N-CSRS 1 main.htm

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

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-3329

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

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

Scott C. Goebel, Secretary

82 Devonshire St.

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

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

Date of fiscal year end:

December 31

 

 

Date of reporting period:

June 30, 2012

Item 1. Reports to Stockholders

Fidelity® Variable Insurance Products:
Equity-Income Portfolio

Semiannual Report

June 30, 2012

(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. © 2012 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, 2012 to June 30, 2012).

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

Beginning
Account Value
January 1, 2012

Ending
Account Value
June 30, 2012

Expenses Paid
During Period*
January 1, 2012
to June 30, 2012

Initial Class

.55%

 

 

 

Actual

 

$ 1,000.00

$ 1,084.50

$ 2.85

HypotheticalA

 

$ 1,000.00

$ 1,022.13

$ 2.77

Service Class

.65%

 

 

 

Actual

 

$ 1,000.00

$ 1,083.70

$ 3.37

HypotheticalA

 

$ 1,000.00

$ 1,021.63

$ 3.27

Service Class 2

.80%

 

 

 

Actual

 

$ 1,000.00

$ 1,083.60

$ 4.14

HypotheticalA

 

$ 1,000.00

$ 1,020.89

$ 4.02

Service Class 2R

.80%

 

 

 

Actual

 

$ 1,000.00

$ 1,082.80

$ 4.14

HypotheticalA

 

$ 1,000.00

$ 1,020.89

$ 4.02

Investor Class

.64%

 

 

 

Actual

 

$ 1,000.00

$ 1,084.20

$ 3.32

HypotheticalA

 

$ 1,000.00

$ 1,021.68

$ 3.22

A 5% return per year before expenses

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

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Chevron Corp.

3.6

4.2

JPMorgan Chase & Co.

3.5

3.3

Wells Fargo & Co.

3.1

3.4

Comcast Corp. Class A

3.0

1.6

Procter & Gamble Co.

2.6

2.7

Pfizer, Inc.

2.5

3.3

General Electric Co.

2.2

2.2

Johnson & Johnson

2.1

1.4

Exxon Mobil Corp.

2.1

1.6

Paychex, Inc.

2.0

1.7

 

26.7

Top Five Market Sectors as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

19.1

19.9

Energy

13.8

12.7

Health Care

13.2

14.0

Consumer Staples

10.7

11.5

Industrials

9.7

9.3

Asset Allocation (% of fund's net assets)

As of June 30, 2012*

As of December 31, 2011**

vpo15

Stocks 93.7%

 

vpo15

Stocks 96.1%

 

vpo18

Bonds 3.4%

 

vpo18

Bonds 2.8%

 

vpo21

Short-Term
Investments and
Net Other Assets
(Liabilities) 2.9%

 

vpo21

Short-Term
Investments and
Net Other Assets
(Liabilities) 1.1%

 

* Foreign investments

14.4%

 

** Foreign investments

17.7%

 

vpo24

Semiannual Report

Investments June 30, 2012 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 91.5%

Shares

Value

CONSUMER DISCRETIONARY - 8.0%

Distributors - 0.2%

Li & Fung Ltd.

4,554,000

$ 8,817,686

Hotels, Restaurants & Leisure - 0.8%

Arcos Dorados Holdings, Inc.

176,400

2,607,192

McDonald's Corp.

460,252

40,746,110

 

43,353,302

Household Durables - 0.5%

KB Home

570,948

5,595,290

Lennar Corp. Class A

381,792

11,801,191

PulteGroup, Inc. (a)

1,240,229

13,270,450

 

30,666,931

Leisure Equipment & Products - 0.3%

Hasbro, Inc.

521,066

17,648,505

Media - 4.4%

Comcast Corp. Class A

5,117,866

163,618,176

Time Warner, Inc.

2,020,374

77,784,399

 

241,402,575

Multiline Retail - 1.5%

Target Corp.

1,397,128

81,298,878

Specialty Retail - 0.3%

Lowe's Companies, Inc.

668,178

19,002,982

TOTAL CONSUMER DISCRETIONARY

442,190,859

CONSUMER STAPLES - 10.5%

Beverages - 2.1%

Anheuser-Busch InBev SA NV

188,681

14,875,850

PepsiCo, Inc.

903,752

63,859,116

The Coca-Cola Co.

477,333

37,322,667

 

116,057,633

Food & Staples Retailing - 2.3%

Safeway, Inc. (d)

1,026,562

18,632,100

Sysco Corp.

621,800

18,535,858

Wal-Mart Stores, Inc.

825,995

57,588,371

Walgreen Co.

1,049,994

31,058,823

 

125,815,152

Food Products - 0.5%

Kellogg Co.

587,834

28,997,851

Household Products - 3.3%

Kimberly-Clark Corp.

306,201

25,650,458

Procter & Gamble Co.

2,341,501

143,416,936

Reckitt Benckiser Group PLC

209,901

11,061,982

 

180,129,376

Tobacco - 2.3%

Altria Group, Inc.

1,428,874

49,367,597

British American Tobacco PLC sponsored ADR

367,600

37,539,312

 

Shares

Value

Lorillard, Inc.

124,782

$ 16,464,985

Philip Morris International, Inc.

266,844

23,284,807

 

126,656,701

TOTAL CONSUMER STAPLES

577,656,713

ENERGY - 13.1%

Energy Equipment & Services - 1.3%

BW Offshore Ltd.

5,396,200

5,850,990

Exterran Partners LP

387,857

7,458,490

Halliburton Co.

803,985

22,825,134

National Oilwell Varco, Inc.

157,156

10,127,133

Noble Corp.

493,202

16,043,861

Trinidad Drilling Ltd. (d)

1,191,800

6,801,255

 

69,106,863

Oil, Gas & Consumable Fuels - 11.8%

Apache Corp.

390,311

34,304,434

BP PLC sponsored ADR

1,060,136

42,977,913

Buckeye Partners LP

181,720

9,480,332

Canadian Natural Resources Ltd.

610,500

16,376,343

Chevron Corp.

1,899,151

200,360,425

EV Energy Partners LP

58,900

2,972,094

Exxon Mobil Corp.

1,328,669

113,694,206

Holly Energy Partners LP

109,284

6,185,474

HollyFrontier Corp.

504,476

17,873,585

Inergy LP

147,118

2,739,337

Inergy Midstream LP

205,600

4,268,256

Legacy Reserves LP

380,101

9,506,326

Markwest Energy Partners LP

159,900

7,884,669

Penn West Petroleum Ltd. (d)

2,006,500

26,921,511

Pioneer Southwest Energy Partners LP

139,402

3,585,419

Royal Dutch Shell PLC Class A sponsored ADR

1,575,700

106,249,451

Suncor Energy, Inc.

551,100

15,935,943

Williams Companies, Inc.

965,900

27,837,238

 

649,152,956

TOTAL ENERGY

718,259,819

FINANCIALS - 18.0%

Capital Markets - 2.8%

Apollo Investment Corp.

808,738

6,211,108

Ashmore Group PLC

2,251,743

12,290,087

BlackRock, Inc. Class A

59,900

10,172,218

Charles Schwab Corp.

1,921,200

24,841,116

FXCM, Inc. Class A (d)

272,097

3,199,861

Goldman Sachs Group, Inc.

143,335

13,740,093

KKR & Co. LP

1,776,843

22,903,506

Manning & Napier, Inc.

439,100

6,248,393

Morgan Stanley

1,957,993

28,567,118

The Blackstone Group LP

1,844,426

24,106,648

 

152,280,148

Common Stocks - continued

Shares

Value

FINANCIALS - continued

Commercial Banks - 5.5%

BB&T Corp.

463,355

$ 14,294,502

Comerica, Inc.

331,820

10,190,192

Cullen/Frost Bankers, Inc.

134,900

7,755,401

First Niagara Financial Group, Inc.

631,834

4,833,530

M&T Bank Corp.

273,493

22,582,317

Standard Chartered PLC (United Kingdom)

381,370

8,269,378

SunTrust Banks, Inc.

862,480

20,897,890

U.S. Bancorp

1,329,738

42,764,374

Wells Fargo & Co.

5,108,236

170,819,412

 

302,406,996

Diversified Financial Services - 4.3%

JPMorgan Chase & Co.

5,464,519

195,247,264

KKR Financial Holdings LLC

3,028,485

25,802,692

New Academy Holding Co. LLC unit (h)(i)

127,200

14,743,752

 

235,793,708

Insurance - 3.6%

ACE Ltd.

562,800

41,720,364

AFLAC, Inc.

451,300

19,220,867

Assured Guaranty Ltd.

211,162

2,977,384

Berkshire Hathaway, Inc. Class B (a)

220,375

18,363,849

Fidelity National Financial, Inc. Class A

537,711

10,356,314

Hanover Insurance Group, Inc.

277,728

10,867,497

MetLife, Inc.

2,201,874

67,927,813

MetLife, Inc. unit (a)

144,300

8,922,069

Validus Holdings Ltd.

586,435

18,783,513

 

199,139,670

Real Estate Investment Trusts - 1.8%

American Capital Agency Corp.

470,888

15,826,546

Annaly Capital Management, Inc. (d)

890,200

14,937,556

Digital Realty Trust, Inc.

124,400

9,338,708

Highwoods Properties, Inc. (SBI)

127,438

4,288,289

Lexington Corporate Properties Trust

308,865

2,616,087

Omega Healthcare Investors, Inc.

464,200

10,444,500

Rayonier, Inc.

239,754

10,764,955

Two Harbors Investment Corp.

1,258,103

13,033,947

Ventas, Inc.

279,338

17,631,815

 

98,882,403

Real Estate Management & Development - 0.0%

Beazer Pre-Owned Rental Homes, Inc. (i)

149,500

2,990,000

TOTAL FINANCIALS

991,492,925

HEALTH CARE - 12.8%

Biotechnology - 0.7%

Amgen, Inc.

316,100

23,087,944

PDL BioPharma, Inc. (d)

2,246,500

14,894,295

 

37,982,239

 

Shares

Value

Health Care Equipment & Supplies - 0.7%

Baxter International, Inc.

100,100

$ 5,320,315

Covidien PLC

412,000

22,042,000

St. Jude Medical, Inc.

268,500

10,715,835

 

38,078,150

Health Care Providers & Services - 1.6%

Aetna, Inc.

439,400

17,035,538

Brookdale Senior Living, Inc. (a)

615,830

10,924,824

McKesson Corp.

61,450

5,760,938

WellPoint, Inc.

803,761

51,271,914

 

84,993,214

Pharmaceuticals - 9.8%

Abbott Laboratories

762,600

49,164,822

AstraZeneca PLC sponsored ADR

466,400

20,871,400

Eli Lilly & Co.

1,095,557

47,010,351

Johnson & Johnson

1,700,268

114,870,106

Merck & Co., Inc.

2,685,789

112,131,691

Pfizer, Inc.

6,030,885

138,710,355

Sanofi SA

459,370

34,774,705

Teva Pharmaceutical Industries Ltd. sponsored ADR

608,822

24,011,940

 

541,545,370

TOTAL HEALTH CARE

702,598,973

INDUSTRIALS - 9.1%

Aerospace & Defense - 2.4%

Lockheed Martin Corp.

302,996

26,384,892

Raytheon Co.

630,741

35,693,633

Rockwell Collins, Inc.

332,585

16,413,070

The Boeing Co.

146,780

10,905,754

United Technologies Corp.

591,376

44,666,629

 

134,063,978

Air Freight & Logistics - 1.4%

C.H. Robinson Worldwide, Inc.

241,500

14,134,995

United Parcel Service, Inc. Class B

781,704

61,567,007

 

75,702,002

Building Products - 0.1%

Lennox International, Inc.

75,800

3,534,554

Commercial Services & Supplies - 1.1%

Intrum Justitia AB

732,919

10,648,195

Republic Services, Inc.

1,961,382

51,898,168

 

62,546,363

Industrial Conglomerates - 2.2%

General Electric Co.

5,884,241

122,627,582

Machinery - 1.1%

Briggs & Stratton Corp.

755,567

13,214,867

Douglas Dynamics, Inc.

535,191

7,626,472

Harsco Corp.

116,600

2,376,308

Illinois Tool Works, Inc.

179,121

9,473,710

Common Stocks - continued

Shares

Value

INDUSTRIALS - continued

Machinery - continued

Ingersoll-Rand PLC

443,938

$ 18,725,305

Stanley Black & Decker, Inc.

120,391

7,748,365

 

59,165,027

Professional Services - 0.3%

Michael Page International PLC

2,475,199

14,494,357

Road & Rail - 0.5%

Union Pacific Corp.

249,462

29,763,311

TOTAL INDUSTRIALS

501,897,174

INFORMATION TECHNOLOGY - 8.7%

Communications Equipment - 1.0%

Cisco Systems, Inc.

3,397,522

58,335,453

Computers & Peripherals - 1.4%

Apple, Inc. (a)

66,930

39,087,120

Hewlett-Packard Co.

1,791,450

36,026,060

 

75,113,180

Electronic Equipment & Components - 0.3%

Arrow Electronics, Inc. (a)

202,022

6,628,342

TE Connectivity Ltd.

351,838

11,227,151

 

17,855,493

Internet Software & Services - 0.2%

VeriSign, Inc. (a)

291,000

12,678,870

IT Services - 4.2%

Accenture PLC Class A

525,471

31,575,552

Cognizant Technology Solutions Corp. Class A (a)

490,433

29,425,980

Fidelity National Information Services, Inc.

98,697

3,363,594

IBM Corp.

79,449

15,538,635

Paychex, Inc.

3,587,887

112,695,531

Visa, Inc. Class A

305,551

37,775,270

 

230,374,562

Semiconductors & Semiconductor Equipment - 1.4%

Applied Materials, Inc.

1,457,200

16,699,512

KLA-Tencor Corp.

382,148

18,820,789

MKS Instruments, Inc.

92,421

2,673,740

Siliconware Precision Industries Co. Ltd. sponsored ADR

2,523,619

13,097,583

Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR

1,698,500

23,711,060

 

75,002,684

Software - 0.2%

CA Technologies, Inc.

401,419

10,874,441

TOTAL INFORMATION TECHNOLOGY

480,234,683

 

Shares

Value

MATERIALS - 1.2%

Chemicals - 0.6%

Eastman Chemical Co.

216,300

$ 10,895,031

PetroLogistics LP

64,800

697,248

PPG Industries, Inc.

185,136

19,646,632

 

31,238,911

Metals & Mining - 0.6%

ArcelorMittal SA Class A unit (d)

421,403

6,434,824

Commercial Metals Co.

668,471

8,449,473

Freeport-McMoRan Copper & Gold, Inc.

329,200

11,215,844

Nucor Corp.

190,500

7,219,950

 

33,320,091

TOTAL MATERIALS

64,559,002

TELECOMMUNICATION SERVICES - 4.7%

Diversified Telecommunication Services - 3.5%

AT&T, Inc.

2,960,276

105,563,442

CenturyLink, Inc.

290,455

11,470,068

Koninklijke KPN NV

1,206,976

11,541,247

Verizon Communications, Inc.

1,499,008

66,615,916

 

195,190,673

Wireless Telecommunication Services - 1.2%

Vodafone Group PLC

22,599,446

63,521,524

TOTAL TELECOMMUNICATION SERVICES

258,712,197

UTILITIES - 5.4%

Electric Utilities - 3.7%

Duke Energy Corp.

2,059,077

47,482,316

El Paso Electric Co.

253,492

8,405,795

FirstEnergy Corp.

563,810

27,733,814

NextEra Energy, Inc.

560,380

38,559,748

PPL Corp.

1,975,734

54,945,163

Southern Co.

601,734

27,860,284

 

204,987,120

Multi-Utilities - 1.7%

Alliant Energy Corp.

190,801

8,694,802

CMS Energy Corp.

118,500

2,784,750

National Grid PLC

3,127,200

33,142,152

PG&E Corp.

455,105

20,602,603

Sempra Energy

422,100

29,074,248

 

94,298,555

TOTAL UTILITIES

299,285,675

TOTAL COMMON STOCKS

(Cost $4,682,960,234)


5,036,888,020

Preferred Stocks - 2.2%

Shares

Value

Convertible Preferred Stocks - 1.3%

CONSUMER DISCRETIONARY - 0.2%

Automobiles - 0.1%

General Motors Co. 4.75%

168,490

$ 5,593,868

Media - 0.1%

Interpublic Group of Companies, Inc. 5.25%

6,200

6,435,538

TOTAL CONSUMER DISCRETIONARY

12,029,406

ENERGY - 0.0%

Oil, Gas & Consumable Fuels - 0.0%

ATP Oil & Gas Corp. Series B, 8.00%

3,700

64,750

FINANCIALS - 0.3%

Commercial Banks - 0.2%

Huntington Bancshares, Inc. 8.50%

9,000

10,314,000

Diversified Financial Services - 0.0%

Citigroup, Inc. 7.50%

19,700

1,685,532

Real Estate Investment Trusts - 0.1%

Health Care REIT, Inc. Series I, 6.50%

84,800

4,579,200

TOTAL FINANCIALS

16,578,732

HEALTH CARE - 0.3%

Health Care Equipment & Supplies - 0.2%

Alere, Inc. 3.00%

41,553

8,601,471

Health Care Providers & Services - 0.1%

HealthSouth Corp. Series A 6.50%

7,600

8,094,000

TOTAL HEALTH CARE

16,695,471

INDUSTRIALS - 0.3%

Aerospace & Defense - 0.2%

United Technologies Corp. 7.50%

251,000

13,225,190

Professional Services - 0.1%

Nielsen Holdings B.V. 6.25%

91,500

4,683,656

TOTAL INDUSTRIALS

17,908,846

MATERIALS - 0.1%

Metals & Mining - 0.1%

AngloGold Ashanti Holdings Finance PLC 6.00%

70,100

2,888,120

UTILITIES - 0.1%

Electric Utilities - 0.1%

PPL Corp. 8.75%

135,000

7,222,500

TOTAL CONVERTIBLE PREFERRED STOCKS

73,387,825

 

Shares

Value

Nonconvertible Preferred Stocks - 0.9%

CONSUMER DISCRETIONARY - 0.6%

Automobiles - 0.6%

Porsche Automobil Holding SE (Germany) (d)

193,475

$ 9,584,364

Volkswagen AG

156,109

24,615,470

 

34,199,834

FINANCIALS - 0.3%

Consumer Finance - 0.3%

Ally Financial, Inc. 7.00% (e)

14,714

13,021,890

TOTAL NONCONVERTIBLE PREFERRED STOCKS

47,221,724

TOTAL PREFERRED STOCKS

(Cost $133,159,847)


120,609,549

Corporate Bonds - 3.2%

 

Principal Amount

 

Convertible Bonds - 2.4%

CONSUMER DISCRETIONARY - 0.1%

Hotels, Restaurants & Leisure - 0.1%

Gaylord Entertainment Co. 3.75% 10/1/14 (e)

$ 2,210,000

3,296,436

ENERGY - 0.5%

Energy Equipment & Services - 0.1%

Transocean, Inc. Series C, 1.5% 12/15/37

5,180,000

5,154,100

Oil, Gas & Consumable Fuels - 0.4%

Amyris, Inc. 3% 2/27/17 (i)

1,383,000

1,152,025

Chesapeake Energy Corp. 2.5% 5/15/37

2,590,000

2,232,062

Massey Energy Co. 3.25% 8/1/15

5,860,000

5,054,250

Peabody Energy Corp. 4.75% 12/15/66

5,050,000

4,096,813

Western Refining, Inc. 5.75% 6/15/14

4,320,000

9,363,600

 

21,898,750

TOTAL ENERGY

27,052,850

FINANCIALS - 0.1%

Thrifts & Mortgage Finance - 0.1%

MGIC Investment Corp. 9% 4/1/63 (e)

10,438,000

4,436,150

HEALTH CARE - 0.1%

Health Care Equipment & Supplies - 0.1%

Teleflex, Inc. 3.875% 8/1/17

3,860,000

4,483,004

Corporate Bonds - continued

 

Principal Amount

Value

Convertible Bonds - continued

INDUSTRIALS - 0.3%

Commercial Services & Supplies - 0.2%

Covanta Holding Corp. 3.25% 6/1/14

$ 10,880,000

$ 12,751,360

Construction & Engineering - 0.1%

MasTec, Inc.:

4% 6/15/14

2,520,000

3,030,300

4.25% 12/15/14

1,300,000

1,610,375

 

4,640,675

TOTAL INDUSTRIALS

17,392,035

INFORMATION TECHNOLOGY - 0.8%

Communications Equipment - 0.1%

InterDigital, Inc. 2.5% 3/15/16

5,740,000

5,589,612

Computers & Peripherals - 0.1%

SanDisk Corp. 1.5% 8/15/17

8,650,000

8,936,488

Internet Software & Services - 0.1%

VeriSign, Inc. 3.25% 8/15/37

4,410,000

6,140,925

IT Services - 0.1%

CACI International, Inc. 2.125% 5/1/14

4,690,000

5,329,013

Semiconductors & Semiconductor Equipment - 0.1%

Micron Technology, Inc.:

1.875% 8/1/31 (e)

4,650,000

4,155,938

3.125% 5/1/32 (e)

650,000

598,406

 

4,754,344

Software - 0.3%

Nuance Communications, Inc. 2.75% 11/1/31 (e)

13,380,000

14,768,175

TOTAL INFORMATION TECHNOLOGY

45,518,557

MATERIALS - 0.2%

Metals & Mining - 0.2%

Goldcorp, Inc. 2% 8/1/14

4,490,000

5,068,312

Newmont Mining Corp. 1.25% 7/15/14

5,990,000

7,427,600

Royal Gold, Inc. 2.875% 6/15/19

1,190,000

1,246,525

 

13,742,437

TELECOMMUNICATION SERVICES - 0.1%

Diversified Telecommunication Services - 0.1%

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

6,660,000

4,145,850

 

 

Principal Amount

Value

UTILITIES - 0.2%

Multi-Utilities - 0.2%

CMS Energy Corp. 5.5% 6/15/29

$ 6,100,000

$ 10,347,430

TOTAL CONVERTIBLE BONDS

130,414,749

Nonconvertible Bonds - 0.8%

CONSUMER DISCRETIONARY - 0.1%

Multiline Retail - 0.1%

The Bon-Ton Department Stores, Inc. 10.25% 3/15/14

3,030,000

2,545,200

CONSUMER STAPLES - 0.2%

Food & Staples Retailing - 0.2%

Rite Aid Corp. 9.5% 6/15/17

9,085,000

9,289,413

Tops Markets LLC 10.125% 10/15/15

2,230,000

2,369,375

 

11,658,788

ENERGY - 0.1%

Oil, Gas & Consumable Fuels - 0.1%

Alpha Natural Resources, Inc. 6% 6/1/19

1,230,000

1,048,575

Western Refining, Inc. 11.25% 6/15/17 (e)

4,045,000

4,530,400

 

5,578,975

FINANCIALS - 0.3%

Diversified Financial Services - 0.1%

Goldman Sachs Capital II 5.793% (f)(g)

7,850,000

5,314,607

Thrifts & Mortgage Finance - 0.2%

Radian Group, Inc.:

5.375% 6/15/15

3,960,000

2,851,200

5.625% 2/15/13

10,000,000

9,400,000

 

12,251,200

TOTAL FINANCIALS

17,565,807

MATERIALS - 0.1%

Paper & Forest Products - 0.1%

AbitibiBowater, Inc. 10.25% 10/15/18

6,015,000

6,676,650

TOTAL NONCONVERTIBLE BONDS

44,025,420

TOTAL CORPORATE BONDS

(Cost $173,855,698)


174,440,169

Floating Rate Loans - 0.2%

 

Principal Amount

Value

ENERGY - 0.1%

Oil, Gas & Consumable Fuels - 0.1%

Chesapeake Energy Corp. term loan 8.5% 12/2/17 (g)

$ 5,630,000

$ 5,566,663

FINANCIALS - 0.1%

Insurance - 0.1%

Asurion Corp. Tranche 2nd LN, term loan 9% 5/24/19 (g)

5,537,000

5,647,740

TOTAL FLOATING RATE LOANS

(Cost $11,057,968)


11,214,403

Money Market Funds - 3.0%

Shares

 

Fidelity Cash Central Fund, 0.17% (b)

99,815,681

99,815,681

Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c)

66,021,525

66,021,525

TOTAL MONEY MARKET FUNDS

(Cost $165,837,206)


165,837,206

TOTAL INVESTMENT PORTFOLIO - 100.1%

(Cost $5,166,870,953)

5,508,989,347

NET OTHER ASSETS (LIABILITIES) - (0.1)%

(3,099,044)

NET ASSETS - 100%

$ 5,505,890,303

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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 $48,953,245 or 0.9% of net assets.

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

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

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

(i) 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 $18,885,777 or 0.3% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost

Amyris, Inc. 3% 2/27/17

2/27/12

$ 1,383,000

Beazer Pre-Owned Rental Homes, Inc.

5/3/12

$ 2,990,000

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

$ 100,972

Fidelity Securities Lending Cash Central Fund

716,888

Total

$ 817,860

Other Information

The following is a summary of the inputs used, as of June 30, 2012, 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 Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 488,420,099

$ 473,166,875

$ 15,253,224

$ -

Consumer Staples

577,656,713

562,780,863

14,875,850

-

Energy

718,324,569

718,259,819

64,750

-

Financials

1,021,093,547

981,415,836

21,943,959

17,733,752

Health Care

719,294,444

676,425,739

42,868,705

-

Industrials

519,806,020

515,122,364

4,683,656

-

Information Technology

480,234,683

480,234,683

-

-

Materials

67,447,122

67,447,122

-

-

Telecommunication Services

258,712,197

195,190,673

63,521,524

-

Utilities

306,508,175

266,143,523

40,364,652

-

Corporate Bonds

174,440,169

-

174,440,169

-

Floating Rate Loans

11,214,403

-

11,214,403

-

Money Market Funds

165,837,206

165,837,206

-

-

Total Investments in Securities:

$ 5,508,989,347

$ 5,102,024,703

$ 389,230,892

$ 17,733,752

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

United States of America

85.6%

United Kingdom

6.4%

Ireland

1.3%

Canada

1.3%

Switzerland

1.3%

Others (Individually Less Than 1%)

4.1%

 

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, 2012 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $64,753,841) - See accompanying schedule:

Unaffiliated issuers (cost $5,001,033,747)

$ 5,343,152,141

 

Fidelity Central Funds (cost $165,837,206)

165,837,206

 

Total Investments (cost $5,166,870,953)

 

$ 5,508,989,347

Foreign currency held at value (cost $12,007)

12,007

Receivable for investments sold

133,467,164

Receivable for fund shares sold

819,201

Dividends receivable

15,015,591

Interest receivable

1,491,601

Distributions receivable from Fidelity Central Funds

48,223

Other receivables

363,372

Total assets

5,660,206,506

 

 

 

Liabilities

Payable to custodian bank

$ 506,796

Payable for investments purchased

79,603,094

Payable for fund shares redeemed

4,941,230

Accrued management fee

2,051,647

Distribution and service plan fees payable

346,654

Other affiliated payables

511,419

Other payables and accrued expenses

333,838

Collateral on securities loaned, at value

66,021,525

Total liabilities

154,316,203

 

 

 

Net Assets

$ 5,505,890,303

Net Assets consist of:

 

Paid in capital

$ 5,002,371,281

Undistributed net investment income

80,004,092

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

81,238,620

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

342,276,310

Net Assets

$ 5,505,890,303

Statement of Assets and Liabilities - continued

 

June 30, 2012 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($3,410,917,771 ÷ 172,545,133 shares)

$ 19.77

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($348,946,352 ÷ 17,719,120 shares)

$ 19.69

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($1,543,366,826 ÷ 79,365,464 shares)

$ 19.45

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($4,905,087 ÷ 253,322 shares)

$ 19.36

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($197,754,267 ÷ 10,034,099 shares)

$ 19.71

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, 2012 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 91,320,183

Interest

 

5,508,617

Income from Fidelity Central Funds

 

817,860

Total income

 

97,646,660

 

 

 

Expenses

Management fee

$ 12,788,191

Transfer agent fees

2,065,952

Distribution and service plan fees

2,166,965

Accounting and security lending fees

557,433

Custodian fees and expenses

67,512

Independent trustees' compensation

18,289

Appreciation in deferred trustee compensation account

83

Audit

44,264

Legal

13,786

Interest

310

Miscellaneous

32,674

Total expenses before reductions

17,755,459

Expense reductions

(225,136)

17,530,323

Net investment income (loss)

80,116,337

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

116,971,037

Foreign currency transactions

(136,072)

Total net realized gain (loss)

 

116,834,965

Change in net unrealized appreciation (depreciation) on:

Investment securities

248,948,696

Assets and liabilities in foreign currencies

167,017

Total change in net unrealized appreciation (depreciation)

 

249,115,713

Net gain (loss)

365,950,678

Net increase (decrease) in net assets resulting from operations

$ 446,067,015

Statement of Changes in Net Assets

 

Six months ended
June 30, 2012
(Unaudited)

Year ended
December 31,
2011

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 80,116,337

$ 137,582,764

Net realized gain (loss)

116,834,965

336,648,895

Change in net unrealized appreciation (depreciation)

249,115,713

(414,416,618)

Net increase (decrease) in net assets resulting from operations

446,067,015

59,815,041

Distributions to shareholders from net investment income

-

(135,446,653)

Distributions to shareholders from net realized gain

(141,235,485)

-

Total distributions

(141,235,485)

(135,446,653)

Share transactions - net increase (decrease)

(132,387,772)

(594,372,345)

Redemption fees

696

2,327

Total increase (decrease) in net assets

172,444,454

(670,001,630)

 

 

 

Net Assets

Beginning of period

5,333,445,849

6,003,447,479

End of period (including undistributed net investment income of $80,004,092 and distributions in excess of net investment income of $132,585, respectively)

$ 5,505,890,303

$ 5,333,445,849

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 18.69

$ 19.02

$ 16.81

$ 13.18

$ 23.91

$ 26.20

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .29

.48

.30

.33

.47

.47

Net realized and unrealized gain (loss)

  1.28

(.31)

2.24

3.64

(10.67)

(.05)

Total from investment operations

  1.57

.17

2.54

3.97

(10.20)

.42

Distributions from net investment income

  -

(.50)

(.33)

(.34)

(.51)

(.50)

Distributions from net realized gain

  (.49)

-

-

-

(.02)

(2.21)

Total distributions

  (.49)

(.50)

(.33)

(.34)

(.53)

(2.71)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.77

$ 18.69

$ 19.02

$ 16.81

$ 13.18

$ 23.91

Total Return B, C, D

  8.45%

.97%

15.15%

30.21%

(42.65)%

1.53%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .55% A

.56%

.56%

.58%

.57%

.55%

Expenses net of fee waivers, if any

  .55% A

.55%

.55%

.58%

.57%

.55%

Expenses net of all reductions

  .55% A

.54%

.55%

.58%

.57%

.54%

Net investment income (loss)

  2.95% A

2.48%

1.71%

2.29%

2.37%

1.71%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 3,410,918

$ 3,345,762

$ 3,798,310

$ 3,771,733

$ 3,322,799

$ 7,201,655

Portfolio turnover rate G

  59% A

96%

29%

29%

34%

20%

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. HExpense 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. IAmount represents less than $.01 per share.

Financial Highlights - Service Class

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 18.63

$ 18.96

$ 16.75

$ 13.14

$ 23.82

$ 26.11

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .28

.46

.28

.31

.44

.44

Net realized and unrealized gain (loss)

  1.27

(.31)

2.24

3.63

(10.62)

(.05)

Total from investment operations

  1.55

.15

2.52

3.94

(10.18)

.39

Distributions from net investment income

  -

(.48)

(.31)

(.33)

(.48)

(.47)

Distributions from net realized gain

  (.49)

-

-

-

(.02)

(2.21)

Total distributions

  (.49)

(.48)

(.31)

(.33)

(.50)

(2.68)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.69

$ 18.63

$ 18.96

$ 16.75

$ 13.14

$ 23.82

Total Return B, C, D

  8.37%

.86%

15.09%

30.03%

(42.70)%

1.42%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .65% A

.66%

.66%

.68%

.67%

.65%

Expenses net of fee waivers, if any

  .65% A

.66%

.65%

.68%

.67%

.65%

Expenses net of all reductions

  .65% A

.64%

.65%

.68%

.67%

.64%

Net investment income (loss)

  2.85% A

2.38%

1.61%

2.19%

2.27%

1.61%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 348,946

$ 347,999

$ 414,431

$ 430,383

$ 405,082

$ 920,054

Portfolio turnover rate G

  59% A

96%

29%

29%

34%

20%

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. HExpense 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. IAmount 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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 18.41

$ 18.75

$ 16.57

$ 13.00

$ 23.57

$ 25.87

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .26

.42

.25

.29

.41

.39

Net realized and unrealized gain (loss)

  1.27

(.31)

2.21

3.58

(10.50)

(.04)

Total from investment operations

  1.53

.11

2.46

3.87

(10.09)

.35

Distributions from net investment income

  -

(.45)

(.28)

(.30)

(.46)

(.44)

Distributions from net realized gain

  (.49)

-

-

-

(.02)

(2.21)

Total distributions

  (.49)

(.45)

(.28)

(.30)

(.48)

(2.65)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.45

$ 18.41

$ 18.75

$ 16.57

$ 13.00

$ 23.57

Total Return B, C, D

  8.36%

.66%

14.92%

29.88%

(42.81)%

1.27%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .80% A

.81%

.81%

.83%

.82%

.80%

Expenses net of fee waivers, if any

  .80% A

.81%

.80%

.83%

.82%

.80%

Expenses net of all reductions

  .80% A

.80%

.80%

.83%

.82%

.80%

Net investment income (loss)

  2.70% A

2.23%

1.46%

2.04%

2.12%

1.46%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 1,543,367

$ 1,457,230

$ 1,619,356

$ 1,558,421

$ 1,321,569

$ 2,583,129

Portfolio turnover rate G

  59% A

96%

29%

29%

34%

20%

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. HExpense 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. IAmount represents less than $.01 per share.

Financial Highlights - Service Class 2R

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 18.34

$ 18.66

$ 16.49

$ 12.93

$ 23.44

$ 25.73

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .26

.42

.25

.28

.41

.39

Net realized and unrealized gain (loss)

  1.25

(.30)

2.20

3.58

(10.45)

(.04)

Total from investment operations

  1.51

.12

2.45

3.86

(10.04)

.35

Distributions from net investment income

  -

(.44)

(.28)

(.30)

(.45)

(.43)

Distributions from net realized gain

  (.49)

-

-

-

(.02)

(2.21)

Total distributions

  (.49)

(.44)

(.28)

(.30)

(.47)

(2.64)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.36

$ 18.34

$ 18.66

$ 16.49

$ 12.93

$ 23.44

Total Return B, C, D

  8.28%

.70%

14.90%

29.95%

(42.82)%

1.27%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .80% A

.81%

.81%

.83%

.82%

.80%

Expenses net of fee waivers, if any

  .80% A

.80%

.80%

.83%

.82%

.80%

Expenses net of all reductions

  .80% A

.79%

.80%

.83%

.81%

.79%

Net investment income (loss)

  2.70% A

2.23%

1.46%

2.04%

2.12%

1.46%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 4,905

$ 3,956

$ 5,405

$ 5,259

$ 5,339

$ 13,558

Portfolio turnover rate G

  59% A

96%

29%

29%

34%

20%

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. HExpense 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. IAmount 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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 18.64

$ 18.97

$ 16.77

$ 13.15

$ 23.85

$ 26.15

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .28

.46

.28

.31

.44

.44

Net realized and unrealized gain (loss)

  1.28

(.31)

2.23

3.64

(10.63)

(.05)

Total from investment operations

  1.56

.15

2.51

3.95

(10.19)

.39

Distributions from net investment income

  -

(.48)

(.31)

(.33)

(.49)

(.48)

Distributions from net realized gain

  (.49)

-

-

-

(.02)

(2.21)

Total distributions

  (.49)

(.48)

(.31)

(.33)

(.51)

(2.69)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.71

$ 18.64

$ 18.97

$ 16.77

$ 13.15

$ 23.85

Total Return B, C, D

  8.42%

.89%

15.04%

30.09%

(42.71)%

1.39%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .64% A

.64%

.65%

.68%

.66%

.66%

Expenses net of fee waivers, if any

  .64% A

.64%

.64%

.68%

.66%

.66%

Expenses net of all reductions

  .63% A

.63%

.64%

.68%

.66%

.66%

Net investment income (loss)

  2.86% A

2.39%

1.62%

2.19%

2.28%

1.60%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 197,754

$ 178,499

$ 165,946

$ 147,358

$ 122,483

$ 230,534

Portfolio turnover rate G

  59% A

96%

29%

29%

34%

20%

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. HExpense 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. IAmount 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, 2012 (Unaudited)

1. Organization.

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

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Security 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 vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security 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 significant 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 are used and are 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 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 and floating rate loans, pricing vendors utilize matrix pricing which considers yield or price of

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices and are generally categorized as Level 2 in the hierarchy. 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. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value 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, 2012, is included at the end of the Fund's Schedule of Investments.

Foreign Currency Translation. 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. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. 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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

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

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

Gross unrealized appreciation

$ 836,134,469

Gross unrealized depreciation

(503,412,986)

Net unrealized appreciation (depreciation) on securities and other investments

$ 332,721,483

 

 

Tax cost

$ 5,176,267,864

Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days are 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.

New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

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.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $1,597,039,051 and $1,883,712,074, respectively.

6. Fees and Other Transactions with Affiliates.

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

Distribution and Service Plan 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

$ 178,980

Service Class 2

1,982,276

Service Class 2R

5,709

 

$ 2,166,965

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. In addition, FIIOC receives an asset-based fee of .0038% 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

$ 1,223,378

Service Class

126,972

Service Class 2

563,280

Service Class 2R

1,605

Investor Class

150,717

 

$ 2,065,952

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. The commissions paid to these affiliated firms were $28,450 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

$ 13,168,000

.42%

$ 310

7. 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 $8,171 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities 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, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. 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 $716,888, including $2,138 from securities loaned to FCM.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $225,136 for the period.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2012

Year ended
December 31,
2011

From net investment income

 

 

Initial Class

$ -

$ 87,368,043

Service Class

-

8,664,568

Service Class 2

-

34,838,681

Service Class 2R

-

92,819

Investor Class

-

4,482,542

Total

$ -

$ 135,446,653

 

From net realized gain

 

 

Initial Class

$ 86,397,034

$ -

Service Class

9,082,257

-

Service Class 2

40,893,881

-

Service Class 2R

114,488

-

Investor Class

4,747,825

-

Total

$ 141,235,485

$ -

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30,
2012

Year ended
December 31,
2011

Six months ended
June 30,
2012

Year ended
December 31,
2011

Initial Class

 

 

 

 

Shares sold

1,803,095

4,371,165

$ 35,046,037

$ 84,316,162

Reinvestment of distributions

4,469,583

4,832,303

86,397,034

87,368,043

Shares redeemed

(12,761,305)

(29,859,019)

(248,524,253)

(577,640,149)

Net increase (decrease)

(6,488,627)

(20,655,551)

$ (127,081,182)

$ (405,955,944)

Service Class

 

 

 

 

Shares sold

448,743

732,651

$ 8,651,357

$ 13,967,159

Reinvestment of distributions

471,316

480,564

9,082,257

8,664,568

Shares redeemed

(1,882,669)

(4,390,826)

(36,702,132)

(85,219,322)

Net increase (decrease)

(962,610)

(3,177,611)

$ (18,968,518)

$ (62,587,595)

Service Class 2

 

 

 

 

Shares sold

7,857,246

6,218,448

$ 150,214,185

$ 117,730,568

Reinvestment of distributions

2,147,788

1,955,033

40,893,881

34,838,681

Shares redeemed

(9,778,461)

(15,423,190)

(186,994,630)

(293,235,286)

Net increase (decrease)

226,573

(7,249,709)

$ 4,113,436

$ (140,666,037)

Service Class 2R

 

 

 

 

Shares sold

58,246

65,572

$ 1,106,634

$ 1,282,023

Reinvestment of distributions

6,038

5,229

114,488

92,819

Shares redeemed

(26,686)

(144,784)

(510,428)

(2,656,411)

Net increase (decrease)

37,598

(73,983)

$ 710,694

$ (1,281,569)

Investor Class

 

 

 

 

Shares sold

748,542

1,692,332

$ 14,524,129

$ 32,847,466

Reinvestment of distributions

246,256

248,478

4,747,825

4,482,542

Shares redeemed

(536,653)

(1,110,397)

(10,434,156)

(21,211,208)

Net increase (decrease)

458,145

830,413

$ 8,837,798

$ 16,118,800

Semiannual Report

12. Other.

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

At the end of the period, FMR or its affiliates were the owners of record of 11% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 18% 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 Northern Trust Company
Chicago, IL 

VIPEI-SANN-0812
1.705693.114

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

Semiannual Report

June 30, 2012

(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. © 2012 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, 2012 to June 30, 2012).

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

Beginning
Account Value
January 1, 2012

Ending
Account Value
June 30, 2012

Expenses Paid
During Period*
January 1, 2012
to June 30, 2012

Initial Class

.55%

 

 

 

Actual

 

$ 1,000.00

$ 1,084.50

$ 2.85

HypotheticalA

 

$ 1,000.00

$ 1,022.13

$ 2.77

Service Class

.65%

 

 

 

Actual

 

$ 1,000.00

$ 1,083.70

$ 3.37

HypotheticalA

 

$ 1,000.00

$ 1,021.63

$ 3.27

Service Class 2

.80%

 

 

 

Actual

 

$ 1,000.00

$ 1,083.60

$ 4.14

HypotheticalA

 

$ 1,000.00

$ 1,020.89

$ 4.02

Service Class 2R

.80%

 

 

 

Actual

 

$ 1,000.00

$ 1,082.80

$ 4.14

HypotheticalA

 

$ 1,000.00

$ 1,020.89

$ 4.02

Investor Class

.64%

 

 

 

Actual

 

$ 1,000.00

$ 1,084.20

$ 3.32

HypotheticalA

 

$ 1,000.00

$ 1,021.68

$ 3.22

A 5% return per year before expenses

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

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Chevron Corp.

3.6

4.2

JPMorgan Chase & Co.

3.5

3.3

Wells Fargo & Co.

3.1

3.4

Comcast Corp. Class A

3.0

1.6

Procter & Gamble Co.

2.6

2.7

Pfizer, Inc.

2.5

3.3

General Electric Co.

2.2

2.2

Johnson & Johnson

2.1

1.4

Exxon Mobil Corp.

2.1

1.6

Paychex, Inc.

2.0

1.7

 

26.7

Top Five Market Sectors as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

19.1

19.9

Energy

13.8

12.7

Health Care

13.2

14.0

Consumer Staples

10.7

11.5

Industrials

9.7

9.3

Asset Allocation (% of fund's net assets)

As of June 30, 2012*

As of December 31, 2011**

vpo15

Stocks 93.7%

 

vpo15

Stocks 96.1%

 

vpo18

Bonds 3.4%

 

vpo18

Bonds 2.8%

 

vpo21

Short-Term
Investments and
Net Other Assets
(Liabilities) 2.9%

 

vpo21

Short-Term
Investments and
Net Other Assets
(Liabilities) 1.1%

 

* Foreign investments

14.4%

 

** Foreign investments

17.7%

 

vpo37

Semiannual Report

Investments June 30, 2012 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 91.5%

Shares

Value

CONSUMER DISCRETIONARY - 8.0%

Distributors - 0.2%

Li & Fung Ltd.

4,554,000

$ 8,817,686

Hotels, Restaurants & Leisure - 0.8%

Arcos Dorados Holdings, Inc.

176,400

2,607,192

McDonald's Corp.

460,252

40,746,110

 

43,353,302

Household Durables - 0.5%

KB Home

570,948

5,595,290

Lennar Corp. Class A

381,792

11,801,191

PulteGroup, Inc. (a)

1,240,229

13,270,450

 

30,666,931

Leisure Equipment & Products - 0.3%

Hasbro, Inc.

521,066

17,648,505

Media - 4.4%

Comcast Corp. Class A

5,117,866

163,618,176

Time Warner, Inc.

