N-CSR 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 811-7205

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

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

Eric D. Roiter, Secretary

82 Devonshire St.

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

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

Date of fiscal year end:	December 31

Date of reporting period:	December 31, 2003

Item 1. Reports to Stockholders

Fidelity® Variable Insurance Products:

Aggressive Growth Portfolio

Annual Report

December 31, 2003

(2_fidelity_logos) (Registered_Trademark)

Performance	<Click Here>	How the fund has done over time.
Management's Discussion	<Click Here>	The manager's review of fund performance, strategy and outlook.
Investment Summary	<Click Here>	A summary of the fund's investments at period end.
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.
Auditors' Opinion	<Click Here>
Trustees and Officers	<Click Here>

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

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

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

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

(Recycle graphic) This report is printed on recycled paper using soy-based inks.

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.

Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC, Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.

Neither the fund nor Fidelity Distributors Corporation is a bank.

Aggressive Growth Portfolio

Fidelity Variable Insurance Products: Aggressive Growth Portfolio

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. Performance numbers are net of all fund operating expenses, but do not include any insurance charges imposed by your insurance company's separate account. If performance information included the effect of these additional charges, the total returns would be lower. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Life of fund ^A
Fidelity® VIP: Aggressive Growth - Initial Class	30.58%	-7.50%
Fidelity VIP: Aggressive Growth - Service Class	30.48%	-7.42%
Fidelity VIP: Aggressive Growth - Service Class 2	30.28%	-7.77%

^A From December 27, 2000.

$10,000 Over Life of Fund

Let's say hypothetically that $10,000 was invested in Fidelity® Variable Insurance Products: Aggressive Growth Portfolio - Initial Class on December 27, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell Midcap® Growth Index did over the same period.

Annual Report

Fidelity Variable Insurance Products: Aggressive Growth Portfolio

Management's Discussion of Fund Performance

Comments from Rajiv Kaul, Portfolio Manager of Fidelity® Variable Insurance Products: Aggressive Growth Portfolio

U.S. equity markets snapped a three-year losing streak in 2003, rebounding on the strength of the lowest interest rates in decades, improved corporate profits and a resurgent economy. For the year overall, the Standard & Poor's 500^SM Index gained 28.69%, the Dow Jones Industrial Average^SM rose 28.14% and the NASDAQ Composite® Index advanced 50.77%. Small-cap stocks led the charge, particularly lower-quality issues in cyclical industries such as biotechnology and the Internet. As a result, the Russell 2000® Index had its best calendar year ever, climbing 47.25%. The start of the year gave little indication of the strong performance to come, as the hangover of corporate governance scandals and an impending war with Iraq clouded the outlook for 2003. However, investors were encouraged by solid gross domestic product (GDP) growth in the first two quarters of 2003, and what seemed to be a quick resolution to the Iraqi conflict. Federal tax cuts and a boom in mortgage refinancing further boosted the markets and put more discretionary income in consumers' pockets. In the third quarter, GDP growth grew 8.2%, its highest level since 1984.

For the 12 months ending December 31, 2003, the fund trailed the Russell Midcap® Growth Index and the Lipper^SM Variable Annuity Mid-Cap Funds Average, which returned 42.71% and 35.40%, respectively. Stock selection in health care equipment and services, a relatively large cash position for much of the period and a cautious stance toward technology stocks worked against the fund's performance. On the positive side, an underweighting in commercial services and supplies was helpful. Biotechnology holding Genentech was the fund's strongest contributor. The stock benefited from improving prospects for the Food and Drug Administration's approval of Avastin, the company's treatment for colorectal cancer. Intel also was one of the fund's top contributors, buoyed by the rapid adoption of the company's new Centrino chipset for wireless computing. Biotech stock Amgen was our largest detractor on a relative basis. Amgen was hurt by concerns about possible cutbacks in Medicare reimbursement for Epogen, its medication for kidney dialysis patients. Also undermining performance versus the index was oil services provider Weatherford International, which suffered as energy exploration companies maintained a cautious stance, focusing on strengthening their balance sheets rather than funding new projects.

The views expressed in this statement reflect those of the portfolio manager only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.

Annual Report

Fidelity Variable Insurance Products: Aggressive Growth Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Genentech, Inc.	3.2
Lexmark International, Inc. Class A	2.1
Microchip Technology, Inc.	1.8
Cisco Systems, Inc.	1.7
Biomet, Inc.	1.7
	10.5
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Information Technology	27.4
Health Care	26.5
Consumer Discretionary	19.0
Industrials	8.5
Consumer Staples	4.3

Asset Allocation as of December 31, 2003
% of fund's net assets*
	Stocks	96.9%
	Short-Term Investments and Net Other Assets	3.1%

* Foreign
investments

4.7%

Annual Report

Fidelity Variable Insurance Products: Aggressive Growth Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 96.9%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 19.0%
Auto Components - 0.3%
Gentex Corp.	300		$ 13,248
Lear Corp.	200		12,266
			25,514
Automobiles - 0.3%
Harley-Davidson, Inc.	550		26,142
Hotels, Restaurants & Leisure - 5.7%
Brinker International, Inc. (a)	1,380		45,761
California Pizza Kitchen, Inc. (a)	530		10,669
Darden Restaurants, Inc.	1,730		36,399
Harrah's Entertainment, Inc.	380		18,913
Hilton Hotels Corp.	1,400		23,982
International Game Technology	1,950		69,615
Mandalay Resort Group	160		7,155
Marriott International, Inc. Class A	470		21,714
McDonald's Corp.	1,200		29,796
Outback Steakhouse, Inc.	370		16,358
Starbucks Corp. (a)	3,140		103,808
Station Casinos, Inc.	400		12,252
Sunterra Corp. (a)	300		3,330
The Cheesecake Factory, Inc. (a)	630		27,739
Wendy's International, Inc.	300		11,772
Yum! Brands, Inc. (a)	1,840		63,296
			502,559
Household Durables - 1.1%
Black & Decker Corp.	560		27,619
Harman International Industries, Inc.	360		26,633
Maytag Corp.	580		16,153
Mohawk Industries, Inc. (a)	240		16,930
Ryland Group, Inc.	100		8,864
			96,199
Internet & Catalog Retail - 0.1%
Overstock.com, Inc. (a)	300		5,958
Leisure Equipment & Products - 0.4%
Brunswick Corp.	200		6,366
Mattel, Inc.	900		17,343
Polaris Industries, Inc.	100		8,858
			32,567
Media - 2.9%
Cablevision Systems Corp. - NY Group Class A (a)	1,570		36,722
E.W. Scripps Co. Class A	420		39,539
Entercom Communications Corp. Class A (a)	120		6,355
Fox Entertainment Group, Inc. Class A (a)	1,400		40,810
Gannett Co., Inc.	230		20,507
Getty Images, Inc. (a)	370		18,548
Lamar Advertising Co. Class A (a)	200		7,464
Pixar (a)	300		20,787

	Shares		Value (Note 1)
Playboy Enterprises, Inc. Class B (non-vtg.) (a)	100		$ 1,616
Radio One, Inc. Class D (non-vtg.) (a)	300		5,790
The New York Times Co. Class A	400		19,116
Viacom, Inc. Class B (non-vtg.)	500		22,190
Westwood One, Inc. (a)	550		18,816
			258,260
Multiline Retail - 1.0%
99 Cents Only Stores (a)	100		2,723
Big Lots, Inc. (a)	660		9,379
Dollar General Corp.	400		8,396
Dollar Tree Stores, Inc. (a)	1,030		30,962
Family Dollar Stores, Inc.	850		30,498
Tuesday Morning Corp. (a)	300		9,075
			91,033
Specialty Retail - 6.4%
Abercrombie & Fitch Co. Class A (a)	500		12,355
AutoZone, Inc. (a)	590		50,274
Chico's FAS, Inc. (a)	1,000		36,950
Christopher & Banks Corp.	780		15,233
Circuit City Stores, Inc.	400		4,052
Foot Locker, Inc.	200		4,690
Hot Topic, Inc. (a)	840		24,746
Jo-Ann Stores, Inc. (a)	200		4,080
Michaels Stores, Inc.	770		34,034
PETsMART, Inc.	1,590		37,842
Pier 1 Imports, Inc.	300		6,558
Ross Stores, Inc.	2,160		57,089
Select Comfort Corp. (a)	1,500		37,140
Staples, Inc. (a)	3,610		98,553
Talbots, Inc.	100		3,078
TJX Companies, Inc.	3,160		69,678
Weight Watchers International, Inc. (a)	1,000		38,370
Williams-Sonoma, Inc. (a)	880		30,598
			565,320
Textiles Apparel & Luxury Goods - 0.8%
Coach, Inc. (a)	1,490		56,248
Kenneth Cole Productions, Inc. Class A	140		4,116
NIKE, Inc. Class B	170		11,638
			72,002
TOTAL CONSUMER DISCRETIONARY			1,675,554
CONSUMER STAPLES - 4.3%
Beverages - 0.5%
Coca-Cola Enterprises, Inc.	410		8,967
Constellation Brands, Inc. Class A (a)	300		9,879
Pepsi Bottling Group, Inc.	800		19,344
PepsiCo, Inc.	150		6,993
			45,183
Food & Staples Retailing - 1.3%
CVS Corp.	1,210		43,705
Common Stocks - continued
	Shares		Value (Note 1)
CONSUMER STAPLES - continued
Food & Staples Retailing - continued
Performance Food Group Co. (a)	470		$ 17,000
Walgreen Co.	300		10,914
Whole Foods Market, Inc.	550		36,922
			108,541
Food Products - 1.7%
Dean Foods Co. (a)	1,780		58,509
Del Monte Foods Co. (a)	3,200		33,280
Hershey Foods Corp.	400		30,796
McCormick & Co., Inc. (non-vtg.)	700		21,070
Smithfield Foods, Inc. (a)	200		4,140
Wm. Wrigley Jr. Co.	30		1,686
			149,481
Household Products - 0.2%
Procter & Gamble Co.	200		19,976
Personal Products - 0.6%
Alberto-Culver Co. Class B	790		49,833
TOTAL CONSUMER STAPLES			373,014
ENERGY - 4.1%
Energy Equipment & Services - 2.3%
BJ Services Co. (a)	30		1,077
Cooper Cameron Corp. (a)	820		38,212
ENSCO International, Inc.	420		11,411
Halliburton Co.	200		5,200
Nabors Industries Ltd. (a)	290		12,035
Noble Corp. (a)	460		16,459
Patterson-UTI Energy, Inc. (a)	690		22,715
Smith International, Inc. (a)	1,020		42,350
Weatherford International Ltd. (a)	1,530		55,080
			204,539
Oil & Gas - 1.8%
Apache Corp.	91		7,380
Burlington Resources, Inc.	740		40,981
Devon Energy Corp.	124		7,100
EOG Resources, Inc.	260		12,004
Murphy Oil Corp.	440		28,736
Pioneer Natural Resources Co. (a)	1,110		35,442
Teekay Shipping Corp.	400		22,812
			154,455
TOTAL ENERGY			358,994
FINANCIALS - 3.6%
Capital Markets - 2.0%
Ameritrade Holding Corp. (a)	1,600		22,512
Bank of New York Co., Inc.	300		9,936
Eaton Vance Corp. (non-vtg.)	670		24,549
Federated Investors, Inc. Class B (non-vtg.)	1,070		31,415

	Shares		Value (Note 1)
Investors Financial Services Corp.	100		$ 3,841
Legg Mason, Inc.	400		30,872
Lehman Brothers Holdings, Inc.	170		13,127
SEI Investments Co.	300		9,141
T. Rowe Price Group, Inc.	260		12,327
Waddell & Reed Financial, Inc. Class A	530		12,434
			170,154
Commercial Banks - 1.3%
East West Bancorp, Inc.	400		21,472
Fifth Third Bancorp	460		27,186
North Fork Bancorp, Inc., New York	260		10,522
Popular, Inc.	300		13,482
Sumitomo Mitsui Financial Group, Inc.	2		10,711
Synovus Financial Corp.	1,130		32,680
			116,053
Real Estate - 0.0%
Catellus Development Corp.	12		289
Thrifts & Mortgage Finance - 0.3%
New York Community Bancorp, Inc.	740		28,157
TOTAL FINANCIALS			314,653
HEALTH CARE - 26.5%
Biotechnology - 8.2%
Affymetrix, Inc. (a)	100		2,461
Alkermes, Inc. (a)	200		2,700
Amylin Pharmaceuticals, Inc. (a)	600		13,332
Biogen Idec, Inc. (a)	2,112		77,679
Celgene Corp. (a)	620		27,912
Cephalon, Inc. (a)	300		14,523
Charles River Laboratories International, Inc. (a)	500		17,165
Genelabs Technologies, Inc. (a)	1,700		4,760
Genentech, Inc. (a)	2,980		278,827
Genzyme Corp. - General Division (a)	70		3,454
Harvard Bioscience, Inc. (a)	600		5,340
ICOS Corp. (a)	200		8,256
ImClone Systems, Inc. (a)	500		19,830
Invitrogen Corp. (a)	300		21,000
Medarex, Inc. (a)	500		3,115
MedImmune, Inc. (a)	2,300		58,420
Millennium Pharmaceuticals, Inc. (a)	4,200		78,414
Neurocrine Biosciences, Inc. (a)	50		2,727
Protein Design Labs, Inc. (a)	4,000		71,600
QIAGEN NV (a)	400		4,784
Trimeris, Inc. (a)	300		6,294
			722,593
Health Care Equipment & Supplies - 6.0%
Arthrocare Corp. (a)	400		9,800
Baxter International, Inc.	2,200		67,144
Beckman Coulter, Inc.	200		10,166
Becton, Dickinson & Co.	300		12,342
Biomet, Inc.	4,020		146,368
Common Stocks - continued
	Shares		Value (Note 1)
HEALTH CARE - continued
Health Care Equipment & Supplies - continued
C.R. Bard, Inc.	450		$ 36,563
Cytyc Corp. (a)	500		6,880
DENTSPLY International, Inc.	875		39,524
Edwards Lifesciences Corp. (a)	1,200		36,096
I-Stat Corp. (a)	100		1,530
Inverness Medical Innovations, Inc. (a)	300		6,534
Medtronic, Inc.	1,440		69,998
ResMed, Inc. (a)	100		4,154
Steris Corp. (a)	100		2,260
Zimmer Holdings, Inc. (a)	1,080		76,032
			525,391
Health Care Providers & Services - 7.7%
Accredo Health, Inc. (a)	550		17,386
Aetna, Inc.	500		33,790
AmerisourceBergen Corp.	410		23,022
Andrx Corp. (a)	300		7,212
Apria Healthcare Group, Inc. (a)	500		14,235
Caremark Rx, Inc. (a)	4,780		121,077
Cerner Corp. (a)	200		7,570
Community Health Systems, Inc. (a)	1,140		30,301
Covance, Inc. (a)	300		8,040
Coventry Health Care, Inc. (a)	550		35,470
DaVita, Inc. (a)	100		3,900
HCA, Inc.	300		12,888
Health Management Associates, Inc. Class A	2,100		50,400
Henry Schein, Inc. (a)	300		20,274
Humana, Inc. (a)	400		9,140
IMS Health, Inc.	1,200		29,832
Inveresk Research Group, Inc. (a)	1,300		32,149
Laboratory Corp. of America Holdings (a)	280		10,346
Lincare Holdings, Inc. (a)	480		14,414
McKesson Corp.	760		24,442
Medco Health Solutions, Inc. (a)	19		646
PacifiCare Health Systems, Inc. (a)	100		6,760
Patterson Dental Co. (a)	160		10,266
Quest Diagnostics, Inc.	280		20,471
Renal Care Group, Inc. (a)	500		20,600
Select Medical Corp.	580		9,442
Specialty Laboratories, Inc. (a)	200		3,358
Tenet Healthcare Corp. (a)	1,200		19,260
Triad Hospitals, Inc. (a)	360		11,977
UnitedHealth Group, Inc.	710		41,308
Universal Health Services, Inc. Class B	600		32,232
			682,208
Pharmaceuticals - 4.6%
Abbott Laboratories	330		15,378
Allergan, Inc.	780		59,912
Barr Laboratories, Inc. (a)	650		50,018

	Shares		Value (Note 1)
Elan Corp. PLC sponsored ADR (a)	300		$ 2,067
Endo Pharmaceuticals Holdings, Inc. (a)	300		5,778
Forest Laboratories, Inc. (a)	425		26,265
IVAX Corp. (a)	2,300		54,924
Johnson & Johnson	200		10,332
MGI Pharma, Inc. (a)	400		16,460
Mylan Laboratories, Inc.	1,175		29,681
Pharmaceutical Resources, Inc. (a)	360		23,454
Salix Pharmaceuticals Ltd. (a)	400		9,068
Schering-Plough Corp.	1,200		20,868
Sepracor, Inc. (a)	2,100		50,253
Watson Pharmaceuticals, Inc. (a)	700		32,200
			406,658
TOTAL HEALTH CARE			2,336,850
INDUSTRIALS - 8.5%
Aerospace & Defense - 1.1%
EADS NV	1,000		23,711
Embraer - Empresa Brasileira de Aeronautica SA sponsored ADR	700		24,521
KVH Industries, Inc. (a)	100		2,747
Lockheed Martin Corp.	400		20,560
Northrop Grumman Corp.	170		16,252
Rockwell Collins, Inc.	300		9,009
			96,800
Air Freight & Logistics - 0.1%
Expeditors International of Washington, Inc.	200		7,532
Building Products - 0.7%
American Standard Companies, Inc. (a)	520		52,364
Trex Co., Inc. (a)	100		3,798
			56,162
Commercial Services & Supplies - 4.3%
Avery Dennison Corp.	530		29,691
Career Education Corp. (a)	400		16,028
ChoicePoint, Inc. (a)	500		19,045
Cintas Corp.	870		43,613
Corinthian Colleges, Inc. (a)	200		11,112
DeVry, Inc. (a)	400		10,052
Education Management Corp. (a)	320		9,933
Equifax, Inc.	870		21,315
H&R Block, Inc.	1,140		63,122
Herman Miller, Inc.	360		8,737
HON Industries, Inc.	200		8,664
ITT Educational Services, Inc. (a)	300		14,091
Manpower, Inc.	70		3,296
Pitney Bowes, Inc.	1,260		51,181
Robert Half International, Inc. (a)	2,500		58,350
School Specialty, Inc. (a)	400		13,604
			381,834
Construction & Engineering - 0.1%
Granite Construction, Inc.	430		10,101
Common Stocks - continued
	Shares		Value (Note 1)
INDUSTRIALS - continued
Electrical Equipment - 0.1%
Cooper Industries Ltd. Class A	150		$ 8,690
Industrial Conglomerates - 0.7%
3M Co.	370		31,461
Tyco International Ltd.	1,120		29,680
			61,141
Machinery - 0.9%
AGCO Corp. (a)	840		16,918
Astec Industries, Inc. (a)	600		7,362
Ingersoll-Rand Co. Ltd. Class A	160		10,861
ITT Industries, Inc.	560		41,558
Pall Corp.	200		5,366
			82,065
Trading Companies & Distributors - 0.5%
Fastenal Co.	840		41,950
TOTAL INDUSTRIALS			746,275
INFORMATION TECHNOLOGY - 27.4%
Communications Equipment - 5.1%
3Com Corp. (a)	2,600		21,242
ADC Telecommunications, Inc. (a)	800		2,376
Advanced Fibre Communications, Inc. (a)	300		6,045
Alcatel SA sponsored ADR (a)	5,700		73,245
Arris Group, Inc. (a)	300		2,172
AudioCodes Ltd. (a)	1,530		15,973
Avaya, Inc. (a)	800		10,352
Avocent Corp. (a)	280		10,226
Brocade Communications Systems, Inc. (a)	1,110		6,416
CIENA Corp. (a)	2,100		13,944
Cisco Systems, Inc. (a)	6,200		150,598
Corning, Inc. (a)	3,700		38,591
Enterasys Networks, Inc. (a)	1,420		5,325
Extreme Networks, Inc. (a)	400		2,884
Finisar Corp. (a)	6,600		20,658
Foundry Networks, Inc. (a)	300		8,208
InterDigital Communication Corp. (a)	300		6,192
JDS Uniphase Corp. (a)	1,900		6,935
Marconi Corp. PLC (a)	2,970		31,395
Polycom, Inc. (a)	280		5,466
SeaChange International, Inc. (a)	300		4,620
Sycamore Networks, Inc. (a)	900		4,716
			447,579
Computers & Peripherals - 4.3%
Avid Technology, Inc. (a)	100		4,800
Diebold, Inc.	1,460		78,650
Electronics for Imaging, Inc. (a)	715		18,604
EMC Corp. (a)	468		6,047
Hewlett-Packard Co.	200		4,594
Hutchinson Technology, Inc. (a)	100		3,074

	Shares		Value (Note 1)
Lexmark International, Inc. Class A (a)	2,340		$ 184,018
Maxtor Corp. (a)	1,900		21,090
Seagate Technology	1,050		19,845
Sun Microsystems, Inc. (a)	6,470		29,050
Western Digital Corp. (a)	800		9,432
			379,204
Electronic Equipment & Instruments - 1.5%
Arrow Electronics, Inc. (a)	400		9,256
CDW Corp.	250		14,440
Celestica, Inc. (sub. vtg.) (a)	200		3,016
Flextronics International Ltd. (a)	2,100		31,164
Ingram Micro, Inc. Class A (a)	500		7,950
KEMET Corp. (a)	1,300		17,797
Solectron Corp. (a)	2,500		14,775
Symbol Technologies, Inc.	1,400		23,646
Vishay Intertechnology, Inc. (a)	600		13,740
			135,784
Internet Software & Services - 0.6%
Retek, Inc. (a)	634		5,884
Sina Corp. (a)	200		6,750
United Online, Inc. (a)	150		2,519
VeriSign, Inc. (a)	300		4,890
Vignette Corp. (a)	6,870		15,595
Vitria Technology, Inc. (a)	1,000		7,100
Yahoo!, Inc. (a)	200		9,034
			51,772
IT Services - 2.8%
Accenture Ltd. Class A (a)	400		10,528
Affiliated Computer Services, Inc. Class A (a)	680		37,033
Anteon International Corp. (a)	100		3,605
BearingPoint, Inc. (a)	400		4,036
Computer Sciences Corp. (a)	100		4,423
Concord EFS, Inc. (a)	3,000		44,520
DST Systems, Inc. (a)	300		12,528
First Data Corp.	770		31,639
Fiserv, Inc. (a)	590		23,311
Infosys Technologies Ltd. sponsored ADR	300		28,710
Iron Mountain, Inc. (a)	600		23,724
Paychex, Inc.	150		5,580
SunGard Data Systems, Inc. (a)	550		15,241
The BISYS Group, Inc. (a)	400		5,952
			250,830
Office Electronics - 0.7%
Xerox Corp. (a)	1,300		17,940
Zebra Technologies Corp. Class A (a)	662		43,937
			61,877
Semiconductors & Semiconductor Equipment - 6.8%
Advanced Micro Devices, Inc. (a)	300		4,470
Agere Systems, Inc. Class A (a)	4,831		14,735
Analog Devices, Inc.	400		18,260
Applied Materials, Inc. (a)	500		11,225
Common Stocks - continued
	Shares		Value (Note 1)
INFORMATION TECHNOLOGY - continued
Semiconductors & Semiconductor Equipment - continued
Cabot Microelectronics Corp. (a)	100		$ 4,900
Conexant Systems, Inc. (a)	9,090		45,177
Cypress Semiconductor Corp. (a)	400		8,544
Integrated Circuit Systems, Inc. (a)	400		11,396
Integrated Device Technology, Inc. (a)	900		15,453
Intel Corp.	320		10,304
KLA-Tencor Corp. (a)	380		22,295
Lam Research Corp. (a)	200		6,460
LSI Logic Corp. (a)	2,400		21,288
Microchip Technology, Inc.	4,850		161,796
Micron Technology, Inc. (a)	2,140		28,826
Mindspeed Technologies, Inc. (a)	263		1,802
National Semiconductor Corp. (a)	900		35,469
Novellus Systems, Inc. (a)	600		25,230
NVIDIA Corp. (a)	2,080		48,360
Photronics, Inc. (a)	1,600		31,872
PMC-Sierra, Inc. (a)	2,216		44,652
Rambus, Inc. (a)	200		6,140
Silicon Laboratories, Inc. (a)	80		3,458
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR (a)	32		328
Texas Instruments, Inc.	100		2,938
United Microelectronics Corp. sponsored ADR (a)	104		515
Varian Semiconductor Equipment Associates, Inc. (a)	300		13,107
			599,000
Software - 5.6%
Adobe Systems, Inc.	1,250		49,125
Amdocs Ltd. (a)	2,400		53,952
Autodesk, Inc.	200		4,916
BEA Systems, Inc. (a)	2,900		35,670
BMC Software, Inc. (a)	460		8,579
Cadence Design Systems, Inc. (a)	2,800		50,344
Citrix Systems, Inc. (a)	350		7,424
Cognos, Inc. (a)	100		3,054
E.piphany, Inc. (a)	800		5,768
Electronic Arts, Inc. (a)	1,000		47,780
i2 Technologies, Inc. (a)	3,900		6,474
Intuit, Inc. (a)	960		50,794
Jack Henry & Associates, Inc.	240		4,939
Manhattan Associates, Inc. (a)	100		2,764
Mercury Interactive Corp. (a)	500		24,320
Network Associates, Inc. (a)	440		6,618
Oracle Corp. (a)	700		9,240
Parametric Technology Corp. (a)	1,000		3,940
Red Hat, Inc. (a)	400		7,508

	Shares		Value (Note 1)
Siebel Systems, Inc. (a)	5,475		$ 75,938
Symantec Corp. (a)	820		28,413
VERITAS Software Corp. (a)	41		1,524
			489,084
TOTAL INFORMATION TECHNOLOGY			2,415,130
MATERIALS - 1.8%
Chemicals - 0.6%
Dow Chemical Co.	400		16,628
Ferro Corp.	500		13,605
International Flavors & Fragrances, Inc.	200		6,984
Olin Corp.	620		12,437
Praxair, Inc.	100		3,820
			53,474
Construction Materials - 0.0%
Martin Marietta Materials, Inc.	70		3,288
Containers & Packaging - 0.7%
Owens-Illinois, Inc. (a)	660		7,847
Pactiv Corp. (a)	400		9,560
Sealed Air Corp. (a)	730		39,522
			56,929
Metals & Mining - 0.5%
Freeport-McMoRan Copper & Gold, Inc. Class B	690		29,070
Massey Energy Co.	570		11,856
United States Steel Corp.	200		7,004
			47,930
TOTAL MATERIALS			161,621
TELECOMMUNICATION SERVICES - 1.7%
Diversified Telecommunication Services - 0.5%
Covad Communications Group, Inc. (a)	3,500		12,600
NTL, Inc. (a)	340		23,715
Qwest Communications International, Inc. (a)	2,410		10,411
			46,726
Wireless Telecommunication Services - 1.2%
Arch Wireless, Inc. Class A (a)	100		1,980
At Road, Inc. (a)	200		2,660
KDDI Corp.	3		17,276
MobilCom AG (a)	483		7,777
Nextel Communications, Inc. Class A (a)	2,700		75,762
			105,455
TOTAL TELECOMMUNICATION SERVICES			152,181
TOTAL COMMON STOCKS (Cost $7,153,712)		8,534,272
Money Market Funds - 6.4%
	Shares		Value (Note 1)
Fidelity Cash Central Fund, 1.07% (b) (Cost $567,561)	567,561		$ 567,561
Cash Equivalents - 0.3%
	Maturity Amount
Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 0.81%, dated 12/31/03 due 1/2/04) (Cost $26,000)	26,001		26,000
TOTAL INVESTMENT PORTFOLIO - 103.6% (Cost $7,747,273)			9,127,833
NET OTHER ASSETS - (3.6)%			(321,041)
NET ASSETS - 100%		$ 8,806,792

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $11,367,371 and $9,270,346, respectively.

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 $914 for the period.

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $1,635,000 of which $191,000 and $1,444,000 will expire on December 31, 2009 and 2010, respectively.

