bread Co. Class A (a)

131,159

24,387,704

Starbucks Corp.

966,873

63,320,513

Texas Roadhouse, Inc. Class A

361,962

9,056,289

Yum! Brands, Inc.

357,598

24,795,845

 

181,619,948

Household Durables - 0.9%

D.R. Horton, Inc.

348,116

7,407,908

Mohawk Industries, Inc. (a)

199,661

22,459,866

Toll Brothers, Inc. (a)

111,700

3,644,771

 

33,512,545

Internet & Catalog Retail - 1.8%

Amazon.com, Inc. (a)

207,688

57,672,881

TripAdvisor, Inc. (a)

230,353

14,021,587

 

71,694,468

Media - 2.0%

Comcast Corp. Class A (special) (non-vtg.)

696,919

27,646,777

Discovery Communications, Inc. Class C (non-vtg.) (a)

409,469

28,523,611

Lions Gate Entertainment Corp. (a)

768,332

21,106,080

 

77,276,468

Multiline Retail - 0.3%

Dollarama, Inc.

194,340

13,602,137

Specialty Retail - 5.7%

GNC Holdings, Inc.

1,445,525

63,906,660

Home Depot, Inc.

1,606,638

124,466,246

TJX Companies, Inc.

322,100

16,124,326

Ulta Salon, Cosmetics & Fragrance, Inc. (a)

102,592

10,275,615

Urban Outfitters, Inc. (a)

94,700

3,808,834

Williams-Sonoma, Inc.

88,500

4,946,265

 

223,527,946

Textiles, Apparel & Luxury Goods - 1.3%

ECLAT Textile Co. Ltd.

1,287,000

9,511,862

 

Shares

Value

Michael Kors Holdings Ltd. (a)

311,403

$ 19,313,214

NIKE, Inc. Class B

347,170

22,107,786

 

50,932,862

TOTAL CONSUMER DISCRETIONARY

859,281,746

CONSUMER STAPLES - 10.2%

Beverages - 2.0%

Monster Beverage Corp. (a)

335,790

20,405,958

Remy Cointreau SA

20,600

2,185,876

SABMiller PLC

474,242

22,738,931

The Coca-Cola Co.

823,790

33,042,217

 

78,372,982

Food & Staples Retailing - 1.3%

Costco Wholesale Corp.

211,800

23,418,726

Whole Foods Market, Inc.

567,488

29,214,282

 

52,633,008

Food Products - 4.8%

Biostime International Holdings Ltd.

654,000

3,667,975

Green Mountain Coffee Roasters, Inc. (a)(d)

1,352,037

101,483,897

Mead Johnson Nutrition Co. Class A

539,766

42,765,660

The Hershey Co.

482,944

43,117,240

 

191,034,772

Personal Products - 1.0%

Herbalife Ltd.

828,255

37,387,431

Tobacco - 1.1%

British American Tobacco PLC sponsored ADR

184,600

19,002,724

Philip Morris International, Inc.

301,631

26,127,277

 

45,130,001

TOTAL CONSUMER STAPLES

404,558,194

ENERGY - 5.2%

Energy Equipment & Services - 2.5%

Cameron International Corp. (a)

641,376

39,226,556

Dril-Quip, Inc. (a)

161,254

14,559,624

National Oilwell Varco, Inc.

142,700

9,832,030

Oceaneering International, Inc.

478,274

34,531,383

 

98,149,593

Oil, Gas & Consumable Fuels - 2.7%

Bonanza Creek Energy, Inc. (a)

717,555

25,444,500

Cobalt International Energy, Inc. (a)

518,500

13,776,545

Continental Resources, Inc. (a)

117,864

10,143,376

Kosmos Energy Ltd. (a)

1,564,083

15,891,083

Markwest Energy Partners LP

239,200

15,990,520

Noble Energy, Inc.

190,800

11,455,632

Pioneer Natural Resources Co.

105,198

15,227,411

 

107,929,067

TOTAL ENERGY

206,078,660

Common Stocks - continued

Shares

Value

FINANCIALS - 4.6%

Capital Markets - 1.9%

BlackRock, Inc. Class A

92,206

$ 23,683,111

Harvest Capital Credit Corp.

161,500

2,437,035

Invesco Ltd.

1,451,797

46,167,145

Virtus Investment Partners, Inc. (a)

21,200

3,736,924

 

76,024,215

Commercial Banks - 0.4%

First Republic Bank

172,800

6,649,344

HDFC Bank Ltd. sponsored ADR

266,900

9,672,456

 

16,321,800

Consumer Finance - 0.2%

Mahindra & Mahindra Financial Services Ltd.

1,532,030

6,719,181

Diversified Financial Services - 0.4%

McGraw-Hill Companies, Inc.

292,788

15,573,394

Insurance - 0.3%

Berkshire Hathaway, Inc. Class B (a)

93,100

10,419,752

Real Estate Investment Trusts - 0.9%

American Tower Corp.

504,955

36,947,557

Real Estate Management & Development - 0.5%

Realogy Holdings Corp.

362,901

17,433,764

TOTAL FINANCIALS

179,439,663

HEALTH CARE - 16.6%

Biotechnology - 8.4%

Acorda Therapeutics, Inc. (a)

136,176

4,492,446

Amgen, Inc.

434,756

42,893,027

Biogen Idec, Inc. (a)

309,141

66,527,143

BioMarin Pharmaceutical, Inc. (a)

681,905

38,043,480

Biovitrum AB (a)

1,546,648

9,271,447

Cytokinetics, Inc. (a)

301,383

3,487,001

Cytokinetics, Inc. warrants 6/25/17 (a)

1,084,980

709,177

Esperion Therapeutics, Inc.

144,000

2,030,400

Gilead Sciences, Inc. (a)

1,742,624

89,239,775

Kamada (a)

422,765

4,701,147

Onyx Pharmaceuticals, Inc. (a)

229,545

27,545,400

Regeneron Pharmaceuticals, Inc. (a)

75,341

16,942,684

Theravance, Inc. (a)

154,847

5,966,255

Thrombogenics NV (a)(d)

40,212

1,541,732

Vertex Pharmaceuticals, Inc. (a)

219,871

17,561,097

 

330,952,211

Health Care Equipment & Supplies - 0.6%

The Cooper Companies, Inc.

186,100

22,155,205

Health Care Providers & Services - 4.1%

Apollo Hospitals Enterprise Ltd.

472,341

8,358,181

BioScrip, Inc. (a)

506,087

8,350,436

 

Shares

Value

Express Scripts Holding Co. (a)

2,271,169

$ 140,108,416

Qualicorp SA (a)

970,500

7,389,605

 

164,206,638

Health Care Technology - 0.5%

Cerner Corp. (a)

229,100

22,014,219

Life Sciences Tools & Services - 0.4%

Illumina, Inc. (a)

189,473

14,180,159

Pharmaceuticals - 2.6%

Actavis, Inc. (a)

166,418

21,005,280

Allergan, Inc.

70,400

5,930,496

Cadence Pharmaceuticals, Inc. (a)

912,822

6,225,446

Novo Nordisk A/S Series B

132,840

20,651,631

Pacira Pharmaceuticals, Inc. (a)

323,466

9,380,514

Valeant Pharmaceuticals International, Inc. (Canada) (a)

449,295

38,739,251

 

101,932,618

TOTAL HEALTH CARE

655,441,050

INDUSTRIALS - 7.2%

Aerospace & Defense - 1.8%

Textron, Inc.

604,925

15,758,296

United Technologies Corp.

574,228

53,368,750

 

69,127,046

Airlines - 0.2%

Ryanair Holdings PLC sponsored ADR

145,782

7,512,146

Building Products - 0.0%

Ply Gem Holdings, Inc.

16,400

328,984

Construction & Engineering - 0.3%

EMCOR Group, Inc.

249,770

10,153,151

Electrical Equipment - 2.0%

AMETEK, Inc.

432,600

18,298,980

Generac Holdings, Inc.

110,500

4,089,605

Hubbell, Inc. Class B

168,341

16,665,759

Roper Industries, Inc.

331,117

41,131,354

 

80,185,698

Industrial Conglomerates - 1.1%

Danaher Corp.

677,924

42,912,589

Machinery - 0.4%

Graco, Inc.

51,062

3,227,629

Haitian International Holdings Ltd.

266,000

388,914

Manitowoc Co., Inc.

758,584

13,586,239

 

17,202,782

Professional Services - 1.0%

Equifax, Inc.

282,921

16,672,535

Verisk Analytics, Inc. (a)

409,904

24,471,269

 

41,143,804

Common Stocks - continued

Shares

Value

INDUSTRIALS - continued

Trading Companies & Distributors - 0.4%

Beacon Roofing Supply, Inc. (a)

420,800

$ 15,939,904

TOTAL INDUSTRIALS

284,506,104

INFORMATION TECHNOLOGY - 26.5%

Communications Equipment - 1.4%

QUALCOMM, Inc.

912,195

55,716,871

Computers & Peripherals - 4.7%

Apple, Inc.

275,771

109,227,378

SanDisk Corp. (a)

1,263,111

77,176,082

 

186,403,460

Internet Software & Services - 8.2%

Blucora, Inc. (a)

776,066

14,388,264

Cornerstone OnDemand, Inc. (a)

252,165

10,916,223

CoStar Group, Inc. (a)

77,524

10,006,023

eBay, Inc. (a)

354,941

18,357,549

Facebook, Inc. Class A (a)

3,688,354

91,692,480

Google, Inc. Class A (a)

137,835

121,345,799

LinkedIn Corp. (a)

49,029

8,741,871

MercadoLibre, Inc. (d)

133,752

14,413,116

SciQuest, Inc. (a)

205,124

5,138,356

SPS Commerce, Inc. (a)

389,015

21,395,825

Xoom Corp. (d)

73,430

1,683,016

Yahoo!, Inc. (a)

204,600

5,137,506

 

323,216,028

IT Services - 2.9%

FleetCor Technologies, Inc. (a)

242,400

19,707,120

ServiceSource International, Inc. (a)

177,501

1,654,309

Visa, Inc. Class A

498,145

91,035,999

 

112,397,428

Semiconductors & Semiconductor Equipment - 4.9%

ASML Holding NV

184,900

14,625,590

Avago Technologies Ltd.

454,586

16,992,425

Broadcom Corp. Class A

2,950,165

99,597,570

Micron Technology, Inc. (a)

4,466,945

64,011,322

 

195,226,907

Software - 4.4%

ANSYS, Inc. (a)

5,410

395,471

Citrix Systems, Inc. (a)

311,882

18,815,841

Computer Modelling Group Ltd.

545,300

12,023,873

Diligent Board Member Services, Inc. (a)

597,514

3,148,696

FleetMatics Group PLC

284,900

9,467,227

Infoblox, Inc. (a)

92,660

2,711,232

 

Shares

Value

salesforce.com, Inc. (a)

1,435,562

$ 54,809,757

ServiceNow, Inc.

109,600

4,426,744

SolarWinds, Inc. (a)

1,165,866

45,247,259

Tableau Software, Inc.

104,200

5,774,764

Ultimate Software Group, Inc. (a)

11,250

1,319,513

VMware, Inc. Class A (a)

150,969

10,113,413

Workday, Inc. Class A

62,800

4,024,852

 

172,278,642

TOTAL INFORMATION TECHNOLOGY

1,045,239,336

MATERIALS - 4.7%

Chemicals - 3.1%

FMC Corp.

371,105

22,659,671

LyondellBasell Industries NV Class A

179,927

11,921,963

Monsanto Co.

597,098

58,993,282

Sherwin-Williams Co.

157,660

27,842,756

 

121,417,672

Construction Materials - 1.3%

Eagle Materials, Inc.

290,165

19,229,235

James Hardie Industries PLC sponsored ADR

207,200

8,934,464

Vulcan Materials Co.

471,146

22,808,178

 

50,971,877

Paper & Forest Products - 0.3%

Canfor Corp. (a)

307,500

5,438,338

Norbord, Inc.

320,800

9,282,061

 

14,720,399

TOTAL MATERIALS

187,109,948

TELECOMMUNICATION SERVICES - 0.7%

Wireless Telecommunication Services - 0.7%

SBA Communications Corp. Class A (a)

395,500

29,314,460

UTILITIES - 1.2%

Electric Utilities - 1.2%

ITC Holdings Corp.

520,169

47,491,430

TOTAL COMMON STOCKS

(Cost $2,958,302,720)


3,898,460,591

Convertible Preferred Stocks - 0.1%

 

 

 

 

CONSUMER DISCRETIONARY - 0.1%

Household Durables - 0.1%

Blu Homes, Inc. Series A, 5.00% (e)

(Cost $4,848,302)

1,049,416


4,848,302

Money Market Funds - 1.5%

Shares

Value

Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c)
(Cost $57,263,925)

57,263,925

$ 57,263,925

TOTAL INVESTMENT PORTFOLIO - 100.3%

(Cost $3,020,414,947)

3,960,572,818

NET OTHER ASSETS (LIABILITIES) - (0.3)%

  (10,369,004)

NET ASSETS - 100%

$ 3,950,203,814

Legend

(a) Non-income producing

(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.

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

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

(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $4,848,302 or 0.1% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost

Blu Homes, Inc. Series A, 5.00%

6/21/13

$ 4,848,302

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

$ 42,130

Fidelity Securities Lending Cash Central Fund

283,279

Total

$ 325,409

Other Information

The following is a summary of the inputs used, as of June 30, 2013, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 864,130,048

$ 859,281,746

$ -

$ 4,848,302

Consumer Staples

404,558,194

404,558,194

-

-

Energy

206,078,660

206,078,660

-

-

Financials

179,439,663

179,439,663

-

-

Health Care

655,441,050

606,534,842

48,906,208

-

Industrials

284,506,104

284,506,104

-

-

Information Technology

1,045,239,336

1,045,239,336

-

-

Materials

187,109,948

187,109,948

-

-

Telecommunication Services

29,314,460

29,314,460

-

-

Utilities

47,491,430

47,491,430

-

-

Money Market Funds

57,263,925

57,263,925

-

-

Total Investments in Securities:

$ 3,960,572,818

$ 3,906,818,308

$ 48,906,208

$ 4,848,302

The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2013. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:

Transfers

Total

Level 1 to Level 2

$ 9,166,623

Level 2 to Level 1

$ 108,229,599

Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited)

United States of America

88.9%

Canada

2.5%

Bermuda

1.6%

Brazil

1.3%

United Kingdom

1.1%

Cayman Islands

1.1%

Others (Individually Less Than 1%)

3.5%

 

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, 2013 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $55,810,739) - See accompanying schedule:

Unaffiliated issuers (cost $2,963,151,022)

$ 3,903,308,893

 

Fidelity Central Funds (cost $57,263,925)

57,263,925

 

Total Investments (cost $3,020,414,947)

 

$ 3,960,572,818

Receivable for investments sold

79,037,118

Receivable for fund shares sold

761,852

Dividends receivable

1,551,499

Distributions receivable from Fidelity Central Funds

59,908

Other receivables

191,158

Total assets

4,042,174,353

 

 

 

Liabilities

Payable to custodian bank

$ 1,348,650

Payable for investments purchased

28,336,967

Payable for fund shares redeemed

2,391,294

Accrued management fee

1,832,755

Distribution and service plan fees payable

167,854

Other affiliated payables

392,825

Other payables and accrued expenses

236,269

Collateral on securities loaned, at value

57,263,925

Total liabilities

91,970,539

 

 

 

Net Assets

$ 3,950,203,814

Net Assets consist of:

 

Paid in capital

$ 3,769,212,733

Undistributed net investment income

6,026,236

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

(765,191,770)

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

940,156,615

Net Assets

$ 3,950,203,814

Statement of Assets and Liabilities - continued

 

June 30, 2013 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($2,738,601,413 ÷ 58,287,344 shares)

$ 46.98

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($418,418,592 ÷ 8,930,927 shares)

$ 46.85

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($627,547,443 ÷ 13,504,741 shares)

$ 46.47

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($5,222,790 ÷ 112,650 shares)

$ 46.36

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($160,413,576 ÷ 3,423,997 shares)

$ 46.85

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, 2013 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 19,745,309

Interest

 

56

Income from Fidelity Central Funds

 

325,409

Total income

 

20,070,774

 

 

 

Expenses

Management fee

$ 10,881,819

Transfer agent fees

1,441,738

Distribution and service plan fees

993,040

Accounting and security lending fees

524,598

Custodian fees and expenses

73,202

Independent trustees' compensation

12,287

Appreciation in deferred trustee compensation account

205

Audit

34,314

Legal

5,456

Miscellaneous

21,329

Total expenses before reductions

13,987,988

Expense reductions

(106,434)

13,881,554

Net investment income (loss)

6,189,220

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

345,929,749

Foreign currency transactions

(99,558)

Total net realized gain (loss)

 

345,830,191

Change in net unrealized appreciation (depreciation) on:

Investment securities

78,341,199

Assets and liabilities in foreign currencies

(1,472)

Total change in net unrealized appreciation (depreciation)

 

78,339,727

Net gain (loss)

424,169,918

Net increase (decrease) in net assets resulting from operations

$ 430,359,138

Statement of Changes in Net Assets

 

Six months ended June 30, 2013
(Unaudited)

Year ended
December 31, 2012

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 6,189,220

$ 22,744,289

Net realized gain (loss)

345,830,191

142,104,433

Change in net unrealized appreciation (depreciation)

78,339,727

361,931,133

Net increase (decrease) in net assets resulting from operations

430,359,138

526,779,855

Distributions to shareholders from net investment income

-

(20,720,579)

Share transactions - net increase (decrease)

(230,495,383)

(456,375,196)

Redemption fees

4,662

1,933

Total increase (decrease) in net assets

199,868,417

49,686,013

 

 

 

Net Assets

Beginning of period

3,750,335,397

3,700,649,384

End of period (including undistributed net investment income of $6,026,236 and distributions in excess of net investment income of $162,984, respectively)

$ 3,950,203,814

$ 3,750,335,397

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 42.05

$ 36.89

$ 37.09

$ 30.04

$ 23.53

$ 45.12

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .08

.26

.14

.07

.10

.27

Net realized and unrealized gain (loss)

  4.85

5.16

(.06)

7.18

6.55

(21.55)

Total from investment operations

  4.93

5.42

.08

7.25

6.65

(21.28)

Distributions from net investment income

  -

(.26)

(.15) H

(.09)

(.12)

(.31)

Distributions from net realized gain

  -

-

(.12) H

(.11)

(.02)

-

Total distributions

  -

(.26)

(.28) L

(.20)

(.14) K

(.31)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 46.98

$ 42.05

$ 36.89

$ 37.09

$ 30.04

$ 23.53

Total Return B,C,D

  11.72%

14.69%

.20%

24.17%

28.29%

(47.17)%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .66% A

.66%

.66%

.67%

.69%

.68%

Expenses net of fee waivers, if any

  .66% A

.66%

.66%

.66%

.69%

.68%

Expenses net of all reductions

  .65% A

.65%

.66%

.66%

.68%

.67%

Net investment income (loss)

  .37% A

.64%

.36%

.22%

.41%

.74%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 2,738,601

$ 2,613,977

$ 2,583,122

$ 2,842,307

$ 2,618,954

$ 2,337,892

Portfolio turnover rate G

  67% A

68%

71%

75%

134%

161%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HThe amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. IExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. JAmount represents less than $.01 per share. KTotal distributions of $.14 per share is comprised of distributions from net investment income of $.118 and distributions from net realized gain of $.023 per share. LTotal distributions of $.28 per share is comprised of distributions from net investment income of $.152 and distributions from net realized gain of $.123 per share.

Financial Highlights - Service Class

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 41.95

$ 36.81

$ 36.99

$ 29.96

$ 23.47

$ 44.99

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .06

.22

.10

.04

.08

.23

Net realized and unrealized gain (loss)

  4.84

5.13

(.05)

7.16

6.52

(21.48)

Total from investment operations

  4.90

5.35

.05

7.20

6.60

(21.25)

Distributions from net investment income

  -

(.21)

(.11) H

(.06)

(.09)

(.27)

Distributions from net realized gain

  -

-

(.12) H

(.11)

(.02)

-

Total distributions

  -

(.21)

(.23)

(.17)

(.11) K

(.27)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 46.85

$ 41.95

$ 36.81

$ 36.99

$ 29.96

$ 23.47

Total Return B,C,D

  11.68%

14.54%

.14%

24.06%

28.15%

(47.23)%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .76% A

.76%

.77%

.77%

.79%

.78%

Expenses net of fee waivers, if any

  .76% A

.76%

.76%

.76%

.79%

.78%

Expenses net of all reductions

  .75% A

.75%

.76%

.76%

.78%

.77%

Net investment income (loss)

  .27% A

.54%

.26%

.12%

.31%

.64%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 418,419

$ 395,589

$ 395,217

$ 453,063

$ 421,996

$ 395,759

Portfolio turnover rate G

  67% A

68%

71%

75%

134%

161%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HThe amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. IExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. JAmount represents less than $.01 per share. KTotal distributions of $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share.

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

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 41.64

$ 36.53

$ 36.72

$ 29.75

$ 23.31

$ 44.65

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .03

.16

.04

(.01)

.04

.17

Net realized and unrealized gain (loss)

  4.80

5.10

(.05)

7.10

6.48

(21.29)

Total from investment operations

  4.83

5.26

(.01)

7.09

6.52

(21.12)

Distributions from net investment income

  -

(.15)

(.06) H

(.01)

(.05)

(.22)

Distributions from net realized gain

  -

-

(.12) H

(.11)

(.02)

-

Total distributions

  -

(.15)

(.18)

(.12)

(.08) K

(.22)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 46.47

$ 41.64

$ 36.53

$ 36.72

$ 29.75

$ 23.31

Total Return B,C,D

  11.60%

14.40%

(.03)%

23.86%

27.97%

(47.31)%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .91% A

.91%

.92%

.92%

.94%

.93%

Expenses net of fee waivers, if any

  .91% A

.91%

.91%

.91%

.94%

.93%

Expenses net of all reductions

  .90% A

.90%

.91%

.91%

.93%

.92%

Net investment income (loss)

  .12% A

.39%

.11%

(.03)%

.16%

.49%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 627,547

$ 592,407

$ 590,556

$ 584,193

$ 528,819

$ 447,530

Portfolio turnover rate G

  67% A

68%

71%

75%

134%

161%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HThe amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. IExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. JAmount represents less than $.01 per share. KTotal distributions of $.08 per share is comprised of distributions from net investment income of $.052 and distributions from net realized gain of $.023 per share.

Financial Highlights - Service Class 2R

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 41.55

$ 36.46

$ 36.64

$ 29.70

$ 23.26

$ 44.42

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .03

.16

.04

(.01)

.04

.18

Net realized and unrealized gain (loss)

  4.78

5.09

(.05)

7.09

6.46

(21.20)

Total from investment operations

  4.81

5.25

(.01)

7.08

6.50

(21.02)

Distributions from net investment income

  -

(.16)

(.05) H

(.03)

(.04)

(.14)

Distributions from net realized gain

  -

-

(.12) H

(.11)

(.02)

-

Total distributions

  -

(.16)

(.17)

(.14)

(.06) K

(.14)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 46.36

$ 41.55

$ 36.46

$ 36.64

$ 29.70

$ 23.26

Total Return B,C,D

  11.58%

14.41%

(.02)%

23.86%

27.98%

(47.31)%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .91% A

.91%

.91%

.92%

.94%

.93%

Expenses net of fee waivers, if any

  .91% A

.91%

.91%

.91%

.94%

.93%

Expenses net of all reductions

  .90% A

.90%

.91%

.91%

.93%

.92%

Net investment income (loss)

  .12% A

.39%

.11%

(.03)%

.16%

.49%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 5,223

$ 5,357

$ 5,202

$ 5,739

$ 4,084

$ 3,061

Portfolio turnover rate G

  67% A

68%

71%

75%

134%

161%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HThe amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. IExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. JAmount represents less than $.01 per share. KTotal distributions of $.06 per share is comprised of distributions from net investment income of $.041 and distributions from net realized gain of $.023 per share.

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

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 41.95

$ 36.81

$ 37.00

$ 29.97

$ 23.48

$ 45.00

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .06

.23

.10

.04

.08

.24

Net realized and unrealized gain (loss)

  4.84

5.13

(.05)

7.17

6.52

(21.49)

Total from investment operations

  4.90

5.36

.05

7.21

6.60

(21.25)

Distributions from net investment income

  -

(.22)

(.12) H

(.07)

(.09)

(.27)

Distributions from net realized gain

  -

-

(.12) H

(.11)

(.02)

-

Total distributions

  -

(.22)

(.24)

(.18)

(.11) K

(.27)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 46.85

$ 41.95

$ 36.81

$ 37.00

$ 29.97

$ 23.48

Total Return B,C,D

  11.68%

14.58%

.14%

24.08%

28.14%

(47.22)%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .74% A

.75%

.75%

.76%

.79%

.77%

Expenses net of fee waivers, if any

  .74% A

.75%

.75%

.75%

.79%

.77%

Expenses net of all reductions

  .74% A

.74%

.74%

.75%

.78%

.76%

Net investment income (loss)

  .28% A

.55%

.27%

.13%

.31%

.65%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 160,414

$ 143,005

$ 126,551

$ 117,936

$ 95,531

$ 93,428

Portfolio turnover rate G

  67% A

68%

71%

75%

134%

161%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HThe amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. IExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. JAmount represents less than $.01 per share. KTotal distributions of $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2013 (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.

2. Investments in Fidelity Central Funds.

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

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

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:

Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are generally categorized as Level 3 in the hierarchy.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2013, including information on transfers between Levels 1 and 2, 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 may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

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

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

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.

Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

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

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

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

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

Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.

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

Gross unrealized appreciation

$ 976,405,370

Gross unrealized depreciation

(43,167,013)

Net unrealized appreciation (depreciation) on securities and other investments

$ 933,238,357

 

 

Tax cost

$ 3,027,334,461

Semiannual Report

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.

Fiscal year of expiration

 

2016

$ (646,554,601)

2017

(458,405,642)

Total capital loss carryforward

$ (1,104,960,243)

Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days may be subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.

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.

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $1,294,747,563 and $1,474,804,565, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% 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 .55% of the Fund's average net assets.

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

For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:

Service Class

$ 207,541

Service Class 2

778,958

Service Class 2R

6,541

 

$ 993,040

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. In addition, FIIOC receives an asset-based fee of .0035% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:

Initial Class

$ 954,639

Service Class

145,778

Service Class 2

219,665

Service Class 2R

1,814

Investor Class

119,842

 

$ 1,441,738

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

5. Fees and Other Transactions with Affiliates - continued

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

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $20,660 for the period.

6. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $5,001 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $11,702,240. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $283,279, including $7,510 from securities loaned to FCM.

8. 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 $106,406 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 $28.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2013

Year ended
December 31,
2012

From net investment income

 

 

Initial Class

$ -

$ 15,820,328

Service Class

-

1,992,915

Service Class 2

-

2,128,126

Service Class 2R

-

21,103

Investor Class

-

758,107

Total

$ -

$ 20,720,579

Semiannual Report

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended June 30,
2013

Year ended
December 31,
2012

Six months ended June 30,
2013

Year ended
December 31, 2012

Initial Class

 

 

 

 

Shares sold

893,609

2,323,728

$ 40,475,933

$ 96,521,392

Reinvestment of distributions

-

381,572

-

15,820,328

Shares redeemed

(4,766,173)

(10,560,173)

(215,975,863)

(437,343,347)

Net increase (decrease)

(3,872,564)

(7,854,873)

$ (175,499,930)

$ (325,001,627)

Service Class

 

 

 

 

Shares sold

237,914

449,055

$ 10,642,309

$ 18,616,054

Reinvestment of distributions

-

48,172

-

1,992,915

Shares redeemed

(736,204)

(1,805,917)

(33,188,209)

(74,456,372)

Net increase (decrease)

(498,290)

(1,308,690)

$ (22,545,900)

$ (53,847,403)

Service Class 2

 

 

 

 

Shares sold

680,918

2,992,976

$ 30,497,510

$ 122,866,709

Reinvestment of distributions

-

51,828

-

2,128,126

Shares redeemed

(1,402,054)

(4,983,249)

(62,835,098)

(200,935,979)

Net increase (decrease)

(721,136)

(1,938,445)

$ (32,337,588)

$ (75,941,144)

Service Class 2R

 

 

 

 

Shares sold

26,320

51,435

$ 1,182,897

$ 2,117,779

Reinvestment of distributions

-

515

-

21,103

Shares redeemed

(42,612)

(65,694)

(1,889,506)

(2,637,205)

Net increase (decrease)

(16,292)

(13,744)

$ (706,609)

$ (498,323)

Investor Class

 

 

 

 

Shares sold

281,821

497,342

$ 12,680,499

$ 20,659,697

Reinvestment of distributions

-

18,329

-

758,107

Shares redeemed

(266,791)

(544,984)

(12,085,855)

(22,504,503)

Net increase (decrease)

15,030

(29,313)

$ 594,644

$ (1,086,699)

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 13% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 23% of the total outstanding shares of the Fund.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Hong Kong) Limited

Fidelity Management & Research (Japan) Inc.

General Distributor

Fidelity Distributors Corporation
Smithfield, RI

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

State Street Bank and Trust Company
Quincy, MA 

VIPGRWT-SANN-0813
1.705692.115

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

Semiannual Report

June 30, 2013

(Fidelity Cover Art)

Contents

Shareholder Expense Example

(Click Here)

An example of shareholder expenses.

Investment Changes

(Click Here)

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

Investments

(Click Here)

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

Financial Statements

(Click Here)

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

Notes

(Click Here)

Notes to the financial statements.

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2013 FMR LLC. All rights reserved.

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

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

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, 2013 to June 30, 2013).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

Annualized Expense RatioB

Beginning
Account Value
January 1, 2013

Ending
Account Value
June 30, 2013

Expenses Paid
During Period*
January 1, 2013 to June 30, 2013

Initial Class

.66%

 

 

 

Actual

 

$ 1,000.00

$ 1,117.20

$ 3.46

HypotheticalA

 

$ 1,000.00

$ 1,021.52

$ 3.31

Service Class

.76%

 

 

 

Actual

 

$ 1,000.00

$ 1,116.80

$ 3.99

HypotheticalA

 

$ 1,000.00

$ 1,021.03

$ 3.81

Service Class 2

.91%

 

 

 

Actual

 

$ 1,000.00

$ 1,116.00

$ 4.77

HypotheticalA

 

$ 1,000.00

$ 1,020.28

$ 4.56

Service Class 2R

.91%

 

 

 

Actual

 

$ 1,000.00

$ 1,115.80

$ 4.77

HypotheticalA

 

$ 1,000.00

$ 1,020.28

$ 4.56

Investor Class

.74%

 

 

 

Actual

 

$ 1,000.00

$ 1,116.80

$ 3.88

HypotheticalA

 

$ 1,000.00

$ 1,021.12

$ 3.71

A 5% return per year before expenses

B Annualized expense ratio reflects expenses net of applicable fee waivers.

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Express Scripts Holding Co.

3.5

3.1

Home Depot, Inc.

3.2

2.3

Google, Inc. Class A

3.1

1.9

Apple, Inc.

2.8

10.7

Harley-Davidson, Inc.

2.7

2.2

Green Mountain Coffee Roasters, Inc.

2.5

1.5

Broadcom Corp. Class A

2.5

0.0

Facebook, Inc. Class A

2.3

2.1

Visa, Inc. Class A

2.3

2.3

Gilead Sciences, Inc.

2.3

1.3

 

27.2

Top Five Market Sectors as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Information Technology

26.5

28.5

Consumer Discretionary

21.9

19.0

Health Care

16.6

12.3

Consumer Staples

10.2

12.2

Industrials

7.2

8.1

Asset Allocation (% of fund's net assets)

As of June 30, 2013 *

As of December 31, 2012 **

vvv1266428

Stocks 98.8%

 

vvv1266428

Stocks 97.6%

 

vvv1266434

Short-Term
Investments and
Net Other Assets
(Liabilities) 1.2%

 

vvv1266434

Short-Term
Investments and
Net Other Assets
(Liabilities) 2.4%

 

* Foreign investments

11.1%

 

** Foreign investments

11.8%

 

vvv1266472

Semiannual Report

Investments June 30, 2013 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 98.7%

Shares

Value

CONSUMER DISCRETIONARY - 21.8%

Automobiles - 4.1%

Harley-Davidson, Inc.

1,943,252

$ 106,529,075

Tesla Motors, Inc. (a)(d)

521,977

56,075,989

 

162,605,064

Diversified Consumer Services - 1.1%

Anhanguera Educacional Participacoes SA

3,325,600

19,464,600

Kroton Educacional SA

1,808,600

25,045,708

 

44,510,308

Hotels, Restaurants & Leisure - 4.6%

Bloomin' Brands, Inc.

149,000

3,707,120

Chipotle Mexican Grill, Inc. (a)

83,201

30,314,284

Dunkin' Brands Group, Inc.

582,595

24,946,718

Noodles & Co.

29,700

1,091,475

Panera Bread Co. Class A (a)

131,159

24,387,704

Starbucks Corp.

966,873

63,320,513

Texas Roadhouse, Inc. Class A

361,962

9,056,289

Yum! Brands, Inc.

357,598

24,795,845

 

181,619,948

Household Durables - 0.9%

D.R. Horton, Inc.

348,116

7,407,908

Mohawk Industries, Inc. (a)

199,661

22,459,866

Toll Brothers, Inc. (a)

111,700

3,644,771

 

33,512,545

Internet & Catalog Retail - 1.8%

Amazon.com, Inc. (a)

207,688

57,672,881

TripAdvisor, Inc. (a)

230,353

14,021,587

 

71,694,468

Media - 2.0%

Comcast Corp. Class A (special) (non-vtg.)

696,919

27,646,777

Discovery Communications, Inc. Class C (non-vtg.) (a)

409,469

28,523,611

Lions Gate Entertainment Corp. (a)

768,332

21,106,080

 

77,276,468

Multiline Retail - 0.3%

Dollarama, Inc.

194,340

13,602,137

Specialty Retail - 5.7%

GNC Holdings, Inc.

1,445,525

63,906,660

Home Depot, Inc.

1,606,638

124,466,246

TJX Companies, Inc.

322,100

16,124,326

Ulta Salon, Cosmetics & Fragrance, Inc. (a)

102,592

10,275,615

Urban Outfitters, Inc. (a)

94,700

3,808,834

Williams-Sonoma, Inc.

88,500

4,946,265

 

223,527,946

Textiles, Apparel & Luxury Goods - 1.3%

ECLAT Textile Co. Ltd.

1,287,000

9,511,862

 

Shares

Value

Michael Kors Holdings Ltd. (a)

311,403

$ 19,313,214

NIKE, Inc. Class B

347,170

22,107,786

 

50,932,862

TOTAL CONSUMER DISCRETIONARY

859,281,746

CONSUMER STAPLES - 10.2%

Beverages - 2.0%

Monster Beverage Corp. (a)

335,790

20,405,958

Remy Cointreau SA

20,600

2,185,876

SABMiller PLC

474,242

22,738,931

The Coca-Cola Co.

823,790

33,042,217

 

78,372,982

Food & Staples Retailing - 1.3%

Costco Wholesale Corp.

211,800

23,418,726

Whole Foods Market, Inc.

567,488

29,214,282

 

52,633,008

Food Products - 4.8%

Biostime International Holdings Ltd.

654,000

3,667,975

Green Mountain Coffee Roasters, Inc. (a)(d)

1,352,037

101,483,897

Mead Johnson Nutrition Co. Class A

539,766

42,765,660

The Hershey Co.

482,944

43,117,240

 

191,034,772

Personal Products - 1.0%

Herbalife Ltd.

828,255

37,387,431

Tobacco - 1.1%

British American Tobacco PLC sponsored ADR

184,600

19,002,724

Philip Morris International, Inc.