2,020,374

77,784,399

 

241,402,575

Multiline Retail - 1.5%

Target Corp.

1,397,128

81,298,878

Specialty Retail - 0.3%

Lowe's Companies, Inc.

668,178

19,002,982

TOTAL CONSUMER DISCRETIONARY

442,190,859

CONSUMER STAPLES - 10.5%

Beverages - 2.1%

Anheuser-Busch InBev SA NV

188,681

14,875,850

PepsiCo, Inc.

903,752

63,859,116

The Coca-Cola Co.

477,333

37,322,667

 

116,057,633

Food & Staples Retailing - 2.3%

Safeway, Inc. (d)

1,026,562

18,632,100

Sysco Corp.

621,800

18,535,858

Wal-Mart Stores, Inc.

825,995

57,588,371

Walgreen Co.

1,049,994

31,058,823

 

125,815,152

Food Products - 0.5%

Kellogg Co.

587,834

28,997,851

Household Products - 3.3%

Kimberly-Clark Corp.

306,201

25,650,458

Procter & Gamble Co.

2,341,501

143,416,936

Reckitt Benckiser Group PLC

209,901

11,061,982

 

180,129,376

Tobacco - 2.3%

Altria Group, Inc.

1,428,874

49,367,597

British American Tobacco PLC sponsored ADR

367,600

37,539,312

 

Shares

Value

Lorillard, Inc.

124,782

$ 16,464,985

Philip Morris International, Inc.

266,844

23,284,807

 

126,656,701

TOTAL CONSUMER STAPLES

577,656,713

ENERGY - 13.1%

Energy Equipment & Services - 1.3%

BW Offshore Ltd.

5,396,200

5,850,990

Exterran Partners LP

387,857

7,458,490

Halliburton Co.

803,985

22,825,134

National Oilwell Varco, Inc.

157,156

10,127,133

Noble Corp.

493,202

16,043,861

Trinidad Drilling Ltd. (d)

1,191,800

6,801,255

 

69,106,863

Oil, Gas & Consumable Fuels - 11.8%

Apache Corp.

390,311

34,304,434

BP PLC sponsored ADR

1,060,136

42,977,913

Buckeye Partners LP

181,720

9,480,332

Canadian Natural Resources Ltd.

610,500

16,376,343

Chevron Corp.

1,899,151

200,360,425

EV Energy Partners LP

58,900

2,972,094

Exxon Mobil Corp.

1,328,669

113,694,206

Holly Energy Partners LP

109,284

6,185,474

HollyFrontier Corp.

504,476

17,873,585

Inergy LP

147,118

2,739,337

Inergy Midstream LP

205,600

4,268,256

Legacy Reserves LP

380,101

9,506,326

Markwest Energy Partners LP

159,900

7,884,669

Penn West Petroleum Ltd. (d)

2,006,500

26,921,511

Pioneer Southwest Energy Partners LP

139,402

3,585,419

Royal Dutch Shell PLC Class A sponsored ADR

1,575,700

106,249,451

Suncor Energy, Inc.

551,100

15,935,943

Williams Companies, Inc.

965,900

27,837,238

 

649,152,956

TOTAL ENERGY

718,259,819

FINANCIALS - 18.0%

Capital Markets - 2.8%

Apollo Investment Corp.

808,738

6,211,108

Ashmore Group PLC

2,251,743

12,290,087

BlackRock, Inc. Class A

59,900

10,172,218

Charles Schwab Corp.

1,921,200

24,841,116

FXCM, Inc. Class A (d)

272,097

3,199,861

Goldman Sachs Group, Inc.

143,335

13,740,093

KKR & Co. LP

1,776,843

22,903,506

Manning & Napier, Inc.

439,100

6,248,393

Morgan Stanley

1,957,993

28,567,118

The Blackstone Group LP

1,844,426

24,106,648

 

152,280,148

Common Stocks - continued

Shares

Value

FINANCIALS - continued

Commercial Banks - 5.5%

BB&T Corp.

463,355

$ 14,294,502

Comerica, Inc.

331,820

10,190,192

Cullen/Frost Bankers, Inc.

134,900

7,755,401

First Niagara Financial Group, Inc.

631,834

4,833,530

M&T Bank Corp.

273,493

22,582,317

Standard Chartered PLC (United Kingdom)

381,370

8,269,378

SunTrust Banks, Inc.

862,480

20,897,890

U.S. Bancorp

1,329,738

42,764,374

Wells Fargo & Co.

5,108,236

170,819,412

 

302,406,996

Diversified Financial Services - 4.3%

JPMorgan Chase & Co.

5,464,519

195,247,264

KKR Financial Holdings LLC

3,028,485

25,802,692

New Academy Holding Co. LLC unit (h)(i)

127,200

14,743,752

 

235,793,708

Insurance - 3.6%

ACE Ltd.

562,800

41,720,364

AFLAC, Inc.

451,300

19,220,867

Assured Guaranty Ltd.

211,162

2,977,384

Berkshire Hathaway, Inc. Class B (a)

220,375

18,363,849

Fidelity National Financial, Inc. Class A

537,711

10,356,314

Hanover Insurance Group, Inc.

277,728

10,867,497

MetLife, Inc.

2,201,874

67,927,813

MetLife, Inc. unit (a)

144,300

8,922,069

Validus Holdings Ltd.

586,435

18,783,513

 

199,139,670

Real Estate Investment Trusts - 1.8%

American Capital Agency Corp.

470,888

15,826,546

Annaly Capital Management, Inc. (d)

890,200

14,937,556

Digital Realty Trust, Inc.

124,400

9,338,708

Highwoods Properties, Inc. (SBI)

127,438

4,288,289

Lexington Corporate Properties Trust

308,865

2,616,087

Omega Healthcare Investors, Inc.

464,200

10,444,500

Rayonier, Inc.

239,754

10,764,955

Two Harbors Investment Corp.

1,258,103

13,033,947

Ventas, Inc.

279,338

17,631,815

 

98,882,403

Real Estate Management & Development - 0.0%

Beazer Pre-Owned Rental Homes, Inc. (i)

149,500

2,990,000

TOTAL FINANCIALS

991,492,925

HEALTH CARE - 12.8%

Biotechnology - 0.7%

Amgen, Inc.

316,100

23,087,944

PDL BioPharma, Inc. (d)

2,246,500

14,894,295

 

37,982,239

 

Shares

Value

Health Care Equipment & Supplies - 0.7%

Baxter International, Inc.

100,100

$ 5,320,315

Covidien PLC

412,000

22,042,000

St. Jude Medical, Inc.

268,500

10,715,835

 

38,078,150

Health Care Providers & Services - 1.6%

Aetna, Inc.

439,400

17,035,538

Brookdale Senior Living, Inc. (a)

615,830

10,924,824

McKesson Corp.

61,450

5,760,938

WellPoint, Inc.

803,761

51,271,914

 

84,993,214

Pharmaceuticals - 9.8%

Abbott Laboratories

762,600

49,164,822

AstraZeneca PLC sponsored ADR

466,400

20,871,400

Eli Lilly & Co.

1,095,557

47,010,351

Johnson & Johnson

1,700,268

114,870,106

Merck & Co., Inc.

2,685,789

112,131,691

Pfizer, Inc.

6,030,885

138,710,355

Sanofi SA

459,370

34,774,705

Teva Pharmaceutical Industries Ltd. sponsored ADR

608,822

24,011,940

 

541,545,370

TOTAL HEALTH CARE

702,598,973

INDUSTRIALS - 9.1%

Aerospace & Defense - 2.4%

Lockheed Martin Corp.

302,996

26,384,892

Raytheon Co.

630,741

35,693,633

Rockwell Collins, Inc.

332,585

16,413,070

The Boeing Co.

146,780

10,905,754

United Technologies Corp.

591,376

44,666,629

 

134,063,978

Air Freight & Logistics - 1.4%

C.H. Robinson Worldwide, Inc.

241,500

14,134,995

United Parcel Service, Inc. Class B

781,704

61,567,007

 

75,702,002

Building Products - 0.1%

Lennox International, Inc.

75,800

3,534,554

Commercial Services & Supplies - 1.1%

Intrum Justitia AB

732,919

10,648,195

Republic Services, Inc.

1,961,382

51,898,168

 

62,546,363

Industrial Conglomerates - 2.2%

General Electric Co.

5,884,241

122,627,582

Machinery - 1.1%

Briggs & Stratton Corp.

755,567

13,214,867

Douglas Dynamics, Inc.

535,191

7,626,472

Harsco Corp.

116,600

2,376,308

Illinois Tool Works, Inc.

179,121

9,473,710

Common Stocks - continued

Shares

Value

INDUSTRIALS - continued

Machinery - continued

Ingersoll-Rand PLC

443,938

$ 18,725,305

Stanley Black & Decker, Inc.

120,391

7,748,365

 

59,165,027

Professional Services - 0.3%

Michael Page International PLC

2,475,199

14,494,357

Road & Rail - 0.5%

Union Pacific Corp.

249,462

29,763,311

TOTAL INDUSTRIALS

501,897,174

INFORMATION TECHNOLOGY - 8.7%

Communications Equipment - 1.0%

Cisco Systems, Inc.

3,397,522

58,335,453

Computers & Peripherals - 1.4%

Apple, Inc. (a)

66,930

39,087,120

Hewlett-Packard Co.

1,791,450

36,026,060

 

75,113,180

Electronic Equipment & Components - 0.3%

Arrow Electronics, Inc. (a)

202,022

6,628,342

TE Connectivity Ltd.

351,838

11,227,151

 

17,855,493

Internet Software & Services - 0.2%

VeriSign, Inc. (a)

291,000

12,678,870

IT Services - 4.2%

Accenture PLC Class A

525,471

31,575,552

Cognizant Technology Solutions Corp. Class A (a)

490,433

29,425,980

Fidelity National Information Services, Inc.

98,697

3,363,594

IBM Corp.

79,449

15,538,635

Paychex, Inc.

3,587,887

112,695,531

Visa, Inc. Class A

305,551

37,775,270

 

230,374,562

Semiconductors & Semiconductor Equipment - 1.4%

Applied Materials, Inc.

1,457,200

16,699,512

KLA-Tencor Corp.

382,148

18,820,789

MKS Instruments, Inc.

92,421

2,673,740

Siliconware Precision Industries Co. Ltd. sponsored ADR

2,523,619

13,097,583

Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR

1,698,500

23,711,060

 

75,002,684

Software - 0.2%

CA Technologies, Inc.

401,419

10,874,441

TOTAL INFORMATION TECHNOLOGY

480,234,683

 

Shares

Value

MATERIALS - 1.2%

Chemicals - 0.6%

Eastman Chemical Co.

216,300

$ 10,895,031

PetroLogistics LP

64,800

697,248

PPG Industries, Inc.

185,136

19,646,632

 

31,238,911

Metals & Mining - 0.6%

ArcelorMittal SA Class A unit (d)

421,403

6,434,824

Commercial Metals Co.

668,471

8,449,473

Freeport-McMoRan Copper & Gold, Inc.

329,200

11,215,844

Nucor Corp.

190,500

7,219,950

 

33,320,091

TOTAL MATERIALS

64,559,002

TELECOMMUNICATION SERVICES - 4.7%

Diversified Telecommunication Services - 3.5%

AT&T, Inc.

2,960,276

105,563,442

CenturyLink, Inc.

290,455

11,470,068

Koninklijke KPN NV

1,206,976

11,541,247

Verizon Communications, Inc.

1,499,008

66,615,916

 

195,190,673

Wireless Telecommunication Services - 1.2%

Vodafone Group PLC

22,599,446

63,521,524

TOTAL TELECOMMUNICATION SERVICES

258,712,197

UTILITIES - 5.4%

Electric Utilities - 3.7%

Duke Energy Corp.

2,059,077

47,482,316

El Paso Electric Co.

253,492

8,405,795

FirstEnergy Corp.

563,810

27,733,814

NextEra Energy, Inc.

560,380

38,559,748

PPL Corp.

1,975,734

54,945,163

Southern Co.

601,734

27,860,284

 

204,987,120

Multi-Utilities - 1.7%

Alliant Energy Corp.

190,801

8,694,802

CMS Energy Corp.

118,500

2,784,750

National Grid PLC

3,127,200

33,142,152

PG&E Corp.

455,105

20,602,603

Sempra Energy

422,100

29,074,248

 

94,298,555

TOTAL UTILITIES

299,285,675

TOTAL COMMON STOCKS

(Cost $4,682,960,234)


5,036,888,020

Preferred Stocks - 2.2%

Shares

Value

Convertible Preferred Stocks - 1.3%

CONSUMER DISCRETIONARY - 0.2%

Automobiles - 0.1%

General Motors Co. 4.75%

168,490

$ 5,593,868

Media - 0.1%

Interpublic Group of Companies, Inc. 5.25%

6,200

6,435,538

TOTAL CONSUMER DISCRETIONARY

12,029,406

ENERGY - 0.0%

Oil, Gas & Consumable Fuels - 0.0%

ATP Oil & Gas Corp. Series B, 8.00%

3,700

64,750

FINANCIALS - 0.3%

Commercial Banks - 0.2%

Huntington Bancshares, Inc. 8.50%

9,000

10,314,000

Diversified Financial Services - 0.0%

Citigroup, Inc. 7.50%

19,700

1,685,532

Real Estate Investment Trusts - 0.1%

Health Care REIT, Inc. Series I, 6.50%

84,800

4,579,200

TOTAL FINANCIALS

16,578,732

HEALTH CARE - 0.3%

Health Care Equipment & Supplies - 0.2%

Alere, Inc. 3.00%

41,553

8,601,471

Health Care Providers & Services - 0.1%

HealthSouth Corp. Series A 6.50%

7,600

8,094,000

TOTAL HEALTH CARE

16,695,471

INDUSTRIALS - 0.3%

Aerospace & Defense - 0.2%

United Technologies Corp. 7.50%

251,000

13,225,190

Professional Services - 0.1%

Nielsen Holdings B.V. 6.25%

91,500

4,683,656

TOTAL INDUSTRIALS

17,908,846

MATERIALS - 0.1%

Metals & Mining - 0.1%

AngloGold Ashanti Holdings Finance PLC 6.00%

70,100

2,888,120

UTILITIES - 0.1%

Electric Utilities - 0.1%

PPL Corp. 8.75%

135,000

7,222,500

TOTAL CONVERTIBLE PREFERRED STOCKS

73,387,825

 

Shares

Value

Nonconvertible Preferred Stocks - 0.9%

CONSUMER DISCRETIONARY - 0.6%

Automobiles - 0.6%

Porsche Automobil Holding SE (Germany) (d)

193,475

$ 9,584,364

Volkswagen AG

156,109

24,615,470

 

34,199,834

FINANCIALS - 0.3%

Consumer Finance - 0.3%

Ally Financial, Inc. 7.00% (e)

14,714

13,021,890

TOTAL NONCONVERTIBLE PREFERRED STOCKS

47,221,724

TOTAL PREFERRED STOCKS

(Cost $133,159,847)


120,609,549

Corporate Bonds - 3.2%

 

Principal Amount

 

Convertible Bonds - 2.4%

CONSUMER DISCRETIONARY - 0.1%

Hotels, Restaurants & Leisure - 0.1%

Gaylord Entertainment Co. 3.75% 10/1/14 (e)

$ 2,210,000

3,296,436

ENERGY - 0.5%

Energy Equipment & Services - 0.1%

Transocean, Inc. Series C, 1.5% 12/15/37

5,180,000

5,154,100

Oil, Gas & Consumable Fuels - 0.4%

Amyris, Inc. 3% 2/27/17 (i)

1,383,000

1,152,025

Chesapeake Energy Corp. 2.5% 5/15/37

2,590,000

2,232,062

Massey Energy Co. 3.25% 8/1/15

5,860,000

5,054,250

Peabody Energy Corp. 4.75% 12/15/66

5,050,000

4,096,813

Western Refining, Inc. 5.75% 6/15/14

4,320,000

9,363,600

 

21,898,750

TOTAL ENERGY

27,052,850

FINANCIALS - 0.1%

Thrifts & Mortgage Finance - 0.1%

MGIC Investment Corp. 9% 4/1/63 (e)

10,438,000

4,436,150

HEALTH CARE - 0.1%

Health Care Equipment & Supplies - 0.1%

Teleflex, Inc. 3.875% 8/1/17

3,860,000

4,483,004

Corporate Bonds - continued

 

Principal Amount

Value

Convertible Bonds - continued

INDUSTRIALS - 0.3%

Commercial Services & Supplies - 0.2%

Covanta Holding Corp. 3.25% 6/1/14

$ 10,880,000

$ 12,751,360

Construction & Engineering - 0.1%

MasTec, Inc.:

4% 6/15/14

2,520,000

3,030,300

4.25% 12/15/14

1,300,000

1,610,375

 

4,640,675

TOTAL INDUSTRIALS

17,392,035

INFORMATION TECHNOLOGY - 0.8%

Communications Equipment - 0.1%

InterDigital, Inc. 2.5% 3/15/16

5,740,000

5,589,612

Computers & Peripherals - 0.1%

SanDisk Corp. 1.5% 8/15/17

8,650,000

8,936,488

Internet Software & Services - 0.1%

VeriSign, Inc. 3.25% 8/15/37

4,410,000

6,140,925

IT Services - 0.1%

CACI International, Inc. 2.125% 5/1/14

4,690,000

5,329,013

Semiconductors & Semiconductor Equipment - 0.1%

Micron Technology, Inc.:

1.875% 8/1/31 (e)

4,650,000

4,155,938

3.125% 5/1/32 (e)

650,000

598,406

 

4,754,344

Software - 0.3%

Nuance Communications, Inc. 2.75% 11/1/31 (e)

13,380,000

14,768,175

TOTAL INFORMATION TECHNOLOGY

45,518,557

MATERIALS - 0.2%

Metals & Mining - 0.2%

Goldcorp, Inc. 2% 8/1/14

4,490,000

5,068,312

Newmont Mining Corp. 1.25% 7/15/14

5,990,000

7,427,600

Royal Gold, Inc. 2.875% 6/15/19

1,190,000

1,246,525

 

13,742,437

TELECOMMUNICATION SERVICES - 0.1%

Diversified Telecommunication Services - 0.1%

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

6,660,000

4,145,850

 

 

Principal Amount

Value

UTILITIES - 0.2%

Multi-Utilities - 0.2%

CMS Energy Corp. 5.5% 6/15/29

$ 6,100,000

$ 10,347,430

TOTAL CONVERTIBLE BONDS

130,414,749

Nonconvertible Bonds - 0.8%

CONSUMER DISCRETIONARY - 0.1%

Multiline Retail - 0.1%

The Bon-Ton Department Stores, Inc. 10.25% 3/15/14

3,030,000

2,545,200

CONSUMER STAPLES - 0.2%

Food & Staples Retailing - 0.2%

Rite Aid Corp. 9.5% 6/15/17

9,085,000

9,289,413

Tops Markets LLC 10.125% 10/15/15

2,230,000

2,369,375

 

11,658,788

ENERGY - 0.1%

Oil, Gas & Consumable Fuels - 0.1%

Alpha Natural Resources, Inc. 6% 6/1/19

1,230,000

1,048,575

Western Refining, Inc. 11.25% 6/15/17 (e)

4,045,000

4,530,400

 

5,578,975

FINANCIALS - 0.3%

Diversified Financial Services - 0.1%

Goldman Sachs Capital II 5.793% (f)(g)

7,850,000

5,314,607

Thrifts & Mortgage Finance - 0.2%

Radian Group, Inc.:

5.375% 6/15/15

3,960,000

2,851,200

5.625% 2/15/13

10,000,000

9,400,000

 

12,251,200

TOTAL FINANCIALS

17,565,807

MATERIALS - 0.1%

Paper & Forest Products - 0.1%

AbitibiBowater, Inc. 10.25% 10/15/18

6,015,000

6,676,650

TOTAL NONCONVERTIBLE BONDS

44,025,420

TOTAL CORPORATE BONDS

(Cost $173,855,698)


174,440,169

Floating Rate Loans - 0.2%

 

Principal Amount

Value

ENERGY - 0.1%

Oil, Gas & Consumable Fuels - 0.1%

Chesapeake Energy Corp. term loan 8.5% 12/2/17 (g)

$ 5,630,000

$ 5,566,663

FINANCIALS - 0.1%

Insurance - 0.1%

Asurion Corp. Tranche 2nd LN, term loan 9% 5/24/19 (g)

5,537,000

5,647,740

TOTAL FLOATING RATE LOANS

(Cost $11,057,968)


11,214,403

Money Market Funds - 3.0%

Shares

 

Fidelity Cash Central Fund, 0.17% (b)

99,815,681

99,815,681

Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c)

66,021,525

66,021,525

TOTAL MONEY MARKET FUNDS

(Cost $165,837,206)


165,837,206

TOTAL INVESTMENT PORTFOLIO - 100.1%

(Cost $5,166,870,953)

5,508,989,347

NET OTHER ASSETS (LIABILITIES) - (0.1)%

(3,099,044)

NET ASSETS - 100%

$ 5,505,890,303

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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 $48,953,245 or 0.9% of net assets.

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

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

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

(i) 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 $18,885,777 or 0.3% of net assets.

Additional information on each restricted holding is as follows:

Security

Acquisition Date

Acquisition Cost

Amyris, Inc. 3% 2/27/17

2/27/12

$ 1,383,000

Beazer Pre-Owned Rental Homes, Inc.

5/3/12

$ 2,990,000

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

$ 100,972

Fidelity Securities Lending Cash Central Fund

716,888

Total

$ 817,860

Other Information

The following is a summary of the inputs used, as of June 30, 2012, 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 Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 488,420,099

$ 473,166,875

$ 15,253,224

$ -

Consumer Staples

577,656,713

562,780,863

14,875,850

-

Energy

718,324,569

718,259,819

64,750

-

Financials

1,021,093,547

981,415,836

21,943,959

17,733,752

Health Care

719,294,444

676,425,739

42,868,705

-

Industrials

519,806,020

515,122,364

4,683,656

-

Information Technology

480,234,683

480,234,683

-

-

Materials

67,447,122

67,447,122

-

-

Telecommunication Services

258,712,197

195,190,673

63,521,524

-

Utilities

306,508,175

266,143,523

40,364,652

-

Corporate Bonds

174,440,169

-

174,440,169

-

Floating Rate Loans

11,214,403

-

11,214,403

-

Money Market Funds

165,837,206

165,837,206

-

-

Total Investments in Securities:

$ 5,508,989,347

$ 5,102,024,703

$ 389,230,892

$ 17,733,752

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

United States of America

85.6%

United Kingdom

6.4%

Ireland

1.3%

Canada

1.3%

Switzerland

1.3%

Others (Individually Less Than 1%)

4.1%

 

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, 2012 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $64,753,841) - See accompanying schedule:

Unaffiliated issuers (cost $5,001,033,747)

$ 5,343,152,141

 

Fidelity Central Funds (cost $165,837,206)

165,837,206

 

Total Investments (cost $5,166,870,953)

 

$ 5,508,989,347

Foreign currency held at value (cost $12,007)

12,007

Receivable for investments sold

133,467,164

Receivable for fund shares sold

819,201

Dividends receivable

15,015,591

Interest receivable

1,491,601

Distributions receivable from Fidelity Central Funds

48,223

Other receivables

363,372

Total assets

5,660,206,506

 

 

 

Liabilities

Payable to custodian bank

$ 506,796

Payable for investments purchased

79,603,094

Payable for fund shares redeemed

4,941,230

Accrued management fee

2,051,647

Distribution and service plan fees payable

346,654

Other affiliated payables

511,419

Other payables and accrued expenses

333,838

Collateral on securities loaned, at value

66,021,525

Total liabilities

154,316,203

 

 

 

Net Assets

$ 5,505,890,303

Net Assets consist of:

 

Paid in capital

$ 5,002,371,281

Undistributed net investment income

80,004,092

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

81,238,620

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

342,276,310

Net Assets

$ 5,505,890,303

Statement of Assets and Liabilities - continued

 

June 30, 2012 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($3,410,917,771 ÷ 172,545,133 shares)

$ 19.77

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($348,946,352 ÷ 17,719,120 shares)

$ 19.69

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($1,543,366,826 ÷ 79,365,464 shares)

$ 19.45

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($4,905,087 ÷ 253,322 shares)

$ 19.36

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($197,754,267 ÷ 10,034,099 shares)

$ 19.71

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, 2012 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 91,320,183

Interest

 

5,508,617

Income from Fidelity Central Funds

 

817,860

Total income

 

97,646,660

 

 

 

Expenses

Management fee

$ 12,788,191

Transfer agent fees

2,065,952

Distribution and service plan fees

2,166,965

Accounting and security lending fees

557,433

Custodian fees and expenses

67,512

Independent trustees' compensation

18,289

Appreciation in deferred trustee compensation account

83

Audit

44,264

Legal

13,786

Interest

310

Miscellaneous

32,674

Total expenses before reductions

17,755,459

Expense reductions

(225,136)

17,530,323

Net investment income (loss)

80,116,337

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

116,971,037

Foreign currency transactions

(136,072)

Total net realized gain (loss)

 

116,834,965

Change in net unrealized appreciation (depreciation) on:

Investment securities

248,948,696

Assets and liabilities in foreign currencies

167,017

Total change in net unrealized appreciation (depreciation)

 

249,115,713

Net gain (loss)

365,950,678

Net increase (decrease) in net assets resulting from operations

$ 446,067,015

Statement of Changes in Net Assets

 

Six months ended
June 30, 2012
(Unaudited)

Year ended
December 31,
2011

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 80,116,337

$ 137,582,764

Net realized gain (loss)

116,834,965

336,648,895

Change in net unrealized appreciation (depreciation)

249,115,713

(414,416,618)

Net increase (decrease) in net assets resulting from operations

446,067,015

59,815,041

Distributions to shareholders from net investment income

-

(135,446,653)

Distributions to shareholders from net realized gain

(141,235,485)

-

Total distributions

(141,235,485)

(135,446,653)

Share transactions - net increase (decrease)

(132,387,772)

(594,372,345)

Redemption fees

696

2,327

Total increase (decrease) in net assets

172,444,454

(670,001,630)

 

 

 

Net Assets

Beginning of period

5,333,445,849

6,003,447,479

End of period (including undistributed net investment income of $80,004,092 and distributions in excess of net investment income of $132,585, respectively)

$ 5,505,890,303

$ 5,333,445,849

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 18.69

$ 19.02

$ 16.81

$ 13.18

$ 23.91

$ 26.20

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .29

.48

.30

.33

.47

.47

Net realized and unrealized gain (loss)

  1.28

(.31)

2.24

3.64

(10.67)

(.05)

Total from investment operations

  1.57

.17

2.54

3.97

(10.20)

.42

Distributions from net investment income

  -

(.50)

(.33)

(.34)

(.51)

(.50)

Distributions from net realized gain

  (.49)

-

-

-

(.02)

(2.21)

Total distributions

  (.49)

(.50)

(.33)

(.34)

(.53)

(2.71)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.77

$ 18.69

$ 19.02

$ 16.81

$ 13.18

$ 23.91

Total Return B, C, D

  8.45%

.97%

15.15%

30.21%

(42.65)%

1.53%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .55% A

.56%

.56%

.58%

.57%

.55%

Expenses net of fee waivers, if any

  .55% A

.55%

.55%

.58%

.57%

.55%

Expenses net of all reductions

  .55% A

.54%

.55%

.58%

.57%

.54%

Net investment income (loss)

  2.95% A

2.48%

1.71%

2.29%

2.37%

1.71%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 3,410,918

$ 3,345,762

$ 3,798,310

$ 3,771,733

$ 3,322,799

$ 7,201,655

Portfolio turnover rate G

  59% A

96%

29%

29%

34%

20%

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. HExpense 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. IAmount represents less than $.01 per share.

Financial Highlights - Service Class

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 18.63

$ 18.96

$ 16.75

$ 13.14

$ 23.82

$ 26.11

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .28

.46

.28

.31

.44

.44

Net realized and unrealized gain (loss)

  1.27

(.31)

2.24

3.63

(10.62)

(.05)

Total from investment operations

  1.55

.15

2.52

3.94

(10.18)

.39

Distributions from net investment income

  -

(.48)

(.31)

(.33)

(.48)

(.47)

Distributions from net realized gain

  (.49)

-

-

-

(.02)

(2.21)

Total distributions

  (.49)

(.48)

(.31)

(.33)

(.50)

(2.68)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.69

$ 18.63

$ 18.96

$ 16.75

$ 13.14

$ 23.82

Total Return B, C, D

  8.37%

.86%

15.09%

30.03%

(42.70)%

1.42%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .65% A

.66%

.66%

.68%

.67%

.65%

Expenses net of fee waivers, if any

  .65% A

.66%

.65%

.68%

.67%

.65%

Expenses net of all reductions

  .65% A

.64%

.65%

.68%

.67%

.64%

Net investment income (loss)

  2.85% A

2.38%

1.61%

2.19%

2.27%

1.61%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 348,946

$ 347,999

$ 414,431

$ 430,383

$ 405,082

$ 920,054

Portfolio turnover rate G

  59% A

96%

29%

29%

34%

20%

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. HExpense 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. IAmount 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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 18.41

$ 18.75

$ 16.57

$ 13.00

$ 23.57

$ 25.87

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .26

.42

.25

.29

.41

.39

Net realized and unrealized gain (loss)

  1.27

(.31)

2.21

3.58

(10.50)

(.04)

Total from investment operations

  1.53

.11

2.46

3.87

(10.09)

.35

Distributions from net investment income

  -

(.45)

(.28)

(.30)

(.46)

(.44)

Distributions from net realized gain

  (.49)

-

-

-

(.02)

(2.21)

Total distributions

  (.49)

(.45)

(.28)

(.30)

(.48)

(2.65)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.45

$ 18.41

$ 18.75

$ 16.57

$ 13.00

$ 23.57

Total Return B, C, D

  8.36%

.66%

14.92%

29.88%

(42.81)%

1.27%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .80% A

.81%

.81%

.83%

.82%

.80%

Expenses net of fee waivers, if any

  .80% A

.81%

.80%

.83%

.82%

.80%

Expenses net of all reductions

  .80% A

.80%

.80%

.83%

.82%

.80%

Net investment income (loss)

  2.70% A

2.23%

1.46%

2.04%

2.12%

1.46%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 1,543,367

$ 1,457,230

$ 1,619,356

$ 1,558,421

$ 1,321,569

$ 2,583,129

Portfolio turnover rate G

  59% A

96%

29%

29%

34%

20%

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. HExpense 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. IAmount represents less than $.01 per share.

Financial Highlights - Service Class 2R

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 18.34

$ 18.66

$ 16.49

$ 12.93

$ 23.44

$ 25.73

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .26

.42

.25

.28

.41

.39

Net realized and unrealized gain (loss)

  1.25

(.30)

2.20

3.58

(10.45)

(.04)

Total from investment operations

  1.51

.12

2.45

3.86

(10.04)

.35

Distributions from net investment income

  -

(.44)

(.28)

(.30)

(.45)

(.43)

Distributions from net realized gain

  (.49)

-

-

-

(.02)

(2.21)

Total distributions

  (.49)

(.44)

(.28)

(.30)

(.47)

(2.64)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.36

$ 18.34

$ 18.66

$ 16.49

$ 12.93

$ 23.44

Total Return B, C, D

  8.28%

.70%

14.90%

29.95%

(42.82)%

1.27%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .80% A

.81%

.81%

.83%

.82%

.80%

Expenses net of fee waivers, if any

  .80% A

.80%

.80%

.83%

.82%

.80%

Expenses net of all reductions

  .80% A

.79%

.80%

.83%

.81%

.79%

Net investment income (loss)

  2.70% A

2.23%

1.46%

2.04%

2.12%

1.46%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 4,905

$ 3,956

$ 5,405

$ 5,259

$ 5,339

$ 13,558

Portfolio turnover rate G

  59% A

96%

29%

29%

34%

20%

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. HExpense 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. IAmount 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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 18.64

$ 18.97

$ 16.77

$ 13.15

$ 23.85

$ 26.15

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .28

.46

.28

.31

.44

.44

Net realized and unrealized gain (loss)

  1.28

(.31)

2.23

3.64

(10.63)

(.05)

Total from investment operations

  1.56

.15

2.51

3.95

(10.19)

.39

Distributions from net investment income

  -

(.48)

(.31)

(.33)

(.49)

(.48)

Distributions from net realized gain

  (.49)

-

-

-

(.02)

(2.21)

Total distributions

  (.49)

(.48)

(.31)

(.33)

(.51)

(2.69)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 19.71

$ 18.64

$ 18.97

$ 16.77

$ 13.15

$ 23.85

Total Return B, C, D

  8.42%

.89%

15.04%

30.09%

(42.71)%

1.39%

Ratios to Average Net Assets F, H

 

 

 

 

 

 

Expenses before reductions

  .64% A

.64%

.65%

.68%

.66%

.66%

Expenses net of fee waivers, if any

  .64% A

.64%

.64%

.68%

.66%

.66%

Expenses net of all reductions

  .63% A

.63%

.64%

.68%

.66%

.66%

Net investment income (loss)

  2.86% A

2.39%

1.62%

2.19%

2.28%

1.60%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 197,754

$ 178,499

$ 165,946

$ 147,358

$ 122,483

$ 230,534

Portfolio turnover rate G

  59% A

96%

29%

29%

34%

20%

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. HExpense 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. IAmount 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, 2012 (Unaudited)

1. Organization.

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

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Security 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 vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security 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 significant 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 are used and are 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 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 and floating rate loans, pricing vendors utilize matrix pricing which considers yield or price of

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

bonds of comparable quality, coupon, maturity and type as well as broker-supplied prices and are generally categorized as Level 2 in the hierarchy. 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. These are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value 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, 2012, is included at the end of the Fund's Schedule of Investments.

Foreign Currency Translation. 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. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. 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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

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

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

Gross unrealized appreciation

$ 836,134,469

Gross unrealized depreciation

(503,412,986)

Net unrealized appreciation (depreciation) on securities and other investments

$ 332,721,483

 

 

Tax cost

$ 5,176,267,864

Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days are 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.

New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

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.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $1,597,039,051 and $1,883,712,074, respectively.

6. Fees and Other Transactions with Affiliates.

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

Distribution and Service Plan 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

$ 178,980

Service Class 2

1,982,276

Service Class 2R

5,709

 

$ 2,166,965

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .15% of average net assets. In addition, FIIOC receives an asset-based fee of .0038% 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

$ 1,223,378

Service Class

126,972

Service Class 2

563,280

Service Class 2R

1,605

Investor Class

150,717

 

$ 2,065,952

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. The commissions paid to these affiliated firms were $28,450 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

$ 13,168,000

.42%

$ 310

7. 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 $8,171 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities 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, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. 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 $716,888, including $2,138 from securities loaned to FCM.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $225,136 for the period.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2012

Year ended
December 31,
2011

From net investment income

 

 

Initial Class

$ -

$ 87,368,043

Service Class

-

8,664,568

Service Class 2

-

34,838,681

Service Class 2R

-

92,819

Investor Class

-

4,482,542

Total

$ -

$ 135,446,653

 

From net realized gain

 

 

Initial Class

$ 86,397,034

$ -

Service Class

9,082,257

-

Service Class 2

40,893,881

-

Service Class 2R

114,488

-

Investor Class

4,747,825

-

Total

$ 141,235,485

$ -

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30,
2012

Year ended
December 31,
2011

Six months ended
June 30,
2012

Year ended
December 31,
2011

Initial Class

 

 

 

 

Shares sold

1,803,095

4,371,165

$ 35,046,037

$ 84,316,162

Reinvestment of distributions

4,469,583

4,832,303

86,397,034

87,368,043

Shares redeemed

(12,761,305)

(29,859,019)

(248,524,253)

(577,640,149)

Net increase (decrease)

(6,488,627)

(20,655,551)

$ (127,081,182)

$ (405,955,944)

Service Class

 

 

 

 

Shares sold

448,743

732,651

$ 8,651,357

$ 13,967,159

Reinvestment of distributions

471,316

480,564

9,082,257

8,664,568

Shares redeemed

(1,882,669)

(4,390,826)

(36,702,132)

(85,219,322)

Net increase (decrease)

(962,610)

(3,177,611)

$ (18,968,518)

$ (62,587,595)

Service Class 2

 

 

 

 

Shares sold

7,857,246

6,218,448

$ 150,214,185

$ 117,730,568

Reinvestment of distributions

2,147,788

1,955,033

40,893,881

34,838,681

Shares redeemed

(9,778,461)

(15,423,190)

(186,994,630)

(293,235,286)

Net increase (decrease)

226,573

(7,249,709)

$ 4,113,436

$ (140,666,037)

Service Class 2R

 

 

 

 

Shares sold

58,246

65,572

$ 1,106,634

$ 1,282,023

Reinvestment of distributions

6,038

5,229

114,488

92,819

Shares redeemed

(26,686)

(144,784)

(510,428)

(2,656,411)

Net increase (decrease)

37,598

(73,983)

$ 710,694

$ (1,281,569)

Investor Class

 

 

 

 

Shares sold

748,542

1,692,332

$ 14,524,129

$ 32,847,466

Reinvestment of distributions

246,256

248,478

4,747,825

4,482,542

Shares redeemed

(536,653)

(1,110,397)

(10,434,156)

(21,211,208)

Net increase (decrease)

458,145

830,413

$ 8,837,798

$ 16,118,800

Semiannual Report

12. Other.

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

At the end of the period, FMR or its affiliates were the owners of record of 11% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 18% 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 Northern Trust Company
Chicago, IL 

VIPEI2R-SANN-0812
1.833447.106

Fidelity® Variable Insurance Products:
Growth Portfolio

Semiannual Report

June 30, 2012

(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. © 2012 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, 2012 to June 30, 2012).

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

Beginning
Account Value
January 1, 2012

Ending
Account Value
June 30, 2012

Expenses Paid
During Period*
January 1, 2012
to June 30, 2012

Initial Class

.66%

 

 

 

Actual

 

$ 1,000.00

$ 1,106.00

$ 3.46

HypotheticalA

 

$ 1,000.00

$ 1,021.58

$ 3.32

Service Class

.76%

 

 

 

Actual

 

$ 1,000.00

$ 1,105.10

$ 3.98

HypotheticalA

 

$ 1,000.00

$ 1,021.08

$ 3.82

Service Class 2

.91%

 

 

 

Actual

 

$ 1,000.00

$ 1,104.60

$ 4.76

HypotheticalA

 

$ 1,000.00

$ 1,020.34

$ 4.57

Service Class 2R

.91%

 

 

 

Actual

 

$ 1,000.00

$ 1,104.50

$ 4.76

HypotheticalA

 

$ 1,000.00

$ 1,020.34

$ 4.57

Investor Class

.75%

 

 

 

Actual

 

$ 1,000.00

$ 1,105.10

$ 3.93

HypotheticalA

 

$ 1,000.00

$ 1,021.13

$ 3.77

A 5% return per year before expenses

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

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Apple, Inc.

11.5

8.7

QUALCOMM, Inc.

2.8

2.2

Harley-Davidson, Inc.

2.1

0.8

The Coca-Cola Co.

2.0

1.3

Home Depot, Inc.

2.0

0.3

Express Scripts Holding Co.

1.7

0.0

Citrix Systems, Inc.

1.7

1.1

Danaher Corp.

1.6

1.5

Philip Morris International, Inc.

1.4

1.3

Google, Inc. Class A

1.4

4.1

 

28.2

Top Five Market Sectors as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Information Technology

31.8

32.7

Consumer Discretionary

18.4

16.6

Industrials

14.2

14.3

Consumer Staples

11.4

8.5

Health Care

6.0

4.2

Asset Allocation (% of fund's net assets)

As of June 30, 2012*

As of December 31, 2011**

vpo15

Stocks 94.5%

 

vpo15

Stocks 95.7%

 

vpo21

Short-Term
Investments and
Net Other Assets (Liabilities) 5.5%

 

vpo21

Short-Term
Investments and
Net Other Assets
(Liabilities) 4.3%

 

* Foreign investments

13.1%

 

** Foreign investments

14.3%

 

vpo48

Semiannual Report

Investments June 30, 2012 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 94.5%

Shares

Value

CONSUMER DISCRETIONARY - 18.4%

Automobiles - 2.5%

Harley-Davidson, Inc.

1,747,260

$ 79,902,200

Tesla Motors, Inc. (a)(d)

521,977

16,332,660

 

96,234,860

Diversified Consumer Services - 0.7%

Anhanguera Educacional Participacoes SA

1,053,000

13,421,359

Kroton Educacional SA unit (a)

844,200

12,210,112

 

25,631,471

Hotels, Restaurants & Leisure - 3.4%

Arcos Dorados Holdings, Inc.

575,400

8,504,412

Chipotle Mexican Grill, Inc. (a)

17,093

6,494,485

Dunkin' Brands Group, Inc.

500,595

17,190,432

McDonald's Corp.

524,257

46,412,472

Sonic Corp. (a)

391,147

3,919,293

Starbucks Corp.

850,273

45,336,556

 

127,857,650

Household Durables - 0.7%

Mohawk Industries, Inc. (a)

139,256

9,724,246

Tupperware Brands Corp.

342,184

18,737,996

 

28,462,242

Internet & Catalog Retail - 1.3%

Amazon.com, Inc. (a)

224,512

51,267,315

Media - 0.6%

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

444,191

22,249,527

Multiline Retail - 2.1%

Dollar General Corp. (a)

529,449

28,796,731

Dollarama, Inc.

722,140

43,395,074

Dollarama, Inc. (a)(e)

128,200

7,703,837

 

79,895,642

Specialty Retail - 6.2%

Bed Bath & Beyond, Inc. (a)

391,526

24,196,307

GNC Holdings, Inc.

798,685

31,308,452

Home Depot, Inc.

1,423,900

75,452,461

PetSmart, Inc.

101,200

6,899,816

Ross Stores, Inc.

513,568

32,082,593

TJX Companies, Inc.

619,500

26,595,135

Ulta Salon, Cosmetics & Fragrance, Inc.

141,734

13,235,121

Vitamin Shoppe, Inc. (a)

502,484

27,601,446

 

237,371,331

Textiles, Apparel & Luxury Goods - 0.9%

lululemon athletica, Inc. (a)

190,700

11,371,441

NIKE, Inc. Class B

214,569

18,834,867

Ralph Lauren Corp.

38,300

5,364,298

 

35,570,606

TOTAL CONSUMER DISCRETIONARY

704,540,644

 

Shares

Value

CONSUMER STAPLES - 11.4%

Beverages - 3.5%

Anheuser-Busch InBev SA NV ADR

128,700

$ 10,250,955

Monster Beverage Corp. (a)

461,675

32,871,260

SABMiller PLC

295,000

11,804,464

The Coca-Cola Co.

995,434

77,832,984

 

132,759,663

Food & Staples Retailing - 0.9%

Costco Wholesale Corp.

120,000

11,400,000

Drogasil SA

492,823

4,968,716

Whole Foods Market, Inc.

212,824

20,286,384

 

36,655,100

Food Products - 2.0%

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

1,345,037

29,294,906

Mead Johnson Nutrition Co. Class A

209,969

16,904,604

The Hershey Co.

366,223

26,379,043

Want Want China Holdings Ltd.

2,491,000

3,080,471

 

75,659,024

Household Products - 1.3%

Colgate-Palmolive Co.

472,242

49,160,392

Personal Products - 1.1%

Estee Lauder Companies, Inc. Class A

95,952

5,192,922

Herbalife Ltd.

775,222

37,466,479

 

42,659,401

Tobacco - 2.6%

Altria Group, Inc.

124,400

4,298,020

British American Tobacco PLC sponsored ADR

333,500

34,057,020

Philip Morris International, Inc.

633,500

55,279,210

Swedish Match Co. AB

162,400

6,543,001

 

100,177,251

TOTAL CONSUMER STAPLES

437,070,831

ENERGY - 5.9%

Energy Equipment & Services - 2.7%

Cameron International Corp. (a)

292,800

12,505,488

Dresser-Rand Group, Inc. (a)

346,491

15,432,709

National Oilwell Varco, Inc.