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

Aggressive Growth Portfolio

Fidelity Variable Insurance Products: Aggressive Growth Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (including repurchase agreements of $26,000) (cost $ 7,747,273) - See accompanying schedule		$ 9,127,833
Cash		16
Receivable for investments sold		166,920
Receivable for fund shares sold		13,122
Dividends receivable		2,953
Interest receivable		423
Prepaid expenses		44
Receivable from investment adviser for expense reductions		17,177
Other receivables		1,563
Total assets		9,330,051

Liabilities
Payable for investments purchased	$ 465,748
Payable for fund shares redeemed	40
Accrued management fee	4,475
Distribution fees payable	1,470
Other affiliated payables	5,491
Other payables and accrued expenses	46,035
Total liabilities		523,259

Net Assets		$ 8,806,792
Net Assets consist of:
Paid in capital		$ 9,097,301
Undistributed net investment income		14,866
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(1,685,922)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		1,380,547
Net Assets		$ 8,806,792

Initial Class: Net Asset Value, offering price and redemption price per share ($907,476 ÷ 114,938 shares)		$ 7.90
Service Class: Net Asset Value, offering price and redemption price per share ($1,025,990 ÷ 129,494 shares)		$ 7.92
Service Class 2: Net Asset Value, offering price and redemption price per share ($6,873,326 ÷ 878,346 shares)		$ 7.83

Statement of Operations

	Year ended December 31, 2003

Investment Income
Dividends		$ 30,694
Interest		8,583
Total income		39,277

Expenses
Management fee	$ 42,657
Transfer agent fees	8,782
Distribution fees	13,656
Accounting fees and expenses	60,013
Non-interested trustees' compensation	27
Custodian fees and expenses	15,212
Audit	59,439
Legal	1,076
Miscellaneous	7,908
Total expenses before reductions	208,770
Expense reductions	(113,727)	95,043

Net investment income (loss)		(55,766)
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	480,299
Foreign currency transactions	129
Futures contracts	34,908
Total net realized gain (loss)		515,336
Change in net unrealized appreciation (depreciation) on: Investment securities	1,391,670
Assets and liabilities in foreign currencies	(13)
Total change in net unrealized appreciation (depreciation)		1,391,657
Net gain (loss)		1,906,993
Net increase (decrease) in net assets resulting from operations		$ 1,851,227

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

Annual Report

Fidelity Variable Insurance Products: Aggressive Growth Portfolio

Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ (55,766)	$ (63,844)
Net realized gain (loss)	515,336	(1,488,256)
Change in net unrealized appreciation (depreciation)	1,391,657	(366,835)
Net increase (decrease) in net assets resulting from operations	1,851,227	(1,918,935)
Share transactions - net increase (decrease)	1,557,602	801,804
Total increase (decrease) in net assets	3,408,829	(1,117,131)

Net Assets
Beginning of period	5,397,963	6,515,094
End of period (including undistributed net investment income of $14,866 and undistributed net investment income of $15,623, respectively)	$ 8,806,792	$ 5,397,963

Other Information:
Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	11,342	4,373	340,232
Reinvested	-	-	-
Redeemed	(10,321)	(3,096)	(116,001)
Net increase (decrease)	1,021	1,277	224,231

Dollars Sold	$ 73,891	$ 29,803	$ 2,324,950
Reinvested	-	-	-
Redeemed	(66,540)	(19,968)	(784,534)
Net increase (decrease)	$ 7,351	$ 9,835	$ 1,540,416

Share Transactions	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	55,910	137,311	771,955
Reinvested	-	-	-
Redeemed	(46,999)	(148,746)	(666,587)
Net increase (decrease)	8,911	(11,435)	105,368

Dollars Sold	$ 415,705	$ 1,087,968	$ 5,652,894
Reinvested	-	-	-
Redeemed	(342,688)	(1,150,185)	(4,861,890)
Net increase (decrease)	$ 73,017	$ (62,217)	$ 791,004

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

Aggressive Growth Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 6.05	$ 8.22	$ 10.02	$ 10.00
Income from Investment Operations
Net investment income (loss)^E	(.04)	(.06)	.03^H	-^I
Net realized and unrealized gain (loss)	1.89	(2.11)	(1.82)^H	.02
Total from investment operations	1.85	(2.17)	(1.79)	.02
Distributions from net investment income	-	-	(.01)	-
Net asset value, end of period	$ 7.90	$ 6.05	$ 8.22	$ 10.02
Total Return^B,C,D	30.58%	(26.40)%	(17.89)%	.20%
Ratios to Average Net Assets^G
Expenses before expense reductions	2.87%	2.51%	3.00%	146.41%^A
Expenses net of voluntary waivers, if any	1.26%	1.50%	1.50%	1.50%^A
Expenses net of all reductions	1.20%	1.35%	1.45%	1.50%^A
Net investment income (loss)	(.62)%	(.85)%	.34%^H	5.50%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 907	$ 689	$ 864	$ 301
Portfolio turnover rate	150%	460%	526%	26%^A

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period December 27, 2000 (commencement of operations) to December 31, 2000.

^G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary 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.

^H Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

^IAmount represents less than $.01 per share.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 6.07	$ 8.25	$ 10.02	$ 10.00
Income from Investment Operations
Net investment income (loss)^E	(.05)	(.07)	.02^H	-^I
Net realized and unrealized gain (loss)	1.90	(2.11)	(1.78)^H	.02
Total from investment operations	1.85	(2.18)	(1.76)	.02
Distributions from net investment income	-	-	(.01)	-
Net asset value, end of period	$ 7.92	$ 6.07	$ 8.25	$ 10.02
Total Return^B,C,D	30.48%	(26.42)%	(17.59)%	.20%
Ratios to Average Net Assets^G
Expenses before expense reductions	2.94%	2.56%	3.09%	146.53%^A
Expenses net of voluntary waivers, if any	1.36%	1.60%	1.60%	1.60%^A
Expenses net of all reductions	1.30%	1.45%	1.55%	1.60%^A
Net investment income (loss)	(.72)%	(.96)%	.24%^H	5.37%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 1,026	$ 779	$ 1,152	$ 301
Portfolio turnover rate	150%	460%	526%	26%^A

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period December 27, 2000 (commencement of operations) to December 31, 2000.

^IAmount represents less than $.01 per share.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 6.01	$ 8.20	$ 10.02	$ 10.00
Income from Investment Operations
Net investment income (loss)^E	(.06)	(.08)	.01^H	-^I
Net realized and unrealized gain (loss)	1.88	(2.11)	(1.82)^H	.02
Total from investment operations	1.82	(2.19)	(1.81)	.02
Distributions from net investment income	-	-	(.01)	-
Net asset value, end of period	$ 7.83	$ 6.01	$ 8.20	$ 10.02
Total Return^B,C,D	30.28%	(26.71)%	(18.08)%	.20%
Ratios to Average Net Assets^G
Expenses before expense reductions	3.14%	2.74%	3.23%	146.63%^A
Expenses net of voluntary waivers, if any	1.51%	1.75%	1.75%	1.75%^A
Expenses net of all reductions	1.45%	1.60%	1.70%	1.75%^A
Net investment income (loss)	(.87)%	(1.11)%	.09%^H	5.24%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 6,873	$ 3,930	$ 4,500	$ 401
Portfolio turnover rate	150%	460%	526%	26%^A

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period December 27, 2000 (commencement of operations) to December 31, 2000.

^I Amount represents less than $.01 per share.

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

Aggressive Growth Portfolio

Notes to Financial Statements

For the period ended December 31, 2003

1. Significant Accounting Policies.

Aggressive Growth Portfolio (the fund) is a fund of Variable Insurance Products Fund III (the trust) (referred to in this report as Fidelity Variable Insurance Products: Aggressive Growth Portfolio) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The fund offers the following classes of shares: Initial Class shares, Service Class shares and Service Class 2 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.

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

Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If an event that is expected to materially affect the value of a security occurs after the close of an exchange or market on which that security trades, but prior to the NAV calculation, then that security will be fair valued taking the event into account. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.

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

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

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

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.

Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. Income dividends and capital gain distributions are declared separately for each class. Distributions are recorded on the ex-dividend date.

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent and temporary book and tax differences. These adjustments have no impact on net assets or the results of operations. Temporary differences will reverse in a subsequent period. These differences are primarily due to futures transactions, foreign currency transactions, market discount, net operating losses, capital loss carryforwards, and losses deferred due to wash sales.

Annual Report

Notes to Financial Statements - continued

1. Significant Accounting Policies - continued

The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:

Unrealized appreciation	$ 1,490,271	\|
Unrealized depreciation	(145,708)
Net unrealized appreciation (depreciation)	1,344,563
Capital loss carryforward	(1,635,067)

Cost for federal income tax purposes	$ 7,783,270

2. Operating Policies.

Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .35% of the fund's average net assets and a group fee rate that averaged .28% 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 annual management fee rate was .63% of the fund's average net assets.

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

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

Service Class	$ 872	\|
Service Class 2	12,784
	$ 13,656

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 account. FIIOC pays a portion of the expenses related to the typesetting, printing and mailing of all shareholder reports, except proxy statements. Each class pays a transfer agent fee excluding out of pocket expenses, equal to an annual rate of .07% of their month end net assets.

Aggressive Growth Portfolio

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

For the period, the total transfer agent fees paid by each class to FIIOC, including out-of-pocket expenses, were as follows:

Initial Class	$ 897	\|
Service Class	800
Service Class 2	7,085
	$ 8,782

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 the month plus out-of-pocket expenses.

Central Funds. The fund may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the fund are recorded as income in the accompanying financial statements and totaled $8,269 for the period.

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 are shown under the caption "Other Information" at the end of the fund's Schedule of Investments.

5. Committed Line of Credit.

The fund participates with other funds managed by FMR in a $3.5 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. During the period, there were no borrowings on this line of credit.

6. Expense Reductions.

FMR agreed to reimburse each class to the extent operating expenses exceeded certain levels of average net assets as noted in the table below. Some expenses, for example interest expense, are excluded from this reimbursement.

	Expense Limitations	Reimbursement from adviser
Initial Class	1.50%-1.00%*	$ 12,398
Service Class	1.60%-1.10%*	13,833
Service Class 2	1.75%-1.25%*	83,511
		$ 109,742

* Expense limitation in effect at period end.

7. Other Information.

At the end of the period, FMR or its affiliates were the owners of record of 51% of the total outstanding shares of the fund and 2 unaffiliated shareholders were the owners of record of 46% of the total outstanding shares of the fund.

Annual Report

Independent Auditors' Report

To the Trustees of Variable Insurance Products Fund III and Shareholders of Aggressive Growth Portfolio:

We have audited the accompanying statement of assets and liabilities of Aggressive Growth Portfolio (the Fund), a fund of Variable Insurance Products Fund III, including the portfolio of investments, as of December 31, 2003, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2003, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Aggressive Growth Portfolio as of December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 18, 2004

Annual Report

Trustees and Officers

The Trustees, Members of the Advisory Board, and executive officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, and review the fund's performance. Except for William O. McCoy, each of the Trustees oversees 292 funds advised by FMR or an affiliate. Mr. McCoy oversees 294 funds advised by FMR or an affiliate.

The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. In any event, each non-interested Trustee shall retire not later than the last day of the calendar year in which his or her 72nd birthday occurs. The executive officers and Advisory Board Members hold office without limit in time, except that any officer and Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.

The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-221-5207.

Interested Trustees*:

Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Edward C. Johnson 3d (73)**
	Year of Election or Appointment: 1994 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc.
Abigail P. Johnson (42)**
	Year of Election or Appointment: 2001 Senior Vice President of VIP Aggressive Growth (2001). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds.
Laura B. Cronin (49)
	Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002).
Robert L. Reynolds (51)
	Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000).

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.

** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.

Annual Report

Non-Interested Trustees:

Correspondence intended for each non-interested Trustee (that is, the Trustees other than the Interested Trustees) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.

Name, Age; Principal Occupation
J. Michael Cook (61)
	Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), Rockwell Automation (2000), and The Dow Chemical Company (2000). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Board of the Directorship Search Group, Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater.
Ralph F. Cox (71)
	Year of Election or Appointment: 1994 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin.
Robert M. Gates (60)
	Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), and Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001). He also serves as a member of the Advisory Board of VoteHere.net (secure internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy.
George H. Heilmeier (67)
	Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002) and Compaq (1994-2002).
Donald J. Kirk (71)
	Year of Election or Appointment: 1994 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations).
Marie L. Knowles (57)
	Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing), URS Corporation (multidisciplinary engineering, 1999), and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (59)
	Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Chairman and as a Director (1998) of Acterna Corporation (communications test equipment). He is also Co-Chairman of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Eaton Corporation (diversified industrial) and the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations.
Marvin L. Mann (70)
	Year of Election or Appointment: 1994 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals) where he served as CEO until April 1998 and retired as Chairman May 1999, and remains a member of the Board. Prior to 1991, he held the positions of Vice President of International Business Machines Corporation (IBM) and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Board member of Imation Corp. (imaging and information storage) and Acterna Corporation (communications test equipment, 1999). He is also a member of the Director Services Committee of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama.
William O. McCoy (70)
	Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), Progress Energy, Inc. (electric utility), and Acterna Corporation (communications test equipment, 1999). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998).
William S. Stavropoulos (64)
	Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman of the Board, President and CEO (2002), and Chairman of the Executive Committee (2000) and a Director of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000) and Chief Executive Officer (1995-2000). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council, World Business Council for Sustainable Development, and the University of Notre Dame Advisory Council for the College of Science.

Annual Report

Advisory Board Members and Executive Officers:

Correspondence intended for Ms. Small may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for each executive officer and Mr. Lynch may be sent to 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Peter S. Lynch (60)
	Year of Election or Appointment: 2003 Member of the Advisory Board of Variable Insurance Products Fund III. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity Magellan Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
Cornelia M. Small (59)
	Year of Election or Appointment: 2004 Member of the Advisory Board of Variable Insurance Products Fund III. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors (1998-1999) of Scudder Kemper Investments. In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
Rajiv Kaul (32)
	Year of Election or Appointment: 2003 Vice President of VIP Aggressive Growth. Mr. Kaul also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Kaul worked as a portfolio manager.
Eric D. Roiter (55)
	Year of Election or Appointment: 2000 Secretary of VIP Aggressive Growth. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003).
Stuart Fross (44)
	Year of Election or Appointment: 2003 Assistant Secretary of VIP Aggressive Growth. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR.
Maria F. Dwyer (45)
	Year of Election or Appointment: 2002 President and Treasurer of VIP Aggressive Growth. Ms. Dwyer also serves as President and Treasurer of other Fidelity funds (2002) and is a Vice President (1999) and an employee (1996) of FMR.
Timothy F. Hayes (53)
	Year of Election or Appointment: 2002 Chief Financial Officer of VIP Aggressive Growth. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998).
John R. Hebble (45)
	Year of Election or Appointment: 2003 Deputy Treasurer of VIP Aggressive Growth. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003).
John H. Costello (57)
	Year of Election or Appointment: 2000 Assistant Treasurer of VIP Aggressive Growth. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Francis V. Knox, Jr. (56)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Aggressive Growth. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002).
Mark Osterheld (48)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Aggressive Growth. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Thomas J. Simpson (45)
	Year of Election or Appointment: 2000 Assistant Treasurer of VIP Aggressive Growth. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995).

Annual Report

Aggressive Growth Portfolio

Annual Report

Aggressive Growth Portfolio

Annual Report

Aggressive Growth Portfolio

Annual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Far East) Inc.

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Shareholder Servicing Agent

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA

Custodian

JPMorgan Chase Bank
New York, NY

VIPAG-ANN-0204
1.751800.103

Fidelity® Variable Insurance Products:

Balanced Portfolio

Annual Report

December 31, 2003

(2_fidelity_logos) (Registered_Trademark)

Performance	<Click Here>	How the fund has done over time.
Management's Discussion	<Click Here>	The manager's review of fund performance, strategy and outlook.
Investment Summary	<Click Here>	A summary of the fund's investments at period end.
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.
Auditors' Opinion	<Click Here>
Trustees and Officers	<Click Here>
Distributions	<Click Here>

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

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

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

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

(Recycle graphic) This report is printed on recycled paper using soy-based inks.

Neither the fund nor Fidelity Distributors Corporation is a bank.

Balanced Portfolio

Fidelity Variable Insurance Products: Balanced Portfolio

Performance: The Bottom Line

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Life of fund^A
Fidelity ® VIP: Balanced - Initial Class	17.72%	1.14%	7.43%
Fidelity VIP: Balanced - Service Class^B	17.53%	1.03%	7.33%
Fidelity VIP: Balanced - Service Class 2^C	17.41%	0.91%	7.26%

^A From January 3, 1995.

^BThe initial offering of Service Class shares took place on November 3, 1997. Performance for Service Class shares reflects an asset-based service fee (12b-1 fee), and returns prior to November 3, 1997 are those of Initial Class and do not include the effects of Service Class' 12b-1 fee. Had Service Class shares' 12b-1 fee been reflected, returns prior to November 3, 1997 would have been lower.

^CThe initial offering of Service Class 2 shares took place on January 12, 2000. Performance for Service Class 2 shares reflects an asset-based service fee (12b-1 fee). Returns from November 3, 1997 through January 12, 2000 are those of Service Class which reflects a different 12b-1 fee. Service Class 2 returns prior to November 3, 1997 are those of Initial Class, and do not include the effects of a 12b-1 fee. Had Service Class 2's 12b-1 fee been reflected, returns prior to January 12, 2000 would have been lower.

$10,000 Over Life of Fund

Let's say hypothetically that $10,000 was invested in Fidelity® Variable Insurance Products: Balanced Portfolio - Initial Class on January 3, 1995, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 Index did over the same period.

Annual Report

Fidelity Variable Insurance Products: Balanced Portfolio

Management's Discussion of Fund Performance

Comments from Louis Salemy, Lead Portfolio Manager of Fidelity® Variable Insurance Products: Balanced Portfolio

Equity markets snapped a three-year losing streak in 2003, rebounding amid historically low interest rates, improved corporate profits and a resurgent economy. Investors were encouraged by solid gross domestic product (GDP) growth in the first two quarters of 2003, and what seemed to be a quick end to the Iraqi conflict. Federal tax cuts and a boom in mortgage refinancing further boosted the markets, as did an astonishing 8.2% surge in third-quarter GDP growth. As a result of 2003's economic upturn, stocks soared: The Standard & Poor's 500^SM Index gained 28.69%, the Dow Jones Industrial Average^SM rose 28.14% and the NASDAQ Composite® Index advanced 50.77%. Meanwhile, despite modestly higher interest rates, investment-grade bonds were up 4.10%, according to the Lehman Brothers® Aggregate Bond Index. Investors' renewed appetite for risk and higher yields helped all spread sectors outpace Treasuries, which returned only 2.24%. Corporates had a stellar year, particularly lower-quality issues, as the Lehman Brothers Credit Bond Index gained 7.70%. Increased volatility tempered mortgage securities, while heightened regulatory scrutiny curbed agency bond performance. Still, the Lehman Brothers Mortgage-Backed Securities and U.S. Agency indexes rose 3.07% and 2.59%, respectively.

During the past year, the fund modestly trailed both the Fidelity Balanced 60/40 Composite Index and the Lipper^SM Variable Annuity Balanced Funds Average, which returned 18.48% and 18.96%, respectively. The fund's equities contributed the most to absolute returns but were a drag on performance relative to its benchmarks. Our fixed-income investments, meanwhile, fared quite well on a relative basis. Specifically, we benefited from allocating part of the bond subportfolio to high-yield securities, which trounced investment-grade debt. Rebounding corporate bonds also helped our investment-grade holdings soundly beat the Lehman Brothers index. On the equity front, weak sector positioning more than offset good stock picking overall. Most of the shortfall versus the S&P 500® came in the second half of the period as I avoided surging technology stocks such as Intel. Overweighting weak telecommunication services stocks - most notably BellSouth - also hurt, as did retailers such as Kohl's. Conversely, I had some solid picks in the media group, led by large stakes in advertising giant Omnicom Group and satellite broadcaster EchoStar. Favoring market-sensitive financials such as Merrill Lynch also helped, as did underweighting the lagging large-cap drug stocks.

The views expressed in this statement reflect those of the portfolio managers only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.

Annual Report

Fidelity Variable Insurance Products: Balanced Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Omnicom Group, Inc.	4.0
Gillette Co.	3.6
Morgan Stanley	3.3
BellSouth Corp.	3.3
Wells Fargo & Co.	2.9
	17.1
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Financials	17.2
Consumer Discretionary	15.1
Consumer Staples	11.2
Telecommunication Services	6.6
Industrials	4.5

Asset Allocation as of December 31, 2003
% of fund's net assets*
	Stocks	55.1%
	Bonds	35.8%
	Short-Term Investments and Net Other Assets	8.9%
	Other Investments	0.2%
* Foreign investments		5.1%

Percentages are adjusted for the effect of futures contracts and swaps, if applicable. The information in the above tables is based on the combined investments of the fund and its pro-rata share of the investments of Fidelity's fixed income central fund.

Annual Report

Fidelity Variable Insurance Products: Balanced Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 55.1%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 12.3%
Hotels, Restaurants & Leisure - 0.4%
Carnival Corp. unit	21,100		$ 838,303
Starwood Hotels & Resorts Worldwide, Inc. unit	15,100		543,147
			1,381,450
Household Durables - 0.1%
Garmin Ltd.	3,800		207,024
Media - 9.7%
Comcast Corp. Class A (special) (a)	39,600		1,238,688
E.W. Scripps Co. Class A	55,400		5,215,356
EchoStar Communications Corp. Class A (a)	294,800		10,023,200
News Corp. Ltd. ADR	63,500		2,292,350
Omnicom Group, Inc.	158,600		13,850,527
Pegasus Communications Corp. Class A (a)	25,600		718,848
Tribune Co.	6,400		330,240
			33,669,209
Multiline Retail - 1.4%
Barneys, Inc. warrants 4/1/08 (a)	120		2,400
Dollar Tree Stores, Inc. (a)	32,200		967,932
Kohl's Corp. (a)	82,200		3,694,068
Nordstrom, Inc.	4,300		147,490
			4,811,890
Specialty Retail - 0.4%
Hollywood Entertainment Corp. (a)	114,200		1,570,250
Textiles Apparel & Luxury Goods - 0.3%
Liz Claiborne, Inc.	29,000		1,028,340
TOTAL CONSUMER DISCRETIONARY			42,668,163
CONSUMER STAPLES - 10.6%
Beverages - 0.8%
Anheuser-Busch Companies, Inc.	11,100		584,748
The Coca-Cola Co.	41,900		2,126,425
			2,711,173
Food & Staples Retailing - 3.3%
Costco Wholesale Corp. (a)	21,200		788,216
Sysco Corp.	27,500		1,023,825
Wal-Mart Stores, Inc.	132,900		7,050,345
Walgreen Co.	69,900		2,542,962
			11,405,348
Food Products - 0.6%
McCormick & Co., Inc. (non-vtg.)	62,400		1,878,240
Unilever PLC sponsored ADR	10,400		391,040
			2,269,280

	Shares		Value (Note 1)
Household Products - 1.6%
Colgate-Palmolive Co.	42,300		$ 2,117,115
Kimberly-Clark Corp.	55,800		3,297,222
			5,414,337
Personal Products - 3.6%
Gillette Co.	336,600		12,363,318
Tobacco - 0.7%
Altria Group, Inc.	45,950		2,500,599
TOTAL CONSUMER STAPLES			36,664,055
ENERGY - 2.7%
Oil & Gas - 2.7%
BP PLC sponsored ADR	63,600		3,138,660
Exxon Mobil Corp.	155,932		6,393,212
			9,531,872
FINANCIALS - 13.3%
Capital Markets - 7.1%
Goldman Sachs Group, Inc.	54,000		5,331,420
Merrill Lynch & Co., Inc.	134,800		7,906,020
Morgan Stanley	198,400		11,481,408
			24,718,848
Commercial Banks - 3.3%
Bank One Corp.	30,500		1,390,495
Wells Fargo & Co.	171,000		10,070,190
			11,460,685
Consumer Finance - 0.5%
American Express Co.	34,100		1,644,643
Insurance - 2.2%
Allstate Corp.	42,200		1,815,444
American International Group, Inc.	65,550		4,344,654
PartnerRe Ltd.	19,200		1,114,560
Travelers Property Casualty Corp. Class B	22,800		386,916
			7,661,574
Real Estate - 0.2%
Equity Office Properties Trust	28,000		802,200
TOTAL FINANCIALS			46,287,950
HEALTH CARE - 2.9%
Biotechnology - 0.5%
Amgen, Inc. (a)	29,400		1,816,920
Health Care Equipment & Supplies - 0.9%
Alcon, Inc.	20,800		1,259,232
Medtronic, Inc.	33,200		1,613,852
			2,873,084
Common Stocks - continued
	Shares		Value (Note 1)
HEALTH CARE - continued
Pharmaceuticals - 1.5%
Allergan, Inc.	16,500		$ 1,267,365
Pfizer, Inc.	113,600		4,013,488
			5,280,853
TOTAL HEALTH CARE			9,970,857
INDUSTRIALS - 3.8%
Aerospace & Defense - 1.1%
EADS NV	19,200		455,259
Lockheed Martin Corp.	19,500		1,002,300
Northrop Grumman Corp.	13,900		1,328,840
United Technologies Corp.	10,200		966,654
			3,753,053
Airlines - 0.8%
Continental Airlines, Inc. Class B (a)	97,900		1,592,833
MAIR Holdings, Inc. (a)	2,493		18,149
Northwest Airlines Corp. (a)	47,800		603,236
Southwest Airlines Co.	31,200		503,568
			2,717,786
Building Products - 0.1%
American Standard Companies, Inc. (a)	4,200		422,940
Commercial Services & Supplies - 0.3%
Avery Dennison Corp.	15,600		873,912
Industrial Conglomerates - 1.1%
General Electric Co.	122,600		3,798,148
Machinery - 0.0%
Illinois Tool Works, Inc.	2,100		176,211
Road & Rail - 0.4%
Union Pacific Corp.	19,900		1,382,652
TOTAL INDUSTRIALS			13,124,702
INFORMATION TECHNOLOGY - 3.7%
Communications Equipment - 1.2%
Cisco Systems, Inc. (a)	164,300		3,990,847
Nokia Corp. sponsored ADR	4,200		71,400
			4,062,247
Computers & Peripherals - 0.0%
Diebold, Inc.	300		16,161
Lexmark International, Inc. Class A (a)	2,400		188,736
			204,897
IT Services - 0.4%
Paychex, Inc.	39,600		1,473,120
Software - 2.1%
Microsoft Corp.	261,500		7,201,710
TOTAL INFORMATION TECHNOLOGY			12,941,974

	Shares		Value (Note 1)
MATERIALS - 0.1%
Chemicals - 0.1%
PPG Industries, Inc.	4,200		$ 268,884
Praxair, Inc.	800		30,560
			299,444
TELECOMMUNICATION SERVICES - 5.2%
Diversified Telecommunication Services - 5.2%
BellSouth Corp.	403,900		11,430,370
SBC Communications, Inc.	113,970		2,971,198
Verizon Communications, Inc.	101,100		3,546,588
			17,948,156
Wireless Telecommunication Services - 0.0%
DigitalGlobe, Inc. (f)	163		163
TOTAL TELECOMMUNICATION SERVICES			17,948,319
UTILITIES - 0.5%
Electric Utilities - 0.5%
Entergy Corp.	32,900		1,879,577
FPL Group, Inc.	400		26,168
			1,905,745
TOTAL COMMON STOCKS (Cost $160,919,358)		191,343,081
Nonconvertible Preferred Stocks - 0.0%

CONSUMER DISCRETIONARY - 0.0%
Media - 0.0%
CSC Holdings, Inc.:
(depositary shares) Series M, 11.125%	620		66,030
Series H, 11.75%	835		88,928
PRIMEDIA, Inc. Series D, 10.00%	80		7,760
			162,718
TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $157,622)		162,718
Corporate Bonds - 13.2%
	Principal Amount
Convertible Bonds - 0.1%
INFORMATION TECHNOLOGY - 0.1%
Electronic Equipment & Instruments - 0.1%
Celestica, Inc. liquid yield option note 0% 8/1/20	$ 410,000		219,350
TELECOMMUNICATION SERVICES - 0.0%
Wireless Telecommunication Services - 0.0%
Nextel Communications, Inc. 5.25% 1/15/10	150,000		152,250
TOTAL CONVERTIBLE BONDS			371,600
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - 13.1%
CONSUMER DISCRETIONARY - 2.8%
Auto Components - 0.1%
DaimlerChrysler NA Holding Corp. 7.2% 9/1/09	$ 150,000		$ 167,516
Dana Corp.:
6.25% 3/1/04	50,000		50,000
6.5% 3/1/09	30,000		31,200
9% 8/15/11	30,000		35,475
Keystone Automotive Operations, Inc. 9.75% 11/1/13 (f)	30,000		32,400
Navistar International Corp. 8% 2/1/08	35,000		35,875
Stoneridge, Inc. 11.5% 5/1/12	15,000		17,625
United Components, Inc. 9.375% 6/15/13	30,000		32,700
			402,791
Automobiles - 0.4%
Case New Holland, Inc. 9.25% 8/1/11 (f)	110,000		123,200
General Motors Corp.:
7.2% 1/15/11	500,000		549,743
8.25% 7/15/23	350,000		397,393
8.375% 7/15/33	120,000		139,298
			1,209,634
Hotels, Restaurants & Leisure - 0.5%
Bally Total Fitness Holding Corp.:
9.875% 10/15/07	70,000		63,175
10.5% 7/15/11	220,000		222,200
Domino's, Inc. 8.25% 7/1/11 (f)	40,000		43,200
Friendly Ice Cream Corp. 10.5% 12/1/07	170,000		176,163
Gaylord Entertainment Co. 8% 11/15/13 (f)	40,000		42,000
Herbst Gaming, Inc. 10.75% 9/1/08	60,000		67,500
Intrawest Corp. 7.5% 10/15/13 (f)	40,000		40,800
Mandalay Resort Group 6.5% 7/31/09	95,000		98,325
Mohegan Tribal Gaming Authority:
6.375% 7/15/09	80,000		82,200
8.375% 7/1/11	20,000		21,800
Morton's Restaurant Group, Inc. 7.5% 7/1/10 (f)	30,000		28,200
Penn National Gaming, Inc. 6.875% 12/1/11 (f)	110,000		109,175
Premier Parks, Inc. 9.75% 6/15/07	121,000		127,171
Six Flags, Inc.:
8.875% 2/1/10	30,000		30,788
9.625% 6/1/14 (f)	140,000		146,300
Sun International Hotels Ltd./Sun International North America, Inc. 8.875% 8/15/11	55,000		59,950
Tricon Global Restaurants, Inc. 7.65% 5/15/08	40,000		45,400
Venetian Casino Resort LLC/Las Vegas Sands, Inc. 11% 6/15/10	125,000		144,375