301,631

26,127,277

 

45,130,001

TOTAL CONSUMER STAPLES

404,558,194

ENERGY - 5.2%

Energy Equipment & Services - 2.5%

Cameron International Corp. (a)

641,376

39,226,556

Dril-Quip, Inc. (a)

161,254

14,559,624

National Oilwell Varco, Inc.

142,700

9,832,030

Oceaneering International, Inc.

478,274

34,531,383

 

98,149,593

Oil, Gas & Consumable Fuels - 2.7%

Bonanza Creek Energy, Inc. (a)

717,555

25,444,500

Cobalt International Energy, Inc. (a)

518,500

13,776,545

Continental Resources, Inc. (a)

117,864

10,143,376

Kosmos Energy Ltd. (a)

1,564,083

15,891,083

Markwest Energy Partners LP

239,200

15,990,520

Noble Energy, Inc.

190,800

11,455,632

Pioneer Natural Resources Co.

105,198

15,227,411

 

107,929,067

TOTAL ENERGY

206,078,660

Common Stocks - continued

Shares

Value

FINANCIALS - 4.6%

Capital Markets - 1.9%

BlackRock, Inc. Class A

92,206

$ 23,683,111

Harvest Capital Credit Corp.

161,500

2,437,035

Invesco Ltd.

1,451,797

46,167,145

Virtus Investment Partners, Inc. (a)

21,200

3,736,924

 

76,024,215

Commercial Banks - 0.4%

First Republic Bank

172,800

6,649,344

HDFC Bank Ltd. sponsored ADR

266,900

9,672,456

 

16,321,800

Consumer Finance - 0.2%

Mahindra & Mahindra Financial Services Ltd.

1,532,030

6,719,181

Diversified Financial Services - 0.4%

McGraw-Hill Companies, Inc.

292,788

15,573,394

Insurance - 0.3%

Berkshire Hathaway, Inc. Class B (a)

93,100

10,419,752

Real Estate Investment Trusts - 0.9%

American Tower Corp.

504,955

36,947,557

Real Estate Management & Development - 0.5%

Realogy Holdings Corp.

362,901

17,433,764

TOTAL FINANCIALS

179,439,663

HEALTH CARE - 16.6%

Biotechnology - 8.4%

Acorda Therapeutics, Inc. (a)

136,176

4,492,446

Amgen, Inc.

434,756

42,893,027

Biogen Idec, Inc. (a)

309,141

66,527,143

BioMarin Pharmaceutical, Inc. (a)

681,905

38,043,480

Biovitrum AB (a)

1,546,648

9,271,447

Cytokinetics, Inc. (a)

301,383

3,487,001

Cytokinetics, Inc. warrants 6/25/17 (a)

1,084,980

709,177

Esperion Therapeutics, Inc.

144,000

2,030,400

Gilead Sciences, Inc. (a)

1,742,624

89,239,775

Kamada (a)

422,765

4,701,147

Onyx Pharmaceuticals, Inc. (a)

229,545

27,545,400

Regeneron Pharmaceuticals, Inc. (a)

75,341

16,942,684

Theravance, Inc. (a)

154,847

5,966,255

Thrombogenics NV (a)(d)

40,212

1,541,732

Vertex Pharmaceuticals, Inc. (a)

219,871

17,561,097

 

330,952,211

Health Care Equipment & Supplies - 0.6%

The Cooper Companies, Inc.

186,100

22,155,205

Health Care Providers & Services - 4.1%

Apollo Hospitals Enterprise Ltd.

472,341

8,358,181

BioScrip, Inc. (a)

506,087

8,350,436

 

Shares

Value

Express Scripts Holding Co. (a)

2,271,169

$ 140,108,416

Qualicorp SA (a)

970,500

7,389,605

 

164,206,638

Health Care Technology - 0.5%

Cerner Corp. (a)

229,100

22,014,219

Life Sciences Tools & Services - 0.4%

Illumina, Inc. (a)

189,473

14,180,159

Pharmaceuticals - 2.6%

Actavis, Inc. (a)

166,418

21,005,280

Allergan, Inc.

70,400

5,930,496

Cadence Pharmaceuticals, Inc. (a)

912,822

6,225,446

Novo Nordisk A/S Series B

132,840

20,651,631

Pacira Pharmaceuticals, Inc. (a)

323,466

9,380,514

Valeant Pharmaceuticals International, Inc. (Canada) (a)

449,295

38,739,251

 

101,932,618

TOTAL HEALTH CARE

655,441,050

INDUSTRIALS - 7.2%

Aerospace & Defense - 1.8%

Textron, Inc.

604,925

15,758,296

United Technologies Corp.

574,228

53,368,750

 

69,127,046

Airlines - 0.2%

Ryanair Holdings PLC sponsored ADR

145,782

7,512,146

Building Products - 0.0%

Ply Gem Holdings, Inc.

16,400

328,984

Construction & Engineering - 0.3%

EMCOR Group, Inc.

249,770

10,153,151

Electrical Equipment - 2.0%

AMETEK, Inc.

432,600

18,298,980

Generac Holdings, Inc.

110,500

4,089,605

Hubbell, Inc. Class B

168,341

16,665,759

Roper Industries, Inc.

331,117

41,131,354

 

80,185,698

Industrial Conglomerates - 1.1%

Danaher Corp.

677,924

42,912,589

Machinery - 0.4%

Graco, Inc.

51,062

3,227,629

Haitian International Holdings Ltd.

266,000

388,914

Manitowoc Co., Inc.

758,584

13,586,239

 

17,202,782

Professional Services - 1.0%

Equifax, Inc.

282,921

16,672,535

Verisk Analytics, Inc. (a)

409,904

24,471,269

 

41,143,804

Common Stocks - continued

Shares

Value

INDUSTRIALS - continued

Trading Companies & Distributors - 0.4%

Beacon Roofing Supply, Inc. (a)

420,800

$ 15,939,904

TOTAL INDUSTRIALS

284,506,104

INFORMATION TECHNOLOGY - 26.5%

Communications Equipment - 1.4%

QUALCOMM, Inc.

912,195

55,716,871

Computers & Peripherals - 4.7%

Apple, Inc.

275,771

109,227,378

SanDisk Corp. (a)

1,263,111

77,176,082

 

186,403,460

Internet Software & Services - 8.2%

Blucora, Inc. (a)

776,066

14,388,264

Cornerstone OnDemand, Inc. (a)

252,165

10,916,223

CoStar Group, Inc. (a)

77,524

10,006,023

eBay, Inc. (a)

354,941

18,357,549

Facebook, Inc. Class A (a)

3,688,354

91,692,480

Google, Inc. Class A (a)

137,835

121,345,799

LinkedIn Corp. (a)

49,029

8,741,871

MercadoLibre, Inc. (d)

133,752

14,413,116

SciQuest, Inc. (a)

205,124

5,138,356

SPS Commerce, Inc. (a)

389,015

21,395,825

Xoom Corp. (d)

73,430

1,683,016

Yahoo!, Inc. (a)

204,600

5,137,506

 

323,216,028

IT Services - 2.9%

FleetCor Technologies, Inc. (a)

242,400

19,707,120

ServiceSource International, Inc. (a)

177,501

1,654,309

Visa, Inc. Class A

498,145

91,035,999

 

112,397,428

Semiconductors & Semiconductor Equipment - 4.9%

ASML Holding NV

184,900

14,625,590

Avago Technologies Ltd.

454,586

16,992,425

Broadcom Corp. Class A

2,950,165

99,597,570

Micron Technology, Inc. (a)

4,466,945

64,011,322

 

195,226,907

Software - 4.4%

ANSYS, Inc. (a)

5,410

395,471

Citrix Systems, Inc. (a)

311,882

18,815,841

Computer Modelling Group Ltd.

545,300

12,023,873

Diligent Board Member Services, Inc. (a)

597,514

3,148,696

FleetMatics Group PLC

284,900

9,467,227

Infoblox, Inc. (a)

92,660

2,711,232

 

Shares

Value

salesforce.com, Inc. (a)

1,435,562

$ 54,809,757

ServiceNow, Inc.

109,600

4,426,744

SolarWinds, Inc. (a)

1,165,866

45,247,259

Tableau Software, Inc.

104,200

5,774,764

Ultimate Software Group, Inc. (a)

11,250

1,319,513

VMware, Inc. Class A (a)

150,969

10,113,413

Workday, Inc. Class A

62,800

4,024,852

 

172,278,642

TOTAL INFORMATION TECHNOLOGY

1,045,239,336

MATERIALS - 4.7%

Chemicals - 3.1%

FMC Corp.

371,105

22,659,671

LyondellBasell Industries NV Class A

179,927

11,921,963

Monsanto Co.

597,098

58,993,282

Sherwin-Williams Co.

157,660

27,842,756

 

121,417,672

Construction Materials - 1.3%

Eagle Materials, Inc.

290,165

19,229,235

James Hardie Industries PLC sponsored ADR

207,200

8,934,464

Vulcan Materials Co.

471,146

22,808,178

 

50,971,877

Paper & Forest Products - 0.3%

Canfor Corp. (a)

307,500

5,438,338

Norbord, Inc.

320,800

9,282,061

 

14,720,399

TOTAL MATERIALS

187,109,948

TELECOMMUNICATION SERVICES - 0.7%

Wireless Telecommunication Services - 0.7%

SBA Communications Corp. Class A (a)

395,500

29,314,460

UTILITIES - 1.2%

Electric Utilities - 1.2%

ITC Holdings Corp.

520,169

47,491,430

TOTAL COMMON STOCKS

(Cost $2,958,302,720)


3,898,460,591

Convertible Preferred Stocks - 0.1%

 

 

 

 

CONSUMER DISCRETIONARY - 0.1%

Household Durables - 0.1%

Blu Homes, Inc. Series A, 5.00% (e)

(Cost $4,848,302)

1,049,416


4,848,302

Money Market Funds - 1.5%

Shares

Value

Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c)
(Cost $57,263,925)

57,263,925

$ 57,263,925

TOTAL INVESTMENT PORTFOLIO - 100.3%

(Cost $3,020,414,947)

3,960,572,818

NET OTHER ASSETS (LIABILITIES) - (0.3)%

  (10,369,004)

NET ASSETS - 100%

$ 3,950,203,814

Legend

(a) Non-income producing

(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.

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

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

(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $4,848,302 or 0.1% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost

Blu Homes, Inc. Series A, 5.00%

6/21/13

$ 4,848,302

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

$ 42,130

Fidelity Securities Lending Cash Central Fund

283,279

Total

$ 325,409

Other Information

The following is a summary of the inputs used, as of June 30, 2013, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 864,130,048

$ 859,281,746

$ -

$ 4,848,302

Consumer Staples

404,558,194

404,558,194

-

-

Energy

206,078,660

206,078,660

-

-

Financials

179,439,663

179,439,663

-

-

Health Care

655,441,050

606,534,842

48,906,208

-

Industrials

284,506,104

284,506,104

-

-

Information Technology

1,045,239,336

1,045,239,336

-

-

Materials

187,109,948

187,109,948

-

-

Telecommunication Services

29,314,460

29,314,460

-

-

Utilities

47,491,430

47,491,430

-

-

Money Market Funds

57,263,925

57,263,925

-

-

Total Investments in Securities:

$ 3,960,572,818

$ 3,906,818,308

$ 48,906,208

$ 4,848,302

The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2013. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:

Transfers

Total

Level 1 to Level 2

$ 9,166,623

Level 2 to Level 1

$ 108,229,599

Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited)

United States of America

88.9%

Canada

2.5%

Bermuda

1.6%

Brazil

1.3%

United Kingdom

1.1%

Cayman Islands

1.1%

Others (Individually Less Than 1%)

3.5%

 

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, 2013 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $55,810,739) - See accompanying schedule:

Unaffiliated issuers (cost $2,963,151,022)

$ 3,903,308,893

 

Fidelity Central Funds (cost $57,263,925)

57,263,925

 

Total Investments (cost $3,020,414,947)

 

$ 3,960,572,818

Receivable for investments sold

79,037,118

Receivable for fund shares sold

761,852

Dividends receivable

1,551,499

Distributions receivable from Fidelity Central Funds

59,908

Other receivables

191,158

Total assets

4,042,174,353

 

 

 

Liabilities

Payable to custodian bank

$ 1,348,650

Payable for investments purchased

28,336,967

Payable for fund shares redeemed

2,391,294

Accrued management fee

1,832,755

Distribution and service plan fees payable

167,854

Other affiliated payables

392,825

Other payables and accrued expenses

236,269

Collateral on securities loaned, at value

57,263,925

Total liabilities

91,970,539

 

 

 

Net Assets

$ 3,950,203,814

Net Assets consist of:

 

Paid in capital

$ 3,769,212,733

Undistributed net investment income

6,026,236

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

(765,191,770)

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

940,156,615

Net Assets

$ 3,950,203,814

Statement of Assets and Liabilities - continued

 

June 30, 2013 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($2,738,601,413 ÷ 58,287,344 shares)

$ 46.98

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($418,418,592 ÷ 8,930,927 shares)

$ 46.85

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($627,547,443 ÷ 13,504,741 shares)

$ 46.47

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($5,222,790 ÷ 112,650 shares)

$ 46.36

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($160,413,576 ÷ 3,423,997 shares)

$ 46.85

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, 2013 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 19,745,309

Interest

 

56

Income from Fidelity Central Funds

 

325,409

Total income

 

20,070,774

 

 

 

Expenses

Management fee

$ 10,881,819

Transfer agent fees

1,441,738

Distribution and service plan fees

993,040

Accounting and security lending fees

524,598

Custodian fees and expenses

73,202

Independent trustees' compensation

12,287

Appreciation in deferred trustee compensation account

205

Audit

34,314

Legal

5,456

Miscellaneous

21,329

Total expenses before reductions

13,987,988

Expense reductions

(106,434)

13,881,554

Net investment income (loss)

6,189,220

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

345,929,749

Foreign currency transactions

(99,558)

Total net realized gain (loss)

 

345,830,191

Change in net unrealized appreciation (depreciation) on:

Investment securities

78,341,199

Assets and liabilities in foreign currencies

(1,472)

Total change in net unrealized appreciation (depreciation)

 

78,339,727

Net gain (loss)

424,169,918

Net increase (decrease) in net assets resulting from operations

$ 430,359,138

Statement of Changes in Net Assets

 

Six months ended June 30, 2013
(Unaudited)

Year ended
December 31, 2012

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 6,189,220

$ 22,744,289

Net realized gain (loss)

345,830,191

142,104,433

Change in net unrealized appreciation (depreciation)

78,339,727

361,931,133

Net increase (decrease) in net assets resulting from operations

430,359,138

526,779,855

Distributions to shareholders from net investment income

-

(20,720,579)

Share transactions - net increase (decrease)

(230,495,383)

(456,375,196)

Redemption fees

4,662

1,933

Total increase (decrease) in net assets

199,868,417

49,686,013

 

 

 

Net Assets

Beginning of period

3,750,335,397

3,700,649,384

End of period (including undistributed net investment income of $6,026,236 and distributions in excess of net investment income of $162,984, respectively)

$ 3,950,203,814

$ 3,750,335,397

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 42.05

$ 36.89

$ 37.09

$ 30.04

$ 23.53

$ 45.12

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .08

.26

.14

.07

.10

.27

Net realized and unrealized gain (loss)

  4.85

5.16

(.06)

7.18

6.55

(21.55)

Total from investment operations

  4.93

5.42

.08

7.25

6.65

(21.28)

Distributions from net investment income

  -

(.26)

(.15) H

(.09)

(.12)

(.31)

Distributions from net realized gain

  -

-

(.12) H

(.11)

(.02)

-

Total distributions

  -

(.26)

(.28) L

(.20)

(.14) K

(.31)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 46.98

$ 42.05

$ 36.89

$ 37.09

$ 30.04

$ 23.53

Total Return B,C,D

  11.72%

14.69%

.20%

24.17%

28.29%

(47.17)%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .66% A

.66%

.66%

.67%

.69%

.68%

Expenses net of fee waivers, if any

  .66% A

.66%

.66%

.66%

.69%

.68%

Expenses net of all reductions

  .65% A

.65%

.66%

.66%

.68%

.67%

Net investment income (loss)

  .37% A

.64%

.36%

.22%

.41%

.74%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 2,738,601

$ 2,613,977

$ 2,583,122

$ 2,842,307

$ 2,618,954

$ 2,337,892

Portfolio turnover rate G

  67% A

68%

71%

75%

134%

161%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HThe amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. IExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. JAmount represents less than $.01 per share. KTotal distributions of $.14 per share is comprised of distributions from net investment income of $.118 and distributions from net realized gain of $.023 per share. LTotal distributions of $.28 per share is comprised of distributions from net investment income of $.152 and distributions from net realized gain of $.123 per share.

Financial Highlights - Service Class

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 41.95

$ 36.81

$ 36.99

$ 29.96

$ 23.47

$ 44.99

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .06

.22

.10

.04

.08

.23

Net realized and unrealized gain (loss)

  4.84

5.13

(.05)

7.16

6.52

(21.48)

Total from investment operations

  4.90

5.35

.05

7.20

6.60

(21.25)

Distributions from net investment income

  -

(.21)

(.11) H

(.06)

(.09)

(.27)

Distributions from net realized gain

  -

-

(.12) H

(.11)

(.02)

-

Total distributions

  -

(.21)

(.23)

(.17)

(.11) K

(.27)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 46.85

$ 41.95

$ 36.81

$ 36.99

$ 29.96

$ 23.47

Total Return B,C,D

  11.68%

14.54%

.14%

24.06%

28.15%

(47.23)%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .76% A

.76%

.77%

.77%

.79%

.78%

Expenses net of fee waivers, if any

  .76% A

.76%

.76%

.76%

.79%

.78%

Expenses net of all reductions

  .75% A

.75%

.76%

.76%

.78%

.77%

Net investment income (loss)

  .27% A

.54%

.26%

.12%

.31%

.64%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 418,419

$ 395,589

$ 395,217

$ 453,063

$ 421,996

$ 395,759

Portfolio turnover rate G

  67% A

68%

71%

75%

134%

161%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HThe amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. IExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. JAmount represents less than $.01 per share. KTotal distributions of $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share.

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

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 41.64

$ 36.53

$ 36.72

$ 29.75

$ 23.31

$ 44.65

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .03

.16

.04

(.01)

.04

.17

Net realized and unrealized gain (loss)

  4.80

5.10

(.05)

7.10

6.48

(21.29)

Total from investment operations

  4.83

5.26

(.01)

7.09

6.52

(21.12)

Distributions from net investment income

  -

(.15)

(.06) H

(.01)

(.05)

(.22)

Distributions from net realized gain

  -

-

(.12) H

(.11)

(.02)

-

Total distributions

  -

(.15)

(.18)

(.12)

(.08) K

(.22)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 46.47

$ 41.64

$ 36.53

$ 36.72

$ 29.75

$ 23.31

Total Return B,C,D

  11.60%

14.40%

(.03)%

23.86%

27.97%

(47.31)%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .91% A

.91%

.92%

.92%

.94%

.93%

Expenses net of fee waivers, if any

  .91% A

.91%

.91%

.91%

.94%

.93%

Expenses net of all reductions

  .90% A

.90%

.91%

.91%

.93%

.92%

Net investment income (loss)

  .12% A

.39%

.11%

(.03)%

.16%

.49%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 627,547

$ 592,407

$ 590,556

$ 584,193

$ 528,819

$ 447,530

Portfolio turnover rate G

  67% A

68%

71%

75%

134%

161%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HThe amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. IExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. JAmount represents less than $.01 per share. KTotal distributions of $.08 per share is comprised of distributions from net investment income of $.052 and distributions from net realized gain of $.023 per share.

Financial Highlights - Service Class 2R

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 41.55

$ 36.46

$ 36.64

$ 29.70

$ 23.26

$ 44.42

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .03

.16

.04

(.01)

.04

.18

Net realized and unrealized gain (loss)

  4.78

5.09

(.05)

7.09

6.46

(21.20)

Total from investment operations

  4.81

5.25

(.01)

7.08

6.50

(21.02)

Distributions from net investment income

  -

(.16)

(.05) H

(.03)

(.04)

(.14)

Distributions from net realized gain

  -

-

(.12) H

(.11)

(.02)

-

Total distributions

  -

(.16)

(.17)

(.14)

(.06) K

(.14)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 46.36

$ 41.55

$ 36.46

$ 36.64

$ 29.70

$ 23.26

Total Return B,C,D

  11.58%

14.41%

(.02)%

23.86%

27.98%

(47.31)%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .91% A

.91%

.91%

.92%

.94%

.93%

Expenses net of fee waivers, if any

  .91% A

.91%

.91%

.91%

.94%

.93%

Expenses net of all reductions

  .90% A

.90%

.91%

.91%

.93%

.92%

Net investment income (loss)

  .12% A

.39%

.11%

(.03)%

.16%

.49%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 5,223

$ 5,357

$ 5,202

$ 5,739

$ 4,084

$ 3,061

Portfolio turnover rate G

  67% A

68%

71%

75%

134%

161%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HThe amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. IExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. JAmount represents less than $.01 per share. KTotal distributions of $.06 per share is comprised of distributions from net investment income of $.041 and distributions from net realized gain of $.023 per share.

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

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 41.95

$ 36.81

$ 37.00

$ 29.97

$ 23.48

$ 45.00

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .06

.23

.10

.04

.08

.24

Net realized and unrealized gain (loss)

  4.84

5.13

(.05)

7.17

6.52

(21.49)

Total from investment operations

  4.90

5.36

.05

7.21

6.60

(21.25)

Distributions from net investment income

  -

(.22)

(.12) H

(.07)

(.09)

(.27)

Distributions from net realized gain

  -

-

(.12) H

(.11)

(.02)

-

Total distributions

  -

(.22)

(.24)

(.18)

(.11) K

(.27)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 46.85

$ 41.95

$ 36.81

$ 37.00

$ 29.97

$ 23.48

Total Return B,C,D

  11.68%

14.58%

.14%

24.08%

28.14%

(47.22)%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .74% A

.75%

.75%

.76%

.79%

.77%

Expenses net of fee waivers, if any

  .74% A

.75%

.75%

.75%

.79%

.77%

Expenses net of all reductions

  .74% A

.74%

.74%

.75%

.78%

.76%

Net investment income (loss)

  .28% A

.55%

.27%

.13%

.31%

.65%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 160,414

$ 143,005

$ 126,551

$ 117,936

$ 95,531

$ 93,428

Portfolio turnover rate G

  67% A

68%

71%

75%

134%

161%

AAnnualized BTotal returns for periods of less than one year are not annualized. CTotal returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. DTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown. ECalculated based on average shares outstanding during the period. FFees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. GAmount does not include the portfolio activity of any underlying Fidelity Central Funds. HThe amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. IExpense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. JAmount represents less than $.01 per share. KTotal distributions of $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2013 (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.

2. Investments in Fidelity Central Funds.

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

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

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:

Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted equity securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are generally categorized as Level 3 in the hierarchy.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2013, including information on transfers between Levels 1 and 2, 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 may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.

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

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

Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.

Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

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

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

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

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

Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.

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

Gross unrealized appreciation

$ 976,405,370

Gross unrealized depreciation

(43,167,013)

Net unrealized appreciation (depreciation) on securities and other investments

$ 933,238,357

 

 

Tax cost

$ 3,027,334,461

Semiannual Report

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.

Fiscal year of expiration

 

2016

$ (646,554,601)

2017

(458,405,642)

Total capital loss carryforward

$ (1,104,960,243)

Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days may be subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.

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.

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $1,294,747,563 and $1,474,804,565, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% 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 .55% of the Fund's average net assets.

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

For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:

Service Class

$ 207,541

Service Class 2

778,958

Service Class 2R

6,541

 

$ 993,040

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. In addition, FIIOC receives an asset-based fee of .0035% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:

Initial Class

$ 954,639

Service Class

145,778

Service Class 2

219,665

Service Class 2R

1,814

Investor Class

119,842

 

$ 1,441,738

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

5. Fees and Other Transactions with Affiliates - continued

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

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $20,660 for the period.

6. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $5,001 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $11,702,240. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $283,279, including $7,510 from securities loaned to FCM.

8. 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 $106,406 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 $28.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2013

Year ended
December 31,
2012

From net investment income

 

 

Initial Class

$ -

$ 15,820,328

Service Class

-

1,992,915

Service Class 2

-

2,128,126

Service Class 2R

-

21,103

Investor Class

-

758,107

Total

$ -

$ 20,720,579

Semiannual Report

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended June 30,
2013

Year ended
December 31,
2012

Six months ended June 30,
2013

Year ended
December 31, 2012

Initial Class

 

 

 

 

Shares sold

893,609

2,323,728

$ 40,475,933

$ 96,521,392

Reinvestment of distributions

-

381,572

-

15,820,328

Shares redeemed

(4,766,173)

(10,560,173)

(215,975,863)

(437,343,347)

Net increase (decrease)

(3,872,564)

(7,854,873)

$ (175,499,930)

$ (325,001,627)

Service Class

 

 

 

 

Shares sold

237,914

449,055

$ 10,642,309

$ 18,616,054

Reinvestment of distributions

-

48,172

-

1,992,915

Shares redeemed

(736,204)

(1,805,917)

(33,188,209)

(74,456,372)

Net increase (decrease)

(498,290)

(1,308,690)

$ (22,545,900)

$ (53,847,403)

Service Class 2

 

 

 

 

Shares sold

680,918

2,992,976

$ 30,497,510

$ 122,866,709

Reinvestment of distributions

-

51,828

-

2,128,126

Shares redeemed

(1,402,054)

(4,983,249)

(62,835,098)

(200,935,979)

Net increase (decrease)

(721,136)

(1,938,445)

$ (32,337,588)

$ (75,941,144)

Service Class 2R

 

 

 

 

Shares sold

26,320

51,435

$ 1,182,897

$ 2,117,779

Reinvestment of distributions

-

515

-

21,103

Shares redeemed

(42,612)

(65,694)

(1,889,506)

(2,637,205)

Net increase (decrease)

(16,292)

(13,744)

$ (706,609)

$ (498,323)

Investor Class

 

 

 

 

Shares sold

281,821

497,342

$ 12,680,499

$ 20,659,697

Reinvestment of distributions

-

18,329

-

758,107

Shares redeemed

(266,791)

(544,984)

(12,085,855)

(22,504,503)

Net increase (decrease)

15,030

(29,313)

$ 594,644

$ (1,086,699)

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 13% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 23% of the total outstanding shares of the Fund.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Hong Kong) Limited

Fidelity Management & Research (Japan) Inc.

General Distributor

Fidelity Distributors Corporation
Smithfield, RI

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

State Street Bank and Trust Company
Quincy, MA 

VIPGRWTR-SANN-0813
1.833448.107

Fidelity® Variable Insurance Products:
Value Portfolio

Semiannual Report

June 30, 2013

(Fidelity Cover Art)

Contents

Shareholder Expense Example

(Click Here)

An example of shareholder expenses.

Investment Changes

(Click Here)

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

Investments

(Click Here)

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

Financial Statements

(Click Here)

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

Notes

(Click Here)

Notes to the financial statements.

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2013 FMR LLC. All rights reserved.

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

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

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, 2013 to June 30, 2013).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

Annualized
Expense RatioB

Beginning
Account Value
January 1, 2013

Ending
Account Value
June 30, 2013

Expenses Paid
During Period*
January 1, 2013 to June 30, 2013

Initial Class

.71%

 

 

 

Actual

 

$ 1,000.00

$ 1,149.20

$ 3.78

HypotheticalA

 

$ 1,000.00

$ 1,021.27

$ 3.56

Service Class

.80%

 

 

 

Actual

 

$ 1,000.00

$ 1,148.40

$ 4.26

HypotheticalA

 

$ 1,000.00

$ 1,020.83

$ 4.01

Service Class 2

.96%

 

 

 

Actual

 

$ 1,000.00

$ 1,148.00

$ 5.11

HypotheticalA

 

$ 1,000.00

$ 1,020.03

$ 4.81

Investor Class

.79%

 

 

 

Actual

 

$ 1,000.00

$ 1,149.30

$ 4.21

HypotheticalA

 

$ 1,000.00

$ 1,020.88

$ 3.96

A 5% return per year before expenses

B Annualized expense ratio reflects expenses net of applicable fee waivers.

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Chevron Corp.

3.4

0.0

General Electric Co.

2.8

3.0

Citigroup, Inc.

2.8

2.3

Wells Fargo & Co.

2.8

2.5

Merck & Co., Inc.

2.6

2.2

JPMorgan Chase & Co.

2.5

2.7

Occidental Petroleum Corp.

2.0

2.4

Cisco Systems, Inc.

1.9

1.4

Berkshire Hathaway, Inc. Class B

1.8

2.5

National Oilwell Varco, Inc.

1.8

0.6

 

24.4

Top Five Market Sectors as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

28.0

26.6

Energy

14.2

14.3

Health Care

11.3

10.1

Industrials

10.8

10.5

Information Technology

10.1

8.6

Asset Allocation (% of fund's net assets)

As of June 30, 2013*

As of December 31, 2012**

vvv1266428

Stocks 98.6%

 

vvv1266428

Stocks 98.3%

 

vvv1266434

Short-Term
Investments and
Net Other Assets (Liabilities) 1.4%

 

vvv1266434

Short-Term
Investments and
Net Other Assets (Liabilities) 1.7%

 

* Foreign investments

15.6%

 

** Foreign investments

19.7%

 

vvv1266483

Semiannual Report

Investments June 30, 2013 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 98.6%

Shares

Value

CONSUMER DISCRETIONARY - 7.8%

Auto Components - 1.1%

Delphi Automotive PLC

19,300

$ 978,317

Tenneco, Inc. (a)

21,400

968,992

 

1,947,309

Hotels, Restaurants & Leisure - 0.5%

Brinker International, Inc.

25,200

993,636

Household Durables - 0.5%

Harman International Industries, Inc.

17,200

932,240

Media - 3.0%

CBS Corp. Class B

26,800

1,309,716

Comcast Corp. Class A

36,200

1,516,056

Omnicom Group, Inc.

22,400

1,408,288

Twenty-First Century Fox, Inc. Class A

45,800

1,327,742

 

5,561,802

Multiline Retail - 1.2%

Kohl's Corp.

17,600

888,976

Target Corp.

20,500

1,411,630

 

2,300,606

Specialty Retail - 1.5%

Ascena Retail Group, Inc. (a)

110,200

1,922,990

Bed Bath & Beyond, Inc. (a)

13,400

950,060

 

2,873,050

TOTAL CONSUMER DISCRETIONARY

14,608,643

CONSUMER STAPLES - 6.3%

Beverages - 0.6%

Monster Beverage Corp. (a)

17,300

1,051,321

Food & Staples Retailing - 0.5%

Walgreen Co.

21,300

941,460

Food Products - 1.8%

Danone SA

29,100

2,184,046

Ingredion, Inc.

18,200

1,194,284

 

3,378,330

Household Products - 2.7%

Procter & Gamble Co.

43,900

3,379,861

Reckitt Benckiser Group PLC

24,306

1,718,282

 

5,098,143

Tobacco - 0.7%

British American Tobacco PLC sponsored ADR

12,100

1,245,574

TOTAL CONSUMER STAPLES

11,714,828

ENERGY - 14.2%

Energy Equipment & Services - 1.8%

National Oilwell Varco, Inc.

49,100

3,382,990

Oil, Gas & Consumable Fuels - 12.4%

Anadarko Petroleum Corp.

23,900

2,053,727

Apache Corp.

12,300

1,031,109

 

Shares

Value

Canadian Natural Resources Ltd.

66,200

$ 1,866,340

Chevron Corp.

54,100

6,402,194

Energen Corp.

36,200

1,891,812

Marathon Petroleum Corp.

25,700

1,826,242

Occidental Petroleum Corp.

42,098

3,756,405

Suncor Energy, Inc.

63,500

1,871,731

The Williams Companies, Inc.

46,300

1,503,361

Whiting Petroleum Corp. (a)

19,900

917,191

 

23,120,112

TOTAL ENERGY

26,503,102

FINANCIALS - 28.0%

Capital Markets - 2.9%

Ameriprise Financial, Inc.

21,800

1,763,184

KKR & Co. LP

67,200

1,321,152

UBS AG

132,472

2,248,558

 

5,332,894

Commercial Banks - 6.0%

Barclays PLC sponsored ADR

94,600

1,619,552

CIT Group, Inc. (a)

36,270

1,691,270

U.S. Bancorp

72,734

2,629,334

Wells Fargo & Co.

127,326

5,254,744

 

11,194,900

Consumer Finance - 1.2%

Capital One Financial Corp.

35,900

2,254,879

Diversified Financial Services - 7.5%

Bank of America Corp.

131,300

1,688,518

Citigroup, Inc.

109,547

5,254,970

IntercontinentalExchange, Inc. (a)(d)

6,300

1,119,888

JPMorgan Chase & Co.

88,819

4,688,755

Moody's Corp.

20,700

1,261,251

 

14,013,382

Insurance - 7.0%

AFLAC, Inc.

27,340

1,589,001

Berkshire Hathaway, Inc. Class B (a)

30,300

3,391,176

MetLife, Inc.

54,800

2,507,648

Primerica, Inc.

29,834

1,116,985

ProAssurance Corp.

18,300

954,528

Reinsurance Group of America, Inc.

21,800

1,506,598

The Travelers Companies, Inc.

26,000

2,077,920

 

13,143,856

Real Estate Investment Trusts - 3.4%

American Tower Corp.

19,300

1,412,181

Equity Lifestyle Properties, Inc.

15,400

1,210,286

Prologis, Inc.

28,287

1,066,986

SL Green Realty Corp.

10,900

961,271

Ventas, Inc.

23,400

1,625,364

 

6,276,088

TOTAL FINANCIALS

52,215,999

Common Stocks - continued

Shares

Value

HEALTH CARE - 11.3%

Biotechnology - 1.0%

Amgen, Inc.

19,000

$ 1,874,540

Health Care Equipment & Supplies - 0.4%

Boston Scientific Corp. (a)

58,868

545,706

Zimmer Holdings, Inc.

1,957

146,658

 

692,364

Health Care Providers & Services - 2.6%

CIGNA Corp.

36,200

2,624,138

McKesson Corp.

19,539

2,237,216

 

4,861,354

Pharmaceuticals - 7.3%

Actavis, Inc. (a)

10,400

1,312,688

GlaxoSmithKline PLC sponsored ADR

41,300

2,063,761

Johnson & Johnson

26,200

2,249,532

Merck & Co., Inc.

104,970

4,875,857

Sanofi SA sponsored ADR

61,100

3,147,261

 

13,649,099

TOTAL HEALTH CARE

21,077,357

INDUSTRIALS - 10.8%

Aerospace & Defense - 1.5%

General Dynamics Corp.

12,300

963,459

United Technologies Corp.

19,268

1,790,768

 

2,754,227

Air Freight & Logistics - 0.6%

FedEx Corp.

11,400

1,123,812

Construction & Engineering - 0.9%

URS Corp.

34,500

1,629,090

Electrical Equipment - 1.4%

Eaton Corp. PLC

25,900

1,704,479

Regal-Beloit Corp.

14,500

940,180

 

2,644,659

Industrial Conglomerates - 4.8%

3M Co.

18,500

2,022,975

Carlisle Companies, Inc.

8,643

538,545

Danaher Corp.

18,400

1,164,720

General Electric Co.

230,948

5,355,684

 

9,081,924

Machinery - 1.6%

Ingersoll-Rand PLC

29,300

1,626,736

Stanley Black & Decker, Inc.

17,700

1,368,210

 

2,994,946

TOTAL INDUSTRIALS

20,228,658

 

Shares

Value

INFORMATION TECHNOLOGY - 10.1%

Communications Equipment - 1.9%

Cisco Systems, Inc.

146,600

$ 3,563,846

Computers & Peripherals - 1.0%

Apple, Inc.

4,700

1,861,576

Electronic Equipment & Components - 1.2%

Arrow Electronics, Inc. (a)

27,900

1,111,815

TE Connectivity Ltd.