277,500

17,882,100

Oceaneering International, Inc.

417,974

20,004,236

Poseidon Concepts Corp. (d)

1,455,000

17,821,285

Schlumberger Ltd.

293,728

19,065,884

 

102,711,702

Oil, Gas & Consumable Fuels - 3.2%

Atlas Pipeline Partners, LP

597,341

18,625,092

Concho Resources, Inc. (a)

230,592

19,627,991

Kosmos Energy Ltd. (a)

1,010,955

11,171,053

Markwest Energy Partners LP

170,100

8,387,631

Noble Energy, Inc.

95,400

8,091,828

Pioneer Natural Resources Co.

154,098

13,592,985

Common Stocks - continued

Shares

Value

ENERGY - continued

Oil, Gas & Consumable Fuels - continued

Targa Resources Corp.

229,280

$ 9,790,256

Valero Energy Corp.

573,500

13,850,025

Williams Companies, Inc.

659,500

19,006,790

 

122,143,651

TOTAL ENERGY

224,855,353

FINANCIALS - 2.5%

Capital Markets - 0.4%

GP Investments Ltd. (depositary receipt) (a)

1,387,358

3,239,586

Invesco Ltd.

573,451

12,959,993

 

16,199,579

Commercial Banks - 0.2%

First Republic Bank (a)

191,124

6,421,766

Consumer Finance - 0.2%

Mahindra & Mahindra Financial Services Ltd.

284,909

3,341,155

Shriram Transport Finance Co. Ltd.

615,161

5,902,463

 

9,243,618

Diversified Financial Services - 0.3%

CME Group, Inc.

46,627

12,501,165

Real Estate Investment Trusts - 1.3%

American Tower Corp.

536,155

37,482,596

Public Storage

76,140

10,995,377

 

48,477,973

Real Estate Management & Development - 0.1%

BR Malls Participacoes SA

182,600

2,091,013

TOTAL FINANCIALS

94,935,114

HEALTH CARE - 6.0%

Biotechnology - 2.1%

Aegerion Pharmaceuticals, Inc. (a)

123,800

1,837,192

Amgen, Inc.

313,300

22,883,432

AVEO Pharmaceuticals, Inc. (a)(d)

805,822

9,798,796

Biogen Idec, Inc. (a)

248,022

35,809,416

Biovitrum AB (a)

2,298,821

7,809,568

Cytokinetics, Inc.

1,808,300

1,158,216

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

1,084,980

5,877

 

79,302,497

Health Care Equipment & Supplies - 0.2%

Conceptus, Inc. (a)

274,300

5,436,626

Edwards Lifesciences Corp. (a)

23,700

2,448,210

 

7,884,836

Health Care Providers & Services - 1.7%

Apollo Hospitals Enterprise Ltd.

158,827

1,769,201

Express Scripts Holding Co. (a)

1,153,554

64,402,920

 

66,172,121

 

Shares

Value

Life Sciences Tools & Services - 0.1%

Illumina, Inc. (a)(d)

87,507

$ 3,534,408

Pharmaceuticals - 1.9%

Novo Nordisk A/S Series B

182,160

26,419,916

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

1,054,619

47,308,172

 

73,728,088

TOTAL HEALTH CARE

230,621,950

INDUSTRIALS - 14.2%

Aerospace & Defense - 3.1%

Honeywell International, Inc.

271,016

15,133,533

Precision Castparts Corp.

206,500

33,967,185

Textron, Inc.

156,044

3,880,814

TransDigm Group, Inc. (a)

195,548

26,262,096

United Technologies Corp.

504,039

38,070,066

 

117,313,694

Air Freight & Logistics - 0.9%

United Parcel Service, Inc. Class B

458,240

36,090,982

Building Products - 0.3%

USG Corp. (a)(d)

515,300

9,816,465

Commercial Services & Supplies - 0.0%

Aggreko PLC

59,788

1,940,158

Electrical Equipment - 1.7%

AMETEK, Inc.

312,086

15,576,212

Regal-Beloit Corp.

269,845

16,800,550

Roper Industries, Inc.

324,567

31,995,815

 

64,372,577

Industrial Conglomerates - 1.6%

Danaher Corp.

1,176,735

61,284,359

Machinery - 2.5%

CLARCOR, Inc.

415,088

19,990,638

Graco, Inc.

178,062

8,205,097

Ingersoll-Rand PLC

949,364

40,044,174

Manitowoc Co., Inc.

1,345,894

15,746,960

Terex Corp. (a)

681,700

12,154,711

 

96,141,580

Professional Services - 3.1%

Advisory Board Co. (a)

462,700

22,945,293

Corporate Executive Board Co.

701,059

28,659,292

Equifax, Inc.

815,503

38,002,440

IHS, Inc. Class A (a)

217,488

23,429,982

Qualicorp SA

612,800

5,357,614

 

118,394,621

Road & Rail - 0.1%

J.B. Hunt Transport Services, Inc.

75,600

4,505,760

Common Stocks - continued

Shares

Value

INDUSTRIALS - continued

Trading Companies & Distributors - 0.9%

MSC Industrial Direct Co., Inc. Class A

141,012

$ 9,243,337

W.W. Grainger, Inc.

127,400

24,363,976

 

33,607,313

TOTAL INDUSTRIALS

543,467,509

INFORMATION TECHNOLOGY - 31.8%

Communications Equipment - 3.5%

Acme Packet, Inc. (a)(d)

844,142

15,743,248

QUALCOMM, Inc.

1,891,697

105,329,689

Riverbed Technology, Inc. (a)

797,181

12,874,473

 

133,947,410

Computers & Peripherals - 12.4%

Apple, Inc. (a)

754,506

440,631,507

SanDisk Corp. (a)

943,412

34,415,670

 

475,047,177

Electronic Equipment & Components - 0.2%

InvenSense, Inc. (d)

576,588

6,515,444

Internet Software & Services - 4.6%

Active Network, Inc. (a)

250,128

3,849,470

Baidu.com, Inc. sponsored ADR (a)

93,795

10,784,549

Bankrate, Inc.

1,033,946

19,014,267

Blucora, Inc. (a)

653,866

8,055,629

CoStar Group, Inc. (a)

114,314

9,282,297

Google, Inc. Class A (a)

94,290

54,694,800

MercadoLibre, Inc.

105,842

8,022,824

SPS Commerce, Inc. (a)

244,958

7,441,824

VeriSign, Inc. (a)

1,227,210

53,469,540

 

174,615,200

IT Services - 1.7%

Cardtronics, Inc. (a)

287,993

8,700,269

Heartland Payment Systems, Inc.

445,336

13,395,707

MasterCard, Inc. Class A

23,800

10,236,618

ServiceSource International, Inc. (a)

908,512

12,582,891

Visa, Inc. Class A

151,700

18,754,671

 

63,670,156

Semiconductors & Semiconductor Equipment - 3.9%

Altera Corp.

273,782

9,264,783

ASML Holding NV

458,600

23,581,212

Avago Technologies Ltd.

734,502

26,368,622

Broadcom Corp. Class A

978,729

33,081,040

Cirrus Logic, Inc. (a)

190,372

5,688,315

Ezchip Semiconductor Ltd. (a)

256,259

10,260,610

MagnaChip Semiconductor Corp. (a)

694,900

6,622,397

Maxim Integrated Products, Inc.

144,300

3,699,852

PMC-Sierra, Inc. (a)

977,475

6,001,697

Texas Instruments, Inc.

899,058

25,793,974

 

150,362,502

 

Shares

Value

Software - 5.5%

ANSYS, Inc. (a)

301,748

$ 19,043,316

Citrix Systems, Inc. (a)

766,177

64,312,897

Computer Modelling Group Ltd.

502,700

8,576,661

Intuit, Inc.

274,856

16,312,704

Red Hat, Inc. (a)

261,500

14,769,520

salesforce.com, Inc. (a)

337,082

46,604,957

SolarWinds, Inc. (a)

486,534

21,193,421

VMware, Inc. Class A (a)

210,777

19,189,138

 

210,002,614

TOTAL INFORMATION TECHNOLOGY

1,214,160,503

MATERIALS - 3.1%

Chemicals - 2.5%

Albemarle Corp.

63,300

3,775,212

FMC Corp.

503,054

26,903,328

Monsanto Co.

290,000

24,006,200

Praxair, Inc.

259,837

28,252,077

Sherwin-Williams Co.

108,300

14,333,505

 

97,270,322

Metals & Mining - 0.6%

Kenmare Resources PLC (a)

4,600,347

2,845,909

Newmont Mining Corp.

404,405

19,617,687

 

22,463,596

TOTAL MATERIALS

119,733,918

TELECOMMUNICATION SERVICES - 1.2%

Wireless Telecommunication Services - 1.2%

SBA Communications Corp. Class A (a)

468,000

26,699,400

TIM Participacoes SA sponsored ADR (d)

634,600

17,426,116

 

44,125,516

TOTAL COMMON STOCKS

(Cost $2,809,365,160)


3,613,511,338

Money Market Funds - 3.9%

 

 

 

 

Fidelity Cash Central Fund, 0.17% (b)

85,174,212

85,174,212

Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c)

61,795,372

61,795,372

TOTAL MONEY MARKET FUNDS

(Cost $146,969,584)


146,969,584

TOTAL INVESTMENT PORTFOLIO - 98.4%

(Cost $2,956,334,744)

3,760,480,922

NET OTHER ASSETS (LIABILITIES) - 1.6%

61,709,773

NET ASSETS - 100%

$ 3,822,190,695

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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 $7,703,837 or 0.2% 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

$ 40,548

Fidelity Securities Lending Cash Central Fund

812,561

Total

$ 853,109

Other Information

The following is a summary of the inputs used, as of June 30, 2012, 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 Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 704,540,644

$ 704,540,644

$ -

$ -

Consumer Staples

437,070,831

433,990,360

3,080,471

-

Energy

224,855,353

224,855,353

-

-

Financials

94,935,114

85,691,496

9,243,618

-

Health Care

230,621,950

202,426,956

28,194,994

-

Industrials

543,467,509

543,467,509

-

-

Information Technology

1,214,160,503

1,214,160,503

-

-

Materials

119,733,918

119,733,918

-

-

Telecommunication Services

44,125,516

44,125,516

-

-

Money Market Funds

146,969,584

146,969,584

-

-

Total Investments in Securities:

$ 3,760,480,922

$ 3,719,961,839

$ 40,519,083

$ -

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

United States of America

86.9%

Canada

3.2%

Brazil

1.5%

Cayman Islands

1.4%

United Kingdom

1.2%

Ireland

1.2%

Others (Individually Less Than 1%)

4.6%

 

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, 2012 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $63,275,577) - See accompanying schedule:

Unaffiliated issuers (cost $2,809,365,160)

$ 3,613,511,338

 

Fidelity Central Funds (cost $146,969,584)

146,969,584

 

Total Investments (cost $2,956,334,744)

 

$ 3,760,480,922

Cash

 

1,263,934

Receivable for investments sold

175,532,351

Receivable for fund shares sold

742,632

Dividends receivable

2,081,057

Distributions receivable from Fidelity Central Funds

265,440

Other receivables

174,846

Total assets

3,940,541,182

 

 

 

Liabilities

Payable for investments purchased

$ 51,968,218

Payable for fund shares redeemed

2,075,728

Accrued management fee

1,758,157

Distribution and service plan fees payable

155,921

Other affiliated payables

382,229

Other payables and accrued expenses

214,862

Collateral on securities loaned, at value

61,795,372

Total liabilities

118,350,487

 

 

 

Net Assets

$ 3,822,190,695

Net Assets consist of:

 

Paid in capital

$ 4,191,632,390

Undistributed net investment income

6,953,969

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

(1,180,546,341)

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

804,150,677

Net Assets

$ 3,822,190,695

Statement of Assets and Liabilities - continued

 

June 30, 2012 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($2,692,563,092 ÷ 65,996,096 shares)

$ 40.80

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($409,193,128 ÷ 10,058,609 shares)

$ 40.68

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($576,861,707 ÷ 14,296,172 shares)

$ 40.35

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($5,039,008 ÷ 125,132 shares)

$ 40.27

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($138,533,760 ÷ 3,405,063 shares)

$ 40.68

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, 2012 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 21,776,261

Interest

 

11

Income from Fidelity Central Funds

 

853,109

Total income

 

22,629,381

 

 

 

Expenses

Management fee

$ 11,001,025

Transfer agent fees

1,465,378

Distribution and service plan fees

984,464

Accounting and security lending fees

523,095

Custodian fees and expenses

60,497

Independent trustees' compensation

13,106

Appreciation in deferred trustee compensation account

98

Audit

35,622

Legal

10,427

Interest

124

Miscellaneous

23,885

Total expenses before reductions

14,117,721

Expense reductions

(37,549)

14,080,172

Net investment income (loss)

8,549,209

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

74,003,060

Foreign currency transactions

3,288

Total net realized gain (loss)

 

74,006,348

Change in net unrealized appreciation (depreciation) on:

Investment securities

304,258,462

Assets and liabilities in foreign currencies

6,460

Total change in net unrealized appreciation (depreciation)

 

304,264,922

Net gain (loss)

378,271,270

Net increase (decrease) in net assets resulting from operations

$ 386,820,479

Statement of Changes in Net Assets

 

Six months ended
June 30, 2012
(Unaudited)

Year ended
December 31,
2011

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 8,549,209

$ 12,085,920

Net realized gain (loss)

74,006,348

390,193,292

Change in net unrealized appreciation (depreciation)

304,264,922

(386,686,117)

Net increase (decrease) in net assets resulting from operations

386,820,479

15,593,095

Distributions to shareholders from net investment income

-

(13,217,872)

Distributions to shareholders from net realized gain

-

(12,854,853)

Total distributions

-

(26,072,725)

Share transactions - net increase (decrease)

(265,280,746)

(292,123,490)

Redemption fees

1,578

14,621

Total increase (decrease) in net assets

121,541,311

(302,588,499)

 

 

 

Net Assets

Beginning of period

3,700,649,384

4,003,237,883

End of period (including undistributed net investment income of $6,953,969 and distributions in excess of net investment income of $1,595,240, respectively)

$ 3,822,190,695

$ 3,700,649,384

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 36.89

$ 37.09

$ 30.04

$ 23.53

$ 45.12

$ 35.87

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .10

.14

.07

.10

.27

.09

Net realized and unrealized gain (loss)

  3.81

(.06) H

7.18

6.55

(21.55)

9.53

Total from investment operations

  3.91

.08

7.25

6.65

(21.28)

9.62

Distributions from net investment income

  -

(.15) M

(.09)

(.12)

(.31)

(.33)

Distributions from net realized gain

  -

(.12) M

(.11)

(.02)

-

(.04)

Total distributions

  -

(.28) L

(.20)

(.14) K

(.31)

(.37)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.80

$ 36.89

$ 37.09

$ 30.04

$ 23.53

$ 45.12

Total Return B, C, D

  10.60%

.20%

24.17%

28.29%

(47.17)%

26.96%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .66% A

.66%

.67%

.69%

.68%

.65%

Expenses net of fee waivers, if any

  .66% A

.66%

.66%

.69%

.68%

.65%

Expenses net of all reductions

  .66% A

.66%

.66%

.68%

.67%

.64%

Net investment income (loss)

  .49% A

.36%

.22%

.41%

.74%

.21%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 2,692,563

$ 2,583,122

$ 2,842,307

$ 2,618,954

$ 2,337,892

$ 6,002,656

Portfolio turnover rate G

  63% A

71%

75%

134%

161%

109%

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 amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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 $.14 per share is comprised of distributions from net investment income of $.118 and distributions from net realized gain of $.023 per share. L Total 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. M The amount shown reflects certain reclassifications related to book to tax differences.

Financial Highlights - Service Class

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 36.81

$ 36.99

$ 29.96

$ 23.47

$ 44.99

$ 35.72

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .08

.10

.04

.08

.23

.04

Net realized and unrealized gain (loss)

  3.79

(.05) H

7.16

6.52

(21.48)

9.51

Total from investment operations

  3.87

.05

7.20

6.60

(21.25)

9.55

Distributions from net investment income

  -

(.11) L

(.06)

(.09)

(.27)

(.24)

Distributions from net realized gain

  -

(.12) L

(.11)

(.02)

-

(.04)

Total distributions

  -

(.23)

(.17)

(.11) K

(.27)

(.28)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.68

$ 36.81

$ 36.99

$ 29.96

$ 23.47

$ 44.99

Total Return B, C, D

  10.51%

.14%

24.06%

28.15%

(47.23)%

26.87%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .76% A

.77%

.77%

.79%

.78%

.75%

Expenses net of fee waivers, if any

  .76% A

.76%

.76%

.79%

.78%

.75%

Expenses net of all reductions

  .76% A

.76%

.76%

.78%

.77%

.74%

Net investment income (loss)

  .39% A

.26%

.12%

.31%

.64%

.11%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 409,193

$ 395,217

$ 453,063

$ 421,996

$ 395,759

$ 929,848

Portfolio turnover rate G

  63% A

71%

75%

134%

161%

109%

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 amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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 $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences.

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

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 36.53

$ 36.72

$ 29.75

$ 23.31

$ 44.65

$ 35.42

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .05

.04

(.01)

.04

.17

(.02)

Net realized and unrealized gain (loss)

  3.77

(.05) H

7.10

6.48

(21.29)

9.43

Total from investment operations

  3.82

(.01)

7.09

6.52

(21.12)

9.41

Distributions from net investment income

  -

(.06) L

(.01)

(.05)

(.22)

(.15)

Distributions from net realized gain

  -

(.12) L

(.11)

(.02)

-

(.03)

Total distributions

  -

(.18)

(.12)

(.08) K

(.22)

(.18)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.35

$ 36.53

$ 36.72

$ 29.75

$ 23.31

$ 44.65

Total Return B, C, D

  10.46%

(.03)%

23.86%

27.97%

(47.31)%

26.66%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .91% A

.92%

.92%

.94%

.93%

.90%

Expenses net of fee waivers, if any

  .91% A

.91%

.91%

.94%

.93%

.90%

Expenses net of all reductions

  .91% A

.91%

.91%

.93%

.92%

.89%

Net investment income (loss)

  .24% A

.11%

(.03)%

.16%

.49%

(.04)%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 576,862

$ 590,556

$ 584,193

$ 528,819

$ 447,530

$ 898,204

Portfolio turnover rate G

  63% A

71%

75%

134%

161%

109%

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 amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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 $.08 per share is comprised of distributions from net investment income of $.052 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences.

Financial Highlights - Service Class 2R

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 36.46

$ 36.64

$ 29.70

$ 23.26

$ 44.42

$ 35.28

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .05

.04

(.01)

.04

.18

(.01)

Net realized and unrealized gain (loss)

  3.76

(.05) H

7.09

6.46

(21.20)

9.38

Total from investment operations

  3.81

(.01)

7.08

6.50

(21.02)

9.37

Distributions from net investment income

  -

(.05) L

(.03)

(.04)

(.14)

(.19)

Distributions from net realized gain

  -

(.12) L

(.11)

(.02)

-

(.04)

Total distributions

  -

(.17)

(.14)

(.06) K

(.14)

(.23)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.27

$ 36.46

$ 36.64

$ 29.70

$ 23.26

$ 44.42

Total Return B, C, D

  10.45%

(.02)%

23.86%

27.98%

(47.31)%

26.66%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .91% A

.91%

.92%

.94%

.93%

.89%

Expenses net of fee waivers, if any

  .91% A

.91%

.91%

.94%

.93%

.89%

Expenses net of all reductions

  .91% A

.91%

.91%

.93%

.92%

.89%

Net investment income (loss)

  .24% A

.11%

(.03)%

.16%

.49%

(.04)%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 5,039

$ 5,202

$ 5,739

$ 4,084

$ 3,061

$ 20,051

Portfolio turnover rate G

  63% A

71%

75%

134%

161%

109%

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 amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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 $.06 per share is comprised of distributions from net investment income of $.041 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences.

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

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 36.81

$ 37.00

$ 29.97

$ 23.48

$ 45.00

$ 35.78

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .08

.10

.04

.08

.24

.04

Net realized and unrealized gain (loss)

  3.79

(.05) H

7.17

6.52

(21.49)

9.50

Total from investment operations

  3.87

.05

7.21

6.60

(21.25)

9.54

Distributions from net investment income

  -

(.12) L

(.07)

(.09)

(.27)

(.28)

Distributions from net realized gain

  -

(.12) L

(.11)

(.02)

-

(.04)

Total distributions

  -

(.24)

(.18)

(.11) K

(.27)

(.32)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.68

$ 36.81

$ 37.00

$ 29.97

$ 23.48

$ 45.00

Total Return B, C, D

  10.51%

.14%

24.08%

28.14%

(47.22)%

26.81%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .75% A

.75%

.76%

.79%

.77%

.76%

Expenses net of fee waivers, if any

  .75% A

.75%

.75%

.79%

.77%

.76%

Expenses net of all reductions

  .75% A

.74%

.75%

.78%

.76%

.76%

Net investment income (loss)

  .40% A

.27%

.13%

.31%

.65%

.09%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 138,534

$ 126,551

$ 117,936

$ 95,531

$ 93,428

$ 181,705

Portfolio turnover rate G

  63% A

71%

75%

134%

161%

109%

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 amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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 $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences.

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2012 (Unaudited)

1. Organization.

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

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Security 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 vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security 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 significant 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 are used and are 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 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 each business day and are categorized as Level 1 in the hierarchy.

Semiannual Report

3. Significant Accounting Policies - continued

Security 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, 2012, is included at the end of the Fund's Schedule of Investments.

Foreign Currency Translation. 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. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. 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, 2011.

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.

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

$ 950,996,351

Gross unrealized depreciation

(155,591,050)

Net unrealized appreciation (depreciation) on securities and other investments

$ 795,405,301

 

 

Tax cost

$ 2,965,075,621

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. At December 31, 2011, capital loss carryforwards were as follows:

Fiscal year of expiration

 

2016

$ (787,084,954)

2017

(458,405,642)

Total capital loss carryforward

$ (1,245,490,596)

Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days are 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.

New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

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

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $1,206,110,813 and $1,510,722,986, respectively.

6. Fees and Other Transactions with Affiliates.

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

Distribution and Service Plan 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.

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan Fees - continued

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

$ 210,957

Service Class 2

767,089

Service Class 2R

6,418

 

$ 984,464

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 .0038% 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

$ 983,155

Service Class

151,094

Service Class 2

220,275

Service Class 2R

1,804

Investor Class

109,050

 

$ 1,465,378

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. The commissions paid to these affiliated firms were $28,842 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

$ 10,649,000

.42%

$ 124

7. 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 $5,746 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities 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, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $3,550,975. Security lending income represents the income earned on

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Security Lending - continued

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 $812,561, including $112,246 from securities loaned to FCM.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $37,517 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 $32.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2012

Year ended
December 31,
2011

From net investment income

 

 

Initial Class

$ -

$ 10,671,389

Service Class

-

1,191,707

Service Class 2

-

935,559

Service Class 2R

-

7,550

Investor Class

-

411,667

Total

$ -

$ 13,217,872

From net realized gain

 

 

Initial Class

$ -

$ 8,992,576

Service Class

-

1,422,036

Service Class 2

-

2,010,246

Service Class 2R

-

18,630

Investor Class

-

411,365

Total

$ -

$ 12,854,853

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30,
2012

Year ended
December 31,
2011

Six months ended
June 30,
2012

Year ended
December 31,
2011

Initial Class

 

 

 

 

Shares sold

1,302,776

5,105,832

$ 53,518,520

$ 193,724,251

Reinvestment of distributions

-

531,779

-

19,663,965

Shares redeemed

(5,321,461)

(12,264,436)

(216,589,870)

(468,044,614)

Net increase (decrease)

(4,018,685)

(6,626,825)

$ (163,071,350)

$ (254,656,398)

Service Class

 

 

 

 

Shares sold

265,636

823,475

$ 10,876,911

$ 31,606,992

Reinvestment of distributions

-

70,516

-

2,613,743

Shares redeemed

(944,934)

(2,403,651)

(38,308,052)

(92,186,437)

Net increase (decrease)

(679,298)

(1,509,660)

$ (27,431,141)

$ (57,965,702)

Service Class 2

 

 

 

 

Shares sold

1,591,418

5,724,223

$ 64,688,449

$ 218,079,773

Reinvestment of distributions

-

79,666

-

2,945,805

Shares redeemed

(3,459,568)

(5,547,933)

(137,511,871)

(210,350,344)

Net increase (decrease)

(1,868,150)

255,956

$ (72,823,422)

$ 10,675,234

Semiannual Report

11. Share Transactions - continued

 

Shares

Dollars

Six months ended
June 30,
2012

Year ended
December 31,
2011

Six months ended
June 30,
2012

Year ended
December 31,
2011

Service Class 2R

 

 

 

 

Shares sold

27,064

116,285

$ 1,096,906

$ 4,451,582

Reinvestment of distributions

-

708

-

26,180

Shares redeemed

(44,618)

(130,935)

(1,764,342)

(4,926,892)

Net increase (decrease)

(17,554)

(13,942)

$ (667,436)

$ (449,130)

Investor Class

 

 

 

 

Shares sold

260,921

882,253

$ 10,695,367

$ 34,127,993

Reinvestment of distributions

-

22,289

-

823,032

Shares redeemed

(294,138)

(653,911)

(11,982,764)

(24,678,519)

Net increase (decrease)

(33,217)

250,631

$ (1,287,397)

$ 10,272,506

12. 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-Adviser

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-0812
1.705692.114

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

Semiannual Report

June 30, 2012

(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. © 2012 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, 2012 to June 30, 2012).

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

Beginning
Account Value
January 1, 2012

Ending
Account Value
June 30, 2012

Expenses Paid
During Period*
January 1, 2012
to June 30, 2012

Initial Class

.66%

 

 

 

Actual

 

$ 1,000.00

$ 1,106.00

$ 3.46

HypotheticalA

 

$ 1,000.00

$ 1,021.58

$ 3.32

Service Class

.76%

 

 

 

Actual

 

$ 1,000.00

$ 1,105.10

$ 3.98

HypotheticalA

 

$ 1,000.00

$ 1,021.08

$ 3.82

Service Class 2

.91%

 

 

 

Actual

 

$ 1,000.00

$ 1,104.60

$ 4.76

HypotheticalA

 

$ 1,000.00

$ 1,020.34

$ 4.57

Service Class 2R

.91%

 

 

 

Actual

 

$ 1,000.00

$ 1,104.50

$ 4.76

HypotheticalA

 

$ 1,000.00

$ 1,020.34

$ 4.57

Investor Class

.75%

 

 

 

Actual

 

$ 1,000.00

$ 1,105.10

$ 3.93

HypotheticalA

 

$ 1,000.00

$ 1,021.13

$ 3.77

A 5% return per year before expenses

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

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Apple, Inc.

11.5

8.7

QUALCOMM, Inc.

2.8

2.2

Harley-Davidson, Inc.

2.1

0.8

The Coca-Cola Co.

2.0

1.3

Home Depot, Inc.

2.0

0.3

Express Scripts Holding Co.

1.7

0.0

Citrix Systems, Inc.

1.7

1.1

Danaher Corp.

1.6

1.5

Philip Morris International, Inc.

1.4

1.3

Google, Inc. Class A

1.4

4.1

 

28.2

Top Five Market Sectors as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Information Technology

31.8

32.7

Consumer Discretionary

18.4

16.6

Industrials

14.2

14.3

Consumer Staples

11.4

8.5

Health Care

6.0

4.2

Asset Allocation (% of fund's net assets)

As of June 30, 2012*

As of December 31, 2011**

vpo15

Stocks 94.5%

 

vpo15

Stocks 95.7%

 

vpo21

Short-Term
Investments and
Net Other Assets (Liabilities) 5.5%

 

vpo21

Short-Term
Investments and
Net Other Assets
(Liabilities) 4.3%

 

* Foreign investments

13.1%

 

** Foreign investments

14.3%

 

vpo59

Semiannual Report

Investments June 30, 2012 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 94.5%

Shares

Value

CONSUMER DISCRETIONARY - 18.4%

Automobiles - 2.5%

Harley-Davidson, Inc.

1,747,260

$ 79,902,200

Tesla Motors, Inc. (a)(d)

521,977

16,332,660

 

96,234,860

Diversified Consumer Services - 0.7%

Anhanguera Educacional Participacoes SA

1,053,000

13,421,359

Kroton Educacional SA unit (a)

844,200

12,210,112

 

25,631,471

Hotels, Restaurants & Leisure - 3.4%

Arcos Dorados Holdings, Inc.

575,400

8,504,412

Chipotle Mexican Grill, Inc. (a)

17,093

6,494,485

Dunkin' Brands Group, Inc.

500,595

17,190,432

McDonald's Corp.

524,257

46,412,472

Sonic Corp. (a)

391,147

3,919,293

Starbucks Corp.

850,273

45,336,556

 

127,857,650

Household Durables - 0.7%

Mohawk Industries, Inc. (a)

139,256

9,724,246

Tupperware Brands Corp.

342,184

18,737,996

 

28,462,242

Internet & Catalog Retail - 1.3%

Amazon.com, Inc. (a)

224,512

51,267,315

Media - 0.6%

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

444,191

22,249,527

Multiline Retail - 2.1%

Dollar General Corp. (a)

529,449

28,796,731

Dollarama, Inc.

722,140

43,395,074

Dollarama, Inc. (a)(e)

128,200

7,703,837

 

79,895,642

Specialty Retail - 6.2%

Bed Bath & Beyond, Inc. (a)

391,526

24,196,307

GNC Holdings, Inc.

798,685

31,308,452

Home Depot, Inc.

1,423,900

75,452,461

PetSmart, Inc.

101,200

6,899,816

Ross Stores, Inc.

513,568

32,082,593

TJX Companies, Inc.

619,500

26,595,135

Ulta Salon, Cosmetics & Fragrance, Inc.

141,734

13,235,121

Vitamin Shoppe, Inc. (a)

502,484

27,601,446

 

237,371,331

Textiles, Apparel & Luxury Goods - 0.9%

lululemon athletica, Inc. (a)

190,700

11,371,441

NIKE, Inc. Class B

214,569

18,834,867

Ralph Lauren Corp.

38,300

5,364,298

 

35,570,606

TOTAL CONSUMER DISCRETIONARY

704,540,644

 

Shares

Value

CONSUMER STAPLES - 11.4%

Beverages - 3.5%

Anheuser-Busch InBev SA NV ADR

128,700

$ 10,250,955

Monster Beverage Corp. (a)

461,675

32,871,260

SABMiller PLC

295,000

11,804,464

The Coca-Cola Co.

995,434

77,832,984

 

132,759,663

Food & Staples Retailing - 0.9%

Costco Wholesale Corp.

120,000

11,400,000

Drogasil SA

492,823

4,968,716

Whole Foods Market, Inc.

212,824

20,286,384

 

36,655,100

Food Products - 2.0%

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

1,345,037

29,294,906

Mead Johnson Nutrition Co. Class A

209,969

16,904,604

The Hershey Co.

366,223

26,379,043

Want Want China Holdings Ltd.

2,491,000

3,080,471

 

75,659,024

Household Products - 1.3%

Colgate-Palmolive Co.

472,242

49,160,392

Personal Products - 1.1%

Estee Lauder Companies, Inc. Class A

95,952

5,192,922

Herbalife Ltd.

775,222

37,466,479

 

42,659,401

Tobacco - 2.6%

Altria Group, Inc.

124,400

4,298,020

British American Tobacco PLC sponsored ADR

333,500

34,057,020

Philip Morris International, Inc.

633,500

55,279,210

Swedish Match Co. AB

162,400

6,543,001

 

100,177,251

TOTAL CONSUMER STAPLES

437,070,831

ENERGY - 5.9%

Energy Equipment & Services - 2.7%

Cameron International Corp. (a)

292,800

12,505,488

Dresser-Rand Group, Inc. (a)

346,491

15,432,709

National Oilwell Varco, Inc.

277,500

17,882,100

Oceaneering International, Inc.

417,974

20,004,236

Poseidon Concepts Corp. (d)

1,455,000

17,821,285

Schlumberger Ltd.

293,728

19,065,884

 

102,711,702

Oil, Gas & Consumable Fuels - 3.2%

Atlas Pipeline Partners, LP

597,341

18,625,092

Concho Resources, Inc. (a)

230,592

19,627,991

Kosmos Energy Ltd. (a)

1,010,955

11,171,053

Markwest Energy Partners LP

170,100

8,387,631

Noble Energy, Inc.

95,400

8,091,828

Pioneer Natural Resources Co.

154,098

13,592,985

Common Stocks - continued

Shares

Value

ENERGY - continued

Oil, Gas & Consumable Fuels - continued

Targa Resources Corp.

229,280

$ 9,790,256

Valero Energy Corp.

573,500

13,850,025

Williams Companies, Inc.

659,500

19,006,790

 

122,143,651

TOTAL ENERGY

224,855,353

FINANCIALS - 2.5%

Capital Markets - 0.4%

GP Investments Ltd. (depositary receipt) (a)

1,387,358

3,239,586

Invesco Ltd.

573,451

12,959,993

 

16,199,579

Commercial Banks - 0.2%

First Republic Bank (a)

191,124

6,421,766

Consumer Finance - 0.2%

Mahindra & Mahindra Financial Services Ltd.

284,909

3,341,155

Shriram Transport Finance Co. Ltd.

615,161

5,902,463

 

9,243,618

Diversified Financial Services - 0.3%

CME Group, Inc.

46,627

12,501,165

Real Estate Investment Trusts - 1.3%

American Tower Corp.

536,155

37,482,596

Public Storage

76,140

10,995,377

 

48,477,973

Real Estate Management & Development - 0.1%

BR Malls Participacoes SA

182,600

2,091,013

TOTAL FINANCIALS

94,935,114

HEALTH CARE - 6.0%

Biotechnology - 2.1%

Aegerion Pharmaceuticals, Inc. (a)

123,800

1,837,192

Amgen, Inc.

313,300

22,883,432

AVEO Pharmaceuticals, Inc. (a)(d)

805,822

9,798,796

Biogen Idec, Inc. (a)

248,022

35,809,416

Biovitrum AB (a)

2,298,821

7,809,568

Cytokinetics, Inc.

1,808,300

1,158,216

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

1,084,980

5,877

 

79,302,497

Health Care Equipment & Supplies - 0.2%

Conceptus, Inc. (a)

274,300

5,436,626

Edwards Lifesciences Corp. (a)

23,700

2,448,210

 

7,884,836

Health Care Providers & Services - 1.7%

Apollo Hospitals Enterprise Ltd.

158,827

1,769,201

Express Scripts Holding Co. (a)

1,153,554

64,402,920

 

66,172,121

 

Shares

Value

Life Sciences Tools & Services - 0.1%

Illumina, Inc. (a)(d)

87,507

$ 3,534,408

Pharmaceuticals - 1.9%

Novo Nordisk A/S Series B

182,160

26,419,916

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

1,054,619

47,308,172

 

73,728,088

TOTAL HEALTH CARE

230,621,950

INDUSTRIALS - 14.2%

Aerospace & Defense - 3.1%

Honeywell International, Inc.

271,016

15,133,533

Precision Castparts Corp.

206,500

33,967,185

Textron, Inc.

156,044

3,880,814

TransDigm Group, Inc. (a)

195,548

26,262,096

United Technologies Corp.

504,039

38,070,066

 

117,313,694

Air Freight & Logistics - 0.9%

United Parcel Service, Inc. Class B

458,240

36,090,982

Building Products - 0.3%

USG Corp. (a)(d)

515,300

9,816,465

Commercial Services & Supplies - 0.0%

Aggreko PLC

59,788

1,940,158

Electrical Equipment - 1.7%

AMETEK, Inc.

312,086

15,576,212

Regal-Beloit Corp.

269,845

16,800,550

Roper Industries, Inc.

324,567

31,995,815

 

64,372,577

Industrial Conglomerates - 1.6%

Danaher Corp.

1,176,735

61,284,359

Machinery - 2.5%

CLARCOR, Inc.

415,088

19,990,638

Graco, Inc.

178,062

8,205,097

Ingersoll-Rand PLC

949,364

40,044,174

Manitowoc Co., Inc.

1,345,894

15,746,960

Terex Corp. (a)

681,700

12,154,711

 

96,141,580

Professional Services - 3.1%

Advisory Board Co. (a)

462,700

22,945,293

Corporate Executive Board Co.

701,059

28,659,292

Equifax, Inc.

815,503

38,002,440

IHS, Inc. Class A (a)

217,488

23,429,982

Qualicorp SA

612,800

5,357,614

 

118,394,621

Road & Rail - 0.1%

J.B. Hunt Transport Services, Inc.

75,600

4,505,760

Common Stocks - continued

Shares

Value

INDUSTRIALS - continued

Trading Companies & Distributors - 0.9%

MSC Industrial Direct Co., Inc. Class A

141,012

$ 9,243,337

W.W. Grainger, Inc.

127,400

24,363,976

 

33,607,313

TOTAL INDUSTRIALS

543,467,509

INFORMATION TECHNOLOGY - 31.8%

Communications Equipment - 3.5%

Acme Packet, Inc. (a)(d)

844,142

15,743,248

QUALCOMM, Inc.

1,891,697

105,329,689

Riverbed Technology, Inc. (a)

797,181

12,874,473

 

133,947,410

Computers & Peripherals - 12.4%

Apple, Inc. (a)

754,506

440,631,507

SanDisk Corp. (a)

943,412

34,415,670

 

475,047,177

Electronic Equipment & Components - 0.2%

InvenSense, Inc. (d)

576,588

6,515,444

Internet Software & Services - 4.6%

Active Network, Inc. (a)

250,128

3,849,470

Baidu.com, Inc. sponsored ADR (a)

93,795

10,784,549

Bankrate, Inc.

1,033,946

19,014,267

Blucora, Inc. (a)

653,866

8,055,629

CoStar Group, Inc. (a)

114,314

9,282,297

Google, Inc. Class A (a)

94,290

54,694,800

MercadoLibre, Inc.

105,842

8,022,824

SPS Commerce, Inc. (a)

244,958

7,441,824

VeriSign, Inc. (a)

1,227,210

53,469,540

 

174,615,200

IT Services - 1.7%

Cardtronics, Inc. (a)

287,993

8,700,269

Heartland Payment Systems, Inc.

445,336

13,395,707

MasterCard, Inc. Class A

23,800

10,236,618

ServiceSource International, Inc. (a)

908,512

12,582,891

Visa, Inc. Class A

151,700

18,754,671

 

63,670,156

Semiconductors & Semiconductor Equipment - 3.9%

Altera Corp.

273,782

9,264,783

ASML Holding NV

458,600

23,581,212

Avago Technologies Ltd.

734,502

26,368,622

Broadcom Corp. Class A

978,729

33,081,040

Cirrus Logic, Inc. (a)

190,372

5,688,315

Ezchip Semiconductor Ltd. (a)

256,259

10,260,610

MagnaChip Semiconductor Corp. (a)

694,900

6,622,397

Maxim Integrated Products, Inc.

144,300

3,699,852

PMC-Sierra, Inc. (a)

977,475

6,001,697

Texas Instruments, Inc.

899,058

25,793,974

 

150,362,502

 

Shares

Value

Software - 5.5%

ANSYS, Inc. (a)

301,748

$ 19,043,316

Citrix Systems, Inc. (a)

766,177

64,312,897

Computer Modelling Group Ltd.

502,700

8,576,661

Intuit, Inc.

274,856

16,312,704

Red Hat, Inc. (a)

261,500

14,769,520

salesforce.com, Inc. (a)

337,082

46,604,957

SolarWinds, Inc. (a)

486,534

21,193,421

VMware, Inc. Class A (a)

210,777

19,189,138

 

210,002,614

TOTAL INFORMATION TECHNOLOGY

1,214,160,503

MATERIALS - 3.1%

Chemicals - 2.5%

Albemarle Corp.

63,300

3,775,212

FMC Corp.

503,054

26,903,328

Monsanto Co.

290,000

24,006,200

Praxair, Inc.

259,837

28,252,077

Sherwin-Williams Co.

108,300

14,333,505

 

97,270,322

Metals & Mining - 0.6%

Kenmare Resources PLC (a)

4,600,347

2,845,909

Newmont Mining Corp.

404,405

19,617,687

 

22,463,596

TOTAL MATERIALS

119,733,918

TELECOMMUNICATION SERVICES - 1.2%

Wireless Telecommunication Services - 1.2%

SBA Communications Corp. Class A (a)

468,000

26,699,400

TIM Participacoes SA sponsored ADR (d)

634,600

17,426,116

 

44,125,516

TOTAL COMMON STOCKS

(Cost $2,809,365,160)


3,613,511,338

Money Market Funds - 3.9%

 

 

 

 

Fidelity Cash Central Fund, 0.17% (b)

85,174,212

85,174,212

Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c)

61,795,372

61,795,372

TOTAL MONEY MARKET FUNDS

(Cost $146,969,584)


146,969,584

TOTAL INVESTMENT PORTFOLIO - 98.4%

(Cost $2,956,334,744)

3,760,480,922

NET OTHER ASSETS (LIABILITIES) - 1.6%

61,709,773

NET ASSETS - 100%

$ 3,822,190,695

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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 $7,703,837 or 0.2% 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

$ 40,548

Fidelity Securities Lending Cash Central Fund

812,561

Total

$ 853,109

Other Information

The following is a summary of the inputs used, as of June 30, 2012, 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 Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 704,540,644

$ 704,540,644

$ -

$ -

Consumer Staples

437,070,831

433,990,360

3,080,471

-

Energy

224,855,353

224,855,353

-

-

Financials

94,935,114

85,691,496

9,243,618

-

Health Care

230,621,950

202,426,956

28,194,994

-

Industrials

543,467,509

543,467,509

-

-

Information Technology

1,214,160,503

1,214,160,503

-

-

Materials

119,733,918

119,733,918

-

-

Telecommunication Services

44,125,516

44,125,516

-

-

Money Market Funds

146,969,584

146,969,584

-

-

Total Investments in Securities:

$ 3,760,480,922

$ 3,719,961,839

$ 40,519,083

$ -

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

United States of America

86.9%

Canada

3.2%

Brazil

1.5%

Cayman Islands

1.4%

United Kingdom

1.2%

Ireland

1.2%

Others (Individually Less Than 1%)

4.6%

 

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, 2012 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $63,275,577) - See accompanying schedule:

Unaffiliated issuers (cost $2,809,365,160)

$ 3,613,511,338

 

Fidelity Central Funds (cost $146,969,584)

146,969,584

 

Total Investments (cost $2,956,334,744)

 

$ 3,760,480,922

Cash

 

1,263,934

Receivable for investments sold

175,532,351

Receivable for fund shares sold

742,632

Dividends receivable

2,081,057

Distributions receivable from Fidelity Central Funds

265,440

Other receivables

174,846

Total assets

3,940,541,182

 

 

 

Liabilities

Payable for investments purchased

$ 51,968,218

Payable for fund shares redeemed

2,075,728

Accrued management fee

1,758,157

Distribution and service plan fees payable

155,921

Other affiliated payables

382,229

Other payables and accrued expenses

214,862

Collateral on securities loaned, at value

61,795,372

Total liabilities

118,350,487

 

 

 

Net Assets

$ 3,822,190,695

Net Assets consist of:

 

Paid in capital

$ 4,191,632,390

Undistributed net investment income

6,953,969

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

(1,180,546,341)

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

804,150,677

Net Assets

$ 3,822,190,695

Statement of Assets and Liabilities - continued

 

June 30, 2012 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($2,692,563,092 ÷ 65,996,096 shares)

$ 40.80

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($409,193,128 ÷ 10,058,609 shares)

$ 40.68

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($576,861,707 ÷ 14,296,172 shares)

$ 40.35

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($5,039,008 ÷ 125,132 shares)

$ 40.27

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($138,533,760 ÷ 3,405,063 shares)

$ 40.68

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, 2012 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 21,776,261

Interest

 

11

Income from Fidelity Central Funds

 

853,109

Total income

 

22,629,381

 

 

 

Expenses

Management fee

$ 11,001,025

Transfer agent fees

1,465,378

Distribution and service plan fees

984,464

Accounting and security lending fees

523,095

Custodian fees and expenses

60,497

Independent trustees' compensation

13,106

Appreciation in deferred trustee compensation account

98

Audit

35,622

Legal

10,427

Interest

124

Miscellaneous

23,885

Total expenses before reductions

14,117,721

Expense reductions

(37,549)

14,080,172

Net investment income (loss)

8,549,209

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

74,003,060

Foreign currency transactions

3,288

Total net realized gain (loss)

 

74,006,348

Change in net unrealized appreciation (depreciation) on:

Investment securities

304,258,462

Assets and liabilities in foreign currencies

6,460

Total change in net unrealized appreciation (depreciation)

 

304,264,922

Net gain (loss)

378,271,270

Net increase (decrease) in net assets resulting from operations

$ 386,820,479

Statement of Changes in Net Assets

 

Six months ended
June 30, 2012
(Unaudited)

Year ended
December 31,
2011

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 8,549,209

$ 12,085,920

Net realized gain (loss)

74,006,348

390,193,292

Change in net unrealized appreciation (depreciation)

304,264,922

(386,686,117)

Net increase (decrease) in net assets resulting from operations

386,820,479

15,593,095

Distributions to shareholders from net investment income

-

(13,217,872)

Distributions to shareholders from net realized gain

-

(12,854,853)

Total distributions

-

(26,072,725)

Share transactions - net increase (decrease)

(265,280,746)

(292,123,490)

Redemption fees

1,578

14,621

Total increase (decrease) in net assets

121,541,311

(302,588,499)

 

 

 

Net Assets

Beginning of period

3,700,649,384

4,003,237,883

End of period (including undistributed net investment income of $6,953,969 and distributions in excess of net investment income of $1,595,240, respectively)

$ 3,822,190,695

$ 3,700,649,384

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 36.89

$ 37.09

$ 30.04

$ 23.53

$ 45.12

$ 35.87

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .10

.14

.07

.10

.27

.09

Net realized and unrealized gain (loss)

  3.81

(.06) H

7.18

6.55

(21.55)

9.53

Total from investment operations

  3.91

.08

7.25

6.65

(21.28)

9.62

Distributions from net investment income

  -

(.15) M

(.09)

(.12)

(.31)

(.33)

Distributions from net realized gain

  -

(.12) M

(.11)

(.02)

-

(.04)

Total distributions

  -

(.28) L

(.20)

(.14) K

(.31)

(.37)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.80

$ 36.89

$ 37.09

$ 30.04

$ 23.53

$ 45.12

Total Return B, C, D

  10.60%

.20%

24.17%

28.29%

(47.17)%

26.96%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .66% A

.66%

.67%

.69%

.68%

.65%

Expenses net of fee waivers, if any

  .66% A

.66%

.66%

.69%

.68%

.65%

Expenses net of all reductions

  .66% A

.66%

.66%

.68%

.67%

.64%

Net investment income (loss)

  .49% A

.36%

.22%

.41%

.74%

.21%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 2,692,563

$ 2,583,122

$ 2,842,307

$ 2,618,954

$ 2,337,892

$ 6,002,656

Portfolio turnover rate G

  63% A

71%

75%

134%

161%

109%

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 amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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 $.14 per share is comprised of distributions from net investment income of $.118 and distributions from net realized gain of $.023 per share. L Total 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. M The amount shown reflects certain reclassifications related to book to tax differences.