	Principal Amount		Value (Note 1)
Waterford Gaming LLC/Waterford Gaming Finance Corp. 8.625% 9/15/12 (f)	$ 29,000		$ 30,668
Wheeling Island Gaming, Inc. 10.125% 12/15/09	100,000		107,500
			1,686,890
Household Durables - 0.1%
Beazer Homes USA, Inc. 8.375% 4/15/12	20,000		22,050
D.R. Horton, Inc. 8.5% 4/15/12	10,000		11,350
Simmons Co. 7.875% 1/15/14 (f)	30,000		30,150
Standard Pacific Corp. 7.75% 3/15/13	150,000		159,750
Telex Communications, Inc. 11.5% 10/15/08 (f)	40,000		42,400
WCI Communities, Inc. 7.875% 10/1/13 (f)	40,000		42,200
William Lyon Homes, Inc. 10.75% 4/1/13	95,000		107,825
			415,725
Internet & Catalog Retail - 0.0%
J. Crew Operating Corp. 10.375% 10/15/07	120,000		123,600
Leisure Equipment & Products - 0.0%
The Hockey Co. 11.25% 4/15/09	100,000		114,500
Media - 1.5%
Advanstar Communications, Inc. 10.75% 8/15/10 (f)	40,000		43,300
AMC Entertainment, Inc.:
9.5% 3/15/09	35,000		36,050
9.875% 2/1/12	35,000		38,325
American Media Operations, Inc. 10.25% 5/1/09	60,000		63,750
AOL Time Warner, Inc. 7.625% 4/15/31	200,000		230,754
British Sky Broadcasting Group PLC (BSkyB) yankee 8.2% 7/15/09	650,000		773,831
CBD Media LLC/ CBD Finance, Inc. 8.625% 6/1/11 (f)	20,000		21,850
Charter Communications Holdings LLC/Charter Communications Holdings Capital Corp.:
0% 5/15/11 (d)	116,000		77,720
9.625% 11/15/09	270,000		236,925
Clear Channel Communications, Inc. 7.65% 9/15/10	200,000		234,108
Comcast Corp. 7.05% 3/15/33	150,000		163,172
Continental Cablevision, Inc. 9% 9/1/08	200,000		241,158
Corus Entertainment, Inc. 8.75% 3/1/12	240,000		264,000
Cox Communications, Inc. 7.125% 10/1/12	195,000		224,916
CSC Holdings, Inc.:
7.625% 4/1/11	170,000		176,800
7.875% 2/15/18	45,000		47,475
9.875% 2/15/13	125,000		130,000
Diamond Holdings PLC yankee 9.125% 2/1/08	50,000		51,750
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
CONSUMER DISCRETIONARY - continued
Media - continued
EchoStar DBS Corp. 10.375% 10/1/07	$ 345,000		$ 378,206
LBI Media Holdings, Inc. 0% 10/15/13 (d)(f)	90,000		58,725
LBI Media, Inc. 10.125% 7/15/12	230,000		261,625
LodgeNet Entertainment Corp. 9.5% 6/15/13	20,000		21,800
News America Holdings, Inc.:
7.375% 10/17/08	200,000		228,185
7.75% 12/1/45	100,000		118,235
PEI Holdings, Inc. 11% 3/15/10	40,000		46,400
PRIMEDIA, Inc.:
7.625% 4/1/08	260,000		260,650
8.875% 5/15/11	15,000		15,600
Rogers Cablesystems Ltd. yankee 11% 12/1/15	10,000		11,600
Telewest PLC:
11% 10/1/07 (c)	30,000		18,900
yankee 9.625% 10/1/06 (c)	90,000		55,350
Time Warner, Inc. 6.625% 5/15/29	105,000		107,906
Videotron LTEE 6.875% 1/15/14 (f)	30,000		30,900
Vivendi Universal SA 6.25% 7/15/08 (f)	265,000		279,575
Yell Finance BV 0% 8/1/11 (d)	85,000		77,775
			5,027,316
Multiline Retail - 0.0%
Barneys, Inc. 9% 4/1/08	120,000		115,200
Specialty Retail - 0.2%
Asbury Automotive Group, Inc.:
8% 3/15/14 (f)	110,000		110,550
9% 6/15/12	15,000		15,900
Boise Cascade Corp.:
6.5% 11/1/10	60,000		62,400
7% 11/1/13	60,000		62,700
Gap, Inc. 10.55% 12/15/08	15,000		18,469
General Nutrition Centers, Inc. 8.5% 12/1/10 (f)	30,000		30,675
Reddy Ice Group, Inc. 8.875% 8/1/11 (f)	20,000		21,300
Sonic Automotive, Inc. 8.625% 8/15/13 (f)	60,000		63,600
United Auto Group, Inc. 9.625% 3/15/12	90,000		100,800
			486,394
TOTAL CONSUMER DISCRETIONARY			9,582,050
CONSUMER STAPLES - 0.6%
Beverages - 0.1%
Miller Brewing Co. 5.5% 8/15/13 (f)	210,000		214,545
Food & Staples Retailing - 0.2%
Kroger Co. 6.8% 4/1/11	195,000		218,239
Neighborcare, Inc. 6.875% 11/15/13 (f)	80,000		81,600
Rite Aid Corp.:
6% 12/15/05 (f)	35,000		35,000

	Principal Amount		Value (Note 1)
8.125% 5/1/10	$ 60,000		$ 63,900
9.5% 2/15/11	60,000		67,800
The Great Atlantic & Pacific Tea Co. 7.75% 4/15/07	120,000		111,000
			577,539
Food Products - 0.2%
Corn Products International, Inc. 8.25% 7/15/07	175,000		192,500
Del Monte Corp. 9.25% 5/15/11	145,000		159,500
Doane Pet Care Co.:
9.75% 5/15/07	125,000		112,500
10.75% 3/1/10	45,000		46,800
Hines Nurseries, Inc. 10.25% 10/1/11 (f)	20,000		21,800
Land O'Lakes, Inc.:
8.75% 11/15/11	40,000		34,000
9% 12/15/10 (f)	80,000		80,000
Michael Foods, Inc. 8% 11/15/13 (f)	30,000		31,350
United Agriculture Products, Inc. 8.25% 12/15/11 (f)	30,000		31,050
			709,500
Household Products - 0.0%
Fort James Corp. 6.875% 9/15/07	20,000		21,000
Johnsondiversey Holdings, Inc. 0% 5/15/13 (d)(f)	80,000		61,200
			82,200
Personal Products - 0.0%
Jafra Cosmetics International, Inc./Distribuidora Comercial Jafra SA de CV 10.75% 5/15/11	40,000		43,200
Revlon Consumer Products Corp. 12% 12/1/05	125,000		125,625
			168,825
Tobacco - 0.1%
Altria Group, Inc. 7% 11/4/13	175,000		186,689
Philip Morris Companies, Inc. 7.75% 1/15/27	275,000		296,716
			483,405
TOTAL CONSUMER STAPLES			2,236,014
ENERGY - 0.4%
Energy Equipment & Services - 0.1%
DI Industries, Inc. 8.875% 7/1/07	12,000		12,330
Grant Prideco, Inc. 9% 12/15/09	20,000		21,950
Hanover Compressor Co. 8.625% 12/15/10	30,000		31,275
Kinder Morgan, Inc. 6.5% 9/1/12	100,000		110,350
Seabulk International, Inc. 9.5% 8/15/13	60,000		62,400
Universal Compression, Inc. 7.25% 5/15/10	115,000		119,025
			357,330
Oil & Gas - 0.3%
Chesapeake Energy Corp. 7.5% 9/15/13	70,000		75,688
El Paso Production Holding Co. 7.75% 6/1/13 (f)	180,000		176,850
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
ENERGY - continued
Oil & Gas - continued
General Maritime Corp. 10% 3/15/13	$ 125,000		$ 141,250
GulfTerra Energy Partners LP/GulfTerra Energy Finance Corp. 10.625% 12/1/12	20,000		24,800
Nuevo Energy Co.:
9.375% 10/1/10	20,000		21,900
9.5% 6/1/08	13,000		13,650
Overseas Shipholding Group, Inc. 8.25% 3/15/13	110,000		117,700
Plains Exploration & Production Co. LP:
Series B, 8.75% 7/1/12	60,000		65,850
8.75% 7/1/12	50,000		54,875
Range Resources Corp. 7.375% 7/15/13	80,000		80,000
Teekay Shipping Corp. 8.875% 7/15/11	200,000		227,000
The Coastal Corp.:
6.375% 2/1/09	10,000		8,925
6.5% 5/15/06	25,000		23,938
6.5% 6/1/08	75,000		68,156
7.5% 8/15/06	80,000		77,700
7.75% 6/15/10	45,000		42,469
			1,220,751
TOTAL ENERGY			1,578,081
FINANCIALS - 3.8%
Capital Markets - 0.4%
Amvescap PLC yankee 6.6% 5/15/05	35,000		37,055
Credit Suisse First Boston (USA), Inc. 6.5% 1/15/12	200,000		222,604
Equinox Holdings Ltd. 9% 12/15/09 (f)	20,000		20,600
Goldman Sachs Group, Inc. 6.6% 1/15/12	410,000		458,187
J.P. Morgan Chase & Co. 5.35% 3/1/07	125,000		133,787
Merrill Lynch & Co., Inc.:
3.125% 7/15/08	105,000		103,152
4% 11/15/07	150,000		153,637
4.125% 1/15/09	50,000		50,547
Morgan Stanley:
5.3% 3/1/13	100,000		102,151
6.6% 4/1/12	160,000		178,694
			1,460,414
Commercial Banks - 0.3%
Bank of America Corp. 6.25% 4/15/12	125,000		137,797
Bank One NA, Chicago 3.7% 1/15/08	220,000		222,581
Chase Manhattan Corp. New 6.375% 4/1/08	75,000		82,647
Fleet Financial Group, Inc. 7.125% 4/15/06	140,000		154,274
Korea Development Bank 7.375% 9/17/04	60,000		61,743

	Principal Amount		Value (Note 1)
PNC Funding Corp. 5.75% 8/1/06	$ 155,000		$ 166,409
Popular North America, Inc. 6.125% 10/15/06	145,000		157,612
			983,063
Consumer Finance - 0.6%
American General Finance Corp.:
2.75% 6/15/08	20,000		19,253
5.875% 7/14/06	480,000		517,982
AmeriCredit Corp. 9.875% 4/15/06	25,000		25,938
Capital One Bank 4.875% 5/15/08	125,000		128,644
Ford Motor Credit Co. 7.375% 10/28/09	525,000		576,535
Household Finance Corp.:
6.375% 10/15/11	260,000		286,308
6.375% 11/27/12	50,000		54,853
7% 5/15/12	40,000		45,615
Household International, Inc. 8.875% 2/15/08	150,000		168,564
MBNA Corp.:
6.25% 1/17/07	120,000		130,643
7.5% 3/15/12	175,000		203,321
			2,157,656
Diversified Financial Services - 1.9%
Ahold Finance USA, Inc.:
6.25% 5/1/09	65,000		64,431
6.875% 5/1/29	50,000		44,500
8.25% 7/15/10	145,000		154,969
Alliance Capital Management LP 5.625% 8/15/06	150,000		159,894
American Airlines, Inc. pass thru trust certificates:
6.817% 5/23/11	115,000		104,075
6.977% 11/23/22	12,066		10,920
7.377% 5/23/19	104,326		74,072
7.379% 5/23/16	33,152		23,538
8.608% 10/1/12	75,000		68,625
10.18% 1/2/13	45,000		35,100
Arch Western Finance LLC 6.75% 7/1/13 (f)	125,000		127,500
BRL Universal Equipment 2001 A LP/BRL Universal Equipment Corp. 8.875% 2/15/08	120,000		129,300
CMS Energy X-TRAS pass thru trust certificates 7% 1/15/05	75,000		75,000
Continental Airlines, Inc. pass thru trust certificates:
6.748% 9/15/18	7,926		6,499
6.9% 1/2/17	76,075		63,142
7.373% 12/15/15	96,389		82,895
7.568% 12/1/06	40,000		33,200
7.73% 9/15/12	30,423		25,555
8.312% 10/2/12	39,401		33,885
8.321% 11/1/06	10,000		9,750
8.388% 5/1/22	22,087		18,222
Couche Tard U.S. LP /Couche Tard Financing Corp. 7.5% 12/15/13 (f)	50,000		52,750
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
FINANCIALS - continued
Diversified Financial Services - continued
Delta Air Lines, Inc. pass thru trust certificates:
7.299% 9/18/06	$ 20,000		$ 18,400
7.57% 11/18/10	45,000		46,617
7.779% 1/2/12	345,713		295,585
7.92% 5/18/12	50,000		45,271
Deutsche Telekom International Finance BV:
5.25% 7/22/13	90,000		90,920
8.75% 6/15/30	250,000		319,357
Dex Media West LLC/Dex Media West Finance Co.:
8.5% 8/15/10 (f)	40,000		44,600
9.875% 8/15/13 (f)	40,000		46,200
El Paso Energy Partners LP/El Paso Energy Partners Finance Corp. 8.5% 6/1/11	17,000		19,125
Gemstone Investor Ltd./Gemstone Investor, Inc. 7.71% 10/31/04 (f)	90,000		90,900
Gerdau AmeriSteel Corp./GUSAP Partners 10.375% 7/15/11 (f)	130,000		145,275
Huntsman Advanced Materials LLC 11% 7/15/10 (f)	40,000		43,900
Kraton Polymers LLC/Kraton Polymers Capital Corp. 8.125% 1/15/14 (f)	20,000		20,900
Level 3 Financing, Inc. 10.75% 10/15/11 (f)	80,000		84,800
MSW Energy Holding LLC/MSW Energy Finance Co., Inc. 8.5% 9/1/10	20,000		21,800
National Beef Packing Co. LLC/National Beef Finance Corp. 10.5% 8/1/11 (f)	30,000		30,900
Nexstar Finance, Inc. 7% 1/15/14 (f)	40,000		40,200
NiSource Finance Corp. 7.875% 11/15/10	395,000		469,809
Northern Telecom Capital Corp. 7.875% 6/15/26	45,000		45,000
Northwest Airlines, Inc. pass thru trust certificates:
7.068% 7/2/17	25,212		21,682
7.626% 4/1/10	21,579		18,342
7.67% 1/2/15	21,851		17,808
Pemex Project Funding Master Trust:
6.125% 8/15/08	400,000		420,000
7.875% 2/1/09 (i)	180,000		203,220
Petronas Capital Ltd. 7% 5/22/12 (f)	395,000		449,953
Power Contract Financing LLC 6.256% 2/1/10 (f)	90,000		92,700
Qwest Capital Funding, Inc.:
5.875% 8/3/04	120,000		120,300
7% 8/3/09	60,000		58,800
7.75% 8/15/06	270,000		279,450
Rabobank Capital Funding Trust II 5.26% 12/31/49 (f)(i)	215,000		215,298
Sensus Metering Systems, Inc. 8.625% 12/15/13 (f)	30,000		30,750
Sheridan Group, Inc. 10.25% 8/15/11 (f)	40,000		42,400

	Principal Amount		Value (Note 1)
Ship Finance International Ltd. 8.5% 12/15/13 (f)	$ 360,000		$ 360,000
Sprint Capital Corp. 6.875% 11/15/28	295,000		287,870
Suburban Propane Partners LP/Suburban Energy Finance Corp. 6.875% 12/15/13 (f)	30,000		30,300
Telecom Italia Capital 5.25% 11/15/13 (f)	250,000		250,498
Tom Brown, Inc./Tom Brown Resources Funding Corp. 7.25% 9/15/13	20,000		21,100
U.S. West Capital Funding, Inc. 6.375% 7/15/08	45,000		43,763
Universal City Development Partners Ltd./UCDP Finance, Inc. 11.75% 4/1/10 (f)	110,000		128,425
Verizon Global Funding Corp. 7.25% 12/1/10	140,000		161,194
Western Financial Bank 9.625% 5/15/12	25,000		27,813
			6,599,047
Insurance - 0.1%
Principal Life Global Funding I:
5.125% 6/28/07 (f)	100,000		107,070
6.25% 2/15/12 (f)	85,000		92,582
			199,652
Real Estate - 0.3%
Boston Properties, Inc. 6.25% 1/15/13	125,000		134,130
BRE Properties, Inc. 5.95% 3/15/07	250,000		268,024
CenterPoint Properties Trust 6.75% 4/1/05	100,000		105,130
EOP Operating LP 7% 7/15/11	200,000		225,682
ERP Operating LP 7.1% 6/23/04	200,000		204,931
LNR Property Corp. 7.625% 7/15/13	50,000		52,000
ProLogis 6.7% 4/15/04	55,000		55,860
Senior Housing Properties Trust:
7.875% 4/15/15	40,000		42,000
8.625% 1/15/12	80,000		87,200
			1,174,957
Thrifts & Mortgage Finance - 0.2%
Countrywide Home Loans, Inc. 5.5% 8/1/06	170,000		181,587
Washington Mutual, Inc.:
4.375% 1/15/08	90,000		92,523
5.625% 1/15/07	250,000		269,441
			543,551
TOTAL FINANCIALS			13,118,340
HEALTH CARE - 0.2%
Health Care Equipment & Supplies - 0.0%
Kinetic Concepts, Inc. 7.375% 5/15/13 (f)	50,000		52,250
Health Care Providers & Services - 0.2%
AmeriPath, Inc. 10.5% 4/1/13	125,000		135,000
Fountain View, Inc. 9.25% 8/19/08 (e)	115,000		113,850
Genesis HealthCare Corp. 8% 10/15/13 (f)	20,000		20,800
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
HEALTH CARE - continued
Health Care Providers & Services - continued
Mariner Health Care, Inc. 8.25% 12/15/13 (f)	$ 40,000		$ 40,500
National Nephrology Associates, Inc. 9% 11/1/11 (f)	30,000		31,350
Psychiatric Solutions, Inc. 10.625% 6/15/13	75,000		84,375
Rotech Healthcare, Inc. 9.5% 4/1/12	75,000		78,000
Tenet Healthcare Corp. 6.375% 12/1/11	25,000		23,875
			527,750
TOTAL HEALTH CARE			580,000
INDUSTRIALS - 0.7%
Aerospace & Defense - 0.2%
BE Aerospace, Inc.:
8% 3/1/08	75,000		69,375
8.5% 10/1/10 (f)	20,000		21,400
8.875% 5/1/11	40,000		37,000
9.5% 11/1/08	10,000		9,800
Orbital Sciences Corp. 9% 7/15/11	60,000		64,200
Raytheon Co. 8.3% 3/1/10	250,000		299,977
Transdigm, Inc. 8.375% 7/15/11	40,000		42,600
			544,352
Airlines - 0.1%
Delta Air Lines, Inc.:
7.9% 12/15/09	10,000		8,200
8.3% 12/15/29	30,000		19,650
Northwest Airlines, Inc.:
7.875% 3/15/08	255,000		211,650
9.875% 3/15/07	30,000		27,600
			267,100
Building Products - 0.0%
FastenTech, Inc. 11.5% 5/1/11 (f)	50,000		53,500
Jacuzzi Brands, Inc. 9.625% 7/1/10 (f)	55,000		60,500
Nortek, Inc.:
9.125% 9/1/07	10,000		10,325
9.25% 3/15/07	20,000		20,600
			144,925
Commercial Services & Supplies - 0.0%
Allied Waste North America, Inc.:
7.625% 1/1/06	30,000		31,575
10% 8/1/09	10,000		10,850
American Color Graphics, Inc. 10% 6/15/10	85,000		86,488
Great Lakes Dredge & Dock Corp. 7.75% 12/15/13 (f)	30,000		30,900
			159,813
Electrical Equipment - 0.0%
General Cable Corp. 9.5% 11/15/10 (f)	30,000		32,400

	Principal Amount		Value (Note 1)
Industrial Conglomerates - 0.2%
Koppers, Inc. 9.875% 10/15/13 (f)	$ 30,000		$ 33,075
Tyco International Group SA yankee:
5.8% 8/1/06	55,000		58,163
6.375% 2/15/06	15,000		15,975
6.75% 2/15/11	400,000		437,000
7% 6/15/28	35,000		36,356
			580,569
Machinery - 0.2%
Cummins, Inc. 9.5% 12/1/10 (f)	50,000		57,500
Dresser, Inc. 9.375% 4/15/11	30,000		32,625
Dunlop Standard Aerospace Holdings PLC yankee 11.875% 5/15/09	170,000		181,900
Terex Corp.:
7.375% 1/15/14 (f)	110,000		111,100
9.25% 7/15/11	195,000		214,500
			597,625
Marine - 0.0%
OMI Corp. 7.625% 12/1/13 (f)	40,000		40,200
Road & Rail - 0.0%
TFM SA de CV yankee:
10.25% 6/15/07	20,000		21,000
11.75% 6/15/09	60,000		61,350
			82,350
TOTAL INDUSTRIALS			2,449,334
INFORMATION TECHNOLOGY - 0.5%
Communications Equipment - 0.1%
L-3 Communications Corp. 6.125% 1/15/14 (f)	70,000		70,700
Marconi Corp. PLC 8% 4/30/08 (f)	70,000		71,400
Motorola, Inc. 6.5% 11/15/28	110,000		108,892
Nortel Networks Corp. 6.125% 2/15/06	80,000		80,800
Northern Telecom Ltd. yankee 6.875% 9/1/23	30,000		28,500
			360,292
Electronic Equipment & Instruments - 0.0%
Jabil Circuit, Inc. 5.875% 7/15/10	40,000		42,000
Solectron Corp. 7.375% 3/1/06	115,000		119,313
			161,313
IT Services - 0.1%
Dex Media, Inc.:
0% 11/15/13 (d)(f)	80,000		56,000
8% 11/15/13 (f)	150,000		157,500
Iron Mountain, Inc. 6.625% 1/1/16	210,000		204,750
			418,250
Office Electronics - 0.1%
Xerox Corp.:
7.125% 6/15/10	150,000		159,375
7.15% 8/1/04	5,000		5,113
7.2% 4/1/16	120,000		121,200
7.625% 6/15/13	70,000		74,900
			360,588
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
INFORMATION TECHNOLOGY - continued
Semiconductors & Semiconductor Equipment - 0.2%
AMI Semiconductor, Inc. 10.75% 2/1/13	$ 39,000		$ 46,410
Amkor Technology, Inc.:
7.75% 5/15/13	175,000		188,125
9.25% 2/15/08	20,000		22,750
10.5% 5/1/09	35,000		37,538
SCG Holding Corp./Semiconductor Components Industries LLC 12% 8/1/09	80,000		86,000
Semiconductor Note Partners Trust 0% 8/4/11 (f)	30,000		32,250
Viasystems, Inc. 10.5% 1/15/11 (f)	110,000		117,700
			530,773
TOTAL INFORMATION TECHNOLOGY			1,831,216
MATERIALS - 1.1%
Chemicals - 0.3%
Avecia Group PLC 11% 7/1/09	75,000		68,625
Berry Plastics Corp. 10.75% 7/15/12 (f)	60,000		69,000
Equistar Chemicals LP/Equistar Funding Corp.:
10.625% 5/1/11 (f)	90,000		99,000
10.625% 5/1/11	35,000		38,238
Geon Co. 6.875% 12/15/05	15,000		14,475
Huntsman International LLC 9.875% 3/1/09 (f)	60,000		65,700
Lyondell Chemical Co.:
9.625% 5/1/07	30,000		31,650
9.875% 5/1/07	55,000		57,750
11.125% 7/15/12	5,000		5,450
Methanex Corp. yankee 7.75% 8/15/05	155,000		163,525
Millennium America, Inc.:
9.25% 6/15/08	40,000		43,800
9.25% 6/15/08 (f)	30,000		32,850
Nalco Co. 7.75% 11/15/11 (f)	50,000		53,125
PolyOne Corp.:
8.875% 5/1/12	65,000		59,475
10.625% 5/15/10	35,000		35,000
Resolution Performance Products LLC:
8% 12/15/09 (f)	60,000		61,800
9.5% 4/15/10	35,000		35,875
13.5% 11/15/10	10,000		8,650
The Scotts Co. 6.625% 11/15/13 (f)	50,000		51,000
			994,988
Construction Materials - 0.0%
Texas Industries, Inc. 10.25% 6/15/11	140,000		161,000
Containers & Packaging - 0.4%
Anchor Glass Container Corp. 11% 2/15/13	60,000		69,750
Applied Extrusion Technologies, Inc. 10.75% 7/1/11	40,000		32,600
Blue Ridge Paper Products, Inc. 9.5% 12/15/08 (f)	55,000		55,550

	Principal Amount		Value (Note 1)
BWAY Corp. 10% 10/15/10	$ 40,000		$ 43,500
Crown Cork & Seal, Inc.:
7.375% 12/15/26	10,000		9,000
8% 4/15/23	45,000		41,850
Jefferson Smurfit Corp. U.S. 7.5% 6/1/13	130,000		131,300
Owens-Brockway Glass Container, Inc.:
7.75% 5/15/11	50,000		52,250
8.25% 5/15/13	105,000		113,925
8.75% 11/15/12	25,000		27,750
8.875% 2/15/09	185,000		201,650
Owens-Illinois, Inc.:
7.15% 5/15/05	45,000		46,350
7.35% 5/15/08	295,000		292,050
7.5% 5/15/10	20,000		20,450
7.8% 5/15/18	45,000		43,875
Sealed Air Corp.:
5.625% 7/15/13 (f)	30,000		30,699
6.875% 7/15/33 (f)	60,000		63,510
Sweetheart Cup Co., Inc. 9.5% 1/15/07 (f)	30,000		30,600
Tekni-Plex, Inc. 8.75% 11/15/13 (f)	115,000		119,744
			1,426,403
Metals & Mining - 0.1%
Compass Minerals International, Inc. 0% 12/15/12 (d)	80,000		63,200
Falconbridge Ltd. yankee 7.35% 6/5/12	100,000		112,946
Massey Energy Co. 6.625% 11/15/10 (f)	40,000		40,900
Steel Dynamics, Inc. 9.5% 3/15/09	35,000		38,500
			255,546
Paper & Forest Products - 0.3%
Buckeye Technologies, Inc. 8.5% 10/1/13	40,000		42,400
Georgia-Pacific Corp.:
7.375% 12/1/25	35,000		33,994
7.5% 5/15/06	120,000		126,600
8% 1/15/24 (f)	80,000		81,600
8.125% 5/15/11	120,000		132,150
8.875% 5/15/31	20,000		21,800
9.625% 3/15/22	25,000		26,000
International Paper Co.:
4.25% 1/15/09	35,000		35,143
5.5% 1/15/14	95,000		95,273
Millar Western Forest Products Ltd. 7.75% 11/15/13 (f)	20,000		20,750
Norske Skog Canada Ltd. 8.625% 6/15/11	150,000		156,000
Weyerhaeuser Co. 6.75% 3/15/12	100,000		109,094
			880,804
TOTAL MATERIALS			3,718,741
TELECOMMUNICATION SERVICES - 1.3%
Diversified Telecommunication Services - 0.7%
ACC Escrow Corp. 10% 8/1/11 (f)	100,000		110,500
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
TELECOMMUNICATION SERVICES - continued
Diversified Telecommunication Services - continued
AT&T Corp. 8.75% 11/15/31	$ 150,000		$ 175,284
Cincinnati Bell, Inc. 8.375% 1/15/14 (f)	40,000		42,500
France Telecom SA:
9% 3/1/11	150,000		180,162
9.75% 3/1/31	200,000		265,735
MCI Communications Corp.:
7.125% 6/15/27 (c)	35,000		28,219
7.75% 3/15/24 (c)	10,000		8,100
7.75% 3/23/25 (c)	10,000		8,075
8.25% 1/20/23 (c)	25,000		20,125
Qwest Corp. 9.125% 3/15/12 (e)(f)	85,000		97,538
Qwest Services Corp.:
13% 12/15/07 (f)	45,000		52,650
13.5% 12/15/10 (f)	75,000		90,750
SBC Communications, Inc. 6.25% 3/15/11	180,000		197,040
Telecomunicaciones de Puerto Rico, Inc. 6.65% 5/15/06	120,000		130,064
Telefonica Europe BV 7.75% 9/15/10	200,000		237,447
TELUS Corp. yankee 7.5% 6/1/07	310,000		346,935
Triton PCS, Inc.:
8.75% 11/15/11	60,000		58,650
9.375% 2/1/11	280,000		281,400
Verizon New York, Inc. 6.875% 4/1/12	200,000		221,301
			2,552,475
Wireless Telecommunication Services - 0.6%
American Tower Corp. 9.375% 2/1/09	205,000		217,300
AT&T Wireless Services, Inc. 8.75% 3/1/31	290,000		357,810
Crown Castle International Corp.:
7.5% 12/1/13 (f)	150,000		151,500
9.375% 8/1/11	40,000		44,200
9.5% 8/1/11	155,000		168,950
10.75% 8/1/11	25,000		28,250
DirecTV Holdings LLC/DirecTV Financing, Inc. 8.375% 3/15/13	70,000		80,675
Dobson Communications Corp. 8.875% 10/1/13	70,000		71,400
Millicom International Cellular SA 10% 12/1/13 (f)	80,000		84,000
Nextel Communications, Inc.:
7.375% 8/1/15	250,000		267,500
9.375% 11/15/09	95,000		103,550
9.5% 2/1/11	50,000		56,750
Nextel Partners, Inc. 8.125% 7/1/11	80,000		84,800
Rogers Wireless, Inc. 9.625% 5/1/11	40,000		47,600
Western Wireless Corp. 9.25% 7/15/13	100,000		106,000
			1,870,285
TOTAL TELECOMMUNICATION SERVICES			4,422,760