26,200

1,193,148

 

2,304,963

IT Services - 2.9%

Accenture PLC Class A

13,000

935,480

Amdocs Ltd.

29,200

1,083,028

Fidelity National Information Services, Inc.

48,050

2,058,462

Global Payments, Inc.

28,400

1,315,488

 

5,392,458

Software - 3.1%

Activision Blizzard, Inc.

79,300

1,130,818

Autodesk, Inc. (a)

27,600

936,744

Electronic Arts, Inc. (a)

53,100

1,219,707

Intuit, Inc.

15,400

939,862

Oracle Corp.

51,800

1,591,296

 

5,818,427

TOTAL INFORMATION TECHNOLOGY

18,941,270

MATERIALS - 4.0%

Chemicals - 2.5%

Air Products & Chemicals, Inc.

6,901

631,925

Albemarle Corp.

13,356

831,945

Eastman Chemical Co.

18,800

1,316,188

LyondellBasell Industries NV Class A

25,400

1,683,004

Methanex Corp.

4,300

184,192

 

4,647,254

Containers & Packaging - 1.0%

Rock-Tenn Co. Class A

18,500

1,847,780

Metals & Mining - 0.5%

Reliance Steel & Aluminum Co.

14,100

924,396

TOTAL MATERIALS

7,419,430

TELECOMMUNICATION SERVICES - 0.8%

Wireless Telecommunication Services - 0.8%

Vodafone Group PLC sponsored ADR

48,900

1,405,386

UTILITIES - 5.3%

Electric Utilities - 2.1%

Edison International

37,107

1,787,073

ITC Holdings Corp.

19,800

1,807,740

Northeast Utilities

7,001

294,182

 

3,888,995

Common Stocks - continued

Shares

Value

UTILITIES - continued

Multi-Utilities - 3.2%

CMS Energy Corp.

59,000

$ 1,603,030

NiSource, Inc.

55,900

1,600,976

PG&E Corp.

27,300

1,248,429

Sempra Energy

19,600

1,602,496

 

6,054,931

TOTAL UTILITIES

9,943,926

TOTAL COMMON STOCKS

(Cost $162,430,100)


184,058,599

Money Market Funds - 3.5%

 

 

 

 

Fidelity Cash Central Fund, 0.13% (b)

5,706,816

5,706,816

Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c)

917,500

917,500

TOTAL MONEY MARKET FUNDS

(Cost $6,624,316)


6,624,316

TOTAL INVESTMENT PORTFOLIO - 102.1%

(Cost $169,054,416)

190,682,915

NET OTHER ASSETS (LIABILITIES) - (2.1)%

(4,003,421)

NET ASSETS - 100%

$ 186,679,494

Legend

(a) Non-income producing

(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.

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

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

Affiliated Central Funds

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

Fund

Income earned

Fidelity Cash Central Fund

$ 2,191

Fidelity Securities Lending Cash Central Fund

10,130

Total

$ 12,321

Other Information

The following is a summary of the inputs used, as of June 30, 2013, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 14,608,643

$ 14,608,643

$ -

$ -

Consumer Staples

11,714,828

11,714,828

-

-

Energy

26,503,102

26,503,102

-

-

Financials

52,215,999

49,967,441

2,248,558

-

Health Care

21,077,357

21,077,357

-

-

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Industrials

$ 20,228,658

$ 20,228,658

$ -

$ -

Information Technology

18,941,270

18,941,270

-

-

Materials

7,419,430

7,419,430

-

-

Telecommunication Services

1,405,386

1,405,386

-

-

Utilities

9,943,926

9,943,926

-

-

Money Market Funds

6,624,316

6,624,316

-

-

Total Investments in Securities:

$ 190,682,915

$ 188,434,357

$ 2,248,558

$ -

The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2013. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:

Transfers

Total

Level 1 to Level 2

$ 0

Level 2 to Level 1

$ 4,686,491

Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited)

United States of America

84.4%

United Kingdom

4.4%

France

2.9%

Ireland

2.3%

Canada

2.1%

Switzerland

1.8%

Others (Individually Less Than 1%)

2.1%

 

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, 2013 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $888,800) - See accompanying schedule:

Unaffiliated issuers (cost $162,430,100)

$ 184,058,599

 

Fidelity Central Funds (cost $6,624,316)

6,624,316

 

Total Investments (cost $169,054,416)

 

$ 190,682,915

Foreign currency held at value (cost $73)

71

Receivable for investments sold

19,513,574

Receivable for fund shares sold

265,290

Dividends receivable

325,880

Distributions receivable from Fidelity Central Funds

1,285

Other receivables

263

Total assets

210,789,278

 

 

 

Liabilities

Payable to custodian bank

$ 312,790

Payable for investments purchased

22,707,302

Payable for fund shares redeemed

31,095

Accrued management fee

85,676

Distribution and service plan fees payable

1,096

Other affiliated payables

25,352

Other payables and accrued expenses

28,973

Collateral on securities loaned, at value

917,500

Total liabilities

24,109,784

 

 

 

Net Assets

$ 186,679,494

Net Assets consist of:

 

Paid in capital

$ 154,422,503

Undistributed net investment income

1,327,538

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

9,302,656

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

21,626,797

Net Assets

$ 186,679,494

Statement of Assets and Liabilities - continued

 

June 30, 2013 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($96,572,682 ÷ 6,668,991 shares)

$ 14.48

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($240,923 ÷ 16,650 shares)

$ 14.47

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($5,116,583 ÷ 356,571 shares)

$ 14.35

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($84,749,306 ÷ 5,858,685 shares)

$ 14.47

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

Semiannual Report

Statement of Operations

Six months ended June 30, 2013 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 1,954,608

Income from Fidelity Central Funds

 

12,321

Total income

 

1,966,929

 

 

 

Expenses

Management fee

$ 474,933

Transfer agent fees

95,810

Distribution and service plan fees

5,704

Accounting and security lending fees

33,419

Custodian fees and expenses

4,717

Independent trustees' compensation

500

Audit

25,741

Legal

328

Miscellaneous

626

Total expenses before reductions

641,778

Expense reductions

(2,583)

639,195

Net investment income (loss)

1,327,734

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

13,241,601

Foreign currency transactions

2,994

Total net realized gain (loss)

 

13,244,595

Change in net unrealized appreciation (depreciation) on:

Investment securities

8,234,154

Assets and liabilities in foreign currencies

(1,671)

Total change in net unrealized appreciation (depreciation)

 

8,232,483

Net gain (loss)

21,477,078

Net increase (decrease) in net assets resulting from operations

$ 22,804,812

Statement of Changes in Net Assets

 

Six months ended June 30, 2013
(Unaudited)

Year ended
December 31, 2012

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 1,327,734

$ 2,451,042

Net realized gain (loss)

13,244,595

19,300,533

Change in net unrealized appreciation (depreciation)

8,232,483

5,851,497

Net increase (decrease) in net assets resulting from operations

22,804,812

27,603,072

Distributions to shareholders from net investment income

-

(2,418,565)

Share transactions - net increase (decrease)

15,364,221

(21,074,853)

Total increase (decrease) in net assets

38,169,033

4,109,654

 

 

 

Net Assets

Beginning of period

148,510,461

144,400,807

End of period (including undistributed net investment income of $1,327,538 and distributions in excess of net investment income of $196, respectively)

$ 186,679,494

$ 148,510,461

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 12.60

$ 10.60

$ 11.00

$ 9.47

$ 6.69

$ 13.10

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .11

.20

.12

.13 H

.07

.13

Net realized and unrealized gain (loss)

  1.77

2.01

(.40)

1.56

2.78

(6.07)

Total from investment operations

  1.88

2.21

(.28)

1.69

2.85

(5.94)

Distributions from net investment income

  -

(.21)

(.12)

(.15)

(.07)

(.10)

Distributions from net realized gain

  -

-

-

(.01)

-

(.37)

Total distributions

  -

(.21)

(.12)

(.16)

(.07)

(.47)

Net asset value, end of period

$ 14.48

$ 12.60

$ 10.60

$ 11.00

$ 9.47

$ 6.69

Total Return B, C, D

  14.92%

20.91%

(2.51)%

17.82%

42.66%

(46.50)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .71% A

.72%

.73%

.76%

.80%

.79%

Expenses net of fee waivers, if any

  .71% A

.72%

.72%

.75%

.80%

.79%

Expenses net of all reductions

  .70% A

.71%

.72%

.74%

.80%

.79%

Net investment income (loss)

  1.59% A

1.70%

1.14%

1.33% H

.95%

1.25%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 96,573

$ 82,711

$ 82,980

$ 78,133

$ 64,198

$ 41,306

Portfolio turnover rate G

  129% A

106%

79%

160%

73%

53%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Investment income per share reflects a large, non-recurring dividend which amounted to $.06 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .69%.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

Financial Highlights - Service Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 12.60

$ 10.60

$ 10.99

$ 9.46

$ 6.69

$ 13.06

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .10

.19

.12

.12 H

.06

.13

Net realized and unrealized gain (loss)

  1.77

2.01

(.40)

1.56

2.77

(6.05)

Total from investment operations

  1.87

2.20

(.28)

1.68

2.83

(5.92)

Distributions from net investment income

  -

(.20)

(.11)

(.14)

(.06)

(.08)

Distributions from net realized gain

  -

-

-

(.01)

-

(.37)

Total distributions

  -

(.20)

(.11)

(.15)

(.06)

(.45)

Net asset value, end of period

$ 14.47

$ 12.60

$ 10.60

$ 10.99

$ 9.46

$ 6.69

Total Return B, C, D

  14.84%

20.80%

(2.55)%

17.73%

42.35%

(46.49)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .80% A

.81%

.81%

.84%

.91%

.88%

Expenses net of fee waivers, if any

  .80% A

.81%

.81%

.83%

.91%

.88%

Expenses net of all reductions

  .80% A

.80%

.81%

.83%

.90%

.88%

Net investment income (loss)

  1.50% A

1.61%

1.05%

1.24% H

.84%

1.17%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 241

$ 211

$ 194

$ 258

$ 251

$ 293

Portfolio turnover rate G

  129% A

106%

79%

160%

73%

53%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Investment income per share reflects a large, non-recurring dividend which amounted to $.06 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .61%.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

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

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 12.50

$ 10.52

$ 10.90

$ 9.38

$ 6.63

$ 12.97

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .09

.17

.10

.11 H

.05

.11

Net realized and unrealized gain (loss)

  1.76

1.99

(.39)

1.53

2.75

(6.01)

Total from investment operations

  1.85

2.16

(.29)

1.64

2.80

(5.90)

Distributions from net investment income

  -

(.18)

(.09)

(.11)

(.05)

(.07)

Distributions from net realized gain

  -

-

-

(.01)

-

(.37)

Total distributions

  -

(.18)

(.09)

(.12)

(.05)

(.44)

Net asset value, end of period

$ 14.35

$ 12.50

$ 10.52

$ 10.90

$ 9.38

$ 6.63

Total Return B, C, D

  14.80%

20.55%

(2.68)%

17.52%

42.32%

(46.68)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .96% A

.98%

.98%

1.00%

1.05%

1.04%

Expenses net of fee waivers, if any

  .96% A

.98%

.97%

1.00%

1.05%

1.04%

Expenses net of all reductions

  .96% A

.97%

.97%

.99%

1.05%

1.04%

Net investment income (loss)

  1.33% A

1.45%

.89%

1.08% H

.70%

1.01%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 5,117

$ 3,736

$ 3,202

$ 8,652

$ 8,277

$ 4,941

Portfolio turnover rate G

  129% A

106%

79%

160%

73%

53%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Investment income per share reflects a large, non-recurring dividend which amounted to $.06 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .45%.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

Financial Highlights - Investor Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 12.59

$ 10.59

$ 10.99

$ 9.46

$ 6.69

$ 13.09

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .11

.19

.12

.12 H

.07

.12

Net realized and unrealized gain (loss)

  1.77

2.01

(.41)

1.56

2.77

(6.06)

Total from investment operations

  1.88

2.20

(.29)

1.68

2.84

(5.94)

Distributions from net investment income

  -

(.20)

(.11)

(.14)

(.07)

(.09)

Distributions from net realized gain

  -

-

-

(.01)

-

(.37)

Total distributions

  -

(.20)

(.11)

(.15)

(.07)

(.46)

Net asset value, end of period

$ 14.47

$ 12.59

$ 10.59

$ 10.99

$ 9.46

$ 6.69

Total Return B, C, D

  14.93%

20.83%

(2.59)%

17.74%

42.41%

(46.53)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .79% A

.80%

.80%

.83%

.89%

.87%

Expenses net of fee waivers, if any

  .79% A

.80%

.80%

.83%

.89%

.87%

Expenses net of all reductions

  .78% A

.79%

.80%

.82%

.88%

.87%

Net investment income (loss)

  1.51% A

1.62%

1.06%

1.25% H

.86%

1.17%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 84,749

$ 61,852

$ 58,025

$ 64,242

$ 56,380

$ 36,199

Portfolio turnover rate G

  129% A

106%

79%

160%

73%

53%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Investment income per share reflects a large, non-recurring dividend which amounted to $.06 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .61%.

I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2013 (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.

2. Investments in Fidelity Central Funds.

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

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

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:

Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2013, including information on transfers between Levels 1 and 2 is included at the end of the Fund's Schedule of Investments.

Semiannual Report

3. Significant Accounting Policies - continued

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

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

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

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

Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

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

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

Book-tax differences are primarily due to future contracts, foreign currency transactions, partnerships, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.

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

Gross unrealized appreciation

$ 22,911,033

Gross unrealized depreciation

(1,923,594)

Net unrealized appreciation (depreciation) on securities and other investments

$ 20,987,439

 

 

Tax cost

$ 169,695,476

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.

Fiscal year of expiration

 

2017

$ (937,041)

2018

(2,066,510)

Total capital loss carryforward

$ (3,003,551)

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $124,346,660 and $107,709,281, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% 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 .55% of the Fund's average net assets.

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

For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:

Service Class

$ 116

Service Class 2

5,588

 

$ 5,704

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. In addition, FIIOC receives an asset-based fee of .0035% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:

Initial Class

$ 35,497

Service Class

81

Service Class 2

1,886

Investor Class

58,346

 

$ 95,810

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

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $4,683 for the period.

Semiannual Report

6. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $199 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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 rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $10,130. During the period, there were no securities loaned to FCM.

8. 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 $2,583 for the period.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2013

Year ended
December 31,
2012

From net investment income

 

 

Initial Class

$ -

$ 1,379,268

Service Class

-

3,393

Service Class 2

-

53,882

Investor Class

-

982,022

Total

$ -

$ 2,418,565

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended June 30,
2013

Year ended
December 31,
2012

Six months ended
June 30,
2013

Year ended
December 31,
2012

Initial Class

 

 

 

 

Shares sold

956,518

1,352,046

$ 13,399,202

$ 15,992,881

Reinvestment of distributions

-

110,518

-

1,379,268

Shares redeemed

(852,413)

(2,727,326)

(12,032,628)

(31,911,868)

Net increase (decrease)

104,105

(1,264,762)

$ 1,366,574

$ (14,539,719)

Service Class

 

 

 

 

Shares sold

-

451

$ -

$ 5,296

Reinvestment of distributions

-

272

-

3,393

Shares redeemed

(138)

(2,236)

(1,906)

(26,470)

Net increase (decrease)

(138)

(1,513)

$ (1,906)

$ (17,781)

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Share Transactions - continued

 

Shares

Dollars

 

Six months ended June 30,
2013

Year ended
December 31,
2012

Six months ended
June 30,
2013

Year ended
December 31,
2012

Service Class 2

 

 

 

 

Shares sold

145,715

141,782

$ 2,032,932

$ 1,633,565

Reinvestment of distributions

-

4,352

-

53,882

Shares redeemed

(88,024)

(151,734)

(1,229,368)

(1,773,957)

Net increase (decrease)

57,691

(5,600)

$ 803,564

$ (86,510)

Investor Class

 

 

 

 

Shares sold

1,531,323

959,913

$ 21,326,261

$ 11,352,729

Reinvestment of distributions

-

78,751

-

982,022

Shares redeemed

(585,108)

(1,604,791)

(8,130,272)

(18,765,594)

Net increase (decrease)

946,215

(566,127)

$ 13,195,989

$ (6,430,843)

11. Other.

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

At the end of the period, VIP Freedom 2020 Portfolio was the owner of record of approximately 20% of the total outstanding shares of the Fund. The VIP Freedom Funds were the owners of record, in the aggregate, of approximately 58% of the total outstanding shares of the Fund. In addition, FMR or its affiliates were the owners of record of 38% of the total outstanding shares of the Fund.

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Hong Kong) Limited

Fidelity Management & Research (Japan) Inc.

General Distributor

Fidelity Distributors Corporation
Smithfield, RI

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

State Street Bank and Trust Company
Quincy, MA 

VIPVAL-SANN-0813
1.761034.112

Fidelity® Variable Insurance Products:

High Income Portfolio

Semiannual Report

June 30, 2013

(Fidelity Cover Art)

Contents

Shareholder Expense Example

(Click Here)

An example of shareholder expenses.

Investment Changes

(Click Here)

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

Investments

(Click Here)

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

Financial Statements

(Click Here)

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

Notes

(Click Here)

Notes to the financial statements.

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2013 FMR LLC. All rights reserved.

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

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

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, 2013 to June 30, 2013).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

Annualized
Expense Ratio B

Beginning
Account Value
January 1, 2013

Ending
Account Value
June 30, 2013

Expenses Paid
During Period*
January 1, 2013
to June 30, 2013

Initial Class

.69%

 

 

 

Actual

 

$ 1,000.00

$ 1,006.20

$ 3.43

HypotheticalA

 

$ 1,000.00

$ 1,021.37

$ 3.46

Service Class

.78%

 

 

 

Actual

 

$ 1,000.00

$ 1,004.50

$ 3.88

HypotheticalA

 

$ 1,000.00

$ 1,020.93

$ 3.91

Service Class 2

.93%

 

 

 

Actual

 

$ 1,000.00

$ 1,004.60

$ 4.62

HypotheticalA

 

$ 1,000.00

$ 1,020.18

$ 4.66

Initial Class R

.68%

 

 

 

Actual

 

$ 1,000.00

$ 1,004.50

$ 3.38

HypotheticalA

 

$ 1,000.00

$ 1,021.42

$ 3.41

Service Class R

.78%

 

 

 

Actual

 

$ 1,000.00

$ 1,004.50

$ 3.88

HypotheticalA

 

$ 1,000.00

$ 1,020.93

$ 3.91

Service Class 2R

.93%

 

 

 

Actual

 

$ 1,000.00

$ 1,004.60

$ 4.62

HypotheticalA

 

$ 1,000.00

$ 1,020.18

$ 4.66

Investor Class

.72%

 

 

 

Actual

 

$ 1,000.00

$ 1,006.20

$ 3.58

HypotheticalA

 

$ 1,000.00

$ 1,021.22

$ 3.61

A 5% return per year before expenses

B Annualized expense ratio reflects expenses net of applicable fee waivers.

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Five Holdings as of June 30, 2013

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

Rite Aid Corp.

3.4

1.8

CCO Holdings LLC/CCO Holdings Capital Corp.

2.4

2.9

International Lease Finance Corp.

2.4

2.9

First Data Corp.

2.0

0.5

Mirant Americas Generation LLC

1.8

1.7

 

12.0

Top Five Market Sectors as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Energy

12.9

9.6

Telecommunications

9.2

8.4

Technology

8.3

3.4

Electric Utilities

5.6

6.9

Diversified Financial Services

5.3

6.7

Quality Diversification (% of fund's net assets)

As of June 30, 2013

As of December 31, 2012

vvv1266428

BBB 1.7%

 

vvv1266428

BBB 4.2%

 

vvv1266492

BB 32.1%

 

vvv1266492

BB 26.7%

 

vvv1266495

B 46.4%

 

vvv1266495

B 47.0%

 

vvv1266431

CCC,CC,C 15.7%

 

vvv1266431

CCC,CC,C 9.8%

 

vvv1266500

Not Rated 0.2%

 

vvv1266500

Not Rated 1.8%

 

vvv1266503

Equities 0.1%

 

vvv1266503

Equities 0.7%

 

vvv1266434

Short-Term
Investments and
Net Other Assets 3.8%

 

vvv1266434

Short-Term
Investments and
Net Other Assets 9.8%

 

vvv1266508

We have used ratings from Moody's Investors Service, Inc. Where Moody's® ratings are not available, we have used S&P® ratings. All ratings are as of the date indicated and do not reflect subsequent changes.

Asset Allocation (% of fund's net assets)

As of June 30, 2013*

As of December 31, 2012**

vvv1266428

Nonconvertible
Bonds 93.2%

 

vvv1266428

Nonconvertible
Bonds 82.1%

 

vvv1266512

Convertible Bonds, Preferred Stocks 0.0%

 

vvv1266514

Convertible Bonds, Preferred Stocks 0.6%

 

vvv1266516

Common Stocks 0.1%

 

vvv1266516

Common Stocks 0.1%

 

vvv1266519

Floating Rate Loans 2.8%

 

vvv1266519

Floating Rate Loans 7.4%

 

vvv1266522

Other Investments 0.1%

 

vvv1266512

Other Investments 0.0%

 

vvv1266434

Short-Term
Investments and
Net Other Assets
(Liabilities) 3.8%

 

vvv1266434

Short-Term
Investments and
Net Other Assets
(Liabilities) 9.8%

 

* Foreign investments

18.8%

 

** Foreign investments

11.8%

 

vvv1266527

Semiannual Report

Investments June 30, 2013 (Unaudited)

Showing Percentage of Net Assets

Nonconvertible Bonds - 93.2%

 

Principal Amount

Value

Aerospace - 1.3%

American Airlines, Inc. pass-thru certificates Series 2013-1B Class B, 5.625% 1/15/21 (d)

$ 495,000

$ 486,338

GenCorp, Inc. 7.125% 3/15/21 (d)

895,000

926,325

Huntington Ingalls Industries, Inc. 7.125% 3/15/21

3,440,000

3,698,000

TransDigm, Inc.:

5.5% 10/15/20 (d)

5,985,000

5,655,825

7.5% 7/15/21 (d)

4,025,000

4,115,563

Triumph Group, Inc. 4.875% 4/1/21 (d)

2,210,000

2,198,950

 

17,081,001

Air Transportation - 3.4%

Air Canada:

5.375% 11/15/22 (d)

530,000

528,675

6.625% 5/15/18 (d)

3,090,000

3,104,523

12% 2/1/16 (d)

3,970,000

4,342,188

Continental Airlines, Inc.:

pass-thru trust certificates 9.798% 4/1/21

2,994,208

3,458,311

5.5% 4/29/22

3,015,000

3,112,988

6.125% 4/29/18 (d)

520,000

525,200

6.75% 9/15/15 (d)

4,090,000

4,171,800

9.25% 5/10/17

717,906

800,465

Delta Air Lines, Inc. pass-thru trust certificates:

6.375% 1/2/16

1,985,000

2,064,400

6.75% 11/23/15

1,985,000

2,049,513

8.021% 8/10/22

1,605,569

1,754,084

8.954% 8/10/14

1,346,496

1,359,961

Hawaiian Airlines pass-thru certificates:

Series 2013-1 Class A, 3.9% 1/15/26

950,000

895,375

Series 2013-1 Class B, 4.95% 1/15/22

2,179,000

2,053,708

Northwest Airlines, Inc. pass-thru trust certificates 8.028% 11/1/17

578,425

610,238

U.S. Airways Group, Inc. 6.125% 6/1/18

3,130,000

2,950,025

U.S. Airways pass-thru certificates Series 2012-2C, 5.45% 6/3/18

3,565,000

3,386,750

U.S. Airways pass-thru Trust Series 2013-1:

Class A, 3.95% 5/15/27

1,720,000

1,655,500

Class B, 5.375% 5/15/23

710,000

697,575

United Air Lines, Inc. pass-thru trust certificates:

Class B, 7.336% 7/2/19

2,472,046

2,546,208

9.75% 1/15/17

1,738,974

1,986,778

 

 

Principal Amount

Value

12% 1/15/16 (d)

$ 516,297

$ 578,252

United Continental Holdings, Inc. 6.375% 6/1/18

300,000

294,750

 

44,927,267

Automotive - 3.0%

American Axle & Manufacturing, Inc. 6.25% 3/15/21

6,980,000

7,067,250

Chrysler Group LLC/CG Co-Issuer, Inc.:

8% 6/15/19

5,015,000

5,472,619

8.25% 6/15/21

2,495,000

2,756,975

Dana Holding Corp.:

6.5% 2/15/19

1,505,000

1,587,775

6.75% 2/15/21

1,710,000

1,812,600

General Motors Financial Co., Inc.:

2.75% 5/15/16 (d)

1,655,000

1,628,106

3.25% 5/15/18 (d)

5,795,000

5,635,638

4.25% 5/15/23 (d)

785,000

731,031

4.75% 8/15/17 (d)

3,370,000

3,454,250

6.75% 6/1/18

3,685,000

4,007,438

Jaguar Land Rover PLC 5.625% 2/1/23 (d)

2,615,000

2,530,013

Tenneco, Inc. 6.875% 12/15/20

1,930,000

2,065,100

TRW Automotive, Inc. 4.5% 3/1/21 (d)

1,500,000

1,496,250

 

40,245,045

Banks & Thrifts - 0.2%

Synovus Financial Corp.:

5.125% 6/15/17

760,000

746,700

7.875% 2/15/19

1,568,000

1,748,320

 

2,495,020

Broadcasting - 0.6%

AMC Networks, Inc. 4.75% 12/15/22

4,335,000

4,183,275

Starz LLC/Starz Finance Corp. 5% 9/15/19

3,275,000

3,225,875

 

7,409,150

Building Materials - 2.8%

Associated Materials LLC 9.125% 11/1/17

390,000

412,425

Building Materials Corp. of America:

6.75% 5/1/21 (d)

3,680,000

3,910,000

6.875% 8/15/18 (d)

4,490,000

4,736,950

HD Supply, Inc.:

7.5% 7/15/20 (d)

7,655,000

7,769,825

8.125% 4/15/19

3,615,000

3,958,425

10.5% 1/15/21

3,435,000

3,551,103

Headwaters, Inc. 7.625% 4/1/19

2,525,000

2,626,000

Masco Corp. 5.95% 3/15/22

1,815,000

1,905,750

Nonconvertible Bonds - continued

 

Principal Amount

Value

Building Materials - continued

Texas Industries, Inc. 9.25% 8/15/20

$ 7,285,000

$ 7,849,588

USG Corp. 7.875% 3/30/20 (d)

970,000

1,057,300

 

37,777,366

Cable TV - 4.8%

Cablevision Systems Corp. 7.75% 4/15/18

740,000

795,500

CCO Holdings LLC/CCO Holdings Capital Corp.:

5.25% 3/15/21 (d)

1,740,000

1,713,900

5.25% 9/30/22

5,635,000

5,353,250

5.75% 9/1/23 (d)

3,240,000

3,126,600

6.5% 4/30/21

9,070,000

9,455,475

6.625% 1/31/22

3,080,000

3,226,300

7% 1/15/19

9,810,000

10,374,075

Cequel Communications Escrow 1 LLC/Cequel Communications Escrow Capital Corp. 6.375% 9/15/20 (d)

3,395,000

3,454,413

Cequel Communications Holdings I LLC/Cequel Capital Corp. 5.125% 12/15/21 (d)

4,290,000

4,064,775

Cogeco Cable, Inc. 4.875% 5/1/20 (d)

710,000

690,475

DISH DBS Corp. 4.25% 4/1/18 (d)

1,145,000

1,122,100

Harron Communications LP/Harron Finance Corp. 9.125% 4/1/20 (d)

2,085,000

2,251,800

Lynx I Corp. 5.375% 4/15/21 (d)

2,550,000

2,550,000

Lynx II Corp. 6.375% 4/15/23 (d)

550,000

554,125

Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH:

5.5% 1/15/23 (d)

1,655,000

1,586,814

7.5% 3/15/19 (d)

950,000

999,875

UPCB Finance III Ltd. 6.625% 7/1/20 (d)

2,710,000

2,804,850

UPCB Finance V Ltd. 7.25% 11/15/21 (d)

3,270,000

3,459,987

WaveDivision Escrow LLC/WaveDivision Escrow Corp. 8.125% 9/1/20 (d)

6,385,000

6,608,475

 

64,192,789

Capital Goods - 0.5%

Amsted Industries, Inc. 8.125% 3/15/18 (d)

2,890,000

3,048,950

JB Poindexter & Co., Inc. 9% 4/1/22 (d)

3,830,000

4,021,500

 

7,070,450

Chemicals - 2.6%

Ashland, Inc.:

3% 3/15/16 (d)

1,170,000

1,175,850

3.875% 4/15/18 (d)

2,365,000

2,323,613

Axiall Corp. 4.875% 5/15/23 (d)

1,695,000

1,610,250

 

 

Principal Amount

Value

Celanese U.S. Holdings LLC:

4.625% 11/15/22

$ 1,605,000

$ 1,572,900

6.625% 10/15/18

1,030,000

1,086,650

Eagle Spinco, Inc. 4.625% 2/15/21 (d)

810,000

775,575

Hexion U.S. Finance Corp. 6.625% 4/15/20 (d)

3,540,000

3,522,300

INEOS Finance PLC 8.375% 2/15/19 (d)

5,495,000

6,003,288

Kinove German Bondco GmbH 9.625% 6/15/18 (d)

3,555,000

3,848,288

Nufarm Australia Ltd. 6.375% 10/15/19 (d)

1,730,000

1,730,000

Rockwood Specialties Group, Inc. 4.625% 10/15/20

2,850,000

2,857,125

Trinseo Materials Operating SCA/Trinseo Materials Finance, Inc. 8.75% 2/1/19 (d)

5,170,000

4,963,200

Tronox Finance LLC 6.375% 8/15/20 (d)

3,675,000

3,463,688

 

34,932,727

Consumer Products - 0.2%

Associated Materials LLC/AMH New Finance, Inc. 9.125% 11/1/17 (d)

1,080,000

1,142,100

First Quality Finance Co., Inc. 4.625% 5/15/21 (d)

1,685,000

1,583,900

 

2,726,000

Containers - 3.3%

Ardagh Packaging Finance PLC 7.375% 10/15/17 (d)

1,415,000

1,510,513

Ardagh Packaging Finance PLC/Ardagh MP Holdings U.S.A., Inc.:

7% 11/15/20 (d)

4,955,000

4,756,800

7.375% 10/15/17 (d)

335,000

356,775

Ball Corp. 4% 11/15/23

3,670,000

3,394,750

BOE Intermediate Holding Corp. 9.75% 11/1/17 pay-in-kind (d)

460,000

435,869

Crown Americas LLC/Crown Americas Capital Corp. IV 4.5% 1/15/23 (d)

4,000,000

3,770,000

Graphic Packaging International, Inc. 4.75% 4/15/21

475,000

456,000

Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer (Luxembourg) SA:

5.75% 10/15/20

8,455,000

8,433,863

8.5% 5/15/18 (c)

6,290,000

6,478,700

9.875% 8/15/19

5,310,000

5,681,700

Sealed Air Corp.:

6.5% 12/1/20 (d)

1,315,000

1,387,325

8.125% 9/15/19 (d)

4,270,000

4,718,350

8.375% 9/15/21 (d)

2,695,000

3,018,400

 

44,399,045

Nonconvertible Bonds - continued

 

Principal Amount

Value

Diversified Financial Services - 5.3%

Aircastle Ltd.:

6.25% 12/1/19

$ 1,740,000

$ 1,807,425

6.75% 4/15/17

2,030,000

2,131,500

9.75% 8/1/18

3,730,000

4,093,675

CIT Group, Inc.:

4.25% 8/15/17

3,180,000

3,195,900

5.25% 3/15/18

4,935,000

5,070,713

5.375% 5/15/20

4,035,000

4,130,831

5.5% 2/15/19 (d)

5,555,000

5,735,538

Icahn Enterprises LP/Icahn Enterprises Finance Corp. 8% 1/15/18

11,285,000

11,849,250

ILFC E-Capital Trust II 6.25% 12/21/65 (d)(g)

1,275,000

1,160,250

International Lease Finance Corp.:

4.625% 4/15/21

2,020,000

1,868,500

5.75% 5/15/16

8,055,000

8,277,592

5.875% 4/1/19

5,485,000

5,539,850

5.875% 8/15/22

3,480,000

3,449,550

6.25% 5/15/19

2,245,000

2,306,738

8.625% 1/15/22

3,855,000

4,433,250

8.75% 3/15/17

2,110,000

2,357,925

8.875% 9/1/17

3,235,000

3,647,463

 

71,055,950

Diversified Media - 1.9%

Clear Channel Worldwide Holdings, Inc.:

6.5% 11/15/22 (d)

2,715,000

2,782,875

6.5% 11/15/22 (d)

4,990,000

5,139,700

MDC Partners, Inc. 6.75% 4/1/20 (d)

4,075,000

4,075,000

Nielsen Finance LLC/Nielsen Finance Co.:

4.5% 10/1/20 (d)

2,600,000

2,496,000

7.75% 10/15/18

3,900,000

4,173,000

Quebecor Media, Inc.:

5.75% 1/15/23

2,360,000

2,301,000

7.75% 3/15/16

2,612,000

2,651,180

7.75% 3/15/16

1,060,000

1,075,900

 

24,694,655

Electric Utilities - 5.6%

Atlantic Power Corp. 9% 11/15/18

6,740,000

6,807,400

Dolphin Subsidiary II, Inc.:

6.5% 10/15/16

2,095,000

2,189,275

7.25% 10/15/21

935,000

967,725

GenOn Energy, Inc.:

9.5% 10/15/18

1,745,000

1,936,950

9.875% 10/15/20

835,000

918,500

Mirant Americas Generation LLC:

8.5% 10/1/21

7,395,000

7,949,625

9.125% 5/1/31

15,020,000

16,071,400

 

 

Principal Amount

Value

NRG Energy, Inc. 6.625% 3/15/23 (d)

$ 4,860,000

$ 4,835,700

NSG Holdings II, LLC 7.75% 12/15/25 (d)

9,865,000

10,210,275

Otter Tail Corp. 9% 12/15/16

2,460,000

2,723,958

Puget Energy, Inc.:

5.625% 7/15/22

1,045,000

1,107,907

6.5% 12/15/20

3,975,000

4,452,020

The AES Corp.:

4.875% 5/15/23

3,475,000

3,231,750

7.375% 7/1/21

9,660,000

10,601,850

 

74,004,335

Energy - 12.5%

Access Midstream Partners LP/ACMP Finance Corp. 4.875% 5/15/23

2,110,000

1,957,025

Antero Resources Finance Corp.:

6% 12/1/20

6,300,000

6,174,000

7.25% 8/1/19

1,845,000

1,905,332

9.375% 12/1/17

4,215,000

4,488,975

Atlas Pipeline Partners LP/Atlas Pipeline Finance Corp. 4.75% 11/15/21 (d)

985,000

886,500

Chesapeake Energy Corp.:

5.375% 6/15/21

2,580,000

2,567,100

5.75% 3/15/23

1,675,000

1,695,938

6.125% 2/15/21

9,950,000

10,447,500

6.875% 11/15/20

1,250,000

1,356,250

Chesapeake Midstream Partners LP/CHKM Finance Corp.:

5.875% 4/15/21

615,000

624,225

6.125% 7/15/22

1,745,000

1,775,538

Chesapeake Oilfield Operating LLC 6.625% 11/15/19 (d)

1,680,000

1,663,200

Continental Resources, Inc. 4.5% 4/15/23 (d)

3,530,000

3,424,100

Crestwood Midstream Partners LP/Finance Corp. 7.75% 4/1/19

2,315,000

2,384,450

Denbury Resources, Inc.:

4.625% 7/15/23

6,660,000

6,127,200

6.375% 8/15/21

2,550,000

2,626,500

Energy Partners Ltd. 8.25% 2/15/18

620,000

638,600

Energy Transfer Equity LP 7.5% 10/15/20

2,930,000

3,201,025

EP Energy LLC/Everest Acquisition Finance, Inc. 7.75% 9/1/22

2,525,000

2,720,688

Everest Acquisition LLC/Everest Acquisition Finance, Inc.:

6.875% 5/1/19

1,655,000

1,762,575

9.375% 5/1/20

8,685,000

9,792,338

Expro Finance Luxembourg SCA 8.5% 12/15/16 (d)

2,812,000

2,952,600

Exterran Holdings, Inc. 7.25% 12/1/18

7,855,000

8,277,599

Nonconvertible Bonds - continued

 

Principal Amount

Value

Energy - continued

Exterran Partners LP/EXLP Finance Corp. 6% 4/1/21 (d)

$ 4,315,000

$ 4,228,700

Forbes Energy Services Ltd. 9% 6/15/19

4,680,000

4,609,800

Forest Oil Corp. 7.5% 9/15/20 (d)

4,155,000

3,947,250

Gibson Energy, Inc. 6.75% 7/15/21 (d)

3,425,000

3,416,438

Hornbeck Offshore Services, Inc.:

5% 3/1/21 (d)

2,465,000

2,286,288

5.875% 4/1/20

1,240,000

1,236,900

Kinder Morgan Finance Co. LLC 6% 1/15/18 (d)

2,355,000

2,472,512

LINN Energy LLC/LINN Energy Finance Corp.:

6.25% 11/1/19 (d)

2,500,000

2,381,250

6.5% 5/15/19

4,395,000

4,252,163

7.75% 2/1/21

2,390,000

2,395,975

8.625% 4/15/20

3,055,000

3,207,750

Northern Tier Energy LLC/Northern Tier Finance Corp. 7.125% 11/15/20 (d)

3,165,000

3,196,650

Offshore Group Investment Ltd.:

7.125% 4/1/23 (d)

1,890,000

1,847,475

7.5% 11/1/19

4,635,000

4,820,400

Oil States International, Inc. 6.5% 6/1/19

3,300,000

3,415,500

Pacific Drilling SA 5.375% 6/1/20 (d)

4,750,000

4,476,875

PBF Holding Co. LLC/PBF Finance Corp. 8.25% 2/15/20

2,075,000

2,199,500

Petroleum Geo-Services ASA 7.375% 12/15/18 (d)

3,225,000

3,507,188

Precision Drilling Corp.:

6.5% 12/15/21

290,000

293,625

6.625% 11/15/20

2,505,000

2,592,675

Rosetta Resources, Inc. 5.625% 5/1/21

1,405,000

1,371,631

Samson Investment Co. 10% 2/15/20 (d)

6,935,000

7,264,413

SemGroup Corp. 7.5% 6/15/21 (d)

1,610,000

1,634,150

Targa Resources Partners LP/Targa Resources Partners Finance Corp.:

4.25% 11/15/23 (d)

2,445,000

2,200,500

5.25% 5/1/23 (d)

5,051,000

4,848,960

6.375% 8/1/22

592,000

620,120

6.875% 2/1/21

2,840,000

3,010,400

7.875% 10/15/18

2,660,000

2,832,900

Western Refining, Inc. 6.25% 4/1/21 (d)

2,245,000

2,194,488

 

166,211,734

 

 

Principal Amount

Value

Entertainment/Film - 0.3%

Cinemark U.S.A., Inc. 4.875% 6/1/23 (d)

$ 1,640,000

$ 1,574,400

Regal Entertainment Group 5.75% 6/15/23

2,920,000

2,868,900

 

4,443,300

Environmental - 1.4%

ADS Waste Holdings, Inc. 8.25% 10/1/20 (d)

4,910,000

4,983,650

Clean Harbors, Inc.:

5.125% 6/1/21

910,000

916,825

5.25% 8/1/20

2,590,000

2,628,850

Covanta Holding Corp. 7.25% 12/1/20

5,165,000

5,415,947

Tervita Corp.:

8% 11/15/18 (d)

1,295,000

1,301,475

9.75% 11/1/19 (d)

2,985,000

2,776,050

 

18,022,797

Food & Drug Retail - 4.3%

ESAL GmbH 6.25% 2/5/23 (d)

7,405,000

6,760,765

Hawk Acquisition Sub, Inc. 4.25% 10/15/20 (d)

4,950,000

4,727,250

Rite Aid Corp.:

6.75% 6/15/21 (d)(f)

5,865,000

5,762,363

9.25% 3/15/20

22,810,000

25,147,997

9.5% 6/15/17

14,440,000

14,963,450

 

57,361,825

Food/Beverage/Tobacco - 0.8%

JBS U.S.A. LLC/JBS U.S.A. Finance, Inc. 8.25% 2/1/20 (d)

6,670,000

6,986,825

Post Holdings, Inc. 7.375% 2/15/22

3,495,000

3,739,650

 

10,726,475

Gaming - 2.3%

Ameristar Casinos, Inc. 7.5% 4/15/21

7,590,000

7,931,550

MCE Finance Ltd. 5% 2/15/21 (d)

4,085,000

3,799,050

MGM Mirage, Inc.:

7.625% 1/15/17

930,000

1,013,700

8.625% 2/1/19

2,760,000

3,139,500

10% 11/1/16

3,185,000

3,726,450

11.375% 3/1/18

2,360,000

2,926,400

Seminole Hard Rock Entertainment, Inc. 5.875% 5/15/21 (d)

1,490,000

1,437,850

Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp.:

4.25% 5/30/23 (d)

2,445,000

2,249,400

5.375% 3/15/22

2,995,000

3,054,900

7.75% 8/15/20

1,535,000

1,703,850

 

30,982,650

Healthcare - 3.8%

DaVita, Inc. 5.75% 8/15/22

4,250,000

4,239,375

Nonconvertible Bonds - continued

 

Principal Amount

Value

Healthcare - continued

DJO Finance LLC/DJO Finance Corp.:

7.75% 4/15/18

$ 1,350,000

$ 1,333,125

8.75% 3/15/18

165,000

179,025

9.875% 4/15/18

2,425,000

2,534,125

Emergency Medical Services Corp. 8.125% 6/1/19

5,100,000

5,418,750

Fresenius Medical Care U.S. Finance II, Inc. 5.625% 7/31/19 (d)

2,775,000

2,872,125

HCA, Inc.:

7.875% 2/15/20

1,160,000

1,247,000

8% 10/1/18

2,060,000

2,366,425

HealthSouth Corp.:

5.75% 11/1/24

2,190,000

2,129,775

7.25% 10/1/18

4,008,000

4,308,600

Legend Acquisition Sub, Inc. 10.75% 8/15/20 (d)

2,275,000

1,831,375

MPT Operating Partnership LP/MPT Finance Corp. 6.875% 5/1/21

2,595,000

2,750,700

Sabra Health Care LP/Sabra Capital Corp.:

5.375% 6/1/23

950,000

923,875

8.125% 11/1/18

338,000

362,505

Valeant Pharmaceuticals International:

6.5% 7/15/16 (d)

5,325,000

5,484,750

6.875% 12/1/18 (d)

4,655,000

4,771,375

VPI Escrow Corp. 6.375% 10/15/20 (d)

3,960,000

3,910,500

VPII Escrow Corp. 6.75% 8/15/18 (d)(f)

4,195,000

4,305,119

 

50,968,524

Homebuilders/Real Estate - 3.7%

Brookfield Residential Properties, Inc./Brookfield Residential U.S. Corp. 6.125% 7/1/22 (d)

910,000

891,800

CB Richard Ellis Services, Inc.:

5% 3/15/23

2,365,000

2,234,925

6.625% 10/15/20

2,370,000

2,500,350

D.R. Horton, Inc.:

3.625% 2/15/18

3,605,000

3,541,913

4.375% 9/15/22

1,675,000

1,591,250

4.75% 5/15/17

1,315,000

1,357,738

4.75% 2/15/23

1,200,000

1,155,000

Lennar Corp.:

4.125% 12/1/18 (d)

3,605,000

3,415,738

4.75% 11/15/22 (d)

3,990,000

3,790,500

6.95% 6/1/18

2,515,000

2,716,200

12.25% 6/1/17

1,600,000

2,052,000

Standard Pacific Corp.:

8.375% 5/15/18

14,220,000

16,210,800

 

 

Principal Amount

Value

8.375% 1/15/21

$ 3,840,000

$ 4,377,600

Toll Brothers Finance Corp. 4.375% 4/15/23

4,105,000

3,817,650

 

49,653,464

Insurance - 0.1%

CNO Financial Group, Inc. 6.375% 10/1/20 (d)

825,000

876,563

Leisure - 1.7%

Cedar Fair LP/Magnum Management Corp. 5.25% 3/15/21 (d)

2,230,000

2,112,925

GWR Operating Partnership LLP/Great Wolf Finance Corp. 10.875% 4/1/17

3,920,000

4,233,600

NCL Corp. Ltd. 5% 2/15/18 (d)

5,690,000

5,633,100

Royal Caribbean Cruises Ltd.:

5.25% 11/15/22

6,045,000

5,893,875

7.25% 3/15/18

1,815,000

2,037,338

7.5% 10/15/27

595,000

645,575

yankee 7.25% 6/15/16

2,445,000

2,689,500

 

23,245,913

Metals/Mining - 2.1%

Alpha Natural Resources, Inc.:

6% 6/1/19

2,805,000

2,286,075

6.25% 6/1/21

2,275,000

1,814,313

Boart Longyear Management Pty Ltd. 7% 4/1/21 (d)

4,765,000

4,491,013

CONSOL Energy, Inc. 8% 4/1/17

2,000,000

2,105,000

FMG Resources (August 2006) Pty Ltd.:

6.375% 2/1/16 (d)

3,145,000

3,141,069

7% 11/1/15 (d)

10,415,000

10,519,150

New Gold, Inc. 6.25% 11/15/22 (d)

1,140,000

1,085,850

Walter Energy, Inc. 8.5% 4/15/21 (d)

3,535,000

2,810,325

 

28,252,795

Paper - 0.4%

Sappi Papier Holding GmbH 7.75% 7/15/17 (d)

4,920,000

5,190,600

Publishing/Printing - 0.5%

McGraw-Hill Global Education Holdings LLC/McGraw-Hill Global Education Finance 9.75% 4/1/21 (d)

6,150,000

6,288,375

Restaurants - 0.4%

NPC International, Inc./NPC Operating Co. A, Inc./NPC Operating Co. B, Inc. 10.5% 1/15/20

4,035,000

4,625,119

Services - 2.8%

APX Group, Inc.:

6.375% 12/1/19 (d)

6,905,000

6,559,750

8.75% 12/1/20 (d)

6,465,000

6,157,913

Nonconvertible Bonds - continued

 

Principal Amount

Value

Services - continued

ARAMARK Corp. 5.75% 3/15/20 (d)

$ 1,700,000

$ 1,738,250

Audatex North America, Inc. 6% 6/15/21 (d)

3,340,000

3,348,350

FTI Consulting, Inc.:

6% 11/15/22 (d)

1,860,000

1,877,298

6.75% 10/1/20

3,100,000

3,255,000

Hertz Corp.:

4.25% 4/1/18 (d)

3,145,000

3,042,788

6.75% 4/15/19

2,390,000

2,527,425

7.5% 10/15/18

4,105,000

4,412,875

TransUnion Holding Co., Inc. 8.125% 6/15/18 pay-in-kind (d)

4,340,000

4,594,975

 

37,514,624

Shipping - 0.4%

Navios Maritime Holdings, Inc. 8.875% 11/1/17

4,410,000

4,575,375

Navios South American Logisitcs, Inc./Navios Logistics Finance U.S., Inc. 9.25% 4/15/19 (d)

420,000

450,450

 

5,025,825

Steel - 2.0%

JMC Steel Group, Inc. 8.25% 3/15/18 (d)

3,970,000

3,880,675

Severstal Columbus LLC 10.25% 2/15/18

8,610,000

9,105,075

Steel Dynamics, Inc.:

5.25% 4/15/23 (d)

3,945,000

3,885,825

6.125% 8/15/19 (d)

5,905,000

6,215,013

7.625% 3/15/20

3,930,000

4,185,450

 

27,272,038

Super Retail - 1.2%

Claire's Stores, Inc.:

7.75% 6/1/20 (d)

620,000

599,850

9% 3/15/19 (d)

3,535,000

3,879,663

CST Brands, Inc. 5% 5/1/23 (d)

410,000

398,725

J. Crew Group, Inc. 8.125% 3/1/19

7,715,000

8,100,750

Netflix, Inc. 5.375% 2/1/21 (d)

2,410,000

2,385,900

The Bon-Ton Department Stores, Inc. 8% 6/15/21 (d)

935,000

944,350

 

16,309,238

Technology - 7.8%

Brocade Communications Systems, Inc. 4.625% 1/15/23 (d)

3,400,000

3,187,500

Ceridian Corp. 11.25% 11/15/15

4,475,000

4,536,531

Compiler Finance Sub, Inc. 7% 5/1/21 (d)

2,210,000

2,154,750

First Data Corp.:

6.75% 11/1/20 (d)

3,280,000

3,337,400

7.375% 6/15/19 (d)

3,400,000

3,493,500

8.25% 1/15/21 (d)

4,740,000

4,834,800

 

 

Principal Amount

Value

12.625% 1/15/21

$ 6,010,000

$ 6,355,575

Flextronics International Ltd. 4.625% 2/15/20 (d)

3,020,000

2,929,400

IAC/InterActiveCorp 4.75% 12/15/22 (d)

4,090,000

3,865,050

Lucent Technologies, Inc.:

6.45% 3/15/29

2,650,000

2,007,375

6.5% 1/15/28

3,265,000

2,448,750

NCR Corp. 4.625% 2/15/21

5,545,000

5,295,475

Nuance Communications, Inc. 5.375% 8/15/20 (d)

11,478,000

11,334,525

NXP BV/NXP Funding LLC:

3.75% 6/1/18 (d)

5,850,000

5,733,000

5.75% 2/15/21 (d)

3,255,000

3,295,688

Sanmina-SCI Corp. 7% 5/15/19 (d)

9,305,000

9,491,100

Seagate HDD Cayman 4.75% 6/1/23 (d)

5,225,000

4,872,313

Softbank Corp. 4.5% 4/15/20 (d)

7,815,000

7,443,788

Spansion LLC 7.875% 11/15/17

5,850,000

5,908,500

VeriSign, Inc. 4.625% 5/1/23 (d)

3,295,000

3,196,150

Viasystems, Inc. 7.875% 5/1/19 (d)

2,810,000

2,964,550

WideOpenWest Finance LLC/WideOpenWest Capital Corp.:

10.25% 7/15/19

2,995,000

3,182,188

13.375% 10/15/19

1,605,000

1,773,525

 

103,641,433

Telecommunications - 9.1%

Altice Financing SA 7.875% 12/15/19 (d)

3,180,000

3,323,100

Altice Finco SA 9.875% 12/15/20 (d)

2,465,000

2,637,550

Crown Castle International Corp. 5.25% 1/15/23

5,520,000

5,299,200

Digicel Group Ltd.:

6% 4/15/21 (d)

8,440,000

8,060,200

7% 2/15/20 (d)

295,000

293,525

8.25% 9/1/17 (d)

5,395,000

5,610,800

8.25% 9/30/20 (d)

7,340,000

7,596,900

DigitalGlobe, Inc. 5.25% 2/1/21 (d)

6,335,000

6,065,763

Intelsat Jackson Holdings SA:

5.5% 8/1/23 (d)

2,655,000

2,489,063

6.625% 12/15/22 (d)

3,230,000

3,125,025

6.625% 12/15/22 (d)

4,440,000

4,306,800

7.25% 4/1/19

1,835,000

1,908,400

7.25% 10/15/20

2,900,000

3,045,000

7.5% 4/1/21

3,050,000

3,175,813

Intelsat Luxembourg SA:

7.75% 6/1/21 (d)

8,760,000

8,847,600

8.125% 6/1/23 (d)

3,140,000

3,242,050

NeuStar, Inc. 4.5% 1/15/23 (d)

2,980,000

2,816,100

Nonconvertible Bonds - continued

 

Principal Amount

Value

Telecommunications - continued

NII Capital Corp.:

7.625% 4/1/21

$ 3,115,000

$ 2,421,913

10% 8/15/16

1,730,000

1,678,100

SBA Communications Corp. 5.625% 10/1/19 (d)

535,000

529,650

Sprint Capital Corp. 6.875% 11/15/28

1,490,000

1,430,400

Sprint Nextel Corp.:

6% 12/1/16

10,710,000

11,319,399

6% 11/15/22

1,700,000

1,661,750

7% 8/15/20

8,730,000

9,166,500

9% 11/15/18 (d)

1,505,000

1,760,850

Telesat Canada/Telesat LLC 6% 5/15/17 (d)

4,310,000

4,396,200

Wind Acquisition Finance SA 11.75% 7/15/17 (d)

3,170,000

3,296,800

Wind Acquisition Holdings Finance SA 12.25% 7/15/17 pay-in-kind (d)(g)

4,710,381

4,745,709

Zayo Group LLC/Zayo Capital, Inc. 8.125% 1/1/20

5,975,000

6,467,938

 

120,718,098

Textiles & Apparel - 0.1%

Hanesbrands, Inc. 6.375% 12/15/20

1,535,000

1,642,450

TOTAL NONCONVERTIBLE BONDS

(Cost $1,226,326,192)


1,241,984,640

Commercial Mortgage Securities - 0.0%

 

LB Multi-family Mortgage Trust Series 1991-4 Class A1, 7.125% 4/25/21 (g)
(Cost $0)

18,733


13,113

Common Stocks - 0.1%

Shares

 

Telecommunications - 0.1%

CUI Acquisition Corp. Class E (a)(d)

1

873,375

Textiles & Apparel - 0.0%

Arena Brands Holding Corp. Class B (a)(h)

48,889

391,112

TOTAL COMMON STOCKS

(Cost $3,248,508)


1,264,487

Floating Rate Loans - 2.8%

 

Principal Amount

Value

Air Transportation - 1.0%

Delta Air Lines, Inc. Tranche B 1LN, term loan 4% 10/18/18 (g)

$ 4,982,513

$ 4,971,850

U.S. Airways, Inc.:

Tranche B 1LN, term loan 4.25% 5/21/19 (g)

4,760,000

4,688,600

Tranche B 2LN, term loan 3.5% 11/21/16 (g)

3,175,000

3,175,000

 

12,835,450

Energy - 0.4%

Chesapeake Energy Corp. Tranche B, term loan 5.75% 12/2/17 (g)

4,710,000

4,768,875

Insurance - 0.6%

Asurion LLC Tranche B 1LN, term loan 4.5% 5/24/19 (g)

1,604

1,584

Lonestar Intermediate Super Holdings LLC term loan 11% 9/2/19 (g)

2,760,000

2,870,400

Stoneriver Group LP:

Tranche 2LN, term loan 8.5% 5/29/20 (g)

1,980,000

1,965,150

Tranche B 1LN, term loan 4.5% 11/29/19 (g)

3,965,000

3,910,680

 

8,747,814

Leisure - 0.3%

Equinox Holdings, Inc.:

Tranche 2LN, term loan 9.75% 5/16/20 (g)

1,600,000

1,616,000

Tranche B 1LN, term loan 4.4994% 2/1/20 (g)

2,977,538

2,977,538

 

4,593,538

Technology - 0.5%

First Data Corp. term loan 4.193% 3/24/18 (g)

6,685,000

6,509,519

TOTAL FLOATING RATE LOANS

(Cost $37,021,727)


37,455,196

Preferred Securities - 0.1%

 

 

 

 

Entertainment/Film - 0.1%

NBCUniversal Enterprise, Inc. 5.25% (d)(e)
(Cost $2,242,287)

2,240,000


2,243,835

Money Market Funds - 1.8%

Shares

Value

Fidelity Cash Central Fund, 0.13% (b)
(Cost $23,906,944)

23,906,944

$ 23,906,944

TOTAL INVESTMENT PORTFOLIO - 98.0%

(Cost $1,292,745,658)

1,306,868,215

NET OTHER ASSETS (LIABILITIES) - 2.0%

26,060,777

NET ASSETS - 100%

$ 1,332,928,992

Legend

(a) Non-income producing

(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.

(c) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end.

(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $563,138,114 or 42.2% of net assets.

(e) Security is perpetual in nature with no stated maturity date.

(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

(g) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end.

(h) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $391,112 or 0.0% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost

Arena Brands Holding Corp. Class B

6/18/97

$ 1,974,627

Affiliated Central Funds

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

Fund

Income earned

Fidelity Cash Central Fund

$ 62,554

Other Information

The following is a summary of the inputs used, as of June 30, 2013, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 391,112

$ -

$ -

$ 391,112

Telecommunication Services

873,375

-

-

873,375

Corporate Bonds

1,241,984,640

-

1,241,984,640

-

Commercial Mortgage Securities

13,113

-

-

13,113

Floating Rate Loans

37,455,196

-

37,455,196

-

Preferred Securities

2,243,835

-

2,243,835

-

Money Market Funds

23,906,944

23,906,944

-

-

Total Investments in Securities:

$ 1,306,868,215

$ 23,906,944

$ 1,281,683,671

$ 1,277,600

Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited)

United States of America

81.2%

Luxembourg

4.3%

Canada

3.4%

Bermuda

2.6%

Cayman Islands

1.7%

Australia

1.4%

Others (Individually Less Than 1%)

5.4%

 

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, 2013 (Unaudited)

 

 

 

Assets

Investment in securities, at value - See accompanying schedule:

Unaffiliated issuers (cost $1,268,838,714)

$ 1,282,961,271

 

Fidelity Central Funds (cost $23,906,944)

23,906,944

 

Total Investments (cost $1,292,745,658)

 

$ 1,306,868,215

Cash

 

487,925

Receivable for investments sold

28,483,465

Receivable for fund shares sold

330,189

Interest receivable

21,643,570

Distributions receivable from Fidelity Central Funds

3,345

Total assets

1,357,816,709

 

 

 

Liabilities

Payable for investments purchased
Regular delivery

$ 11,227,585

Delayed delivery

10,645,000

Payable for fund shares redeemed

2,100,940

Accrued management fee

655,632

Distribution and service plan fees payable

54,800

Other affiliated payables

152,451

Other payables and accrued expenses

51,309

Total liabilities

24,887,717

 

 

 

Net Assets

$ 1,332,928,992

Net Assets consist of:

 

Paid in capital

$ 1,341,651,756

Undistributed net investment income

46,670,745

Accumulated undistributed net realized gain (loss) on investments

(69,516,066)

Net unrealized appreciation (depreciation) on investments

14,122,557

Net Assets

$ 1,332,928,992

Statement of Assets and Liabilities - continued

 

June 30, 2013 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($565,847,371 ÷ 96,955,327 shares)

$ 5.84

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($69,989,395 ÷ 12,064,472 shares)

$ 5.80

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($217,316,699 ÷ 38,283,901 shares)

$ 5.68

 

 

 

Initial Class R:
Net Asset Value, offering price and redemption price per share ($28,822,671 ÷ 4,957,676 shares)

$ 5.81

 

 

 

Service Class R:
Net Asset Value, offering price and redemption price per share ($31,045,424 ÷ 5,380,153 shares)

$ 5.77

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($4,633,060 ÷ 816,699 shares)

$ 5.67

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($415,274,372 ÷ 71,410,458 shares)

$ 5.82

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

Semiannual Report

Statement of Operations

Six months ended June 30, 2013 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 213,937

Interest

 

46,779,296

Income from Fidelity Central Funds

 

62,554

Total income

 

47,055,787

 

 

 

Expenses

Management fee

$ 4,272,246

Transfer agent fees

621,602

Distribution and service plan fees

416,113

Accounting fees and expenses

255,070

Custodian fees and expenses

14,286

Independent trustees' compensation

4,773

Audit

40,169

Legal

6,085

Interest

1,289

Miscellaneous

8,240

Total expenses before reductions

5,639,873

Expense reductions

(795)

5,639,078

Net investment income (loss)

41,416,709

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

 

36,435,465

Change in net unrealized appreciation (depreciation) on investment securities

(66,663,671)

Net gain (loss)

(30,228,206)

Net increase (decrease) in net assets resulting from operations

$ 11,188,503

Statement of Changes in Net Assets

 

Six months ended
June 30, 2013
(Unaudited)

Year ended
December 31,
2012

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 41,416,709

$ 85,504,440

Net realized gain (loss)

36,435,465

13,064,180

Change in net unrealized appreciation (depreciation)

(66,663,671)

80,611,074

Net increase (decrease) in net assets resulting from operations

11,188,503

179,179,694

Distributions to shareholders from net investment income

(1,565,682)

(84,934,228)

Share transactions - net increase (decrease)

(189,972,586)

164,623,275

Redemption fees

22,671

64,369

Total increase (decrease) in net assets

(180,327,094)

258,933,110

 

 

 

Net Assets

Beginning of period

1,513,256,086

1,254,322,976

End of period (including undistributed net investment income of $46,670,745 and undistributed net investment income of $6,819,718, respectively)

$ 1,332,928,992

$ 1,513,256,086

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.81

$ 5.39

$ 5.57

$ 5.29

$ 3.96

$ 5.98

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .164

.361

.391

.439

.438

.475

Net realized and unrealized gain (loss)

  (.128)

.405

(.171)

.288

1.298

(1.990)

Total from investment operations

  .036

.766

.220

.727

1.736

(1.515)

Distributions from net investment income

  (.006)

(.346)

(.400)

(.448)

(.406)

(.506)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.84

$ 5.81

$ 5.39

$ 5.57

$ 5.29

$ 3.96

Total Return B, C, D

  .62%

14.23%

4.03%

13.82%

43.96%

(24.98)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .69% A

.68%

.69%

.69%

.70%

.71%

Expenses net of fee waivers, if any

  .69% A

.68%

.69%

.69%

.70%

.71%

Expenses net of all reductions

  .69% A

.68%

.69%

.69%

.70%

.70%

Net investment income (loss)

  5.57% A

6.22%

6.85%

7.84%

9.02%

8.48%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 565,847

$ 606,506

$ 561,514

$ 594,688

$ 608,802

$ 451,824

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

Financial Highlights - Service Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.78

$ 5.36

$ 5.54

$ 5.26

$ 3.95

$ 5.95

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .160

.353

.384

.431

.429

.469

Net realized and unrealized gain (loss)

  (.134)

.407

(.171)

.290

1.281

(1.971)

Total from investment operations

  .026

.760

.213

.721

1.710

(1.502)

Distributions from net investment income

  (.006)

(.340)

(.393)

(.442)

(.400)

(.499)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.80

$ 5.78

$ 5.36

$ 5.54

$ 5.26

$ 3.95

Total Return B, C, D

  .45%

14.20%

3.93%

13.79%

43.41%

(24.87)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .78% A

.78%

.79%

.79%

.80%

.80%

Expenses net of fee waivers, if any

  .78% A

.78%

.79%

.78%

.80%

.80%

Expenses net of all reductions

  .78% A

.78%

.79%

.78%

.80%

.80%

Net investment income (loss)

  5.47% A

6.13%

6.75%

7.74%

8.92%

8.39%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 69,989

$ 77,397

$ 91,573

$ 98,988

$ 103,511

$ 95,461

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.66

$ 5.26

$ 5.45

$ 5.18

$ 3.89

$ 5.88

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .153

.338

.368

.417

.422

.450

Net realized and unrealized gain (loss)

  (.127)

.396

(.170)

.287

1.264

(1.949)

Total from investment operations

  .026

.734

.198

.704

1.686

(1.499)

Distributions from net investment income

  (.006)

(.334)

(.388)

(.435)

(.396)

(.492)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.68

$ 5.66

$ 5.26

$ 5.45

$ 5.18

$ 3.89

Total Return B, C, D

  .46%

13.97%

3.72%

13.67%

43.46%

(25.14)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .93% A

.93%

.94%

.94%

.95%

.96%

Expenses net of fee waivers, if any

  .93% A

.93%

.94%

.94%

.95%

.96%

Expenses net of all reductions

  .93% A

.93%

.94%

.94%

.95%

.96%

Net investment income (loss)

  5.33% A

5.98%

6.60%

7.59%

8.77%

8.23%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 217,317

$ 281,065

$ 220,333

$ 182,465

$ 181,377

$ 87,077

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

Financial Highlights - Initial Class R

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.79

$ 5.37

$ 5.55

$ 5.27

$ 3.95

$ 5.96

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .164

.360

.391

.439

.440

.471

Net realized and unrealized gain (loss)

  (.138)

.407

(.171)

.288

1.286

(1.975)

Total from investment operations

  .026

.767

.220

.727

1.726

(1.504)

Distributions from net investment income

  (.006)

(.347)

(.400)

(.448)

(.406)

(.507)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.81

$ 5.79

$ 5.37

$ 5.55

$ 5.27

$ 3.95

Total Return B, C, D

  .45%

14.30%

4.05%

13.88%

43.82%

(24.88)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .68% A

.68%

.68%

.69%

.70%

.70%

Expenses net of fee waivers, if any

  .68% A

.68%

.68%

.68%

.70%

.70%

Expenses net of all reductions

  .68% A

.68%

.68%

.68%

.69%

.70%

Net investment income (loss)

  5.58% A

6.23%

6.85%

7.84%

9.02%

8.49%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 28,823

$ 35,605

$ 31,627

$ 34,946

$ 34,080

$ 19,801

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Service Class R

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.75

$ 5.34

$ 5.52

$ 5.25

$ 3.94

$ 5.93

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .160

.352

.383

.433

.431

.467

Net realized and unrealized gain (loss)

  (.134)

.400

(.167)

.280

1.280

(1.959)

Total from investment operations

  .026

.752

.216

.713

1.711

(1.492)

Distributions from net investment income

  (.006)

(.342)

(.396)

(.444)

(.401)

(.499)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.77

$ 5.75

$ 5.34

$ 5.52

$ 5.25

$ 3.94

Total Return B, C, D

  .45%

14.10%

3.99%

13.66%

43.56%

(24.79)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .78% A

.78%

.78%

.79%

.80%

.80%

Expenses net of fee waivers, if any

  .78% A

.78%

.78%

.78%

.80%

.80%

Expenses net of all reductions

  .78% A

.78%

.78%

.78%

.80%

.80%

Net investment income (loss)

  5.48% A

6.13%

6.75%

7.74%

8.92%

8.39%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 31,045

$ 69,893

$ 63,557

$ 68,806

$ 47,873

$ 26,572

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

Financial Highlights - Service Class 2R

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.65

$ 5.26

$ 5.45

$ 5.17

$ 3.89

$ 5.87

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .153

.340

.369

.415

.416

.451

Net realized and unrealized gain (loss)

  (.127)

.390

(.175)

.293

1.257

(1.940)

Total from investment operations

  .026

.730

.194

.708

1.673

(1.489)

Distributions from net investment income

  (.006)

(.340)

(.384)

(.429)

(.393)

(.492)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.67

$ 5.65

$ 5.26

$ 5.45

$ 5.17

$ 3.89

Total Return B, C, D

  .46%

13.90%

3.64%

13.79%

43.13%

(24.99)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .93% A

.93%

.93%

.94%

.95%

.95%

Expenses net of fee waivers, if any

  .93% A

.93%

.93%

.93%

.95%

.95%

Expenses net of all reductions

  .93% A

.93%

.93%

.93%

.94%

.95%

Net investment income (loss)

  5.33% A

5.98%

6.60%

7.59%

8.77%

8.24%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 4,633

$ 4,019

$ 1,350

$ 1,543

$ 2,016

$ 1,487

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.79

$ 5.37

$ 5.56

$ 5.27

$ 3.96

$ 5.96

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .163

.358

.388

.437

.441

.473

Net realized and unrealized gain (loss)

  (.127)

.407

(.180)

.298

1.274

(1.971)

Total from investment operations

  .036

.765

.208

.735

1.715

(1.498)

Distributions from net investment income

  (.006)

(.345)

(.398)

(.446)

(.405)

(.503)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.82

$ 5.79

$ 5.37

$ 5.56

$ 5.27

$ 3.96

Total Return B, C, D

  .62%

14.26%

3.82%

14.04%

43.43%

(24.76)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .72% A

.71%

.72%

.73%

.73%

.74%

Expenses net of fee waivers, if any

  .72% A

.71%

.72%

.72%

.73%

.74%

Expenses net of all reductions

  .72% A

.71%

.72%

.72%

.73%

.74%

Net investment income (loss)

  5.54% A

6.20%

6.82%

7.81%

8.99%

8.45%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 415,274

$ 438,772

$ 284,370

$ 244,738

$ 182,806

$ 90,312

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2013 (Unaudited)

1. Organization.

VIP High Income Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class.

2. Investments in Fidelity Central Funds.

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

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

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:

Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Valuation techniques used to value the Fund's investments by major category are as follows:

Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For corporate bonds, floating rate loans and preferred securities, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices. For commercial mortgage securities, pricing vendors utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances. The Fund invests a significant portion of its assets in below investment grade securities. The value of these securities can be more volatile due to changes in the credit quality of the issuer and is sensitive to changes in economic, market and regulatory conditions.

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For restricted securities and private placements

Semiannual Report

3. Significant Accounting Policies - continued

Investment Valuation - continued

where observable inputs are limited, assumptions about market activity and risk are used and these securities are generally categorized as Level 3 in the hierarchy.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2013, is included at the end of the Fund's Schedule of Investments.

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

Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction.

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

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

Book-tax differences are primarily due to market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.

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

Gross unrealized appreciation

$ 41,330,620

Gross unrealized depreciation

(25,162,548)

Net unrealized appreciation (depreciation) on securities and other investments

$ 16,168,072

 

 

Tax cost

$ 1,290,700,143

Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.

Fiscal year of expiration

 

2016

$ (26,397,633)

2017

(79,447,269)

Total capital loss carryforward

$ (105,844,902)

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, and Service Class 2R shares held by investors less than 60 days may be subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.

Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

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

Loans and Other Direct Debt Instruments. The Fund invests in direct debt instruments which are interests in amounts owed to lenders by corporate or other borrowers. These instruments may be in the form of loans, trade claims or other receivables and may include standby financing commitments such as revolving credit facilities that obligate the Fund to supply additional cash to the borrower on demand. Loans may be acquired through assignment or participation, or may be made directly to a borrower. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these loans. The Fund did not have any unfunded loan commitments, which are contractual obligations for future funding, at period end.

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $630,830,838 and $682,909,942, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the Fund's average net assets and an annualized group fee rate that averaged .11% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% of the Fund's average net assets.

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

For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:

Service Class

$ 37,314

Service Class 2

342,512

Service Class R

31,142

Service Class 2R

5,145

 

$ 416,113

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .10% of average net assets. In addition, FIIOC receives an asset-based fee of .0035% of average net assets for

Semiannual Report

5. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:

Initial Class

$ 223,646

Service Class

26,841

Service Class 2

98,246

Initial Class R

11,844

Service Class R

21,842

Service Class 2R

1,443

Investor Class

237,740

 

$ 621,602

Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The fee is based on the level of average net assets for each month.

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

Borrower or Lender

Average Loan
Balance

Weighted Average
Interest Rate

Interest Expense

Borrower

$ 24,831,167

.31%

$ 1,289

6. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,966 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

7. Expense Reductions.

Through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $795.