Financial Highlights - Service Class

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 36.81

$ 36.99

$ 29.96

$ 23.47

$ 44.99

$ 35.72

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .08

.10

.04

.08

.23

.04

Net realized and unrealized gain (loss)

  3.79

(.05) H

7.16

6.52

(21.48)

9.51

Total from investment operations

  3.87

.05

7.20

6.60

(21.25)

9.55

Distributions from net investment income

  -

(.11) L

(.06)

(.09)

(.27)

(.24)

Distributions from net realized gain

  -

(.12) L

(.11)

(.02)

-

(.04)

Total distributions

  -

(.23)

(.17)

(.11) K

(.27)

(.28)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.68

$ 36.81

$ 36.99

$ 29.96

$ 23.47

$ 44.99

Total Return B, C, D

  10.51%

.14%

24.06%

28.15%

(47.23)%

26.87%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .76% A

.77%

.77%

.79%

.78%

.75%

Expenses net of fee waivers, if any

  .76% A

.76%

.76%

.79%

.78%

.75%

Expenses net of all reductions

  .76% A

.76%

.76%

.78%

.77%

.74%

Net investment income (loss)

  .39% A

.26%

.12%

.31%

.64%

.11%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 409,193

$ 395,217

$ 453,063

$ 421,996

$ 395,759

$ 929,848

Portfolio turnover rate G

  63% A

71%

75%

134%

161%

109%

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 amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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 $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences.

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

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 36.53

$ 36.72

$ 29.75

$ 23.31

$ 44.65

$ 35.42

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .05

.04

(.01)

.04

.17

(.02)

Net realized and unrealized gain (loss)

  3.77

(.05) H

7.10

6.48

(21.29)

9.43

Total from investment operations

  3.82

(.01)

7.09

6.52

(21.12)

9.41

Distributions from net investment income

  -

(.06) L

(.01)

(.05)

(.22)

(.15)

Distributions from net realized gain

  -

(.12) L

(.11)

(.02)

-

(.03)

Total distributions

  -

(.18)

(.12)

(.08) K

(.22)

(.18)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.35

$ 36.53

$ 36.72

$ 29.75

$ 23.31

$ 44.65

Total Return B, C, D

  10.46%

(.03)%

23.86%

27.97%

(47.31)%

26.66%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .91% A

.92%

.92%

.94%

.93%

.90%

Expenses net of fee waivers, if any

  .91% A

.91%

.91%

.94%

.93%

.90%

Expenses net of all reductions

  .91% A

.91%

.91%

.93%

.92%

.89%

Net investment income (loss)

  .24% A

.11%

(.03)%

.16%

.49%

(.04)%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 576,862

$ 590,556

$ 584,193

$ 528,819

$ 447,530

$ 898,204

Portfolio turnover rate G

  63% A

71%

75%

134%

161%

109%

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 amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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 $.08 per share is comprised of distributions from net investment income of $.052 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences.

Financial Highlights - Service Class 2R

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 36.46

$ 36.64

$ 29.70

$ 23.26

$ 44.42

$ 35.28

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .05

.04

(.01)

.04

.18

(.01)

Net realized and unrealized gain (loss)

  3.76

(.05) H

7.09

6.46

(21.20)

9.38

Total from investment operations

  3.81

(.01)

7.08

6.50

(21.02)

9.37

Distributions from net investment income

  -

(.05) L

(.03)

(.04)

(.14)

(.19)

Distributions from net realized gain

  -

(.12) L

(.11)

(.02)

-

(.04)

Total distributions

  -

(.17)

(.14)

(.06) K

(.14)

(.23)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.27

$ 36.46

$ 36.64

$ 29.70

$ 23.26

$ 44.42

Total Return B, C, D

  10.45%

(.02)%

23.86%

27.98%

(47.31)%

26.66%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .91% A

.91%

.92%

.94%

.93%

.89%

Expenses net of fee waivers, if any

  .91% A

.91%

.91%

.94%

.93%

.89%

Expenses net of all reductions

  .91% A

.91%

.91%

.93%

.92%

.89%

Net investment income (loss)

  .24% A

.11%

(.03)%

.16%

.49%

(.04)%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 5,039

$ 5,202

$ 5,739

$ 4,084

$ 3,061

$ 20,051

Portfolio turnover rate G

  63% A

71%

75%

134%

161%

109%

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 amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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 $.06 per share is comprised of distributions from net investment income of $.041 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences.

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

Semiannual Report

Financial Highlights - Investor Class

 

Six months ended
June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 36.81

$ 37.00

$ 29.97

$ 23.48

$ 45.00

$ 35.78

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .08

.10

.04

.08

.24

.04

Net realized and unrealized gain (loss)

  3.79

(.05) H

7.17

6.52

(21.49)

9.50

Total from investment operations

  3.87

.05

7.21

6.60

(21.25)

9.54

Distributions from net investment income

  -

(.12) L

(.07)

(.09)

(.27)

(.28)

Distributions from net realized gain

  -

(.12) L

(.11)

(.02)

-

(.04)

Total distributions

  -

(.24)

(.18)

(.11) K

(.27)

(.32)

Redemption fees added to paid in capital E, J

  -

-

-

-

-

-

Net asset value, end of period

$ 40.68

$ 36.81

$ 37.00

$ 29.97

$ 23.48

$ 45.00

Total Return B, C, D

  10.51%

.14%

24.08%

28.14%

(47.22)%

26.81%

Ratios to Average Net Assets F, I

 

 

 

 

 

 

Expenses before reductions

  .75% A

.75%

.76%

.79%

.77%

.76%

Expenses net of fee waivers, if any

  .75% A

.75%

.75%

.79%

.77%

.76%

Expenses net of all reductions

  .75% A

.74%

.75%

.78%

.76%

.76%

Net investment income (loss)

  .40% A

.27%

.13%

.31%

.65%

.09%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 138,534

$ 126,551

$ 117,936

$ 95,531

$ 93,428

$ 181,705

Portfolio turnover rate G

  63% A

71%

75%

134%

161%

109%

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 amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund. I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or 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 $.11 per share is comprised of distributions from net investment income of $.089 and distributions from net realized gain of $.023 per share. L The amount shown reflects certain reclassifications related to book to tax differences.

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2012 (Unaudited)

1. Organization.

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

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Security 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 vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security 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 significant 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 are used and are 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 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 each business day and are categorized as Level 1 in the hierarchy.

Semiannual Report

3. Significant Accounting Policies - continued

Security 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, 2012, is included at the end of the Fund's Schedule of Investments.

Foreign Currency Translation. 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. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. 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, 2011.

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.

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

$ 950,996,351

Gross unrealized depreciation

(155,591,050)

Net unrealized appreciation (depreciation) on securities and other investments

$ 795,405,301

 

 

Tax cost

$ 2,965,075,621

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. At December 31, 2011, capital loss carryforwards were as follows:

Fiscal year of expiration

 

2016

$ (787,084,954)

2017

(458,405,642)

Total capital loss carryforward

$ (1,245,490,596)

Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days are 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.

New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

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

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $1,206,110,813 and $1,510,722,986, respectively.

6. Fees and Other Transactions with Affiliates.

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

Distribution and Service Plan 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.

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan Fees - continued

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

$ 210,957

Service Class 2

767,089

Service Class 2R

6,418

 

$ 984,464

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 .0038% 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

$ 983,155

Service Class

151,094

Service Class 2

220,275

Service Class 2R

1,804

Investor Class

109,050

 

$ 1,465,378

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. The commissions paid to these affiliated firms were $28,842 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

$ 10,649,000

.42%

$ 124

7. 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 $5,746 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities 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, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $3,550,975. Security lending income represents the income earned on

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Security Lending - continued

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 $812,561, including $112,246 from securities loaned to FCM.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $37,517 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 $32.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2012

Year ended
December 31,
2011

From net investment income

 

 

Initial Class

$ -

$ 10,671,389

Service Class

-

1,191,707

Service Class 2

-

935,559

Service Class 2R

-

7,550

Investor Class

-

411,667

Total

$ -

$ 13,217,872

From net realized gain

 

 

Initial Class

$ -

$ 8,992,576

Service Class

-

1,422,036

Service Class 2

-

2,010,246

Service Class 2R

-

18,630

Investor Class

-

411,365

Total

$ -

$ 12,854,853

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended
June 30,
2012

Year ended
December 31,
2011

Six months ended
June 30,
2012

Year ended
December 31,
2011

Initial Class

 

 

 

 

Shares sold

1,302,776

5,105,832

$ 53,518,520

$ 193,724,251

Reinvestment of distributions

-

531,779

-

19,663,965

Shares redeemed

(5,321,461)

(12,264,436)

(216,589,870)

(468,044,614)

Net increase (decrease)

(4,018,685)

(6,626,825)

$ (163,071,350)

$ (254,656,398)

Service Class

 

 

 

 

Shares sold

265,636

823,475

$ 10,876,911

$ 31,606,992

Reinvestment of distributions

-

70,516

-

2,613,743

Shares redeemed

(944,934)

(2,403,651)

(38,308,052)

(92,186,437)

Net increase (decrease)

(679,298)

(1,509,660)

$ (27,431,141)

$ (57,965,702)

Service Class 2

 

 

 

 

Shares sold

1,591,418

5,724,223

$ 64,688,449

$ 218,079,773

Reinvestment of distributions

-

79,666

-

2,945,805

Shares redeemed

(3,459,568)

(5,547,933)

(137,511,871)

(210,350,344)

Net increase (decrease)

(1,868,150)

255,956

$ (72,823,422)

$ 10,675,234

Semiannual Report

11. Share Transactions - continued

 

Shares

Dollars

Six months ended
June 30,
2012

Year ended
December 31,
2011

Six months ended
June 30,
2012

Year ended
December 31,
2011

Service Class 2R

 

 

 

 

Shares sold

27,064

116,285

$ 1,096,906

$ 4,451,582

Reinvestment of distributions

-

708

-

26,180

Shares redeemed

(44,618)

(130,935)

(1,764,342)

(4,926,892)

Net increase (decrease)

(17,554)

(13,942)

$ (667,436)

$ (449,130)

Investor Class

 

 

 

 

Shares sold

260,921

882,253

$ 10,695,367

$ 34,127,993

Reinvestment of distributions

-

22,289

-

823,032

Shares redeemed

(294,138)

(653,911)

(11,982,764)

(24,678,519)

Net increase (decrease)

(33,217)

250,631

$ (1,287,397)

$ 10,272,506

12. 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-Adviser

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-0812
1.833448.106

Fidelity® Variable Insurance Products:
High Income Portfolio

Semiannual Report

June 30, 2012

(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. © 2012 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, 2012 to June 30, 2012).

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

Beginning
Account Value
January 1, 2012

Ending
Account Value
June 30, 2012

Expenses Paid
During Period*
January 1, 2012
to June 30, 2012

Initial Class

.69%

 

 

 

Actual

 

$ 1,000.00

$ 1,071.10

$ 3.55

HypotheticalA

 

$ 1,000.00

$ 1,021.43

$ 3.47

Service Class

.78%

 

 

 

Actual

 

$ 1,000.00

$ 1,071.50

$ 4.02

HypotheticalA

 

$ 1,000.00

$ 1,020.98

$ 3.92

Service Class 2

.94%

 

 

 

Actual

 

$ 1,000.00

$ 1,069.00

$ 4.84

HypotheticalA

 

$ 1,000.00

$ 1,020.19

$ 4.72

Initial Class R

.68%

 

 

 

Actual

 

$ 1,000.00

$ 1,071.30

$ 3.50

HypotheticalA

 

$ 1,000.00

$ 1,021.48

$ 3.42

Service Class R

.78%

 

 

 

Actual

 

$ 1,000.00

$ 1,069.90

$ 4.01

HypotheticalA

 

$ 1,000.00

$ 1,020.98

$ 3.92

Service Class 2R

.94%

 

 

 

Actual

 

$ 1,000.00

$ 1,069.00

$ 4.84

HypotheticalA

 

$ 1,000.00

$ 1,020.19

$ 4.72

Investor Class

.72%

 

 

 

Actual

 

$ 1,000.00

$ 1,071.30

$ 3.71

HypotheticalA

 

$ 1,000.00

$ 1,021.28

$ 3.62

A 5% return per year before expenses

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

Semiannual Report

Investment Changes (Unaudited)

Top Five Holdings as of June 30, 2012

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

Ford Motor Credit Co. LLC

3.1

2.5

MGM Mirage, Inc.

2.9

2.3

CCO Holdings LLC/CCO Holdings Capital Corp.

2.7

2.3

International Lease Finance Corp.

2.6

2.2

CIT Group, Inc.

2.1

1.4

 

13.4

Top Five Market Sectors as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Energy

10.8

12.6

Automotive

7.7

7.2

Electric Utilities

7.3

6.2

Diversified Financial Services

7.1

5.3

Telecommunications

6.8

8.6

Quality Diversification (% of fund's net assets)

As of June 30, 2012

As of December 31, 2011

vpo15

BBB 4.8%

 

vpo15

BBB 2.1%

 

vpo68

BB 30.3%

 

vpo68

BB 32.0%

 

vpo71

B 43.2%

 

vpo71

B 44.7%

 

vpo18

CCC,CC,C 11.5%

 

vpo18

CCC,CC,C 11.1%

 

vpo76

Not Rated 1.9%

 

vpo76

Not Rated 1.7%

 

vpo79

Equities 0.4%

 

vpo79

Equities 0.4%

 

vpo21

Short-Term
Investments and
Net Other Assets 7.9%

 

vpo21

Short-Term
Investments and
Net Other Assets 8.0%

 

vpo84

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, 2012 *

As of December 31, 2011 **

vpo15

Nonconvertible
Bonds 84.1%

 

vpo15

Nonconvertible
Bonds 83.9%

 

vpo88

Convertible Bonds, Preferred Stocks 0.3%

 

vpo88

Convertible Bonds, Preferred Stocks 0.3%

 

vpo91

Common Stocks 0.1%

 

vpo91

Common Stocks 0.1%

 

vpo94

Floating Rate
Loans 7.6%

 

vpo94

Floating Rate
Loans 7.7%

 

vpo21

Short-Term
Investments and
Net Other Assets 7.9%

 

vpo21

Short-Term
Investments and
Net Other Assets 8.0%

 

* Foreign investments

12.9%

 

** Foreign investments

13.7%

 

vpo99

Semiannual Report

Investments June 30, 2012 (Unaudited)

Showing Percentage of Net Assets

Nonconvertible Bonds - 84.1%

 

Principal Amount

Value

Aerospace - 0.4%

Huntington Ingalls Industries, Inc. 6.875% 3/15/18

$ 5,100,000

$ 5,316,750

Air Transportation - 1.8%

Continental Airlines, Inc.:

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

3,272,082

3,517,489

6.75% 9/15/15 (d)

4,090,000

4,202,475

Continental Airlines, Inc. 9.25% 5/10/17

840,632

920,492

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

6.375% 1/2/16

1,985,000

1,985,000

6.75% 11/23/15

1,985,000

1,980,038

8.021% 8/10/22

1,776,600

1,796,675

8.954% 8/10/14

1,548,039

1,578,999

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

645,668

652,125

United Air Lines, Inc. 9.875% 8/1/13 (d)

659,000

685,360

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

Class B, 7.336% 7/2/19

2,598,479

2,572,495

9.75% 1/15/17

2,041,297

2,321,975

12% 1/15/16 (d)

676,093

731,871

 

22,944,994

Automotive - 6.3%

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

8% 6/15/19

6,970,000

7,161,675

8.25% 6/15/21

7,665,000

7,837,463

Dana Holding Corp.:

6.5% 2/15/19

1,505,000

1,602,825

6.75% 2/15/21

1,710,000

1,846,800

Delphi Corp.:

5.875% 5/15/19

8,625,000

9,185,625

6.125% 5/15/21

1,475,000

1,611,438

Ford Motor Co. 7.45% 7/16/31

4,370,000

5,473,425

Ford Motor Credit Co. LLC:

3.875% 1/15/15

6,975,000

7,182,953

4.25% 2/3/17

3,465,000

3,632,110

5% 5/15/18

7,600,000

8,070,303

5.875% 8/2/21

4,145,000

4,611,346

6.625% 8/15/17

3,200,000

3,640,000

7% 4/15/15

2,250,000

2,491,875

8% 12/15/16

4,870,000

5,760,022

12% 5/15/15

3,495,000

4,351,275

General Motors Financial Co., Inc. 6.75% 6/1/18

3,685,000

4,025,863

Tenneco, Inc.:

6.875% 12/15/20

1,930,000

2,084,400

7.75% 8/15/18

1,685,000

1,807,163

 

82,376,561

 

 

Principal Amount

Value

Banks & Thrifts - 0.8%

Ally Financial, Inc.:

3.6669% 2/11/14 (f)

$ 3,805,000

$ 3,728,900

4.625% 6/26/15

2,665,000

2,681,510

5.5% 2/15/17

4,355,000

4,431,213

 

10,841,623

Broadcasting - 1.7%

Allbritton Communications Co. 8% 5/15/18

2,205,000

2,293,200

Univision Communications, Inc.:

6.875% 5/15/19 (d)

6,165,000

6,334,538

7.875% 11/1/20 (d)

1,180,000

1,262,600

8.5% 5/15/21 (d)

9,605,000

9,677,038

UPC Holding BV 9.875% 4/15/18 (d)

1,630,000

1,784,850

 

21,352,226

Building Materials - 1.8%

Building Materials Corp. of America:

6.75% 5/1/21 (d)

3,680,000

3,937,600

6.875% 8/15/18 (d)

4,490,000

4,770,625

HD Supply, Inc.:

8.125% 4/15/19 (d)

2,725,000

2,943,000

11% 4/15/20 (d)

1,365,000

1,467,375

Headwaters, Inc. 7.625% 4/1/19

5,505,000

5,449,950

Masco Corp. 5.95% 3/15/22

1,815,000

1,868,336

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

1,565,000

1,561,088

USG Corp. 7.875% 3/30/20 (d)

970,000

1,003,950

 

23,001,924

Cable TV - 5.1%

Cablevision Systems Corp.:

7.75% 4/15/18

1,340,000

1,427,100

8.625% 9/15/17

1,000,000

1,115,000

CCO Holdings LLC/CCO Holdings Capital Corp.:

6.5% 4/30/21

10,700,000

11,395,500

6.625% 1/31/22

3,080,000

3,295,600

7% 1/15/19

9,810,000

10,594,800

7.25% 10/30/17

7,685,000

8,338,225

7.875% 4/30/18

985,000

1,071,188

Cequel Communications Holdings I LLC/Cequel Capital Corp. 8.625% 11/15/17 (d)

11,730,000

12,609,750

CSC Holdings LLC:

6.75% 11/15/21 (d)

1,205,000

1,274,288

8.625% 2/15/19

215,000

248,325

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

530,000

548,550

Unitymedia Hessen GmbH & Co. KG / Unitymedia NRW GmbH 7.5% 3/15/19 (d)

950,000

1,009,375

Nonconvertible Bonds - continued

 

Principal Amount

Value

Cable TV - continued

Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH 8.125% 12/1/17 (d)

$ 490,000

$ 525,525

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

2,710,000

2,750,650

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

3,270,000

3,400,800

UPCB Finance VI Ltd. 6.875% 1/15/22 (d)

1,325,000

1,344,875

Zayo Escrow Corp.:

8.125% 1/1/20 (d)

3,265,000

3,395,600

10.125% 7/1/20 (d)

1,360,000

1,428,000

 

65,773,151

Capital Goods - 0.5%

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

2,890,000

3,056,175

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

3,830,000

3,830,000

 

6,886,175

Chemicals - 1.4%

Celanese US Holdings LLC 6.625% 10/15/18

1,030,000

1,122,700

INEOS Finance PLC:

7.5% 5/1/20 (d)

1,065,000

1,075,650

8.375% 2/15/19 (d)

865,000

895,275

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

2,575,000

2,652,250

LyondellBasell Industries NV:

5% 4/15/19 (d)

3,195,000

3,338,775

5.75% 4/15/24 (d)

2,130,000

2,271,006

6% 11/15/21 (d)

1,005,000

1,102,988

NOVA Chemicals Corp. 3.8549% 11/15/13 (f)

5,325,000

5,318,344

 

17,776,988

Consumer Products - 0.2%

NBTY, Inc. 9% 10/1/18

2,690,000

2,975,947

Containers - 2.4%

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

1,415,000

1,499,900

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

7.875% 8/15/19 (d)

6,625,000

7,121,875

8.5% 5/15/18 (c)(d)

4,275,000

4,104,000

9.875% 8/15/19 (d)

5,145,000

5,260,763

9.875% 8/15/19 (d)

430,000

446,125

Sealed Air Corp.:

8.125% 9/15/19 (d)

5,645,000

6,237,725

8.375% 9/15/21 (d)

4,900,000

5,488,000

Tekni-Plex, Inc. 9.75% 6/1/19 (d)

1,290,000

1,302,900

 

31,461,288

 

 

Principal Amount

Value

Diversified Financial Services - 6.9%

Aircastle Ltd.:

6.75% 4/15/17

$ 2,030,000

$ 2,050,300

9.75% 8/1/18

3,730,000

4,121,650

CIT Group, Inc.:

4.75% 2/15/15 (d)

3,100,000

3,173,625

5% 5/15/17

3,230,000

3,310,750

5.25% 3/15/18

4,935,000

5,095,388

5.375% 5/15/20

2,155,000

2,203,488

5.5% 2/15/19 (d)

4,280,000

4,397,700

7% 5/2/16 (d)

7,645,000

7,654,556

7% 5/2/17 (d)

1,553,687

1,555,629

Icahn Enterprises LP/Icahn Enterprises Finance Corp.:

7.75% 1/15/16

6,595,000

6,932,994

8% 1/15/18

11,845,000

12,585,313

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

1,275,000

879,750

International Lease Finance Corp.:

4.875% 4/1/15

3,400,000

3,408,500

5.65% 6/1/14

1,315,000

1,347,875

5.75% 5/15/16

8,055,000

8,175,825

5.875% 4/1/19

1,485,000

1,470,150

6.25% 5/15/19

2,245,000

2,287,094

8.625% 9/15/15

6,070,000

6,722,525

8.625% 1/15/22

3,855,000

4,462,163

8.75% 3/15/17

2,110,000

2,373,750

8.875% 9/1/17

3,235,000

3,655,550

Reynolds Group DL Escrow LLC 7.75% 10/15/16 (c)(d)

1,000,000

1,055,000

 

88,919,575

Diversified Media - 0.8%

Nielsen Finance LLC/Nielsen Finance Co.:

7.75% 10/15/18

3,900,000

4,338,750

11.5% 5/1/16

1,445,000

1,643,688

Quebecor Media, Inc.:

7.75% 3/15/16

2,612,000

2,696,890

7.75% 3/15/16

1,955,000

2,018,538

 

10,697,866

Electric Utilities - 7.3%

Atlantic Power Corp. 9% 11/15/18 (d)

6,740,000

6,891,650

Calpine Construction Finance Co. LP 8% 6/1/16 (d)

5,775,000

6,193,688

Dolphin Subsidiary II, Inc.:

6.5% 10/15/16 (d)

7,095,000

7,662,600

7.25% 10/15/21 (d)

2,295,000

2,547,450

Everest Acquisition LLC / Everest Acquisition Finance, Inc.:

6.875% 5/1/19 (d)

1,655,000

1,721,200

9.375% 5/1/20 (d)

2,725,000

2,820,375

Nonconvertible Bonds - continued

 

Principal Amount

Value

Electric Utilities - continued

GenOn Energy, Inc.:

9.5% 10/15/18

$ 3,310,000

$ 3,272,763

9.875% 10/15/20

1,465,000

1,428,375

InterGen NV 9% 6/30/17 (d)

4,150,000

4,067,000

IPALCO Enterprises, Inc. 5% 5/1/18

1,435,000

1,436,866

Mirant Americas Generation LLC:

8.5% 10/1/21

7,395,000

6,655,500

9.125% 5/1/31

6,570,000

5,847,300

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

9,865,000

9,865,000

NV Energy, Inc. 6.25% 11/15/20

4,295,000

4,794,637

Otter Tail Corp. 9% 12/15/16

2,460,000

2,669,100

Puget Energy, Inc.:

5.625% 7/15/22 (d)

1,045,000

1,088,054

6.5% 12/15/20

3,975,000

4,337,918

RRI Energy, Inc. 7.625% 6/15/14

6,280,000

6,405,600

The AES Corp.:

7.375% 7/1/21 (d)

5,145,000

5,723,813

7.75% 10/15/15

3,745,000

4,194,400

8% 10/15/17

1,515,000

1,715,738

9.75% 4/15/16

3,010,000

3,566,850

 

94,905,877

Energy - 10.4%

AmeriGas Partners LP/AmeriGas Finance Corp.:

6.25% 8/20/19

1,710,000

1,718,550

6.5% 5/20/21

642,000

645,210

Antero Resources Finance Corp.:

7.25% 8/1/19

1,845,000

1,914,188

9.375% 12/1/17

4,215,000

4,636,500

Berry Petroleum Co. 6.375% 9/15/22

2,890,000

2,983,925

Chesapeake Energy Corp.:

6.125% 2/15/21

4,950,000

4,789,125

6.775% 3/15/19

2,005,000

1,939,838

6.875% 11/15/20

1,250,000

1,231,250

Chesapeake Midstream Partners LP/CHKM Finance Corp.:

5.875% 4/15/21

615,000

596,550

6.125% 7/15/22

1,745,000

1,714,463

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

1,680,000

1,512,000

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

2,315,000

2,297,638

Denbury Resources, Inc. 6.375% 8/15/21

2,550,000

2,626,500

Edgen Murray Corp. 12.25% 1/15/15

4,760,000

4,688,600

Energy Transfer Equity LP 7.5% 10/15/20

2,930,000

3,215,675

 

 

Principal Amount

Value

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

$ 2,812,000

$ 2,706,550

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

7,855,000

7,383,700

Ferrellgas LP/Ferrellgas Finance Corp. 6.5% 5/1/21

2,259,000

2,061,338

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

4,680,000

4,352,400

Frontier Oil Corp.:

6.875% 11/15/18

1,245,000

1,294,800

8.5% 9/15/16

2,700,000

2,835,000

Hornbeck Offshore Services, Inc.:

5.875% 4/1/20 (d)

1,400,000

1,393,000

8% 9/1/17

215,000

231,125

Inergy LP/Inergy Finance Corp.:

6.875% 8/1/21

1,415,000

1,415,000

7% 10/1/18

3,155,000

3,186,550

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

6,445,000

6,735,025

LINN Energy LLC/LINN Energy Finance Corp.:

6.5% 5/15/19 (d)

2,895,000

2,822,625

7.75% 2/1/21

2,390,000

2,515,475

8.625% 4/15/20

3,055,000

3,291,763

MRC Global, Inc. 9.5% 12/15/16

6,600,000

7,128,000

Newfield Exploration Co. 5.625% 7/1/24

1,470,000

1,503,075

Offshore Group Investment Ltd.:

11.5% 8/1/15

4,390,000

4,719,250

11.5% 8/1/15 (d)

2,770,000

2,998,525

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

3,995,000

4,154,800

Pan American Energy LLC 7.875% 5/7/21 (d)

5,360,000

4,529,200

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

4,340,000

4,318,300

PetroBakken Energy Ltd. 8.625% 2/1/20 (d)

2,015,000

1,994,850

Petrohawk Energy Corp. 7.25% 8/15/18

1,685,000

1,904,050

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

3,225,000

3,273,375

Plains Exploration & Production Co. 6.125% 6/15/19

3,190,000

3,190,000

Precision Drilling Corp.:

6.5% 12/15/21

290,000

295,800

6.625% 11/15/20

2,505,000

2,555,100

Quicksilver Resources, Inc. 7.125% 4/1/16

3,255,000

2,571,450

Samson Investment Co. 9.75% 2/15/20 (d)

5,105,000

5,066,713

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

6.375% 8/1/22 (d)

800,000

798,000

6.875% 2/1/21

900,000

936,000

Nonconvertible Bonds - continued

 

Principal Amount

Value

Energy - continued

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

7.875% 10/15/18

$ 2,660,000

$ 2,872,800

WPX Energy, Inc. 6% 1/15/22

1,625,000

1,616,875

 

135,160,526

Environmental - 0.5%

Covanta Holding Corp. 7.25% 12/1/20

6,440,000

6,977,180

Food & Drug Retail - 1.4%

Rite Aid Corp.:

9.25% 3/15/20 (d)

4,135,000

4,155,675

9.25% 3/15/20 (d)

3,165,000

3,180,825

9.5% 6/15/17

10,170,000

10,398,825

 

17,735,325

Food/Beverage/Tobacco - 0.8%

JBS USA LLC/JBS USA Finance, Inc. 8.25% 2/1/20 (d)

3,700,000

3,644,500

Post Holdings, Inc. 7.375% 2/15/22 (d)

2,730,000

2,866,500

US Foodservice, Inc. 8.5% 6/30/19 (d)

3,990,000

4,099,725

 

10,610,725

Gaming - 4.6%

Ameristar Casinos, Inc.:

7.5% 4/15/21

3,720,000

3,943,200

7.5% 4/15/21 (d)

2,415,000

2,559,900

Chukchansi Economic Development Authority 9.75% 5/30/20 (d)

1,378,000

1,102,400

CityCenter Holdings LLC/CityCenter Finance Corp.:

7.625% 1/15/16

4,240,000

4,452,000

7.625% 1/15/16 (d)

2,755,000

2,858,313

11.5% 1/15/17 pay-in-kind (f)

5,277,559

5,528,829

MGM Mirage, Inc.:

6.625% 7/15/15

8,205,000

8,410,125

6.75% 4/1/13

1,140,000

1,168,500

7.5% 6/1/16

2,600,000

2,691,000

7.625% 1/15/17

10,930,000

11,093,950

7.75% 3/15/22

2,720,000

2,767,600

8.625% 2/1/19 (d)

4,135,000

4,445,125

10% 11/1/16

3,185,000

3,487,575

11.375% 3/1/18

3,150,000

3,709,125

Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp. 7.75% 8/15/20

1,895,000

2,084,500

 

60,302,142

Healthcare - 5.2%

DJO Finance LLC/DJO Finance Corp.:

7.75% 4/15/18

1,350,000

1,113,750

 

 

Principal Amount

Value

10.875% 11/15/14

$ 4,365,000

$ 4,441,388

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

5,100,000

5,323,125

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

3,265,000

3,403,763

HCA, Inc.:

5.875% 3/15/22

670,000

699,313

6.5% 2/15/20

755,000

821,063

9.875% 2/15/17

1,032,000

1,119,720

HealthSouth Corp. 7.25% 10/1/18

4,470,000

4,704,675

IASIS Healthcare LLC/IASIS Capital Corp. 8.375% 5/15/19

8,105,000

7,983,425

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

2,595,000

2,698,800

Mylan, Inc.:

6% 11/15/18 (d)

2,000,000

2,095,000

7.625% 7/15/17 (d)

1,255,000

1,380,500

Omega Healthcare Investors, Inc. 6.75% 10/15/22

4,540,000

4,835,100

Radiation Therapy Services, Inc. 8.875% 1/15/17 (d)

1,190,000

1,142,400

Rural/Metro Corp. 10.125% 7/15/19 (d)

1,055,000

991,700

Sabra Health Care LP/Sabra Capital Corp. 8.125% 11/1/18

6,590,000

7,084,250

Senior Housing Properties Trust 6.75% 4/15/20

2,640,000

2,861,892

Valeant Pharmaceuticals International:

6.5% 7/15/16 (d)

6,275,000

6,526,000

6.75% 8/15/21 (d)

1,325,000

1,298,500

6.875% 12/1/18 (d)

4,655,000

4,817,925

7% 10/1/20 (d)

375,000

378,281

WP Rocket Merger Sub, Inc. 10.125% 7/15/19 (d)

2,345,000

2,274,650

 

67,995,220

Homebuilders/Real Estate - 2.8%

CB Richard Ellis Services, Inc. 6.625% 10/15/20

2,370,000

2,512,200

D.R. Horton, Inc. 4.75% 5/15/17

1,315,000

1,355,272

KB Home 7.25% 6/15/18

5,145,000

5,042,100

Lennar Corp.:

5.6% 5/31/15

545,000

569,525

6.95% 6/1/18

2,515,000

2,684,763

12.25% 6/1/17

1,600,000

2,040,000

Realogy Corp. 7.625% 1/15/20 (d)

3,475,000

3,605,313

Standard Pacific Corp.:

8.375% 5/15/18

11,850,000

12,946,096

8.375% 1/15/21

2,375,000

2,588,750

10.75% 9/15/16

2,405,000

2,837,900

 

36,181,919

Nonconvertible Bonds - continued

 

Principal Amount

Value

Hotels - 0.4%

Host Hotels & Resorts LP:

5.875% 6/15/19

$ 2,165,000

$ 2,338,200

9% 5/15/17

2,195,000

2,425,475

 

4,763,675

Leisure - 1.1%

Equinox Holdings, Inc. 9.5% 2/1/16 (d)

3,570,000

3,784,200

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

3,920,000

4,370,800

Royal Caribbean Cruises Ltd.:

7.25% 3/15/18

1,815,000

1,969,275

yankee 7.25% 6/15/16

2,445,000

2,652,825

Universal City Development Partners Ltd./UCDP Finance, Inc. 8.875% 11/15/15

809,000

866,860

 

13,643,960

Metals/Mining - 1.4%

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

1,790,000

1,834,750

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

2,080,000

2,147,600

FMG Resources (August 2006) Pty Ltd.:

6.375% 2/1/16 (d)

3,145,000

3,176,450

7% 11/1/15 (d)

8,120,000

8,302,700

Vedanta Resources PLC 6.75% 6/7/16 (d)

2,560,000

2,409,472

 

17,870,972

Paper - 0.1%

Sappi Papier Holding GmbH:

7.75% 7/15/17 (d)(e)

735,000

744,188

8.375% 6/15/19 (d)(e)

995,000

999,975

 

1,744,163

Restaurants - 0.3%

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

4,035,000

4,468,763

Services - 2.7%

ARAMARK Corp.:

3.9659% 2/1/15 (f)

7,820,000

7,761,350

8.5% 2/1/15

4,830,000

4,950,750

ARAMARK Holdings Corp. 8.625% 5/1/16 pay-in-kind (d)(f)

5,580,000

5,726,196

Audatex North America, Inc. 6.75% 6/15/18 (d)

425,000

448,375

FTI Consulting, Inc. 6.75% 10/1/20

3,100,000

3,274,530

Hertz Corp.:

6.75% 4/15/19

2,660,000

2,766,400

6.75% 4/15/19 (d)

2,850,000

2,949,750

7.5% 10/15/18

7,205,000

7,691,338

 

35,568,689

 

 

Principal Amount

Value

Shipping - 1.1%

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

$ 1,725,000

$ 1,759,500

Overseas Shipholding Group, Inc.:

7.5% 2/15/24

475,000

268,375

8.125% 3/30/18

2,895,000

2,026,500

Ship Finance International Ltd. 8.5% 12/15/13

10,800,000

10,692,000

 

14,746,375

Steel - 1.4%

Essar Steel Algoma, Inc. 9.375% 3/15/15 (d)

5,215,000

5,032,475

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

3,970,000

3,940,225

Severstal Columbus LLC 10.25% 2/15/18

5,610,000

5,610,000

Steel Dynamics, Inc. 7.625% 3/15/20

3,335,000

3,568,450

 

18,151,150

Super Retail - 1.8%

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

3,975,000

4,104,188

PETCO Animal Supplies, Inc. 9.25% 12/1/18 (d)

7,585,000

8,286,613

Sonic Automotive, Inc. 7% 7/15/22 (d)

945,000

972,216

Toys 'R' Us Property Co. II LLC 8.5% 12/1/17

6,795,000

7,100,775

Toys 'R' Us, Inc. 7.375% 9/1/16 (d)

2,740,000

2,698,900

 

23,162,692

Technology - 3.8%

Amkor Technology, Inc. 7.375% 5/1/18

4,830,000

5,047,350

Avaya, Inc.:

9.75% 11/1/15

5,735,000

4,631,013

10.125% 11/1/15 pay-in-kind (f)

5,905,000

4,783,050

CDW LLC/CDW Finance Corp. 8.5% 4/1/19

4,650,000

4,929,000

Lucent Technologies, Inc.:

6.45% 3/15/29

6,625,000

4,505,000

6.5% 1/15/28

4,915,000

3,317,625

Sanmina-SCI Corp. 7% 5/15/19 (d)

6,455,000

6,293,625

Spansion LLC 7.875% 11/15/17

5,850,000

5,674,500

SunGard Data Systems, Inc.:

7.375% 11/15/18

595,000

636,650

10.25% 8/15/15

3,080,000

3,187,800

Viasystems, Inc. 7.875% 5/1/19 (d)

5,880,000

5,850,600

 

48,856,213

Nonconvertible Bonds - continued

 

Principal Amount

Value

Telecommunications - 6.6%

Digicel Group Ltd.:

7% 2/15/20 (d)

$ 295,000

$ 283,938

8.25% 9/1/17 (d)

5,395,000

5,529,875

8.875% 1/15/15 (d)

7,580,000

7,655,800

9.125% 1/15/15 pay-in-kind (d)(f)

4,447,000

4,491,470

Intelsat Jackson Holdings SA 7.25% 10/15/20 (d)

2,900,000

3,045,000

Intelsat Ltd. 11.25% 6/15/16

1,118,000

1,171,105

Intelsat Luxembourg SA:

11.25% 2/4/17

8,780,000

9,087,300

11.5% 2/4/17 pay-in-kind (d)(f)

2,730,000

2,818,725

11.5% 2/4/17 pay-in-kind (f)

12,031,864

12,422,900

Nextel Communications, Inc.:

5.95% 3/15/14

4,940,000

4,946,175

7.375% 8/1/15

5,195,000

5,201,494

NII Capital Corp. 7.625% 4/1/21

2,385,000

2,033,213

Sprint Nextel Corp.:

6% 12/1/16

10,710,000

10,254,825

9% 11/15/18 (d)

1,505,000

1,681,838

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

4,145,000

4,217,538

U.S. West Communications 7.5% 6/15/23

9,460,000

9,483,650

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

1,149,105

723,010

 

85,047,856

Textiles & Apparel - 0.3%

Hanesbrands, Inc. 6.375% 12/15/20

1,535,000

1,619,425

Levi Strauss & Co. 6.875% 5/1/22 (d)

2,590,000

2,648,275

 

4,267,700

TOTAL NONCONVERTIBLE BONDS

(Cost $1,051,651,456)


1,092,486,190

Commercial Mortgage Securities - 0.0%

 

LB Multi-family Mortgage Trust Series 1991-4 Class A1, 7.1104% 4/25/21 (f)
(Cost $0)

25,932


18,153

Common Stocks - 0.1%

Shares

 

Telecommunications - 0.1%

CUI Acquisition Corp. Class E (d)

1

873,375

 

Shares

Value

Textiles & Apparel - 0.0%

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

48,889

$ 341,734

TOTAL COMMON STOCKS

(Cost $3,248,508)


1,215,109

Convertible Preferred Stocks - 0.3%

 

 

 

 

Automotive - 0.3%

General Motors Co. 4.75%
(Cost $5,336,226)

111,200


3,691,840

Floating Rate Loans - 7.6%

 

Principal Amount

 

Air Transportation - 1.0%

Delta Air Lines, Inc. Tranche B, term loan 5.5% 4/20/17 (f)

$ 7,271,550

7,280,639

US Airways Group, Inc. term loan 2.7453% 3/23/14 (f)

5,541,187

5,264,128

 

12,544,767

Automotive - 1.1%

Chrysler Group LLC Tranche B, term loan 6% 5/24/17 (f)

8,761,351

8,827,061

Federal-Mogul Corp.:

Tranche B, term loan 2.1776% 12/27/14 (f)

3,589,525

3,410,049

Tranche C, term loan 2.1776% 12/27/15 (f)

2,415,458

2,294,685

 

14,531,795

Broadcasting - 0.5%

Univision Communications, Inc. term loan 4.4953% 3/31/17 (f)

6,722,026

6,318,704

Cable TV - 0.3%

Harron Communications LP Tranche B, term loan 5.5% 10/6/17 (f)

2,720,638

2,720,638

UPC Broadband Holding BV Tranche AB, term loan 4.75% 12/31/17 (f)

1,640,000

1,607,200

 

4,327,838

Capital Goods - 0.3%

Colfax Corp. Tranche B, term loan 4.5% 9/12/18 (f)

3,427,775

3,419,206

Chemicals - 0.3%

Ascend Performance Materials Operation LLC Tranche B, term loan 6.75% 4/10/18 (f)

3,157,088

3,062,375

Kronos Worldwide, Inc. term loan 5.75% 6/13/18 (f)

1,340,000

1,336,650

 

4,399,025

Consumer Products - 0.2%

Visant Corp. Tranche B, term loan 5.25% 12/22/16 (f)

2,849,186

2,763,711

Floating Rate Loans - continued

 

Principal Amount

Value

Containers - 0.3%

Anchor Glass Container Corp.:

Tranche 1LN, term loan 6% 3/2/16 (f)

$ 1,523,734

$ 1,523,734

Tranche 2LN, term loan 10% 9/2/16 (f)

2,070,000

2,070,000

 

3,593,734

Diversified Financial Services - 0.2%

Flying Fortress, Inc. Tranche 3, term loan 5% 6/30/17 (f)

2,310,000

2,318,778

Electric Utilities - 0.0%

The AES Corp. Tranche B, term loan 4.25% 5/27/18 (f)

661,625

661,625

Energy - 0.4%

Chesapeake Energy Corp. term loan 8.5% 12/2/17 (f)

1,450,000

1,433,688

Crestwood Holdings Partners LLC Tranche B, term loan 9.75% 3/26/18 (f)

1,810,000

1,819,050

Energy Transfer Equity LP Tranche B, term loan 3.75% 3/23/17 (f)

2,660,000

2,606,800

 

5,859,538

Food & Drug Retail - 0.2%

SUPERVALU, Inc. Tranche B 3LN, term loan 4.5% 4/29/18 (f)

2,058,938

2,026,345

Healthcare - 0.8%

Emergency Medical Services Corp. Tranche B, term loan 5.25% 5/25/18 (f)

2,893,778

2,868,458

HCA, Inc. Tranche B2, term loan 3.7106% 3/31/17 (f)

3,135,000

3,052,863

Quintiles Transnational Corp. Tranche B, term loan 5% 6/8/18 (f)

3,977,976

3,928,252

 

9,849,573

Insurance - 0.8%

Asurion Corp.:

Tranche 1st LN, term loan 5.5% 5/24/18 (f)

2,735,227

2,725,107

Tranche 2nd LN, term loan 9% 5/24/19 (f)

5,360,000

5,467,200

Lonestar Inter Super Hld LLC term loan 11% 9/2/19 (f)

2,760,000

2,884,200

 

11,076,507

Metals/Mining - 0.1%

Arch Coal, Inc. Tranche B, term loan 5.75% 5/16/18 (f)

965,000

945,700

Publishing/Printing - 0.1%

Newsday LLC term loan 10.5% 8/1/13

925,000

938,875

Restaurants - 0.2%

Landry's Restaurants, Inc. Tranche B, term loan 6.5% 4/24/18 (f)

2,718,188

2,718,188

 

 

Principal Amount

Value

Services - 0.2%

U.S. Foodservice term loan 5.75% 3/31/17 (f)

$ 2,791,800

$ 2,666,169

Steel - 0.2%

JMC Steel Group, Inc. term loan 4.75% 4/1/17 (f)

3,033,613

3,026,029

Super Retail - 0.3%

Neiman Marcus Group, Inc. Tranche B, term loan 4.75% 5/16/18 (f)

3,335,000

3,301,650

PETCO Animal Supplies, Inc. term loan 4.5% 11/24/17 (f)

480,200

476,599

 

3,778,249

Telecommunications - 0.1%

Intelsat Jackson Holdings SA term loan 3.2408% 2/1/14 (f)

830,000

805,100

TOTAL FLOATING RATE LOANS

(Cost $96,960,248)


98,569,456

Money Market Funds - 6.0%

Shares

 

Fidelity Cash Central Fund, 0.17% (b)
(Cost $78,021,675)

78,021,675


78,021,675

TOTAL INVESTMENT PORTFOLIO - 98.1%

(Cost $1,235,218,113)

1,274,002,423

NET OTHER ASSETS (LIABILITIES) - 1.9%

24,517,815

NET ASSETS - 100%

$ 1,298,520,238

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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 $376,463,904 or 29.0% of net assets.