	Principal Amount		Value (Note 1)
UTILITIES - 1.7%
Electric Utilities - 0.7%
Allegheny Energy Supply Co. LLC:
8.75% 4/15/12 (f)	$ 270,000		$ 256,013
10.25% 11/15/07 (f)	58,792		61,732
13% 11/15/07 (f)(i)	6,204		6,235
CMS Energy Corp.:
7.625% 11/15/04	150,000		154,500
7.75% 8/1/10 (f)	145,000		152,431
8.5% 4/15/11	85,000		91,269
8.9% 7/15/08	20,000		21,675
9.875% 10/15/07	115,000		127,506
Detroit Edison Co. 6.125% 10/1/10	165,000		181,016
Dominion Resources, Inc. 6.25% 6/30/12	160,000		173,539
Duke Capital Corp. 6.75% 2/15/32	210,000		212,067
Edison International 6.875% 9/15/04	35,000		35,910
FirstEnergy Corp. 6.45% 11/15/11	85,000		88,098
Illinois Power Co.:
7.5% 6/15/09	155,000		170,500
11.5% 12/15/10	100,000		121,000
Nevada Power Co.:
6.2% 4/15/04	20,000		20,125
10.875% 10/15/09	65,000		74,425
Niagara Mohawk Power Corp. 8.875% 5/15/07	75,000		87,936
Pacific Gas & Electric Co. 6.25% 3/1/04	60,000		60,300
PG&E Corp. 6.875% 7/15/08 (f)	45,000		48,713
Public Service Co. of Colorado 7.875% 10/1/12	115,000		139,575
TECO Energy, Inc. 10.5% 12/1/07	105,000		123,113
			2,407,678
Gas Utilities - 0.3%
Consolidated Natural Gas Co. 6.85% 4/15/11	70,000		79,573
Dynegy Holdings, Inc.:
9.875% 7/15/10 (f)	70,000		79,100
10.125% 7/15/13 (f)	110,000		126,500
El Paso Energy Corp. 6.95% 12/15/07	95,000		91,319
Sonat, Inc.:
6.625% 2/1/08	65,000		59,638
6.75% 10/1/07	70,000		65,800
6.875% 6/1/05	280,000		275,800
Southern Natural Gas Co. 8.875% 3/15/10	40,000		44,950
Texas Eastern Transmission Corp. 7.3% 12/1/10	185,000		212,510
Transcontinental Gas Pipe Line Corp. 6.125% 1/15/05	20,000		20,200
Williams Holdings of Delaware, Inc. 6.25% 2/1/06	10,000		10,250
			1,065,640
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
UTILITIES - continued
Multi-Utilities & Unregulated Power - 0.7%
AES Corp.:
8.375% 8/15/07	$ 50,000		$ 50,625
8.5% 11/1/07	29,000		29,435
8.75% 6/15/08	30,000		32,100
8.75% 5/15/13 (f)	170,000		189,975
8.875% 2/15/11	54,000		58,928
9% 5/15/15 (f)	90,000		101,700
9.375% 9/15/10	16,000		17,760
9.5% 6/1/09	144,000		159,840
10% 12/12/05 (f)	26,925		27,800
Calpine Corp.:
6.9% 7/15/07 (f)(i)	204,488		199,375
8.5% 7/15/10 (f)	20,000		19,400
El Paso Corp.:
7% 5/15/11	90,000		83,025
7.875% 6/15/12	35,000		33,075
NRG Energy, Inc. 8% 12/15/13 (f)	140,000		147,000
Reliant Resources, Inc.:
9.25% 7/15/10 (f)	60,000		62,850
9.5% 7/15/13 (f)	20,000		21,150
Western Resources, Inc. 9.75% 5/1/07	90,000		102,150
Williams Companies, Inc.:
6.5% 8/1/06	50,000		51,750
6.75% 1/15/06	80,000		82,400
7.125% 9/1/11	245,000		259,088
7.5% 1/15/31	10,000		10,125
7.625% 7/15/19	105,000		110,250
7.875% 9/1/21	80,000		84,500
8.125% 3/15/12	340,000		374,000
8.625% 6/1/10	80,000		89,600
8.75% 3/15/32	25,000		27,750
			2,425,651
TOTAL UTILITIES			5,898,969
TOTAL NONCONVERTIBLE BONDS			45,415,505
TOTAL CORPORATE BONDS (Cost $41,714,357)		45,787,105
U.S. Government and Government Agency Obligations - 6.7%

U.S. Government Agency Obligations - 1.5%
Fannie Mae:
5.5% 3/15/11	315,000		339,699
6.25% 2/1/11	345,000		381,382
Federal Home Loan Bank:
3.625% 11/14/08	1,760,000		1,770,113
5.8% 9/2/08	155,000		170,692

	Principal Amount		Value (Note 1)
Freddie Mac:
3.625% 9/15/08	$ 163,000		$ 164,079
4% 6/12/13	1,575,000		1,470,155
6.25% 7/15/32	166,000		180,527
6.625% 9/15/09	475,000		543,196
6.75% 3/15/31	244,000		281,793
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS			5,301,636
U.S. Treasury Inflation Protected Obligations - 0.3%
U.S. Treasury Inflation-Indexed Notes 1.875% 7/15/13	1,007,310		1,000,069
U.S. Treasury Obligations - 4.9%
U.S. Treasury Bonds:
6.25% 5/15/30	2,530,000		2,919,580
6.625% 2/15/27	50,000		59,721
8% 11/15/21	100,000		135,055
U.S. Treasury Notes:
1.875% 11/30/05	3,570,000		3,576,694
3.25% 8/15/07	150,000		153,006
4.375% 5/15/07	375,000		397,104
6.5% 2/15/10	8,240,000		9,575,135
TOTAL U.S. TREASURY OBLIGATIONS			16,816,295
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $22,905,630)		23,118,000
U.S. Government Agency - Mortgage Securities - 11.2%

Fannie Mae - 9.9%
4% 1/1/19 (g)	6,100,000		5,941,781
4.5% 7/1/33 to 10/1/33	4,228,642		4,048,498
5% 11/1/17 to 8/1/18	5,384,430		5,498,612
5.5% 2/1/11 to 11/1/17	245,639		255,005
5.5% 1/1/34 (g)	4,435,130		4,491,955
6% 4/1/09 to 10/1/32	2,703,603		2,832,250
6.5% 6/1/09 to 7/1/32 (h)	5,488,241		5,792,652
6.5% 1/1/34 (g)	4,360,591		4,559,543
7% 12/1/24 to 2/1/28	207,952		221,146
7.5% 10/1/26 to 8/1/28	692,674		741,300
TOTAL FANNIE MAE			34,382,742
Freddie Mac - 0.0%
7.5% 1/1/27	52,032		56,037
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount		Value (Note 1)
Government National Mortgage Association - 1.3%
6% 1/1/34 (g)	$ 1,661,547		$ 1,725,932
6.5% 10/15/27 to 8/15/32	1,401,871		1,479,531
7% 1/15/28 to 7/15/32	928,361		989,652
7.5% 6/15/27 to 3/15/28	187,037		200,974
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION			4,396,089
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $38,394,224)		38,834,868
Asset-Backed Securities - 1.1%

American Express Credit Account Master Trust:
Series 1999-2 Class B, 6.1% 12/15/06	200,000		203,556
Series 2001-6 Class B, 1.5125% 12/15/08 (i)	200,000		200,571
Capital One Master Trust:
Series 2001-3A Class A, 5.45% 3/16/09	140,000		148,107
Series 2001-4 Class B, 1.5325% 4/16/07 (i)	200,000		200,133
Capital One Multi-Asset Execution Trust:
Series 2003-A4 Class A4, 3.65% 7/15/11	116,000		115,797
Series 2003-B4 Class B4, 1.9625% 7/15/11 (i)	105,000		105,050
Chase Manhattan Auto Owner Trust Series 2001-A:
Class A4, 5.07% 2/15/08	430,000		442,832
Class CTFS, 5.06% 2/15/08	32,653		33,419
Citibank Credit Card Issuance Trust Series 2002-C1 Class C1, 2.16% 2/9/09 (i)	250,000		252,931
Discover Card Master Trust I:
Series 2001-6 Class A, 5.75% 12/15/08	600,000		646,354
Series 2003-4 Class B1, 1.47% 5/16/11 (i)	155,000		155,000
Ford Credit Auto Owner Trust:
Series 2001-B Class B, 5.71% 9/15/05	90,000		91,725
Series 2001-C Class B, 5.54% 12/15/05	100,000		102,151
Honda Auto Receivables Owner Trust Series 2001-2:
Class A3, 4.67% 3/18/05	39,613		39,770
Class A4, 5.09% 10/18/06	145,000		147,032
MBNA Credit Card Master Note Trust Series 2001-A1 Class A1, 5.75% 10/15/08	200,000		215,096
Sears Credit Account Master Trust II:
Series 2000-2 Class A, 6.75% 9/16/09	365,000		392,399
Series 2001-2 Class B, 1.4525% 6/16/08 (i)	200,000		199,742
TOTAL ASSET-BACKED SECURITIES (Cost $3,566,313)		3,691,665
Commercial Mortgage Securities - 0.8%
	Principal Amount		Value (Note 1)

CS First Boston Mortgage Securities Corp.:
sequential pay Series 2000-C1 Class A2, 7.545% 4/14/62	$ 500,000		$ 582,898
Series 1997-C2 Class D, 7.27% 1/17/35	150,000		167,826
Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1 Class A2, 6.538% 6/15/31	105,000		114,994
DLJ Commercial Mortgage Corp. sequential pay Series 2000-CF1 Class A1B, 7.62% 6/10/33	500,000		585,113
GS Mortgage Securities Corp. II:
Series 1998-GLII Class E, 7.1905% 4/13/31 (i)	120,000		122,061
Series 2003-C1 Class A2A, 3.59% 1/10/40	125,000		125,443
J.P. Morgan Commercial Mortgage Finance Corp. sequential pay Series 2000-C9 Class A2, 7.77% 10/15/32	225,000		263,534
Leafs CMBS I Ltd./Leafs CMBS I Corp. Series 2002-1A:
Class B, 4.13% 11/20/37 (f)	110,000		101,832
Class C, 4.13% 11/20/37 (f)	110,000		97,539
Thirteen Affiliates of General Growth Properties, Inc. sequential pay Series 1 Class A2, 6.602% 11/15/07 (f)	500,000		550,044
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $2,468,971)		2,711,284
Municipal Securities - 0.1%

Illinois Gen. Oblig. 5.1% 6/1/33	170,000		156,310
Oregon Gen. Oblig. 5.892% 6/1/27	50,000		52,028
TOTAL MUNICIPAL SECURITIES (Cost $220,000)		208,338
Foreign Government and Government Agency Obligations - 0.2%

Chilean Republic:
5.5% 1/15/13	150,000		154,275
6.875% 4/28/09	150,000		169,646
7.125% 1/11/12	160,000		183,000
State of Israel 4.625% 6/15/13	30,000		28,688
United Mexican States 4.625% 10/8/08	150,000		151,875
TOTAL FOREIGN GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $636,338)		687,484
Floating Rate Loans - 0.2%
	Principal Amount		Value (Note 1)
TELECOMMUNICATION SERVICES - 0.1%
Diversified Telecommunication Services - 0.1%
Qwest Corp. Tranche A term loan 6.5% 6/30/07 (i)	$ 200,000		$ 209,750
UTILITIES - 0.1%
Multi-Utilities & Unregulated Power - 0.1%
AES Corp. term loan 5.2643% 4/30/08 (i)	300,000		302,250
TOTAL FLOATING RATE LOANS (Cost $499,688)		512,000
Fixed-Income Funds - 1.4%
	Shares
Fidelity Ultra-Short Central Fund (Cost $4,999,984)	50,241		5,002,496
Money Market Funds - 14.7%

Fidelity Cash Central Fund, 1.07% (b) (Cost $51,170,599)	51,170,599		51,170,599

TOTAL INVESTMENT PORTFOLIO - 104.7%

(Cost $327,653,084)

363,229,638

NET OTHER ASSETS - (4.7)%

(16,185,079)

NET ASSETS - 100%

$ 347,044,559

Swap Agreements
	Expiration Date	Notional Amount	Unrealized Appreciation/ (Depreciation)
Interest Rate Swap
Receive quarterly a fixed rate equal to 2.735% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.	Oct. 2006	$ 350,000	$ 1,522
Receive quarterly a fixed rate equal to 3.098% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.	April 2007	1,550,000	14,639
Receive quarterly a fixed rate equal to 3.1422% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.	April 2007	1,320,000	14,779
TOTAL INTEREST RATE SWAP		3,220,000	30,940

	Expiration Date	Notional Amount	Unrealized Appreciation/ (Depreciation)
Total Return Swap
Receive monthly a return equal to Lehman Brothers CMBS AAA 8.5+ and pay monthly a floating rate based on 1-month LIBOR minus 65 basis points with Lehman Borthers, Inc.	Oct. 2004	$ 500,000	$ 55
Receive monthly a return equal to Lehman Brothers CMBS AAA 8.5+ and pay monthly a floating rate based on 1-month LIBOR minus 70 basis points with Lehman Brothers, Inc.	Feb. 2004	500,000	5,772
Receive quarterly a return equal to Banc of America LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 75 basis points with Bank of America	May 2004	500,000	898
Receive quarterly a return equal to Banc of America LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 80 basis points with Bank of America	April 2004	500,000	8,498
TOTAL TOTAL RETURN SWAP		2,000,000	15,223
		$ 5,220,000	$ 46,163

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(d) Debt obligation initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end.

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

(f) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $9,498,907 or 2.7% of net assets.

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

(h) A portion of the security is subject to a forward commitment to sell.

(i) The coupon rate shown on floating or adjustable rate securities represents the rate at period end.

Other Information

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

U.S.Government and U.S.Government Agency Obligations	18.0%
AAA,AA,A	4.9
BBB	4.0
BB	1.6
B	5.0
CCC,CC,C	0.8
Not Rated	0.2
Equities	55.1
Short-Term Investments and Net Other Assets	10.4
	100.0%

We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings.

Purchases and sales of securities, other than short-term securities, aggregated $298,413,552 and $274,390,817, respectively, of which long-term U.S. government and government agency obligations aggregated $193,346,640 and $188,175,337, respectively.

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 $4,990 for the period.

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $19,804,000 of which $10,146,000 and $9,658,000 will expire on December 31, 2009 and 2010, respectively.

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

Annual Report

Fidelity Variable Insurance Products: Balanced Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (cost $327,653,084) - See accompanying schedule		$ 363,229,638
Commitment to sell securities on a delayed delivery basis	$ (1,049,470)
Receivable for securities sold on a delayed delivery basis	1,049,934	464
Cash		7,711
Receivable for fund shares sold		88,433
Dividends receivable		177,776
Interest receivable		1,360,630
Unrealized gain on swap agreements		46,163
Prepaid expenses		1,887
Other receivables		4,469
Total assets		364,917,171

Liabilities
Payable for investments purchased Regular delivery	823,907
Delayed delivery	16,706,217
Payable for fund shares redeemed	124,582
Accrued management fee	121,234
Distribution fees payable	7,745
Other affiliated payables	29,684
Other payables and accrued expenses	59,243
Total liabilities		17,872,612

Net Assets		$ 347,044,559
Net Assets consist of:
Paid in capital		$ 324,879,627
Undistributed net investment income		7,087,612
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(20,545,861)
Net unrealized appreciation (depreciation) on investments		35,623,181
Net Assets		$ 347,044,559

Initial Class: Net Asset Value, offering price and redemption price per share ($295,656,410 ÷ 21,305,700 shares)		$ 13.88

Service Class: Net Asset Value, offering price and redemption price per share ($21,902,862 ÷ 1,585,468 shares)		$ 13.81

Service Class 2: Net Asset Value, offering price and redemption price per share ($29,485,287 ÷ 2,144,587 shares)		$ 13.75

Statement of Operations

	Year ended December 31, 2003

Investment Income
Dividends		$ 2,656,923
Interest		6,182,656
Total income		8,839,579

Expenses
Management fee	$ 1,310,786
Transfer agent fees	215,147
Distribution fees	79,307
Accounting fees and expenses	119,009
Non-interested trustees' compensation	1,492
Custodian fees and expenses	23,741
Audit	54,479
Legal	1,737
Miscellaneous	58,941
Total expenses before reductions	1,864,639
Expense reductions	(12,082)	1,852,557
Net investment income (loss)		6,987,022
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	3,035,827
Foreign currency transactions	126
Swap agreements	26,393
Total net realized gain (loss)		3,062,346
Change in net unrealized appreciation (depreciation) on: Investment securities	38,952,800
Assets and liabilities in foreign currencies	(320)
Swap agreements	46,163
Delayed delivery commitments	464
Total change in net unrealized appreciation (depreciation)		38,999,107
Net gain (loss)		42,061,453
Net increase (decrease) in net assets resulting from operations		$ 49,048,475

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

Annual Report

Fidelity Variable Insurance Products: Balanced Portfolio
Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ 6,987,022	$ 8,209,006
Net realized gain (loss)	3,062,346	(9,031,439)
Change in net unrealized appreciation (depreciation)	38,999,107	(27,890,095)
Net increase (decrease) in net assets resulting from operations	49,048,475	(28,712,528)
Distributions to shareholders from net investment income	(7,974,845)	(8,837,001)
Share transactions - net increase (decrease)	32,311,069	4,349,125
Total increase (decrease) in net assets	73,384,699	(33,200,404)

Net Assets
Beginning of period	273,659,860	306,860,264
End of period (including undistributed net investment income of $7,087,612 and undistributed net investment income of $8,300,210, respectively)	$ 347,044,559	$ 273,659,860

Other Information:
Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	4,747,709	87,816	932,305
Reinvested	599,512	50,167	45,486
Redeemed	(3,372,673)	(205,767)	(374,801)
Net increase (decrease)	1,974,548	(67,784)	602,990

Dollars Sold	$ 61,609,403	$ 1,115,888	$ 11,910,142
Reinvested	6,882,396	573,909	518,540
Redeemed	(42,908,423)	(2,600,420)	(4,790,366)
Net increase (decrease)	$ 25,583,376	$ (910,623)	$ 7,638,316

Share Transactions	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	3,458,033	233,061	650,930
Reinvested	586,697	54,643	37,261
Redeemed	(4,004,430)	(497,329)	(380,772)
Net increase (decrease)	40,300	(209,625)	307,419

Dollars Sold	$ 44,057,181	$ 3,005,489	$ 8,292,512
Reinvested	7,644,656	709,812	482,533
Redeemed	(49,132,561)	(6,145,338)	(4,565,159)
Net increase (decrease)	$ 2,569,276	$ (2,430,037)	$ 4,209,886

Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 6,882,396	$ 573,909	$ 518,540
From net realized gain	-	-	-
Total	$ 6,882,396	$ 573,909	$ 518,540
	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 7,644,656	$ 709,812	$ 482,533
From net realized gain	-	-	-
Total	$ 7,644,656	$ 709,812	$ 482,533

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

Balanced Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 12.16	$ 13.72	$ 14.45	$ 16.00	$ 16.11
Income from Investment Operations
Net investment income (loss)^C	.30	.36	.42	.48	.45
Net realized and unrealized gain (loss)	1.78	(1.53)	(.63)	(1.15)	.24
Total from investment operations	2.08	(1.17)	(.21)	(.67)	.69
Distributions from net investment income	(.36)	(.39)	(.52)	(.48)	(.37)
Distributions from net realized gain	-	-	-	(.35)	(.43)
Distributions in excess of net realized gain	-	-	-	(.05)	-
Total distributions	(.36)	(.39)	(.52)	(.88)	(.80)
Net asset value, end of period	$ 13.88	$ 12.16	$ 13.72	$ 14.45	$ 16.00
Total Return^{A, B}	17.72%	(8.72)%	(1.58)%	(4.30)%	4.55%
Ratios to Average Net Assets^D
Expenses before expense reductions	.59%	.57%	.57%	.58%	.57%
Expenses net of voluntary waivers, if any	.59%	.57%	.57%	.58%	.57%
Expenses net of all reductions	.58%	.55%	.55%	.56%	.55%
Net investment income (loss)	2.32%	2.84%	3.11%	3.18%	2.87%
Supplemental Data
Net assets, end of period (000 omitted)	$ 295,656	$ 235,064	$ 264,608	$ 250,802	$ 325,371
Portfolio turnover rate	102%	134%	126%	126%	108%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

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

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 12.11	$ 13.66	$ 14.39	$ 15.94	$ 16.07
Income from Investment Operations
Net investment income (loss)^C	.28	.34	.41	.46	.43
Net realized and unrealized gain (loss)	1.77	(1.51)	(.64)	(1.14)	.24
Total from investment operations	2.05	(1.17)	(.23)	(.68)	.67
Distributions from net investment income	(.35)	(.38)	(.50)	(.47)	(.37)
Distributions from net realized gain	-	-	-	(.35)	(.43)
Distributions in excess of net realized gain	-	-	-	(.05)	-
Total distributions	(.35)	(.38)	(.50)	(.87)	(.80)
Net asset value, end of period	$ 13.81	$ 12.11	$ 13.66	$ 14.39	$ 15.94
Total Return^{A, B}	17.53%	(8.75)%	(1.72)%	(4.38)%	4.43%
Ratios to Average Net Assets^D
Expenses before expense reductions	.69%	.67%	.67%	.68%	.67%
Expenses net of voluntary waivers, if any	.69%	.67%	.67%	.68%	.67%
Expenses net of all reductions	.68%	.65%	.65%	.66%	.66%
Net investment income (loss)	2.22%	2.74%	3.01%	3.08%	2.77%
Supplemental Data
Net assets, end of period (000 omitted)	$ 21,903	$ 20,019	$ 25,455	$ 27,563	$ 27,054
Portfolio turnover rate	102%	134%	126%	126%	108%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 12.05	$ 13.61	$ 14.37	$ 15.59
Income from Investment Operations
Net investment income (loss)^E	.26	.32	.38	.40
Net realized and unrealized gain (loss)	1.77	(1.51)	(.63)	(.75)
Total from investment operations	2.03	(1.19)	(.25)	(.35)
Distributions from net investment income	(.33)	(.37)	(.51)	(.47)
Distributions from net realized gain	-	-	-	(.35)
Distributions in excess of net realized gain	-	-	-	(.05)
Total distributions	(.33)	(.37)	(.51)	(.87)
Net asset value, end of period	$ 13.75	$ 12.05	$ 13.61	$ 14.37
Total Return^{B, C, D}	17.41%	(8.93)%	(1.87)%	(2.37)%
Ratios to Average Net Assets^G
Expenses before expense reductions	.84%	.83%	.83%	.85%^A
Expenses net of voluntary waivers, if any	.84%	.83%	.83%	.85%^A
Expenses net of all reductions	.84%	.81%	.81%	.83%^A
Net investment income (loss)	2.06%	2.58%	2.85%	2.91%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 29,485	$ 18,577	$ 16,798	$ 4,797
Portfolio turnover rate	102%	134%	126%	126%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period January 12, 2000 (commencement of sale of shares) to December 31, 2000.

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

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

Balanced Portfolio

Notes to Financial Statements

For the period ended December 31, 2003

1. Significant Accounting Policies.

Balanced Portfolio (the fund) is a fund of Variable Insurance Products Fund III (the trust) (referred to in this report as Fidelity Variable Insurance Products: Balanced Portfolio) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The fund offers the following classes of shares: Initial Class shares, Service Class shares and Service Class 2 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.

Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. Debt securities for which quotations are readily available are valued at their most recent bid prices (sales prices if the principal market is an exchange) in the principal market in which such securities are normally traded, as determined by recognized dealers in such securities, or securities are valued on the basis of information provided by a pricing service. Pricing services use valuation matrices that incorporate both dealer-supplied valuations and valuation models. If an event that is expected to materially affect the value of a security occurs after the close of an exchange or market on which that security trades, but prior to the NAV calculation, then that security will be fair valued taking the event into account. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.

Annual Report

Notes to Financial Statements - continued

1. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent and temporary book and tax differences. These adjustments have no impact on net assets or the results of operations. Temporary differences will reverse in a subsequent period. These differences are primarily due to foreign currency transactions, market discount, non-taxable dividends, financing transactions, capital loss carryforwards and losses deferred due to wash sales.

The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:

Unrealized appreciation	$ 41,795,692	\|
Unrealized depreciation	(6,678,026)
Net unrealized appreciation (depreciation)	35,117,666
Undistributed ordinary income	6,850,598
Capital loss carryforward	(19,803,393)

Cost for federal income tax purposes	$ 328,111,972

The tax character of distributions paid was as follows:

	December 31, 2003	December 31, 2002
Ordinary Income	$ 7,974,845	$ 8,837,001

2. Operating Policies.

Delayed Delivery Transactions and When-Issued Securities. The fund may purchase or sell 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. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of 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 may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments that obligate the fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. Information regarding loans and other direct debt instruments is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

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

Interest rate swaps are agreements to exchange cash flows periodically based on a notional principal amount, for example, the exchange of fixed rate interest payments for floating rate interest payments. Periodic payments received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. The primary risk associated with interest rate swaps is that unfavorable changes in the fluctuation of interest rates could adversely impact the fund.

Balanced Portfolio

2. Operating Policies - continued

Swap Agreement - continued

Total return swaps are agreements to exchange the return generated by one instrument for the return generated by another instrument, for example, the agreement to pay interest in exchange for a market-linked return based on a notional amount. To the extent the total return of the index exceeds the offsetting interest obligation, the fund will receive a payment from the counterparty. To the extent it is less, the fund will make a payment to the counterparty. Periodic payments received or made by the fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively.

Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Gains or losses are realized upon early termination of the swap agreement. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with the fund's custodian in compliance with swap contracts. Risks may exceed amounts recognized on the Statement of Assets and Liabilities. These risks include changes in the returns of the underlying instruments, failure of the counterparties to perform under the contracts' terms and the possible lack of liquidity with respect to the swap agreements. Details of swap agreements open at period end are included in the fund's Schedule of Investments under the caption "Swap Agreements."

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

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .15% of the fund's average net assets and a group fee rate that averaged .28% 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 annual management fee rate was .43% of the fund's average net assets.

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

Service Class	$ 20,784
Service Class 2	58,523
	$ 79,307

Annual Report

Notes to Financial Statements - continued

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees - continued

For the period, the total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class	$ 181,695
Service Class	15,125
Service Class 2	18,327
	$ 215,147

5. Committed Line of Credit.

6. 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 $10,789 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $1,293.