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30, 2013

Year ended
December 31, 2012

From net investment income

 

 

Initial Class

$ 619,024

$ 34,341,731

Service Class

78,876

4,352,958

Service Class 2

293,027

15,615,687

Initial Class R

36,356

2,033,316

Service Class R

72,616

3,948,919

Service Class 2R

3,963

215,852

Investor Class

461,820

24,425,765

Total

$ 1,565,682

$ 84,934,228

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

9. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30, 2013

Year ended
December 31, 2012

Six months ended
June 30, 2013

Year ended
December 31, 2012

Initial Class

 

 

 

 

Shares sold

5,300,670

13,853,360

$ 31,437,958

$ 80,405,792

Reinvestment of distributions

105,816

5,923,006

619,024

34,341,731

Shares redeemed

(12,868,294)

(19,521,567)

(76,290,025)

(112,985,217)

Net increase (decrease)

(7,461,808)

254,799

$ (44,233,043)

$ 1,762,306

Service Class

 

 

 

 

Shares sold

515,082

1,525,261

$ 3,053,476

$ 8,621,959

Reinvestment of distributions

13,553

754,748

78,876

4,352,958

Shares redeemed

(1,862,449)

(5,957,709)

(10,965,320)

(33,943,822)

Net increase (decrease)

(1,333,814)

(3,677,700)

$ (7,832,968)

$ (20,968,905)

Service Class 2

 

 

 

 

Shares sold

5,937,920

25,700,556

$ 34,369,051

$ 145,593,661

Reinvestment of distributions

51,499

2,764,623

293,027

15,615,687

Shares redeemed

(17,394,005)

(20,664,331)

(100,063,070)

(115,959,882)

Net increase (decrease)

(11,404,586)

7,800,848

$ (65,400,992)

$ 45,249,466

Initial Class R

 

 

 

 

Shares sold

424,246

2,462,639

$ 2,519,244

$ 14,321,536

Reinvestment of distributions

6,236

351,902

36,356

2,033,316

Shares redeemed

(1,626,282)

(2,548,693)

(9,614,463)

(14,732,861)

Net increase (decrease)

(1,195,800)

265,848

$ (7,058,863)

$ 1,621,991

Service Class R

 

 

 

 

Shares sold

332,984

8,023,964

$ 1,970,696

$ 46,504,431

Reinvestment of distributions

12,563

688,191

72,616

3,948,919

Shares redeemed

(7,129,835)

(8,456,038)

(41,941,445)

(47,748,690)

Net increase (decrease)

(6,784,288)

256,117

$ (39,898,133)

$ 2,704,660

Service Class 2R

 

 

 

 

Shares sold

669,951

580,649

$ 3,933,332

$ 3,315,329

Reinvestment of distributions

696

38,276

3,963

215,852

Shares redeemed

(564,974)

(164,440)

(3,254,621)

(925,854)

Net increase (decrease)

105,673

454,485

$ 682,674

$ 2,605,327

Investor Class

 

 

 

 

Shares sold

7,988,498

28,186,563

$ 47,277,940

$ 162,161,430

Reinvestment of distributions

79,214

4,226,954

461,820

24,425,765

Shares redeemed

(12,456,054)

(9,530,114)

(73,971,021)

(54,938,765)

Net increase (decrease)

(4,388,342)

22,883,403

$ (26,231,261)

$ 131,648,430

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 39% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of 15% of the total outstanding shares of the Fund.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Hong Kong) Limited

Fidelity Management & Research (Japan) Inc.

General Distributor

Fidelity Distributors Corporation
Smithfield, RI

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

The Bank of New York Mellon
New York, NY 

VIPHI-SANN-0813
1.705694.115

Fidelity® Variable Insurance Products:

High Income Portfolio - Class R

Semiannual Report

June 30, 2013

(Fidelity Cover Art)

Contents

Shareholder Expense Example

(Click Here)

An example of shareholder expenses.

Investment Changes

(Click Here)

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

Investments

(Click Here)

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

Financial Statements

(Click Here)

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

Notes

(Click Here)

Notes to the financial statements.

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2013 FMR LLC. All rights reserved.

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

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

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, 2013 to June 30, 2013).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

Annualized
Expense Ratio B

Beginning
Account Value
January 1, 2013

Ending
Account Value
June 30, 2013

Expenses Paid
During Period*
January 1, 2013
to June 30, 2013

Initial Class

.69%

 

 

 

Actual

 

$ 1,000.00

$ 1,006.20

$ 3.43

HypotheticalA

 

$ 1,000.00

$ 1,021.37

$ 3.46

Service Class

.78%

 

 

 

Actual

 

$ 1,000.00

$ 1,004.50

$ 3.88

HypotheticalA

 

$ 1,000.00

$ 1,020.93

$ 3.91

Service Class 2

.93%

 

 

 

Actual

 

$ 1,000.00

$ 1,004.60

$ 4.62

HypotheticalA

 

$ 1,000.00

$ 1,020.18

$ 4.66

Initial Class R

.68%

 

 

 

Actual

 

$ 1,000.00

$ 1,004.50

$ 3.38

HypotheticalA

 

$ 1,000.00

$ 1,021.42

$ 3.41

Service Class R

.78%

 

 

 

Actual

 

$ 1,000.00

$ 1,004.50

$ 3.88

HypotheticalA

 

$ 1,000.00

$ 1,020.93

$ 3.91

Service Class 2R

.93%

 

 

 

Actual

 

$ 1,000.00

$ 1,004.60

$ 4.62

HypotheticalA

 

$ 1,000.00

$ 1,020.18

$ 4.66

Investor Class

.72%

 

 

 

Actual

 

$ 1,000.00

$ 1,006.20

$ 3.58

HypotheticalA

 

$ 1,000.00

$ 1,021.22

$ 3.61

A 5% return per year before expenses

B Annualized expense ratio reflects expenses net of applicable fee waivers.

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Top Five Holdings as of June 30, 2013

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

Rite Aid Corp.

3.4

1.8

CCO Holdings LLC/CCO Holdings Capital Corp.

2.4

2.9

International Lease Finance Corp.

2.4

2.9

First Data Corp.

2.0

0.5

Mirant Americas Generation LLC

1.8

1.7

 

12.0

Top Five Market Sectors as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Energy

12.9

9.6

Telecommunications

9.2

8.4

Technology

8.3

3.4

Electric Utilities

5.6

6.9

Diversified Financial Services

5.3

6.7

Quality Diversification (% of fund's net assets)

As of June 30, 2013

As of December 31, 2012

vvv1266428

BBB 1.7%

 

vvv1266428

BBB 4.2%

 

vvv1266492

BB 32.1%

 

vvv1266492

BB 26.7%

 

vvv1266495

B 46.4%

 

vvv1266495

B 47.0%

 

vvv1266431

CCC,CC,C 15.7%

 

vvv1266431

CCC,CC,C 9.8%

 

vvv1266500

Not Rated 0.2%

 

vvv1266500

Not Rated 1.8%

 

vvv1266503

Equities 0.1%

 

vvv1266503

Equities 0.7%

 

vvv1266434

Short-Term
Investments and
Net Other Assets 3.8%

 

vvv1266434

Short-Term
Investments and
Net Other Assets 9.8%

 

vvv1266548

We have used ratings from Moody's Investors Service, Inc. Where Moody's® ratings are not available, we have used S&P® ratings. All ratings are as of the date indicated and do not reflect subsequent changes.

Asset Allocation (% of fund's net assets)

As of June 30, 2013*

As of December 31, 2012**

vvv1266428

Nonconvertible
Bonds 93.2%

 

vvv1266428

Nonconvertible
Bonds 82.1%

 

vvv1266512

Convertible Bonds, Preferred Stocks 0.0%

 

vvv1266514

Convertible Bonds, Preferred Stocks 0.6%

 

vvv1266516

Common Stocks 0.1%

 

vvv1266516

Common Stocks 0.1%

 

vvv1266519

Floating Rate Loans 2.8%

 

vvv1266519

Floating Rate Loans 7.4%

 

vvv1266522

Other Investments 0.1%

 

vvv1266512

Other Investments 0.0%

 

vvv1266434

Short-Term
Investments and
Net Other Assets
(Liabilities) 3.8%

 

vvv1266434

Short-Term
Investments and
Net Other Assets
(Liabilities) 9.8%

 

* Foreign investments

18.8%

 

** Foreign investments

11.8%

 

vvv1266562

Semiannual Report

Investments June 30, 2013 (Unaudited)

Showing Percentage of Net Assets

Nonconvertible Bonds - 93.2%

 

Principal Amount

Value

Aerospace - 1.3%

American Airlines, Inc. pass-thru certificates Series 2013-1B Class B, 5.625% 1/15/21 (d)

$ 495,000

$ 486,338

GenCorp, Inc. 7.125% 3/15/21 (d)

895,000

926,325

Huntington Ingalls Industries, Inc. 7.125% 3/15/21

3,440,000

3,698,000

TransDigm, Inc.:

5.5% 10/15/20 (d)

5,985,000

5,655,825

7.5% 7/15/21 (d)

4,025,000

4,115,563

Triumph Group, Inc. 4.875% 4/1/21 (d)

2,210,000

2,198,950

 

17,081,001

Air Transportation - 3.4%

Air Canada:

5.375% 11/15/22 (d)

530,000

528,675

6.625% 5/15/18 (d)

3,090,000

3,104,523

12% 2/1/16 (d)

3,970,000

4,342,188

Continental Airlines, Inc.:

pass-thru trust certificates 9.798% 4/1/21

2,994,208

3,458,311

5.5% 4/29/22

3,015,000

3,112,988

6.125% 4/29/18 (d)

520,000

525,200

6.75% 9/15/15 (d)

4,090,000

4,171,800

9.25% 5/10/17

717,906

800,465

Delta Air Lines, Inc. pass-thru trust certificates:

6.375% 1/2/16

1,985,000

2,064,400

6.75% 11/23/15

1,985,000

2,049,513

8.021% 8/10/22

1,605,569

1,754,084

8.954% 8/10/14

1,346,496

1,359,961

Hawaiian Airlines pass-thru certificates:

Series 2013-1 Class A, 3.9% 1/15/26

950,000

895,375

Series 2013-1 Class B, 4.95% 1/15/22

2,179,000

2,053,708

Northwest Airlines, Inc. pass-thru trust certificates 8.028% 11/1/17

578,425

610,238

U.S. Airways Group, Inc. 6.125% 6/1/18

3,130,000

2,950,025

U.S. Airways pass-thru certificates Series 2012-2C, 5.45% 6/3/18

3,565,000

3,386,750

U.S. Airways pass-thru Trust Series 2013-1:

Class A, 3.95% 5/15/27

1,720,000

1,655,500

Class B, 5.375% 5/15/23

710,000

697,575

United Air Lines, Inc. pass-thru trust certificates:

Class B, 7.336% 7/2/19

2,472,046

2,546,208

9.75% 1/15/17

1,738,974

1,986,778

 

 

Principal Amount

Value

12% 1/15/16 (d)

$ 516,297

$ 578,252

United Continental Holdings, Inc. 6.375% 6/1/18

300,000

294,750

 

44,927,267

Automotive - 3.0%

American Axle & Manufacturing, Inc. 6.25% 3/15/21

6,980,000

7,067,250

Chrysler Group LLC/CG Co-Issuer, Inc.:

8% 6/15/19

5,015,000

5,472,619

8.25% 6/15/21

2,495,000

2,756,975

Dana Holding Corp.:

6.5% 2/15/19

1,505,000

1,587,775

6.75% 2/15/21

1,710,000

1,812,600

General Motors Financial Co., Inc.:

2.75% 5/15/16 (d)

1,655,000

1,628,106

3.25% 5/15/18 (d)

5,795,000

5,635,638

4.25% 5/15/23 (d)

785,000

731,031

4.75% 8/15/17 (d)

3,370,000

3,454,250

6.75% 6/1/18

3,685,000

4,007,438

Jaguar Land Rover PLC 5.625% 2/1/23 (d)

2,615,000

2,530,013

Tenneco, Inc. 6.875% 12/15/20

1,930,000

2,065,100

TRW Automotive, Inc. 4.5% 3/1/21 (d)

1,500,000

1,496,250

 

40,245,045

Banks & Thrifts - 0.2%

Synovus Financial Corp.:

5.125% 6/15/17

760,000

746,700

7.875% 2/15/19

1,568,000

1,748,320

 

2,495,020

Broadcasting - 0.6%

AMC Networks, Inc. 4.75% 12/15/22

4,335,000

4,183,275

Starz LLC/Starz Finance Corp. 5% 9/15/19

3,275,000

3,225,875

 

7,409,150

Building Materials - 2.8%

Associated Materials LLC 9.125% 11/1/17

390,000

412,425

Building Materials Corp. of America:

6.75% 5/1/21 (d)

3,680,000

3,910,000

6.875% 8/15/18 (d)

4,490,000

4,736,950

HD Supply, Inc.:

7.5% 7/15/20 (d)

7,655,000

7,769,825

8.125% 4/15/19

3,615,000

3,958,425

10.5% 1/15/21

3,435,000

3,551,103

Headwaters, Inc. 7.625% 4/1/19

2,525,000

2,626,000

Masco Corp. 5.95% 3/15/22

1,815,000

1,905,750

Nonconvertible Bonds - continued

 

Principal Amount

Value

Building Materials - continued

Texas Industries, Inc. 9.25% 8/15/20

$ 7,285,000

$ 7,849,588

USG Corp. 7.875% 3/30/20 (d)

970,000

1,057,300

 

37,777,366

Cable TV - 4.8%

Cablevision Systems Corp. 7.75% 4/15/18

740,000

795,500

CCO Holdings LLC/CCO Holdings Capital Corp.:

5.25% 3/15/21 (d)

1,740,000

1,713,900

5.25% 9/30/22

5,635,000

5,353,250

5.75% 9/1/23 (d)

3,240,000

3,126,600

6.5% 4/30/21

9,070,000

9,455,475

6.625% 1/31/22

3,080,000

3,226,300

7% 1/15/19

9,810,000

10,374,075

Cequel Communications Escrow 1 LLC/Cequel Communications Escrow Capital Corp. 6.375% 9/15/20 (d)

3,395,000

3,454,413

Cequel Communications Holdings I LLC/Cequel Capital Corp. 5.125% 12/15/21 (d)

4,290,000

4,064,775

Cogeco Cable, Inc. 4.875% 5/1/20 (d)

710,000

690,475

DISH DBS Corp. 4.25% 4/1/18 (d)

1,145,000

1,122,100

Harron Communications LP/Harron Finance Corp. 9.125% 4/1/20 (d)

2,085,000

2,251,800

Lynx I Corp. 5.375% 4/15/21 (d)

2,550,000

2,550,000

Lynx II Corp. 6.375% 4/15/23 (d)

550,000

554,125

Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH:

5.5% 1/15/23 (d)

1,655,000

1,586,814

7.5% 3/15/19 (d)

950,000

999,875

UPCB Finance III Ltd. 6.625% 7/1/20 (d)

2,710,000

2,804,850

UPCB Finance V Ltd. 7.25% 11/15/21 (d)

3,270,000

3,459,987

WaveDivision Escrow LLC/WaveDivision Escrow Corp. 8.125% 9/1/20 (d)

6,385,000

6,608,475

 

64,192,789

Capital Goods - 0.5%

Amsted Industries, Inc. 8.125% 3/15/18 (d)

2,890,000

3,048,950

JB Poindexter & Co., Inc. 9% 4/1/22 (d)

3,830,000

4,021,500

 

7,070,450

Chemicals - 2.6%

Ashland, Inc.:

3% 3/15/16 (d)

1,170,000

1,175,850

3.875% 4/15/18 (d)

2,365,000

2,323,613

Axiall Corp. 4.875% 5/15/23 (d)

1,695,000

1,610,250

 

 

Principal Amount

Value

Celanese U.S. Holdings LLC:

4.625% 11/15/22

$ 1,605,000

$ 1,572,900

6.625% 10/15/18

1,030,000

1,086,650

Eagle Spinco, Inc. 4.625% 2/15/21 (d)

810,000

775,575

Hexion U.S. Finance Corp. 6.625% 4/15/20 (d)

3,540,000

3,522,300

INEOS Finance PLC 8.375% 2/15/19 (d)

5,495,000

6,003,288

Kinove German Bondco GmbH 9.625% 6/15/18 (d)

3,555,000

3,848,288

Nufarm Australia Ltd. 6.375% 10/15/19 (d)

1,730,000

1,730,000

Rockwood Specialties Group, Inc. 4.625% 10/15/20

2,850,000

2,857,125

Trinseo Materials Operating SCA/Trinseo Materials Finance, Inc. 8.75% 2/1/19 (d)

5,170,000

4,963,200

Tronox Finance LLC 6.375% 8/15/20 (d)

3,675,000

3,463,688

 

34,932,727

Consumer Products - 0.2%

Associated Materials LLC/AMH New Finance, Inc. 9.125% 11/1/17 (d)

1,080,000

1,142,100

First Quality Finance Co., Inc. 4.625% 5/15/21 (d)

1,685,000

1,583,900

 

2,726,000

Containers - 3.3%

Ardagh Packaging Finance PLC 7.375% 10/15/17 (d)

1,415,000

1,510,513

Ardagh Packaging Finance PLC/Ardagh MP Holdings U.S.A., Inc.:

7% 11/15/20 (d)

4,955,000

4,756,800

7.375% 10/15/17 (d)

335,000

356,775

Ball Corp. 4% 11/15/23

3,670,000

3,394,750

BOE Intermediate Holding Corp. 9.75% 11/1/17 pay-in-kind (d)

460,000

435,869

Crown Americas LLC/Crown Americas Capital Corp. IV 4.5% 1/15/23 (d)

4,000,000

3,770,000

Graphic Packaging International, Inc. 4.75% 4/15/21

475,000

456,000

Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC/Reynolds Group Issuer (Luxembourg) SA:

5.75% 10/15/20

8,455,000

8,433,863

8.5% 5/15/18 (c)

6,290,000

6,478,700

9.875% 8/15/19

5,310,000

5,681,700

Sealed Air Corp.:

6.5% 12/1/20 (d)

1,315,000

1,387,325

8.125% 9/15/19 (d)

4,270,000

4,718,350

8.375% 9/15/21 (d)

2,695,000

3,018,400

 

44,399,045

Nonconvertible Bonds - continued

 

Principal Amount

Value

Diversified Financial Services - 5.3%

Aircastle Ltd.:

6.25% 12/1/19

$ 1,740,000

$ 1,807,425

6.75% 4/15/17

2,030,000

2,131,500

9.75% 8/1/18

3,730,000

4,093,675

CIT Group, Inc.:

4.25% 8/15/17

3,180,000

3,195,900

5.25% 3/15/18

4,935,000

5,070,713

5.375% 5/15/20

4,035,000

4,130,831

5.5% 2/15/19 (d)

5,555,000

5,735,538

Icahn Enterprises LP/Icahn Enterprises Finance Corp. 8% 1/15/18

11,285,000

11,849,250

ILFC E-Capital Trust II 6.25% 12/21/65 (d)(g)

1,275,000

1,160,250

International Lease Finance Corp.:

4.625% 4/15/21

2,020,000

1,868,500

5.75% 5/15/16

8,055,000

8,277,592

5.875% 4/1/19

5,485,000

5,539,850

5.875% 8/15/22

3,480,000

3,449,550

6.25% 5/15/19

2,245,000

2,306,738

8.625% 1/15/22

3,855,000

4,433,250

8.75% 3/15/17

2,110,000

2,357,925

8.875% 9/1/17

3,235,000

3,647,463

 

71,055,950

Diversified Media - 1.9%

Clear Channel Worldwide Holdings, Inc.:

6.5% 11/15/22 (d)

2,715,000

2,782,875

6.5% 11/15/22 (d)

4,990,000

5,139,700

MDC Partners, Inc. 6.75% 4/1/20 (d)

4,075,000

4,075,000

Nielsen Finance LLC/Nielsen Finance Co.:

4.5% 10/1/20 (d)

2,600,000

2,496,000

7.75% 10/15/18

3,900,000

4,173,000

Quebecor Media, Inc.:

5.75% 1/15/23

2,360,000

2,301,000

7.75% 3/15/16

2,612,000

2,651,180

7.75% 3/15/16

1,060,000

1,075,900

 

24,694,655

Electric Utilities - 5.6%

Atlantic Power Corp. 9% 11/15/18

6,740,000

6,807,400

Dolphin Subsidiary II, Inc.:

6.5% 10/15/16

2,095,000

2,189,275

7.25% 10/15/21

935,000

967,725

GenOn Energy, Inc.:

9.5% 10/15/18

1,745,000

1,936,950

9.875% 10/15/20

835,000

918,500

Mirant Americas Generation LLC:

8.5% 10/1/21

7,395,000

7,949,625

9.125% 5/1/31

15,020,000

16,071,400

 

 

Principal Amount

Value

NRG Energy, Inc. 6.625% 3/15/23 (d)

$ 4,860,000

$ 4,835,700

NSG Holdings II, LLC 7.75% 12/15/25 (d)

9,865,000

10,210,275

Otter Tail Corp. 9% 12/15/16

2,460,000

2,723,958

Puget Energy, Inc.:

5.625% 7/15/22

1,045,000

1,107,907

6.5% 12/15/20

3,975,000

4,452,020

The AES Corp.:

4.875% 5/15/23

3,475,000

3,231,750

7.375% 7/1/21

9,660,000

10,601,850

 

74,004,335

Energy - 12.5%

Access Midstream Partners LP/ACMP Finance Corp. 4.875% 5/15/23

2,110,000

1,957,025

Antero Resources Finance Corp.:

6% 12/1/20

6,300,000

6,174,000

7.25% 8/1/19

1,845,000

1,905,332

9.375% 12/1/17

4,215,000

4,488,975

Atlas Pipeline Partners LP/Atlas Pipeline Finance Corp. 4.75% 11/15/21 (d)

985,000

886,500

Chesapeake Energy Corp.:

5.375% 6/15/21

2,580,000

2,567,100

5.75% 3/15/23

1,675,000

1,695,938

6.125% 2/15/21

9,950,000

10,447,500

6.875% 11/15/20

1,250,000

1,356,250

Chesapeake Midstream Partners LP/CHKM Finance Corp.:

5.875% 4/15/21

615,000

624,225

6.125% 7/15/22

1,745,000

1,775,538

Chesapeake Oilfield Operating LLC 6.625% 11/15/19 (d)

1,680,000

1,663,200

Continental Resources, Inc. 4.5% 4/15/23 (d)

3,530,000

3,424,100

Crestwood Midstream Partners LP/Finance Corp. 7.75% 4/1/19

2,315,000

2,384,450

Denbury Resources, Inc.:

4.625% 7/15/23

6,660,000

6,127,200

6.375% 8/15/21

2,550,000

2,626,500

Energy Partners Ltd. 8.25% 2/15/18

620,000

638,600

Energy Transfer Equity LP 7.5% 10/15/20

2,930,000

3,201,025

EP Energy LLC/Everest Acquisition Finance, Inc. 7.75% 9/1/22

2,525,000

2,720,688

Everest Acquisition LLC/Everest Acquisition Finance, Inc.:

6.875% 5/1/19

1,655,000

1,762,575

9.375% 5/1/20

8,685,000

9,792,338

Expro Finance Luxembourg SCA 8.5% 12/15/16 (d)

2,812,000

2,952,600

Exterran Holdings, Inc. 7.25% 12/1/18

7,855,000

8,277,599

Nonconvertible Bonds - continued

 

Principal Amount

Value

Energy - continued

Exterran Partners LP/EXLP Finance Corp. 6% 4/1/21 (d)

$ 4,315,000

$ 4,228,700

Forbes Energy Services Ltd. 9% 6/15/19

4,680,000

4,609,800

Forest Oil Corp. 7.5% 9/15/20 (d)

4,155,000

3,947,250

Gibson Energy, Inc. 6.75% 7/15/21 (d)

3,425,000

3,416,438

Hornbeck Offshore Services, Inc.:

5% 3/1/21 (d)

2,465,000

2,286,288

5.875% 4/1/20

1,240,000

1,236,900

Kinder Morgan Finance Co. LLC 6% 1/15/18 (d)

2,355,000

2,472,512

LINN Energy LLC/LINN Energy Finance Corp.:

6.25% 11/1/19 (d)

2,500,000

2,381,250

6.5% 5/15/19

4,395,000

4,252,163

7.75% 2/1/21

2,390,000

2,395,975

8.625% 4/15/20

3,055,000

3,207,750

Northern Tier Energy LLC/Northern Tier Finance Corp. 7.125% 11/15/20 (d)

3,165,000

3,196,650

Offshore Group Investment Ltd.:

7.125% 4/1/23 (d)

1,890,000

1,847,475

7.5% 11/1/19

4,635,000

4,820,400

Oil States International, Inc. 6.5% 6/1/19

3,300,000

3,415,500

Pacific Drilling SA 5.375% 6/1/20 (d)

4,750,000

4,476,875

PBF Holding Co. LLC/PBF Finance Corp. 8.25% 2/15/20

2,075,000

2,199,500

Petroleum Geo-Services ASA 7.375% 12/15/18 (d)

3,225,000

3,507,188

Precision Drilling Corp.:

6.5% 12/15/21

290,000

293,625

6.625% 11/15/20

2,505,000

2,592,675

Rosetta Resources, Inc. 5.625% 5/1/21

1,405,000

1,371,631

Samson Investment Co. 10% 2/15/20 (d)

6,935,000

7,264,413

SemGroup Corp. 7.5% 6/15/21 (d)

1,610,000

1,634,150

Targa Resources Partners LP/Targa Resources Partners Finance Corp.:

4.25% 11/15/23 (d)

2,445,000

2,200,500

5.25% 5/1/23 (d)

5,051,000

4,848,960

6.375% 8/1/22

592,000

620,120

6.875% 2/1/21

2,840,000

3,010,400

7.875% 10/15/18

2,660,000

2,832,900

Western Refining, Inc. 6.25% 4/1/21 (d)

2,245,000

2,194,488

 

166,211,734

 

 

Principal Amount

Value

Entertainment/Film - 0.3%

Cinemark U.S.A., Inc. 4.875% 6/1/23 (d)

$ 1,640,000

$ 1,574,400

Regal Entertainment Group 5.75% 6/15/23

2,920,000

2,868,900

 

4,443,300

Environmental - 1.4%

ADS Waste Holdings, Inc. 8.25% 10/1/20 (d)

4,910,000

4,983,650

Clean Harbors, Inc.:

5.125% 6/1/21

910,000

916,825

5.25% 8/1/20

2,590,000

2,628,850

Covanta Holding Corp. 7.25% 12/1/20

5,165,000

5,415,947

Tervita Corp.:

8% 11/15/18 (d)

1,295,000

1,301,475

9.75% 11/1/19 (d)

2,985,000

2,776,050

 

18,022,797

Food & Drug Retail - 4.3%

ESAL GmbH 6.25% 2/5/23 (d)

7,405,000

6,760,765

Hawk Acquisition Sub, Inc. 4.25% 10/15/20 (d)

4,950,000

4,727,250

Rite Aid Corp.:

6.75% 6/15/21 (d)(f)

5,865,000

5,762,363

9.25% 3/15/20

22,810,000

25,147,997

9.5% 6/15/17

14,440,000

14,963,450

 

57,361,825

Food/Beverage/Tobacco - 0.8%

JBS U.S.A. LLC/JBS U.S.A. Finance, Inc. 8.25% 2/1/20 (d)

6,670,000

6,986,825

Post Holdings, Inc. 7.375% 2/15/22

3,495,000

3,739,650

 

10,726,475

Gaming - 2.3%

Ameristar Casinos, Inc. 7.5% 4/15/21

7,590,000

7,931,550

MCE Finance Ltd. 5% 2/15/21 (d)

4,085,000

3,799,050

MGM Mirage, Inc.:

7.625% 1/15/17

930,000

1,013,700

8.625% 2/1/19

2,760,000

3,139,500

10% 11/1/16

3,185,000

3,726,450

11.375% 3/1/18

2,360,000

2,926,400

Seminole Hard Rock Entertainment, Inc. 5.875% 5/15/21 (d)

1,490,000

1,437,850

Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp.:

4.25% 5/30/23 (d)

2,445,000

2,249,400

5.375% 3/15/22

2,995,000

3,054,900

7.75% 8/15/20

1,535,000

1,703,850

 

30,982,650

Healthcare - 3.8%

DaVita, Inc. 5.75% 8/15/22

4,250,000

4,239,375

Nonconvertible Bonds - continued

 

Principal Amount

Value

Healthcare - continued

DJO Finance LLC/DJO Finance Corp.:

7.75% 4/15/18

$ 1,350,000

$ 1,333,125

8.75% 3/15/18

165,000

179,025

9.875% 4/15/18

2,425,000

2,534,125

Emergency Medical Services Corp. 8.125% 6/1/19

5,100,000

5,418,750

Fresenius Medical Care U.S. Finance II, Inc. 5.625% 7/31/19 (d)

2,775,000

2,872,125

HCA, Inc.:

7.875% 2/15/20

1,160,000

1,247,000

8% 10/1/18

2,060,000

2,366,425

HealthSouth Corp.:

5.75% 11/1/24

2,190,000

2,129,775

7.25% 10/1/18

4,008,000

4,308,600

Legend Acquisition Sub, Inc. 10.75% 8/15/20 (d)

2,275,000

1,831,375

MPT Operating Partnership LP/MPT Finance Corp. 6.875% 5/1/21

2,595,000

2,750,700

Sabra Health Care LP/Sabra Capital Corp.:

5.375% 6/1/23

950,000

923,875

8.125% 11/1/18

338,000

362,505

Valeant Pharmaceuticals International:

6.5% 7/15/16 (d)

5,325,000

5,484,750

6.875% 12/1/18 (d)

4,655,000

4,771,375

VPI Escrow Corp. 6.375% 10/15/20 (d)

3,960,000

3,910,500

VPII Escrow Corp. 6.75% 8/15/18 (d)(f)

4,195,000

4,305,119

 

50,968,524

Homebuilders/Real Estate - 3.7%

Brookfield Residential Properties, Inc./Brookfield Residential U.S. Corp. 6.125% 7/1/22 (d)

910,000

891,800

CB Richard Ellis Services, Inc.:

5% 3/15/23

2,365,000

2,234,925

6.625% 10/15/20

2,370,000

2,500,350

D.R. Horton, Inc.:

3.625% 2/15/18

3,605,000

3,541,913

4.375% 9/15/22

1,675,000

1,591,250

4.75% 5/15/17

1,315,000

1,357,738

4.75% 2/15/23

1,200,000

1,155,000

Lennar Corp.:

4.125% 12/1/18 (d)

3,605,000

3,415,738

4.75% 11/15/22 (d)

3,990,000

3,790,500

6.95% 6/1/18

2,515,000

2,716,200

12.25% 6/1/17

1,600,000

2,052,000

Standard Pacific Corp.:

8.375% 5/15/18

14,220,000

16,210,800

 

 

Principal Amount

Value

8.375% 1/15/21

$ 3,840,000

$ 4,377,600

Toll Brothers Finance Corp. 4.375% 4/15/23

4,105,000

3,817,650

 

49,653,464

Insurance - 0.1%

CNO Financial Group, Inc. 6.375% 10/1/20 (d)

825,000

876,563

Leisure - 1.7%

Cedar Fair LP/Magnum Management Corp. 5.25% 3/15/21 (d)

2,230,000

2,112,925

GWR Operating Partnership LLP/Great Wolf Finance Corp. 10.875% 4/1/17

3,920,000

4,233,600

NCL Corp. Ltd. 5% 2/15/18 (d)

5,690,000

5,633,100

Royal Caribbean Cruises Ltd.:

5.25% 11/15/22

6,045,000

5,893,875

7.25% 3/15/18

1,815,000

2,037,338

7.5% 10/15/27

595,000

645,575

yankee 7.25% 6/15/16

2,445,000

2,689,500

 

23,245,913

Metals/Mining - 2.1%

Alpha Natural Resources, Inc.:

6% 6/1/19

2,805,000

2,286,075

6.25% 6/1/21

2,275,000

1,814,313

Boart Longyear Management Pty Ltd. 7% 4/1/21 (d)

4,765,000

4,491,013

CONSOL Energy, Inc. 8% 4/1/17

2,000,000

2,105,000

FMG Resources (August 2006) Pty Ltd.:

6.375% 2/1/16 (d)

3,145,000

3,141,069

7% 11/1/15 (d)

10,415,000

10,519,150

New Gold, Inc. 6.25% 11/15/22 (d)

1,140,000

1,085,850

Walter Energy, Inc. 8.5% 4/15/21 (d)

3,535,000

2,810,325

 

28,252,795

Paper - 0.4%

Sappi Papier Holding GmbH 7.75% 7/15/17 (d)

4,920,000

5,190,600

Publishing/Printing - 0.5%

McGraw-Hill Global Education Holdings LLC/McGraw-Hill Global Education Finance 9.75% 4/1/21 (d)

6,150,000

6,288,375

Restaurants - 0.4%

NPC International, Inc./NPC Operating Co. A, Inc./NPC Operating Co. B, Inc. 10.5% 1/15/20

4,035,000

4,625,119

Services - 2.8%

APX Group, Inc.:

6.375% 12/1/19 (d)

6,905,000

6,559,750

8.75% 12/1/20 (d)

6,465,000

6,157,913

Nonconvertible Bonds - continued

 

Principal Amount

Value

Services - continued

ARAMARK Corp. 5.75% 3/15/20 (d)

$ 1,700,000

$ 1,738,250

Audatex North America, Inc. 6% 6/15/21 (d)

3,340,000

3,348,350

FTI Consulting, Inc.:

6% 11/15/22 (d)

1,860,000

1,877,298

6.75% 10/1/20

3,100,000

3,255,000

Hertz Corp.:

4.25% 4/1/18 (d)

3,145,000

3,042,788

6.75% 4/15/19

2,390,000

2,527,425

7.5% 10/15/18

4,105,000

4,412,875

TransUnion Holding Co., Inc. 8.125% 6/15/18 pay-in-kind (d)

4,340,000

4,594,975

 

37,514,624

Shipping - 0.4%

Navios Maritime Holdings, Inc. 8.875% 11/1/17

4,410,000

4,575,375

Navios South American Logisitcs, Inc./Navios Logistics Finance U.S., Inc. 9.25% 4/15/19 (d)

420,000

450,450

 

5,025,825

Steel - 2.0%

JMC Steel Group, Inc. 8.25% 3/15/18 (d)

3,970,000

3,880,675

Severstal Columbus LLC 10.25% 2/15/18

8,610,000

9,105,075

Steel Dynamics, Inc.:

5.25% 4/15/23 (d)

3,945,000

3,885,825

6.125% 8/15/19 (d)

5,905,000

6,215,013

7.625% 3/15/20

3,930,000

4,185,450

 

27,272,038

Super Retail - 1.2%

Claire's Stores, Inc.:

7.75% 6/1/20 (d)

620,000

599,850

9% 3/15/19 (d)

3,535,000

3,879,663

CST Brands, Inc. 5% 5/1/23 (d)

410,000

398,725

J. Crew Group, Inc. 8.125% 3/1/19

7,715,000

8,100,750

Netflix, Inc. 5.375% 2/1/21 (d)

2,410,000

2,385,900

The Bon-Ton Department Stores, Inc. 8% 6/15/21 (d)

935,000

944,350

 

16,309,238

Technology - 7.8%

Brocade Communications Systems, Inc. 4.625% 1/15/23 (d)

3,400,000

3,187,500

Ceridian Corp. 11.25% 11/15/15

4,475,000

4,536,531

Compiler Finance Sub, Inc. 7% 5/1/21 (d)

2,210,000

2,154,750

First Data Corp.:

6.75% 11/1/20 (d)

3,280,000

3,337,400

7.375% 6/15/19 (d)

3,400,000

3,493,500

8.25% 1/15/21 (d)

4,740,000

4,834,800

 

 

Principal Amount

Value

12.625% 1/15/21

$ 6,010,000

$ 6,355,575

Flextronics International Ltd. 4.625% 2/15/20 (d)

3,020,000

2,929,400

IAC/InterActiveCorp 4.75% 12/15/22 (d)

4,090,000

3,865,050

Lucent Technologies, Inc.:

6.45% 3/15/29

2,650,000

2,007,375

6.5% 1/15/28

3,265,000

2,448,750

NCR Corp. 4.625% 2/15/21

5,545,000

5,295,475

Nuance Communications, Inc. 5.375% 8/15/20 (d)

11,478,000

11,334,525

NXP BV/NXP Funding LLC:

3.75% 6/1/18 (d)

5,850,000

5,733,000

5.75% 2/15/21 (d)

3,255,000

3,295,688

Sanmina-SCI Corp. 7% 5/15/19 (d)