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

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

(g) 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 $341,734 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

$ 46,168

Other Information

The following is a summary of the inputs used, as of June 30, 2012, 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 Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 4,033,574

$ 3,691,840

$ -

$ 341,734

Telecommunication Services

873,375

-

-

873,375

Corporate Bonds

1,092,486,190

-

1,092,486,190

-

Commercial Mortgage Securities

18,153

-

-

18,153

Floating Rate Loans

98,569,456

-

98,569,456

-

Money Market Funds

78,021,675

78,021,675

-

-

Total Investments in Securities:

$ 1,274,002,423

$ 81,713,515

$ 1,191,055,646

$ 1,233,262

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

United States of America

87.1%

Bermuda

2.9%

Canada

2.4%

Luxembourg

2.4%

Cayman Islands

1.2%

Australia

1.0%

Others (Individually Less Than 1%)

3.0%

 

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, 2012 (Unaudited)

 

 

 

Assets

Investment in securities, at value - See accompanying schedule:

Unaffiliated issuers (cost $1,157,196,438)

$ 1,195,980,748

 

Fidelity Central Funds (cost $78,021,675)

78,021,675

 

Total Investments (cost $1,235,218,113)

 

$ 1,274,002,423

Cash

 

126,402

Receivable for investments sold

7,520,700

Receivable for fund shares sold

1,224,221

Interest receivable

21,001,010

Distributions receivable from Fidelity Central Funds

6,073

Total assets

1,303,880,829

 

 

 

Liabilities

Payable for investments purchased
Regular delivery

$ 2,276,590

Delayed delivery

1,730,000

Payable for fund shares redeemed

500,425

Accrued management fee

611,932

Distribution and service plan fees payable

51,977

Other affiliated payables

145,474

Other payables and accrued expenses

44,193

Total liabilities

5,360,591

 

 

 

Net Assets

$ 1,298,520,238

Net Assets consist of:

 

Paid in capital

$ 1,324,501,256

Undistributed net investment income

48,800,111

Accumulated undistributed net realized gain (loss) on investments

(113,565,439)

Net unrealized appreciation (depreciation) on investments

38,784,310

Net Assets

$ 1,298,520,238

Statement of Assets and Liabilities - continued

 

June 30, 2012 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($580,134,083 ÷ 100,556,569 shares)

$ 5.77

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($77,482,244 ÷ 13,506,900 shares)

$ 5.74

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($201,590,760 ÷ 35,854,899 shares)

$ 5.62

 

 

 

Initial Class R:
Net Asset Value, offering price and redemption price per share ($32,203,203 ÷ 5,601,531 shares)

$ 5.75

 

 

 

Service Class R:
Net Asset Value, offering price and redemption price per share ($38,215,857 ÷ 6,693,688 shares)

$ 5.71

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($1,813,910 ÷ 322,498 shares)

$ 5.62

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($367,080,181 ÷ 63,834,407 shares)

$ 5.75

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, 2012 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 316,467

Interest

 

47,667,358

Income from Fidelity Central Funds

 

46,168

Total income

 

48,029,993

 

 

 

Expenses

Management fee

$ 3,739,200

Transfer agent fees

538,900

Distribution and service plan fees

361,161

Accounting fees and expenses

227,525

Custodian fees and expenses

12,005

Independent trustees' compensation

4,330

Audit

38,344

Legal

11,752

Interest

153

Miscellaneous

6,997

Total expenses before reductions

4,940,367

Expense reductions

(273)

4,940,094

Net investment income (loss)

43,089,899

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

5,621,562

Change in net unrealized appreciation (depreciation) on investment securities

38,609,156

Net gain (loss)

44,230,718

Net increase (decrease) in net assets resulting from operations

$ 87,320,617

Statement of Changes in Net Assets

 

Six months ended June 30, 2012
(Unaudited)

Year ended
December 31, 2011

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 43,089,899

$ 82,841,870

Net realized gain (loss)

5,621,562

30,894,343

Change in net unrealized appreciation (depreciation)

38,609,156

(67,492,572)

Net increase (decrease) in net assets resulting from operations

87,320,617

46,243,641

Distributions to shareholders from net investment income

(713,358)

(84,003,585)

Share transactions - net increase (decrease)

(42,452,271)

65,821,196

Redemption fees

42,274

88,182

Total increase (decrease) in net assets

44,197,262

28,149,434

 

 

 

Net Assets

Beginning of period

1,254,322,976

1,226,173,542

End of period (including undistributed net investment income of $48,800,111 and undistributed net investment income of $6,423,570, respectively)

$ 1,298,520,238

$ 1,254,322,976

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.39

$ 5.57

$ 5.29

$ 3.96

$ 5.98

$ 6.35

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .186

.391

.439

.438

.475

.485

Net realized and unrealized gain (loss)

  .197

(.171)

.288

1.298

(1.990)

(.311)

Total from investment operations

  .383

.220

.727

1.736

(1.515)

.174

Distributions from net investment income

  (.003)

(.400)

(.448)

(.406)

(.506)

(.545)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.77

$ 5.39

$ 5.57

$ 5.29

$ 3.96

$ 5.98

Total Return B,C,D

  7.11%

4.03%

13.82%

43.96%

(24.98)%

2.79%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .69% A

.69%

.69%

.70%

.71%

.68%

Expenses net of fee waivers, if any

  .69% A

.69%

.69%

.70%

.71%

.68%

Expenses net of all reductions

  .69% A

.69%

.69%

.70%

.70%

.68%

Net investment income (loss)

  6.61% A

6.85%

7.84%

9.02%

8.48%

7.47%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 580,134

$ 561,514

$ 594,688

$ 608,802

$ 451,824

$ 726,409

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.36

$ 5.54

$ 5.26

$ 3.95

$ 5.95

$ 6.32

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .182

.384

.431

.429

.469

.477

Net realized and unrealized gain (loss)

  .201

(.171)

.290

1.281

(1.971)

(.312)

Total from investment operations

  .383

.213

.721

1.710

(1.502)

.165

Distributions from net investment income

  (.003)

(.393)

(.442)

(.400)

(.499)

(.536)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.74

$ 5.36

$ 5.54

$ 5.26

$ 3.95

$ 5.95

Total Return B,C,D

  7.15%

3.93%

13.79%

43.41%

(24.87)%

2.66%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .78% A

.79%

.79%

.80%

.80%

.78%

Expenses net of fee waivers, if any

  .78% A

.79%

.78%

.80%

.80%

.78%

Expenses net of all reductions

  .78% A

.79%

.78%

.80%

.80%

.78%

Net investment income (loss)

  6.52% A

6.75%

7.74%

8.92%

8.39%

7.37%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 77,482

$ 91,573

$ 98,988

$ 103,511

$ 95,461

$ 180,837

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.26

$ 5.45

$ 5.18

$ 3.89

$ 5.88

$ 6.25

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .174

.368

.417

.422

.450

.461

Net realized and unrealized gain (loss)

  .189

(.170)

.287

1.264

(1.949)

(.305)

Total from investment operations

  .363

.198

.704

1.686

(1.499)

.156

Distributions from net investment income

  (.003)

(.388)

(.435)

(.396)

(.492)

(.527)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.62

$ 5.26

$ 5.45

$ 5.18

$ 3.89

$ 5.88

Total Return B,C,D

  6.90%

3.72%

13.67%

43.46%

(25.14)%

2.54%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .94% A

.94%

.94%

.95%

.96%

.93%

Expenses net of fee waivers, if any

  .94% A

.94%

.94%

.95%

.96%

.93%

Expenses net of all reductions

  .94% A

.94%

.94%

.95%

.96%

.93%

Net investment income (loss)

  6.36% A

6.60%

7.59%

8.77%

8.23%

7.22%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 201,591

$ 220,333

$ 182,465

$ 181,377

$ 87,077

$ 97,266

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.37

$ 5.55

$ 5.27

$ 3.95

$ 5.96

$ 6.34

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .185

.391

.439

.440

.471

.479

Net realized and unrealized gain (loss)

  .198

(.171)

.288

1.286

(1.975)

(.313)

Total from investment operations

  .383

.220

.727

1.726

(1.504)

.166

Distributions from net investment income

  (.003)

(.400)

(.448)

(.406)

(.507)

(.547)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.75

$ 5.37

$ 5.55

$ 5.27

$ 3.95

$ 5.96

Total Return B,C,D

  7.13%

4.05%

13.88%

43.82%

(24.88)%

2.65%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .68% A

.68%

.69%

.70%

.70%

.68%

Expenses net of fee waivers, if any

  .68% A

.68%

.68%

.70%

.70%

.68%

Expenses net of all reductions

  .68% A

.68%

.68%

.69%

.70%

.67%

Net investment income (loss)

  6.61% A

6.85%

7.84%

9.02%

8.49%

7.47%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 32,203

$ 31,627

$ 34,946

$ 34,080

$ 19,801

$ 19,401

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.34

$ 5.52

$ 5.25

$ 3.94

$ 5.93

$ 6.32

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .182

.383

.433

.431

.467

.471

Net realized and unrealized gain (loss)

  .191

(.167)

.280

1.280

(1.959)

(.318)

Total from investment operations

  .373

.216

.713

1.711

(1.492)

.153

Distributions from net investment income

  (.003)

(.396)

(.444)

(.401)

(.499)

(.544)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.71

$ 5.34

$ 5.52

$ 5.25

$ 3.94

$ 5.93

Total Return B,C,D

  6.99%

3.99%

13.66%

43.56%

(24.79)%

2.45%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .78% A

.78%

.79%

.80%

.80%

.78%

Expenses net of fee waivers, if any

  .78% A

.78%

.78%

.80%

.80%

.78%

Expenses net of all reductions

  .78% A

.78%

.78%

.80%

.80%

.77%

Net investment income (loss)

  6.52% A

6.75%

7.74%

8.92%

8.39%

7.37%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 38,216

$ 63,557

$ 68,806

$ 47,873

$ 26,572

$ 33,129

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.26

$ 5.45

$ 5.17

$ 3.89

$ 5.87

$ 6.25

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .174

.369

.415

.416

.451

.453

Net realized and unrealized gain (loss)

  .189

(.175)

.293

1.257

(1.940)

(.294)

Total from investment operations

  .363

.194

.708

1.673

(1.489)

.159

Distributions from net investment income

  (.003)

(.384)

(.429)

(.393)

(.492)

(.540)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.62

$ 5.26

$ 5.45

$ 5.17

$ 3.89

$ 5.87

Total Return B,C,D

  6.90%

3.64%

13.79%

43.13%

(24.99)%

2.59%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .94% A

.93%

.94%

.95%

.95%

.93%

Expenses net of fee waivers, if any

  .94% A

.93%

.93%

.95%

.95%

.93%

Expenses net of all reductions

  .94% A

.93%

.93%

.94%

.95%

.92%

Net investment income (loss)

  6.36% A

6.60%

7.59%

8.77%

8.24%

7.23%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 1,814

$ 1,350

$ 1,543

$ 2,016

$ 1,487

$ 2,347

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.37

$ 5.56

$ 5.27

$ 3.96

$ 5.96

$ 6.34

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .184

.388

.437

.441

.473

.477

Net realized and unrealized gain (loss)

  .199

(.180)

.298

1.274

(1.971)

(.317)

Total from investment operations

  .383

.208

.735

1.715

(1.498)

.160

Distributions from net investment income

  (.003)

(.398)

(.446)

(.405)

(.503)

(.541)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.75

$ 5.37

$ 5.56

$ 5.27

$ 3.96

$ 5.96

Total Return B,C,D

  7.13%

3.82%

14.04%

43.43%

(24.76)%

2.56%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .72% A

.72%

.73%

.73%

.74%

.75%

Expenses net of fee waivers, if any

  .72% A

.72%

.72%

.73%

.74%

.75%

Expenses net of all reductions

  .72% A

.72%

.72%

.73%

.74%

.75%

Net investment income (loss)

  6.58% A

6.82%

7.81%

8.99%

8.45%

7.40%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 367,080

$ 284,370

$ 244,738

$ 182,806

$ 90,312

$ 105,920

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012 (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, and 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. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Security 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 vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities 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 security type and may include market or security 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 and floating rate loans, 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 and are generally categorized as Level 2 in the hierarchy. 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 and, accordingly, such securities are generally categorized as Level 2 in the hierarchy. 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. These 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.

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

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. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are 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 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, 2012 for the Fund's investments, is included at the end of 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 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.

Expenses. 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, equity-debt classifications, 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

$ 61,835,024

Gross unrealized depreciation

(16,007,787)

Net unrealized appreciation (depreciation) on securities and other investments

$ 45,827,237

 

 

Tax cost

$ 1,228,175,186

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. At December 31, 2011, capital loss carryforwards were as follows:

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Fiscal year of expiration

 

2016

$ (39,467,710)

2017

(79,447,269)

Total capital loss carryforward

$ (118,914,979)

Trading (Redemption) Fees. Initial Class R shares, Service Class R shares and Service Class 2 R shares held by investors less than 60 days are 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.

4. Operating Policies.

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.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $315,370,188 and $319,470,044, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the Fund's average net assets and an annualized group fee rate that averaged .12% 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 .57% 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

$ 42,338

Service Class 2

285,832

Service Class R

31,148

Service Class 2 R

1,843

 

$ 361,161

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .10% of average net assets. In addition, FIIOC receives an asset-based fee of .0038% 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

$ 218,112

Service Class

30,564

Service Class 2

82,835

Initial Class R

11,582

Service Class R

21,812

Service Class 2R

518

Investor Class

173,477

 

$ 538,900

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

$ 6,556,000

.42%

$ 153

7. 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 $1,893 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. 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 $273.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2012

Year ended
December 31,
2011

From net investment income

 

 

Initial Class

$ 311,601

$ 38,834,457

Service Class

51,381

5,348,721

Service Class 2

127,438

14,701,408

Initial Class R

17,999

2,203,822

Service Class R

35,933

4,443,415

Service Class 2R

753

92,376

Investor Class

168,253

18,379,386

Total

$ 713,358

$ 84,003,585

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended June 30,
2012

Year ended
December 31,
2011

Six months ended June 30,
2012

Year ended
December 31,
2011

Initial Class

 

 

 

 

Shares sold

6,729,348

14,954,963

$ 38,008,922

$ 85,548,272

Reinvestment of distributions

55,743

7,279,400

311,601

38,834,457

Shares redeemed

(10,390,858)

(24,811,221)

(58,723,626)

(141,718,667)

Net increase (decrease)

(3,605,767)

(2,576,858)

$ (20,403,103)

$ (17,335,938)

Service Class

 

 

 

 

Shares sold

1,103,599

4,391,885

$ 6,139,214

$ 23,974,978

Reinvestment of distributions

9,241

1,008,126

51,381

5,348,721

Shares redeemed

(4,681,926)

(6,182,000)

(26,388,477)

(35,059,439)

Net increase (decrease)

(3,569,086)

(781,989)

$ (20,197,882)

$ (5,735,740)

Service Class 2

 

 

 

 

Shares sold

7,730,084

35,272,315

$ 42,652,629

$ 197,650,737

Reinvestment of distributions

23,340

2,824,984

127,438

14,701,408

Shares redeemed

(13,786,164)

(29,704,714)

(75,952,033)

(165,911,073)

Net increase (decrease)

(6,032,740)

8,392,585

$ (33,171,966)

$ 46,441,072

Initial Class R

 

 

 

 

Shares sold

1,124,028

2,974,865

$ 6,357,182

$ 17,006,544

Reinvestment of distributions

3,231

414,639

17,999

2,203,822

Shares redeemed

(1,413,356)

(3,795,258)

(7,958,959)

(21,688,955)

Net increase (decrease)

(286,097)

(405,754)

$ (1,583,778)

$ (2,478,589)

Service Class R

 

 

 

 

Shares sold

1,338,183

8,003,006

$ 7,516,332

$ 45,643,141

Reinvestment of distributions

6,486

840,752

35,933

4,443,415

Shares redeemed

(6,559,305)

(9,397,413)

(36,538,504)

(53,628,031)

Net increase (decrease)

(5,214,636)

(553,655)

$ (28,986,239)

$ (3,541,475)

Service Class 2R

 

 

 

 

Shares sold

144,235

77,098

$ 805,255

$ 432,475

Reinvestment of distributions

138

17,746

753

92,376

Shares redeemed

(78,416)

(121,577)

(432,764)

(682,497)

Net increase (decrease)

65,957

(26,733)

$ 373,244

$ (157,646)

Investor Class

 

 

 

 

Shares sold

16,931,787

35,223,887

$ 95,479,603

$ 199,792,708

Reinvestment of distributions

30,153

3,458,337

168,253

18,379,386

Shares redeemed

(6,042,930)

(29,823,638)

(34,130,403)

(169,542,582)

Net increase (decrease)

10,919,010

8,858,586

$ 61,517,453

$ 48,629,512

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 38% 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

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-0812
1.705694.114

Fidelity® Variable Insurance Products:
High Income Portfolio - Class R

Semiannual Report

June 30, 2012

(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. © 2012 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, 2012 to June 30, 2012).

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

Beginning
Account Value
January 1, 2012

Ending
Account Value
June 30, 2012

Expenses Paid
During Period*
January 1, 2012
to June 30, 2012

Initial Class

.69%

 

 

 

Actual

 

$ 1,000.00

$ 1,071.10

$ 3.55

HypotheticalA

 

$ 1,000.00

$ 1,021.43

$ 3.47

Service Class

.78%

 

 

 

Actual

 

$ 1,000.00

$ 1,071.50

$ 4.02

HypotheticalA

 

$ 1,000.00

$ 1,020.98

$ 3.92

Service Class 2

.94%

 

 

 

Actual

 

$ 1,000.00

$ 1,069.00

$ 4.84

HypotheticalA

 

$ 1,000.00

$ 1,020.19

$ 4.72

Initial Class R

.68%

 

 

 

Actual

 

$ 1,000.00

$ 1,071.30

$ 3.50

HypotheticalA

 

$ 1,000.00

$ 1,021.48

$ 3.42

Service Class R

.78%

 

 

 

Actual

 

$ 1,000.00

$ 1,069.90

$ 4.01

HypotheticalA

 

$ 1,000.00

$ 1,020.98

$ 3.92

Service Class 2R

.94%

 

 

 

Actual

 

$ 1,000.00

$ 1,069.00

$ 4.84

HypotheticalA

 

$ 1,000.00

$ 1,020.19

$ 4.72

Investor Class

.72%

 

 

 

Actual

 

$ 1,000.00

$ 1,071.30

$ 3.71

HypotheticalA

 

$ 1,000.00

$ 1,021.28

$ 3.62

A 5% return per year before expenses

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

Semiannual Report

Investment Changes (Unaudited)

Top Five Holdings as of June 30, 2012

(by issuer, excluding cash equivalents)

% of fund's
net assets

% of fund's net assets
6 months ago

Ford Motor Credit Co. LLC

3.1

2.5

MGM Mirage, Inc.

2.9

2.3

CCO Holdings LLC/CCO Holdings Capital Corp.

2.7

2.3

International Lease Finance Corp.

2.6

2.2

CIT Group, Inc.

2.1

1.4

 

13.4

Top Five Market Sectors as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Energy

10.8

12.6

Automotive

7.7

7.2

Electric Utilities

7.3

6.2

Diversified Financial Services

7.1

5.3

Telecommunications

6.8

8.6

Quality Diversification (% of fund's net assets)

As of June 30, 2012

As of December 31, 2011

vpo15

BBB 4.8%

 

vpo15

BBB 2.1%

 

vpo68

BB 30.3%

 

vpo68

BB 32.0%

 

vpo71

B 43.2%

 

vpo71

B 44.7%

 

vpo18

CCC,CC,C 11.5%

 

vpo18

CCC,CC,C 11.1%

 

vpo76

Not Rated 1.9%

 

vpo76

Not Rated 1.7%

 

vpo79

Equities 0.4%

 

vpo79

Equities 0.4%

 

vpo21

Short-Term
Investments and
Net Other Assets 7.9%

 

vpo21

Short-Term
Investments and
Net Other Assets 8.0%

 

vpo120

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, 2012 *

As of December 31, 2011 **

vpo15

Nonconvertible
Bonds 84.1%

 

vpo15

Nonconvertible
Bonds 83.9%

 

vpo88

Convertible Bonds, Preferred Stocks 0.3%

 

vpo88

Convertible Bonds, Preferred Stocks 0.3%

 

vpo91

Common Stocks 0.1%

 

vpo91

Common Stocks 0.1%

 

vpo94

Floating Rate
Loans 7.6%

 

vpo94

Floating Rate
Loans 7.7%

 

vpo21

Short-Term
Investments and
Net Other Assets 7.9%

 

vpo21

Short-Term
Investments and
Net Other Assets 8.0%

 

* Foreign investments

12.9%

 

** Foreign investments

13.7%

 

vpo132

Semiannual Report

Investments June 30, 2012 (Unaudited)

Showing Percentage of Net Assets

Nonconvertible Bonds - 84.1%

 

Principal Amount

Value

Aerospace - 0.4%

Huntington Ingalls Industries, Inc. 6.875% 3/15/18

$ 5,100,000

$ 5,316,750

Air Transportation - 1.8%

Continental Airlines, Inc.:

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

3,272,082

3,517,489

6.75% 9/15/15 (d)

4,090,000

4,202,475

Continental Airlines, Inc. 9.25% 5/10/17

840,632

920,492

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

6.375% 1/2/16

1,985,000

1,985,000

6.75% 11/23/15

1,985,000

1,980,038

8.021% 8/10/22

1,776,600

1,796,675

8.954% 8/10/14

1,548,039

1,578,999

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

645,668

652,125

United Air Lines, Inc. 9.875% 8/1/13 (d)

659,000

685,360

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

Class B, 7.336% 7/2/19

2,598,479

2,572,495

9.75% 1/15/17

2,041,297

2,321,975

12% 1/15/16 (d)

676,093

731,871

 

22,944,994

Automotive - 6.3%

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

8% 6/15/19

6,970,000

7,161,675

8.25% 6/15/21

7,665,000

7,837,463

Dana Holding Corp.:

6.5% 2/15/19

1,505,000

1,602,825

6.75% 2/15/21

1,710,000

1,846,800

Delphi Corp.:

5.875% 5/15/19

8,625,000

9,185,625

6.125% 5/15/21

1,475,000

1,611,438

Ford Motor Co. 7.45% 7/16/31

4,370,000

5,473,425

Ford Motor Credit Co. LLC:

3.875% 1/15/15

6,975,000

7,182,953

4.25% 2/3/17

3,465,000

3,632,110

5% 5/15/18

7,600,000

8,070,303

5.875% 8/2/21

4,145,000

4,611,346

6.625% 8/15/17

3,200,000

3,640,000

7% 4/15/15

2,250,000

2,491,875

8% 12/15/16

4,870,000

5,760,022

12% 5/15/15

3,495,000

4,351,275

General Motors Financial Co., Inc. 6.75% 6/1/18

3,685,000

4,025,863

Tenneco, Inc.:

6.875% 12/15/20

1,930,000

2,084,400

7.75% 8/15/18

1,685,000

1,807,163

 

82,376,561

 

 

Principal Amount

Value

Banks & Thrifts - 0.8%

Ally Financial, Inc.:

3.6669% 2/11/14 (f)

$ 3,805,000

$ 3,728,900

4.625% 6/26/15

2,665,000

2,681,510

5.5% 2/15/17

4,355,000

4,431,213

 

10,841,623

Broadcasting - 1.7%

Allbritton Communications Co. 8% 5/15/18

2,205,000

2,293,200

Univision Communications, Inc.:

6.875% 5/15/19 (d)

6,165,000

6,334,538

7.875% 11/1/20 (d)

1,180,000

1,262,600

8.5% 5/15/21 (d)

9,605,000

9,677,038

UPC Holding BV 9.875% 4/15/18 (d)

1,630,000

1,784,850

 

21,352,226

Building Materials - 1.8%

Building Materials Corp. of America:

6.75% 5/1/21 (d)

3,680,000

3,937,600

6.875% 8/15/18 (d)

4,490,000

4,770,625

HD Supply, Inc.:

8.125% 4/15/19 (d)

2,725,000

2,943,000

11% 4/15/20 (d)

1,365,000

1,467,375

Headwaters, Inc. 7.625% 4/1/19

5,505,000

5,449,950

Masco Corp. 5.95% 3/15/22

1,815,000

1,868,336

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

1,565,000

1,561,088

USG Corp. 7.875% 3/30/20 (d)

970,000

1,003,950

 

23,001,924

Cable TV - 5.1%

Cablevision Systems Corp.:

7.75% 4/15/18

1,340,000

1,427,100

8.625% 9/15/17

1,000,000

1,115,000

CCO Holdings LLC/CCO Holdings Capital Corp.:

6.5% 4/30/21

10,700,000

11,395,500

6.625% 1/31/22

3,080,000

3,295,600

7% 1/15/19

9,810,000

10,594,800

7.25% 10/30/17

7,685,000

8,338,225

7.875% 4/30/18

985,000

1,071,188

Cequel Communications Holdings I LLC/Cequel Capital Corp. 8.625% 11/15/17 (d)

11,730,000

12,609,750

CSC Holdings LLC:

6.75% 11/15/21 (d)

1,205,000

1,274,288

8.625% 2/15/19

215,000

248,325

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

530,000

548,550

Unitymedia Hessen GmbH & Co. KG / Unitymedia NRW GmbH 7.5% 3/15/19 (d)

950,000

1,009,375

Nonconvertible Bonds - continued

 

Principal Amount

Value

Cable TV - continued

Unitymedia Hessen GmbH & Co. KG/Unitymedia NRW GmbH 8.125% 12/1/17 (d)

$ 490,000

$ 525,525

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

2,710,000

2,750,650

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

3,270,000

3,400,800

UPCB Finance VI Ltd. 6.875% 1/15/22 (d)

1,325,000

1,344,875

Zayo Escrow Corp.:

8.125% 1/1/20 (d)

3,265,000

3,395,600

10.125% 7/1/20 (d)

1,360,000

1,428,000

 

65,773,151

Capital Goods - 0.5%

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

2,890,000

3,056,175

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

3,830,000

3,830,000

 

6,886,175

Chemicals - 1.4%

Celanese US Holdings LLC 6.625% 10/15/18

1,030,000

1,122,700

INEOS Finance PLC:

7.5% 5/1/20 (d)

1,065,000

1,075,650

8.375% 2/15/19 (d)

865,000

895,275

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

2,575,000

2,652,250

LyondellBasell Industries NV:

5% 4/15/19 (d)

3,195,000

3,338,775

5.75% 4/15/24 (d)

2,130,000

2,271,006

6% 11/15/21 (d)

1,005,000

1,102,988

NOVA Chemicals Corp. 3.8549% 11/15/13 (f)

5,325,000

5,318,344

 

17,776,988

Consumer Products - 0.2%

NBTY, Inc. 9% 10/1/18

2,690,000

2,975,947

Containers - 2.4%

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

1,415,000

1,499,900

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

7.875% 8/15/19 (d)

6,625,000

7,121,875

8.5% 5/15/18 (c)(d)

4,275,000

4,104,000

9.875% 8/15/19 (d)

5,145,000

5,260,763

9.875% 8/15/19 (d)

430,000

446,125

Sealed Air Corp.:

8.125% 9/15/19 (d)

5,645,000

6,237,725

8.375% 9/15/21 (d)

4,900,000

5,488,000

Tekni-Plex, Inc. 9.75% 6/1/19 (d)

1,290,000

1,302,900

 

31,461,288

 

 

Principal Amount

Value

Diversified Financial Services - 6.9%

Aircastle Ltd.:

6.75% 4/15/17

$ 2,030,000

$ 2,050,300

9.75% 8/1/18

3,730,000

4,121,650

CIT Group, Inc.:

4.75% 2/15/15 (d)

3,100,000

3,173,625

5% 5/15/17

3,230,000

3,310,750

5.25% 3/15/18

4,935,000

5,095,388

5.375% 5/15/20

2,155,000

2,203,488

5.5% 2/15/19 (d)

4,280,000

4,397,700

7% 5/2/16 (d)

7,645,000

7,654,556

7% 5/2/17 (d)

1,553,687

1,555,629

Icahn Enterprises LP/Icahn Enterprises Finance Corp.:

7.75% 1/15/16

6,595,000

6,932,994

8% 1/15/18

11,845,000

12,585,313

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

1,275,000

879,750

International Lease Finance Corp.:

4.875% 4/1/15

3,400,000

3,408,500

5.65% 6/1/14

1,315,000

1,347,875

5.75% 5/15/16

8,055,000

8,175,825

5.875% 4/1/19

1,485,000

1,470,150

6.25% 5/15/19

2,245,000

2,287,094

8.625% 9/15/15

6,070,000

6,722,525

8.625% 1/15/22

3,855,000

4,462,163

8.75% 3/15/17

2,110,000

2,373,750

8.875% 9/1/17

3,235,000

3,655,550

Reynolds Group DL Escrow LLC 7.75% 10/15/16 (c)(d)

1,000,000

1,055,000

 

88,919,575

Diversified Media - 0.8%

Nielsen Finance LLC/Nielsen Finance Co.:

7.75% 10/15/18

3,900,000

4,338,750

11.5% 5/1/16

1,445,000

1,643,688

Quebecor Media, Inc.:

7.75% 3/15/16

2,612,000

2,696,890

7.75% 3/15/16

1,955,000

2,018,538

 

10,697,866

Electric Utilities - 7.3%

Atlantic Power Corp. 9% 11/15/18 (d)

6,740,000

6,891,650

Calpine Construction Finance Co. LP 8% 6/1/16 (d)

5,775,000

6,193,688

Dolphin Subsidiary II, Inc.:

6.5% 10/15/16 (d)

7,095,000

7,662,600

7.25% 10/15/21 (d)

2,295,000

2,547,450

Everest Acquisition LLC / Everest Acquisition Finance, Inc.:

6.875% 5/1/19 (d)

1,655,000

1,721,200

9.375% 5/1/20 (d)

2,725,000

2,820,375

Nonconvertible Bonds - continued

 

Principal Amount

Value

Electric Utilities - continued

GenOn Energy, Inc.:

9.5% 10/15/18

$ 3,310,000

$ 3,272,763

9.875% 10/15/20

1,465,000

1,428,375

InterGen NV 9% 6/30/17 (d)

4,150,000

4,067,000

IPALCO Enterprises, Inc. 5% 5/1/18

1,435,000

1,436,866

Mirant Americas Generation LLC:

8.5% 10/1/21

7,395,000

6,655,500

9.125% 5/1/31

6,570,000

5,847,300

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

9,865,000

9,865,000

NV Energy, Inc. 6.25% 11/15/20

4,295,000

4,794,637

Otter Tail Corp. 9% 12/15/16

2,460,000

2,669,100

Puget Energy, Inc.:

5.625% 7/15/22 (d)

1,045,000

1,088,054

6.5% 12/15/20

3,975,000

4,337,918

RRI Energy, Inc. 7.625% 6/15/14

6,280,000

6,405,600

The AES Corp.:

7.375% 7/1/21 (d)

5,145,000

5,723,813

7.75% 10/15/15

3,745,000

4,194,400

8% 10/15/17

1,515,000

1,715,738

9.75% 4/15/16

3,010,000

3,566,850

 

94,905,877

Energy - 10.4%

AmeriGas Partners LP/AmeriGas Finance Corp.:

6.25% 8/20/19

1,710,000

1,718,550

6.5% 5/20/21

642,000

645,210

Antero Resources Finance Corp.:

7.25% 8/1/19

1,845,000

1,914,188

9.375% 12/1/17

4,215,000

4,636,500

Berry Petroleum Co. 6.375% 9/15/22

2,890,000

2,983,925

Chesapeake Energy Corp.:

6.125% 2/15/21

4,950,000

4,789,125

6.775% 3/15/19

2,005,000

1,939,838

6.875% 11/15/20

1,250,000

1,231,250

Chesapeake Midstream Partners LP/CHKM Finance Corp.:

5.875% 4/15/21

615,000

596,550

6.125% 7/15/22

1,745,000

1,714,463

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

1,680,000

1,512,000

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

2,315,000

2,297,638

Denbury Resources, Inc. 6.375% 8/15/21

2,550,000

2,626,500

Edgen Murray Corp. 12.25% 1/15/15

4,760,000

4,688,600

Energy Transfer Equity LP 7.5% 10/15/20

2,930,000

3,215,675

 

 

Principal Amount

Value

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

$ 2,812,000

$ 2,706,550

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

7,855,000

7,383,700

Ferrellgas LP/Ferrellgas Finance Corp. 6.5% 5/1/21

2,259,000

2,061,338

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

4,680,000

4,352,400

Frontier Oil Corp.:

6.875% 11/15/18

1,245,000

1,294,800

8.5% 9/15/16

2,700,000

2,835,000

Hornbeck Offshore Services, Inc.:

5.875% 4/1/20 (d)

1,400,000

1,393,000

8% 9/1/17

215,000

231,125

Inergy LP/Inergy Finance Corp.:

6.875% 8/1/21

1,415,000

1,415,000

7% 10/1/18

3,155,000

3,186,550

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

6,445,000

6,735,025

LINN Energy LLC/LINN Energy Finance Corp.:

6.5% 5/15/19 (d)

2,895,000

2,822,625

7.75% 2/1/21

2,390,000

2,515,475

8.625% 4/15/20

3,055,000

3,291,763

MRC Global, Inc. 9.5% 12/15/16

6,600,000

7,128,000

Newfield Exploration Co. 5.625% 7/1/24

1,470,000

1,503,075

Offshore Group Investment Ltd.:

11.5% 8/1/15

4,390,000

4,719,250

11.5% 8/1/15 (d)

2,770,000

2,998,525

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

3,995,000

4,154,800

Pan American Energy LLC 7.875% 5/7/21 (d)

5,360,000

4,529,200

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

4,340,000

4,318,300

PetroBakken Energy Ltd. 8.625% 2/1/20 (d)

2,015,000

1,994,850

Petrohawk Energy Corp. 7.25% 8/15/18

1,685,000

1,904,050

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

3,225,000

3,273,375

Plains Exploration & Production Co. 6.125% 6/15/19

3,190,000

3,190,000

Precision Drilling Corp.:

6.5% 12/15/21

290,000

295,800

6.625% 11/15/20

2,505,000

2,555,100

Quicksilver Resources, Inc. 7.125% 4/1/16

3,255,000

2,571,450

Samson Investment Co. 9.75% 2/15/20 (d)

5,105,000

5,066,713

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

6.375% 8/1/22 (d)

800,000

798,000

6.875% 2/1/21

900,000

936,000

Nonconvertible Bonds - continued

 

Principal Amount

Value

Energy - continued

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

7.875% 10/15/18

$ 2,660,000

$ 2,872,800

WPX Energy, Inc. 6% 1/15/22

1,625,000

1,616,875

 

135,160,526

Environmental - 0.5%

Covanta Holding Corp. 7.25% 12/1/20

6,440,000

6,977,180

Food & Drug Retail - 1.4%

Rite Aid Corp.:

9.25% 3/15/20 (d)

4,135,000

4,155,675

9.25% 3/15/20 (d)

3,165,000

3,180,825

9.5% 6/15/17

10,170,000

10,398,825

 

17,735,325

Food/Beverage/Tobacco - 0.8%

JBS USA LLC/JBS USA Finance, Inc. 8.25% 2/1/20 (d)

3,700,000

3,644,500

Post Holdings, Inc. 7.375% 2/15/22 (d)

2,730,000

2,866,500

US Foodservice, Inc. 8.5% 6/30/19 (d)

3,990,000

4,099,725

 

10,610,725

Gaming - 4.6%

Ameristar Casinos, Inc.:

7.5% 4/15/21

3,720,000

3,943,200

7.5% 4/15/21 (d)

2,415,000

2,559,900

Chukchansi Economic Development Authority 9.75% 5/30/20 (d)

1,378,000

1,102,400

CityCenter Holdings LLC/CityCenter Finance Corp.:

7.625% 1/15/16

4,240,000

4,452,000

7.625% 1/15/16 (d)

2,755,000

2,858,313

11.5% 1/15/17 pay-in-kind (f)

5,277,559

5,528,829

MGM Mirage, Inc.:

6.625% 7/15/15

8,205,000

8,410,125

6.75% 4/1/13

1,140,000

1,168,500

7.5% 6/1/16

2,600,000

2,691,000

7.625% 1/15/17

10,930,000

11,093,950

7.75% 3/15/22

2,720,000

2,767,600

8.625% 2/1/19 (d)

4,135,000

4,445,125

10% 11/1/16

3,185,000

3,487,575

11.375% 3/1/18

3,150,000

3,709,125

Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp. 7.75% 8/15/20

1,895,000

2,084,500

 

60,302,142

Healthcare - 5.2%

DJO Finance LLC/DJO Finance Corp.:

7.75% 4/15/18

1,350,000

1,113,750

 

 

Principal Amount

Value

10.875% 11/15/14

$ 4,365,000

$ 4,441,388

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

5,100,000

5,323,125

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

3,265,000

3,403,763

HCA, Inc.:

5.875% 3/15/22

670,000

699,313

6.5% 2/15/20

755,000

821,063

9.875% 2/15/17

1,032,000

1,119,720

HealthSouth Corp. 7.25% 10/1/18

4,470,000

4,704,675

IASIS Healthcare LLC/IASIS Capital Corp. 8.375% 5/15/19

8,105,000

7,983,425

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

2,595,000

2,698,800

Mylan, Inc.:

6% 11/15/18 (d)

2,000,000

2,095,000

7.625% 7/15/17 (d)

1,255,000

1,380,500

Omega Healthcare Investors, Inc. 6.75% 10/15/22

4,540,000

4,835,100

Radiation Therapy Services, Inc. 8.875% 1/15/17 (d)

1,190,000

1,142,400

Rural/Metro Corp. 10.125% 7/15/19 (d)

1,055,000

991,700

Sabra Health Care LP/Sabra Capital Corp. 8.125% 11/1/18

6,590,000

7,084,250

Senior Housing Properties Trust 6.75% 4/15/20

2,640,000

2,861,892

Valeant Pharmaceuticals International:

6.5% 7/15/16 (d)

6,275,000

6,526,000

6.75% 8/15/21 (d)

1,325,000

1,298,500

6.875% 12/1/18 (d)

4,655,000

4,817,925

7% 10/1/20 (d)

375,000

378,281

WP Rocket Merger Sub, Inc. 10.125% 7/15/19 (d)

2,345,000

2,274,650

 

67,995,220

Homebuilders/Real Estate - 2.8%

CB Richard Ellis Services, Inc. 6.625% 10/15/20

2,370,000

2,512,200

D.R. Horton, Inc. 4.75% 5/15/17

1,315,000

1,355,272

KB Home 7.25% 6/15/18

5,145,000

5,042,100

Lennar Corp.:

5.6% 5/31/15

545,000

569,525

6.95% 6/1/18

2,515,000

2,684,763

12.25% 6/1/17

1,600,000

2,040,000

Realogy Corp. 7.625% 1/15/20 (d)

3,475,000

3,605,313

Standard Pacific Corp.:

8.375% 5/15/18

11,850,000

12,946,096

8.375% 1/15/21

2,375,000

2,588,750

10.75% 9/15/16

2,405,000

2,837,900

 

36,181,919

Nonconvertible Bonds - continued

 

Principal Amount

Value

Hotels - 0.4%

Host Hotels & Resorts LP:

5.875% 6/15/19

$ 2,165,000

$ 2,338,200

9% 5/15/17

2,195,000

2,425,475

 

4,763,675

Leisure - 1.1%

Equinox Holdings, Inc. 9.5% 2/1/16 (d)

3,570,000

3,784,200

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

3,920,000

4,370,800

Royal Caribbean Cruises Ltd.:

7.25% 3/15/18

1,815,000

1,969,275

yankee 7.25% 6/15/16

2,445,000

2,652,825

Universal City Development Partners Ltd./UCDP Finance, Inc. 8.875% 11/15/15

809,000

866,860

 

13,643,960

Metals/Mining - 1.4%

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

1,790,000

1,834,750

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

2,080,000

2,147,600

FMG Resources (August 2006) Pty Ltd.:

6.375% 2/1/16 (d)

3,145,000

3,176,450

7% 11/1/15 (d)

8,120,000

8,302,700

Vedanta Resources PLC 6.75% 6/7/16 (d)

2,560,000

2,409,472

 

17,870,972

Paper - 0.1%

Sappi Papier Holding GmbH:

7.75% 7/15/17 (d)(e)

735,000

744,188

8.375% 6/15/19 (d)(e)