7. Other Information.

At the end of the period, FMR or its affiliates were the owners of record of 60% of the total outstanding shares of the fund and one unaffiliated shareholder was the owner of record of 26% of the total outstanding shares of the fund.

Balanced Portfolio

Independent Auditors' Report

To the Trustees of Variable Insurance Products Fund III and Shareholders of Balanced Portfolio:

We have audited the accompanying statement of assets and liabilities of Balanced Portfolio (the Fund), a fund of Variable Insurance Products Fund III, including the portfolio of investments, as of December 31, 2003, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Balanced Portfolio as of December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 18, 2004

Annual Report

Trustees and Officers

The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-221-5207.

Interested Trustees*:

Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Edward C. Johnson 3d (73)**
	Year of Election or Appointment: 1994 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc.
Abigail P. Johnson (42)**
	Year of Election or Appointment: 2001 Senior Vice President of VIP Balanced (2001). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds.
Laura B. Cronin (49)
	Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002).
Robert L. Reynolds (51)
	Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000).

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.

** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.

Annual Report

Non-Interested Trustees:

Name, Age; Principal Occupation
J. Michael Cook (61)
	Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), Rockwell Automation (2000), and The Dow Chemical Company (2000). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Board of the Directorship Search Group, Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater.
Ralph F. Cox (71)
	Year of Election or Appointment: 1994 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin.
Robert M. Gates (60)
	Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), and Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001). He also serves as a member of the Advisory Board of VoteHere.net (secure internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy.
George H. Heilmeier (67)
	Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002) and Compaq (1994-2002).
Donald J. Kirk (71)
	Year of Election or Appointment: 1994 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations).
Marie L. Knowles (57)
	Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing), URS Corporation (multidisciplinary engineering, 1999), and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (59)
	Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Chairman and as a Director (1998) of Acterna Corporation (communications test equipment). He is also Co-Chairman of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Eaton Corporation (diversified industrial) and the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations.
Marvin L. Mann (70)
	Year of Election or Appointment: 1994 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals) where he served as CEO until April 1998 and retired as Chairman May 1999, and remains a member of the Board. Prior to 1991, he held the positions of Vice President of International Business Machines Corporation (IBM) and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Board member of Imation Corp. (imaging and information storage) and Acterna Corporation (communications test equipment, 1999). He is also a member of the Director Services Committee of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama.
William O. McCoy (70)
	Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), Progress Energy, Inc. (electric utility), and Acterna Corporation (communications test equipment, 1999). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998).
William S. Stavropoulos (64)
	Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman of the Board, President and CEO (2002), and Chairman of the Executive Committee (2000) and a Director of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000) and Chief Executive Officer (1995-2000). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council, World Business Council for Sustainable Development, and the University of Notre Dame Advisory Council for the College of Science.

Annual Report

Advisory Board Members and Executive Officers:

Name, Age; Principal Occupation
Peter S. Lynch (60)
	Year of Election or Appointment: 2003 Member of the Advisory Board of Variable Insurance Products Fund III. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity® Magellan® Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
Cornelia M. Small (59)
	Year of Election or Appointment: 2004 Member of the Advisory Board of Variable Insurance Products Fund III. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors (1998-1999) of Scudder Kemper Investments. In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
Bart A. Grenier (44)
	Year of Election or Appointment: 2001 Vice President of VIP Balanced. Mr. Grenier also serves as Vice President of certain Equity Funds (2001), a position he previously held from 1999 to 2000, and Vice President of certain High Income Funds (2002). He is Senior Vice President of FMR (1999) and FMR Co., Inc. (2001), and President and Director of Strategic Advisers, Inc. (2002). He also heads Fidelity's Asset Allocation Group (2000), Fidelity's Growth and Income Group (2001), Fidelity's Value Group (2001), and Fidelity's High Income Division (2001). Previously, Mr. Grenier served as President of Fidelity Ventures (2000), Vice President of certain High Income Funds (1997-2000), High Income Division Head (1997-2000), Group Leader of the Income-Growth and Asset Allocation-Income Groups (1996-2000), and Assistant Equity Division Head (1997-2000).
Charles S. Morrison (43)
	Year of Election or Appointment: 2002 Vice President of VIP Balanced. Mr. Morrison also serves as Vice President of Fidelity's Bond Funds (2002), and Vice President of certain Asset Allocation and Balanced Funds (2002). He serves as Vice President (2002) and Bond Group Leader (2002) of Fidelity Investments Fixed Income Division. Mr. Morrison is also Vice President of FIMM (2002) and FMR (2002). Mr. Morrison joined Fidelity in 1987 as a Corporate Bond Analyst in the Fixed Income Research Division.
Ford O'Neil (41)
	Year of Election or Appointment: 2001 Vice President of VIP Balanced. Mr. O'Neil is also Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. O'Neil managed a variety of Fidelity funds.
Louis Salemy (41)
	Year of Election or Appointment: 2002 Vice President of VIP Balanced. Mr. Salemy is also Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Salemy managed a variety of Fidelity funds.
Eric D. Roiter (55)
	Year of Election or Appointment: 1998 Secretary of VIP Balanced. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003).
Stuart Fross (44)
	Year of Election or Appointment: 2003 Assistant Secretary of VIP Balanced. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR.
Maria F. Dwyer (45)
	Year of Election or Appointment: 2002 President and Treasurer of VIP Balanced. Ms. Dwyer also serves as President and Treasurer of other Fidelity funds (2002) and is a Vice President (1999) and an employee (1996) of FMR.
Timothy F. Hayes (53)
	Year of Election or Appointment: 2002 Chief Financial Officer of VIP Balanced. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998).
John R. Hebble (45)
	Year of Election or Appointment: 2003 Deputy Treasurer of VIP Balanced. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003).
John H. Costello (57)
	Year of Election or Appointment: 1994 Assistant Treasurer of VIP Balanced. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Francis V. Knox, Jr. (56)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Balanced. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002).
Mark Osterheld (48)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Balanced. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Thomas J. Simpson (45)
	Year of Election or Appointment: 2000 Assistant Treasurer of VIP Balanced. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995).

Annual Report

Distributions

A total of 9.96% of the dividends distributed during the fiscal year was derived from interest on U.S. Government securities which is generally exempt from state income tax.

A percentage of the dividends distributed during the fiscal year for the following classes qualifies for the dividends-received deduction for corporate shareholders:

Initial Class	25%
Service Class	26%
Service Class 2	28%

The fund will notify shareholders in January 2004 of amounts for use in preparing 2003 income tax returns.

Annual Report

Balanced Portfolio

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

Fidelity Investments Money Management, Inc.

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

Fidelity Management & Research (Far East) Inc.

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Shareholder Servicing Agent

Fidelity Investments Institutional Operations Co., Inc.
Boston, MA

Custodian

JPMorgan Chase Bank
New York, NY

VIPBAL-ANN-0204
1.540208.106

Fidelity® Variable Insurance Products:

Dynamic Capital Appreciation Portfolio

Annual Report

December 31, 2003

(2_fidelity_logos) (Registered_Trademark)

Performance	<Click Here>	How the fund has done over time.
Management's Discussion	<Click Here>	The manager's review of fund performance, strategy and outlook.
Investment Summary	<Click Here>	A summary of the fund's investments at period end.
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.
Auditor's Opinion	<Click Here>
Trustees and Officers	<Click Here>

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

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

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

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

(Recycle graphic) This report is printed on recycled paper using soy-based inks.

Neither the fund nor Fidelity Distributors Corporation is a bank.

Dynamic Capital Appreciation Portfolio

Fidelity Variable Insurance Products: Dynamic Capital Appreciation Portfolio

Performance: The Bottom Line

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Life of fund ^A
Fidelity ® VIP: Dynamic Capital Appreciation - Initial Class	25.49%	-9.91%
Fidelity VIP: Dynamic Capital Appreciation - Service Class ^B	25.18%	-10.03%
Fidelity VIP: Dynamic Capital Appreciation - Service Class 2 ^C	24.91%	-10.19%

^A From September 25, 2000

^BPerformance for Service Class shares reflects an asset-based service fee (12b-1 fee).

^CPerformance for Service Class 2 shares reflects an asset-based service fee (12b-1 fee).

$10,000 Over Life of Fund

Let's say hypothetically that $10,000 was invested in Fidelity® Variable Insurance Products: Dynamic Capital Appreciation Portfolio - Initial Class on September 25, 2000, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Standard & Poor's 500^SM Index did over the same period.

Annual Report

Fidelity Variable Insurance Products: Dynamic Capital Appreciation Portfolio

Management's Discussion of Fund Performance

Comments from John Porter, Portfolio Manager of Fidelity® Variable Insurance Products: Dynamic Capital Appreciation Portfolio

For the 12 months ending December 31, 2003, Fidelity Variable Insurance Products: Dynamic Capital Appreciation Portfolio underperformed the Lipper^SM Variable Annuity Capital Appreciation Funds Average and the S&P 500® index, which returned 32.75% and 28.69%, respectively. The fund's performance relative to its index was hurt by an overweighting in the energy sector, where the fund emphasized generally poor-performing energy services companies such as Rowan, Weatherford, BJ Services and ENSCO. Elsewhere, the fund's underweighting in technology during the first nine months of the period also held back its relative return, as this was the market's best-performing sector during 2003. Other individual detractors included telecommunication services provider Qwest Communications and hospital facility operator Tenet Healthcare. Although telecommunications was the market's worst-performing sector, strong gains from holdings in U.K. cable provider NTL and wireless services carrier Nextel helped the fund's positions in the group deliver a return of more than 160%. The fund's largest two holdings on average throughout the period - health care provider UnitedHealth Group and satellite-TV company EchoStar Communications - also were among the fund's top contributors.

Annual Report

Fidelity Variable Insurance Products: Dynamic Capital Appreciation Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Time Warner, Inc.	6.5
NTL, Inc.	4.1
EchoStar Communications Corp. Class A	3.8
UnitedHealth Group, Inc.	3.5
Pride International, Inc.	3.2
	21.1
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Information Technology	34.5
Consumer Discretionary	25.1
Energy	14.5
Telecommunication Services	8.2
Health Care	4.8

Asset Allocation as of December 31, 2003
% of fund's net assets *
	Stocks	96.4%
	Short-Term Investments and Net Other Assets	3.6%

* Foreign
investments

7.4%

Annual Report

Fidelity Variable Insurance Products: Dynamic Capital Appreciation Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 96.4%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 25.1%
Household Durables - 3.6%
D.R. Horton, Inc.	5,760		$ 249,178
Harman International Industries, Inc.	3,400		251,532
Hovnanian Enterprises, Inc. Class A (a)	970		84,448
Lennar Corp. Class A	1,350		129,600
Toll Brothers, Inc. (a)	7,480		297,405
			1,012,163
Internet & Catalog Retail - 5.2%
InterActiveCorp (a)	16,380		555,773
Netflix, Inc. (a)	16,500		902,385
			1,458,158
Media - 15.3%
Cablevision Systems Corp. - NY Group Class A (a)	4,610		107,828
Clear Channel Communications, Inc.	6,930		324,532
EchoStar Communications Corp. Class A (a)	32,090		1,091,060
Entercom Communications Corp. Class A (a)	300		15,888
Fox Entertainment Group, Inc. Class A (a)	9,900		288,585
Hughes Electronics Corp. (a)	6,558		108,535
News Corp. Ltd. sponsored ADR	677		20,479
Omnicom Group, Inc.	20		1,747
Time Warner, Inc. (a)	101,860		1,832,461
Viacom, Inc. Class B (non-vtg.)	10,200		452,676
Walt Disney Co.	4,200		97,986
			4,341,777
Specialty Retail - 1.0%
Best Buy Co., Inc.	5,510		287,842
TOTAL CONSUMER DISCRETIONARY			7,099,940
ENERGY - 14.5%
Energy Equipment & Services - 14.3%
Baker Hughes, Inc.	1,420		45,667
BJ Services Co. (a)	10,920		392,028
ENSCO International, Inc.	24,260		659,144
Grant Prideco, Inc. (a)	21,880		284,878
Grey Wolf, Inc. (a)	20,800		77,792
Nabors Industries Ltd. (a)	3,030		125,745
National-Oilwell, Inc. (a)	4,220		94,359
Parker Drilling Co. (a)	5,200		13,260
Pride International, Inc. (a)	48,990		913,174
Rowan Companies, Inc. (a)	35,060		812,340
Smith International, Inc. (a)	2,030		84,286
Transocean, Inc. (a)	5,020		120,530
Varco International, Inc. (a)	7,550		155,757
Weatherford International Ltd. (a)	7,310		263,160
			4,042,120

	Shares		Value (Note 1)
Oil & Gas - 0.2%
Chesapeake Energy Corp.	3,910		$ 53,098
TOTAL ENERGY			4,095,218
FINANCIALS - 3.7%
Capital Markets - 1.4%
Ameritrade Holding Corp. (a)	16,730		235,391
Lehman Brothers Holdings, Inc.	90		6,950
Morgan Stanley	2,720		157,406
			399,747
Commercial Banks - 0.1%
Fifth Third Bancorp	470		27,777
Diversified Financial Services - 0.1%
CIT Group, Inc.	1,110		39,905
Insurance - 0.9%
Conseco, Inc. (a)	11,100		241,980
Thrifts & Mortgage Finance - 1.2%
Countrywide Financial Corp.	2		152
Sovereign Bancorp, Inc.	14,700		349,125
			349,277
TOTAL FINANCIALS			1,058,686
HEALTH CARE - 4.8%
Biotechnology - 0.5%
Biogen Idec, Inc. (a)	500		18,390
Genentech, Inc. (a)	1,300		121,641
Millennium Pharmaceuticals, Inc. (a)	100		1,867
			141,898
Health Care Providers & Services - 3.8%
UnitedHealth Group, Inc.	16,930		984,987
WebMD Corp. (a)	9,200		82,708
			1,067,695
Pharmaceuticals - 0.5%
Forest Laboratories, Inc. (a)	1,060		65,508
Merck & Co., Inc.	40		1,848
Schering-Plough Corp.	5,300		92,167
			159,523
TOTAL HEALTH CARE			1,369,116
INDUSTRIALS - 3.7%
Aerospace & Defense - 0.7%
Bombardier, Inc. Class B (sub. vtg.)	5,400		22,771
Embraer - Empresa Brasileira de Aeronautica SA sponsored ADR	200		7,006
Lockheed Martin Corp.	3,020		155,228
			185,005
Common Stocks - continued
	Shares		Value (Note 1)
INDUSTRIALS - continued
Airlines - 0.8%
JetBlue Airways Corp. (a)	4,999		$ 132,573
Ryanair Holdings PLC sponsored ADR (a)	2,000		101,280
			233,853
Commercial Services & Supplies - 2.2%
Cendant Corp. (a)	8,060		179,496
Monster Worldwide, Inc. (a)	18,600		408,456
Robert Half International, Inc. (a)	200		4,668
Spherion Corp. (a)	2,800		27,412
			620,032
TOTAL INDUSTRIALS			1,038,890
INFORMATION TECHNOLOGY - 34.5%
Communications Equipment - 4.6%
Adtran, Inc.	2,800		86,800
Avaya, Inc. (a)	14,600		188,924
CIENA Corp. (a)	26,300		174,632
Cisco Systems, Inc. (a)	2,800		68,012
Emulex Corp. (a)	2,300		61,364
Juniper Networks, Inc. (a)	2,300		42,964
Motorola, Inc.	6,570		92,440
Powerwave Technologies, Inc. (a)	8,900		68,085
QUALCOMM, Inc.	900		48,537
Scientific-Atlanta, Inc.	6,000		163,800
SeaChange International, Inc. (a)	2,300		35,420
Telefonaktiebolaget LM Ericsson ADR (a)	15,000		265,500
			1,296,478
Computers & Peripherals - 2.0%
Dell, Inc. (a)	2,400		81,504
EMC Corp. (a)	9,600		124,032
Gateway, Inc. (a)	4,200		19,320
Hewlett-Packard Co.	2,640		60,641
Maxtor Corp. (a)	10,200		113,220
Mobility Electronics, Inc. (a)	3,700		33,082
SanDisk Corp. (a)	500		30,570
Seagate Technology	2,500		47,250
Sun Microsystems, Inc. (a)	14,730		66,138
			575,757
Electronic Equipment & Instruments - 2.6%
Arrow Electronics, Inc. (a)	400		9,256
AVX Corp.	2,300		38,226
Celestica, Inc. (sub. vtg.) (a)	5,100		76,901
Flextronics International Ltd. (a)	34,710		515,096
Solectron Corp. (a)	7,800		46,098
Symbol Technologies, Inc.	3,750		63,338
			748,915
Internet Software & Services - 5.1%
Ariba, Inc. (a)	10,500		31,500
j2 Global Communications, Inc. (a)	7,300		180,821

	Shares		Value (Note 1)
RADWARE Ltd. (a)	1,200		$ 32,700
United Online, Inc. (a)	52,130		875,263
VeriSign, Inc. (a)	4,100		66,830
Yahoo Japan Corp. (a)	18		243,098
			1,430,212
IT Services - 2.2%
Affiliated Computer Services, Inc. Class A (a)	11,490		625,745
Semiconductors & Semiconductor Equipment - 15.5%
Advanced Micro Devices, Inc. (a)	11,100		165,390
Agere Systems, Inc.:
Class A (a)	12,300		37,515
Class B (a)	45,600		132,240
Applied Materials, Inc. (a)	2,100		47,145
ASML Holding NV (NY Shares) (a)	9,220		184,861
Asyst Technologies, Inc. (a)	12,400		215,140
Atmel Corp. (a)	5,000		30,050
Axcelis Technologies, Inc. (a)	10,200		104,244
Conexant Systems, Inc. (a)	36,400		180,908
Cypress Semiconductor Corp. (a)	2,400		51,264
DuPont Photomasks, Inc. (a)	4,100		98,974
Entegris, Inc. (a)	13,400		172,190
Fairchild Semiconductor International, Inc. (a)	3,200		79,904
GlobespanVirata, Inc. (a)	12,000		70,560
Intel Corp.	12,080		388,976
Intersil Corp. Class A	12,400		308,140
KLA-Tencor Corp. (a)	5,100		299,217
Lam Research Corp. (a)	8,300		268,090
Linear Technology Corp.	1,300		54,691
Marvell Technology Group Ltd. (a)	5,700		216,201
Maxim Integrated Products, Inc.	3,000		149,400
MEMC Electronic Materials, Inc. (a)	8,400		80,808
Microchip Technology, Inc.	800		26,688
National Semiconductor Corp. (a)	6,400		252,224
Photronics, Inc. (a)	7,400		147,408
PMC-Sierra, Inc. (a)	7,000		141,050
Samsung Electronics Co. Ltd.	210		79,421
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR (a)	4,800		49,152
Teradyne, Inc. (a)	9,900		251,955
Xilinx, Inc. (a)	2,600		100,724
			4,384,530
Software - 2.5%
BEA Systems, Inc. (a)	11,800		145,140
i2 Technologies, Inc. (a)	81,000		134,460
Microsoft Corp.	3,700		101,898
Oracle Corp. (a)	5,200		68,640
Quest Software, Inc. (a)	2,100		29,820
Siebel Systems, Inc. (a)	7,300		101,251
Common Stocks - continued
	Shares		Value (Note 1)
INFORMATION TECHNOLOGY - continued
Software - continued
Take-Two Interactive Software, Inc. (a)	1,700		$ 48,977
VERITAS Software Corp. (a)	1,900		70,604
			700,790
TOTAL INFORMATION TECHNOLOGY			9,762,427
MATERIALS - 1.9%
Chemicals - 0.9%
Lyondell Chemical Co.	14,680		248,826
Metals & Mining - 1.0%
Apex Silver Mines Ltd. (a)	3,100		64,790
Kinross Gold Corp. (a)	10,190		81,068
Newmont Mining Corp.	640		31,110
Nucor Corp.	600		33,600
Pan American Silver Corp. (a)	6,100		86,807
			297,375
TOTAL MATERIALS			546,201
TELECOMMUNICATION SERVICES - 8.2%
Diversified Telecommunication Services - 5.0%
Covad Communications Group, Inc. (a)	68,300		245,880
NTL, Inc. (a)	16,659		1,161,965
XO Communications, Inc. (a)	400		2,300
			1,410,145
Wireless Telecommunication Services - 3.2%
At Road, Inc. (a)	1,000		13,300
Nextel Communications, Inc. Class A (a)	31,840		893,430
			906,730
TOTAL TELECOMMUNICATION SERVICES			2,316,875
UTILITIES - 0.0%
Multi-Utilities & Unregulated Power - 0.0%
Sierra Pacific Resources (a)	1,100		8,074
TOTAL COMMON STOCKS (Cost $24,825,629)		27,295,427
Money Market Funds - 7.1%
	Shares		Value (Note 1)
Fidelity Cash Central Fund, 1.07% (b) (Cost $2,007,230)	2,007,230		$ 2,007,230
TOTAL INVESTMENT PORTFOLIO - 103.5% (Cost $26,832,859)			29,302,657
NET OTHER ASSETS - (3.5)%			(994,633)
NET ASSETS - 100%		$ 28,308,024

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $53,443,068 and $36,686,667, respectively.

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 $12,522 for the period.

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $1,293,000 of which $1,013,000 and $280,000 will expire on December 31, 2009 and 2010, respectively.

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

Annual Report

Fidelity Variable Insurance Products: Dynamic Capital Appreciation Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (cost $26,832,859) - See accompanying schedule		$ 29,302,657
Cash		2,142
Receivable for investments sold		223,996
Receivable for fund shares sold		163,576
Dividends receivable		4,828
Interest receivable		874
Prepaid expenses		77
Receivable from investment adviser for expense reductions		13,300
Other receivables		5,168
Total assets		29,716,618
Liabilities
Payable for investments purchased	$ 1,334,725
Payable for fund shares redeemed	9,203
Accrued management fee	12,201
Distribution fees payable	2,227
Other affiliated payables	6,560
Other payables and accrued expenses	43,678
Total liabilities		1,408,594
Net Assets		$ 28,308,024
Net Assets consist of:
Paid in capital		$ 27,279,480
Accumulated net investment loss		(19,223)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(1,422,415)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		2,470,182
Net Assets		$ 28,308,024
Initial Class: Net Asset Value, offering price and redemption price per share ($16,684,295 ÷ 2,354,378 shares)		$ 7.09
Service Class: Net Asset Value, offering price and redemption price per share ($851,889 ÷ 120,705 shares)		$ 7.06
Service Class 2: Net Asset Value, offering price and redemption price per share ($10,771,840 ÷ 1,533,706 shares)		$ 7.02

Statement of Operations

	Year ended December 31, 2003
Investment Income
Dividends		$ 70,897
Interest		9,899
Total income		80,796
Expenses
Management fee	$ 70,860
Transfer agent fees	13,328
Distribution fees	20,380
Accounting fees and expenses	60,008
Non-interested trustees' compensation	44
Custodian fees and expenses	23,125
Audit	38,992
Legal	49
Reports to shareholders	19,337
Miscellaneous	81
Total expenses before reductions	246,204
Expense reductions	(90,631)	155,573
Net investment income (loss)		(74,777)
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	646,622
Foreign currency transactions	(1,450)
Total net realized gain (loss)		645,172
Change in net unrealized appreciation (depreciation) on: Investment securities	2,393,016
Assets and liabilities in foreign currencies	217
Total change in net unrealized appreciation (depreciation)		2,393,233
Net gain (loss)		3,038,405
Net increase (decrease) in net assets resulting from operations		$ 2,963,628

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

Annual Report

Fidelity Variable Insurance Products: Dynamic Capital Appreciation Portfolio
Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ (74,777)	$ 7,876
Net realized gain (loss)	645,172	(295,077)
Change in net unrealized appreciation (depreciation)	2,393,233	(372,246)
Net increase (decrease) in net assets resulting from operations	2,963,628	(659,447)
Distributions to shareholders from net investment income	-	(13,673)
Share transactions - net increase (decrease)	17,643,469	3,097,097
Total increase (decrease) in net assets	20,607,097	2,423,977
Net Assets
Beginning of period	7,700,927	5,276,950
End of period (including accumulated net investment loss of $19,223 and $0, respectively)	$ 28,308,024	$ 7,700,927

Other Information:
Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	2,499,801	13,223	958,232
Reinvested	-	-	-
Redeemed	(272,552)	(29,607)	(528,986)
Net increase (decrease)	2,227,249	(16,384)	429,246
Dollars Sold	$ 16,849,324	$ 79,816	$ 5,979,794
Reinvested	-	-	-
Redeemed	(1,809,908)	(180,396)	(3,275,161)
Net increase (decrease)	$ 15,039,416	$ (100,580)	$ 2,704,633
Share Transactions	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	115,079	190,371	667,854
Reinvested	227	244	1,965
Redeemed	(52,017)	(203,736)	(218,035)
Net increase (decrease)	63,289	(13,121)	451,784
Dollars Sold	$ 679,760	$ 1,195,213	$ 3,910,631
Reinvested	1,278	1,372	11,023
Redeemed	(293,043)	(1,213,482)	(1,195,655)
Net increase (decrease)	$ 387,995	$ (16,897)	$ 2,725,999
Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ -	$ -	$ -
From net realized gain	-	-	-
Total	$ -	$ -	$ -
	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 1,278	$ 1,372	$ 11,023
From net realized gain	-	-	-
Total	$ 1,278	$ 1,372	$ 11,023

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

Dynamic Capital Appreciation Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 5.65	$ 6.10	$ 8.52	$ 10.00
Income from Investment Operations
Net investment income (loss)^E	(.02)	.02	- ^H	.01
Net realized and unrealized gain (loss)	1.46	(.46)	(2.41)	(1.49)
Total from investment operations	1.44	(.44)	(2.41)	(1.48)
Distributions from net investment income	-	(.01)	(.01)	-
Net asset value, end of period	$ 7.09	$ 5.65	$ 6.10	$ 8.52
Total Return^B,C,D	25.49%	(7.21)%	(28.32)%	(14.80)%
Ratios to Average Net Assets^G
Expenses before expense reductions	1.83%	2.64%	3.59%	10.18%^A
Expenses net of voluntary waivers, if any	1.06%	1.50%	1.50%	1.50%^A
Expenses net of all reductions	.96%	1.38%	1.43%	1.50%^A
Net investment income (loss)	(.30)%	.32%	.02%	.47%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 16,684	$ 719	$ 390	$ 256
Portfolio turnover rate	307%	349%	432%	295%^A

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period September 25, 2000 (commencement of operations) to December 31, 2000.

^H Amount represents less than $.01 per share.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 5.64	$ 6.09	$ 8.52	$ 10.00
Income from Investment Operations
Net investment income (loss)^E	(.04)	.01	(.01)	.01
Net realized and unrealized gain (loss)	1.46	(.45)	(2.41)	(1.49)
Total from investment operations	1.42	(.44)	(2.42)	(1.48)
Distributions from net investment income	-	(.01)	(.01)	-
Net asset value, end of period	$ 7.06	$ 5.64	$ 6.09	$ 8.52
Total Return^B,C,D	25.18%	(7.22)%	(28.44)%	(14.80)%
Ratios to Average Net Assets^G
Expenses before expense reductions	1.92%	2.61%	3.63%	10.30%^A
Expenses net of voluntary waivers, if any	1.38%	1.60%	1.60%	1.60%^A
Expenses net of all reductions	1.29%	1.48%	1.53%	1.60%^A
Net investment income (loss)	(.63)%	.22%	(.08)%	.36%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 852	$ 773	$ 915	$ 802
Portfolio turnover rate	307%	349%	432%	295%^A

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period September 25, 2000 (commencement of operations) to December 31, 2000.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 5.62	$ 6.09	$ 8.52	$ 10.00
Income from Investment Operations
Net investment income (loss)^E	(.05)	- ^H	(.01)	- ^H
Net realized and unrealized gain (loss)	1.45	(.46)	(2.41)	(1.48)
Total from investment operations	1.40	(.46)	(2.42)	(1.48)
Distributions from net investment income	-	(.01)	(.01)	-
Net asset value, end of period	$ 7.02	$ 5.62	$ 6.09	$ 8.52
Total Return^B,C,D	24.91%	(7.55)%	(28.44)%	(14.80)%
Ratios to Average Net Assets^G
Expenses before expense reductions	2.10%	2.79%	3.77%	10.49%^A
Expenses net of voluntary waivers, if any	1.51%	1.75%	1.75%	1.75%^A
Expenses net of all reductions	1.41%	1.63%	1.68%	1.75%^A
Net investment income (loss)	(.75)%	.07%	(.23)%	.21%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 10,772	$ 6,209	$ 3,972	$ 1,549
Portfolio turnover rate	307%	349%	432%	295%^A

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period September 25, 2000 (commencement of operations) to December 31, 2000.