9,305,000

9,491,100

Seagate HDD Cayman 4.75% 6/1/23 (d)

5,225,000

4,872,313

Softbank Corp. 4.5% 4/15/20 (d)

7,815,000

7,443,788

Spansion LLC 7.875% 11/15/17

5,850,000

5,908,500

VeriSign, Inc. 4.625% 5/1/23 (d)

3,295,000

3,196,150

Viasystems, Inc. 7.875% 5/1/19 (d)

2,810,000

2,964,550

WideOpenWest Finance LLC/WideOpenWest Capital Corp.:

10.25% 7/15/19

2,995,000

3,182,188

13.375% 10/15/19

1,605,000

1,773,525

 

103,641,433

Telecommunications - 9.1%

Altice Financing SA 7.875% 12/15/19 (d)

3,180,000

3,323,100

Altice Finco SA 9.875% 12/15/20 (d)

2,465,000

2,637,550

Crown Castle International Corp. 5.25% 1/15/23

5,520,000

5,299,200

Digicel Group Ltd.:

6% 4/15/21 (d)

8,440,000

8,060,200

7% 2/15/20 (d)

295,000

293,525

8.25% 9/1/17 (d)

5,395,000

5,610,800

8.25% 9/30/20 (d)

7,340,000

7,596,900

DigitalGlobe, Inc. 5.25% 2/1/21 (d)

6,335,000

6,065,763

Intelsat Jackson Holdings SA:

5.5% 8/1/23 (d)

2,655,000

2,489,063

6.625% 12/15/22 (d)

3,230,000

3,125,025

6.625% 12/15/22 (d)

4,440,000

4,306,800

7.25% 4/1/19

1,835,000

1,908,400

7.25% 10/15/20

2,900,000

3,045,000

7.5% 4/1/21

3,050,000

3,175,813

Intelsat Luxembourg SA:

7.75% 6/1/21 (d)

8,760,000

8,847,600

8.125% 6/1/23 (d)

3,140,000

3,242,050

NeuStar, Inc. 4.5% 1/15/23 (d)

2,980,000

2,816,100

Nonconvertible Bonds - continued

 

Principal Amount

Value

Telecommunications - continued

NII Capital Corp.:

7.625% 4/1/21

$ 3,115,000

$ 2,421,913

10% 8/15/16

1,730,000

1,678,100

SBA Communications Corp. 5.625% 10/1/19 (d)

535,000

529,650

Sprint Capital Corp. 6.875% 11/15/28

1,490,000

1,430,400

Sprint Nextel Corp.:

6% 12/1/16

10,710,000

11,319,399

6% 11/15/22

1,700,000

1,661,750

7% 8/15/20

8,730,000

9,166,500

9% 11/15/18 (d)

1,505,000

1,760,850

Telesat Canada/Telesat LLC 6% 5/15/17 (d)

4,310,000

4,396,200

Wind Acquisition Finance SA 11.75% 7/15/17 (d)

3,170,000

3,296,800

Wind Acquisition Holdings Finance SA 12.25% 7/15/17 pay-in-kind (d)(g)

4,710,381

4,745,709

Zayo Group LLC/Zayo Capital, Inc. 8.125% 1/1/20

5,975,000

6,467,938

 

120,718,098

Textiles & Apparel - 0.1%

Hanesbrands, Inc. 6.375% 12/15/20

1,535,000

1,642,450

TOTAL NONCONVERTIBLE BONDS

(Cost $1,226,326,192)


1,241,984,640

Commercial Mortgage Securities - 0.0%

 

LB Multi-family Mortgage Trust Series 1991-4 Class A1, 7.125% 4/25/21 (g)
(Cost $0)

18,733


13,113

Common Stocks - 0.1%

Shares

 

Telecommunications - 0.1%

CUI Acquisition Corp. Class E (a)(d)

1

873,375

Textiles & Apparel - 0.0%

Arena Brands Holding Corp. Class B (a)(h)

48,889

391,112

TOTAL COMMON STOCKS

(Cost $3,248,508)


1,264,487

Floating Rate Loans - 2.8%

 

Principal Amount

Value

Air Transportation - 1.0%

Delta Air Lines, Inc. Tranche B 1LN, term loan 4% 10/18/18 (g)

$ 4,982,513

$ 4,971,850

U.S. Airways, Inc.:

Tranche B 1LN, term loan 4.25% 5/21/19 (g)

4,760,000

4,688,600

Tranche B 2LN, term loan 3.5% 11/21/16 (g)

3,175,000

3,175,000

 

12,835,450

Energy - 0.4%

Chesapeake Energy Corp. Tranche B, term loan 5.75% 12/2/17 (g)

4,710,000

4,768,875

Insurance - 0.6%

Asurion LLC Tranche B 1LN, term loan 4.5% 5/24/19 (g)

1,604

1,584

Lonestar Intermediate Super Holdings LLC term loan 11% 9/2/19 (g)

2,760,000

2,870,400

Stoneriver Group LP:

Tranche 2LN, term loan 8.5% 5/29/20 (g)

1,980,000

1,965,150

Tranche B 1LN, term loan 4.5% 11/29/19 (g)

3,965,000

3,910,680

 

8,747,814

Leisure - 0.3%

Equinox Holdings, Inc.:

Tranche 2LN, term loan 9.75% 5/16/20 (g)

1,600,000

1,616,000

Tranche B 1LN, term loan 4.4994% 2/1/20 (g)

2,977,538

2,977,538

 

4,593,538

Technology - 0.5%

First Data Corp. term loan 4.193% 3/24/18 (g)

6,685,000

6,509,519

TOTAL FLOATING RATE LOANS

(Cost $37,021,727)


37,455,196

Preferred Securities - 0.1%

 

 

 

 

Entertainment/Film - 0.1%

NBCUniversal Enterprise, Inc. 5.25% (d)(e)
(Cost $2,242,287)

2,240,000


2,243,835

Money Market Funds - 1.8%

Shares

Value

Fidelity Cash Central Fund, 0.13% (b)
(Cost $23,906,944)

23,906,944

$ 23,906,944

TOTAL INVESTMENT PORTFOLIO - 98.0%

(Cost $1,292,745,658)

1,306,868,215

NET OTHER ASSETS (LIABILITIES) - 2.0%

26,060,777

NET ASSETS - 100%

$ 1,332,928,992

Legend

(a) Non-income producing

(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.

(c) Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end.

(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $563,138,114 or 42.2% of net assets.

(e) Security is perpetual in nature with no stated maturity date.

(f) Security or a portion of the security purchased on a delayed delivery or when-issued basis.

(g) Coupon rates for floating and adjustable rate securities reflect the rates in effect at period end.

(h) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $391,112 or 0.0% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost

Arena Brands Holding Corp. Class B

6/18/97

$ 1,974,627

Affiliated Central Funds

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

Fund

Income earned

Fidelity Cash Central Fund

$ 62,554

Other Information

The following is a summary of the inputs used, as of June 30, 2013, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the table below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 391,112

$ -

$ -

$ 391,112

Telecommunication Services

873,375

-

-

873,375

Corporate Bonds

1,241,984,640

-

1,241,984,640

-

Commercial Mortgage Securities

13,113

-

-

13,113

Floating Rate Loans

37,455,196

-

37,455,196

-

Preferred Securities

2,243,835

-

2,243,835

-

Money Market Funds

23,906,944

23,906,944

-

-

Total Investments in Securities:

$ 1,306,868,215

$ 23,906,944

$ 1,281,683,671

$ 1,277,600

Distribution of investments by country or territory of incorporation, as a percentage of total net assets, is as follows. (Unaudited)

United States of America

81.2%

Luxembourg

4.3%

Canada

3.4%

Bermuda

2.6%

Cayman Islands

1.7%

Australia

1.4%

Others (Individually Less Than 1%)

5.4%

 

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, 2013 (Unaudited)

 

 

 

Assets

Investment in securities, at value - See accompanying schedule:

Unaffiliated issuers (cost $1,268,838,714)

$ 1,282,961,271

 

Fidelity Central Funds (cost $23,906,944)

23,906,944

 

Total Investments (cost $1,292,745,658)

 

$ 1,306,868,215

Cash

 

487,925

Receivable for investments sold

28,483,465

Receivable for fund shares sold

330,189

Interest receivable

21,643,570

Distributions receivable from Fidelity Central Funds

3,345

Total assets

1,357,816,709

 

 

 

Liabilities

Payable for investments purchased
Regular delivery

$ 11,227,585

Delayed delivery

10,645,000

Payable for fund shares redeemed

2,100,940

Accrued management fee

655,632

Distribution and service plan fees payable

54,800

Other affiliated payables

152,451

Other payables and accrued expenses

51,309

Total liabilities

24,887,717

 

 

 

Net Assets

$ 1,332,928,992

Net Assets consist of:

 

Paid in capital

$ 1,341,651,756

Undistributed net investment income

46,670,745

Accumulated undistributed net realized gain (loss) on investments

(69,516,066)

Net unrealized appreciation (depreciation) on investments

14,122,557

Net Assets

$ 1,332,928,992

Statement of Assets and Liabilities - continued

 

June 30, 2013 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($565,847,371 ÷ 96,955,327 shares)

$ 5.84

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($69,989,395 ÷ 12,064,472 shares)

$ 5.80

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($217,316,699 ÷ 38,283,901 shares)

$ 5.68

 

 

 

Initial Class R:
Net Asset Value, offering price and redemption price per share ($28,822,671 ÷ 4,957,676 shares)

$ 5.81

 

 

 

Service Class R:
Net Asset Value, offering price and redemption price per share ($31,045,424 ÷ 5,380,153 shares)

$ 5.77

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($4,633,060 ÷ 816,699 shares)

$ 5.67

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($415,274,372 ÷ 71,410,458 shares)

$ 5.82

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

Semiannual Report

Statement of Operations

Six months ended June 30, 2013 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 213,937

Interest

 

46,779,296

Income from Fidelity Central Funds

 

62,554

Total income

 

47,055,787

 

 

 

Expenses

Management fee

$ 4,272,246

Transfer agent fees

621,602

Distribution and service plan fees

416,113

Accounting fees and expenses

255,070

Custodian fees and expenses

14,286

Independent trustees' compensation

4,773

Audit

40,169

Legal

6,085

Interest

1,289

Miscellaneous

8,240

Total expenses before reductions

5,639,873

Expense reductions

(795)

5,639,078

Net investment income (loss)

41,416,709

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

 

36,435,465

Change in net unrealized appreciation (depreciation) on investment securities

(66,663,671)

Net gain (loss)

(30,228,206)

Net increase (decrease) in net assets resulting from operations

$ 11,188,503

Statement of Changes in Net Assets

 

Six months ended
June 30, 2013
(Unaudited)

Year ended
December 31,
2012

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 41,416,709

$ 85,504,440

Net realized gain (loss)

36,435,465

13,064,180

Change in net unrealized appreciation (depreciation)

(66,663,671)

80,611,074

Net increase (decrease) in net assets resulting from operations

11,188,503

179,179,694

Distributions to shareholders from net investment income

(1,565,682)

(84,934,228)

Share transactions - net increase (decrease)

(189,972,586)

164,623,275

Redemption fees

22,671

64,369

Total increase (decrease) in net assets

(180,327,094)

258,933,110

 

 

 

Net Assets

Beginning of period

1,513,256,086

1,254,322,976

End of period (including undistributed net investment income of $46,670,745 and undistributed net investment income of $6,819,718, respectively)

$ 1,332,928,992

$ 1,513,256,086

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.81

$ 5.39

$ 5.57

$ 5.29

$ 3.96

$ 5.98

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .164

.361

.391

.439

.438

.475

Net realized and unrealized gain (loss)

  (.128)

.405

(.171)

.288

1.298

(1.990)

Total from investment operations

  .036

.766

.220

.727

1.736

(1.515)

Distributions from net investment income

  (.006)

(.346)

(.400)

(.448)

(.406)

(.506)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.84

$ 5.81

$ 5.39

$ 5.57

$ 5.29

$ 3.96

Total Return B, C, D

  .62%

14.23%

4.03%

13.82%

43.96%

(24.98)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .69% A

.68%

.69%

.69%

.70%

.71%

Expenses net of fee waivers, if any

  .69% A

.68%

.69%

.69%

.70%

.71%

Expenses net of all reductions

  .69% A

.68%

.69%

.69%

.70%

.70%

Net investment income (loss)

  5.57% A

6.22%

6.85%

7.84%

9.02%

8.48%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 565,847

$ 606,506

$ 561,514

$ 594,688

$ 608,802

$ 451,824

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

Financial Highlights - Service Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.78

$ 5.36

$ 5.54

$ 5.26

$ 3.95

$ 5.95

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .160

.353

.384

.431

.429

.469

Net realized and unrealized gain (loss)

  (.134)

.407

(.171)

.290

1.281

(1.971)

Total from investment operations

  .026

.760

.213

.721

1.710

(1.502)

Distributions from net investment income

  (.006)

(.340)

(.393)

(.442)

(.400)

(.499)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.80

$ 5.78

$ 5.36

$ 5.54

$ 5.26

$ 3.95

Total Return B, C, D

  .45%

14.20%

3.93%

13.79%

43.41%

(24.87)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .78% A

.78%

.79%

.79%

.80%

.80%

Expenses net of fee waivers, if any

  .78% A

.78%

.79%

.78%

.80%

.80%

Expenses net of all reductions

  .78% A

.78%

.79%

.78%

.80%

.80%

Net investment income (loss)

  5.47% A

6.13%

6.75%

7.74%

8.92%

8.39%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 69,989

$ 77,397

$ 91,573

$ 98,988

$ 103,511

$ 95,461

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.66

$ 5.26

$ 5.45

$ 5.18

$ 3.89

$ 5.88

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .153

.338

.368

.417

.422

.450

Net realized and unrealized gain (loss)

  (.127)

.396

(.170)

.287

1.264

(1.949)

Total from investment operations

  .026

.734

.198

.704

1.686

(1.499)

Distributions from net investment income

  (.006)

(.334)

(.388)

(.435)

(.396)

(.492)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.68

$ 5.66

$ 5.26

$ 5.45

$ 5.18

$ 3.89

Total Return B, C, D

  .46%

13.97%

3.72%

13.67%

43.46%

(25.14)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .93% A

.93%

.94%

.94%

.95%

.96%

Expenses net of fee waivers, if any

  .93% A

.93%

.94%

.94%

.95%

.96%

Expenses net of all reductions

  .93% A

.93%

.94%

.94%

.95%

.96%

Net investment income (loss)

  5.33% A

5.98%

6.60%

7.59%

8.77%

8.23%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 217,317

$ 281,065

$ 220,333

$ 182,465

$ 181,377

$ 87,077

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

Financial Highlights - Initial Class R

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.79

$ 5.37

$ 5.55

$ 5.27

$ 3.95

$ 5.96

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .164

.360

.391

.439

.440

.471

Net realized and unrealized gain (loss)

  (.138)

.407

(.171)

.288

1.286

(1.975)

Total from investment operations

  .026

.767

.220

.727

1.726

(1.504)

Distributions from net investment income

  (.006)

(.347)

(.400)

(.448)

(.406)

(.507)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.81

$ 5.79

$ 5.37

$ 5.55

$ 5.27

$ 3.95

Total Return B, C, D

  .45%

14.30%

4.05%

13.88%

43.82%

(24.88)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .68% A

.68%

.68%

.69%

.70%

.70%

Expenses net of fee waivers, if any

  .68% A

.68%

.68%

.68%

.70%

.70%

Expenses net of all reductions

  .68% A

.68%

.68%

.68%

.69%

.70%

Net investment income (loss)

  5.58% A

6.23%

6.85%

7.84%

9.02%

8.49%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 28,823

$ 35,605

$ 31,627

$ 34,946

$ 34,080

$ 19,801

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Service Class R

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.75

$ 5.34

$ 5.52

$ 5.25

$ 3.94

$ 5.93

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .160

.352

.383

.433

.431

.467

Net realized and unrealized gain (loss)

  (.134)

.400

(.167)

.280

1.280

(1.959)

Total from investment operations

  .026

.752

.216

.713

1.711

(1.492)

Distributions from net investment income

  (.006)

(.342)

(.396)

(.444)

(.401)

(.499)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.77

$ 5.75

$ 5.34

$ 5.52

$ 5.25

$ 3.94

Total Return B, C, D

  .45%

14.10%

3.99%

13.66%

43.56%

(24.79)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .78% A

.78%

.78%

.79%

.80%

.80%

Expenses net of fee waivers, if any

  .78% A

.78%

.78%

.78%

.80%

.80%

Expenses net of all reductions

  .78% A

.78%

.78%

.78%

.80%

.80%

Net investment income (loss)

  5.48% A

6.13%

6.75%

7.74%

8.92%

8.39%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 31,045

$ 69,893

$ 63,557

$ 68,806

$ 47,873

$ 26,572

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

Financial Highlights - Service Class 2R

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.65

$ 5.26

$ 5.45

$ 5.17

$ 3.89

$ 5.87

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .153

.340

.369

.415

.416

.451

Net realized and unrealized gain (loss)

  (.127)

.390

(.175)

.293

1.257

(1.940)

Total from investment operations

  .026

.730

.194

.708

1.673

(1.489)

Distributions from net investment income

  (.006)

(.340)

(.384)

(.429)

(.393)

(.492)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.67

$ 5.65

$ 5.26

$ 5.45

$ 5.17

$ 3.89

Total Return B, C, D

  .46%

13.90%

3.64%

13.79%

43.13%

(24.99)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .93% A

.93%

.93%

.94%

.95%

.95%

Expenses net of fee waivers, if any

  .93% A

.93%

.93%

.93%

.95%

.95%

Expenses net of all reductions

  .93% A

.93%

.93%

.93%

.94%

.95%

Net investment income (loss)

  5.33% A

5.98%

6.60%

7.59%

8.77%

8.24%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 4,633

$ 4,019

$ 1,350

$ 1,543

$ 2,016

$ 1,487

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

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

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended
June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.79

$ 5.37

$ 5.56

$ 5.27

$ 3.96

$ 5.96

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .163

.358

.388

.437

.441

.473

Net realized and unrealized gain (loss)

  (.127)

.407

(.180)

.298

1.274

(1.971)

Total from investment operations

  .036

.765

.208

.735

1.715

(1.498)

Distributions from net investment income

  (.006)

(.345)

(.398)

(.446)

(.405)

(.503)

Redemption fees added to paid in capital E

  - I

- I

- I

.001

- I

.001

Net asset value, end of period

$ 5.82

$ 5.79

$ 5.37

$ 5.56

$ 5.27

$ 3.96

Total Return B, C, D

  .62%

14.26%

3.82%

14.04%

43.43%

(24.76)%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .72% A

.71%

.72%

.73%

.73%

.74%

Expenses net of fee waivers, if any

  .72% A

.71%

.72%

.72%

.73%

.74%

Expenses net of all reductions

  .72% A

.71%

.72%

.72%

.73%

.74%

Net investment income (loss)

  5.54% A

6.20%

6.82%

7.81%

8.99%

8.45%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 415,274

$ 438,772

$ 284,370

$ 244,738

$ 182,806

$ 90,312

Portfolio turnover rate G

  90% A

55%

79%

81%

70%

58%

A Annualized

B Total returns for periods of less than one year are not annualized.

C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.

D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.

E Calculated based on average shares outstanding during the period.

F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.

G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.

H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

I Amount represents less than $.001 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2013 (Unaudited)

1. Organization.

VIP High Income Portfolio (the Fund) is a fund of Variable Insurance Products Fund (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares, Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class.

2. Investments in Fidelity Central Funds.

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

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

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:

Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Valuation techniques used to value the Fund's investments by major category are as follows:

Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. For corporate bonds, floating rate loans and preferred securities, pricing vendors utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices. For commercial mortgage securities, pricing vendors utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances. The Fund invests a significant portion of its assets in below investment grade securities. The value of these securities can be more volatile due to changes in the credit quality of the issuer and is sensitive to changes in economic, market and regulatory conditions.

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For restricted securities and private placements

Semiannual Report

3. Significant Accounting Policies - continued

Investment Valuation - continued

where observable inputs are limited, assumptions about market activity and risk are used and these securities are generally categorized as Level 3 in the hierarchy.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2013, is included at the end of the Fund's Schedule of Investments.

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

Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction.

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

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

Book-tax differences are primarily due to market discount, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.

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

Gross unrealized appreciation

$ 41,330,620

Gross unrealized depreciation

(25,162,548)

Net unrealized appreciation (depreciation) on securities and other investments

$ 16,168,072

 

 

Tax cost

$ 1,290,700,143

Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.

Fiscal year of expiration

 

2016

$ (26,397,633)

2017

(79,447,269)

Total capital loss carryforward

$ (105,844,902)

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, and Service Class 2R shares held by investors less than 60 days may be subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.

Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Schedule of Investments. The Fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

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

Loans and Other Direct Debt Instruments. The Fund invests in direct debt instruments which are interests in amounts owed to lenders by corporate or other borrowers. These instruments may be in the form of loans, trade claims or other receivables and may include standby financing commitments such as revolving credit facilities that obligate the Fund to supply additional cash to the borrower on demand. Loans may be acquired through assignment or participation, or may be made directly to a borrower. The Fund may be contractually obligated to receive approval from the agent bank and/or borrower prior to the sale of these loans. The Fund did not have any unfunded loan commitments, which are contractual obligations for future funding, at period end.

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $630,830,838 and $682,909,942, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the Fund's average net assets and an annualized group fee rate that averaged .11% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by FMR. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the period, the total annualized management fee rate was .56% of the Fund's average net assets.

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

For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:

Service Class

$ 37,314

Service Class 2

342,512

Service Class R

31,142

Service Class 2R

5,145

 

$ 416,113

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .10% of average net assets. In addition, FIIOC receives an asset-based fee of .0035% of average net assets for

Semiannual Report

5. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:

Initial Class

$ 223,646

Service Class

26,841

Service Class 2

98,246

Initial Class R

11,844

Service Class R

21,842

Service Class 2R

1,443

Investor Class

237,740

 

$ 621,602

Accounting Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the Fund's accounting records. The fee is based on the level of average net assets for each month.

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

Borrower or Lender

Average Loan
Balance

Weighted Average
Interest Rate

Interest Expense

Borrower

$ 24,831,167

.31%

$ 1,289

6. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,966 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

7. Expense Reductions.

Through arrangements with the Fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $795.

8. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30, 2013

Year ended
December 31, 2012

From net investment income

 

 

Initial Class

$ 619,024

$ 34,341,731

Service Class

78,876

4,352,958

Service Class 2

293,027

15,615,687

Initial Class R

36,356

2,033,316

Service Class R

72,616

3,948,919

Service Class 2R

3,963

215,852

Investor Class

461,820

24,425,765

Total

$ 1,565,682

$ 84,934,228

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

9. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30, 2013

Year ended
December 31, 2012

Six months ended
June 30, 2013

Year ended
December 31, 2012

Initial Class

 

 

 

 

Shares sold

5,300,670

13,853,360

$ 31,437,958

$ 80,405,792

Reinvestment of distributions

105,816

5,923,006

619,024

34,341,731

Shares redeemed

(12,868,294)

(19,521,567)

(76,290,025)

(112,985,217)

Net increase (decrease)

(7,461,808)

254,799

$ (44,233,043)

$ 1,762,306

Service Class

 

 

 

 

Shares sold

515,082

1,525,261

$ 3,053,476

$ 8,621,959

Reinvestment of distributions

13,553

754,748

78,876

4,352,958

Shares redeemed

(1,862,449)

(5,957,709)

(10,965,320)

(33,943,822)

Net increase (decrease)

(1,333,814)

(3,677,700)

$ (7,832,968)

$ (20,968,905)

Service Class 2

 

 

 

 

Shares sold

5,937,920

25,700,556

$ 34,369,051

$ 145,593,661

Reinvestment of distributions

51,499

2,764,623

293,027

15,615,687

Shares redeemed

(17,394,005)

(20,664,331)

(100,063,070)

(115,959,882)

Net increase (decrease)

(11,404,586)

7,800,848

$ (65,400,992)

$ 45,249,466

Initial Class R

 

 

 

 

Shares sold

424,246

2,462,639

$ 2,519,244

$ 14,321,536

Reinvestment of distributions

6,236

351,902

36,356

2,033,316

Shares redeemed

(1,626,282)

(2,548,693)

(9,614,463)

(14,732,861)

Net increase (decrease)

(1,195,800)

265,848

$ (7,058,863)

$ 1,621,991

Service Class R

 

 

 

 

Shares sold

332,984

8,023,964

$ 1,970,696

$ 46,504,431

Reinvestment of distributions

12,563

688,191

72,616

3,948,919

Shares redeemed

(7,129,835)

(8,456,038)

(41,941,445)

(47,748,690)

Net increase (decrease)

(6,784,288)

256,117

$ (39,898,133)

$ 2,704,660

Service Class 2R

 

 

 

 

Shares sold

669,951

580,649

$ 3,933,332

$ 3,315,329

Reinvestment of distributions

696

38,276

3,963

215,852

Shares redeemed

(564,974)

(164,440)

(3,254,621)

(925,854)

Net increase (decrease)

105,673

454,485

$ 682,674

$ 2,605,327

Investor Class

 

 

 

 

Shares sold

7,988,498

28,186,563

$ 47,277,940

$ 162,161,430

Reinvestment of distributions

79,214

4,226,954

461,820

24,425,765

Shares redeemed

(12,456,054)

(9,530,114)

(73,971,021)

(54,938,765)

Net increase (decrease)

(4,388,342)

22,883,403

$ (26,231,261)

$ 131,648,430

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 39% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of 15% of the total outstanding shares of the Fund.

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Hong Kong) Limited

Fidelity Management & Research (Japan) Inc.

General Distributor

Fidelity Distributors Corporation
Smithfield, RI

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

The Bank of New York Mellon
New York, NY 

VIPHIR-SANN-0813
1.833449.107

Fidelity® Variable Insurance Products:

Overseas Portfolio

Semiannual Report

June 30, 2013

(Fidelity Cover Art)

Contents

Shareholder Expense Example

(Click Here)

An example of shareholder expenses.

Investment Changes

(Click Here)

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

Investments

(Click Here)

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

Financial Statements

(Click Here)

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

Notes

(Click Here)

Notes to the financial statements.

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2013 FMR LLC. All rights reserved.

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

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

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, 2013 to June 30, 2013).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

Annualized
Expense Ratio B

Beginning
Account Value
January 1, 2013

Ending
Account Value
June 30, 2013

Expenses Paid
During Period*
January 1, 2013
to June 30, 2013

Initial Class

.84%

 

 

 

Actual

 

$ 1,000.00

$ 1,057.80

$ 4.29

HypotheticalA

 

$ 1,000.00

$ 1,020.63

$ 4.21

Service Class

.94%

 

 

 

Actual

 

$ 1,000.00

$ 1,057.40

$ 4.80

HypotheticalA

 

$ 1,000.00

$ 1,020.13

$ 4.71

Service Class 2

1.09%

 

 

 

Actual

 

$ 1,000.00

$ 1,056.40

$ 5.56

HypotheticalA

 

$ 1,000.00

$ 1,019.39

$ 5.46

Initial Class R

.84%

 

 

 

Actual

 

$ 1,000.00

$ 1,057.30

$ 4.28

HypotheticalA

 

$ 1,000.00

$ 1,020.63

$ 4.21

Service Class R

.94%

 

 

 

Actual

 

$ 1,000.00

$ 1,056.90

$ 4.79

HypotheticalA

 

$ 1,000.00

$ 1,020.13

$ 4.71

Service Class 2R

1.09%

 

 

 

Actual

 

$ 1,000.00

$ 1,056.30

$ 5.56

HypotheticalA

 

$ 1,000.00

$ 1,019.39

$ 5.46

Investor Class R

.92%

 

 

 

Actual

 

$ 1,000.00

$ 1,057.40

$ 4.69

HypotheticalA

 

$ 1,000.00

$ 1,020.23

$ 4.61

A 5% return per year before expenses

B Annualized expense ratio reflects expenses net of applicable fee waivers.

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Geographic Diversification (% of fund's net assets)

As of June 30, 2013

vvv1266569

Japan

20.9%

 

vvv1266571

United Kingdom

20.4%

 

vvv1266573

France

10.1%

 

vvv1266575

Switzerland

7.8%

 

vvv1266577

Germany

5.8%

 

vvv1266579

United States of America*

5.7%

 

vvv1266581

Cayman Islands

4.1%

 

vvv1266583

Ireland

3.4%

 

vvv1266585

Australia

3.2%

 

vvv1266587

Other

18.6%

 

vvv1266589

Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.

As of December 31, 2012

vvv1266569

United Kingdom

23.4%

 

vvv1266571

Japan

13.1%

 

vvv1266573

France

12.9%

 

vvv1266575

Switzerland

9.0%

 

vvv1266577

Germany

7.9%

 

vvv1266579

United States of America*

6.1%

 

vvv1266581

Australia

3.7%

 

vvv1266583

Cayman Islands

2.9%

 

vvv1266585

Ireland

2.6%

 

vvv1266587

Other

18.4%

 

vvv1266601

Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.

* Includes Short-Term Investments and Net Other Assets.

Asset Allocation as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Stocks

99.6

99.1

Short-Term Investments and Net Other Assets (Liabilities)

0.4

0.9

Top Ten Stocks as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Nestle SA (Switzerland, Food Products)

2.8

2.8

Sanofi SA (France, Pharmaceuticals)

2.4

2.8

SoftBank Corp. (Japan, Wireless Telecommunication Services)

1.8

0.9

HSBC Holdings PLC (United Kingdom, Commercial Banks)

1.8

1.9

Toyota Motor Corp. (Japan, Automobiles)

1.7

1.2

Mitsubishi UFJ Financial Group, Inc. (Japan, Commercial Banks)

1.6

1.3

Novo Nordisk A/S Series B (Denmark, Pharmaceuticals)

1.6

2.0

Rakuten, Inc. (Japan, Internet & Catalog Retail)

1.5

1.3

Danone SA (France, Food Products)

1.5

1.1

Tencent Holdings Ltd. (Cayman Islands, Internet Software & Services)

1.3

1.2

 

18.0

Market Sectors as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Consumer Discretionary

24.0

19.8

Financials

19.3

17.9

Consumer Staples

14.2

14.5

Information Technology

12.3

10.6

Health Care

8.9

9.3

Industrials

8.3

7.9

Materials

6.2

9.1

Energy

3.6

5.9

Telecommunication Services

2.1

3.0

Utilities

0.7

1.1

Semiannual Report

Investments June 30, 2013 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 98.0%

Shares

Value

Australia - 3.2%

BHP Billiton Ltd.

318,002

$ 9,152,995

Carsales.com Ltd.

320,637

2,765,240

CSL Ltd.

169,506

9,546,237

Fortescue Metals Group Ltd.

258,379

718,354

G8 Education Ltd.

1,177,748

2,649,689

iSelect Ltd.

1,499,813

2,331,812

Macquarie Group Ltd.

105,682

4,046,797

McMillan Shakespeare Ltd.

187,689

2,777,313

Rio Tinto Ltd.

24,301

1,163,896

Westfield Group unit

1,008,657

10,553,025

TOTAL AUSTRALIA

45,705,358

Bailiwick of Jersey - 1.3%

Experian PLC

233,300

4,055,794

Informa PLC

813,663

6,065,187

WPP PLC

478,707

8,182,455

TOTAL BAILIWICK OF JERSEY

18,303,436

Belgium - 0.8%

Ageas

66,760

2,344,078

Anheuser-Busch InBev SA NV

33,577

3,023,045

Hamon & Compagnie International SA (a)(d)

62,254

1,099,617

KBC Groupe SA

31,157

1,160,090

UCB SA

72,400

3,900,100

TOTAL BELGIUM

11,526,930

Bermuda - 0.8%

Clear Media Ltd.

2,035,000

1,390,592

Oriental Watch Holdings Ltd.

7,028,000

2,292,512

Signet Jewelers Ltd.

115,400

7,781,422

TOTAL BERMUDA

11,464,526

Brazil - 0.8%

Anhanguera Educacional Participacoes SA

579,300

3,390,619

Cielo SA

301,440

7,557,108

TOTAL BRAZIL

10,947,727

British Virgin Islands - 0.6%

Gem Diamonds Ltd. (a)

802,019

1,655,920

Mail.Ru Group Ltd.:

GDR (e)

6,600

189,156

GDR (Reg. S)

258,800

7,417,208

TOTAL BRITISH VIRGIN ISLANDS

9,262,284

Canada - 0.0%

Bauer Performance Sports Ltd. (a)

55,161

626,245

Cayman Islands - 4.1%

51job, Inc. sponsored ADR (a)

36,000

2,430,360

Baidu.com, Inc. sponsored ADR (a)

61,400

5,804,142

Biostime International Holdings Ltd.

1,086,500

6,093,662

Greatview Aseptic Pack Co. Ltd.

4,056,000

2,510,144

 

Shares

Value

Hengdeli Holdings Ltd.

25,429,800

$ 5,803,308

Noah Holdings Ltd. sponsored ADR

348,200

3,088,534

Shenguan Holdings Group Ltd.

2,636,000

1,226,908

SouFun Holdings Ltd. ADR (d)

340,400

8,448,728

Tencent Holdings Ltd.

484,300

18,994,728

Vipshop Holdings Ltd. ADR (a)

79,500

2,318,220

Youku Tudou, Inc. ADR (a)

96,000

1,842,240

TOTAL CAYMAN ISLANDS

58,560,974

Denmark - 1.7%

Danske Bank A/S (a)

96,100

1,643,566

Novo Nordisk A/S:

Series B

16,125

2,506,832

Series B sponsored ADR

128,300

19,882,651

TOTAL DENMARK

24,033,049

France - 10.1%

AXA SA

95,620

1,878,781

AXA SA sponsored ADR

135,400

2,666,026

Beneteau SA (a)

196,900

2,175,944

BNP Paribas SA

137,903

7,534,573

Bollore

6,400

2,664,530

Club Mediterranee SA (a)

85,000

1,939,524

Danone SA

285,212

21,406,056

Edenred SA

116,400

3,560,533

Essilor International SA

38,339

4,079,150

Gameloft Se (a)

537,900

3,766,848

Iliad SA (d)

20,787

4,495,587

Ipsos SA

134,292

5,068,360

LVMH Moet Hennessy - Louis Vuitton SA

95,996

15,556,672

Pernod Ricard SA

95,400

10,578,674

PPR SA

46,900

9,532,549

PPR SA rights 10/1/13 (a)

46,900

122,278

Safran SA

110,900

5,792,163

Sanofi SA

139,290

14,399,884

Sanofi SA sponsored ADR

403,822

20,800,871

Societe Generale Series A (d)

84,943

2,918,944

Total SA (d)

87,900

4,293,317

TOTAL FRANCE

145,231,264

Germany - 4.2%

adidas AG

75,900

8,213,836

Allianz AG

74,132

10,831,442

Bayer AG

118,678

12,656,318

Commerzbank AG (a)

55,520

484,048

Deutsche Bank AG

58,446

2,450,808

GSW Immobilien AG (d)

59,000

2,282,801

Linde AG

38,187

7,125,371

SAP AG

185,839

13,570,532

SAP AG sponsored ADR (d)

39,300

2,862,219

TOTAL GERMANY

60,477,375

Common Stocks - continued

Shares

Value

Hong Kong - 1.1%

AIA Group Ltd.

2,299,400

$ 9,738,886

Television Broadcasts Ltd.

869,000

5,971,816

TOTAL HONG KONG

15,710,702

Ireland - 3.4%

C&C Group PLC

2,823,500

15,288,868

CRH PLC

458,042

9,267,424

Glanbia PLC

451,000

6,075,907

Kingspan Group PLC (United Kingdom)

719,800

9,640,986

Paddy Power PLC (Ireland)

103,900

8,915,115

TOTAL IRELAND

49,188,300

Isle of Man - 0.3%

Playtech Ltd.