995,000

999,975

 

1,744,163

Restaurants - 0.3%

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

4,035,000

4,468,763

Services - 2.7%

ARAMARK Corp.:

3.9659% 2/1/15 (f)

7,820,000

7,761,350

8.5% 2/1/15

4,830,000

4,950,750

ARAMARK Holdings Corp. 8.625% 5/1/16 pay-in-kind (d)(f)

5,580,000

5,726,196

Audatex North America, Inc. 6.75% 6/15/18 (d)

425,000

448,375

FTI Consulting, Inc. 6.75% 10/1/20

3,100,000

3,274,530

Hertz Corp.:

6.75% 4/15/19

2,660,000

2,766,400

6.75% 4/15/19 (d)

2,850,000

2,949,750

7.5% 10/15/18

7,205,000

7,691,338

 

35,568,689

 

 

Principal Amount

Value

Shipping - 1.1%

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

$ 1,725,000

$ 1,759,500

Overseas Shipholding Group, Inc.:

7.5% 2/15/24

475,000

268,375

8.125% 3/30/18

2,895,000

2,026,500

Ship Finance International Ltd. 8.5% 12/15/13

10,800,000

10,692,000

 

14,746,375

Steel - 1.4%

Essar Steel Algoma, Inc. 9.375% 3/15/15 (d)

5,215,000

5,032,475

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

3,970,000

3,940,225

Severstal Columbus LLC 10.25% 2/15/18

5,610,000

5,610,000

Steel Dynamics, Inc. 7.625% 3/15/20

3,335,000

3,568,450

 

18,151,150

Super Retail - 1.8%

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

3,975,000

4,104,188

PETCO Animal Supplies, Inc. 9.25% 12/1/18 (d)

7,585,000

8,286,613

Sonic Automotive, Inc. 7% 7/15/22 (d)

945,000

972,216

Toys 'R' Us Property Co. II LLC 8.5% 12/1/17

6,795,000

7,100,775

Toys 'R' Us, Inc. 7.375% 9/1/16 (d)

2,740,000

2,698,900

 

23,162,692

Technology - 3.8%

Amkor Technology, Inc. 7.375% 5/1/18

4,830,000

5,047,350

Avaya, Inc.:

9.75% 11/1/15

5,735,000

4,631,013

10.125% 11/1/15 pay-in-kind (f)

5,905,000

4,783,050

CDW LLC/CDW Finance Corp. 8.5% 4/1/19

4,650,000

4,929,000

Lucent Technologies, Inc.:

6.45% 3/15/29

6,625,000

4,505,000

6.5% 1/15/28

4,915,000

3,317,625

Sanmina-SCI Corp. 7% 5/15/19 (d)

6,455,000

6,293,625

Spansion LLC 7.875% 11/15/17

5,850,000

5,674,500

SunGard Data Systems, Inc.:

7.375% 11/15/18

595,000

636,650

10.25% 8/15/15

3,080,000

3,187,800

Viasystems, Inc. 7.875% 5/1/19 (d)

5,880,000

5,850,600

 

48,856,213

Nonconvertible Bonds - continued

 

Principal Amount

Value

Telecommunications - 6.6%

Digicel Group Ltd.:

7% 2/15/20 (d)

$ 295,000

$ 283,938

8.25% 9/1/17 (d)

5,395,000

5,529,875

8.875% 1/15/15 (d)

7,580,000

7,655,800

9.125% 1/15/15 pay-in-kind (d)(f)

4,447,000

4,491,470

Intelsat Jackson Holdings SA 7.25% 10/15/20 (d)

2,900,000

3,045,000

Intelsat Ltd. 11.25% 6/15/16

1,118,000

1,171,105

Intelsat Luxembourg SA:

11.25% 2/4/17

8,780,000

9,087,300

11.5% 2/4/17 pay-in-kind (d)(f)

2,730,000

2,818,725

11.5% 2/4/17 pay-in-kind (f)

12,031,864

12,422,900

Nextel Communications, Inc.:

5.95% 3/15/14

4,940,000

4,946,175

7.375% 8/1/15

5,195,000

5,201,494

NII Capital Corp. 7.625% 4/1/21

2,385,000

2,033,213

Sprint Nextel Corp.:

6% 12/1/16

10,710,000

10,254,825

9% 11/15/18 (d)

1,505,000

1,681,838

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

4,145,000

4,217,538

U.S. West Communications 7.5% 6/15/23

9,460,000

9,483,650

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

1,149,105

723,010

 

85,047,856

Textiles & Apparel - 0.3%

Hanesbrands, Inc. 6.375% 12/15/20

1,535,000

1,619,425

Levi Strauss & Co. 6.875% 5/1/22 (d)

2,590,000

2,648,275

 

4,267,700

TOTAL NONCONVERTIBLE BONDS

(Cost $1,051,651,456)


1,092,486,190

Commercial Mortgage Securities - 0.0%

 

LB Multi-family Mortgage Trust Series 1991-4 Class A1, 7.1104% 4/25/21 (f)
(Cost $0)

25,932


18,153

Common Stocks - 0.1%

Shares

 

Telecommunications - 0.1%

CUI Acquisition Corp. Class E (d)

1

873,375

 

Shares

Value

Textiles & Apparel - 0.0%

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

48,889

$ 341,734

TOTAL COMMON STOCKS

(Cost $3,248,508)


1,215,109

Convertible Preferred Stocks - 0.3%

 

 

 

 

Automotive - 0.3%

General Motors Co. 4.75%
(Cost $5,336,226)

111,200


3,691,840

Floating Rate Loans - 7.6%

 

Principal Amount

 

Air Transportation - 1.0%

Delta Air Lines, Inc. Tranche B, term loan 5.5% 4/20/17 (f)

$ 7,271,550

7,280,639

US Airways Group, Inc. term loan 2.7453% 3/23/14 (f)

5,541,187

5,264,128

 

12,544,767

Automotive - 1.1%

Chrysler Group LLC Tranche B, term loan 6% 5/24/17 (f)

8,761,351

8,827,061

Federal-Mogul Corp.:

Tranche B, term loan 2.1776% 12/27/14 (f)

3,589,525

3,410,049

Tranche C, term loan 2.1776% 12/27/15 (f)

2,415,458

2,294,685

 

14,531,795

Broadcasting - 0.5%

Univision Communications, Inc. term loan 4.4953% 3/31/17 (f)

6,722,026

6,318,704

Cable TV - 0.3%

Harron Communications LP Tranche B, term loan 5.5% 10/6/17 (f)

2,720,638

2,720,638

UPC Broadband Holding BV Tranche AB, term loan 4.75% 12/31/17 (f)

1,640,000

1,607,200

 

4,327,838

Capital Goods - 0.3%

Colfax Corp. Tranche B, term loan 4.5% 9/12/18 (f)

3,427,775

3,419,206

Chemicals - 0.3%

Ascend Performance Materials Operation LLC Tranche B, term loan 6.75% 4/10/18 (f)

3,157,088

3,062,375

Kronos Worldwide, Inc. term loan 5.75% 6/13/18 (f)

1,340,000

1,336,650

 

4,399,025

Consumer Products - 0.2%

Visant Corp. Tranche B, term loan 5.25% 12/22/16 (f)

2,849,186

2,763,711

Floating Rate Loans - continued

 

Principal Amount

Value

Containers - 0.3%

Anchor Glass Container Corp.:

Tranche 1LN, term loan 6% 3/2/16 (f)

$ 1,523,734

$ 1,523,734

Tranche 2LN, term loan 10% 9/2/16 (f)

2,070,000

2,070,000

 

3,593,734

Diversified Financial Services - 0.2%

Flying Fortress, Inc. Tranche 3, term loan 5% 6/30/17 (f)

2,310,000

2,318,778

Electric Utilities - 0.0%

The AES Corp. Tranche B, term loan 4.25% 5/27/18 (f)

661,625

661,625

Energy - 0.4%

Chesapeake Energy Corp. term loan 8.5% 12/2/17 (f)

1,450,000

1,433,688

Crestwood Holdings Partners LLC Tranche B, term loan 9.75% 3/26/18 (f)

1,810,000

1,819,050

Energy Transfer Equity LP Tranche B, term loan 3.75% 3/23/17 (f)

2,660,000

2,606,800

 

5,859,538

Food & Drug Retail - 0.2%

SUPERVALU, Inc. Tranche B 3LN, term loan 4.5% 4/29/18 (f)

2,058,938

2,026,345

Healthcare - 0.8%

Emergency Medical Services Corp. Tranche B, term loan 5.25% 5/25/18 (f)

2,893,778

2,868,458

HCA, Inc. Tranche B2, term loan 3.7106% 3/31/17 (f)

3,135,000

3,052,863

Quintiles Transnational Corp. Tranche B, term loan 5% 6/8/18 (f)

3,977,976

3,928,252

 

9,849,573

Insurance - 0.8%

Asurion Corp.:

Tranche 1st LN, term loan 5.5% 5/24/18 (f)

2,735,227

2,725,107

Tranche 2nd LN, term loan 9% 5/24/19 (f)

5,360,000

5,467,200

Lonestar Inter Super Hld LLC term loan 11% 9/2/19 (f)

2,760,000

2,884,200

 

11,076,507

Metals/Mining - 0.1%

Arch Coal, Inc. Tranche B, term loan 5.75% 5/16/18 (f)

965,000

945,700

Publishing/Printing - 0.1%

Newsday LLC term loan 10.5% 8/1/13

925,000

938,875

Restaurants - 0.2%

Landry's Restaurants, Inc. Tranche B, term loan 6.5% 4/24/18 (f)

2,718,188

2,718,188

 

 

Principal Amount

Value

Services - 0.2%

U.S. Foodservice term loan 5.75% 3/31/17 (f)

$ 2,791,800

$ 2,666,169

Steel - 0.2%

JMC Steel Group, Inc. term loan 4.75% 4/1/17 (f)

3,033,613

3,026,029

Super Retail - 0.3%

Neiman Marcus Group, Inc. Tranche B, term loan 4.75% 5/16/18 (f)

3,335,000

3,301,650

PETCO Animal Supplies, Inc. term loan 4.5% 11/24/17 (f)

480,200

476,599

 

3,778,249

Telecommunications - 0.1%

Intelsat Jackson Holdings SA term loan 3.2408% 2/1/14 (f)

830,000

805,100

TOTAL FLOATING RATE LOANS

(Cost $96,960,248)


98,569,456

Money Market Funds - 6.0%

Shares

 

Fidelity Cash Central Fund, 0.17% (b)
(Cost $78,021,675)

78,021,675


78,021,675

TOTAL INVESTMENT PORTFOLIO - 98.1%

(Cost $1,235,218,113)

1,274,002,423

NET OTHER ASSETS (LIABILITIES) - 1.9%

24,517,815

NET ASSETS - 100%

$ 1,298,520,238

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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 $376,463,904 or 29.0% of net assets.

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

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

(g) 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 $341,734 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

$ 46,168

Other Information

The following is a summary of the inputs used, as of June 30, 2012, 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 Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 4,033,574

$ 3,691,840

$ -

$ 341,734

Telecommunication Services

873,375

-

-

873,375

Corporate Bonds

1,092,486,190

-

1,092,486,190

-

Commercial Mortgage Securities

18,153

-

-

18,153

Floating Rate Loans

98,569,456

-

98,569,456

-

Money Market Funds

78,021,675

78,021,675

-

-

Total Investments in Securities:

$ 1,274,002,423

$ 81,713,515

$ 1,191,055,646

$ 1,233,262

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

United States of America

87.1%

Bermuda

2.9%

Canada

2.4%

Luxembourg

2.4%

Cayman Islands

1.2%

Australia

1.0%

Others (Individually Less Than 1%)

3.0%

 

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, 2012 (Unaudited)

 

 

 

Assets

Investment in securities, at value - See accompanying schedule:

Unaffiliated issuers (cost $1,157,196,438)

$ 1,195,980,748

 

Fidelity Central Funds (cost $78,021,675)

78,021,675

 

Total Investments (cost $1,235,218,113)

 

$ 1,274,002,423

Cash

 

126,402

Receivable for investments sold

7,520,700

Receivable for fund shares sold

1,224,221

Interest receivable

21,001,010

Distributions receivable from Fidelity Central Funds

6,073

Total assets

1,303,880,829

 

 

 

Liabilities

Payable for investments purchased
Regular delivery

$ 2,276,590

Delayed delivery

1,730,000

Payable for fund shares redeemed

500,425

Accrued management fee

611,932

Distribution and service plan fees payable

51,977

Other affiliated payables

145,474

Other payables and accrued expenses

44,193

Total liabilities

5,360,591

 

 

 

Net Assets

$ 1,298,520,238

Net Assets consist of:

 

Paid in capital

$ 1,324,501,256

Undistributed net investment income

48,800,111

Accumulated undistributed net realized gain (loss) on investments

(113,565,439)

Net unrealized appreciation (depreciation) on investments

38,784,310

Net Assets

$ 1,298,520,238

Statement of Assets and Liabilities - continued

 

June 30, 2012 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($580,134,083 ÷ 100,556,569 shares)

$ 5.77

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($77,482,244 ÷ 13,506,900 shares)

$ 5.74

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($201,590,760 ÷ 35,854,899 shares)

$ 5.62

 

 

 

Initial Class R:
Net Asset Value, offering price and redemption price per share ($32,203,203 ÷ 5,601,531 shares)

$ 5.75

 

 

 

Service Class R:
Net Asset Value, offering price and redemption price per share ($38,215,857 ÷ 6,693,688 shares)

$ 5.71

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($1,813,910 ÷ 322,498 shares)

$ 5.62

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($367,080,181 ÷ 63,834,407 shares)

$ 5.75

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, 2012 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 316,467

Interest

 

47,667,358

Income from Fidelity Central Funds

 

46,168

Total income

 

48,029,993

 

 

 

Expenses

Management fee

$ 3,739,200

Transfer agent fees

538,900

Distribution and service plan fees

361,161

Accounting fees and expenses

227,525

Custodian fees and expenses

12,005

Independent trustees' compensation

4,330

Audit

38,344

Legal

11,752

Interest

153

Miscellaneous

6,997

Total expenses before reductions

4,940,367

Expense reductions

(273)

4,940,094

Net investment income (loss)

43,089,899

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

5,621,562

Change in net unrealized appreciation (depreciation) on investment securities

38,609,156

Net gain (loss)

44,230,718

Net increase (decrease) in net assets resulting from operations

$ 87,320,617

Statement of Changes in Net Assets

 

Six months ended June 30, 2012
(Unaudited)

Year ended
December 31, 2011

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 43,089,899

$ 82,841,870

Net realized gain (loss)

5,621,562

30,894,343

Change in net unrealized appreciation (depreciation)

38,609,156

(67,492,572)

Net increase (decrease) in net assets resulting from operations

87,320,617

46,243,641

Distributions to shareholders from net investment income

(713,358)

(84,003,585)

Share transactions - net increase (decrease)

(42,452,271)

65,821,196

Redemption fees

42,274

88,182

Total increase (decrease) in net assets

44,197,262

28,149,434

 

 

 

Net Assets

Beginning of period

1,254,322,976

1,226,173,542

End of period (including undistributed net investment income of $48,800,111 and undistributed net investment income of $6,423,570, respectively)

$ 1,298,520,238

$ 1,254,322,976

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.39

$ 5.57

$ 5.29

$ 3.96

$ 5.98

$ 6.35

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .186

.391

.439

.438

.475

.485

Net realized and unrealized gain (loss)

  .197

(.171)

.288

1.298

(1.990)

(.311)

Total from investment operations

  .383

.220

.727

1.736

(1.515)

.174

Distributions from net investment income

  (.003)

(.400)

(.448)

(.406)

(.506)

(.545)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.77

$ 5.39

$ 5.57

$ 5.29

$ 3.96

$ 5.98

Total Return B,C,D

  7.11%

4.03%

13.82%

43.96%

(24.98)%

2.79%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .69% A

.69%

.69%

.70%

.71%

.68%

Expenses net of fee waivers, if any

  .69% A

.69%

.69%

.70%

.71%

.68%

Expenses net of all reductions

  .69% A

.69%

.69%

.70%

.70%

.68%

Net investment income (loss)

  6.61% A

6.85%

7.84%

9.02%

8.48%

7.47%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 580,134

$ 561,514

$ 594,688

$ 608,802

$ 451,824

$ 726,409

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.36

$ 5.54

$ 5.26

$ 3.95

$ 5.95

$ 6.32

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .182

.384

.431

.429

.469

.477

Net realized and unrealized gain (loss)

  .201

(.171)

.290

1.281

(1.971)

(.312)

Total from investment operations

  .383

.213

.721

1.710

(1.502)

.165

Distributions from net investment income

  (.003)

(.393)

(.442)

(.400)

(.499)

(.536)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.74

$ 5.36

$ 5.54

$ 5.26

$ 3.95

$ 5.95

Total Return B,C,D

  7.15%

3.93%

13.79%

43.41%

(24.87)%

2.66%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .78% A

.79%

.79%

.80%

.80%

.78%

Expenses net of fee waivers, if any

  .78% A

.79%

.78%

.80%

.80%

.78%

Expenses net of all reductions

  .78% A

.79%

.78%

.80%

.80%

.78%

Net investment income (loss)

  6.52% A

6.75%

7.74%

8.92%

8.39%

7.37%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 77,482

$ 91,573

$ 98,988

$ 103,511

$ 95,461

$ 180,837

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.26

$ 5.45

$ 5.18

$ 3.89

$ 5.88

$ 6.25

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .174

.368

.417

.422

.450

.461

Net realized and unrealized gain (loss)

  .189

(.170)

.287

1.264

(1.949)

(.305)

Total from investment operations

  .363

.198

.704

1.686

(1.499)

.156

Distributions from net investment income

  (.003)

(.388)

(.435)

(.396)

(.492)

(.527)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.62

$ 5.26

$ 5.45

$ 5.18

$ 3.89

$ 5.88

Total Return B,C,D

  6.90%

3.72%

13.67%

43.46%

(25.14)%

2.54%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .94% A

.94%

.94%

.95%

.96%

.93%

Expenses net of fee waivers, if any

  .94% A

.94%

.94%

.95%

.96%

.93%

Expenses net of all reductions

  .94% A

.94%

.94%

.95%

.96%

.93%

Net investment income (loss)

  6.36% A

6.60%

7.59%

8.77%

8.23%

7.22%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 201,591

$ 220,333

$ 182,465

$ 181,377

$ 87,077

$ 97,266

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.37

$ 5.55

$ 5.27

$ 3.95

$ 5.96

$ 6.34

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .185

.391

.439

.440

.471

.479

Net realized and unrealized gain (loss)

  .198

(.171)

.288

1.286

(1.975)

(.313)

Total from investment operations

  .383

.220

.727

1.726

(1.504)

.166

Distributions from net investment income

  (.003)

(.400)

(.448)

(.406)

(.507)

(.547)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.75

$ 5.37

$ 5.55

$ 5.27

$ 3.95

$ 5.96

Total Return B,C,D

  7.13%

4.05%

13.88%

43.82%

(24.88)%

2.65%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .68% A

.68%

.69%

.70%

.70%

.68%

Expenses net of fee waivers, if any

  .68% A

.68%

.68%

.70%

.70%

.68%

Expenses net of all reductions

  .68% A

.68%

.68%

.69%

.70%

.67%

Net investment income (loss)

  6.61% A

6.85%

7.84%

9.02%

8.49%

7.47%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 32,203

$ 31,627

$ 34,946

$ 34,080

$ 19,801

$ 19,401

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.34

$ 5.52

$ 5.25

$ 3.94

$ 5.93

$ 6.32

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .182

.383

.433

.431

.467

.471

Net realized and unrealized gain (loss)

  .191

(.167)

.280

1.280

(1.959)

(.318)

Total from investment operations

  .373

.216

.713

1.711

(1.492)

.153

Distributions from net investment income

  (.003)

(.396)

(.444)

(.401)

(.499)

(.544)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.71

$ 5.34

$ 5.52

$ 5.25

$ 3.94

$ 5.93

Total Return B,C,D

  6.99%

3.99%

13.66%

43.56%

(24.79)%

2.45%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .78% A

.78%

.79%

.80%

.80%

.78%

Expenses net of fee waivers, if any

  .78% A

.78%

.78%

.80%

.80%

.78%

Expenses net of all reductions

  .78% A

.78%

.78%

.80%

.80%

.77%

Net investment income (loss)

  6.52% A

6.75%

7.74%

8.92%

8.39%

7.37%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 38,216

$ 63,557

$ 68,806

$ 47,873

$ 26,572

$ 33,129

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.26

$ 5.45

$ 5.17

$ 3.89

$ 5.87

$ 6.25

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .174

.369

.415

.416

.451

.453

Net realized and unrealized gain (loss)

  .189

(.175)

.293

1.257

(1.940)

(.294)

Total from investment operations

  .363

.194

.708

1.673

(1.489)

.159

Distributions from net investment income

  (.003)

(.384)

(.429)

(.393)

(.492)

(.540)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.62

$ 5.26

$ 5.45

$ 5.17

$ 3.89

$ 5.87

Total Return B,C,D

  6.90%

3.64%

13.79%

43.13%

(24.99)%

2.59%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .94% A

.93%

.94%

.95%

.95%

.93%

Expenses net of fee waivers, if any

  .94% A

.93%

.93%

.95%

.95%

.93%

Expenses net of all reductions

  .94% A

.93%

.93%

.94%

.95%

.92%

Net investment income (loss)

  6.36% A

6.60%

7.59%

8.77%

8.24%

7.23%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 1,814

$ 1,350

$ 1,543

$ 2,016

$ 1,487

$ 2,347

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 5.37

$ 5.56

$ 5.27

$ 3.96

$ 5.96

$ 6.34

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .184

.388

.437

.441

.473

.477

Net realized and unrealized gain (loss)

  .199

(.180)

.298

1.274

(1.971)

(.317)

Total from investment operations

  .383

.208

.735

1.715

(1.498)

.160

Distributions from net investment income

  (.003)

(.398)

(.446)

(.405)

(.503)

(.541)

Redemption fees added to paid in capital E

  - I

- I

.001

- I

.001

.001

Net asset value, end of period

$ 5.75

$ 5.37

$ 5.56

$ 5.27

$ 3.96

$ 5.96

Total Return B,C,D

  7.13%

3.82%

14.04%

43.43%

(24.76)%

2.56%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .72% A

.72%

.73%

.73%

.74%

.75%

Expenses net of fee waivers, if any

  .72% A

.72%

.72%

.73%

.74%

.75%

Expenses net of all reductions

  .72% A

.72%

.72%

.73%

.74%

.75%

Net investment income (loss)

  6.58% A

6.82%

7.81%

8.99%

8.45%

7.40%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 367,080

$ 284,370

$ 244,738

$ 182,806

$ 90,312

$ 105,920

Portfolio turnover rate G

  51% A

79%

81%

70%

58%

70%

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, 2012 (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, and 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. Investment income, realized and unrealized capital gains and losses, the common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class.

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Security 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 vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities 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 security type and may include market or security 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 and floating rate loans, 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 and are generally categorized as Level 2 in the hierarchy. 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 and, accordingly, such securities are generally categorized as Level 2 in the hierarchy. 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. These 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.

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

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. Utilizing these techniques may result in transfers between Level 1 and Level 2. For restricted securities and private placements where observable inputs are limited, assumptions about market activity and risk are used and these securities are 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 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, 2012 for the Fund's investments, is included at the end of 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 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.

Expenses. 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, equity-debt classifications, 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

$ 61,835,024

Gross unrealized depreciation

(16,007,787)

Net unrealized appreciation (depreciation) on securities and other investments

$ 45,827,237

 

 

Tax cost

$ 1,228,175,186

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. At December 31, 2011, capital loss carryforwards were as follows:

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Fiscal year of expiration

 

2016

$ (39,467,710)

2017

(79,447,269)

Total capital loss carryforward

$ (118,914,979)

Trading (Redemption) Fees. Initial Class R shares, Service Class R shares and Service Class 2 R shares held by investors less than 60 days are 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.

4. Operating Policies.

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.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $315,370,188 and $319,470,044, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .45% of the Fund's average net assets and an annualized group fee rate that averaged .12% 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 .57% 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

$ 42,338

Service Class 2

285,832

Service Class R

31,148

Service Class 2 R

1,843

 

$ 361,161

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class (with the exception of Investor Class) pays a transfer agent fee, excluding out of pocket expenses, equal to an annual rate of .07% of average net assets. Investor Class pays a monthly asset-based transfer agent fee of .10% of average net assets. In addition, FIIOC receives an asset-based fee of .0038% 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

$ 218,112

Service Class

30,564

Service Class 2

82,835

Initial Class R

11,582

Service Class R

21,812

Service Class 2R

518

Investor Class

173,477

 

$ 538,900

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

$ 6,556,000

.42%

$ 153

7. 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 $1,893 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. 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 $273.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2012

Year ended
December 31,
2011

From net investment income

 

 

Initial Class

$ 311,601

$ 38,834,457

Service Class

51,381

5,348,721

Service Class 2

127,438

14,701,408

Initial Class R

17,999

2,203,822

Service Class R

35,933

4,443,415

Service Class 2R

753

92,376

Investor Class

168,253

18,379,386

Total

$ 713,358

$ 84,003,585

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended June 30,
2012

Year ended
December 31,
2011

Six months ended June 30,
2012

Year ended
December 31,
2011

Initial Class

 

 

 

 

Shares sold

6,729,348

14,954,963

$ 38,008,922

$ 85,548,272

Reinvestment of distributions

55,743

7,279,400

311,601

38,834,457

Shares redeemed

(10,390,858)

(24,811,221)

(58,723,626)

(141,718,667)

Net increase (decrease)

(3,605,767)

(2,576,858)

$ (20,403,103)

$ (17,335,938)

Service Class

 

 

 

 

Shares sold

1,103,599

4,391,885

$ 6,139,214

$ 23,974,978

Reinvestment of distributions

9,241

1,008,126

51,381

5,348,721

Shares redeemed

(4,681,926)

(6,182,000)

(26,388,477)

(35,059,439)

Net increase (decrease)

(3,569,086)

(781,989)

$ (20,197,882)

$ (5,735,740)

Service Class 2

 

 

 

 

Shares sold

7,730,084

35,272,315

$ 42,652,629

$ 197,650,737

Reinvestment of distributions

23,340

2,824,984

127,438

14,701,408

Shares redeemed

(13,786,164)

(29,704,714)

(75,952,033)

(165,911,073)

Net increase (decrease)

(6,032,740)

8,392,585

$ (33,171,966)

$ 46,441,072

Initial Class R

 

 

 

 

Shares sold

1,124,028

2,974,865

$ 6,357,182

$ 17,006,544

Reinvestment of distributions

3,231

414,639

17,999

2,203,822

Shares redeemed

(1,413,356)

(3,795,258)

(7,958,959)

(21,688,955)

Net increase (decrease)

(286,097)

(405,754)

$ (1,583,778)

$ (2,478,589)

Service Class R

 

 

 

 

Shares sold

1,338,183

8,003,006

$ 7,516,332

$ 45,643,141

Reinvestment of distributions

6,486

840,752

35,933

4,443,415

Shares redeemed

(6,559,305)

(9,397,413)

(36,538,504)

(53,628,031)

Net increase (decrease)

(5,214,636)

(553,655)

$ (28,986,239)

$ (3,541,475)

Service Class 2R

 

 

 

 

Shares sold

144,235

77,098

$ 805,255

$ 432,475

Reinvestment of distributions

138

17,746

753

92,376

Shares redeemed

(78,416)

(121,577)

(432,764)

(682,497)

Net increase (decrease)

65,957

(26,733)

$ 373,244

$ (157,646)

Investor Class

 

 

 

 

Shares sold

16,931,787

35,223,887

$ 95,479,603

$ 199,792,708

Reinvestment of distributions

30,153

3,458,337

168,253

18,379,386

Shares redeemed

(6,042,930)

(29,823,638)

(34,130,403)

(169,542,582)

Net increase (decrease)

10,919,010

8,858,586

$ 61,517,453

$ 48,629,512

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 38% 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

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-0812
1.833449.106

Fidelity® Variable Insurance Products:
Overseas Portfolio

Semiannual Report

June 30, 2012

(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. © 2012 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, 2012 to June 30, 2012).

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

Beginning
Account Value
January 1, 2012

Ending
Account Value
June 30, 2012

Expenses Paid
During Period*
January 1, 2012
to June 30, 2012

Initial Class

.85%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.80

$ 4.37

HypotheticalA

 

$ 1,000.00

$ 1,020.64

$ 4.27

Service Class

.95%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.30

$ 4.88

HypotheticalA

 

$ 1,000.00

$ 1,020.14

$ 4.77

Service Class 2

1.09%

 

 

 

Actual

 

$ 1,000.00

$ 1,065.10

$ 5.60

HypotheticalA

 

$ 1,000.00

$ 1,019.44

$ 5.47

Initial Class R

.85%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.90

$ 4.37

HypotheticalA

 

$ 1,000.00

$ 1,020.64

$ 4.27

Service Class R

.94%

 

 

 

Actual

 

$ 1,000.00

$ 1,065.60

$ 4.83

HypotheticalA

 

$ 1,000.00

$ 1,020.19

$ 4.72

Service Class 2R

1.09%

 

 

 

Actual

 

$ 1,000.00

$ 1,064.90

$ 5.60

HypotheticalA

 

$ 1,000.00

$ 1,019.44

$ 5.47

Investor Class R

.93%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.20

$ 4.78

HypotheticalA

 

$ 1,000.00

$ 1,020.24

$ 4.67

A 5% return per year before expenses

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

Semiannual Report

Investment Changes (Unaudited)

Geographic Diversification (% of fund's net assets)

As of June 30, 2012

vpo139

United Kingdom

21.4%

 

vpo141

Japan

15.9%

 

vpo143

France

12.2%

 

vpo145

Switzerland

8.7%

 

vpo147

Germany

8.4%

 

vpo149

United States of America

7.4%

 

vpo151

Cayman Islands

4.4%

 

vpo153

Denmark

2.9%

 

vpo155

Ireland

2.7%

 

vpo157

Other

16.0%

 

vpo159

Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.

As of December 31, 2011

vpo139

United Kingdom

18.8%

 

vpo141

Japan

16.7%

 

vpo143

France

12.3%

 

vpo145

Germany

10.8%

 

vpo147

Switzerland

7.9%

 

vpo149

Ireland

4.2%

 

vpo151

United States of America

4.0%

 

vpo153

Cayman Islands

4.0%

 

vpo155

Denmark

3.0%

 

vpo157

Other

18.3%

 

vpo171

Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.

Asset Allocation

 

% of fund's
net assets

% of fund's net assets
6 months ago

Stocks

97.6

98.3

Short-Term Investments and Net Other Assets (Liabilities)

2.4

1.7

Top Ten Stocks as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Novo Nordisk A/S Series B (Denmark, Pharmaceuticals)

2.8

2.3

Sanofi SA (France, Pharmaceuticals)

2.5

2.1

Rakuten, Inc. (Japan, Internet & Catalog Retail)

2.4

2.2

Nestle SA (Switzerland, Food Products)

2.3

0.0

Diageo PLC (United Kingdom, Beverages)

1.8

1.3

Softbank Corp. (Japan, Wireless Telecommunication Services)

1.8

0.9

Imperial Tobacco Group PLC (United Kingdom, Tobacco)

1.7

1.7

LVMH Moet Hennessy - Louis Vuitton SA (France, Textiles, Apparel & Luxury Goods)

1.7

1.6

Paddy Power PLC (Ireland) (Ireland, Hotels, Restaurants & Leisure)

1.7

1.5

HSBC Holdings PLC (United Kingdom, Commercial Banks)

1.7

1.7

 

20.4

Market Sectors as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Consumer Discretionary

20.3

23.4

Financials

15.5

16.0

Consumer Staples

15.1

9.0

Information Technology

10.9

9.4

Materials

9.8

12.2

Health Care

7.6

6.6

Energy

7.1

8.0

Industrials

6.4

7.0

Telecommunication Services

4.3

5.1

Utilities

0.6

1.6

Semiannual Report

Investments June 30, 2012 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 95.9%

Shares

Value

Australia - 2.4%

Aristocrat Leisure Ltd.

1,050,218

$ 2,994,092

BHP Billiton Ltd.

318,002

10,358,067

Fortescue Metals Group Ltd.

258,379

1,320,222

Macquarie Group Ltd.

105,682

2,853,825

Newcrest Mining Ltd.

304,955

7,096,639

Rio Tinto Ltd.

24,301

1,426,637

Westfield Group unit

811,159

7,942,374

TOTAL AUSTRALIA

33,991,856

Bailiwick of Jersey - 1.0%

Informa PLC

903,074

5,375,942

Wolseley PLC

43,800

1,630,559

WPP PLC

583,107

7,078,772

TOTAL BAILIWICK OF JERSEY

14,085,273

Belgium - 0.4%

Ageas

743,600

1,468,000

Anheuser-Busch InBev SA NV

33,577

2,647,253

Hamon & Compagnie International SA

73,974

1,465,061

TOTAL BELGIUM

5,580,314

Bermuda - 0.9%

Clear Media Ltd.

2,035,000

1,053,539

Oriental Watch Holdings Ltd.

10,492,000

2,813,795

Petra Diamonds Ltd. (a)

809,300

1,529,855

Signet Jewelers Ltd.

161,500

7,107,615

TOTAL BERMUDA

12,504,804

Brazil - 0.4%

Drogasil SA

66,000

665,422

Souza Cruz SA

351,900

5,165,055

TOTAL BRAZIL

5,830,477

British Virgin Islands - 0.7%

Gem Diamonds Ltd. (a)

796,100

2,443,752

Mail.ru Group Ltd.:

GDR (a)(e)

6,600

223,674

GDR (Reg. S) (a)

235,300

7,974,317

TOTAL BRITISH VIRGIN ISLANDS

10,641,743

Canada - 1.0%

Barrick Gold Corp.

90,000

3,390,138

Potash Corp. of Saskatchewan, Inc.

167,900

7,338,719

Yamana Gold, Inc.

196,700

3,035,220

TOTAL CANADA

13,764,077

Cayman Islands - 4.4%

Baidu.com, Inc. sponsored ADR (a)

114,300

13,142,214

Biostime International Holdings Ltd.

1,325,000

3,473,297

Hengdeli Holdings Ltd.

47,490,000

15,171,842

Natural Beauty Bio-Technology Ltd.

8,580,000

1,377,230

Noah Holdings Ltd. sponsored ADR (d)

348,200

1,713,144

 

Shares

Value

Perfect World Co. Ltd. sponsored ADR Class B

237,700

$ 2,381,754

Renren, Inc. ADR (a)(d)

25,900

116,809

Shenguan Holdings Group Ltd.

5,328,000

3,075,042

SINA Corp. (a)(d)

18,800

974,028

Tencent Holdings Ltd.

624,400

18,439,335

YouKu.com, Inc. ADR (a)(d)

96,000

2,081,280

TOTAL CAYMAN ISLANDS

61,945,975

Denmark - 2.9%

Danske Bank A/S (a)

96,100

1,331,519

Novo Nordisk A/S:

Series B

51,925

7,531,039

Series B sponsored ADR

222,000

32,265,480

TOTAL DENMARK

41,128,038

France - 12.2%

Alstom SA (d)

287,302

9,064,066

Atos Origin SA

72,705

4,335,425

AXA SA

67,020

888,849

AXA SA sponsored ADR

158,600

2,114,138

Beneteau SA

196,900

1,893,745

BNP Paribas SA

142,299

5,462,708

Club Mediterranee SA (a)

85,000

1,452,161

Danone SA

305,612

18,956,649

Gameloft (a)

537,900

3,335,491

GDF Suez

185,600

4,405,114

Iliad SA

28,200

4,077,251

Ingenico SA

106,367

5,158,157

Ipsos SA (d)

149,292

4,385,043

Lafarge SA (Bearer) (d)

85,200

3,790,433

LVMH Moet Hennessy - Louis Vuitton SA

159,541

24,197,611

Pernod Ricard SA (d)

163,500

17,434,173

Safran SA

118,400

4,375,188

Sanofi SA

139,290

10,544,373

Sanofi SA sponsored ADR

620,600

23,446,268

Societe Generale Series A

45,643

1,063,384

Total SA

307,200

13,826,747

Total SA sponsored ADR

31,400

1,411,430

Unibail-Rodamco

32,400

5,949,419

TOTAL FRANCE

171,567,823

Germany - 6.7%

adidas AG

102,600

7,330,783

Allianz AG

77,600

7,768,824

Bayer AG

131,478

9,447,364

Beiersdorf AG

214,700

13,897,601

Commerzbank AG (a)

555,200

938,681

Deutsche Bank AG

77,046

2,780,841

Deutsche Boerse AG

180,720

9,726,660

Deutsche Post AG

273,501

4,824,850

GSW Immobilien AG

59,000

2,014,448

K&S AG

37,600

1,712,981

Linde AG

51,987

8,069,088

Common Stocks - continued

Shares

Value

Germany - continued

Munich Re Group AG

23,549

$ 3,312,410

Puma AG

20,483

5,903,562

SAP AG

189,513

11,222,095

SAP AG sponsored ADR (d)

84,700

5,027,792

Tom Tailor Holding AG

45,300

737,514

TOTAL GERMANY

94,715,494

Hong Kong - 1.7%

AIA Group Ltd.

1,274,400

4,401,853

Cheung Kong Holdings Ltd.

334,000

4,123,665

Henderson Land Development Co. Ltd.

814,919

4,530,486

Hutchison Whampoa Ltd.

278,000

2,411,346

Television Broadcasts Ltd.

1,125,000

7,842,436

TOTAL HONG KONG

23,309,786

Ireland - 2.7%

CRH PLC

505,756

9,689,342

Kingspan Group PLC (United Kingdom)

623,100

5,046,612

Paddy Power PLC (Ireland)

363,800

23,733,048

TOTAL IRELAND

38,469,002

Israel - 0.1%

Israel Chemicals Ltd.

116,100

1,247,030

Italy - 1.5%

Assicurazioni Generali SpA

158,500

2,138,201

Brunello Cucinelli SpA

11,600

165,001

ENI SpA

200,700

4,263,903

ENI SpA sponsored ADR (d)

67,900

2,887,108

Intesa Sanpaolo SpA

685,202

969,444

Saipem SpA

207,303

9,179,345

UniCredit SpA (a)

276,159

1,041,448

TOTAL ITALY

20,644,450

Japan - 15.9%

Calbee, Inc.

48,500

3,045,591

Canon, Inc. sponsored ADR

53,200

2,124,808

Dai-ichi Mutual Life Insurance Co.

1,893

2,192,355

Denso Corp.

87,400

2,986,547

East Japan Railway Co.

43,300

2,718,859

Fanuc Corp.

42,500

6,986,198

Fuji Media Holdings, Inc.

1,691

2,906,914

Honda Motor Co. Ltd.

250,400

8,737,846

Japan Retail Fund Investment Corp.

2,795

4,433,583

Japan Tobacco, Inc.

323,400

9,580,934

Kakaku.com, Inc. (d)

104,400

3,542,651

KDDI Corp.

1,087

7,012,141

Keyence Corp.

33,220

8,217,734

Mitsubishi Corp.

461,800

9,334,960

Mitsubishi Estate Co. Ltd.

223,000

4,000,799

Mitsubishi UFJ Financial Group, Inc. (d)

2,944,500

14,106,744

 

Shares

Value

Mitsubishi UFJ Financial Group, Inc. sponsored ADR (d)

489,200

$ 2,323,700

Mitsui & Co. Ltd.

431,700

6,414,999

MS&AD Insurance Group Holdings, Inc.

141,900

2,482,582

NKSJ Holdings, Inc.

95,000

2,022,345

Nomura Holdings, Inc.

505,000

1,887,963

ORIX Corp.

83,930

7,821,927

Rakuten, Inc.

3,282,300

33,934,614

Softbank Corp.

665,200

24,761,194

Start Today Co. Ltd. (d)

617,300

8,626,455

Sumitomo Mitsui Financial Group, Inc.

324,200

10,709,925

Tokio Marine Holdings, Inc.

158,300

3,972,238

Tokyo Electron Ltd.

35,700

1,674,148

Toshiba Corp.

672,000

2,557,873

Toyota Motor Corp.

314,000

12,673,738

Unicharm Corp.

107,300

6,107,651

Yahoo! Japan Corp.

12,647

4,094,632

TOTAL JAPAN

223,994,648

Korea (South) - 0.5%

Samsung Electronics Co. Ltd.

6,722

7,143,645

Luxembourg - 0.4%

ArcelorMittal SA Class A unit (d)

117,100

1,788,117

L'Occitane Ltd.

1,209,500

3,356,720

TOTAL LUXEMBOURG

5,144,837

Netherlands - 1.6%

AEGON NV (d)

259,400

1,202,990

ASML Holding NV

44,300

2,277,906

Gemalto NV

48,009

3,438,148

ING Groep NV (Certificaten Van Aandelen) (a)

558,084

3,741,453

Koninklijke Philips Electronics NV

304,416

5,998,726

Koninklijke Philips Electronics NV (depositary receipt) (NY Reg.)

173,900

3,420,613

Yandex NV (a)

124,400

2,369,820

TOTAL NETHERLANDS

22,449,656

Nigeria - 0.2%

Guinness Nigeria PLC

728,214

1,020,171

Nigerian Breweries PLC

2,274,042

1,414,447

TOTAL NIGERIA

2,434,618

Norway - 0.9%

DnB NOR ASA

294,800

2,921,412

Schibsted ASA (B Shares)

210,200

6,805,665

StatoilHydro ASA

14,100

336,264

StatoilHydro ASA sponsored ADR (d)

103,300

2,464,738

TOTAL NORWAY

12,528,079

Singapore - 0.2%

United Overseas Bank Ltd.

180,973

2,687,365

Common Stocks - continued

Shares

Value

South Africa - 0.3%

City Lodge Hotels Ltd.

73,400

$ 762,736

Life Healthcare Group Holdings Ltd.

905,400

3,447,740

TOTAL SOUTH AFRICA

4,210,476

Spain - 0.5%

Banco Bilbao Vizcaya Argentaria SA

574,666

4,103,896

Banco Santander SA (Spain)

469,908

3,108,562

TOTAL SPAIN

7,212,458

Sweden - 1.2%

Nordea Bank AB

417,800

3,587,640

Swedbank AB (A Shares)

102,432

1,608,124

Swedish Match Co. AB

278,200

11,208,515

TOTAL SWEDEN

16,404,279

Switzerland - 8.7%

Adecco SA (Reg.)

200,790

8,884,981

Compagnie Financiere Richemont SA Series A

289,809

15,831,635

Credit Suisse Group

71,082

1,300,591

Credit Suisse Group sponsored ADR (d)

95,368

1,748,095

Nestle SA

532,300

31,714,234

Roche Holding AG (participation certificate)

93,528

16,120,930

Sika AG (Bearer)

2,710

5,219,280

Swatch Group AG (Bearer)

36,070

14,193,905

Swiss Re Ltd.

50,606

3,175,038

Syngenta AG (Switzerland)

38,450

13,162,404

UBS AG

504,997

5,909,564

Zurich Financial Services AG

25,658

5,771,462

TOTAL SWITZERLAND

123,032,119

Taiwan - 0.1%

Wowprime Corp.