^H Amount represents less than $.01 per share.

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

Dynamic Capital Appreciation Portfolio

Notes to Financial Statements

For the period ended December 31, 2003

1. Significant Accounting Policies.

Dynamic Capital Appreciation Portfolio (the fund) is a fund of Variable Insurance Products Fund III (the trust) (referred to in this report as Fidelity Variable Insurance Products: Dynamic Capital Appreciation Portfolio) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The fund offers the following classes of shares: Initial Class shares, Service Class shares and Service Class 2 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent and temporary book and tax differences. These adjustments have no impact on net assets or the results of operations. Temporary differences will reverse in a subsequent period. These differences are primarily due to passive foreign investment companies (PFIC), net operating losses, capital loss carryforwards, and losses deferred due to wash sales.

Annual Report

Notes to Financial Statements - continued

1. Significant Accounting Policies - continued

The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:

Unrealized appreciation	$ 2,945,456
Unrealized depreciation	(614,409)
Net unrealized appreciation (depreciation)	2,331,047
Capital loss carryforward	(1,292,872)

Cost for federal income tax purposes	$ 26,971,610

The tax character of distributions paid was as follows:

	December 31, 2003	December 31, 2002
Ordinary Income	$ -	$ 13,673

2. Operating Policies.

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% 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 annual management fee rate was .58% of the fund's average net assets.

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

Service Class	$ 799
Service Class 2	19,581
	$ 20,380

For the period, the total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class	$ 3,424
Service Class	672
Service Class 2	9,232
	$ 13,328

Dynamic Capital Appreciation Portfolio

4. Fees and Other Transactions with Affiliates - continued

5. Committed Line of Credit.

6. Expense Reductions.

	Expense Limitations	Reimbursement from adviser
Initial Class	1.50-1.00%*	$ 27,612
Service Class	1.60-1.10%*	4,270
Service Class 2	1.75-1.25%*	46,673
		$ 78,555

*Expense limitation in effect at period end.

7. Other Information.

At the end of the period, FMR or its affiliates were the owners of record of 54% of the total outstanding shares of the fund. In addition, two unaffiliated shareholders were the owners of record of 30% of the total outstanding shares of the fund.

Annual Report

Independent Auditors' Report

To the Trustees of Variable Insurance Products Fund III and Shareholders of Dynamic Capital Appreciation Portfolio:

We have audited the accompanying statement of assets and liabilities of Dynamic Capital Appreciation Portfolio (the Fund), a fund of Variable Insurance Products Fund III, including the portfolio of investments, as of December 31, 2003, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Dynamic Capital Appreciation Portfolio as of December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the four years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 18, 2004

Annual Report

Trustees and Officers

The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-221-5207.

Interested Trustees*:

Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Edward C. Johnson 3d (73)**
	Year of Election or Appointment: 1994 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc.
Abigail P. Johnson (42)**
	Year of Election or Appointment: 2001 Senior Vice President of VIP Dynamic Capital Appreciation (2001). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds.
Laura B. Cronin (49)
	Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002).
Robert L. Reynolds (51)
	Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000).

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.

** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.

Annual Report

Non-Interested Trustees:

Name, Age; Principal Occupation
J. Michael Cook (61)
	Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), Rockwell Automation (2000) and The Dow Chemical Company (2000). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Board of the Directorship Search Group, Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater.
Ralph F. Cox (71)
	Year of Election or Appointment: 1994 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin.
Robert M. Gates (60)
	Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), and Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001). He also serves as a member of the Advisory Board of VoteHere.net (secure internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy.
George H. Heilmeier (67)
	Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002) and Compaq (1994-2002).
Donald J. Kirk (71)
	Year of Election or Appointment: 1994 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations).
Marie L. Knowles (57)
	Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing), URS Corporation (multidisciplinary engineering, 1999), and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (59)
	Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Chairman and as a Director (1998) of Acterna Corporation (communications test equipment). He is also Co-Chairman of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Eaton Corporation (diversified industrial) and the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations.
Marvin L. Mann (70)
	Year of Election or Appointment: 1994 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals) where he served as CEO until April 1998 and retired as Chairman May 1999, and remains a member of the Board. Prior to 1991, he held the positions of Vice President of International Business Machines Corporation (IBM) and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Board member of Imation Corp. (imaging and information storage) and Acterna Corporation (communications test equipment, 1999). He is also a member of the Director Services Committee of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama.
William O. McCoy (70)
	Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), Progress Energy, Inc. (electric utility), and Acterna Corporation (communications test equipment, 1999). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998).
William S. Stavropoulos (64)
	Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman of the Board, President and CEO (2002), and Chairman of the Executive Committee (2000) and a Director of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000) and Chief Executive Officer (1995-2000). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council, World Business Council for Sustainable Development, and the University of Notre Dame Advisory Council for the College of Science.

Annual Report

Advisory Board Members and Executive Officers:

Name, Age; Principal Occupation
Peter S. Lynch (60)
	Year of Election or Appointment: 2003 Member of the Advisory Board of Variable Insurance Products III. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity® Magellan® Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
Cornelia M. Small (59)
	Year of Election or Appointment: 2004 Member of the Advisory Board of Variable Insurance Products III. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors (1998-1999) of Scudder Kemper Investments. In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
John B. McDowell (45)
	Year of Election or Appointment: 2002 Vice President of VIP Dynamic Capital Appreciation. Mr. McDowell also serves as Vice President of certain Equity Funds (2002). He is Senior Vice President of FMR (1999), FMR Co., Inc. (2001), and Fidelity Management Trust Company (FMTC). Since joining Fidelity Investments in 1985, Mr. McDowell has worked as a research analyst and manager.
Eric D. Roiter (55)
	Year of Election or Appointment: 2000 Secretary of VIP Dynamic Capital Appreciation. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003).
Stuart Fross (44)
	Year of Election or Appointment: 2003 Assistant Secretary of VIP Dynamic Capital Appreciation. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR.
Maria F. Dwyer (45)
	Year of Election or Appointment: 2002 President and Treasurer of VIP Dynamic Capital Appreciation. Ms. Dwyer also serves as President and Treasurer of other Fidelity funds (2002) and is a Vice President (1999) and an employee (1996) of FMR.
Timothy F. Hayes (53)
	Year of Election or Appointment: 2002 Chief Financial Officer of VIP Dynamic Capital Appreciation. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998).
John R. Hebble (45)
	Year of Election or Appointment: 2003 Deputy Treasurer of VIP Dynamic Capital Appreciation. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003).
John H. Costello (57)
	Year of Election or Appointment: 2000 Assistant Treasurer of VIP Dynamic Capital Appreciation. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Francis V. Knox, Jr. (56)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Dynamic Capital Appreciation. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002).
Mark Osterheld (48)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Dynamic Capital Appreciation. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Thomas J. Simpson (45)
	Year of Election or Appointment: 2000 Assistant Treasurer of VIP Dynamic Capital Appreciation. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995).

Annual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Far East) Inc.

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Shareholder Servicing Agent

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA

Custodian

State Street Bank and Trust Company
Quincy, MA

VIPDCA-ANN-0204
1.751799.103

Fidelity® Variable Insurance Products:

Growth Opportunities Portfolio

Annual Report

December 31, 2003

(2_fidelity_logos) (Registered_Trademark)

Performance	<Click Here>	How the fund has done over time.
Management's Discussion	<Click Here>	The manager's review of fund performance, strategy and outlook.
Investment Summary	<Click Here>	A summary of the fund's investments at period end.
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.
Auditors' Opinion	<Click Here>
Trustees and Officers	<Click Here>
Distributions	<Click Here>

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

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

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

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

(Recycle graphic) This report is printed on recycled paper using soy-based inks.

Neither the fund nor Fidelity Distributors Corporation is a bank.

Growth Opportunities Portfolio

Fidelity Variable Insurance Products: Growth Opportunities Portfolio

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. Performance numbers are net of all underlying fund operating expenses, but do not include any insurance charges imposed by your insurance company's separate account. If performance information included the effect of these additional charges, the total returns would have been lower. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Life of fund ^A
Fidelity ® VIP: Growth Opportunities - Initial Class	29.87%	-5.56%	7.44%
Fidelity VIP: Growth Opportunities - Service Class ^B	29.66%	-5.65%	7.37%
Fidelity VIP: Growth Opportunities - Service Class 2 ^C	29.40%	-5.78%	7.29%

^A From January 3, 1995

^B The initial offering of Service Class shares took place November 3, 1997. Performance for Service Class shares reflects an asset based service fee (12b-1 fee), and returns prior to November 3, 1997 are those of Initial Class and do not include the effects of Service Class 12b-1 fee. Had Service Class shares' 12b-1 fee been reflected, returns prior to November 3, 1997 would have been lower.

^C The initial offering of Service Class 2 shares took place January 12, 2000. Performance for Service Class 2 shares reflects an asset based service fee (12b-1 fee). Returns from November 3, 1997 to January 12, 2000 are those of Service Class which reflect a different 12b-1 fee. Service Class 2 returns prior to November 3, 1997 are those of Initial Class and do not include the effects of a 12b-1 fee. Had Service Class 2 shares' 12b-1 fee been reflected, returns prior to January 12, 2000 would have been lower.

$10,000 Over Life of Fund

Let's say hypothetically that $10,000 was invested in Fidelity® Variable Insurance Products: Growth Opportunities Portfolio - Initial Class on January 3, 1995, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index did over the same period.

Annual Report

Fidelity Variable Insurance Products: Growth Opportunities Portfolio

Management's Discussion of Fund Performance

Comments from Bettina Doulton, Portfolio Manager of Fidelity® Variable Insurance Products: Growth Opportunities Portfolio

For the year ending December 31, 2003, the fund slightly outperformed the S&P 500® index, which gained 28.69%, and performed about in line with the Lipper^SM Variable Annuity Growth Funds Average, which returned 30.23%. The fund outperformed its peers through much of the year, but couldn't quite maintain its lead as the market rally increasingly focused on smaller, aggressive stocks and NASDAQ names later in the year. Consequently, several of the large-cap, defensive steady growers among the fund's top-10 holdings, such as Microsoft, Gillette and Coca-Cola, lagged in the second-half rally. Stock selection in technology, particularly semiconductors, was a significant contributor relative to the index. Three of our top eight performers were semiconductor-related: National Semiconductor, Texas Instruments and Analog Devices. In media, weak advertising spending in the spot market - local TV, radio and newspapers - hurt the fund's positions in Viacom and Fox Entertainment. Cooper Cameron and Schlumberger also disappointed, as energy companies worked to improve their balance sheets rather than fund new exploration projects. On the other hand, brokerage stocks Merrill Lynch and Citigroup boosted performance as the capital markets improved.

Annual Report

Fidelity Variable Insurance Products: Growth Opportunities Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Microsoft Corp.	3.5
General Electric Co.	3.1
Citigroup, Inc.	3.0
Pfizer, Inc.	2.9
Viacom, Inc. Class B (non-vtg.)	2.2
	14.7
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Consumer Discretionary	18.3
Information Technology	18.2
Financials	13.3
Health Care	13.0
Industrials	10.2

Asset Allocation as of December 31, 2003
% of fund's net assets *
	Stocks and Equity Futures	98.2%
	Short-Term Investments and Net Other Assets	1.8%

* Foreign investments

6.9%

Annual Report

Fidelity Variable Insurance Products: Growth Opportunities Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 93.7%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 18.3%
Automobiles - 0.4%
Harley-Davidson, Inc.	68,200		$ 3,241,546
Hotels, Restaurants & Leisure - 2.2%
Carnival Corp. unit	22,800		905,844
Darden Restaurants, Inc.	43,100		906,824
Hilton Hotels Corp.	198,600		3,402,018
Krispy Kreme Doughnuts, Inc. (a)	48,500		1,775,100
Mandalay Resort Group	21,500		961,480
McDonald's Corp.	110,700		2,748,681
Panera Bread Co. Class A (a)	30,700		1,213,571
Starbucks Corp. (a)	51,200		1,692,672
Starwood Hotels & Resorts Worldwide, Inc. unit	102,500		3,686,925
			17,293,115
Internet & Catalog Retail - 0.5%
Amazon.com, Inc. (a)	38,400		2,021,376
InterActiveCorp (a)	55,800		1,893,294
			3,914,670
Media - 11.8%
Cablevision Systems Corp. - NY Group Class A (a)	126,700		2,963,513
Clear Channel Communications, Inc.	160,600		7,520,898
Comcast Corp. Class A (special) (a)	100,808		3,153,274
Dow Jones & Co., Inc.	66,500		3,315,025
Fox Entertainment Group, Inc. Class A (a)	324,400		9,456,260
Hughes Electronics Corp. (a)	70,055		1,159,410
Liberty Media Corp. Class A (a)	335,800		3,992,662
Meredith Corp.	50,600		2,469,786
News Corp. Ltd.:
ADR	294,600		10,635,060
sponsored ADR	7,835		237,009
Omnicom Group, Inc.	33,600		2,934,288
Time Warner, Inc. (a)	811,200		14,593,488
Univision Communications, Inc. Class A (a)	210,300		8,346,807
Viacom, Inc. Class B (non-vtg.)	391,120		17,357,906
Walt Disney Co.	152,700		3,562,491
			91,697,877
Specialty Retail - 2.8%
Best Buy Co., Inc.	102,600		5,359,824
Circuit City Stores, Inc.	179,000		1,813,270
Home Depot, Inc.	150,900		5,355,441
Lowe's Companies, Inc.	23,300		1,290,587
Staples, Inc. (a)	212,200		5,793,060
Williams-Sonoma, Inc. (a)	49,900		1,735,023
			21,347,205

	Shares		Value (Note 1)
Textiles Apparel & Luxury Goods - 0.6%
Coach, Inc. (a)	32,800		$ 1,238,200
NIKE, Inc. Class B	47,100		3,224,466
			4,462,666
TOTAL CONSUMER DISCRETIONARY			141,957,079
CONSUMER STAPLES - 8.9%
Beverages - 2.8%
Anheuser-Busch Companies, Inc.	39,200		2,065,056
PepsiCo, Inc.	68,500		3,193,470
The Coca-Cola Co.	318,600		16,168,950
			21,427,476
Food & Staples Retailing - 1.2%
Costco Wholesale Corp. (a)	26,600		988,988
Sysco Corp.	67,200		2,501,856
Wal-Mart Stores, Inc.	106,100		5,628,605
			9,119,449
Food Products - 1.1%
Dean Foods Co. (a)	142,500		4,683,975
The J.M. Smucker Co.	80,078		3,626,733
			8,310,708
Household Products - 0.6%
Colgate-Palmolive Co.	73,900		3,698,695
Procter & Gamble Co.	10,820		1,080,702
			4,779,397
Personal Products - 2.4%
Avon Products, Inc.	23,222		1,567,253
Gillette Co.	470,970		17,298,728
			18,865,981
Tobacco - 0.8%
Altria Group, Inc.	114,320		6,221,294
TOTAL CONSUMER STAPLES			68,724,305
ENERGY - 5.5%
Energy Equipment & Services - 2.4%
Baker Hughes, Inc.	88,100		2,833,296
Cooper Cameron Corp. (a)	30,800		1,435,280
Helmerich & Payne, Inc.	25,200		703,836
Schlumberger Ltd. (NY Shares)	256,500		14,035,680
			19,008,092
Oil & Gas - 3.1%
BP PLC sponsored ADR	171,290		8,453,162
ConocoPhillips	47,930		3,142,770
Exxon Mobil Corp.	301,400		12,357,400
			23,953,332
TOTAL ENERGY			42,961,424
Common Stocks - continued
	Shares		Value (Note 1)
FINANCIALS - 13.3%
Capital Markets - 4.4%
Bank of New York Co., Inc.	32,300		$ 1,069,776
Charles Schwab Corp.	100,500		1,189,920
Goldman Sachs Group, Inc.	44,700		4,413,231
Lehman Brothers Holdings, Inc.	22,700		1,752,894
Merrill Lynch & Co., Inc.	215,000		12,609,750
Morgan Stanley	223,200		12,916,584
			33,952,155
Commercial Banks - 0.6%
Bank of America Corp.	38,100		3,064,383
Bank One Corp.	33,700		1,536,383
			4,600,766
Consumer Finance - 1.7%
American Express Co.	255,000		12,298,650
SLM Corp.	21,200		798,816
			13,097,466
Diversified Financial Services - 3.0%
Citigroup, Inc.	482,307		23,411,182
Insurance - 2.0%
AFLAC, Inc.	11,000		397,980
American International Group, Inc.	202,062		13,392,669
MetLife, Inc.	22,400		754,208
Travelers Property Casualty Corp. Class A	49,709		834,117
			15,378,974
Thrifts & Mortgage Finance - 1.6%
Fannie Mae	139,200		10,448,352
Freddie Mac	37,400		2,181,168
			12,629,520
TOTAL FINANCIALS			103,070,063
HEALTH CARE - 13.0%
Biotechnology - 0.2%
Celgene Corp. (a)	27,900		1,256,058
CV Therapeutics, Inc. (a)	16,000		234,560
			1,490,618
Health Care Equipment & Supplies - 2.2%
Alcon, Inc.	98,400		5,957,136
Bausch & Lomb, Inc.	64,700		3,357,930
Becton, Dickinson & Co.	97,000		3,990,580
C.R. Bard, Inc.	8,400		682,500
Medtronic, Inc.	40,500		1,968,705
St. Jude Medical, Inc. (a)	17,880		1,096,938
			17,053,789
Health Care Providers & Services - 0.8%
Cardinal Health, Inc.	14,205		868,778
McKesson Corp.	22,400		720,384

	Shares		Value (Note 1)
UnitedHealth Group, Inc.	39,900		$ 2,321,382
WebMD Corp. (a)	252,300		2,268,177
			6,178,721
Pharmaceuticals - 9.8%
Abbott Laboratories	178,830		8,333,478
AstraZeneca PLC sponsored ADR	44,600		2,157,748
Barr Laboratories, Inc. (a)	36,145		2,781,358
Bristol-Myers Squibb Co.	27,900		797,940
Eli Lilly & Co.	38,900		2,735,837
Forest Laboratories, Inc. (a)	27,700		1,711,860
Johnson & Johnson	256,500		13,250,790
Merck & Co., Inc.	153,700		7,100,940
Novartis AG sponsored ADR	134,700		6,181,383
Pfizer, Inc.	629,593		22,243,521
Schering-Plough Corp.	87,100		1,514,669
Watson Pharmaceuticals, Inc. (a)	32,700		1,504,200
Wyeth	142,500		6,049,125
			76,362,849
TOTAL HEALTH CARE			101,085,977
INDUSTRIALS - 10.2%
Aerospace & Defense - 1.8%
Boeing Co.	117,900		4,968,306
EADS NV	78,650		1,864,903
Honeywell International, Inc.	22,700		758,861
Lockheed Martin Corp.	54,370		2,794,618
Northrop Grumman Corp.	34,100		3,259,960
			13,646,648
Air Freight & Logistics - 1.3%
FedEx Corp.	68,400		4,617,000
United Parcel Service, Inc. Class B	79,100		5,896,905
			10,513,905
Airlines - 0.7%
Continental Airlines, Inc. Class B (a)	55,700		906,239
Southwest Airlines Co.	267,450		4,316,643
			5,222,882
Commercial Services & Supplies - 0.5%
Apollo Group, Inc. Class A (a)	22,300		1,516,400
Manpower, Inc.	33,300		1,567,764
Monster Worldwide, Inc. (a)	22,600		496,296
			3,580,460
Industrial Conglomerates - 4.6%
3M Co.	89,800		7,635,694
General Electric Co.	775,250		24,017,245
Tyco International Ltd.	162,200		4,298,300
			35,951,239
Machinery - 1.1%
Caterpillar, Inc.	50,200		4,167,604
Common Stocks - continued
	Shares		Value (Note 1)
INDUSTRIALS - continued
Machinery - continued
Danaher Corp.	23,500		$ 2,156,125
Parker Hannifin Corp.	33,200		1,975,400
			8,299,129
Road & Rail - 0.2%
CSX Corp.	34,290		1,232,383
Union Pacific Corp.	11,040		767,059
			1,999,442
TOTAL INDUSTRIALS			79,213,705
INFORMATION TECHNOLOGY - 18.2%
Communications Equipment - 4.1%
CIENA Corp. (a)	63,800		423,632
Cisco Systems, Inc. (a)	643,460		15,629,643
Corning, Inc. (a)	232,600		2,426,018
Juniper Networks, Inc. (a)	199,600		3,728,528
Motorola, Inc.	186,700		2,626,869
Nortel Networks Corp. (a)	369,600		1,563,409
QUALCOMM, Inc.	22,600		1,218,818
Scientific-Atlanta, Inc.	48,470		1,323,231
Sonus Networks, Inc. (a)	322,800		2,440,368
			31,380,516
Computers & Peripherals - 2.9%
Dell, Inc. (a)	190,900		6,482,964
Diebold, Inc.	46,300		2,494,181
EMC Corp. (a)	157,000		2,028,440
Hewlett-Packard Co.	183,000		4,203,510
International Business Machines Corp.	22,600		2,094,568
Lexmark International, Inc. Class A (a)	17,000		1,336,880
Maxtor Corp. (a)	90,500		1,004,550
Network Appliance, Inc. (a)	85,500		1,755,315
Sun Microsystems, Inc. (a)	211,200		948,288
			22,348,696
Electronic Equipment & Instruments - 0.2%
Agilent Technologies, Inc. (a)	49,400		1,444,456
Internet Software & Services - 0.4%
Yahoo!, Inc. (a)	72,700		3,283,859
IT Services - 0.2%
Hewitt Associates, Inc. Class A (a)	29,500		882,050
Paychex, Inc.	22,166		824,575
			1,706,625
Semiconductors & Semiconductor Equipment - 5.6%
Agere Systems, Inc. Class A (a)	54,900		167,445
Analog Devices, Inc.	115,300		5,263,445
Applied Materials, Inc. (a)	123,000		2,761,350
Intel Corp.	318,210		10,246,362
KLA-Tencor Corp. (a)	42,500		2,493,475
Lam Research Corp. (a)	81,700		2,638,910

	Shares		Value (Note 1)
Marvell Technology Group Ltd. (a)	27,877		$ 1,057,375
National Semiconductor Corp. (a)	141,300		5,568,633
Omnivision Technologies, Inc. (a)	9,100		502,775
Samsung Electronics Co. Ltd.	2,850		1,077,861
Teradyne, Inc. (a)	38,800		987,460
Texas Instruments, Inc.	260,100		7,641,738
Xilinx, Inc. (a)	75,300		2,917,122
			43,323,951
Software - 4.8%
Adobe Systems, Inc.	96,200		3,780,660
Microsoft Corp.	996,520		27,444,159
Oracle Corp. (a)	73,800		974,160
Red Hat, Inc. (a)	65,899		1,236,924
Symantec Corp. (a)	50,600		1,753,290
VERITAS Software Corp. (a)	63,788		2,370,362
			37,559,555
TOTAL INFORMATION TECHNOLOGY			141,047,658
MATERIALS - 4.2%
Chemicals - 2.1%
Dow Chemical Co.	196,300		8,160,191
E.I. du Pont de Nemours & Co.	44,900		2,060,461
International Flavors & Fragrances, Inc.	43,100		1,505,052
Praxair, Inc.	118,600		4,530,520
			16,256,224
Containers & Packaging - 0.1%
Pactiv Corp. (a)	39,800		951,220
Metals & Mining - 1.7%
Alcoa, Inc.	171,700		6,524,600
Phelps Dodge Corp. (a)	87,420		6,651,788
			13,176,388
Paper & Forest Products - 0.3%
International Paper Co.	54,700		2,358,117
TOTAL MATERIALS			32,741,949
TELECOMMUNICATION SERVICES - 2.0%
Diversified Telecommunication Services - 2.0%
BellSouth Corp.	42,800		1,211,240
NTL, Inc. (a)	10,800		753,300
SBC Communications, Inc.	266,060		6,936,184
Verizon Communications, Inc.	183,400		6,433,672
			15,334,396
UTILITIES - 0.1%
Electric Utilities - 0.1%
PG&E Corp. (a)	21,600		599,832
TOTAL COMMON STOCKS (Cost $597,451,356)		726,736,388

U.S. Treasury Obligations - 0.3%
	Principal Amount	Value (Note 1)
U.S. Treasury Bills, yield at date of purchase 0.87% 3/11/04 (c) (Cost $2,495,710)	$ 2,500,000	$ 2,495,928

Money Market Funds - 6.4%
	Shares
Fidelity Cash Central Fund, 1.07% (b) (Cost $49,407,853)	49,407,853		49,407,853
TOTAL INVESTMENT PORTFOLIO - 100.4% (Cost $649,354,919)			778,640,169
NET OTHER ASSETS - (0.4)%			(3,141,514)
NET ASSETS - 100%		$ 775,498,655

Futures Contracts
	Expiration Date	Underlying Face Amount at Value	Unrealized Appreciation/ (Depreciation)
Purchased
Equity Index Contracts
127 S&P 500 Index Contracts	March 2004	$ 35,261,550	$ 853,313

The face value of futures purchased as a percentage of net assets - 4.5%

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(c) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $2,495,928.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $397,900,867 and $378,416,859, respectively.

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $277,246,000 of which $11,753,000, $149,878,000 and $115,615,000 will expire on December 31, 2008, 2009 and 2010, respectively.