436,355

3,995,318

Israel - 0.3%

Rami Levi Chain Stores Hashikma Marketing 2006 Ltd.

80,100

3,721,433

Italy - 1.5%

Assicurazioni Generali SpA

158,500

2,768,701

ENI SpA

200,700

4,119,163

ENI SpA sponsored ADR

67,900

2,786,616

Moleskine SpA

1,277,502

2,901,692

Tod's SpA (d)

67,189

9,497,783

TOTAL ITALY

22,073,955

Japan - 20.9%

Cosmos Pharmaceutical Corp.

114,900

11,651,731

Daiwa Securities Group, Inc.

490,000

4,103,712

DENSO Corp.

87,400

4,108,952

Dentsu, Inc.

431,700

14,934,486

East Japan Railway Co.

43,300

3,370,149

EPS Co. Ltd.

2,231

2,490,013

Fuji Media Holdings, Inc.

1,619

3,254,613

Hitachi Ltd.

2,478,000

15,877,787

Honda Motor Co. Ltd.

325,800

12,103,284

Japan Tobacco, Inc.

291,700

10,296,296

Kakaku.com, Inc.

219,900

6,715,112

Keyence Corp.

36,720

11,699,389

Komatsu Ltd.

239,400

5,513,846

Makita Corp.

74,600

4,010,667

Mitsubishi Corp.

357,000

6,098,882

Mitsubishi Electric Corp.

750,000

7,008,081

Mitsubishi UFJ Financial Group, Inc.

3,141,700

19,402,730

Mitsubishi UFJ Financial Group, Inc. sponsored ADR (d)

489,200

3,037,932

MS&AD Insurance Group Holdings, Inc.

177,500

4,496,110

Nomura Holdings, Inc.

505,000

3,717,188

Nomura Holdings, Inc. sponsored ADR (d)

57,600

428,544

ORIX Corp.

1,367,300

18,659,161

Rakuten, Inc.

1,820,500

21,527,383

Ship Healthcare Holdings, Inc.

97,600

3,587,879

 

Shares

Value

SMC Corp.

21,000

$ 4,209,988

SoftBank Corp.

436,500

25,408,646

Start Today Co. Ltd.

242,500

4,748,535

Sumitomo Mitsui Financial Group, Inc.

364,200

16,670,545

Suzuki Motor Corp.

128,100

2,952,747

THK Co. Ltd.

158,500

3,325,809

Tokio Marine Holdings, Inc.

136,600

4,310,409

Toshiba Corp.

672,000

3,221,283

Toyota Motor Corp.

314,000

18,939,803

Toyota Motor Corp. sponsored ADR (d)

47,500

5,731,350

Tsuruha Holdings, Inc.

39,800

3,761,954

Yahoo! Japan Corp.

18,401

9,060,928

TOTAL JAPAN

300,435,924

Korea (South) - 1.0%

Hotel Shilla Co.

162,838

8,694,955

Samsung Electronics Co. Ltd.

4,860

5,709,138

TOTAL KOREA (SOUTH)

14,404,093

Netherlands - 1.5%

AEGON NV

259,400

1,740,330

ASML Holding NV

34,111

2,698,180

ING Groep NV (Certificaten Van Aandelen) (a)

558,084

5,100,381

Koninklijke Philips Electronics NV

304,416

8,298,720

Yandex NV (a)

124,400

3,437,172

TOTAL NETHERLANDS

21,274,783

Nigeria - 0.2%

Guinness Nigeria PLC

941,861

1,454,950

Nigerian Breweries PLC (a)

2,064,790

1,983,103

TOTAL NIGERIA

3,438,053

Norway - 1.6%

DNB ASA

447,800

6,483,658

Schibsted ASA (B Shares)

333,600

14,410,865

StatoilHydro ASA

14,100

291,279

StatoilHydro ASA sponsored ADR

103,300

2,137,277

TOTAL NORWAY

23,323,079

Philippines - 0.3%

Alliance Global Group, Inc.

8,954,300

4,861,499

South Africa - 0.6%

City Lodge Hotels Ltd.

73,400

891,043

Life Healthcare Group Holdings Ltd.

621,600

2,358,106

Naspers Ltd. Class N

70,000

5,169,423

TOTAL SOUTH AFRICA

8,418,572

Spain - 0.9%

Banco Bilbao Vizcaya Argentaria SA

584,927

4,915,648

Banco Santander SA (Spain)

320,353

2,050,019

Grifols SA ADR

189,000

5,382,720

TOTAL SPAIN

12,348,387

Common Stocks - continued

Shares

Value

Sweden - 2.3%

Investment AB Kinnevik

414,100

$ 10,614,782

Nordea Bank AB

608,800

6,808,726

Svenska Cellulosa AB (SCA) (B Shares)

518,300

13,007,544

Swedbank AB (A Shares)

102,432

2,349,211

TOTAL SWEDEN

32,780,263

Switzerland - 7.8%

Compagnie Financiere Richemont SA Series A

136,086

12,037,463

Credit Suisse Group

72,815

1,927,711

Credit Suisse Group sponsored ADR (d)

41,352

1,094,174

Nestle SA

606,480

39,797,458

Sika AG (Bearer)

2,510

6,499,878

Swatch Group AG (Bearer)

30,020

16,431,465

Swiss Re Ltd.

46,826

3,485,118

Syngenta AG (Switzerland)

38,450

14,993,916

UBS AG

591,162

10,034,289

UBS AG (NY Shares)

184,900

3,134,055

Zurich Insurance Group AG

11,638

3,018,697

TOTAL SWITZERLAND

112,454,224

Taiwan - 0.4%

MediaTek, Inc.

323,000

3,755,939

Wowprime Corp.

157,300

2,117,803

TOTAL TAIWAN

5,873,742

Thailand - 0.6%

Airports of Thailand PCL (For. Reg.)

606,600

3,296,633

Thai Beverage PCL

12,231,000

5,693,325

TOTAL THAILAND

8,989,958

United Kingdom - 20.4%

Aberdeen Asset Management PLC

840,800

4,895,303

Aggreko PLC

106,300

2,654,736

Anglo American PLC ADR

96,800

932,184

ASOS PLC (a)

137,700

8,471,638

Aviva PLC

329,400

1,697,777

Barclays PLC

2,050,253

8,731,506

Barclays PLC sponsored ADR

159,400

2,728,928

BG Group PLC

551,038

9,374,162

BHP Billiton PLC

466,881

11,904,457

BP PLC

464,793

3,225,639

Brammer PLC (d)

1,113,400

5,503,634

British Land Co. PLC

715,689

6,166,506

Burberry Group PLC

356,200

7,319,210

Centrica PLC

1,106,700

6,063,014

Dechra Pharmaceuticals PLC

159,300

1,671,783

Diageo PLC

633,943

18,179,150

Dunelm Group PLC

464,300

6,687,497

GlaxoSmithKline PLC

518,800

12,968,047

 

Shares

Value

GlaxoSmithKline PLC sponsored ADR

73,900

$ 3,692,783

Glencore Xstrata PLC

1,246,535

5,159,739

Hays PLC

2,206,800

2,985,547

HSBC Holdings PLC:

(United Kingdom)

921,022

9,534,558

sponsored ADR

293,970

15,257,043

Johnson Matthey PLC

154,198

6,163,381

Legal & General Group PLC

814,483

2,123,282

Lloyds Banking Group PLC (a)

11,162,744

10,719,717

Michael Page International PLC

754,200

4,255,743

Prudential PLC

271,361

4,429,365

Reckitt Benckiser Group PLC

142,100

10,045,583

Rio Tinto PLC

142,915

5,812,204

Rio Tinto PLC sponsored ADR (d)

34,900

1,433,692

Rolls-Royce Group PLC

322,708

5,565,930

Royal Bank of Scotland Group PLC (a)

255,480

1,060,186

Royal Dutch Shell PLC:

Class A (United Kingdom)

439,441

14,037,510

Class B (United Kingdom)

380,537

12,602,987

SABMiller PLC

357,400

17,136,597

Scottish & Southern Energy PLC

210,600

4,878,353

Standard Chartered PLC (United Kingdom)

337,667

7,328,710

Sthree PLC

229,400

1,157,495

Taylor Wimpey PLC

1,954,800

2,846,794

Tesco PLC

566,800

2,856,915

Travis Perkins PLC

488,300

10,813,419

William Hill PLC

1,790,944

12,009,835

TOTAL UNITED KINGDOM

293,082,539

United States of America - 5.3%

Deckers Outdoor Corp. (a)(d)

136,000

6,869,360

Dunkin' Brands Group, Inc.

136,400

5,840,648

GNC Holdings, Inc.

95,400

4,217,634

Google, Inc. Class A (a)

16,800

14,790,216

LinkedIn Corp. (a)

17,200

3,066,760

MercadoLibre, Inc. (d)

48,300

5,204,808

Monsanto Co.

43,203

4,268,456

priceline.com, Inc. (a)

9,060

7,493,798

Tiffany & Co., Inc.

112,000

8,158,080

Visa, Inc. Class A

72,100

13,176,275

Yahoo!, Inc. (a)

149,200

3,746,412

TOTAL UNITED STATES OF AMERICA

76,832,447

TOTAL COMMON STOCKS

(Cost $1,216,136,019)


1,409,346,439

Nonconvertible Preferred Stocks - 1.6%

Shares

Value

Germany - 1.6%

ProSiebenSat.1 Media AG

96,900

$ 4,164,809

Sartorius AG (non-vtg.)

39,500

4,248,950

Volkswagen AG

74,047

14,992,419

TOTAL NONCONVERTIBLE PREFERRED STOCKS

(Cost $13,693,221)


23,406,178

Money Market Funds - 2.7%

 

 

 

 

Fidelity Cash Central Fund, 0.13% (b)

14,259,896

14,259,896

Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c)

24,176,872

24,176,872

TOTAL MONEY MARKET FUNDS

(Cost $38,436,768)


38,436,768

TOTAL INVESTMENT PORTFOLIO - 102.3%

(Cost $1,268,266,008)

1,471,189,385

NET OTHER ASSETS (LIABILITIES) - (2.3)%

(33,254,855)

NET ASSETS - 100%

$ 1,437,934,530

Legend

(a) Non-income producing

(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.

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

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

(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $189,156 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

$ 5,061

Fidelity Securities Lending Cash Central Fund

563,390

Total

$ 568,451

Other Information

Categorizations in the Schedule of Investments are based on country or territory of incorporation.

The following is a summary of the inputs used, as of June 30, 2013, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 346,951,830

$ 256,199,572

$ 90,752,258

$ -

Consumer Staples

203,279,159

116,569,525

86,709,634

-

Energy

52,867,950

14,298,055

38,569,895

-

Financials

278,647,111

142,894,961

135,752,150

-

Health Care

124,172,324

88,219,669

35,952,655

-

Industrials

117,853,766

76,017,624

41,836,142

-

Information Technology

179,372,866

119,227,835

60,145,031

-

Materials

88,762,011

37,631,015

51,130,996

-

Telecommunication Services

29,904,233

4,495,587

25,408,646

-

Utilities

10,941,367

10,941,367

-

-

Money Market Funds

38,436,768

38,436,768

-

-

Total Investments in Securities:

$ 1,471,189,385

$ 904,931,978

$ 566,257,407

$ -

The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2013. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:

Transfers

Total

Level 1 to Level 2

$ 0

Level 2 to Level 1

$ 581,435,927

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2013 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $23,361,277) - See accompanying schedule:

Unaffiliated issuers (cost $1,229,829,240)

$ 1,432,752,617

 

Fidelity Central Funds (cost $38,436,768)

38,436,768

 

Total Investments (cost $1,268,266,008)

 

$ 1,471,189,385

Cash

 

4,928

Foreign currency held at value (cost $194,825)

194,825

Receivable for investments sold

9,981,318

Receivable for fund shares sold

716,985

Dividends receivable

3,354,995

Distributions receivable from Fidelity Central Funds

43,757

Other receivables

317,745

Total assets

1,485,803,938

 

 

 

Liabilities

Payable for investments purchased

$ 20,611,832

Payable for fund shares redeemed

1,212,677

Accrued management fee

857,906

Distribution and service plan fees payable

86,019

Other affiliated payables

178,733

Other payables and accrued expenses

745,369

Collateral on securities loaned, at value

24,176,872

Total liabilities

47,869,408

 

 

 

Net Assets

$ 1,437,934,530

Net Assets consist of:

 

Paid in capital

$ 1,555,970,732

Undistributed net investment income

16,485,342

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

(337,330,997)

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

202,809,453

Net Assets

$ 1,437,934,530

Statement of Assets and Liabilities - continued

 

June 30, 2013 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($663,267,518 ÷ 38,977,941 shares)

$ 17.02

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($104,224,159 ÷ 6,152,114 shares)

$ 16.94

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($274,385,375 ÷ 16,282,889 shares)

$ 16.85

 

 

 

Initial Class R:
Net Asset Value, offering price and redemption price per share ($85,932,249 ÷ 5,062,464 shares)

$ 16.97

 

 

 

Service Class R:
Net Asset Value, offering price and redemption price per share ($45,407,002 ÷ 2,684,906 shares)

$ 16.91

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($70,400,551 ÷ 4,217,186 shares)

$ 16.69

 

 

 

Investor Class R:
Net Asset Value, offering price and redemption price per share ($194,317,676 ÷ 11,454,677 shares)

$ 16.96

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, 2013 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 24,907,762

Interest

 

66

Income from Fidelity Central Funds

 

568,451

Income before foreign taxes withheld

 

25,476,279

Less foreign taxes withheld

 

(1,977,321)

Total income

 

23,498,958

 

 

 

Expenses

Management fee

$ 5,374,769

Transfer agent fees

627,742

Distribution and service plan fees

592,152

Accounting and security lending fees

348,369

Custodian fees and expenses

90,358

Independent trustees' compensation

4,720

Appreciation in deferred trustee compensation account

61

Audit

32,958

Legal

4,197

Interest

190

Miscellaneous

7,501

Total expenses before reductions

7,083,017

Expense reductions

(114,900)

6,968,117

Net investment income (loss)

16,530,841

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

64,922,620

Foreign currency transactions

(504,115)

Total net realized gain (loss)

 

64,418,505

Change in net unrealized appreciation (depreciation) on:

Investment securities

8,961,964

Assets and liabilities in foreign currencies

(83,959)

Total change in net unrealized appreciation (depreciation)

 

8,878,005

Net gain (loss)

73,296,510

Net increase (decrease) in net assets resulting from operations

$ 89,827,351

Statement of Changes in Net Assets

 

Six months ended
June 30, 2013
(Unaudited)

Year ended
December 31,
2012

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 16,530,841

$ 26,849,201

Net realized gain (loss)

64,418,505

6,602,044

Change in net unrealized appreciation (depreciation)

8,878,005

240,168,202

Net increase (decrease) in net assets resulting from operations

89,827,351

273,619,447

Distributions to shareholders from net investment income

-

(26,228,448)

Distributions to shareholders from net realized gain

-

(5,357,064)

Total distributions

-

(31,585,512)

Share transactions - net increase (decrease)

(148,466,200)

(136,580,307)

Redemption fees

6,799

11,237

Total increase (decrease) in net assets

(58,632,050)

105,464,865

 

 

 

Net Assets

Beginning of period

1,496,566,580

1,391,101,715

End of period (including undistributed net investment income of $16,485,342 and distributions in excess of net investment income of $45,499, respectively)

$ 1,437,934,530

$ 1,496,566,580

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 16.09

$ 13.63

$ 16.77

$ 15.05

$ 12.17

$ 25.33

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .19

.29

.26

.21

.28

.46

Net realized and unrealized gain (loss)

  .74

2.53

(3.14)

1.76

2.93

(10.67)

Total from investment operations

  .93

2.82

(2.88)

1.97

3.21

(10.21)

Distributions from net investment income

  -

(.30) H

(.23)

(.22)

(.29)

(.49)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.36)

(.26)

(.25)

(.33)

(2.95)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 17.02

$ 16.09

$ 13.63

$ 16.77

$ 15.05

$ 12.17

Total Return B, C, D

  5.78%

20.74%

(17.16)%

13.11%

26.53%

(43.83)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .84% A

.85%

.85%

.86%

.88%

.87%

Expenses net of fee waivers, if any

  .84% A

.85%

.85%

.85%

.88%

.87%

Expenses net of all reductions

  .83% A

.83%

.83%

.83%

.84%

.84%

Net investment income (loss)

  2.25% A

1.94%

1.59%

1.41%

2.17%

2.45%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 663,268

$ 659,258

$ 598,862

$ 779,501

$ 758,018

$ 703,357

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

Financial Highlights - Service Class

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 16.02

$ 13.58

$ 16.70

$ 14.99

$ 12.12

$ 25.23

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .18

.28

.24

.19

.26

.44

Net realized and unrealized gain (loss)

  .74

2.50

(3.12)

1.75

2.93

(10.61)

Total from investment operations

  .92

2.78

(2.88)

1.94

3.19

(10.17)

Distributions from net investment income

  -

(.29) H

(.21)

(.20)

(.28)

(.48)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.34) K

(.24)

(.23)

(.32)

(2.94)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.94

$ 16.02

$ 13.58

$ 16.70

$ 14.99

$ 12.12

Total Return B, C, D

  5.74%

20.54%

(17.23)%

12.99%

26.44%

(43.89)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .94% A

.95%

.95%

.96%

.98%

.97%

Expenses net of fee waivers, if any

  .94% A

.95%

.95%

.95%

.98%

.97%

Expenses net of all reductions

  .93% A

.93%

.93%

.93%

.94%

.94%

Net investment income (loss)

  2.15% A

1.84%

1.49%

1.31%

2.07%

2.35%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 104,224

$ 110,468

$ 108,921

$ 162,394

$ 171,252

$ 165,608

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K Total distributions of $.34 per share is comprised of distributions from net investment income of $.286 and distributions from net realized gain of $.059 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, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 15.95

$ 13.52

$ 16.62

$ 14.92

$ 12.07

$ 25.12

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .17

.25

.21

.17

.24

.40

Net realized and unrealized gain (loss)

  .73

2.50

(3.09)

1.74

2.91

(10.54)

Total from investment operations

  .90

2.75

(2.88)

1.91

3.15

(10.14)

Distributions from net investment income

  -

(.26) H

(.19)

(.18)

(.26)

(.45)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.32)

(.22)

(.21)

(.30)

(2.91)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.85

$ 15.95

$ 13.52

$ 16.62

$ 14.92

$ 12.07

Total Return B, C, D

  5.64%

20.38%

(17.34)%

12.83%

26.22%

(43.96)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  1.09% A

1.10%

1.10%

1.11%

1.12%

1.12%

Expenses net of fee waivers, if any

  1.09% A

1.10%

1.10%

1.10%

1.12%

1.12%

Expenses net of all reductions

  1.07% A

1.08%

1.08%

1.08%

1.09%

1.09%

Net investment income (loss)

  2.00% A

1.69%

1.34%

1.16%

1.93%

2.21%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 274,385

$ 349,364

$ 342,206

$ 461,033

$ 457,971

$ 414,492

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

Financial Highlights - Initial Class R

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 16.05

$ 13.60

$ 16.73

$ 15.02

$ 12.14

$ 25.28

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .19

.29

.26

.21

.28

.46

Net realized and unrealized gain (loss)

  .73

2.52

(3.13)

1.75

2.93

(10.65)

Total from investment operations

  .92

2.81

(2.87)

1.96

3.21

(10.19)

Distributions from net investment income

  -

(.30) H

(.23)

(.22)

(.29)

(.49)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.36)

(.26)

(.25)

(.33)

(2.95)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.97

$ 16.05

$ 13.60

$ 16.73

$ 15.02

$ 12.14

Total Return B, C, D

  5.73%

20.71%

(17.14)%

13.07%

26.60%

(43.84)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .84% A

.85%

.85%

.86%

.88%

.87%

Expenses net of fee waivers, if any

  .84% A

.85%

.85%

.85%

.88%

.87%

Expenses net of all reductions

  .83% A

.83%

.83%

.83%

.84%

.84%

Net investment income (loss)

  2.25% A

1.94%

1.59%

1.41%

2.17%

2.46%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 85,932

$ 88,587

$ 85,922

$ 122,655

$ 128,689

$ 118,749

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

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

Semiannual Report

Financial Highlights - Service Class R

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 16.00

$ 13.56

$ 16.68

$ 14.97

$ 12.10

$ 25.19

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .18

.28

.24

.19

.27

.43

Net realized and unrealized gain (loss)

  .73

2.51

(3.12)

1.75

2.92

(10.58)

Total from investment operations

  .91

2.79

(2.88)

1.94

3.19

(10.15)

Distributions from net investment income

  -

(.29) H

(.21)

(.20)

(.28)

(.48)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.35)

(.24)

(.23)

(.32)

(2.94)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.91

$ 16.00

$ 13.56

$ 16.68

$ 14.97

$ 12.10

Total Return B, C, D

  5.69%

20.58%

(17.24)%

13.01%

26.49%

(43.88)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .94% A

.94%

.95%

.96%

.97%

.96%

Expenses net of fee waivers, if any

  .94% A

.94%

.94%

.95%

.97%

.96%

Expenses net of all reductions

  .92% A

.93%

.93%

.93%

.94%

.94%

Net investment income (loss)

  2.16% A

1.84%

1.49%

1.31%

2.08%

2.36%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 45,407

$ 45,774

$ 43,414

$ 60,617

$ 66,014

$ 61,825

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

Financial Highlights - Service Class 2R

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 15.80

$ 13.40

$ 16.48

$ 14.80

$ 11.98

$ 24.95

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .17

.25

.21

.17

.25

.40

Net realized and unrealized gain (loss)

  .72

2.47

(3.07)

1.73

2.87

(10.46)

Total from investment operations

  .89

2.72

(2.86)

1.90

3.12

(10.06)

Distributions from net investment income

  -

(.26) H

(.19)

(.19)

(.26)

(.45)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.32)

(.22)

(.22)

(.30)

(2.91)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.69

$ 15.80

$ 13.40

$ 16.48

$ 14.80

$ 11.98

Total Return B, C, D

  5.63%

20.36%

(17.33)%

12.82%

26.20%

(43.94)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  1.09% A

1.09%

1.10%

1.11%

1.12%

1.11%

Expenses net of fee waivers, if any

  1.09% A

1.09%

1.09%

1.10%

1.12%

1.11%

Expenses net of all reductions

  1.07% A

1.08%

1.08%

1.08%

1.09%

1.09%

Net investment income (loss)

  2.01% A

1.69%

1.34%

1.16%

1.93%

2.21%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 70,401

$ 67,674

$ 58,968

$ 69,393

$ 64,200

$ 46,323

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

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

Semiannual Report

Financial Highlights - Investor Class R

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 16.04

$ 13.60

$ 16.73

$ 15.01

$ 12.14

$ 25.27

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .18

.28

.24

.20

.27

.43

Net realized and unrealized gain (loss)

  .74

2.51

(3.12)

1.76

2.92

(10.62)

Total from investment operations

  .92

2.79

(2.88)

1.96

3.19

(10.19)

Distributions from net investment income

  -

(.29) H

(.22)

(.21)

(.28)

(.48)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.35)

(.25)

(.24)

(.32)

(2.94)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.96

$ 16.04

$ 13.60

$ 16.73

$ 15.01

$ 12.14

Total Return B, C, D

  5.74%

20.54%

(17.22)%

13.07%

26.42%

(43.89)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .92% A

.93%

.93%

.95%

.97%

.96%

Expenses net of fee waivers, if any

  .92% A

.93%

.93%

.94%

.97%

.96%

Expenses net of all reductions

  .91% A

.92%

.91%

.92%

.94%

.93%

Net investment income (loss)

  2.17% A

1.85%

1.51%

1.32%

2.08%

2.36%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 194,318

$ 175,442

$ 152,810

$ 177,984

$ 148,806

$ 124,111

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2013 (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. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.

2. Investments in Fidelity Central Funds.

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

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

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:

Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

Semiannual Report

3. Significant Accounting Policies - continued

Investment Valuation - continued

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2013, including information on transfers between Levels 1 and 2, is included at the end of the Fund's Schedule of Investments.

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

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

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

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

Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

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

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences resulted in distribution reclassifications for the period ended December 31, 2012.

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

Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

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

Gross unrealized appreciation

$ 297,070,576

Gross unrealized depreciation

(110,488,866)

Net unrealized appreciation (depreciation) on securities and other investments

$ 186,581,710

 

 

Tax cost

$ 1,284,607,675

Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.

Fiscal year of expiration

 

2016

$ (99,490,351)

2017

(280,447,470)

Total capital loss carryforward

$ (379,937,821)

Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class R shares held by investors less than 60 days may be subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.

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.

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $332,055,723 and $456,236,485, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the Fund's average net assets and an annualized group fee rate that averaged .25% 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 .70% of the Fund's average net assets.

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

For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:

Service Class

$ 54,304

Service Class 2

425,984

Service Class R

23,519

Service Class 2R

88,345

 

$ 592,152

Semiannual Report

5. 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 R) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class R pays a monthly asset-based transfer agent fee of .15% of average net assets. In addition, FIIOC receives an asset-based fee of .0035% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:

Initial Class

$ 245,059

Service Class

39,195

Service Class 2

121,515

Initial Class R

32,515

Service Class R

16,333

Service Class 2R

24,542

Investor Class R

148,583

 

$ 627,742

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

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $1,095 for the period.

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

Borrower or Lender

Average Loan
Balance

Weighted Average
Interest Rate

Interest Expense

Borrower

$ 3,407,400

.40%

$ 190

6. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,943 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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 rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $563,390. During the period, there were no securities loaned to FCM.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. 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 $114,900 for the period.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
June 30, 2013

Year ended
December 31, 2012

From net investment income

 

 

Initial Class

$ -

$ 12,006,007

Service Class

-

1,929,055

Service Class 2

-

5,676,951

Initial Class R

-

1,647,375

Service Class R

-

804,767

Service Class 2R

-

1,102,032

Investor Class R

-

3,062,261

Total

$ -

$ 26,228,448

From net realized gain

 

 

Initial Class

$ -

$ 2,332,435

Service Class

-

397,090

Service Class 2

-

1,276,004

Initial Class R

-

320,038

Service Class R

-

165,080

Service Class 2R

-

244,876

Investor Class R

-

621,541

Total

$ -

$ 5,357,064

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30, 2013

Year ended
December 31, 2012

Six months ended
June 30, 2013

Year ended
December 31, 2012

Initial Class

 

 

 

 

Shares sold

2,429,979

5,444,050

$ 41,620,299

$ 81,965,581

Reinvestment of distributions

-

905,776

-

14,338,442

Shares redeemed

(4,430,862)

(9,304,668)

(75,355,832)

(141,203,928)

Net increase (decrease)

(2,000,883)

(2,954,842)

$ (33,735,533)

$ (44,899,905)

Service Class

 

 

 

 

Shares sold

138,827

308,352

$ 2,332,941

$ 4,623,052

Reinvestment of distributions

-

147,504

-

2,326,145

Shares redeemed

(880,376)

(1,584,094)

(14,753,412)

(23,791,164)

Net increase (decrease)

(741,549)

(1,128,238)

$ (12,420,471)

$ (16,841,967)

Service Class 2

 

 

 

 

Shares sold

752,744

1,454,591

$ 12,672,606

$ 21,413,096

Reinvestment of distributions

-

442,863

-

6,952,955

Shares redeemed

(6,371,795)

(5,312,307)

(111,900,983)

(79,852,380)

Net increase (decrease)

(5,619,051)

(3,414,853)

$ (99,228,377)

$ (51,486,329)

Initial Class R

 

 

 

 

Shares sold

128,591

225,830

$ 2,186,091

$ 3,396,796

Reinvestment of distributions

-

124,599

-

1,967,413

Shares redeemed

(586,255)

(1,149,012)

(9,982,018)

(17,268,375)

Net increase (decrease)

(457,664)

(798,583)

$ (7,795,927)

$ (11,904,166)

Semiannual Report

10. Share Transactions - continued

 

Shares

Dollars

Six months ended
June 30, 2013

Year ended
December 31, 2012

Six months ended
June 30, 2013

Year ended
December 31, 2012

Service Class R

 

 

 

 

Shares sold

60,007

244,158

$ 1,010,958

$ 3,670,758

Reinvestment of distributions

-

61,617

-

969,847

Shares redeemed

(236,563)

(647,072)

(3,992,882)

(9,806,526)

Net increase (decrease)

(176,556)

(341,297)

$ (2,981,924)

$ (5,165,921)

Service Class 2R

 

 

 

 

Shares sold

196,886

531,202

$ 3,264,605

$ 7,828,308

Reinvestment of distributions

-

86,618

-

1,346,907

Shares redeemed

(262,299)

(737,328)

(4,309,241)

(10,984,899)

Net increase (decrease)

(65,413)

(119,508)

$ (1,044,636)

$ (1,809,684)

Investor Class R

 

 

 

 

Shares sold

1,220,427

1,329,601

$ 20,653,968

$ 19,962,890

Reinvestment of distributions

-

233,300

-

3,683,801

Shares redeemed

(700,271)

(1,867,920)

(11,913,300)

(28,119,026)

Net increase (decrease)

520,156

(305,019)

$ 8,740,668

$ (4,472,335)

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 17% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 30% of the total outstanding shares of the Fund.

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Japan) Inc.

Fidelity Management & Research (Hong Kong) Limited

FIL Investment Advisors

FIL Investment Advisors (UK) Limited

FIL Investments (Japan) Limited

General Distributor

Fidelity Distributors Corporation
Smithfield, RI

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

JPMorgan Chase Bank
New York, NY 

VIPOVRS-SANN-0813
1.705696.115

Fidelity® Variable Insurance Products:

Overseas Portfolio - Class R

Semiannual Report

June 30, 2013

(Fidelity Cover Art)

Contents

Shareholder Expense Example

(Click Here)

An example of shareholder expenses.

Investment Changes

(Click Here)

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

(Click Here)

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

Financial Statements

(Click Here)

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

Notes

(Click Here)

Notes to the financial statements.

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2013 FMR LLC. All rights reserved.

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

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.advisor.fidelity.com, or http://www.401k.com, as applicable.

NOT FDIC INSURED • MAY LOSE VALUE • NO BANK GUARANTEE

Neither the fund nor Fidelity Distributors Corporation is a bank.

Semiannual Report

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, 2013 to June 30, 2013).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

Annualized
Expense Ratio B

Beginning
Account Value
January 1, 2013

Ending
Account Value
June 30, 2013

Expenses Paid
During Period*
January 1, 2013
to June 30, 2013

Initial Class

.84%

 

 

 

Actual

 

$ 1,000.00

$ 1,057.80

$ 4.29

HypotheticalA

 

$ 1,000.00

$ 1,020.63

$ 4.21

Service Class

.94%

 

 

 

Actual

 

$ 1,000.00

$ 1,057.40

$ 4.80

HypotheticalA

 

$ 1,000.00

$ 1,020.13

$ 4.71

Service Class 2

1.09%

 

 

 

Actual

 

$ 1,000.00

$ 1,056.40

$ 5.56

HypotheticalA

 

$ 1,000.00

$ 1,019.39

$ 5.46

Initial Class R

.84%

 

 

 

Actual

 

$ 1,000.00

$ 1,057.30

$ 4.28

HypotheticalA

 

$ 1,000.00

$ 1,020.63

$ 4.21

Service Class R

.94%

 

 

 

Actual

 

$ 1,000.00

$ 1,056.90

$ 4.79

HypotheticalA

 

$ 1,000.00

$ 1,020.13

$ 4.71

Service Class 2R

1.09%

 

 

 

Actual

 

$ 1,000.00

$ 1,056.30

$ 5.56

HypotheticalA

 

$ 1,000.00

$ 1,019.39

$ 5.46

Investor Class R

.92%

 

 

 

Actual

 

$ 1,000.00

$ 1,057.40

$ 4.69

HypotheticalA

 

$ 1,000.00

$ 1,020.23

$ 4.61

A 5% return per year before expenses

B Annualized expense ratio reflects expenses net of applicable fee waivers.

* Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

Semiannual Report

Investment Changes (Unaudited)

Geographic Diversification (% of fund's net assets)

As of June 30, 2013

vvv1266569

Japan

20.9%

 

vvv1266571

United Kingdom

20.4%

 

vvv1266573

France

10.1%

 

vvv1266575

Switzerland

7.8%

 

vvv1266577

Germany

5.8%

 

vvv1266579

United States of America*

5.7%

 

vvv1266581

Cayman Islands

4.1%

 

vvv1266583

Ireland

3.4%

 

vvv1266585

Australia

3.2%

 

vvv1266587

Other

18.6%

 

vvv1266618

Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.

As of December 31, 2012

vvv1266569

United Kingdom

23.4%

 

vvv1266571

Japan

13.1%

 

vvv1266573

France

12.9%

 

vvv1266575

Switzerland

9.0%

 

vvv1266577

Germany

7.9%

 

vvv1266579

United States of America*

6.1%

 

vvv1266581

Australia

3.7%

 

vvv1266583

Cayman Islands

2.9%

 

vvv1266585

Ireland

2.6%

 

vvv1266587

Other

18.4%

 

vvv1266630

Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.

* Includes Short-Term Investments and Net Other Assets.

Asset Allocation as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Stocks

99.6

99.1

Short-Term Investments and Net Other Assets (Liabilities)

0.4

0.9

Top Ten Stocks as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Nestle SA (Switzerland, Food Products)

2.8

2.8

Sanofi SA (France, Pharmaceuticals)

2.4

2.8

SoftBank Corp. (Japan, Wireless Telecommunication Services)

1.8

0.9

HSBC Holdings PLC (United Kingdom, Commercial Banks)

1.8

1.9

Toyota Motor Corp. (Japan, Automobiles)

1.7

1.2

Mitsubishi UFJ Financial Group, Inc. (Japan, Commercial Banks)

1.6

1.3

Novo Nordisk A/S Series B (Denmark, Pharmaceuticals)

1.6

2.0

Rakuten, Inc. (Japan, Internet & Catalog Retail)

1.5

1.3

Danone SA (France, Food Products)

1.5

1.1

Tencent Holdings Ltd. (Cayman Islands, Internet Software & Services)

1.3

1.2

 

18.0

Market Sectors as of June 30, 2013

 

% of fund's
net assets

% of fund's net assets
6 months ago

Consumer Discretionary

24.0

19.8

Financials

19.3

17.9

Consumer Staples

14.2

14.5

Information Technology

12.3

10.6

Health Care

8.9

9.3

Industrials

8.3

7.9

Materials

6.2

9.1

Energy

3.6

5.9

Telecommunication Services

2.1

3.0

Utilities

0.7

1.1

Semiannual Report

Investments June 30, 2013 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 98.0%

Shares

Value

Australia - 3.2%

BHP Billiton Ltd.

318,002

$ 9,152,995

Carsales.com Ltd.

320,637

2,765,240

CSL Ltd.

169,506

9,546,237

Fortescue Metals Group Ltd.

258,379

718,354

G8 Education Ltd.

1,177,748

2,649,689

iSelect Ltd.

1,499,813

2,331,812

Macquarie Group Ltd.

105,682

4,046,797

McMillan Shakespeare Ltd.

187,689

2,777,313

Rio Tinto Ltd.

24,301

1,163,896

Westfield Group unit

1,008,657

10,553,025

TOTAL AUSTRALIA

45,705,358

Bailiwick of Jersey - 1.3%

Experian PLC

233,300

4,055,794

Informa PLC

813,663

6,065,187

WPP PLC

478,707

8,182,455

TOTAL BAILIWICK OF JERSEY

18,303,436

Belgium - 0.8%

Ageas

66,760

2,344,078

Anheuser-Busch InBev SA NV

33,577

3,023,045

Hamon & Compagnie International SA (a)(d)

62,254

1,099,617

KBC Groupe SA

31,157

1,160,090

UCB SA

72,400

3,900,100

TOTAL BELGIUM

11,526,930

Bermuda - 0.8%

Clear Media Ltd.

2,035,000

1,390,592

Oriental Watch Holdings Ltd.