92,000

1,373,892

United Kingdom - 21.4%

Anglo American PLC:

ADR

238,400

3,940,752

(United Kingdom)

262,580

8,588,741

ARM Holdings PLC

219,900

1,742,183

Aviva PLC

431,600

1,848,091

Barclays PLC

1,821,577

4,654,588

BG Group PLC

745,038

15,168,937

BHP Billiton PLC

545,809

15,513,215

BP PLC

1,601,793

10,697,091

BP PLC sponsored ADR

96,295

3,903,799

Brammer PLC

488,700

1,995,722

 

Shares

Value

Centrica PLC

765,200

$ 3,810,969

Diageo PLC

972,707

25,071,509

Hays PLC

6,757,500

7,794,570

HSBC Holdings PLC:

(United Kingdom)

767,422

6,762,397

sponsored ADR

382,370

16,873,988

Imperial Tobacco Group PLC

633,283

24,349,087

Johnson Matthey PLC

181,970

6,292,630

Legal & General Group PLC

1,128,633

2,250,166

Lloyds Banking Group PLC (a)

5,811,344

2,838,895

Prudential PLC

239,221

2,773,771

Reckitt Benckiser Group PLC

272,400

14,355,738

Rio Tinto PLC

176,515

8,388,637

Rio Tinto PLC sponsored ADR (d)

103,200

4,933,992

Rolls-Royce Group PLC

268,408

3,606,751

Royal Bank of Scotland Group PLC (a)

255,480

865,397

Royal Dutch Shell PLC:

Class A (United Kingdom)

549,741

18,522,401

Class B (United Kingdom)

443,001

15,471,245

SABMiller PLC

428,600

17,150,486

Standard Chartered PLC (United Kingdom)

266,071

5,769,310

Sthree PLC

229,400

955,671

Vodafone Group PLC

6,973,198

19,599,957

Vodafone Group PLC sponsored ADR

131,500

3,705,670

William Hill PLC

3,273,400

14,498,125

Xstrata PLC

433,400

5,420,653

TOTAL UNITED KINGDOM

300,115,134

United States of America - 5.0%

Apple, Inc. (a)

23,500

13,724,000

Deckers Outdoor Corp. (a)(d)

279,900

12,318,399

Dunkin' Brands Group, Inc.

136,400

4,683,976

Google, Inc. Class A (a)

24,100

13,979,687

Life Technologies Corp. (a)

45,700

2,056,043

Lorillard, Inc.

21,800

2,876,510

MercadoLibre, Inc.

26,700

2,023,860

Monsanto Co.

34,400

2,847,632

Republic Services, Inc.

145,100

3,839,346

Visa, Inc. Class A

94,000

11,621,220

TOTAL UNITED STATES OF AMERICA

69,970,673

TOTAL COMMON STOCKS

(Cost $1,314,654,134)


1,348,128,021

Nonconvertible Preferred Stocks - 1.7%

 

 

 

 

Germany - 1.7%

Volkswagen AG
(Cost $17,285,452)

149,047


23,501,925

Money Market Funds - 7.7%

Shares

Value

Fidelity Cash Central Fund, 0.17% (b)

29,738,464

$ 29,738,464

Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c)

77,947,755

77,947,755

TOTAL MONEY MARKET FUNDS

(Cost $107,686,219)


107,686,219

TOTAL INVESTMENT PORTFOLIO - 105.3%

(Cost $1,439,625,805)

1,479,316,165

NET OTHER ASSETS (LIABILITIES) - (5.3)%

(74,236,888)

NET ASSETS - 100%

$ 1,405,079,277

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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 $223,674 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

$ 13,270

Fidelity Securities Lending Cash Central Fund

873,291

Total

$ 886,561

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, 2012, 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 Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 286,429,593

$ 174,878,391

$ 111,551,202

$ -

Consumer Staples

214,586,595

160,208,088

54,378,507

-

Energy

98,133,008

35,015,357

63,117,651

-

Financials

215,991,277

93,930,212

122,061,065

-

Health Care

104,859,237

86,783,825

18,075,412

-

Industrials

90,769,078

56,903,990

33,865,088

-

Information Technology

154,944,686

96,310,390

58,634,296

-

Materials

138,544,176

71,589,013

66,955,163

-

Telecommunication Services

59,156,213

7,782,921

51,373,292

-

Utilities

8,216,083

8,216,083

-

-

Money Market Funds

107,686,219

107,686,219

-

-

Total Investments in Securities:

$ 1,479,316,165

$ 899,304,489

$ 580,011,676

$ -

The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2012. 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

$ 251,573,173

Level 2 to Level 1

$ -

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2012 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $77,746,336) - See accompanying schedule:

Unaffiliated issuers (cost $1,331,939,586)

$ 1,371,629,946

 

Fidelity Central Funds (cost $107,686,219)

107,686,219

 

Total Investments (cost $1,439,625,805)

 

$ 1,479,316,165

Foreign currency held at value (cost $9,871)

9,871

Receivable for investments sold
Regular delivery

 

11,683,391

Delayed delivery

 

44,559

Receivable for fund shares sold

1,415,073

Dividends receivable

3,472,867

Distributions receivable from Fidelity Central Funds

104,868

Other receivables

320,845

Total assets

1,496,367,639

 

 

 

Liabilities

Payable to custodian bank

$ 16,585

Payable for investments purchased

9,734,974

Payable for fund shares redeemed

1,795,611

Accrued management fee

797,415

Distribution and service plan fees payable

92,393

Other affiliated payables

165,196

Other payables and accrued expenses

738,433

Collateral on securities loaned, at value

77,947,755

Total liabilities

91,288,362

 

 

 

Net Assets

$ 1,405,079,277

Net Assets consist of:

 

Paid in capital

$ 1,759,058,648

Undistributed net investment income

19,653,719

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

(413,279,089)

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

39,645,999

Net Assets

$ 1,405,079,277

Statement of Assets and Liabilities - continued

 

June 30, 2012 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($612,481,727 ÷ 42,119,935 shares)

$ 14.54

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($106,859,017 ÷ 7,381,060 shares)

$ 14.48

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($339,510,252 ÷ 23,574,179 shares)

$ 14.40

 

 

 

Initial Class R:
Net Asset Value, offering price and redemption price per share ($84,344,573 ÷ 5,814,412 shares)

$ 14.51

 

 

 

Service Class R:
Net Asset Value, offering price and redemption price per share ($43,481,515 ÷ 3,008,386 shares)

$ 14.45

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($60,325,522 ÷ 4,226,743 shares)

$ 14.27

 

 

 

Investor Class R:
Net Asset Value, offering price and redemption price per share ($158,076,671 ÷ 10,903,571 shares)

$ 14.50

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, 2012 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 28,452,355

Income from Fidelity Central Funds

 

886,561

Income before foreign taxes withheld

 

29,338,916

Less foreign taxes withheld

 

(2,225,875)

Total income

 

27,113,041

 

 

 

Expenses

Management fee

$ 5,199,208

Transfer agent fees

606,922

Distribution and service plan fees

608,327

Accounting and security lending fees

337,395

Custodian fees and expenses

83,271

Independent trustees' compensation

4,801

Depreciation in deferred trustee compensation account

(10)

Audit

32,729

Legal

3,820

Interest

197

Miscellaneous

9,718

Total expenses before reductions

6,886,378

Expense reductions

(96,705)

6,789,673

Net investment income (loss)

20,323,368

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

(10,056,900)

Foreign currency transactions

(227,707)

Total net realized gain (loss)

 

(10,284,607)

Change in net unrealized appreciation (depreciation) on:

Investment securities

85,841,926

Assets and liabilities in foreign currencies

40,827

Total change in net unrealized appreciation (depreciation)

 

85,882,753

Net gain (loss)

75,598,146

Net increase (decrease) in net assets resulting from operations

$ 95,921,514

Statement of Changes in Net Assets

 

Six months ended June 30, 2012
(Unaudited)

Year ended
December 31,
2011

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 20,323,368

$ 25,185,031

Net realized gain (loss)

(10,284,607)

78,355,769

Change in net unrealized appreciation (depreciation)

85,882,753

(394,991,221)

Net increase (decrease) in net assets resulting from operations

95,921,514

(291,450,421)

Distributions to shareholders from net investment income

-

(21,660,010)

Distributions to shareholders from net realized gain

-

(3,263,788)

Total distributions

-

(24,923,798)

Share transactions - net increase (decrease)

(81,950,772)

(126,132,361)

Redemption fees

6,820

31,905

Total increase (decrease) in net assets

13,977,562

(442,474,675)

 

 

 

Net Assets

Beginning of period

1,391,101,715

1,833,576,390

End of period (including undistributed net investment income of $19,653,719 and distributions in excess of net investment income of $669,649, respectively)

$ 1,405,079,277

$ 1,391,101,715

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.63

$ 16.77

$ 15.05

$ 12.17

$ 25.33

$ 23.96

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .21

.26

.21

.28

.46

.45

Net realized and unrealized gain (loss)

  .70

(3.14)

1.76

2.93

(10.67)

3.42

Total from investment operations

  .91

(2.88)

1.97

3.21

(10.21)

3.87

Distributions from net investment income

  -

(.23)

(.22)

(.29)

(.49)

(.84)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.26)

(.25)

(.33)

(2.95)

(2.50)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.54

$ 13.63

$ 16.77

$ 15.05

$ 12.17

$ 25.33

Total Return B,C,D

  6.68%

(17.16)%

13.11%

26.53%

(43.83)%

17.41%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .85% A

.85%

.86%

.88%

.87%

.85%

Expenses net of fee waivers, if any

  .85% A

.85%

.85%

.88%

.87%

.85%

Expenses net of all reductions

  .83% A

.83%

.83%

.84%

.84%

.82%

Net investment income (loss)

  2.86% A

1.59%

1.41%

2.17%

2.45%

1.85%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 612,482

$ 598,862

$ 779,501

$ 758,018

$ 703,357

$ 1,702,235

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.01 per share.

Financial Highlights - Service Class

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.58

$ 16.70

$ 14.99

$ 12.12

$ 25.23

$ 23.86

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .20

.24

.19

.26

.44

.43

Net realized and unrealized gain (loss)

  .70

(3.12)

1.75

2.93

(10.61)

3.39

Total from investment operations

  .90

(2.88)

1.94

3.19

(10.17)

3.82

Distributions from net investment income

  -

(.21)

(.20)

(.28)

(.48)

(.79)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.24)

(.23)

(.32)

(2.94)

(2.45)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.48

$ 13.58

$ 16.70

$ 14.99

$ 12.12

$ 25.23

Total Return B,C,D

  6.63%

(17.23)%

12.99%

26.44%

(43.89)%

17.25%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .95% A

.95%

.96%

.98%

.97%

.95%

Expenses net of fee waivers, if any

  .95% A

.95%

.95%

.98%

.97%

.95%

Expenses net of all reductions

  .93% A

.93%

.93%

.94%

.94%

.92%

Net investment income (loss)

  2.76% A

1.49%

1.31%

2.07%

2.35%

1.75%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 106,859

$ 108,921

$ 162,394

$ 171,252

$ 165,608

$ 366,777

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.52

$ 16.62

$ 14.92

$ 12.07

$ 25.12

$ 23.75

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .19

.21

.17

.24

.40

.39

Net realized and unrealized gain (loss)

  .69

(3.09)

1.74

2.91

(10.54)

3.37

Total from investment operations

  .88

(2.88)

1.91

3.15

(10.14)

3.76

Distributions from net investment income

  -

(.19)

(.18)

(.26)

(.45)

(.73)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.22)

(.21)

(.30)

(2.91)

(2.39)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.40

$ 13.52

$ 16.62

$ 14.92

$ 12.07

$ 25.12

Total Return B,C,D

  6.51%

(17.34)%

12.83%

26.22%

(43.96)%

17.05%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  1.09% A

1.10%

1.11%

1.12%

1.12%

1.10%

Expenses net of fee waivers, if any

  1.09% A

1.10%

1.10%

1.12%

1.12%

1.10%

Expenses net of all reductions

  1.08% A

1.08%

1.08%

1.09%

1.09%

1.07%

Net investment income (loss)

  2.61% A

1.34%

1.16%

1.93%

2.21%

1.60%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 339,510

$ 342,206

$ 461,033

$ 457,971

$ 414,492

$ 821,943

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.01 per share.

Financial Highlights - Initial Class R

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.60

$ 16.73

$ 15.02

$ 12.14

$ 25.28

$ 23.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .21

.26

.21

.28

.46

.45

Net realized and unrealized gain (loss)

  .70

(3.13)

1.75

2.93

(10.65)

3.41

Total from investment operations

  .91

(2.87)

1.96

3.21

(10.19)

3.86

Distributions from net investment income

  -

(.23)

(.22)

(.29)

(.49)

(.84)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.26)

(.25)

(.33)

(2.95)

(2.50)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.51

$ 13.60

$ 16.73

$ 15.02

$ 12.14

$ 25.28

Total Return B,C,D

  6.69%

(17.14)%

13.07%

26.60%

(43.84)%

17.40%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .85% A

.85%

.86%

.88%

.87%

.85%

Expenses net of fee waivers, if any

  .85% A

.85%

.85%

.88%

.87%

.85%

Expenses net of all reductions

  .83% A

.83%

.83%

.84%

.84%

.82%

Net investment income (loss)

  2.86% A

1.59%

1.41%

2.17%

2.46%

1.85%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 84,345

$ 85,922

$ 122,655

$ 128,689

$ 118,749

$ 275,678

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.56

$ 16.68

$ 14.97

$ 12.10

$ 25.19

$ 23.83

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .20

.24

.19

.27

.43

.43

Net realized and unrealized gain (loss)

  .69

(3.12)

1.75

2.92

(10.58)

3.38

Total from investment operations

  .89

(2.88)

1.94

3.19

(10.15)

3.81

Distributions from net investment income

  -

(.21)

(.20)

(.28)

(.48)

(.79)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.24)

(.23)

(.32)

(2.94)

(2.45)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.45

$ 13.56

$ 16.68

$ 14.97

$ 12.10

$ 25.19

Total Return B,C,D

  6.56%

(17.24)%

13.01%

26.49%

(43.88)%

17.23%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .94% A

.95%

.96%

.97%

.96%

.94%

Expenses net of fee waivers, if any

  .94% A

.94%

.95%

.97%

.96%

.94%

Expenses net of all reductions

  .93% A

.93%

.93%

.94%

.94%

.92%

Net investment income (loss)

  2.76% A

1.49%

1.31%

2.08%

2.36%

1.75%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 43,482

$ 43,414

$ 60,617

$ 66,014

$ 61,825

$ 135,038

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.01 per share.

Financial Highlights - Service Class 2R

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.40

$ 16.48

$ 14.80

$ 11.98

$ 24.95

$ 23.61

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .19

.21

.17

.25

.40

.39

Net realized and unrealized gain (loss)

  .68

(3.07)

1.73

2.87

(10.46)

3.35

Total from investment operations

  .87

(2.86)

1.90

3.12

(10.06)

3.74

Distributions from net investment income

  -

(.19)

(.19)

(.26)

(.45)

(.74)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.22)

(.22)

(.30)

(2.91)

(2.40)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.27

$ 13.40

$ 16.48

$ 14.80

$ 11.98

$ 24.95

Total Return B,C,D

  6.49%

(17.33)%

12.82%

26.20%

(43.94)%

17.06%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  1.09% A

1.10%

1.11%

1.12%

1.11%

1.09%

Expenses net of fee waivers, if any

  1.09% A

1.09%

1.10%

1.12%

1.11%

1.09%

Expenses net of all reductions

  1.08% A

1.08%

1.08%

1.09%

1.09%

1.07%

Net investment income (loss)

  2.61% A

1.34%

1.16%

1.93%

2.21%

1.60%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 60,326

$ 58,968

$ 69,393

$ 64,200

$ 46,323

$ 95,871

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.60

$ 16.73

$ 15.01

$ 12.14

$ 25.27

$ 23.91

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .21

.24

.20

.27

.43

.42

Net realized and unrealized gain (loss)

  .69

(3.12)

1.76

2.92

(10.62)

3.41

Total from investment operations

  .90

(2.88)

1.96

3.19

(10.19)

3.83

Distributions from net investment income

  -

(.22)

(.21)

(.28)

(.48)

(.81)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.25)

(.24)

(.32)

(2.94)

(2.47)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.50

$ 13.60

$ 16.73

$ 15.01

$ 12.14

$ 25.27

Total Return B,C,D

  6.62%

(17.22)%

13.07%

26.42%

(43.89)%

17.25%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .93% A

.93%

.95%

.97%

.96%

.96%

Expenses net of fee waivers, if any

  .93% A

.93%

.94%

.97%

.96%

.96%

Expenses net of all reductions

  .92% A

.91%

.92%

.94%

.93%

.94%

Net investment income (loss)

  2.77% A

1.51%

1.32%

2.08%

2.36%

1.74%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 158,077

$ 152,810

$ 177,984

$ 148,806

$ 124,111

$ 229,829

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.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, 2012 (Unaudited)

1. Organization.

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

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Security 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 vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security 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 significant 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 are used and are 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 categorized as Level 3 in the hierarchy.

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value 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, 2012, including information on transfers between Levels 1 and 2, is included at the end of the Fund's Schedule of Investments.

Foreign Currency Translation. 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.

Expenses. 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), 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

$ 215,996,873

Gross unrealized depreciation

(192,858,385)

Net unrealized appreciation (depreciation) on securities and other investments

$ 23,138,488

 

 

Tax cost

$ 1,456,177,677

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. At December 31, 2011, capital loss carryforwards were as follows:

Fiscal year of expiration

 

2016

$ (104,621,946)

2017

(280,447,470)

Total capital loss carryforward

$ (385,069,416)

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 are 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.

New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

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 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.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $276,757,349 and $348,318,391, respectively.

6. Fees and Other Transactions with Affiliates.

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

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

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

$ 56,791

Service Class 2

449,695

Service Class R

22,901

Service Class 2R

78,940

 

$ 608,327

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 .0038% 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

$ 235,948

Service Class

41,871

Service Class 2

130,319

Initial Class R

33,021

Service Class R

16,110

Service Class 2R

22,205

Investor Class R

127,448

 

$ 606,922

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. The commissions paid to these affiliated firms were $620 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

$ 6,189,333

.38%

$ 197

7. 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 $2,215 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Security Lending.

The Fund lends portfolio securities 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, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. 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 $873,291, including $127 from securities loaned to FCM.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $96,705 for the period.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2012

Year ended
December 31,
2011

From net investment income

 

 

Initial Class

$ -

$ 9,935,133

Service Class

-

1,687,320

Service Class 2

-

4,694,383

Initial Class R

-

1,431,302

Service Class R

-

672,673

Service Class 2R

-

834,608

Investor Class R

-

2,404,591

Total

$ -

$ 21,660,010

 

From net realized gain

 

 

Initial Class

$ -

$ 1,379,086

Service Class

-

286,878

Service Class 2

-

827,775

Initial Class R

-

215,214

Service Class R

-

108,589

Service Class 2R

-

125,027

Investor Class R

-

321,219

Total

$ -

$ 3,263,788

Semiannual Report

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended June 30,
2012

Year ended
December 31,
2011

Six months ended June 30,
2012

Year ended
December 31,
2011

Initial Class

 

 

 

 

Shares sold

2,995,261

5,097,862

$ 43,926,376

$ 81,025,708

Reinvestment of distributions

-

832,902

-

11,314,219

Shares redeemed

(4,808,992)

(8,473,195)

(71,987,134)

(137,488,847)

Net increase (decrease)

(1,813,731)

(2,542,431)

$ (28,060,758)

$ (45,148,920)

Service Class

 

 

 

 

Shares sold

138,334

534,926

$ 2,029,573

$ 8,440,397

Reinvestment of distributions

-

145,051

-

1,974,198

Shares redeemed

(779,175)

(2,381,130)

(11,515,515)

(38,838,120)

Net increase (decrease)

(640,841)

(1,701,153)

$ (9,485,942)

$ (28,423,525)

Service Class 2

 

 

 

 

Shares sold

779,499

3,042,278

$ 11,231,181

$ 47,105,875

Reinvestment of distributions

-

407,165

-

5,522,158

Shares redeemed

(2,522,113)

(5,867,222)

(37,510,849)

(93,897,989)

Net increase (decrease)

(1,742,614)

(2,417,779)

$ (26,279,668)

$ (41,269,956)

Initial Class R

 

 

 

 

Shares sold

109,939

381,782

$ 1,624,106

$ 6,067,099

Reinvestment of distributions

-

121,223

-

1,646,516

Shares redeemed

(614,238)

(1,514,903)

(9,105,044)

(24,431,217)

Net increase (decrease)

(504,299)

(1,011,898)

$ (7,480,938)

$ (16,717,602)

Service Class R

 

 

 

 

Shares sold

73,960

254,650

$ 1,086,025

$ 4,119,851

Reinvestment of distributions

-

57,620

-

781,262

Shares redeemed

(268,333)

(744,662)

(3,993,666)

(11,887,713)

Net increase (decrease)

(194,373)

(432,392)

$ (2,907,641)

$ (6,986,600)

Service Class 2R

 

 

 

 

Shares sold

159,830

782,450

$ 2,341,248

$ 11,400,821

Reinvestment of distributions

-

71,749

-

959,635

Shares redeemed

(335,194)

(662,036)

(4,928,393)

(10,765,925)

Net increase (decrease)

(175,364)

192,163

$ (2,587,145)

$ 1,594,531

Investor Class R

 

 

 

 

Shares sold

683,675

2,014,152

$ 9,919,450

$ 33,125,698

Reinvestment of distributions

-

201,469

-

2,725,810

Shares redeemed

(1,019,644)

(1,616,453)

(15,068,130)

(25,031,797)

Net increase (decrease)

(335,969)

599,168

$ (5,148,680)

$ 10,819,711

12. 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 16% 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

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-0812
1.705696.114

Fidelity® Variable Insurance Products:
Overseas Portfolio - Class R

Semiannual Report

June 30, 2012

(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. © 2012 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, 2012 to June 30, 2012).

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

Beginning
Account Value
January 1, 2012

Ending
Account Value
June 30, 2012

Expenses Paid
During Period*
January 1, 2012
to June 30, 2012

Initial Class

.85%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.80

$ 4.37

HypotheticalA

 

$ 1,000.00

$ 1,020.64

$ 4.27

Service Class

.95%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.30

$ 4.88

HypotheticalA

 

$ 1,000.00

$ 1,020.14

$ 4.77

Service Class 2

1.09%

 

 

 

Actual

 

$ 1,000.00

$ 1,065.10

$ 5.60

HypotheticalA

 

$ 1,000.00

$ 1,019.44

$ 5.47

Initial Class R

.85%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.90

$ 4.37

HypotheticalA

 

$ 1,000.00

$ 1,020.64

$ 4.27

Service Class R

.94%

 

 

 

Actual

 

$ 1,000.00

$ 1,065.60

$ 4.83

HypotheticalA

 

$ 1,000.00

$ 1,020.19

$ 4.72

Service Class 2R

1.09%

 

 

 

Actual

 

$ 1,000.00

$ 1,064.90

$ 5.60

HypotheticalA

 

$ 1,000.00

$ 1,019.44

$ 5.47

Investor Class R

.93%

 

 

 

Actual

 

$ 1,000.00

$ 1,066.20

$ 4.78

HypotheticalA

 

$ 1,000.00

$ 1,020.24

$ 4.67

A 5% return per year before expenses

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

Semiannual Report

Investment Changes (Unaudited)

Geographic Diversification (% of fund's net assets)

As of June 30, 2012

vpo139

United Kingdom

21.4%

 

vpo141

Japan

15.9%

 

vpo143

France

12.2%

 

vpo145

Switzerland

8.7%

 

vpo147

Germany

8.4%

 

vpo149

United States of America

7.4%

 

vpo151

Cayman Islands

4.4%

 

vpo153

Denmark

2.9%

 

vpo155

Ireland

2.7%

 

vpo157

Other

16.0%

 

vpo188

Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.

As of December 31, 2011

vpo139

United Kingdom

18.8%

 

vpo141

Japan

16.7%

 

vpo143

France

12.3%

 

vpo145

Germany

10.8%

 

vpo147

Switzerland

7.9%

 

vpo149

Ireland

4.2%

 

vpo151

United States of America

4.0%

 

vpo153

Cayman Islands

4.0%

 

vpo155

Denmark

3.0%

 

vpo157

Other

18.3%

 

vpo200

Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.

Asset Allocation

 

% of fund's
net assets

% of fund's net assets
6 months ago

Stocks

97.6

98.3

Short-Term Investments and Net Other Assets (Liabilities)

2.4

1.7

Top Ten Stocks as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Novo Nordisk A/S Series B (Denmark, Pharmaceuticals)

2.8

2.3

Sanofi SA (France, Pharmaceuticals)

2.5

2.1

Rakuten, Inc. (Japan, Internet & Catalog Retail)

2.4

2.2

Nestle SA (Switzerland, Food Products)

2.3

0.0

Diageo PLC (United Kingdom, Beverages)

1.8

1.3

Softbank Corp. (Japan, Wireless Telecommunication Services)

1.8

0.9

Imperial Tobacco Group PLC (United Kingdom, Tobacco)

1.7

1.7

LVMH Moet Hennessy - Louis Vuitton SA (France, Textiles, Apparel & Luxury Goods)

1.7

1.6

Paddy Power PLC (Ireland) (Ireland, Hotels, Restaurants & Leisure)

1.7

1.5

HSBC Holdings PLC (United Kingdom, Commercial Banks)

1.7

1.7

 

20.4

Market Sectors as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Consumer Discretionary

20.3

23.4

Financials

15.5

16.0

Consumer Staples

15.1

9.0

Information Technology

10.9

9.4

Materials

9.8

12.2

Health Care

7.6

6.6

Energy

7.1

8.0

Industrials

6.4

7.0

Telecommunication Services

4.3

5.1

Utilities

0.6

1.6

Semiannual Report

Investments June 30, 2012 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 95.9%

Shares

Value

Australia - 2.4%

Aristocrat Leisure Ltd.

1,050,218

$ 2,994,092

BHP Billiton Ltd.

318,002

10,358,067

Fortescue Metals Group Ltd.

258,379

1,320,222

Macquarie Group Ltd.

105,682

2,853,825

Newcrest Mining Ltd.

304,955

7,096,639

Rio Tinto Ltd.

24,301

1,426,637

Westfield Group unit

811,159

7,942,374

TOTAL AUSTRALIA

33,991,856

Bailiwick of Jersey - 1.0%

Informa PLC

903,074

5,375,942

Wolseley PLC

43,800

1,630,559

WPP PLC

583,107

7,078,772

TOTAL BAILIWICK OF JERSEY

14,085,273

Belgium - 0.4%

Ageas

743,600

1,468,000

Anheuser-Busch InBev SA NV

33,577

2,647,253

Hamon & Compagnie International SA

73,974

1,465,061

TOTAL BELGIUM

5,580,314

Bermuda - 0.9%

Clear Media Ltd.

2,035,000

1,053,539

Oriental Watch Holdings Ltd.

10,492,000

2,813,795

Petra Diamonds Ltd. (a)

809,300

1,529,855

Signet Jewelers Ltd.

161,500

7,107,615

TOTAL BERMUDA

12,504,804

Brazil - 0.4%

Drogasil SA

66,000

665,422

Souza Cruz SA

351,900

5,165,055

TOTAL BRAZIL

5,830,477

British Virgin Islands - 0.7%

Gem Diamonds Ltd. (a)

796,100

2,443,752

Mail.ru Group Ltd.:

GDR (a)(e)

6,600

223,674

GDR (Reg. S) (a)

235,300

7,974,317

TOTAL BRITISH VIRGIN ISLANDS

10,641,743

Canada - 1.0%

Barrick Gold Corp.

90,000

3,390,138

Potash Corp. of Saskatchewan, Inc.

167,900

7,338,719

Yamana Gold, Inc.

196,700

3,035,220

TOTAL CANADA

13,764,077

Cayman Islands - 4.4%

Baidu.com, Inc. sponsored ADR (a)

114,300

13,142,214

Biostime International Holdings Ltd.

1,325,000

3,473,297

Hengdeli Holdings Ltd.

47,490,000

15,171,842

Natural Beauty Bio-Technology Ltd.

8,580,000

1,377,230

Noah Holdings Ltd. sponsored ADR (d)

348,200

1,713,144

 

Shares

Value

Perfect World Co. Ltd. sponsored ADR Class B

237,700

$ 2,381,754

Renren, Inc. ADR (a)(d)

25,900

116,809

Shenguan Holdings Group Ltd.

5,328,000

3,075,042

SINA Corp. (a)(d)

18,800

974,028

Tencent Holdings Ltd.

624,400

18,439,335

YouKu.com, Inc. ADR (a)(d)

96,000

2,081,280

TOTAL CAYMAN ISLANDS

61,945,975

Denmark - 2.9%

Danske Bank A/S (a)

96,100

1,331,519

Novo Nordisk A/S:

Series B

51,925

7,531,039

Series B sponsored ADR

222,000

32,265,480

TOTAL DENMARK

41,128,038

France - 12.2%

Alstom SA (d)

287,302

9,064,066

Atos Origin SA

72,705

4,335,425

AXA SA

67,020

888,849

AXA SA sponsored ADR

158,600

2,114,138

Beneteau SA

196,900

1,893,745

BNP Paribas SA

142,299

5,462,708

Club Mediterranee SA (a)

85,000

1,452,161

Danone SA

305,612

18,956,649

Gameloft (a)

537,900

3,335,491

GDF Suez

185,600

4,405,114

Iliad SA

28,200

4,077,251

Ingenico SA

106,367

5,158,157

Ipsos SA (d)

149,292

4,385,043

Lafarge SA (Bearer) (d)

85,200

3,790,433

LVMH Moet Hennessy - Louis Vuitton SA

159,541

24,197,611

Pernod Ricard SA (d)

163,500

17,434,173

Safran SA

118,400

4,375,188

Sanofi SA

139,290

10,544,373

Sanofi SA sponsored ADR

620,600

23,446,268

Societe Generale Series A

45,643

1,063,384

Total SA

307,200

13,826,747

Total SA sponsored ADR

31,400

1,411,430

Unibail-Rodamco

32,400

5,949,419

TOTAL FRANCE

171,567,823

Germany - 6.7%

adidas AG

102,600

7,330,783

Allianz AG

77,600

7,768,824

Bayer AG

131,478

9,447,364

Beiersdorf AG

214,700

13,897,601

Commerzbank AG (a)

555,200

938,681

Deutsche Bank AG

77,046

2,780,841

Deutsche Boerse AG

180,720

9,726,660

Deutsche Post AG

273,501

4,824,850

GSW Immobilien AG

59,000

2,014,448

K&S AG

37,600

1,712,981

Linde AG

51,987

8,069,088

Common Stocks - continued

Shares

Value

Germany - continued

Munich Re Group AG

23,549

$ 3,312,410

Puma AG

20,483

5,903,562

SAP AG

189,513

11,222,095

SAP AG sponsored ADR (d)

84,700

5,027,792

Tom Tailor Holding AG

45,300

737,514

TOTAL GERMANY

94,715,494

Hong Kong - 1.7%

AIA Group Ltd.

1,274,400

4,401,853

Cheung Kong Holdings Ltd.

334,000

4,123,665

Henderson Land Development Co. Ltd.

814,919

4,530,486

Hutchison Whampoa Ltd.

278,000

2,411,346

Television Broadcasts Ltd.

1,125,000

7,842,436

TOTAL HONG KONG

23,309,786

Ireland - 2.7%

CRH PLC

505,756

9,689,342

Kingspan Group PLC (United Kingdom)

623,100

5,046,612

Paddy Power PLC (Ireland)

363,800

23,733,048

TOTAL IRELAND

38,469,002

Israel - 0.1%

Israel Chemicals Ltd.

116,100

1,247,030

Italy - 1.5%

Assicurazioni Generali SpA

158,500

2,138,201

Brunello Cucinelli SpA

11,600

165,001

ENI SpA

200,700

4,263,903

ENI SpA sponsored ADR (d)

67,900

2,887,108

Intesa Sanpaolo SpA

685,202

969,444

Saipem SpA

207,303

9,179,345

UniCredit SpA (a)

276,159

1,041,448

TOTAL ITALY

20,644,450

Japan - 15.9%

Calbee, Inc.

48,500

3,045,591

Canon, Inc. sponsored ADR

53,200

2,124,808

Dai-ichi Mutual Life Insurance Co.

1,893

2,192,355

Denso Corp.

87,400

2,986,547

East Japan Railway Co.

43,300

2,718,859

Fanuc Corp.

42,500

6,986,198

Fuji Media Holdings, Inc.

1,691

2,906,914

Honda Motor Co. Ltd.

250,400

8,737,846

Japan Retail Fund Investment Corp.

2,795

4,433,583

Japan Tobacco, Inc.

323,400

9,580,934

Kakaku.com, Inc. (d)

104,400

3,542,651

KDDI Corp.

1,087

7,012,141

Keyence Corp.

33,220

8,217,734

Mitsubishi Corp.

461,800

9,334,960

Mitsubishi Estate Co. Ltd.

223,000

4,000,799

Mitsubishi UFJ Financial Group, Inc. (d)

2,944,500

14,106,744

 

Shares

Value

Mitsubishi UFJ Financial Group, Inc. sponsored ADR (d)

489,200

$ 2,323,700

Mitsui & Co. Ltd.

431,700

6,414,999

MS&AD Insurance Group Holdings, Inc.

141,900

2,482,582

NKSJ Holdings, Inc.

95,000

2,022,345

Nomura Holdings, Inc.

505,000

1,887,963

ORIX Corp.

83,930

7,821,927

Rakuten, Inc.

3,282,300

33,934,614

Softbank Corp.

665,200

24,761,194

Start Today Co. Ltd. (d)

617,300

8,626,455

Sumitomo Mitsui Financial Group, Inc.

324,200

10,709,925

Tokio Marine Holdings, Inc.

158,300

3,972,238

Tokyo Electron Ltd.

35,700

1,674,148

Toshiba Corp.

672,000

2,557,873

Toyota Motor Corp.

314,000

12,673,738

Unicharm Corp.

107,300

6,107,651

Yahoo! Japan Corp.

12,647

4,094,632

TOTAL JAPAN

223,994,648

Korea (South) - 0.5%

Samsung Electronics Co. Ltd.

6,722

7,143,645

Luxembourg - 0.4%

ArcelorMittal SA Class A unit (d)

117,100

1,788,117

L'Occitane Ltd.

1,209,500

3,356,720

TOTAL LUXEMBOURG

5,144,837

Netherlands - 1.6%

AEGON NV (d)

259,400

1,202,990

ASML Holding NV

44,300

2,277,906

Gemalto NV

48,009

3,438,148

ING Groep NV (Certificaten Van Aandelen) (a)

558,084

3,741,453

Koninklijke Philips Electronics NV

304,416

5,998,726

Koninklijke Philips Electronics NV (depositary receipt) (NY Reg.)

173,900

3,420,613

Yandex NV (a)

124,400

2,369,820

TOTAL NETHERLANDS

22,449,656

Nigeria - 0.2%

Guinness Nigeria PLC

728,214

1,020,171

Nigerian Breweries PLC

2,274,042

1,414,447

TOTAL NIGERIA

2,434,618

Norway - 0.9%

DnB NOR ASA

294,800

2,921,412

Schibsted ASA (B Shares)

210,200

6,805,665

StatoilHydro ASA

14,100

336,264

StatoilHydro ASA sponsored ADR (d)

103,300

2,464,738

TOTAL NORWAY

12,528,079

Singapore - 0.2%

United Overseas Bank Ltd.

180,973

2,687,365

Common Stocks - continued

Shares

Value

South Africa - 0.3%

City Lodge Hotels Ltd.

73,400

$ 762,736

Life Healthcare Group Holdings Ltd.

905,400

3,447,740

TOTAL SOUTH AFRICA

4,210,476

Spain - 0.5%

Banco Bilbao Vizcaya Argentaria SA

574,666

4,103,896

Banco Santander SA (Spain)

469,908

3,108,562

TOTAL SPAIN

7,212,458

Sweden - 1.2%

Nordea Bank AB

417,800

3,587,640

Swedbank AB (A Shares)

102,432

1,608,124

Swedish Match Co. AB

278,200

11,208,515

TOTAL SWEDEN

16,404,279

Switzerland - 8.7%

Adecco SA (Reg.)

200,790

8,884,981

Compagnie Financiere Richemont SA Series A

289,809

15,831,635

Credit Suisse Group

71,082

1,300,591

Credit Suisse Group sponsored ADR (d)

95,368

1,748,095

Nestle SA

532,300

31,714,234

Roche Holding AG (participation certificate)

93,528

16,120,930

Sika AG (Bearer)

2,710

5,219,280

Swatch Group AG (Bearer)

36,070

14,193,905

Swiss Re Ltd.

50,606

3,175,038

Syngenta AG (Switzerland)

38,450

13,162,404

UBS AG

504,997

5,909,564

Zurich Financial Services AG

25,658

5,771,462

TOTAL SWITZERLAND

123,032,119

Taiwan - 0.1%

Wowprime Corp.

92,000

1,373,892

United Kingdom - 21.4%

Anglo American PLC:

ADR

238,400

3,940,752

(United Kingdom)

262,580

8,588,741

ARM Holdings PLC

219,900

1,742,183

Aviva PLC

431,600

1,848,091

Barclays PLC

1,821,577

4,654,588

BG Group PLC

745,038

15,168,937

BHP Billiton PLC

545,809

15,513,215

BP PLC

1,601,793

10,697,091

BP PLC sponsored ADR

96,295

3,903,799

Brammer PLC

488,700

1,995,722

 

Shares

Value

Centrica PLC

765,200

$ 3,810,969

Diageo PLC

972,707

25,071,509

Hays PLC

6,757,500

7,794,570

HSBC Holdings PLC:

(United Kingdom)

767,422

6,762,397

sponsored ADR

382,370

16,873,988

Imperial Tobacco Group PLC

633,283

24,349,087

Johnson Matthey PLC

181,970

6,292,630

Legal & General Group PLC

1,128,633

2,250,166

Lloyds Banking Group PLC (a)

5,811,344

2,838,895

Prudential PLC

239,221

2,773,771

Reckitt Benckiser Group PLC

272,400

14,355,738

Rio Tinto PLC

176,515

8,388,637

Rio Tinto PLC sponsored ADR (d)

103,200

4,933,992

Rolls-Royce Group PLC

268,408

3,606,751

Royal Bank of Scotland Group PLC (a)

255,480

865,397

Royal Dutch Shell PLC:

Class A (United Kingdom)

549,741

18,522,401

Class B (United Kingdom)

443,001

15,471,245

SABMiller PLC

428,600

17,150,486

Standard Chartered PLC (United Kingdom)

266,071

5,769,310

Sthree PLC

229,400

955,671

Vodafone Group PLC

6,973,198

19,599,957

Vodafone Group PLC sponsored ADR

131,500

3,705,670

William Hill PLC

3,273,400

14,498,125

Xstrata PLC

433,400

5,420,653

TOTAL UNITED KINGDOM

300,115,134

United States of America - 5.0%

Apple, Inc. (a)

23,500

13,724,000

Deckers Outdoor Corp. (a)(d)

279,900

12,318,399

Dunkin' Brands Group, Inc.

136,400

4,683,976

Google, Inc. Class A (a)

24,100

13,979,687

Life Technologies Corp. (a)

45,700

2,056,043

Lorillard, Inc.

21,800

2,876,510

MercadoLibre, Inc.

26,700

2,023,860

Monsanto Co.

34,400

2,847,632

Republic Services, Inc.

145,100

3,839,346

Visa, Inc. Class A

94,000

11,621,220

TOTAL UNITED STATES OF AMERICA

69,970,673

TOTAL COMMON STOCKS

(Cost $1,314,654,134)


1,348,128,021

Nonconvertible Preferred Stocks - 1.7%

 

 

 

 

Germany - 1.7%

Volkswagen AG
(Cost $17,285,452)

149,047


23,501,925

Money Market Funds - 7.7%

Shares

Value

Fidelity Cash Central Fund, 0.17% (b)

29,738,464

$ 29,738,464

Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c)

77,947,755

77,947,755

TOTAL MONEY MARKET FUNDS

(Cost $107,686,219)


107,686,219

TOTAL INVESTMENT PORTFOLIO - 105.3%

(Cost $1,439,625,805)

1,479,316,165

NET OTHER ASSETS (LIABILITIES) - (5.3)%

(74,236,888)

NET ASSETS - 100%

$ 1,405,079,277

Legend

(a) Non-income producing

(b) Affiliated fund that is available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. 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 $223,674 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

$ 13,270

Fidelity Securities Lending Cash Central Fund

873,291

Total

$ 886,561

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, 2012, 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 Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 286,429,593

$ 174,878,391

$ 111,551,202

$ -

Consumer Staples

214,586,595

160,208,088

54,378,507

-

Energy

98,133,008

35,015,357

63,117,651

-

Financials

215,991,277

93,930,212

122,061,065

-

Health Care

104,859,237

86,783,825

18,075,412

-

Industrials

90,769,078

56,903,990

33,865,088

-

Information Technology

154,944,686

96,310,390

58,634,296

-

Materials

138,544,176

71,589,013

66,955,163

-

Telecommunication Services

59,156,213

7,782,921

51,373,292

-

Utilities

8,216,083

8,216,083

-

-

Money Market Funds

107,686,219

107,686,219

-

-

Total Investments in Securities:

$ 1,479,316,165

$ 899,304,489

$ 580,011,676

$ -

The following is a summary of transfers between Level 1 and Level 2 for the period ended June 30, 2012. 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

$ 251,573,173

Level 2 to Level 1

$ -

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

Semiannual Report

Financial Statements

Statement of Assets and Liabilities

 

June 30, 2012 (Unaudited)

 

 

 

Assets

Investment in securities, at value (including securities loaned of $77,746,336) - See accompanying schedule:

Unaffiliated issuers (cost $1,331,939,586)

$ 1,371,629,946

 

Fidelity Central Funds (cost $107,686,219)

107,686,219

 

Total Investments (cost $1,439,625,805)

 

$ 1,479,316,165

Foreign currency held at value (cost $9,871)

9,871

Receivable for investments sold
Regular delivery

 

11,683,391

Delayed delivery

 

44,559

Receivable for fund shares sold

1,415,073

Dividends receivable

3,472,867

Distributions receivable from Fidelity Central Funds

104,868

Other receivables

320,845

Total assets

1,496,367,639

 

 

 

Liabilities

Payable to custodian bank

$ 16,585

Payable for investments purchased

9,734,974

Payable for fund shares redeemed

1,795,611

Accrued management fee

797,415

Distribution and service plan fees payable

92,393

Other affiliated payables

165,196

Other payables and accrued expenses

738,433

Collateral on securities loaned, at value

77,947,755

Total liabilities

91,288,362

 

 

 

Net Assets

$ 1,405,079,277

Net Assets consist of:

 

Paid in capital

$ 1,759,058,648

Undistributed net investment income

19,653,719

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

(413,279,089)

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

39,645,999

Net Assets

$ 1,405,079,277

Statement of Assets and Liabilities - continued

 

June 30, 2012 (Unaudited)

 

 

 

Initial Class:
Net Asset Value, offering price and redemption price per share ($612,481,727 ÷ 42,119,935 shares)

$ 14.54

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($106,859,017 ÷ 7,381,060 shares)

$ 14.48

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($339,510,252 ÷ 23,574,179 shares)

$ 14.40

 

 

 

Initial Class R:
Net Asset Value, offering price and redemption price per share ($84,344,573 ÷ 5,814,412 shares)

$ 14.51

 

 

 

Service Class R:
Net Asset Value, offering price and redemption price per share ($43,481,515 ÷ 3,008,386 shares)

$ 14.45

 

 

 

Service Class 2R:
Net Asset Value, offering price and redemption price per share ($60,325,522 ÷ 4,226,743 shares)

$ 14.27

 

 

 

Investor Class R:
Net Asset Value, offering price and redemption price per share ($158,076,671 ÷ 10,903,571 shares)

$ 14.50

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, 2012 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 28,452,355

Income from Fidelity Central Funds

 

886,561

Income before foreign taxes withheld

 

29,338,916

Less foreign taxes withheld

 

(2,225,875)

Total income

 

27,113,041

 

 

 

Expenses

Management fee

$ 5,199,208

Transfer agent fees

606,922

Distribution and service plan fees

608,327

Accounting and security lending fees

337,395

Custodian fees and expenses

83,271

Independent trustees' compensation

4,801

Depreciation in deferred trustee compensation account

(10)

Audit

32,729

Legal

3,820

Interest

197

Miscellaneous

9,718

Total expenses before reductions

6,886,378

Expense reductions

(96,705)

6,789,673

Net investment income (loss)

20,323,368

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

(10,056,900)

Foreign currency transactions

(227,707)

Total net realized gain (loss)

 

(10,284,607)

Change in net unrealized appreciation (depreciation) on:

Investment securities

85,841,926

Assets and liabilities in foreign currencies

40,827

Total change in net unrealized appreciation (depreciation)

 

85,882,753

Net gain (loss)

75,598,146

Net increase (decrease) in net assets resulting from operations

$ 95,921,514

Statement of Changes in Net Assets

 

Six months ended June 30, 2012
(Unaudited)

Year ended
December 31,
2011

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 20,323,368

$ 25,185,031

Net realized gain (loss)

(10,284,607)

78,355,769

Change in net unrealized appreciation (depreciation)

85,882,753

(394,991,221)

Net increase (decrease) in net assets resulting from operations

95,921,514

(291,450,421)

Distributions to shareholders from net investment income

-

(21,660,010)

Distributions to shareholders from net realized gain

-

(3,263,788)

Total distributions

-

(24,923,798)

Share transactions - net increase (decrease)

(81,950,772)

(126,132,361)

Redemption fees

6,820

31,905

Total increase (decrease) in net assets

13,977,562

(442,474,675)

 

 

 

Net Assets

Beginning of period

1,391,101,715

1,833,576,390

End of period (including undistributed net investment income of $19,653,719 and distributions in excess of net investment income of $669,649, respectively)

$ 1,405,079,277

$ 1,391,101,715

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.63

$ 16.77

$ 15.05

$ 12.17

$ 25.33

$ 23.96

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .21

.26

.21

.28

.46

.45

Net realized and unrealized gain (loss)

  .70

(3.14)

1.76

2.93

(10.67)

3.42

Total from investment operations

  .91

(2.88)

1.97

3.21

(10.21)

3.87

Distributions from net investment income

  -

(.23)

(.22)

(.29)

(.49)

(.84)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.26)

(.25)

(.33)

(2.95)

(2.50)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.54

$ 13.63

$ 16.77

$ 15.05

$ 12.17

$ 25.33

Total Return B,C,D

  6.68%

(17.16)%

13.11%

26.53%

(43.83)%

17.41%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .85% A

.85%

.86%

.88%

.87%

.85%

Expenses net of fee waivers, if any

  .85% A

.85%

.85%

.88%

.87%

.85%

Expenses net of all reductions

  .83% A

.83%

.83%

.84%

.84%

.82%

Net investment income (loss)

  2.86% A

1.59%

1.41%

2.17%

2.45%

1.85%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 612,482

$ 598,862

$ 779,501

$ 758,018

$ 703,357

$ 1,702,235

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.01 per share.