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

Growth Opportunities Portfolio

Fidelity Variable Insurance Products: Growth Opportunities Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (cost $649,354,919) - See accompanying schedule		$ 778,640,169
Receivable for investments sold		2,922,920
Receivable for fund shares sold		405,301
Dividends receivable		813,790
Interest receivable		44,711
Receivable for daily variation on futures contracts		92,075
Prepaid expenses		4,155
Other receivables		62,315
Total assets		782,985,436

Liabilities
Payable for investments purchased	$ 6,235,221
Payable for fund shares redeemed	747,007
Accrued management fee	361,863
Distribution fees payable	30,301
Other affiliated payables	61,667
Other payables and accrued expenses	50,722
Total liabilities		7,486,781

Net Assets		$ 775,498,655
Net Assets consist of:
Paid in capital		$ 924,036,354
Undistributed net investment income		3,663,993
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(282,350,096)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		130,148,404
Net Assets		$ 775,498,655

Initial Class: Net Asset Value, offering price and redemption price per share ($490,709,558 ÷ 32,560,919 shares)		$ 15.07

Service Class: Net Asset Value, offering price and redemption price per share ($224,659,918 ÷ 14,914,814 shares)		$ 15.06

Service Class 2: Net Asset Value, offering price and redemption price per share ($60,129,179 ÷ 4,013,130 shares)		$ 14.98

Statement of Operations

	Year ended December 31, 2003

Investment Income
Dividends		$ 8,281,240
Interest		728,218
Security lending		10,959
Total income		9,020,417

Expenses
Management fee	$ 3,917,176
Transfer agent fees	480,549
Distribution fees	319,540
Accounting and security lending fees	211,274
Non-interested trustees' compensation	3,316
Custodian fees and expenses	20,923
Audit	38,405
Legal	4,692
Miscellaneous	206,799
Total expenses before reductions	5,202,674
Expense reductions	(161,542)	5,041,132
Net investment income (loss)		3,979,285
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	10,832,776
Foreign currency transactions	1,489
Futures contracts	7,370,564
Total net realized gain (loss)		18,204,829
Change in net unrealized appreciation (depreciation) on: Investment securities	151,661,594
Assets and liabilities in foreign currencies	6,103
Futures contracts	2,816,998
Total change in net unrealized appreciation (depreciation)		154,484,695
Net gain (loss)		172,689,524
Net increase (decrease) in net assets resulting from operations		$ 176,668,809

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

Annual Report

Fidelity Variable Insurance Products: Growth Opportunities Portfolio
Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ 3,979,285	$ 4,975,875
Net realized gain (loss)	18,204,829	(113,552,394)
Change in net unrealized appreciation (depreciation)	154,484,695	(95,136,556)
Net increase (decrease) in net assets resulting from operations	176,668,809	(203,713,075)
Distributions to shareholders from net investment income	(4,842,328)	(8,515,304)
Share transactions - net increase (decrease)	(29,607,058)	(130,074,012)
Total increase (decrease) in net assets	142,219,423	(342,302,391)

Net Assets
Beginning of period	633,279,232	975,581,623
End of period (including undistributed net investment income of $3,663,993 and undistributed net investment income of $4,525,392, respectively)	$ 775,498,655	$ 633,279,232

Other Information:
Share Transactions	Year ended December 31, 2003
Shares	Initial Class	Service Class	Service Class 2
Sold	4,861,113	1,609,284	1,388,002
Reinvested	309,123	114,933	19,452
Redeemed	(7,052,265)	(2,906,117)	(959,886)
Net increase (decrease)	(1,882,029)	(1,181,900)	447,568

Dollars Sold	$ 63,883,410	$ 21,117,379	$ 18,018,110
Reinvested	3,375,625	1,255,069	211,634
Redeemed	(88,846,190)	(36,517,831)	(12,104,264)
Net increase (decrease)	$ (21,587,155)	$ (14,145,383)	$ 6,125,480

Share Transactions	Year ended December 31, 2002
Shares	Initial Class	Service Class	Service Class 2
Sold	4,073,344	2,148,249	2,793,837
Reinvested	418,938	154,434	23,984
Redeemed	(13,173,878)	(4,639,853)	(2,220,662)
Net increase (decrease)	(8,681,596)	(2,337,170)	597,159

Dollars Sold	$ 53,351,268	$ 28,729,746	$ 36,310,489
Reinvested	5,974,043	2,200,701	340,561
Redeemed	(170,612,111)	(58,753,780)	(27,614,929)
Net increase (decrease)	$ (111,286,800)	$ (27,823,333)	$ 9,036,121
Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 3,375,625	$ 1,255,069	$ 211,634
From net realized gain	-	-	-
Total	$ 3,375,625	$ 1,255,069	$ 211,634
	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 5,974,042	$ 2,200,701	$ 340,561
From net realized gain	-	-	-
Total	$ 5,974,042	$ 2,200,701	$ 340,561

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

Growth Opportunities Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 11.71	$ 15.13	$ 17.74	$ 23.15	$ 22.88
Income from Investment Operations
Net investment income (loss)^C	.08	.09	.12	.06	.27
Net realized and unrealized gain (loss)	3.38	(3.37)	(2.67)	(3.77)	.66
Total from investment operations	3.46	(3.28)	(2.55)	(3.71)	.93
Distributions from net investment income	(.10)	(.14)	(.06)	(.29)	(.23)
Distributions from net realized gain	-	-	-	(1.41)	(.43)
Total distributions	(.10)	(.14)	(.06)	(1.70)	(.66)
Net asset value, end of period	$ 15.07	$ 11.71	$ 15.13	$ 17.74	$ 23.15
Total Return^A,B	29.87%	(21.84)%	(14.42)%	(17.07)%	4.27%
Ratios to Average Net Assets^D
Expenses before expense reductions	.72%	.70%	.69%	.68%	.69%
Expenses net of voluntary waivers, if any	.72%	.70%	.69%	.68%	.69%
Expenses net of all reductions	.70%	.66%	.67%	.66%	.68%
Net investment income (loss)	.64%	.68%	.79%	.31%	1.20%
Supplemental Data
Net assets, end of period (000 omitted)	$ 490,710	$ 403,476	$ 652,493	$ 951,875	$ 1,541,587
Portfolio turnover rate	62%	60%	89%	117%	42%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 11.70	$ 15.11	$ 17.71	$ 23.12	$ 22.86
Income from Investment Operations
Net investment income (loss)^C	.07	.08	.11	.04	.25
Net realized and unrealized gain (loss)	3.37	(3.37)	(2.67)	(3.76)	.66
Total from investment operations	3.44	(3.29)	(2.56)	(3.72)	.91
Distributions from net investment income	(.08)	(.12)	(.04)	(.28)	(.22)
Distributions from net realized gain	-	-	-	(1.41)	(.43)
Total distributions	(.08)	(.12)	(.04)	(1.69)	(.65)
Net asset value, end of period	$ 15.06	$ 11.70	$ 15.11	$ 17.71	$ 23.12
Total Return^A,B	29.66%	(21.92)%	(14.49)%	(17.13)%	4.18%
Ratios to Average Net Assets^D
Expenses before expense reductions	.82%	.80%	.79%	.79%	.79%
Expenses net of voluntary waivers, if any	.82%	.80%	.79%	.79%	.79%
Expenses net of all reductions	.80%	.77%	.77%	.76%	.78%
Net investment income (loss)	.54%	.58%	.69%	.21%	1.09%
Supplemental Data
Net assets, end of period (000 omitted)	$ 224,660	$ 188,318	$ 278,446	$ 345,960	$ 344,778
Portfolio turnover rate	62%	60%	89%	117%	42%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 11.64	$ 15.04	$ 17.68	$ 22.70
Income from Investment Operations
Net investment income (loss)^E	.05	.05	.08	.01
Net realized and unrealized gain (loss)	3.35	(3.34)	(2.66)	(3.34)
Total from investment operations	3.40	(3.29)	(2.58)	(3.33)
Distributions from net investment income	(.06)	(.11)	(.06)	(.28)
Distributions from net realized gain	-	-	-	(1.41)
Total distributions	(.06)	(.11)	(.06)	(1.69)
Net asset value, end of period	$ 14.98	$ 11.64	$ 15.04	$ 17.68
Total Return^B,C,D	29.40%	(22.01) %	(14.64) %	(15.74) %
Ratios to Average Net Assets^G
Expenses before expense reductions	.99%	.97%	.95%	.95%^A
Expenses net of voluntary waivers, if any	.99%	.97%	.95%	.95%^A
Expenses net of all reductions	.96%	.94%	.93%	.93%^A
Net investment income (loss)	.37%	.41%	.53%	.04%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 60,129	$ 41,486	$ 44,643	$ 25,827
Portfolio turnover rate	62%	60%	89%	117%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period January 12, 2000 (commencement of sale of shares) to December 31, 2000.

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

Growth Opportunities Portfolio

Notes to Financial Statements

For the period ended December 31, 2003

1. Significant Accounting Policies.

Growth Opportunities Portfolio (the fund) is a fund of Variable Insurance Products Fund III (the trust) (referred to in this report as Fidelity Variable Insurance Products: Growth Opportunities Portfolio) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The fund offers the following classes of shares: Initial Class shares, Service Class shares and Service Class 2 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent and temporary book and tax differences. These adjustments have no impact on net assets or the results of operations. Temporary differences will reverse in a subsequent period. These differences are primarily due to futures transactions, foreign currency transactions, capital loss carryforwards and losses deferred due to wash sales.

Annual Report

Notes to Financial Statements - continued

1. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:

Unrealized appreciation	$ 145,777,394	\|
Unrealized depreciation	(20,734,261)
Net unrealized appreciation (depreciation)	125,043,133
Undistributed ordinary income	3,665,484
Capital loss carryforward	(277,246,288)

Cost for federal income tax purposes	$ 653,597,036

The tax character of distributions paid was as follows:

	December 31, 2003	December 31, 2002
Ordinary Income	$ 4,842,328	$ 8,515,304

2. Operating Policies.

Futures Contracts. The fund may use futures contracts to manage its exposure to the stock market. Buying futures tends to increase the fund's exposure to the underlying instrument, while selling futures tends to decrease the fund's exposure to the underlying instrument or hedge other fund investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in the Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in the Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counter-parties do not perform under the contracts' terms. Gains (losses) are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% 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 annual management fee rate was .58% of the fund's average net assets.

Growth Opportunities Portfolio

4. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan - continued

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

Service Class	$ 197,953	\|
Service Class 2	121,587
	$ 319,540

For the period, the total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class	$ 298,640	\|
Service Class	139,421
Service Class 2	42,488
	$ 480,549

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains the fund's accounting records and administers the security lending program. The security lending fee is based on the number and duration of lending transactions. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses.

5. Committed Line of Credit.

6. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. 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. Cash collateral is invested in cash equivalents. At period end there were no security loans outstanding.

7. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $161,467 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 $75.

8. Other Information.

At the end of the period, FMR or its affiliates were the owners of record of 20% of the total outstanding shares of the fund and one unaffiliated shareholder was the owner of record of 48% of the total outstanding shares of the fund.

Annual Report

Independent Auditors' Report

To the Trustees of Variable Insurance Products Fund III and Shareholders of Growth Opportunities Portfolio:

We have audited the accompanying statement of assets and liabilities of Growth Opportunities Portfolio (the Fund), a fund of Variable Insurance Products Fund III, including the portfolio of investments, as of December 31, 2003, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Growth Opportunities Portfolio as of December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 11, 2004

Annual Report

Trustees and Officers

The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-221-5207.

Interested Trustees*:

Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Edward C. Johnson 3d (73)**
	Year of Election or Appointment: 1994 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc.
Abigail P. Johnson (42)**
	Year of Election or Appointment: 2001 Senior Vice President of VIP Growth Opportunities (2001). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds.
Laura B. Cronin (49)
	Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002).
Robert L. Reynolds (51)
	Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000).

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.

** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.

Annual Report

Non-Interested Trustees:

Name, Age; Principal Occupation
J. Michael Cook (61)
	Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), Rockwell Automation (2000) and The Dow Chemical Company (2000). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Board of the Directorship Search Group, Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater.
Ralph F. Cox (71)
	Year of Election or Appointment: 1994 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin.
Robert M. Gates (60)
	Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), and Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001). He also serves as a member of the Advisory Board of VoteHere.net (secure internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy.
George H. Heilmeier (67)
	Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002) and Compaq (1994-2002).
Donald J. Kirk (71)
	Year of Election or Appointment: 1994 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations).
Marie L. Knowles (57)
	Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing), URS Corporation (multidisciplinary engineering, 1999), and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (59)
	Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Chairman and as a Director (1998) of Acterna Corporation (communications test equipment). He is also Co-Chairman of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Eaton Corporation (diversified industrial) and the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations.
Marvin L. Mann (70)
	Year of Election or Appointment: 1994 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals) where he served as CEO until April 1998 and retired as Chairman May 1999, and remains a member of the Board. Prior to 1991, he held the positions of Vice President of International Business Machines Corporation (IBM) and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Board member of Imation Corp. (imaging and information storage) and Acterna Corporation (communications test equipment, 1999). He is also a member of the Director Services Committee of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama.
William O. McCoy (70)
	Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), Progress Energy, Inc. (electric utility), and Acterna Corporation (communications test equipment, 1999). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998).
William S. Stavropoulos (64)
	Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman of the Board, President and CEO (2002), and Chairman of the Executive Committee (2000) and a Director of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000) and Chief Executive Officer (1995-2000). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council, World Business Council for Sustainable Development, and the University of Notre Dame Advisory Council for the College of Science.

Annual Report

Advisory Board Members and Executive Officers:

Name, Age; Principal Occupation
Peter S. Lynch (60)
	Year of Election or Appointment: 2003 Member of the Advisory Board of Variable Insurance Products Fund III. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity^® Magellan^® Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
Cornelia M. Small (59)
	Year of Election or Appointment: 2004 Member of the Advisory Board of Variable Insurance Products Fund III. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors (1998-1999) of Scudder Kemper Investments. In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
John B. McDowell (45)
	Year of Election or Appointment: 2002 Vice President of VIP Growth Opportunities. Mr. McDowell also serves as Vice President of certain Equity Funds (2002). He is Senior Vice President of FMR (1999), FMR Co., Inc. (2001), and Fidelity Management Trust Company (FMTC). Since joining Fidelity Investments in 1985, Mr. McDowell has worked as a research analyst and manager.
Bettina Doulton (39)
	Year of Election or Appointment: 2000 Vice President of VIP Growth Opportunities. Ms. Doulton is also Vice President of another fund advised by FMR. Prior to assuming her current responsibilities, Ms. Doulton managed a variety of Fidelity funds.
Eric D. Roiter (55)
	Year of Election or Appointment: 1998 Secretary of VIP Growth Opportunities. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003).
Stuart Fross (44)
	Year of Election or Appointment: 2003 Assistant Secretary of VIP Growth Opportunities. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR.
Maria F. Dwyer (45)
	Year of Election or Appointment: 2002 President and Treasurer of VIP Growth Opportunities. Ms. Dwyer also serves as President and Treasurer of other Fidelity funds (2002) and is a Vice President (1999) and an employee (1996) of FMR.
Timothy F. Hayes (53)
	Year of Election or Appointment: 2002 Chief Financial Officer of VIP Growth Opportunities. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998).
John R. Hebble (45)
	Year of Election or Appointment: 2003 Deputy Treasurer of VIP Growth Opportunities. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003).
John H. Costello (57)
	Year of Election or Appointment: 1995 Assistant Treasurer of VIP Growth Opportunities. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Francis V. Knox, Jr. (56)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Growth Opportunities. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002).
Mark Osterheld (48)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Growth Opportunities. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Thomas J. Simpson (45)
	Year of Election or Appointment: 2000 Assistant Treasurer of VIP Growth Opportunities. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995).

Annual Report

Distributions

A percentage of the dividends distributed during the fiscal year for the following classes qualifies for the dividends-received deduction for corporate shareholders:

Initial Class	100%
Service Class	100%
Service Class 2	100%

The fund will notify shareholders in January 2004 of amounts for use in preparing 2003 income tax returns.

Annual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Far East) Inc.

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Shareholder Servicing Agent

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA

Custodian

Mellon Bank, N.A.
Pittsburgh, PA

VIPGRO-ANN-0204
1.540209.106

Fidelity® Variable Insurance Products:

Growth & Income Portfolio

Annual Report

December 31, 2003

(2_fidelity_logos) (Registered_Trademark)

Performance	<Click Here>	How the fund has done over time.
Management's Discussion	<Click Here>	The manager's review of fund performance, strategy and outlook.
Investment Summary	<Click Here>	A summary of the fund's investments at period end.
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.
Auditor's Opinion	<Click Here>
Trustees and Officers	<Click Here>
Distributions	<Click Here>

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

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

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

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

(Recycle graphic) This report is printed on recycled paper using soy-based inks.

Neither the fund nor Fidelity Distributors Corporation is a bank.

Growth & Income Portfolio

Fidelity Variable Insurance Products: Growth & Income Portfolio

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. Performance numbers are net of all underlying fund operating expenses, but do not include any insurance charges imposed by your insurance company's separate account. If performance information included the effect of these additional charges, the total returns would have been lower. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Life of fund ^A
Fidelity® VIP: Growth & Income - Initial Class	23.77%	-0.18%	7.45%
Fidelity VIP: Growth & Income - Service Class^B	23.60%	-0.29%	7.33%
Fidelity VIP: Growth & Income - Service Class 2 ^C	23.44%	-0.41%	7.24%

^A From December 31, 1996.

^BThe initial offering of Service Class shares took place on November 3, 1997. Performance for Service Class shares reflects an asset based distribution fee (12b-1 fee), and returns prior to November 3, 1997 are those of Initial Class and do not include the effects of Service Class' 12b-1 fee. Had Service Class shares' 12b-1 fee been reflected, returns prior to November 3, 1997 would have been lower.

^CThe initial offering of Service Class 2 shares took place on January 12, 2000. Performance for Service Class 2 shares reflects an asset based distribution fee (12b-1 fee). Returns from November 3, 1997 to January 12, 2000 are those of Service Class which reflect a different 12b-1 fee. Service Class 2 returns prior to November 3, 1997 are those of the Initial Class and do not include the effects of a 12b-1 fee. Had Service Class 2's 12b-1 fee been reflected, returns prior to January 12, 2000 would have been lower.

$10,000 Over Life of Fund

Let's say hypothetically that $10,000 was invested in Fidelity® Variable Insurance Products: Growth & Income Portfolio - Initial Class on December 31, 1996, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P 500 ^® Index did over the same period.

Annual Report

Fidelity Variable Insurance Products: Growth & Income Portfolio

Management's Discussion of Fund Performance

Comments from Louis Salemy, Portfolio Manager of Fidelity® Variable Insurance Products: Growth & Income Portfolio

During the past year, the fund posted solid gains but trailed both the Standard & Poor's 500^SM Index and the Lipper^SM Variable Annuity Growth & Income Funds Average, which returned 28.69% and 28.54%, respectively. Weak sector positioning more than offset good stock picking overall. Most of the shortfall versus the index came during the second half of the period amid a strong speculative rally in cyclical- and growth-oriented segments of the market. Shying away from technology stocks hurt a lot as the sector took off early in the spring and never looked back. Unfortunately, I wasn't able to generate enough excess returns elsewhere in the fund to make up for not owning top-performing tech names in the index such as Intel. Another drag was overweighting weak telecommunication services stocks - most notably BellSouth - and retailers such as Kohl's. In addition, having an average of roughly 12% of the fund in cash during the period detracted in an up market. On the plus side, I had some solid picks in media, where our collective holdings beat those in the index by a wide margin. Large stakes in advertising giant Omnicom Group and satellite broadcaster EchoStar led the way here. Favoring market-sensitive financials such as Merrill Lynch also helped, as did underweighting the lagging large-cap drug stocks.

Annual Report

Fidelity Variable Insurance Products: Growth & Income Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Omnicom Group, Inc.	6.5
Gillette Co.	5.8
BellSouth Corp.	5.3
Morgan Stanley	5.2
EchoStar Communications Corp. Class A	4.8
	27.6
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Financials	21.2
Consumer Discretionary	20.0
Consumer Staples	16.9
Telecommunication Services	8.4
Industrials	6.0

Asset Allocation as of December 31, 2003
% of fund's net assets *
	Stocks	88.5%
	Short-Term Investments and Net Other Assets	11.5%

* Foreign investments

4.4%

Annual Report

Fidelity Variable Insurance Products: Growth & Income Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 88.5%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 20.0%
Hotels, Restaurants & Leisure - 0.6%
Carnival Corp. unit	152,200		$ 6,046,906
Starwood Hotels & Resorts Worldwide, Inc. unit	96,100		3,456,717
			9,503,623
Household Durables - 0.1%
Garmin Ltd.	26,410		1,438,817
Media - 15.9%
Comcast Corp. Class A (special) (a)	266,200		8,326,736
E.W. Scripps Co. Class A	384,300		36,178,002
EchoStar Communications Corp. Class A (a)	2,107,100		71,641,400
News Corp. Ltd. ADR	469,100		16,934,510
Omnicom Group, Inc.	1,100,600		96,115,398
Pegasus Communications Corp. Class A (a)	142,909		4,012,885
Tribune Co.	44,500		2,296,200
			235,505,131
Multiline Retail - 2.2%
Dollar Tree Stores, Inc. (a)	216,500		6,507,990
Kohl's Corp. (a)	570,400		25,633,776
Nordstrom, Inc.	29,700		1,018,710
			33,160,476
Specialty Retail - 0.7%
Hollywood Entertainment Corp. (a)	751,700		10,335,875
Textiles Apparel & Luxury Goods - 0.5%
Liz Claiborne, Inc.	205,800		7,297,668
TOTAL CONSUMER DISCRETIONARY			297,241,590
CONSUMER STAPLES - 16.9%
Beverages - 1.2%
Anheuser-Busch Companies, Inc.	74,800		3,940,464
The Coca-Cola Co.	290,400		14,737,800
			18,678,264
Food & Staples Retailing - 5.3%
Costco Wholesale Corp. (a)	152,400		5,666,232
Sysco Corp.	164,700		6,131,781
Wal-Mart Stores, Inc.	921,900		48,906,795
Walgreen Co.	485,000		17,644,300
			78,349,108
Food Products - 0.8%
McCormick & Co., Inc. (non-vtg.)	421,100		12,675,110
Household Products - 2.6%
Colgate-Palmolive Co.	309,200		15,475,460
Kimberly-Clark Corp.	387,000		22,867,830
			38,343,290
Personal Products - 5.8%
Gillette Co.	2,335,300		85,775,569

	Shares		Value (Note 1)
Tobacco - 1.2%
Altria Group, Inc.	318,960		$ 17,357,803
TOTAL CONSUMER STAPLES			251,179,144
ENERGY - 4.6%
Oil & Gas - 4.6%
BP PLC sponsored ADR	471,100		23,248,785
Exxon Mobil Corp.	1,082,056		44,364,296
			67,613,081
FINANCIALS - 21.2%
Capital Markets - 11.4%
Goldman Sachs Group, Inc.	374,500		36,974,385
Merrill Lynch & Co., Inc.	935,100		54,843,615
Morgan Stanley	1,332,700		77,123,349
			168,941,349
Commercial Banks - 5.2%
Bank One Corp.	180,300		8,219,877
Wells Fargo & Co.	1,186,400		69,867,096
			78,086,973
Consumer Finance - 0.8%
American Express Co.	236,700		11,416,041
Insurance - 3.5%
Allstate Corp.	288,500		12,411,270
American International Group, Inc.	454,905		30,151,103
PartnerRe Ltd.	111,600		6,478,380
Travelers Property Casualty Corp. Class B	141,300		2,397,861
			51,438,614
Real Estate - 0.3%
Equity Office Properties Trust	165,800		4,750,170
TOTAL FINANCIALS			314,633,147
HEALTH CARE - 4.5%
Biotechnology - 0.9%
Amgen, Inc. (a)	215,000		13,287,000
Health Care Equipment & Supplies - 1.2%
Advanced Medical Optics, Inc. (a)	1		20
Alcon, Inc.	124,300		7,525,122
Medtronic, Inc.	227,200		11,044,192
			18,569,334
Pharmaceuticals - 2.4%
Allergan, Inc.	98,500		7,565,785
Pfizer, Inc.	788,400		27,854,172
			35,419,957
TOTAL HEALTH CARE			67,276,291
INDUSTRIALS - 6.0%
Aerospace & Defense - 1.5%
EADS NV	135,200		3,205,783
Lockheed Martin Corp.	115,500		5,936,700
Common Stocks - continued
	Shares		Value (Note 1)
INDUSTRIALS - continued
Aerospace & Defense - continued
Northrop Grumman Corp.	83,100		$ 7,944,360
United Technologies Corp.	58,500		5,544,045
			22,630,888
Airlines - 1.4%
Continental Airlines, Inc. Class B (a)	668,500		10,876,495
MAIR Holdings, Inc. (a)	435,200		3,168,256
Northwest Airlines Corp. (a)	320,000		4,038,400
Southwest Airlines Co.	179,500		2,897,130
			20,980,281
Building Products - 0.2%
American Standard Companies, Inc. (a)	29,300		2,950,510
Commercial Services & Supplies - 0.4%
Avery Dennison Corp.	92,400		5,176,248
Industrial Conglomerates - 1.8%
General Electric Co.	850,800		26,357,784
Machinery - 0.1%
Illinois Tool Works, Inc.	14,500		1,216,695
Road & Rail - 0.6%
Union Pacific Corp.	136,200		9,463,176
TOTAL INDUSTRIALS			88,775,582
INFORMATION TECHNOLOGY - 5.9%
Communications Equipment - 1.9%
Cisco Systems, Inc. (a)	1,139,700		27,683,313
Foundry Networks, Inc. (a)	300		8,208
Nokia Corp. sponsored ADR	27,900		474,300
			28,165,821
Computers & Peripherals - 0.1%
Diebold, Inc.	2,300		123,901
Lexmark International, Inc. Class A (a)	14,000		1,100,960
			1,224,861
IT Services - 0.6%
Paychex, Inc.	241,819		8,995,667
Software - 3.3%
Microsoft Corp.	1,814,800		49,979,592
TOTAL INFORMATION TECHNOLOGY			88,365,941
MATERIALS - 0.1%
Chemicals - 0.1%
PPG Industries, Inc.	28,900		1,850,178
Praxair, Inc.	4,600		175,720
			2,025,898

	Shares		Value (Note 1)
Containers & Packaging - 0.0%
Ball Corp.	6		$ 357
TOTAL MATERIALS			2,026,255
TELECOMMUNICATION SERVICES - 8.4%
Diversified Telecommunication Services - 8.4%
BellSouth Corp.	2,802,600		79,313,580
SBC Communications, Inc.	790,530		20,609,117
Verizon Communications, Inc.	701,500		24,608,620
			124,531,317
UTILITIES - 0.9%
Electric Utilities - 0.9%
Entergy Corp.	228,300		13,042,779
FPL Group, Inc.	2,800		183,176
			13,225,955
TOTAL COMMON STOCKS (Cost $1,174,667,456)		1,314,868,303
Money Market Funds - 13.2%

Fidelity Cash Central Fund, 1.07% (b)	192,721,736		192,721,736
Fidelity Securities Lending Cash Central Fund, 1.09% (b)	3,255,875		3,255,875
TOTAL MONEY MARKET FUNDS (Cost $195,977,611)		195,977,611
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $1,370,645,067)			1,510,845,914
NET OTHER ASSETS - (1.7)%			(25,777,628)
NET ASSETS - 100%		$ 1,485,068,286

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $468,088,420 and $267,385,284, respectively.

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $166,422,000 of which $49,149,000, $107,382,000 and $9,891,000 will expire on December 31, 2009, 2010 and 2011, respectively.

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

Growth & Income Portfolio

Fidelity Variable Insurance Products: Growth & Income Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (including securities loaned of $3,104,535) (cost $1,370,645,067) - See accompanying schedule		$ 1,510,845,914
Receivable for fund shares sold		654,942
Dividends receivable		1,158,009
Interest receivable		172,140
Prepaid expenses		7,722
Other receivables		28,733
Total assets		1,512,867,460

Liabilities
Payable for investments purchased	$ 22,903,336
Payable for fund shares redeemed	803,077
Accrued management fee	574,873
Distribution fees payable	96,439
Other affiliated payables	110,046
Other payables and accrued expenses	55,528
Collateral on securities loaned, at value	3,255,875
Total liabilities		27,799,174

Net Assets		$ 1,485,068,286
Net Assets consist of:
Paid in capital		$ 1,502,091,257
Undistributed net investment income		12,027,562
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(169,251,380)
Net unrealized appreciation (depreciation) on investments		140,200,847
Net Assets		$ 1,485,068,286
Initial Class: Net Asset Value, offering price and redemption price per share ($785,493,956 ÷ 59,249,650 shares)		$ 13.26

Service Class: Net Asset Value, offering price and redemption price per share ($357,585,122 ÷ 27,133,909 shares)		$ 13.18

Service Class 2: Net Asset Value, offering price and redemption price per share ($341,989,208 ÷ 26,133,761 shares)		$ 13.09

Statement of Operations

	Year ended December 31, 2003

Investment Income
Dividends		$ 17,031,170
Interest		2,596,201
Security lending		24,914
Total income		19,652,285

Expenses
Management fee	$ 5,872,983
Transfer agent fees	846,160
Distribution fees	851,782
Accounting and security lending fees	297,038
Non-interested trustees' compensation	4,861
Custodian fees and expenses	18,218
Audit	38,843
Legal	7,697
Miscellaneous	183,971
Total expenses before reductions	8,121,553
Expense reductions	(33,216)	8,088,337
Net investment income (loss)		11,563,948
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	(8,956,799)
Foreign currency transactions	(366)
Total net realized gain (loss)		(8,957,165)
Change in net unrealized appreciation (depreciation) on investment securities		256,023,394
Net gain (loss)		247,066,229
Net increase (decrease) in net assets resulting from operations		$ 258,630,177

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

Annual Report

Fidelity Variable Insurance Products: Growth & Income Portfolio
Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ 11,563,948	$ 14,033,270
Net realized gain (loss)	(8,957,165)	(105,954,322)
Change in net unrealized appreciation (depreciation)	256,023,394	(123,219,077)
Net increase (decrease) in net assets resulting from operations	258,630,177	(215,140,129)
Distributions to shareholders from net investment income	(12,772,749)	(15,060,404)
Share transactions - net increase (decrease)	210,037,372	8,584,266
Total increase (decrease) in net assets	455,894,800	(221,616,267)

Net Assets
Beginning of period	1,029,173,486	1,250,789,753
End of period (including undistributed net investment income of $12,027,562 and undistributed net investment income of $13,960,647, respectively)	$ 1,485,068,286	$ 1,029,173,486

Other Information:
Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	8,588,135	4,730,597	14,305,974
Reinvested	791,445	298,276	164,516
Redeemed	(8,881,933)	(1,062,769)	(1,468,648)
Net increase (decrease)	497,647	3,966,104	13,001,842

Dollars Sold	$ 102,662,499	$ 56,731,473	$ 170,921,383
Reinvested	8,080,656	3,030,479	1,661,614
Redeemed	(103,784,385)	(12,033,144)	(17,233,203)
Net increase (decrease)	$ 6,958,770	$ 47,728,808	$ 155,349,794

Share Transactions	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	5,547,232	3,741,835	8,546,664
Reinvested	858,112	262,919	83,941
Redeemed	(15,376,984)	(2,273,174)	(1,333,545)
Net increase (decrease)	(8,971,640)	1,731,580	7,297,060

Dollars Sold	$ 65,703,944	$ 44,246,058	$ 98,819,591
Reinvested	10,743,568	3,275,965	1,040,871
Redeemed	(175,367,574)	(25,009,314)	(14,868,843)
Net increase (decrease)	$ (98,920,062)	$ 22,512,709	$ 84,991,619

Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 8,080,656	$ 3,030,479	$ 1,661,614
From net realized gain	-	-	-
Total	$ 8,080,656	$ 3,030,479	$ 1,661,614

	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 10,743,568	$ 3,275,965	$ 1,040,871
From net realized gain	-	-	-
Total	$ 10,743,568	$ 3,275,965	$ 1,040,871

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

Growth & Income Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 10.86	$ 13.19	$ 15.26	$ 17.30	$ 16.15
Income from Investment Operations
Net investment income (loss)^C	.12	.15	.18	.20	.18
Net realized and unrealized gain (loss)	2.42	(2.32)	(1.45)	(.81)	1.27
Total from investment operations	2.54	(2.17)	(1.27)	(.61)	1.45
Distributions from net investment income	(.14)	(.16)	(.19)	(.19)	(.10)
Distributions from net realized gain	-	-	(.61)	(1.24)	(.20)
Total distributions	(.14)	(.16)	(.80)	(1.43)	(.30)
Net asset value, end of period	$ 13.26	$ 10.86	$ 13.19	$ 15.26	$ 17.30
Total Return^{A, B}	23.77%	(16.61)%	(8.75)%	(3.62)%	9.17%
Ratios to Average Net Assets^D
Expenses before expense reductions	.59%	.59%	.58%	.58%	.60%
Expenses net of voluntary waivers, if any	.59%	.59%	.58%	.58%	.60%
Expenses net of all reductions	.59%	.58%	.56%	.57%	.59%
Net investment income (loss)	1.02%	1.30%	1.34%	1.26%	1.08%
Supplemental Data
Net assets, end of period (000 omitted)	$ 785,494	$ 638,124	$ 893,359	$ 1,011,393	$ 1,259,396
Portfolio turnover rate	25%	43%	58%	72%	58%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 10.80	$ 13.12	$ 15.19	$ 17.24	$ 16.11
Income from Investment Operations
Net investment income (loss)^C	.11	.14	.16	.18	.16
Net realized and unrealized gain (loss)	2.40	(2.31)	(1.44)	(.80)	1.27
Total from investment operations	2.51	(2.17)	(1.28)	(.62)	1.43
Distributions from net investment income	(.13)	(.15)	(.18)	(.19)	(.10)
Distributions from net realized gain	-	-	(.61)	(1.24)	(.20)
Total distributions	(.13)	(.15)	(.79)	(1.43)	(.30)
Net asset value, end of period	$ 13.18	$ 10.80	$ 13.12	$ 15.19	$ 17.24
Total Return^{A, B}	23.60%	(16.69)%	(8.85)%	(3.69)%	9.06%
Ratios to Average Net Assets^D
Expenses before expense reductions	.69%	.69%	.68%	.69%	.70%
Expenses net of voluntary waivers, if any	.69%	.69%	.68%	.69%	.70%
Expenses net of all reductions	.69%	.68%	.66%	.68%	.69%
Net investment income (loss)	.92%	1.20%	1.24%	1.16%	.98%
Supplemental Data
Net assets, end of period (000 omitted)	$ 357,585	$ 250,160	$ 281,194	$ 212,994	$ 95,600
Portfolio turnover rate	25%	43%	58%	72%	58%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 10.73	$ 13.07	$ 15.17	$ 16.94
Income from Investment Operations
Net investment income (loss)^E	.09	.12	.14	.15
Net realized and unrealized gain (loss)	2.39	(2.30)	(1.44)	(.49)
Total from investment operations	2.48	(2.18)	(1.30)	(.34)
Distributions from net investment income	(.12)	(.16)	(.19)	(.19)
Distributions from net realized gain	-	-	(.61)	(1.24)
Total distributions	(.12)	(.16)	(.80)	(1.43)
Net asset value, end of period	$ 13.09	$ 10.73	$ 13.07	$ 15.17
Total Return^{B, C, D}	23.44%	(16.84)%	(9.01)%	(2.11)%
Ratios to Average Net Assets^G
Expenses before expense reductions	.85%	.85%	.84%	.85%^A
Expenses net of voluntary waivers, if any	.85%	.85%	.84%	.85%^A
Expenses net of all reductions	.84%	.84%	.82%	.84%^A
Net investment income (loss)	.76%	1.05%	1.08%	1.00%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 341,989	$ 140,890	$ 76,237	$ 13,025
Portfolio turnover rate	25%	43%	58%	72%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period January 12, 2000 (commencement of sale of shares) to December 31, 2000.