7,028,000

2,292,512

Signet Jewelers Ltd.

115,400

7,781,422

TOTAL BERMUDA

11,464,526

Brazil - 0.8%

Anhanguera Educacional Participacoes SA

579,300

3,390,619

Cielo SA

301,440

7,557,108

TOTAL BRAZIL

10,947,727

British Virgin Islands - 0.6%

Gem Diamonds Ltd. (a)

802,019

1,655,920

Mail.Ru Group Ltd.:

GDR (e)

6,600

189,156

GDR (Reg. S)

258,800

7,417,208

TOTAL BRITISH VIRGIN ISLANDS

9,262,284

Canada - 0.0%

Bauer Performance Sports Ltd. (a)

55,161

626,245

Cayman Islands - 4.1%

51job, Inc. sponsored ADR (a)

36,000

2,430,360

Baidu.com, Inc. sponsored ADR (a)

61,400

5,804,142

Biostime International Holdings Ltd.

1,086,500

6,093,662

Greatview Aseptic Pack Co. Ltd.

4,056,000

2,510,144

 

Shares

Value

Hengdeli Holdings Ltd.

25,429,800

$ 5,803,308

Noah Holdings Ltd. sponsored ADR

348,200

3,088,534

Shenguan Holdings Group Ltd.

2,636,000

1,226,908

SouFun Holdings Ltd. ADR (d)

340,400

8,448,728

Tencent Holdings Ltd.

484,300

18,994,728

Vipshop Holdings Ltd. ADR (a)

79,500

2,318,220

Youku Tudou, Inc. ADR (a)

96,000

1,842,240

TOTAL CAYMAN ISLANDS

58,560,974

Denmark - 1.7%

Danske Bank A/S (a)

96,100

1,643,566

Novo Nordisk A/S:

Series B

16,125

2,506,832

Series B sponsored ADR

128,300

19,882,651

TOTAL DENMARK

24,033,049

France - 10.1%

AXA SA

95,620

1,878,781

AXA SA sponsored ADR

135,400

2,666,026

Beneteau SA (a)

196,900

2,175,944

BNP Paribas SA

137,903

7,534,573

Bollore

6,400

2,664,530

Club Mediterranee SA (a)

85,000

1,939,524

Danone SA

285,212

21,406,056

Edenred SA

116,400

3,560,533

Essilor International SA

38,339

4,079,150

Gameloft Se (a)

537,900

3,766,848

Iliad SA (d)

20,787

4,495,587

Ipsos SA

134,292

5,068,360

LVMH Moet Hennessy - Louis Vuitton SA

95,996

15,556,672

Pernod Ricard SA

95,400

10,578,674

PPR SA

46,900

9,532,549

PPR SA rights 10/1/13 (a)

46,900

122,278

Safran SA

110,900

5,792,163

Sanofi SA

139,290

14,399,884

Sanofi SA sponsored ADR

403,822

20,800,871

Societe Generale Series A (d)

84,943

2,918,944

Total SA (d)

87,900

4,293,317

TOTAL FRANCE

145,231,264

Germany - 4.2%

adidas AG

75,900

8,213,836

Allianz AG

74,132

10,831,442

Bayer AG

118,678

12,656,318

Commerzbank AG (a)

55,520

484,048

Deutsche Bank AG

58,446

2,450,808

GSW Immobilien AG (d)

59,000

2,282,801

Linde AG

38,187

7,125,371

SAP AG

185,839

13,570,532

SAP AG sponsored ADR (d)

39,300

2,862,219

TOTAL GERMANY

60,477,375

Common Stocks - continued

Shares

Value

Hong Kong - 1.1%

AIA Group Ltd.

2,299,400

$ 9,738,886

Television Broadcasts Ltd.

869,000

5,971,816

TOTAL HONG KONG

15,710,702

Ireland - 3.4%

C&C Group PLC

2,823,500

15,288,868

CRH PLC

458,042

9,267,424

Glanbia PLC

451,000

6,075,907

Kingspan Group PLC (United Kingdom)

719,800

9,640,986

Paddy Power PLC (Ireland)

103,900

8,915,115

TOTAL IRELAND

49,188,300

Isle of Man - 0.3%

Playtech Ltd.

436,355

3,995,318

Israel - 0.3%

Rami Levi Chain Stores Hashikma Marketing 2006 Ltd.

80,100

3,721,433

Italy - 1.5%

Assicurazioni Generali SpA

158,500

2,768,701

ENI SpA

200,700

4,119,163

ENI SpA sponsored ADR

67,900

2,786,616

Moleskine SpA

1,277,502

2,901,692

Tod's SpA (d)

67,189

9,497,783

TOTAL ITALY

22,073,955

Japan - 20.9%

Cosmos Pharmaceutical Corp.

114,900

11,651,731

Daiwa Securities Group, Inc.

490,000

4,103,712

DENSO Corp.

87,400

4,108,952

Dentsu, Inc.

431,700

14,934,486

East Japan Railway Co.

43,300

3,370,149

EPS Co. Ltd.

2,231

2,490,013

Fuji Media Holdings, Inc.

1,619

3,254,613

Hitachi Ltd.

2,478,000

15,877,787

Honda Motor Co. Ltd.

325,800

12,103,284

Japan Tobacco, Inc.

291,700

10,296,296

Kakaku.com, Inc.

219,900

6,715,112

Keyence Corp.

36,720

11,699,389

Komatsu Ltd.

239,400

5,513,846

Makita Corp.

74,600

4,010,667

Mitsubishi Corp.

357,000

6,098,882

Mitsubishi Electric Corp.

750,000

7,008,081

Mitsubishi UFJ Financial Group, Inc.

3,141,700

19,402,730

Mitsubishi UFJ Financial Group, Inc. sponsored ADR (d)

489,200

3,037,932

MS&AD Insurance Group Holdings, Inc.

177,500

4,496,110

Nomura Holdings, Inc.

505,000

3,717,188

Nomura Holdings, Inc. sponsored ADR (d)

57,600

428,544

ORIX Corp.

1,367,300

18,659,161

Rakuten, Inc.

1,820,500

21,527,383

Ship Healthcare Holdings, Inc.

97,600

3,587,879

 

Shares

Value

SMC Corp.

21,000

$ 4,209,988

SoftBank Corp.

436,500

25,408,646

Start Today Co. Ltd.

242,500

4,748,535

Sumitomo Mitsui Financial Group, Inc.

364,200

16,670,545

Suzuki Motor Corp.

128,100

2,952,747

THK Co. Ltd.

158,500

3,325,809

Tokio Marine Holdings, Inc.

136,600

4,310,409

Toshiba Corp.

672,000

3,221,283

Toyota Motor Corp.

314,000

18,939,803

Toyota Motor Corp. sponsored ADR (d)

47,500

5,731,350

Tsuruha Holdings, Inc.

39,800

3,761,954

Yahoo! Japan Corp.

18,401

9,060,928

TOTAL JAPAN

300,435,924

Korea (South) - 1.0%

Hotel Shilla Co.

162,838

8,694,955

Samsung Electronics Co. Ltd.

4,860

5,709,138

TOTAL KOREA (SOUTH)

14,404,093

Netherlands - 1.5%

AEGON NV

259,400

1,740,330

ASML Holding NV

34,111

2,698,180

ING Groep NV (Certificaten Van Aandelen) (a)

558,084

5,100,381

Koninklijke Philips Electronics NV

304,416

8,298,720

Yandex NV (a)

124,400

3,437,172

TOTAL NETHERLANDS

21,274,783

Nigeria - 0.2%

Guinness Nigeria PLC

941,861

1,454,950

Nigerian Breweries PLC (a)

2,064,790

1,983,103

TOTAL NIGERIA

3,438,053

Norway - 1.6%

DNB ASA

447,800

6,483,658

Schibsted ASA (B Shares)

333,600

14,410,865

StatoilHydro ASA

14,100

291,279

StatoilHydro ASA sponsored ADR

103,300

2,137,277

TOTAL NORWAY

23,323,079

Philippines - 0.3%

Alliance Global Group, Inc.

8,954,300

4,861,499

South Africa - 0.6%

City Lodge Hotels Ltd.

73,400

891,043

Life Healthcare Group Holdings Ltd.

621,600

2,358,106

Naspers Ltd. Class N

70,000

5,169,423

TOTAL SOUTH AFRICA

8,418,572

Spain - 0.9%

Banco Bilbao Vizcaya Argentaria SA

584,927

4,915,648

Banco Santander SA (Spain)

320,353

2,050,019

Grifols SA ADR

189,000

5,382,720

TOTAL SPAIN

12,348,387

Common Stocks - continued

Shares

Value

Sweden - 2.3%

Investment AB Kinnevik

414,100

$ 10,614,782

Nordea Bank AB

608,800

6,808,726

Svenska Cellulosa AB (SCA) (B Shares)

518,300

13,007,544

Swedbank AB (A Shares)

102,432

2,349,211

TOTAL SWEDEN

32,780,263

Switzerland - 7.8%

Compagnie Financiere Richemont SA Series A

136,086

12,037,463

Credit Suisse Group

72,815

1,927,711

Credit Suisse Group sponsored ADR (d)

41,352

1,094,174

Nestle SA

606,480

39,797,458

Sika AG (Bearer)

2,510

6,499,878

Swatch Group AG (Bearer)

30,020

16,431,465

Swiss Re Ltd.

46,826

3,485,118

Syngenta AG (Switzerland)

38,450

14,993,916

UBS AG

591,162

10,034,289

UBS AG (NY Shares)

184,900

3,134,055

Zurich Insurance Group AG

11,638

3,018,697

TOTAL SWITZERLAND

112,454,224

Taiwan - 0.4%

MediaTek, Inc.

323,000

3,755,939

Wowprime Corp.

157,300

2,117,803

TOTAL TAIWAN

5,873,742

Thailand - 0.6%

Airports of Thailand PCL (For. Reg.)

606,600

3,296,633

Thai Beverage PCL

12,231,000

5,693,325

TOTAL THAILAND

8,989,958

United Kingdom - 20.4%

Aberdeen Asset Management PLC

840,800

4,895,303

Aggreko PLC

106,300

2,654,736

Anglo American PLC ADR

96,800

932,184

ASOS PLC (a)

137,700

8,471,638

Aviva PLC

329,400

1,697,777

Barclays PLC

2,050,253

8,731,506

Barclays PLC sponsored ADR

159,400

2,728,928

BG Group PLC

551,038

9,374,162

BHP Billiton PLC

466,881

11,904,457

BP PLC

464,793

3,225,639

Brammer PLC (d)

1,113,400

5,503,634

British Land Co. PLC

715,689

6,166,506

Burberry Group PLC

356,200

7,319,210

Centrica PLC

1,106,700

6,063,014

Dechra Pharmaceuticals PLC

159,300

1,671,783

Diageo PLC

633,943

18,179,150

Dunelm Group PLC

464,300

6,687,497

GlaxoSmithKline PLC

518,800

12,968,047

 

Shares

Value

GlaxoSmithKline PLC sponsored ADR

73,900

$ 3,692,783

Glencore Xstrata PLC

1,246,535

5,159,739

Hays PLC

2,206,800

2,985,547

HSBC Holdings PLC:

(United Kingdom)

921,022

9,534,558

sponsored ADR

293,970

15,257,043

Johnson Matthey PLC

154,198

6,163,381

Legal & General Group PLC

814,483

2,123,282

Lloyds Banking Group PLC (a)

11,162,744

10,719,717

Michael Page International PLC

754,200

4,255,743

Prudential PLC

271,361

4,429,365

Reckitt Benckiser Group PLC

142,100

10,045,583

Rio Tinto PLC

142,915

5,812,204

Rio Tinto PLC sponsored ADR (d)

34,900

1,433,692

Rolls-Royce Group PLC

322,708

5,565,930

Royal Bank of Scotland Group PLC (a)

255,480

1,060,186

Royal Dutch Shell PLC:

Class A (United Kingdom)

439,441

14,037,510

Class B (United Kingdom)

380,537

12,602,987

SABMiller PLC

357,400

17,136,597

Scottish & Southern Energy PLC

210,600

4,878,353

Standard Chartered PLC (United Kingdom)

337,667

7,328,710

Sthree PLC

229,400

1,157,495

Taylor Wimpey PLC

1,954,800

2,846,794

Tesco PLC

566,800

2,856,915

Travis Perkins PLC

488,300

10,813,419

William Hill PLC

1,790,944

12,009,835

TOTAL UNITED KINGDOM

293,082,539

United States of America - 5.3%

Deckers Outdoor Corp. (a)(d)

136,000

6,869,360

Dunkin' Brands Group, Inc.

136,400

5,840,648

GNC Holdings, Inc.

95,400

4,217,634

Google, Inc. Class A (a)

16,800

14,790,216

LinkedIn Corp. (a)

17,200

3,066,760

MercadoLibre, Inc. (d)

48,300

5,204,808

Monsanto Co.

43,203

4,268,456

priceline.com, Inc. (a)

9,060

7,493,798

Tiffany & Co., Inc.

112,000

8,158,080

Visa, Inc. Class A

72,100

13,176,275

Yahoo!, Inc. (a)

149,200

3,746,412

TOTAL UNITED STATES OF AMERICA

76,832,447

TOTAL COMMON STOCKS

(Cost $1,216,136,019)


1,409,346,439

Nonconvertible Preferred Stocks - 1.6%

Shares

Value

Germany - 1.6%

ProSiebenSat.1 Media AG

96,900

$ 4,164,809

Sartorius AG (non-vtg.)

39,500

4,248,950

Volkswagen AG

74,047

14,992,419

TOTAL NONCONVERTIBLE PREFERRED STOCKS

(Cost $13,693,221)


23,406,178

Money Market Funds - 2.7%

 

 

 

 

Fidelity Cash Central Fund, 0.13% (b)

14,259,896

14,259,896

Fidelity Securities Lending Cash Central Fund, 0.13% (b)(c)

24,176,872

24,176,872

TOTAL MONEY MARKET FUNDS

(Cost $38,436,768)


38,436,768

TOTAL INVESTMENT PORTFOLIO - 102.3%

(Cost $1,268,266,008)

1,471,189,385

NET OTHER ASSETS (LIABILITIES) - (2.3)%

(33,254,855)

NET ASSETS - 100%

$ 1,437,934,530

Legend

(a) Non-income producing

(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.

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

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

(e) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $189,156 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

$ 5,061

Fidelity Securities Lending Cash Central Fund

563,390

Total

$ 568,451

Other Information

Categorizations in the Schedule of Investments are based on country or territory of incorporation.

The following is a summary of the inputs used, as of June 30, 2013, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used in the tables below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 346,951,830

$ 256,199,572

$ 90,752,258

$ -

Consumer Staples

203,279,159

116,569,525

86,709,634

-

Energy

52,867,950

14,298,055

38,569,895

-

Financials

278,647,111

142,894,961

135,752,150

-

Health Care

124,172,324

88,219,669

35,952,655

-

Industrials

117,853,766

76,017,624

41,836,142

-

Information Technology

179,372,866

119,227,835

60,145,031

-

Materials

88,762,011

37,631,015

51,130,996

-

Telecommunication Services

29,904,233

4,495,587

25,408,646

-

Utilities

10,941,367

10,941,367

-

-

Money Market Funds

38,436,768

38,436,768

-

-

Total Investments in Securities:

$ 1,471,189,385

$ 904,931,978

$ 566,257,407

$ -

The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2013. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:

Transfers

Total

Level 1 to Level 2

$ 0

Level 2 to Level 1

$ 581,435,927

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2013 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $23,361,277) - See accompanying schedule:

Unaffiliated issuers (cost $1,229,829,240)

$ 1,432,752,617

 

Fidelity Central Funds (cost $38,436,768)

38,436,768

 

Total Investments (cost $1,268,266,008)

 

$ 1,471,189,385

Cash

 

4,928

Foreign currency held at value (cost $194,825)

194,825

Receivable for investments sold

9,981,318

Receivable for fund shares sold

716,985

Dividends receivable

3,354,995

Distributions receivable from Fidelity Central Funds

43,757

Other receivables

317,745

Total assets

1,485,803,938

 

 

 

Liabilities

Payable for investments purchased

$ 20,611,832

Payable for fund shares redeemed

1,212,677

Accrued management fee

857,906

Distribution and service plan fees payable

86,019

Other affiliated payables

178,733

Other payables and accrued expenses

745,369

Collateral on securities loaned, at value

24,176,872

Total liabilities

47,869,408

 

 

 

Net Assets

$ 1,437,934,530

Net Assets consist of:

 

Paid in capital

$ 1,555,970,732

Undistributed net investment income

16,485,342

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

(337,330,997)

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

202,809,453

Net Assets

$ 1,437,934,530

Statement of Assets and Liabilities - continued

 

June 30, 2013 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($663,267,518 ÷ 38,977,941 shares)

$ 17.02

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($104,224,159 ÷ 6,152,114 shares)

$ 16.94

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($274,385,375 ÷ 16,282,889 shares)

$ 16.85

 

 

 

Initial Class R:
Net Asset Value, offering price and redemption price per share ($85,932,249 ÷ 5,062,464 shares)

$ 16.97

 

 

 

Service Class R:
Net Asset Value, offering price and redemption price per share ($45,407,002 ÷ 2,684,906 shares)

$ 16.91

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($70,400,551 ÷ 4,217,186 shares)

$ 16.69

 

 

 

Investor Class R:
Net Asset Value, offering price and redemption price per share ($194,317,676 ÷ 11,454,677 shares)

$ 16.96

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, 2013 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 24,907,762

Interest

 

66

Income from Fidelity Central Funds

 

568,451

Income before foreign taxes withheld

 

25,476,279

Less foreign taxes withheld

 

(1,977,321)

Total income

 

23,498,958

 

 

 

Expenses

Management fee

$ 5,374,769

Transfer agent fees

627,742

Distribution and service plan fees

592,152

Accounting and security lending fees

348,369

Custodian fees and expenses

90,358

Independent trustees' compensation

4,720

Appreciation in deferred trustee compensation account

61

Audit

32,958

Legal

4,197

Interest

190

Miscellaneous

7,501

Total expenses before reductions

7,083,017

Expense reductions

(114,900)

6,968,117

Net investment income (loss)

16,530,841

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

64,922,620

Foreign currency transactions

(504,115)

Total net realized gain (loss)

 

64,418,505

Change in net unrealized appreciation (depreciation) on:

Investment securities

8,961,964

Assets and liabilities in foreign currencies

(83,959)

Total change in net unrealized appreciation (depreciation)

 

8,878,005

Net gain (loss)

73,296,510

Net increase (decrease) in net assets resulting from operations

$ 89,827,351

Statement of Changes in Net Assets

 

Six months ended
June 30, 2013
(Unaudited)

Year ended
December 31,
2012

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 16,530,841

$ 26,849,201

Net realized gain (loss)

64,418,505

6,602,044

Change in net unrealized appreciation (depreciation)

8,878,005

240,168,202

Net increase (decrease) in net assets resulting from operations

89,827,351

273,619,447

Distributions to shareholders from net investment income

-

(26,228,448)

Distributions to shareholders from net realized gain

-

(5,357,064)

Total distributions

-

(31,585,512)

Share transactions - net increase (decrease)

(148,466,200)

(136,580,307)

Redemption fees

6,799

11,237

Total increase (decrease) in net assets

(58,632,050)

105,464,865

 

 

 

Net Assets

Beginning of period

1,496,566,580

1,391,101,715

End of period (including undistributed net investment income of $16,485,342 and distributions in excess of net investment income of $45,499, respectively)

$ 1,437,934,530

$ 1,496,566,580

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 16.09

$ 13.63

$ 16.77

$ 15.05

$ 12.17

$ 25.33

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .19

.29

.26

.21

.28

.46

Net realized and unrealized gain (loss)

  .74

2.53

(3.14)

1.76

2.93

(10.67)

Total from investment operations

  .93

2.82

(2.88)

1.97

3.21

(10.21)

Distributions from net investment income

  -

(.30) H

(.23)

(.22)

(.29)

(.49)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.36)

(.26)

(.25)

(.33)

(2.95)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 17.02

$ 16.09

$ 13.63

$ 16.77

$ 15.05

$ 12.17

Total Return B, C, D

  5.78%

20.74%

(17.16)%

13.11%

26.53%

(43.83)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .84% A

.85%

.85%

.86%

.88%

.87%

Expenses net of fee waivers, if any

  .84% A

.85%

.85%

.85%

.88%

.87%

Expenses net of all reductions

  .83% A

.83%

.83%

.83%

.84%

.84%

Net investment income (loss)

  2.25% A

1.94%

1.59%

1.41%

2.17%

2.45%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 663,268

$ 659,258

$ 598,862

$ 779,501

$ 758,018

$ 703,357

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

Financial Highlights - Service Class

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 16.02

$ 13.58

$ 16.70

$ 14.99

$ 12.12

$ 25.23

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .18

.28

.24

.19

.26

.44

Net realized and unrealized gain (loss)

  .74

2.50

(3.12)

1.75

2.93

(10.61)

Total from investment operations

  .92

2.78

(2.88)

1.94

3.19

(10.17)

Distributions from net investment income

  -

(.29) H

(.21)

(.20)

(.28)

(.48)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.34) K

(.24)

(.23)

(.32)

(2.94)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.94

$ 16.02

$ 13.58

$ 16.70

$ 14.99

$ 12.12

Total Return B, C, D

  5.74%

20.54%

(17.23)%

12.99%

26.44%

(43.89)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .94% A

.95%

.95%

.96%

.98%

.97%

Expenses net of fee waivers, if any

  .94% A

.95%

.95%

.95%

.98%

.97%

Expenses net of all reductions

  .93% A

.93%

.93%

.93%

.94%

.94%

Net investment income (loss)

  2.15% A

1.84%

1.49%

1.31%

2.07%

2.35%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 104,224

$ 110,468

$ 108,921

$ 162,394

$ 171,252

$ 165,608

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

A Annualized B Total returns for periods of less than one year are not annualized. C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown. D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown. E Calculated based on average shares outstanding during the period. F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. G Amount does not include the portfolio activity of any underlying Fidelity Central Funds. H The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class. J Amount represents less than $.01 per share. K Total distributions of $.34 per share is comprised of distributions from net investment income of $.286 and distributions from net realized gain of $.059 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, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 15.95

$ 13.52

$ 16.62

$ 14.92

$ 12.07

$ 25.12

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .17

.25

.21

.17

.24

.40

Net realized and unrealized gain (loss)

  .73

2.50

(3.09)

1.74

2.91

(10.54)

Total from investment operations

  .90

2.75

(2.88)

1.91

3.15

(10.14)

Distributions from net investment income

  -

(.26) H

(.19)

(.18)

(.26)

(.45)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.32)

(.22)

(.21)

(.30)

(2.91)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.85

$ 15.95

$ 13.52

$ 16.62

$ 14.92

$ 12.07

Total Return B, C, D

  5.64%

20.38%

(17.34)%

12.83%

26.22%

(43.96)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  1.09% A

1.10%

1.10%

1.11%

1.12%

1.12%

Expenses net of fee waivers, if any

  1.09% A

1.10%

1.10%

1.10%

1.12%

1.12%

Expenses net of all reductions

  1.07% A

1.08%

1.08%

1.08%

1.09%

1.09%

Net investment income (loss)

  2.00% A

1.69%

1.34%

1.16%

1.93%

2.21%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 274,385

$ 349,364

$ 342,206

$ 461,033

$ 457,971

$ 414,492

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

Financial Highlights - Initial Class R

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 16.05

$ 13.60

$ 16.73

$ 15.02

$ 12.14

$ 25.28

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .19

.29

.26

.21

.28

.46

Net realized and unrealized gain (loss)

  .73

2.52

(3.13)

1.75

2.93

(10.65)

Total from investment operations

  .92

2.81

(2.87)

1.96

3.21

(10.19)

Distributions from net investment income

  -

(.30) H

(.23)

(.22)

(.29)

(.49)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.36)

(.26)

(.25)

(.33)

(2.95)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.97

$ 16.05

$ 13.60

$ 16.73

$ 15.02

$ 12.14

Total Return B, C, D

  5.73%

20.71%

(17.14)%

13.07%

26.60%

(43.84)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .84% A

.85%

.85%

.86%

.88%

.87%

Expenses net of fee waivers, if any

  .84% A

.85%

.85%

.85%

.88%

.87%

Expenses net of all reductions

  .83% A

.83%

.83%

.83%

.84%

.84%

Net investment income (loss)

  2.25% A

1.94%

1.59%

1.41%

2.17%

2.46%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 85,932

$ 88,587

$ 85,922

$ 122,655

$ 128,689

$ 118,749

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

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

Semiannual Report

Financial Highlights - Service Class R

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 16.00

$ 13.56

$ 16.68

$ 14.97

$ 12.10

$ 25.19

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .18

.28

.24

.19

.27

.43

Net realized and unrealized gain (loss)

  .73

2.51

(3.12)

1.75

2.92

(10.58)

Total from investment operations

  .91

2.79

(2.88)

1.94

3.19

(10.15)

Distributions from net investment income

  -

(.29) H

(.21)

(.20)

(.28)

(.48)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.35)

(.24)

(.23)

(.32)

(2.94)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.91

$ 16.00

$ 13.56

$ 16.68

$ 14.97

$ 12.10

Total Return B, C, D

  5.69%

20.58%

(17.24)%

13.01%

26.49%

(43.88)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .94% A

.94%

.95%

.96%

.97%

.96%

Expenses net of fee waivers, if any

  .94% A

.94%

.94%

.95%

.97%

.96%

Expenses net of all reductions

  .92% A

.93%

.93%

.93%

.94%

.94%

Net investment income (loss)

  2.16% A

1.84%

1.49%

1.31%

2.08%

2.36%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 45,407

$ 45,774

$ 43,414

$ 60,617

$ 66,014

$ 61,825

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

Financial Highlights - Service Class 2R

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 15.80

$ 13.40

$ 16.48

$ 14.80

$ 11.98

$ 24.95

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .17

.25

.21

.17

.25

.40

Net realized and unrealized gain (loss)

  .72

2.47

(3.07)

1.73

2.87

(10.46)

Total from investment operations

  .89

2.72

(2.86)

1.90

3.12

(10.06)

Distributions from net investment income

  -

(.26) H

(.19)

(.19)

(.26)

(.45)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.32)

(.22)

(.22)

(.30)

(2.91)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.69

$ 15.80

$ 13.40

$ 16.48

$ 14.80

$ 11.98

Total Return B, C, D

  5.63%

20.36%

(17.33)%

12.82%

26.20%

(43.94)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  1.09% A

1.09%

1.10%

1.11%

1.12%

1.11%

Expenses net of fee waivers, if any

  1.09% A

1.09%

1.09%

1.10%

1.12%

1.11%

Expenses net of all reductions

  1.07% A

1.08%

1.08%

1.08%

1.09%

1.09%

Net investment income (loss)

  2.01% A

1.69%

1.34%

1.16%

1.93%

2.21%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 70,401

$ 67,674

$ 58,968

$ 69,393

$ 64,200

$ 46,323

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

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

Semiannual Report

Financial Highlights - Investor Class R

 

Six months ended June 30, 2013

Years ended December 31,

 

(Unaudited)

2012

2011

2010

2009

2008

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 16.04

$ 13.60

$ 16.73

$ 15.01

$ 12.14

$ 25.27

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .18

.28

.24

.20

.27

.43

Net realized and unrealized gain (loss)

  .74

2.51

(3.12)

1.76

2.92

(10.62)

Total from investment operations

  .92

2.79

(2.88)

1.96

3.19

(10.19)

Distributions from net investment income

  -

(.29) H

(.22)

(.21)

(.28)

(.48)

Distributions from net realized gain

  -

(.06) H

(.03)

(.03)

(.04)

(2.46)

Total distributions

  -

(.35)

(.25)

(.24)

(.32)

(2.94)

Redemption fees added to paid in capital E,J

  -

-

-

-

-

-

Net asset value, end of period

$ 16.96

$ 16.04

$ 13.60

$ 16.73

$ 15.01

$ 12.14

Total Return B, C, D

  5.74%

20.54%

(17.22)%

13.07%

26.42%

(43.89)%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .92% A

.93%

.93%

.95%

.97%

.96%

Expenses net of fee waivers, if any

  .92% A

.93%

.93%

.94%

.97%

.96%

Expenses net of all reductions

  .91% A

.92%

.91%

.92%

.94%

.93%

Net investment income (loss)

  2.17% A

1.85%

1.51%

1.32%

2.08%

2.36%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 194,318

$ 175,442

$ 152,810

$ 177,984

$ 148,806

$ 124,111

Portfolio turnover rate G

  44% A

41%

45%

50%

78%

77%

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

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2013 (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. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.

2. Investments in Fidelity Central Funds.

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

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

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:

Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. In accordance with valuation policies and procedures approved by the Board of Trustees (the Board), the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and is responsible for approving and reporting to the Board all fair value determinations.

The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:

Level 1 - quoted prices in active markets for identical investments

Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)

Level 3 - unobservable inputs (including the Fund's own assumptions based on the best information available)

Valuation techniques used to value the Fund's investments by major category are as follows:

Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

Semiannual Report

3. Significant Accounting Policies - continued

Investment Valuation - continued

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level, as of June 30, 2013, including information on transfers between Levels 1 and 2, is included at the end of the Fund's Schedule of Investments.

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

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

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

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

Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.

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

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. A fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences resulted in distribution reclassifications for the period ended December 31, 2012.

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

Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

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

Gross unrealized appreciation

$ 297,070,576

Gross unrealized depreciation

(110,488,866)

Net unrealized appreciation (depreciation) on securities and other investments

$ 186,581,710

 

 

Tax cost

$ 1,284,607,675

Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.

Fiscal year of expiration

 

2016

$ (99,490,351)

2017

(280,447,470)

Total capital loss carryforward

$ (379,937,821)

Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class R shares held by investors less than 60 days may be subject to a redemption fee equal to 1% of the net asset value of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.

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.

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $332,055,723 and $456,236,485, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the Fund's average net assets and an annualized group fee rate that averaged .25% 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 .70% of the Fund's average net assets.

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

For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services were as follows:

Service Class

$ 54,304

Service Class 2

425,984

Service Class R

23,519

Service Class 2R

88,345

 

$ 592,152

Semiannual Report

5. 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 R) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class R pays a monthly asset-based transfer agent fee of .15% of average net assets. In addition, FIIOC receives an asset-based fee of .0035% of average net assets for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees for each class, including printing and out of pocket expenses, were as follows:

Initial Class

$ 245,059

Service Class

39,195

Service Class 2

121,515

Initial Class R

32,515

Service Class R

16,333

Service Class 2R

24,542

Investor Class R

148,583

 

$ 627,742

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

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $1,095 for the period.

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

Borrower or Lender

Average Loan
Balance

Weighted Average
Interest Rate

Interest Expense

Borrower

$ 3,407,400

.40%

$ 190

6. Committed Line of Credit.

The Fund participates with other funds managed by FMR or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,943 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. If the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. 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 rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $563,390. During the period, there were no securities loaned to FCM.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. 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 $114,900 for the period.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

 

Six months ended
June 30, 2013

Year ended
December 31, 2012

From net investment income

 

 

Initial Class

$ -

$ 12,006,007

Service Class

-

1,929,055

Service Class 2

-

5,676,951

Initial Class R

-

1,647,375

Service Class R

-

804,767

Service Class 2R

-

1,102,032

Investor Class R

-

3,062,261

Total

$ -

$ 26,228,448

From net realized gain

 

 

Initial Class

$ -

$ 2,332,435

Service Class

-

397,090

Service Class 2

-

1,276,004

Initial Class R

-

320,038

Service Class R

-

165,080

Service Class 2R

-

244,876

Investor Class R

-

621,541

Total

$ -

$ 5,357,064

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30, 2013

Year ended
December 31, 2012

Six months ended
June 30, 2013

Year ended
December 31, 2012

Initial Class

 

 

 

 

Shares sold

2,429,979

5,444,050

$ 41,620,299

$ 81,965,581

Reinvestment of distributions

-

905,776

-

14,338,442

Shares redeemed

(4,430,862)

(9,304,668)

(75,355,832)

(141,203,928)

Net increase (decrease)

(2,000,883)

(2,954,842)

$ (33,735,533)

$ (44,899,905)

Service Class

 

 

 

 

Shares sold

138,827

308,352

$ 2,332,941

$ 4,623,052

Reinvestment of distributions

-

147,504

-

2,326,145

Shares redeemed

(880,376)

(1,584,094)

(14,753,412)

(23,791,164)

Net increase (decrease)

(741,549)

(1,128,238)

$ (12,420,471)

$ (16,841,967)

Service Class 2

 

 

 

 

Shares sold

752,744

1,454,591

$ 12,672,606

$ 21,413,096

Reinvestment of distributions

-

442,863

-

6,952,955

Shares redeemed

(6,371,795)

(5,312,307)

(111,900,983)

(79,852,380)

Net increase (decrease)

(5,619,051)

(3,414,853)

$ (99,228,377)

$ (51,486,329)

Initial Class R

 

 

 

 

Shares sold

128,591

225,830

$ 2,186,091

$ 3,396,796

Reinvestment of distributions

-

124,599

-

1,967,413

Shares redeemed

(586,255)

(1,149,012)

(9,982,018)

(17,268,375)

Net increase (decrease)

(457,664)

(798,583)

$ (7,795,927)

$ (11,904,166)

Semiannual Report

10. Share Transactions - continued

 

Shares

Dollars

Six months ended
June 30, 2013

Year ended
December 31, 2012

Six months ended
June 30, 2013

Year ended
December 31, 2012

Service Class R

 

 

 

 

Shares sold

60,007

244,158

$ 1,010,958

$ 3,670,758

Reinvestment of distributions

-

61,617

-

969,847

Shares redeemed

(236,563)

(647,072)

(3,992,882)

(9,806,526)

Net increase (decrease)

(176,556)

(341,297)

$ (2,981,924)

$ (5,165,921)

Service Class 2R

 

 

 

 

Shares sold

196,886

531,202

$ 3,264,605

$ 7,828,308

Reinvestment of distributions

-

86,618

-

1,346,907

Shares redeemed

(262,299)

(737,328)

(4,309,241)

(10,984,899)

Net increase (decrease)

(65,413)

(119,508)

$ (1,044,636)

$ (1,809,684)

Investor Class R

 

 

 

 

Shares sold

1,220,427

1,329,601

$ 20,653,968

$ 19,962,890

Reinvestment of distributions

-

233,300

-

3,683,801

Shares redeemed

(700,271)

(1,867,920)

(11,913,300)

(28,119,026)

Net increase (decrease)

520,156

(305,019)

$ 8,740,668

$ (4,472,335)

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 17% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 30% of the total outstanding shares of the Fund.

Semiannual Report

Semiannual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Japan) Inc.

Fidelity Management & Research (Hong Kong) Limited

FIL Investment Advisors

FIL Investment Advisors (UK) Limited

FIL Investments (Japan) Limited

General Distributor

Fidelity Distributors Corporation
Smithfield, RI

Transfer and Service Agents

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA 

Fidelity Service Company, Inc.
Boston, MA 

Custodian

JPMorgan Chase Bank
New York, NY 

VIPOVRSR-SANN-0813
1.774855.111

Item 2. Code of Ethics

Not applicable.

Item 3. Audit Committee Financial Expert

Not applicable.

Item 4. Principal Accountant Fees and Services

Not applicable.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Investments

(a) Not applicable.

(b) Not applicable

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

Not applicable.

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

Not applicable.

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

Not applicable.

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

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

Item 11. Controls and Procedures

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

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

Item 12. Exhibits

(a)

(1)

Not applicable.

(a)

(2)

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

(a)

(3)

Not applicable.

(b)

 

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

SIGNATURES

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

Variable Insurance Products Fund

By:

/s/Kenneth B. Robins

 

Kenneth B. Robins

 

President and Treasurer

 

 

Date:

August 21, 2013

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 21, 2013

By:

/s/Christine Reynolds

 

Christine Reynolds

 

Chief Financial Officer

 

 

Date:

August 21, 2013