Financial Highlights - Service Class

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.58

$ 16.70

$ 14.99

$ 12.12

$ 25.23

$ 23.86

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .20

.24

.19

.26

.44

.43

Net realized and unrealized gain (loss)

  .70

(3.12)

1.75

2.93

(10.61)

3.39

Total from investment operations

  .90

(2.88)

1.94

3.19

(10.17)

3.82

Distributions from net investment income

  -

(.21)

(.20)

(.28)

(.48)

(.79)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.24)

(.23)

(.32)

(2.94)

(2.45)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.48

$ 13.58

$ 16.70

$ 14.99

$ 12.12

$ 25.23

Total Return B,C,D

  6.63%

(17.23)%

12.99%

26.44%

(43.89)%

17.25%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .95% A

.95%

.96%

.98%

.97%

.95%

Expenses net of fee waivers, if any

  .95% A

.95%

.95%

.98%

.97%

.95%

Expenses net of all reductions

  .93% A

.93%

.93%

.94%

.94%

.92%

Net investment income (loss)

  2.76% A

1.49%

1.31%

2.07%

2.35%

1.75%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 106,859

$ 108,921

$ 162,394

$ 171,252

$ 165,608

$ 366,777

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.52

$ 16.62

$ 14.92

$ 12.07

$ 25.12

$ 23.75

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .19

.21

.17

.24

.40

.39

Net realized and unrealized gain (loss)

  .69

(3.09)

1.74

2.91

(10.54)

3.37

Total from investment operations

  .88

(2.88)

1.91

3.15

(10.14)

3.76

Distributions from net investment income

  -

(.19)

(.18)

(.26)

(.45)

(.73)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.22)

(.21)

(.30)

(2.91)

(2.39)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.40

$ 13.52

$ 16.62

$ 14.92

$ 12.07

$ 25.12

Total Return B,C,D

  6.51%

(17.34)%

12.83%

26.22%

(43.96)%

17.05%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  1.09% A

1.10%

1.11%

1.12%

1.12%

1.10%

Expenses net of fee waivers, if any

  1.09% A

1.10%

1.10%

1.12%

1.12%

1.10%

Expenses net of all reductions

  1.08% A

1.08%

1.08%

1.09%

1.09%

1.07%

Net investment income (loss)

  2.61% A

1.34%

1.16%

1.93%

2.21%

1.60%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 339,510

$ 342,206

$ 461,033

$ 457,971

$ 414,492

$ 821,943

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.01 per share.

Financial Highlights - Initial Class R

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.60

$ 16.73

$ 15.02

$ 12.14

$ 25.28

$ 23.92

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .21

.26

.21

.28

.46

.45

Net realized and unrealized gain (loss)

  .70

(3.13)

1.75

2.93

(10.65)

3.41

Total from investment operations

  .91

(2.87)

1.96

3.21

(10.19)

3.86

Distributions from net investment income

  -

(.23)

(.22)

(.29)

(.49)

(.84)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.26)

(.25)

(.33)

(2.95)

(2.50)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.51

$ 13.60

$ 16.73

$ 15.02

$ 12.14

$ 25.28

Total Return B,C,D

  6.69%

(17.14)%

13.07%

26.60%

(43.84)%

17.40%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .85% A

.85%

.86%

.88%

.87%

.85%

Expenses net of fee waivers, if any

  .85% A

.85%

.85%

.88%

.87%

.85%

Expenses net of all reductions

  .83% A

.83%

.83%

.84%

.84%

.82%

Net investment income (loss)

  2.86% A

1.59%

1.41%

2.17%

2.46%

1.85%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 84,345

$ 85,922

$ 122,655

$ 128,689

$ 118,749

$ 275,678

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.56

$ 16.68

$ 14.97

$ 12.10

$ 25.19

$ 23.83

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .20

.24

.19

.27

.43

.43

Net realized and unrealized gain (loss)

  .69

(3.12)

1.75

2.92

(10.58)

3.38

Total from investment operations

  .89

(2.88)

1.94

3.19

(10.15)

3.81

Distributions from net investment income

  -

(.21)

(.20)

(.28)

(.48)

(.79)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.24)

(.23)

(.32)

(2.94)

(2.45)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.45

$ 13.56

$ 16.68

$ 14.97

$ 12.10

$ 25.19

Total Return B,C,D

  6.56%

(17.24)%

13.01%

26.49%

(43.88)%

17.23%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .94% A

.95%

.96%

.97%

.96%

.94%

Expenses net of fee waivers, if any

  .94% A

.94%

.95%

.97%

.96%

.94%

Expenses net of all reductions

  .93% A

.93%

.93%

.94%

.94%

.92%

Net investment income (loss)

  2.76% A

1.49%

1.31%

2.08%

2.36%

1.75%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 43,482

$ 43,414

$ 60,617

$ 66,014

$ 61,825

$ 135,038

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.01 per share.

Financial Highlights - Service Class 2R

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.40

$ 16.48

$ 14.80

$ 11.98

$ 24.95

$ 23.61

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .19

.21

.17

.25

.40

.39

Net realized and unrealized gain (loss)

  .68

(3.07)

1.73

2.87

(10.46)

3.35

Total from investment operations

  .87

(2.86)

1.90

3.12

(10.06)

3.74

Distributions from net investment income

  -

(.19)

(.19)

(.26)

(.45)

(.74)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.22)

(.22)

(.30)

(2.91)

(2.40)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.27

$ 13.40

$ 16.48

$ 14.80

$ 11.98

$ 24.95

Total Return B,C,D

  6.49%

(17.33)%

12.82%

26.20%

(43.94)%

17.06%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  1.09% A

1.10%

1.11%

1.12%

1.11%

1.09%

Expenses net of fee waivers, if any

  1.09% A

1.09%

1.10%

1.12%

1.11%

1.09%

Expenses net of all reductions

  1.08% A

1.08%

1.08%

1.09%

1.09%

1.07%

Net investment income (loss)

  2.61% A

1.34%

1.16%

1.93%

2.21%

1.60%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 60,326

$ 58,968

$ 69,393

$ 64,200

$ 46,323

$ 95,871

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.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, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 13.60

$ 16.73

$ 15.01

$ 12.14

$ 25.27

$ 23.91

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .21

.24

.20

.27

.43

.42

Net realized and unrealized gain (loss)

  .69

(3.12)

1.76

2.92

(10.62)

3.41

Total from investment operations

  .90

(2.88)

1.96

3.19

(10.19)

3.83

Distributions from net investment income

  -

(.22)

(.21)

(.28)

(.48)

(.81)

Distributions from net realized gain

  -

(.03)

(.03)

(.04)

(2.46)

(1.66)

Total distributions

  -

(.25)

(.24)

(.32)

(2.94)

(2.47)

Redemption fees added to paid in capital E,I

  -

-

-

-

-

-

Net asset value, end of period

$ 14.50

$ 13.60

$ 16.73

$ 15.01

$ 12.14

$ 25.27

Total Return B,C,D

  6.62%

(17.22)%

13.07%

26.42%

(43.89)%

17.25%

Ratios to Average Net Assets F,H

 

 

 

 

 

 

Expenses before reductions

  .93% A

.93%

.95%

.97%

.96%

.96%

Expenses net of fee waivers, if any

  .93% A

.93%

.94%

.97%

.96%

.96%

Expenses net of all reductions

  .92% A

.91%

.92%

.94%

.93%

.94%

Net investment income (loss)

  2.77% A

1.51%

1.32%

2.08%

2.36%

1.74%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 158,077

$ 152,810

$ 177,984

$ 148,806

$ 124,111

$ 229,829

Portfolio turnover rate G

  38% A

45%

50%

78%

77%

62%

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 $.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, 2012 (Unaudited)

1. Organization.

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

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Security 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 vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security 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 significant 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 are used and are 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 categorized as Level 3 in the hierarchy.

Semiannual Report

3. Significant Accounting Policies - continued

Security Valuation - continued

Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value 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, 2012, including information on transfers between Levels 1 and 2, is included at the end of the Fund's Schedule of Investments.

Foreign Currency Translation. 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.

Expenses. 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), 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

$ 215,996,873

Gross unrealized depreciation

(192,858,385)

Net unrealized appreciation (depreciation) on securities and other investments

$ 23,138,488

 

 

Tax cost

$ 1,456,177,677

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. At December 31, 2011, capital loss carryforwards were as follows:

Fiscal year of expiration

 

2016

$ (104,621,946)

2017

(280,447,470)

Total capital loss carryforward

$ (385,069,416)

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 are 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.

New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Operating Policies.

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 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.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $276,757,349 and $348,318,391, respectively.

6. Fees and Other Transactions with Affiliates.

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

Semiannual Report

6. Fees and Other Transactions with Affiliates - continued

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

$ 56,791

Service Class 2

449,695

Service Class R

22,901

Service Class 2R

78,940

 

$ 608,327

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 .0038% 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

$ 235,948

Service Class

41,871

Service Class 2

130,319

Initial Class R

33,021

Service Class R

16,110

Service Class 2R

22,205

Investor Class R

127,448

 

$ 606,922

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. The commissions paid to these affiliated firms were $620 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

$ 6,189,333

.38%

$ 197

7. 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 $2,215 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

8. Security Lending.

The Fund lends portfolio securities 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, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. 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 $873,291, including $127 from securities loaned to FCM.

9. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the Fund provided services to the Fund in addition to trade execution. These services included payments of certain expenses on behalf of the Fund totaling $96,705 for the period.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2012

Year ended
December 31,
2011

From net investment income

 

 

Initial Class

$ -

$ 9,935,133

Service Class

-

1,687,320

Service Class 2

-

4,694,383

Initial Class R

-

1,431,302

Service Class R

-

672,673

Service Class 2R

-

834,608

Investor Class R

-

2,404,591

Total

$ -

$ 21,660,010

 

From net realized gain

 

 

Initial Class

$ -

$ 1,379,086

Service Class

-

286,878

Service Class 2

-

827,775

Initial Class R

-

215,214

Service Class R

-

108,589

Service Class 2R

-

125,027

Investor Class R

-

321,219

Total

$ -

$ 3,263,788

Semiannual Report

11. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

Six months ended June 30,
2012

Year ended
December 31,
2011

Six months ended June 30,
2012

Year ended
December 31,
2011

Initial Class

 

 

 

 

Shares sold

2,995,261

5,097,862

$ 43,926,376

$ 81,025,708

Reinvestment of distributions

-

832,902

-

11,314,219

Shares redeemed

(4,808,992)

(8,473,195)

(71,987,134)

(137,488,847)

Net increase (decrease)

(1,813,731)

(2,542,431)

$ (28,060,758)

$ (45,148,920)

Service Class

 

 

 

 

Shares sold

138,334

534,926

$ 2,029,573

$ 8,440,397

Reinvestment of distributions

-

145,051

-

1,974,198

Shares redeemed

(779,175)

(2,381,130)

(11,515,515)

(38,838,120)

Net increase (decrease)

(640,841)

(1,701,153)

$ (9,485,942)

$ (28,423,525)

Service Class 2

 

 

 

 

Shares sold

779,499

3,042,278

$ 11,231,181

$ 47,105,875

Reinvestment of distributions

-

407,165

-

5,522,158

Shares redeemed

(2,522,113)

(5,867,222)

(37,510,849)

(93,897,989)

Net increase (decrease)

(1,742,614)

(2,417,779)

$ (26,279,668)

$ (41,269,956)

Initial Class R

 

 

 

 

Shares sold

109,939

381,782

$ 1,624,106

$ 6,067,099

Reinvestment of distributions

-

121,223

-

1,646,516

Shares redeemed

(614,238)

(1,514,903)

(9,105,044)

(24,431,217)

Net increase (decrease)

(504,299)

(1,011,898)

$ (7,480,938)

$ (16,717,602)

Service Class R

 

 

 

 

Shares sold

73,960

254,650

$ 1,086,025

$ 4,119,851

Reinvestment of distributions

-

57,620

-

781,262

Shares redeemed

(268,333)

(744,662)

(3,993,666)

(11,887,713)

Net increase (decrease)

(194,373)

(432,392)

$ (2,907,641)

$ (6,986,600)

Service Class 2R

 

 

 

 

Shares sold

159,830

782,450

$ 2,341,248

$ 11,400,821

Reinvestment of distributions

-

71,749

-

959,635

Shares redeemed

(335,194)

(662,036)

(4,928,393)

(10,765,925)

Net increase (decrease)

(175,364)

192,163

$ (2,587,145)

$ 1,594,531

Investor Class R

 

 

 

 

Shares sold

683,675

2,014,152

$ 9,919,450

$ 33,125,698

Reinvestment of distributions

-

201,469

-

2,725,810

Shares redeemed

(1,019,644)

(1,616,453)

(15,068,130)

(25,031,797)

Net increase (decrease)

(335,969)

599,168

$ (5,148,680)

$ 10,819,711

12. 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 16% 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

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-0812
1.774855.110

Fidelity® Variable Insurance Products:
Value Portfolio

Semiannual Report

June 30, 2012

(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. © 2012 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, 2012 to June 30, 2012).

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 Ratio

Beginning
Account Value
January 1, 2012

Ending
Account Value
June 30, 2012

Expenses Paid
During Period*
January 1, 2012 to June 30, 2012

Initial Class

.72%

 

 

 

Actual

 

$ 1,000.00

$ 1,090.60

$ 3.74

HypotheticalA

 

$ 1,000.00

$ 1,021.28

$ 3.62

Service Class

.81%

 

 

 

Actual

 

$ 1,000.00

$ 1,089.60

$ 4.21

HypotheticalA

 

$ 1,000.00

$ 1,020.84

$ 4.07

Service Class 2

.98%

 

 

 

Actual

 

$ 1,000.00

$ 1,088.40

$ 5.09

HypotheticalA

 

$ 1,000.00

$ 1,019.99

$ 4.92

Investor Class

.80%

 

 

 

Actual

 

$ 1,000.00

$ 1,089.70

$ 4.16

HypotheticalA

 

$ 1,000.00

$ 1,020.89

$ 4.02

A 5% return per year before expenses

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

Semiannual Report

Investment Changes (Unaudited)

Top Ten Stocks as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Chevron Corp.

4.9

3.0

Wells Fargo & Co.

2.8

2.7

General Electric Co.

2.6

3.0

JPMorgan Chase & Co.

2.5

2.8

Berkshire Hathaway, Inc. Class B

2.2

0.7

Occidental Petroleum Corp.

2.2

1.1

Merck & Co., Inc.

2.2

2.0

Royal Dutch Shell PLC Class A sponsored ADR

2.1

2.2

UnitedHealth Group, Inc.

1.7

1.0

McKesson Corp.

1.7

0.3

 

24.9

Top Five Market Sectors as of June 30, 2012

 

% of fund's
net assets

% of fund's net assets
6 months ago

Financials

26.4

23.1

Energy

15.7

14.3

Health Care

11.9

12.2

Consumer Discretionary

9.3

10.0

Industrials

8.9

8.6

Asset Allocation (% of fund's net assets)

As of June 30, 2012 *

As of December 31, 2011 **

vpo15

Stocks 99.9%

 

vpo15

Stocks 99.3%

 

vpo21

Short-Term Investments
and Net Other
Assets (Liabilities) 0.1%

 

vpo21

Short-Term Investments
and Net Other
Assets (Liabilities) 0.7%

 

* Foreign investments

19.4%

 

** Foreign investments

9.9%

 

vpo211

Semiannual Report

Investments June 30, 2012 (Unaudited)

Showing Percentage of Net Assets

Common Stocks - 99.9%

Shares

Value

CONSUMER DISCRETIONARY - 9.3%

Auto Components - 1.1%

Johnson Controls, Inc.

22,300

$ 617,933

Tenneco, Inc. (a)

32,700

877,014

 

1,494,947

Hotels, Restaurants & Leisure - 0.5%

Carnival Corp. unit

19,600

671,692

Household Durables - 0.9%

Lennar Corp. Class A (d)

39,100

1,208,581

Media - 4.2%

Cablevision Systems Corp. - NY Group Class A

89,000

1,182,810

Comcast Corp. Class A

44,300

1,416,271

The Walt Disney Co.

40,134

1,946,499

Time Warner, Inc.

36,400

1,401,400

 

5,946,980

Multiline Retail - 0.8%

Target Corp.

19,500

1,134,705

Specialty Retail - 1.8%

Advance Auto Parts, Inc.

15,200

1,036,944

Lowe's Companies, Inc.

54,300

1,544,292

 

2,581,236

TOTAL CONSUMER DISCRETIONARY

13,038,141

CONSUMER STAPLES - 7.7%

Beverages - 0.9%

Anheuser-Busch InBev SA NV

15,631

1,232,368

Food & Staples Retailing - 0.8%

CVS Caremark Corp.

25,400

1,186,942

Food Products - 2.6%

Bunge Ltd.

16,000

1,003,840

Flowers Foods, Inc.

37,000

859,510

The J.M. Smucker Co.

23,300

1,759,616

 

3,622,966

Household Products - 2.3%

Procter & Gamble Co.

23,600

1,445,500

Reckitt Benckiser Group PLC

34,300

1,807,643

 

3,253,143

Tobacco - 1.1%

British American Tobacco PLC sponsored ADR

14,900

1,521,588

TOTAL CONSUMER STAPLES

10,817,007

ENERGY - 15.7%

Energy Equipment & Services - 1.6%

Halliburton Co.

49,100

1,393,949

National Oilwell Varco, Inc.

13,500

869,940

 

2,263,889

 

Shares

Value

Oil, Gas & Consumable Fuels - 14.1%

Anadarko Petroleum Corp.

16,800

$ 1,112,160

Apache Corp.

9,900

870,111

Chesapeake Energy Corp.

37,500

697,500

Chevron Corp.

65,722

6,933,670

Energen Corp.

14,500

654,385

Marathon Petroleum Corp.

27,900

1,253,268

Nexen, Inc.

36,600

619,766

Occidental Petroleum Corp.

35,998

3,087,548

Royal Dutch Shell PLC Class A sponsored ADR (d)

43,647

2,943,117

Williams Companies, Inc.

55,900

1,611,038

 

19,782,563

TOTAL ENERGY

22,046,452

FINANCIALS - 26.4%

Capital Markets - 3.0%

Ameriprise Financial, Inc.

16,400

857,064

Goldman Sachs Group, Inc.

7,708

738,889

Morgan Stanley

77,860

1,135,977

State Street Corp.

33,200

1,482,048

 

4,213,978

Commercial Banks - 5.7%

CIT Group, Inc. (a)

21,070

750,935

Comerica, Inc.

33,000

1,013,430

U.S. Bancorp

71,534

2,300,533

Wells Fargo & Co.

115,526

3,863,189

 

7,928,087

Consumer Finance - 1.2%

Capital One Financial Corp.

31,000

1,694,460

Diversified Financial Services - 4.1%

Citigroup, Inc.

84,447

2,314,692

JPMorgan Chase & Co.

97,619

3,487,927

 

5,802,619

Insurance - 8.1%

AFLAC, Inc.

35,840

1,526,426

Aon PLC

35,400

1,656,012

Berkshire Hathaway, Inc. Class B (a)

37,600

3,133,208

MetLife, Inc.

23,800

734,230

Prudential Financial, Inc.

23,200

1,123,576

The Travelers Companies, Inc.

26,100

1,666,224

Validus Holdings Ltd.

49,757

1,593,717

 

11,433,393

Real Estate Investment Trusts - 3.8%

American Tower Corp.

18,400

1,286,344

Extra Space Storage, Inc.

27,200

832,320

Prologis, Inc.

21,387

710,690

SL Green Realty Corp.

7,300

585,752

Ventas, Inc.

18,900

1,192,968

Weyerhaeuser Co.

34,200

764,712

 

5,372,786

Common Stocks - continued

Shares

Value

FINANCIALS - continued

Real Estate Management & Development - 0.5%

Forest City Enterprises, Inc. Class A (a)

48,700

$ 711,020

TOTAL FINANCIALS

37,156,343

HEALTH CARE - 11.9%

Health Care Equipment & Supplies - 1.6%

Covidien PLC

20,500

1,096,750

Zimmer Holdings, Inc.

18,057

1,162,149

 

2,258,899

Health Care Providers & Services - 3.4%

McKesson Corp.

24,839

2,328,656

UnitedHealth Group, Inc.

40,800

2,386,800

 

4,715,456

Pharmaceuticals - 6.9%

GlaxoSmithKline PLC sponsored ADR

38,000

1,731,660

Johnson & Johnson

27,000

1,824,120

Merck & Co., Inc.

72,170

3,013,098

Novartis AG sponsored ADR

18,700

1,045,330

Sanofi SA sponsored ADR

56,500

2,134,570

 

9,748,778

TOTAL HEALTH CARE

16,723,133

INDUSTRIALS - 8.9%

Aerospace & Defense - 0.6%

United Technologies Corp.

11,768

888,837

Building Products - 0.7%

Owens Corning (a)

33,375

952,523

Electrical Equipment - 0.5%

Regal-Beloit Corp.

11,300

703,538

Industrial Conglomerates - 2.6%

General Electric Co.

172,148

3,587,564

Machinery - 4.5%

Cummins, Inc.

15,271

1,479,913

Illinois Tool Works, Inc.

22,800

1,205,892

Ingersoll-Rand PLC

31,400

1,324,452

Parker Hannifin Corp.

16,000

1,230,080

Stanley Black & Decker, Inc.

16,600

1,068,376

 

6,308,713

TOTAL INDUSTRIALS

12,441,175

INFORMATION TECHNOLOGY - 8.4%

Communications Equipment - 2.2%

Cisco Systems, Inc.

119,200

2,046,664

Motorola Solutions, Inc.

20,000

962,200

 

3,008,864

 

Shares

Value

Electronic Equipment & Components - 1.4%

Arrow Electronics, Inc. (a)

27,400

$ 898,994

TE Connectivity Ltd.

34,300

1,094,513

 

1,993,507

IT Services - 2.6%

Accenture PLC Class A

28,800

1,730,592

Amdocs Ltd. (a)

34,500

1,025,340

Fiserv, Inc. (a)

12,800

924,416

 

3,680,348

Semiconductors & Semiconductor Equipment - 0.8%

Analog Devices, Inc.

28,300

1,066,061

Software - 1.4%

Microsoft Corp.

33,776

1,033,208

Oracle Corp.

32,500

965,250

 

1,998,458

TOTAL INFORMATION TECHNOLOGY

11,747,238

MATERIALS - 4.2%

Chemicals - 2.8%

Air Products & Chemicals, Inc.

19,200

1,550,016

Ashland, Inc.

15,200

1,053,512

LyondellBasell Industries NV Class A

34,600

1,393,342

 

3,996,870

Containers & Packaging - 1.4%

Ball Corp.

18,300

751,215

Rock-Tenn Co. Class A

22,400

1,221,920

 

1,973,135

TOTAL MATERIALS

5,970,005

TELECOMMUNICATION SERVICES - 1.3%

Wireless Telecommunication Services - 1.3%

America Movil SAB de CV Series L sponsored ADR

25,900

674,954

Vodafone Group PLC sponsored ADR

39,700

1,118,746

 

1,793,700

UTILITIES - 6.1%

Electric Utilities - 3.5%

Edison International

40,907

1,889,903

ITC Holdings Corp.

22,100

1,522,911

NextEra Energy, Inc.

22,100

1,520,701

 

4,933,515

Multi-Utilities - 2.6%

PG&E Corp.

41,600

1,883,232

Sempra Energy

26,000

1,790,880

 

3,674,112

TOTAL UTILITIES

8,607,627

TOTAL COMMON STOCKS

(Cost $135,388,656)


140,340,821

Money Market Funds - 1.4%

Shares

Value

Fidelity Cash Central Fund, 0.17% (b)

698,539

$ 698,539

Fidelity Securities Lending Cash Central Fund, 0.18% (b)(c)

1,187,930

1,187,930

TOTAL MONEY MARKET FUNDS

(Cost $1,886,469)


1,886,469

TOTAL INVESTMENT PORTFOLIO - 101.3%

(Cost $137,275,125)

142,227,290

NET OTHER ASSETS (LIABILITIES) - (1.3)%

(1,758,229)

NET ASSETS - 100%

$ 140,469,061

Legend

(a) Non-income producing

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

$ 1,985

Fidelity Securities Lending Cash Central Fund

11,806

Total

$ 13,791

Other Information

The following is a summary of the inputs used, as of June 30, 2012, 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 Security Valuation section in the accompanying Notes to Financial Statements.

Valuation Inputs at Reporting Date:

Description

Total

Level 1

Level 2

Level 3

Investments in Securities:

Equities:

Consumer Discretionary

$ 13,038,141

$ 13,038,141

$ -

$ -

Consumer Staples

10,817,007

9,584,639

1,232,368

-

Energy

22,046,452

22,046,452

-

-

Financials

37,156,343

37,156,343

-

-

Health Care

16,723,133

16,723,133

-

-

Industrials

12,441,175

12,441,175

-

-

Information Technology

11,747,238

11,747,238

-

-

Materials

5,970,005

5,970,005

-

-

Telecommunication Services

1,793,700

1,793,700

-

-

Utilities

8,607,627

8,607,627

-

-

Money Market Funds

1,886,469

1,886,469

-

-

Total Investments in Securities:

$ 142,227,290

$ 140,994,922

$ 1,232,368

$ -

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

United States of America

80.6%

United Kingdom

7.7%

Ireland

2.9%

Bermuda

1.8%

Switzerland

1.5%

France

1.5%

Netherlands

1.0%

Others (Individually Less Than 1%)

3.0%

 

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, 2012 (Unaudited)

Assets

Investment in securities, at value (including securities loaned of $1,223,550) - See accompanying schedule:

Unaffiliated issuers (cost $135,388,656)

$ 140,340,821

 

Fidelity Central Funds (cost $1,886,469)

1,886,469

 

Total Investments (cost $137,275,125)

 

$ 142,227,290

Receivable for fund shares sold

42,084

Dividends receivable

242,572

Distributions receivable from Fidelity Central Funds

670

Other receivables

531

Total assets

142,513,147

 

 

 

Liabilities

Payable for fund shares redeemed

$ 743,450

Accrued management fee

64,740

Distribution and service plan fees payable

844

Other affiliated payables

19,137

Other payables and accrued expenses

27,985

Collateral on securities loaned, at value

1,187,930

Total liabilities

2,044,086

 

 

 

Net Assets

$ 140,469,061

Net Assets consist of:

 

Paid in capital

$ 143,540,491

Undistributed net investment income

1,329,109

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

(9,352,689)

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

4,952,150

Net Assets

$ 140,469,061

Statement of Assets and Liabilities - continued

 

June 30, 2012 (Unaudited)

Initial Class:
Net Asset Value, offering price and redemption price per share ($78,174,650 ÷ 6,764,764 shares)

$ 11.56

 

 

 

Service Class:
Net Asset Value, offering price and redemption price per share ($209,615 ÷ 18,151 shares)

$ 11.55

 

 

 

Service Class 2:
Net Asset Value, offering price and redemption price per share ($3,678,162 ÷ 321,197 shares)

$ 11.45

 

 

 

Investor Class:
Net Asset Value, offering price and redemption price per share ($58,406,634 ÷ 5,059,446 shares)

$ 11.54

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

Semiannual Report

Statement of Operations

Six months ended June 30, 2012 (Unaudited)

 

 

 

Investment Income

 

 

Dividends

 

$ 1,927,923

Income from Fidelity Central Funds

 

13,791

Total income

 

1,941,714

 

 

 

Expenses

Management fee

$ 419,742

Transfer agent fees

87,397

Distribution and service plan fees

5,021

Accounting and security lending fees

29,452

Custodian fees and expenses

4,853

Independent trustees' compensation

485

Audit

25,092

Legal

331

Miscellaneous

708

Total expenses

573,081

Net investment income (loss)

1,368,633

Realized and Unrealized Gain (Loss)

Net realized gain (loss) on:

Investment securities:

 

 

Unaffiliated issuers

13,920,720

Foreign currency transactions

(1,288)

Futures contracts

(33,520)

Total net realized gain (loss)

 

13,885,912

Change in net unrealized appreciation (depreciation) on:

Investment securities

(2,590,782)

Assets and liabilities in foreign currencies

115

Total change in net unrealized appreciation (depreciation)

 

(2,590,667)

Net gain (loss)

11,295,245

Net increase (decrease) in net assets resulting from operations

$ 12,663,878

Statement of Changes in Net Assets

 

Six months ended June 30, 2012
(Unaudited)

Year ended
December 31,
2011

Increase (Decrease) in Net Assets

 

 

Operations

 

 

Net investment income (loss)

$ 1,368,633

$ 1,649,411

Net realized gain (loss)

13,885,912

4,621,100

Change in net unrealized appreciation (depreciation)

(2,590,667)

(9,787,553)

Net increase (decrease) in net assets resulting from operations

12,663,878

(3,517,042)

Distributions to shareholders from net investment income

-

(1,578,080)

Share transactions - net increase (decrease)

(16,595,624)

(1,789,127)

Total increase (decrease) in net assets

(3,931,746)

(6,884,249)

 

 

 

Net Assets

Beginning of period

144,400,807

151,285,056

End of period (including undistributed net investment income of $1,329,109 and distributions in excess of net investment income of $39,524, respectively)

$ 140,469,061

$ 144,400,807

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

Semiannual Report

Financial Highlights - Initial Class

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 10.60

$ 11.00

$ 9.47

$ 6.69

$ 13.10

$ 14.28

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .11

.12

.13 H

.07

.13

.10

Net realized and unrealized gain (loss)

  .85

(.40)

1.56

2.78

(6.07)

.22

Total from investment operations

  .96

(.28)

1.69

2.85

(5.94)

.32

Distributions from net investment income

  -

(.12)

(.15)

(.07)

(.10)

(.09)

Distributions from net realized gain

  -

-

(.01)

-

(.37)

(1.41)

Total distributions

  -

(.12)

(.16)

(.07)

(.47)

(1.50) J

Net asset value, end of period

$ 11.56

$ 10.60

$ 11.00

$ 9.47

$ 6.69

$ 13.10

Total Return B,C,D

  9.06%

(2.51)%

17.82%

42.66%

(46.50)%

2.02%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .72% A

.73%

.76%

.80%

.79%

.77%

Expenses net of fee waivers, if any

  .72% A

.72%

.75%

.80%

.79%

.77%

Expenses net of all reductions

  .72% A

.72%

.74%

.80%

.79%

.77%

Net investment income (loss)

  1.86% A

1.14%

1.33% H

.95%

1.25%

.68%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 78,175

$ 82,980

$ 78,133

$ 64,198

$ 41,306

$ 52,544

Portfolio turnover rate G

  148% A

79%

160%

73%

53%

52%

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.

J Total distributions of $1.50 per share is comprised of distributions from net investment income of $.092 and distributions from net realized gain of $1.405 per share.

Financial Highlights - Service Class

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 10.60

$ 10.99

$ 9.46

$ 6.69

$ 13.06

$ 14.24

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .10

.12

.12 H

.06

.13

.09

Net realized and unrealized gain (loss)

  .85

(.40)

1.56

2.77

(6.05)

.21

Total from investment operations

  .95

(.28)

1.68

2.83

(5.92)

.30

Distributions from net investment income

  -

(.11)

(.14)

(.06)

(.08)

(.08)

Distributions from net realized gain

  -

-

(.01)

-

(.37)

(1.41)

Total distributions

  -

(.11)

(.15)

(.06)

(.45)

(1.48) J

Net asset value, end of period

$ 11.55

$ 10.60

$ 10.99

$ 9.46

$ 6.69

$ 13.06

Total Return B,C,D

  8.96%

(2.55)%

17.73%

42.35%

(46.49)%

1.92%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .81% A

.81%

.84%

.91%

.88%

.86%

Expenses net of fee waivers, if any

  .81% A

.81%

.83%

.91%

.88%

.86%

Expenses net of all reductions

  .81% A

.81%

.83%

.90%

.88%

.86%

Net investment income (loss)

  1.77% A

1.05%

1.24% H

.84%

1.17%

.60%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 210

$ 194

$ 258

$ 251

$ 293

$ 958

Portfolio turnover rate G

  148% A

79%

160%

73%

53%

52%

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.

J Total distributions of $1.48 per share is comprised of distributions from net investment income of $.077 and distributions from net realized gain of $1.405 per share.

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

Semiannual Report

Financial Highlights - Service Class 2

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 10.52

$ 10.90

$ 9.38

$ 6.63

$ 12.97

$ 14.14

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .09

.10

.11 H

.05

.11

.06

Net realized and unrealized gain (loss)

  .84

(.39)

1.53

2.75

(6.01)

.23

Total from investment operations

  .93

(.29)

1.64

2.80

(5.90)

.29

Distributions from net investment income

  -

(.09)

(.11)

(.05)

(.07)

(.06)

Distributions from net realized gain

  -

-

(.01)

-

(.37)

(1.41)

Total distributions

  -

(.09)

(.12)

(.05)

(.44)

(1.46) J

Net asset value, end of period

$ 11.45

$ 10.52

$ 10.90

$ 9.38

$ 6.63

$ 12.97

Total Return B,C,D

  8.84%

(2.68)%

17.52%

42.32%

(46.68)%

1.86%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .98% A

.98%

1.00%

1.05%

1.04%

1.02%

Expenses net of fee waivers, if any

  .98% A

.97%

1.00%

1.05%

1.04%

1.02%

Expenses net of all reductions

  .98% A

.97%

.99%

1.05%

1.04%

1.02%

Net investment income (loss)

  1.60% A

.89%

1.08% H

.70%

1.01%

.43%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 3,678

$ 3,202

$ 8,652

$ 8,277

$ 4,941

$ 11,081

Portfolio turnover rate G

  148% A

79%

160%

73%

53%

52%

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.

J Total distributions of $1.46 per share is comprised of distributions from net investment income of $.058 and distributions from net realized gain of $1.405 per share.

Financial Highlights - Investor Class

 

Six months ended June 30, 2012

Years ended December 31,

 

(Unaudited)

2011

2010

2009

2008

2007

Selected Per-Share Data

 

 

 

 

 

 

Net asset value, beginning of period

$ 10.59

$ 10.99

$ 9.46

$ 6.69

$ 13.09

$ 14.26

Income from Investment Operations

 

 

 

 

 

 

Net investment income (loss) E

  .10

.12

.12 H

.07

.12

.08

Net realized and unrealized gain (loss)

  .85

(.41)

1.56

2.77

(6.06)

.23

Total from investment operations

  .95

(.29)

1.68

2.84

(5.94)

.31

Distributions from net investment income

  -

(.11)

(.14)

(.07)

(.09)

(.08)

Distributions from net realized gain

  -

-

(.01)

-

(.37)

(1.41)

Total distributions

  -

(.11)

(.15)

(.07)

(.46)

(1.48) J

Net asset value, end of period

$ 11.54

$ 10.59

$ 10.99

$ 9.46

$ 6.69

$ 13.09

Total Return B,C,D

  8.97%

(2.59)%

17.74%

42.41%

(46.53)%

1.99%

Ratios to Average Net Assets F,I

 

 

 

 

 

 

Expenses before reductions

  .80% A

.80%

.83%

.89%

.87%

.88%

Expenses net of fee waivers, if any

  .80% A

.80%

.83%

.89%

.87%

.88%

Expenses net of all reductions

  .80% A

.80%

.82%

.88%

.87%

.88%

Net investment income (loss)

  1.78% A

1.06%

1.25% H

.86%

1.17%

.58%

Supplemental Data

 

 

 

 

 

 

Net assets, end of period (000 omitted)

$ 58,407

$ 58,025

$ 64,242

$ 56,380

$ 36,199

$ 61,052

Portfolio turnover rate G

  148% A

79%

160%

73%

53%

52%

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.

J Total distributions of $1.48 per share is comprised of distributions from net investment income of $.078 and distributions from net realized gain of $1.405 per share.

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

Semiannual Report

Notes to Financial Statements

For the period ended June 30, 2012 (Unaudited)

1. Organization.

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

2. Investments in Fidelity Central Funds.

The Fund invests in Fidelity Central Funds, which are open-end investment companies available only to other investment companies and accounts managed by Fidelity Management & Research Company (FMR) and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds 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) web site at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC web site or upon request.

3. Significant Accounting Policies.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (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:

Security 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 vendor or broker to value its investments. When current market prices, quotations or rates are not readily available or reliable, securities will be fair valued in good faith by the FMR Fair Value Committee (the Committee), in accordance with procedures adopted by the Fund's Board. Factors used in determining fair value vary by security type and may include market or security 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 significant 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 are used and are 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 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.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

3. Significant Accounting Policies - continued

Foreign Currency Translation. 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. The Fund estimates the components of distributions received that may be considered return of capital distributions or capital gain distributions. Interest income and distributions from the Fidelity Central Funds are accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.

Expenses. 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 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

$ 11,782,467

Gross unrealized depreciation

(7,531,135)

Net unrealized appreciation (depreciation) on securities and other investments

$ 4,251,332

 

 

Tax cost

$ 137,975,958

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. At December 31, 2011, capital loss carryforwards were as follows:

Fiscal year of expiration

 

2016

$ (4,706,288)

2017

(15,545,941)

2018

(2,066,509)

Total with expiration

$ (22,318,738)

New Accounting Pronouncement. In December 2011, the Financial Accounting Standards Board issued Accounting Standard Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. The update creates new disclosure requirements requiring entities to disclose both gross and net information for derivatives and other financial instruments that are either offset in the Statement of Assets and Liabilities or subject to an enforceable master netting arrangement or similar agreement. The disclosure requirements are effective for interim and annual reporting periods beginning on or after January 1, 2013. Management is currently evaluating the impact of the update's adoption on the Fund's financial statement disclosures.

4. Derivative Instruments.

Risk Exposures and the Use of Derivative Instruments. The Fund's investment objectives allow the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified instrument based on specified terms, or to exchange future cash flows at periodic intervals based on a notional principal amount. The Fund used derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.

The Fund's use of derivatives increased or decreased its exposure to the following risk:

Equity Risk

Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment.

The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts is minimal because of the protection provided by the exchange on which they trade. Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, involves risk of loss in excess of the initial investment, if any, collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, for futures contracts, there is the risk that the change in value of the derivative contract may not correspond to the change in value of the underlying instrument.

Futures Contracts. A futures contract is an agreement between two parties to buy or sell a specified underlying instrument for a fixed price at a specified future date. The Fund used futures contracts to manage its exposure to the stock market fluctuations.

Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent payments are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable is included in daily variation margin on futures contracts in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.

Any open futures contracts at period end are shown in the Schedule of Investments under the caption "Futures Contracts." The underlying face amount at value reflects each contract's exposure to the underlying instrument at period end.

During the period the Fund recognized net realized gain (loss) of $(33,520) related to its investment in futures contracts. This amount is included in the Statement of Operations.

Semiannual Report

Notes to Financial Statements (Unaudited) - continued

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $109,033,350 and $123,373,766, respectively.

6. Fees and Other Transactions with Affiliates.

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

Distribution and Service Plan 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

$ 104

Service Class 2

4,917

 

$ 5,021

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 .0038% 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

$ 36,042

Service Class

78

Service Class 2

1,790

Investor Class

49,487

 

$ 87,397

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. The commissions paid to these affiliated firms were $2,050 for the period.

7. 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 $223 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, there were no borrowings on this line of credit.

8. Security Lending.

The Fund lends portfolio securities 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, a fund could experience delays and costs in recovering the securities loaned or in gaining access to the collateral. Any cash collateral received is invested in the

Semiannual Report

8. Security Lending - continued

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 $11,806. During the period, there were no securities loaned to FCM.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Six months ended
June 30,
2012

Year ended
December 31,
2011

From net investment income

 

 

Initial Class

$ -

$ 919,631

Service Class

-

1,921

Service Class 2

-

50,543

Investor Class

-

605,985

Total

$ -

$ 1,578,080

10. Share Transactions.

Transactions for each class of shares were as follows:

 

Shares

Dollars

 

Six months ended June 30,
2012

Year ended
December 31,
2011

Six months ended June 30,
2012

Year ended
December 31,
2011

Initial Class

 

 

 

 

Shares sold

761,577

2,216,092

$ 8,722,244

$ 24,201,146

Reinvestment of distributions

-

89,895

-

919,631

Shares redeemed

(1,826,461)

(1,580,332)

(20,742,042)

(17,459,004)

Net increase (decrease)

(1,064,884)

725,655

$ (12,019,798)

$ 7,661,773

Service Class

 

 

 

 

Shares sold

13

3,437

$ 160

$ 37,751

Reinvestment of distributions

-

188

-

1,921

Shares redeemed

(163)

(8,825)

(1,835)

(93,547)

Net increase (decrease)

(150)

(5,200)

$ (1,675)

$ (53,875)

Service Class 2

 

 

 

 

Shares sold

100,962

257,288

$ 1,135,921

$ 2,756,545

Reinvestment of distributions

-

4,980

-

50,543

Shares redeemed

(84,245)

(751,266)

(957,098)

(8,113,278)

Net increase (decrease)

16,717

(488,998)

$ 178,823

$ (5,306,190)

Investor Class

 

 

 

 

Shares sold

487,716

1,105,876

$ 5,524,035

$ 12,075,704

Reinvestment of distributions

-

59,236

-

605,985

Shares redeemed

(906,867)

(1,531,761)

(10,277,009)

(16,772,524)

Net increase (decrease)

(419,151)

(366,649)

$ (4,752,974)

$ (4,090,835)

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 was the owner of record of approximately 24% of the total outstanding shares of the Fund. The VIP Freedom Funds were the owners of record, in the aggregate, of approximately 63% of the total outstanding shares of the Fund. In addition, FMR or its affiliates were the owners of record of 33% 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 

VIPVAL-SANN-0812
1.761034.111

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 17, 2012

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 17, 2012

By:

/s/Christine Reynolds

 

Christine Reynolds

 

Chief Financial Officer

 

 

Date:

August 17, 2012