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

Growth & Income Portfolio

Notes to Financial Statements

For the period ended December 31, 2003

1. Significant Accounting Policies.

Growth & Income Portfolio (the fund) is a fund of Variable Insurance Products Fund III (the trust) (referred to in this report as Fidelity Variable Insurance Products: Growth & Income Portfolio) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The fund offers the following classes of shares: Initial Class shares, Service Class shares and Service Class 2 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.

Annual Report

Notes to Financial Statements - continued

1. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent and temporary book and tax differences. These adjustments have no impact on net assets or the results of operations. Temporary differences will reverse in a subsequent period. These differences are primarily due to foreign currency transactions, market discount, non-taxable dividends, capital loss carryforwards and losses deferred due to wash sales.

The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:

Unrealized appreciation	$ 218,916,802	\|
Unrealized depreciation	(81,646,274)
Net unrealized appreciation (depreciation)	137,270,528
Undistributed ordinary income	12,128,444
Capital loss carryforward	(166,421,945)

Cost for federal income tax purposes	$ 1,373,575,386

The tax character of distributions paid was as follows:

	December 31, 2003	December 31, 2002
Ordinary Income	$ 12,772,749	$ 15,060,404

2. Operating Policies.

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the fund's average net assets and a group fee rate that averaged .28% 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 annual management fee rate was .48% of the fund's average net assets.

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

Service Class	$ 294,948	\|
Service Class 2	556,834
	$ 851,782

Growth & Income Portfolio

1. Fees and Other Transactions with Affiliates - continued

For the period, the total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class	$ 482,906	\|
Service Class	203,338
Service Class 2	159,916
	$ 846,160

5. Committed Line of Credit.

6. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. 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. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.

7. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $33,165 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 $51.

8. Other Information.

At the end of the period, FMR or its affiliates were the owners of record of 22% of the total outstanding shares of the fund and two unaffiliated shareholders were the owners of record of 49% of the total outstanding shares of the fund.

Annual Report

Independent Auditors' Report

To the Trustees of Variable Insurance Products Fund III and Shareholders of Growth & Income Portfolio:

We have audited the accompanying statement of assets and liabilities of Growth & Income Portfolio (the Fund), a fund of Variable Insurance Products Fund III, including the portfolio of investments, as of December 31, 2003, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Growth & Income Portfolio as of December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 11, 2004

Annual Report

Trustees and Officers

The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-221-5207.

Interested Trustees*:

Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Edward C. Johnson 3d (73)**
	Year of Election or Appointment: 1994 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc.
Abigail P. Johnson (42)**
	Year of Election or Appointment: 2001 Senior Vice President of VIP Growth & Income (2001). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds.
Laura B. Cronin (49)
	Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002).
Robert L. Reynolds (51)
	Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000).

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.

** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.

Annual Report

Non-Interested Trustees:

Name, Age; Principal Occupation
J. Michael Cook (61)
	Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), Rockwell Automation (2000), and The Dow Chemical Company (2000). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Board of the Directorship Search Group, Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater.
Ralph F. Cox (71)
	Year of Election or Appointment: 1994 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin.
Robert M. Gates (60)
	Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), and Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001). He also serves as a member of the Advisory Board of VoteHere.net (secure internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy.
George H. Heilmeier (67)
	Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002) and Compaq (1994-2002).
Donald J. Kirk (71)
	Year of Election or Appointment: 1994 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations).
Marie L. Knowles (57)
	Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing), URS Corporation (multidisciplinary engineering, 1999), and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (59)
	Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Chairman and as a Director (1998) of Acterna Corporation (communications test equipment). He is also Co-Chairman of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Eaton Corporation (diversified industrial) and the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations.
Marvin L. Mann (70)
	Year of Election or Appointment: 1994 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals) where he served as CEO until April 1998 and retired as Chairman May 1999, and remains a member of the Board. Prior to 1991, he held the positions of Vice President of International Business Machines Corporation (IBM) and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Board member of Imation Corp. (imaging and information storage) and Acterna Corporation (communications test equipment, 1999). He is also a member of the Director Services Committee of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama.
William O. McCoy (70)
	Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), Progress Energy, Inc. (electric utility), and Acterna Corporation (communications test equipment, 1999). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998).
William S. Stavropoulos (64)
	Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman of the Board, President and CEO (2002), and Chairman of the Executive Committee (2000) and a Director of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000) and Chief Executive Officer (1995-2000). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council, World Business Council for Sustainable Development, and the University of Notre Dame Advisory Council for the College of Science.

Annual Report

Advisory Board Members and Executive Officers:

Name, Age; Principal Occupation
Peter S. Lynch (60)
	Year of Election or Appointment: 2003 Member of the Advisory Board of Variable Insurance Products III. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity Magellan Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
Cornelia M. Small (59)
	Year of Election or Appointment: 2004 Member of the Advisory Board of Variable Insurance Products III. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors (1998-1999) of Scudder Kemper Investments. In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
Bart A. Grenier (44)
	Year of Election or Appointment: 2001 Vice President of VIP Growth & Income. Mr. Grenier also serves as Vice President of certain Equity Funds (2001), a position he previously held from 1999 to 2000, and Vice President of certain High Income Funds (2002). He is Senior Vice President of FMR (1999) and FMR Co., Inc. (2001), and President and Director of Strategic Advisers, Inc. (2002). He also heads Fidelity's Asset Allocation Group (2000), Fidelity's Growth and Income Group (2001), Fidelity's Value Group (2001), and Fidelity's High Income Division (2001). Previously, Mr. Grenier served as President of Fidelity Ventures (2000), Vice President of certain High Income Funds (1997-2000), High Income Division Head (1997-2000), Group Leader of the Income-Growth and Asset Allocation-Income Groups (1996-2000), and Assistant Equity Division Head (1997-2000).
Louis Salemy (42)
	Year of Election or Appointment: 2000 Vice President of VIP Growth & Income and other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Salemy managed a variety of Fidelity funds.
Eric D. Roiter (55)
	Year of Election or Appointment: 1998 Secretary of VIP Growth & Income. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003).
Stuart Fross (44)
	Year of Election or Appointment: 2003 Assistant Secretary of VIP Growth & Income. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR.
Maria F. Dwyer (45)
	Year of Election or Appointment: 2002 President and Treasurer of VIP Growth & Income. Ms. Dwyer also serves as President and Treasurer of other Fidelity funds (2002) and is a Vice President (1999) and an employee (1996) of FMR.
Timothy F. Hayes (53)
	Year of Election or Appointment: 2002 Chief Financial Officer of VIP Growth & Income. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998).
John R. Hebble (45)
	Year of Election or Appointment: 2003 Deputy Treasurer of VIP Growth & Income. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003).
John H. Costello (57)
	Year of Election or Appointment: 1996 Assistant Treasurer of VIP Growth & Income. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Francis V. Knox, Jr. (56)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Growth & Income. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002).
Mark Osterheld (48)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Growth & Income. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Thomas J. Simpson (45)
	Year of Election or Appointment: 2000 Assistant Treasurer of VIP Growth & Income. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995).

Annual Report

Distributions

A percentage of the dividends distributed during the fiscal year for the following classes qualifies for the dividends-received deduction for corporate shareholders:

Initial Class	92%
Service Class	99%
Service Class 2	100%

The fund will notify shareholders in January 2004 of amounts for use in preparing 2003 income tax returns.

Annual Report

Growth & Income Portfolio

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Far East) Inc.

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Shareholder Servicing Agent

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA

Custodian

JPMorgan Chase Bank
New York, NY

VIPGI-ANN-0204
1.540026.106

Fidelity® Variable Insurance Products:

Mid Cap Portfolio

Annual Report

December 31, 2003

(2_fidelity_logos) (Registered_Trademark)

Performance	<Click Here>	How the fund has done over time.
Management's Discussion	<Click Here>	The manager's review of fund performance, strategy and outlook.
Investment Summary	<Click Here>	A summary of the fund's investments at period end.
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.
Auditors' Opinion	<Click Here>
Trustees and Officers	<Click Here>
Distributions	<Click Here>

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

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

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

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

(Recycle graphic) This report is printed on recycled paper using soy-based inks.

Neither the fund nor Fidelity Distributors Corporation is a bank.

Mid Cap Portfolio

Fidelity Variable Insurance Products: Mid Cap Portfolio

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. Performance numbers are net of all fund operating expenses, but do not include any insurance charges imposed by your insurance company's separate account. If performance information included the effect of these additional charges, the total returns would have been lower. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Life of fund ^A
Fidelity ® VIP: Mid Cap Portfolio - Initial Class	38.64%	19.25%	19.93%
Fidelity VIP: Mid Cap Portfolio - Service Class ^B	38.52%	19.13%	19.81%
Fidelity VIP: Mid Cap Portfolio - Service Class 2 ^C	38.31%	18.98%	19.66%

^A From December 28, 1998.

^B Performance for Service Class shares reflects an asset based distribution fee (12b-1).

^C The initial offering of Service Class 2 shares took place January 12, 2000. Performance for Service Class 2 shares reflects an asset based distribution fee (12b-1 fee). Returns from December 28, 1998 to January 12, 2000 are those of Service Class which reflect a different 12b-1 fee. Had Service Class 2's 12b-1 fee been reflected, returns prior to January 12, 2000 would have been lower.

$10,000 Over Life of Fund

Let's say hypothetically that $10,000 was invested in Fidelity® Variable Insurance Products: Mid Cap Portfolio - Initial Class on December 28, 1998, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the S&P® MidCap 400 Index did over the same period.

Annual Report

Fidelity Variable Insurance Products: Mid Cap Portfolio

Management's Discussion of Fund Performance

Comments from Tom Allen, Portfolio Manager of Fidelity® Variable Insurance Products: Mid Cap Portfolio

For the 12-month period that ended December 31, 2003, the fund posted strong positive returns, outperforming both the Standard & Poor's® MidCap 400 Index, which gained 35.62%, and the Lipper^SM Variable Annuity Mid-Cap Funds Average, which rose 35.40%. The fund's significant overweighting in strong-performing materials stocks, including base metals such as copper and zinc - as well as big positions in gold mining issues - provided a large part of the fund's positive performance. Favorable stock selection in areas such as biotechnology, energy and health care equipment also contributed solid gains. Among the top contributors were gold producer Newmont Mining and Invitrogen, a life sciences technology company. Performance suffered because of the fund's overly cautious stance, particularly early in the period, which resulted in an unusually large position in cash and a significant underweighting in the resurgent semiconductor industry. Several gold mining stocks that did well in 2002 - Meridian Gold and Agnico-Eagle, for example - hurt performance in 2003 as investors reduced their exposure to these issues.

Annual Report

Fidelity Variable Insurance Products: Mid Cap Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Newmont Mining Corp.	5.6
Invitrogen Corp.	3.4
Symbol Technologies, Inc.	2.3
Meridian Gold, Inc.	2.1
Freeport-McMoRan Copper & Gold, Inc. Class B	2.1
	15.5
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Materials	22.7
Health Care	21.3
Consumer Discretionary	14.0
Energy	11.7
Information Technology	8.9

Asset Allocation as of December 31, 2003
% of fund's net assets*
	Stocks	96.8%
	Short-Term Investments and Net Other Assets	3.2%

*Foreign
investments 26.0%

Annual Report

Fidelity Variable Insurance Products: Mid Cap Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 96.8%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 14.0%
Auto Components - 1.1%
Autoliv, Inc.	77,900		$ 2,932,935
China Yuchai International Ltd.	100		3,060
Gentex Corp.	391,500		17,288,640
IMPCO Technologies, Inc. (a)	203,100		1,771,032
Johnson Controls, Inc.	100		11,612
Starcraft Corp.	100		3,252
Superior Industries International, Inc.	121,800		5,300,736
			27,311,267
Automobiles - 0.0%
Fiat Spa sponsord ADR	100		774
Harley-Davidson, Inc.	100		4,753
Monaco Coach Corp. (a)	200		4,760
Thor Industries, Inc.	100		5,622
			15,909
Distributors - 0.0%
Advanced Marketing Services, Inc.	100		1,140
Educational Development Corp.	100		1,103
Li & Fung Ltd.	2,000		3,426
			5,669
Hotels, Restaurants & Leisure - 2.7%
Applebee's International, Inc.	100		3,927
GTECH Holdings Corp.	22		1,067
Krispy Kreme Doughnuts, Inc. (a)	93,000		3,403,800
Outback Steakhouse, Inc.	849,600		37,560,816
P.F. Chang's China Bistro, Inc. (a)	100		5,088
Panera Bread Co. Class A (a)	100		3,953
Red Robin Gourmet Burgers, Inc. (a)	92,000		2,800,480
Sonic Corp. (a)	670,750		20,538,365
Starbucks Corp. (a)	100		3,306
Total Entertainment Restaurant Corp. (a)	100		1,208
			64,322,010
Household Durables - 2.9%
Alba PLC	718,435		8,146,018
CFM, Inc. (a)	100		843
Fedders Corp.	100		720
Fedders Corp. rights 1/16/04 (a)	100		6
Garmin Ltd.	565,100		30,786,648
Harman International Industries, Inc.	320,000		23,673,600
Hovnanian Enterprises, Inc. Class A (a)	100		8,706
Lennar Corp.:
Class A	100		9,600
Class B	10		914
Mohawk Industries, Inc. (a)	100		7,054
Sekisui House Ltd.	800,000		8,305,851
Techtronic Industries Co.	2,000		5,552
The Stanley Works	100		3,787
William Lyon Homes, Inc. (a)	100		6,277
			70,955,576

	Shares		Value (Note 1)
Internet & Catalog Retail - 0.0%
1-800-FLOWERS.com, Inc. Class A (a)	200		$ 2,212
Alloy, Inc. (a)	100		521
Drugstore.com, Inc. (a)	100		551
eBay, Inc. (a)	100		6,459
GSI Commerce, Inc. (a)	100		976
InterActiveCorp (a)	487		16,524
J. Jill Group, Inc. (a)	100		1,271
Netflix, Inc. (a)	200		10,938
Sportsmans Guide, Inc. (a)	100		1,715
			41,167
Leisure Equipment & Products - 0.0%
Arctic Cat, Inc.	100		2,470
Leapfrog Enterprises, Inc. Class A (a)	100		2,653
Mega Bloks, Inc. (a)	100		1,773
Oakley, Inc.	100		1,384
Polaris Industries, Inc.	100		8,858
SCP Pool Corp. (a)	150		4,902
SHIMANO, Inc.	100		2,082
			24,122
Media - 1.1%
Astral Media, Inc. Class A (non-vtg.)	408,000		8,822,387
Catalina Marketing Corp. (a)	443,000		8,930,880
Chum Ltd. Class B (non-vtg.)	100		4,857
Cumulus Media, Inc. Class A (a)	100		2,200
E.W. Scripps Co. Class A	100		9,414
EchoStar Communications Corp. Class A (a)	100		3,400
Entercom Communications Corp. Class A (a)	100		5,296
Entravision Communications Corp. Class A (a)	100		1,110
Fox Entertainment Group, Inc. Class A (a)	100		2,915
Getty Images, Inc. (a)	100		5,013
Grupo Televisa SA de CV sponsored ADR	191,900		7,649,134
Harris Interactive, Inc. (a)	100		830
Hughes Electronics Corp. (a)	82		1,357
Modern Times Group AB (MTG) (B Shares) (a)	66,100		1,391,415
News Corp. Ltd. sponsored ADR	9		272
Omnicom Group, Inc.	100		8,733
Pixar (a)	100		6,929
Radio One, Inc. Class A (a)	100		1,955
Reader's Digest Association, Inc. (non-vtg.)	100		1,466
Saga Communications, Inc. Class A (a)	100		1,853
SBS Broadcasting SA (a)	100		3,260
Scholastic Corp. (a)	100		3,404
TiVo, Inc. (a)	100		740
Torstar Corp. Class B	100		2,236
Univision Communications, Inc. Class A (a)	100		3,969
Common Stocks - continued
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - continued
Media - continued
Washington Post Co. Class B	100		$ 79,140
Westwood One, Inc. (a)	100		3,421
			26,947,586
Multiline Retail - 0.2%
99 Cents Only Stores (a)	143,700		3,912,951
Big Lots, Inc. (a)	100		1,421
Dollar General Corp.	100		2,099
Dollar Tree Stores, Inc. (a)	100		3,006
Family Dollar Stores, Inc.	100		3,588
Fred's, Inc. Class A	100		3,098
Kohl's Corp. (a)	100		4,494
Tuesday Morning Corp. (a)	44,200		1,337,050
			5,267,707
Specialty Retail - 4.4%
Abercrombie & Fitch Co. Class A (a)	100		2,471
AC Moore Arts & Crafts, Inc. (a)	580,300		11,176,578
Advance Auto Parts, Inc. (a)	100		8,140
AutoZone, Inc. (a)	100		8,521
Bed Bath & Beyond, Inc. (a)	100		4,335
Best Buy Co., Inc.	200		10,448
Cache, Inc. (a)	100		2,083
CarMax, Inc. (a)	473,700		14,651,541
Chico's FAS, Inc. (a)	42,700		1,577,765
Christopher & Banks Corp.	84,751		1,655,187
Claire's Stores, Inc.	205,900		3,879,156
Cole National Corp. Class A (a)	100		2,000
Cost Plus, Inc. (a)	26,900		1,102,900
Deb Shops, Inc.	100		2,150
Forzani Group Ltd. Class A (a)	100		1,253
Genesco, Inc. (a)	100		1,513
Group 1 Automotive, Inc. (a)	100		3,619
Guitar Center, Inc. (a)	100		3,258
Hibbett Sporting Goods, Inc. (a)	100		2,980
Hot Topic, Inc. (a)	1,141,450		33,627,117
Jos. A. Bank Clothiers, Inc. (a)	100		3,469
KOMERI Co. Ltd.	528,900		12,301,889
Michaels Stores, Inc.	100		4,420
Nitori Co. Ltd.	148,200		9,270,872
O'Reilly Automotive, Inc. (a)	100		3,836
Pacific Sunwear of California, Inc. (a)	199,300		4,209,216
Peacock Group PLC	1,258,300		4,313,895
PETsMART, Inc.	100		2,380
Pier 1 Imports, Inc.	100		2,186
RONA, Inc. (a)	100,000		2,404,409
Ross Stores, Inc.	296,600		7,839,138
Select Comfort Corp. (a)	100		2,476
Sharper Image Corp. (a)	100		3,265
Shimamura Co. Ltd.	100		6,828
Sports Authority, Inc. (a)	100		3,840
Staples, Inc. (a)	100		2,730

	Shares		Value (Note 1)
Talbots, Inc.	100		$ 3,078
TBC Corp. (a)	100		2,581
The Bombay Company, Inc. (a)	100		814
Tiffany & Co., Inc.	100		4,520
TJX Companies, Inc.	100		2,205
Too, Inc. (a)	100		1,688
Tractor Supply Co. (a)	100		3,889
Urban Outfitters, Inc. (a)	200		7,410
Weight Watchers International, Inc. (a)	100		3,837
Williams-Sonoma, Inc. (a)	200		6,954
			108,134,840
Textiles Apparel & Luxury Goods - 1.6%
Adidas-Salomon AG	100		11,359
Brown Shoe Co., Inc.	100		3,793
Coach, Inc. (a)	200		7,550
Columbia Sportswear Co. (a)	626,200		34,127,900
Compagnie Financiere Richemont unit	100		2,394
DHB Industries, Inc. (a)	100		700
Fossil, Inc. (a)	145,300		4,069,853
Gildan Activewear, Inc. Class A (sub. vtg.) (a)	100		3,088
K-Swiss, Inc. Class A	200		4,812
Kenneth Cole Productions, Inc. Class A	100		2,940
Liz Claiborne, Inc.	100		3,546
NIKE, Inc. Class B	100		6,846
Quiksilver, Inc. (a)	200		3,546
Ted Baker PLC	25,000		154,678
The Swatch Group AG (Bearer)	100		11,972
Timberland Co. Class A (a)	100		5,207
Vans, Inc. (a)	100		1,141
			38,421,325
TOTAL CONSUMER DISCRETIONARY			341,447,178
CONSUMER STAPLES - 3.0%
Beverages - 0.0%
Boston Beer Co., Inc. Class A (a)	100		1,814
Companhia de Bebidas das Americas (AmBev) sponsored ADR	29,100		742,341
Fomento Economico Mexicano SA de CV sponsored ADR	100		3,688
Grupo Modelo SA de CV Series C	100		241
Harbin Brewery Group Ltd.	2,000		805
Tsingtao Brewery Co. Ltd. (H Shares)	1,000		1,172
			750,061
Food & Staples Retailing - 0.2%
Companhia Brasileira de Distribuicao Grupo Pao de Acucar sponsored ADR	100		2,515
Costco Wholesale Corp. (a)	100		3,718
Plant Co. Ltd. (a)	30,100		468,620
United Natural Foods, Inc. (a)	100		3,591
Whole Foods Market, Inc.	64,100		4,303,033
			4,781,477
Common Stocks - continued
	Shares		Value (Note 1)
CONSUMER STAPLES - continued
Food Products - 2.5%
Central Garden & Pet Co. Class A (a)	100		$ 2,803
Delta & Pine Land Co.	152,200		3,865,880
Fresh Del Monte Produce, Inc.	100		2,383
Green Mountain Coffee Roasters, Inc. (a)	245,895		5,660,503
Hershey Foods Corp.	244,300		18,808,657
Horizon Organic Holding Corp. (a)	40,600		972,370
IAWS Group PLC (Ireland)	50		610
Lindt & Spruengli AG (participation certificate)	100		83,038
McCormick & Co., Inc. (non-vtg.)	473,600		14,255,360
Peet's Coffee & Tea, Inc. (a)	100		1,741
PT Indofood Sukses Makmur	34,620,000		3,289,315
Sensient Technologies Corp.	100		1,977
Smithfield Foods, Inc. (a)	637,600		13,198,320
Tootsie Roll Industries, Inc.	100		3,600
Yakult Honsha Co. Ltd.	1,000		15,709
			60,162,266
Household Products - 0.0%
Uni-Charm Corp.	100		4,943
Personal Products - 0.3%
Alberto-Culver Co. Class B	100		6,308
Hengan International Group Co. Ltd. (a)	9,002,000		4,840,969
Kose Corp.	77,600		2,809,283
NBTY, Inc. (a)	100		2,686
USANA Health Sciences, Inc. (a)	200		6,120
			7,665,366
TOTAL CONSUMER STAPLES			73,364,113
ENERGY - 11.7%
Energy Equipment & Services - 6.6%
BJ Services Co. (a)	622,810		22,358,879
Cal Dive International, Inc. (a)	135,000		3,254,850
Carbo Ceramics, Inc.	115,700		5,929,625
Cooper Cameron Corp. (a)	154,000		7,176,400
Core Laboratories NV (a)	100		1,669
Global Industries Ltd. (a)	342,000		1,761,300
GlobalSantaFe Corp.	490,350		12,175,391
Helmerich & Payne, Inc.	96,000		2,681,280
Matrix Service Co. (a)	200		3,630
Nabors Industries Ltd. (a)	38,800		1,610,200
National-Oilwell, Inc. (a)	430,600		9,628,216
Noble Corp. (a)	200,800		7,184,624
NS Group, Inc. (a)	130,300		1,263,910
Oceaneering International, Inc. (a)	877,400		24,567,200
Pason Systems, Inc.	296,300		5,756,059
Pioneer Drilling Co. (a)	13,900		67,415
Pride International, Inc. (a)	519,500		9,683,480
Smith International, Inc. (a)	233,890		9,711,113
Tidewater, Inc.	580,150		17,334,882

	Shares		Value (Note 1)
Varco International, Inc. (a)	656,648		$ 13,546,638
W-H Energy Services, Inc. (a)	358,400		5,806,080
			161,502,841
Oil & Gas - 5.1%
Apache Corp.	500,220		40,567,842
Burlington Resources, Inc.	109,600		6,069,648
China Petroleum & Chemical Corp. sponsored ADR	100		4,441
Comstock Resources, Inc. (a)	373,200		7,202,760
Golar LNG Ltd. (a)	145,600		2,084,084
Golar LNG Ltd. (Nasdaq) (a)	70		1,000
Niko Resources Ltd.	138,000		2,882,979
Nuevo Energy Co. (a)	117,800		2,847,226
OAO Gazprom sponsored ADR	100		2,590
Petro-Canada	100		4,927
PetroChina Co. Ltd. sponsored ADR	100		5,705
PetroKazakhstan, Inc. Class A (a)	1,292,100		29,154,924
Petroleo Brasileiro SA Petrobras sponsored ADR	100		2,924
Pioneer Natural Resources Co. (a)	309,500		9,882,335
Pogo Producing Co.	169,600		8,191,680
Suncor Energy, Inc.	117,200		2,936,324
Surgutneftegaz JSC sponsored ADR	100		2,940
Talisman Energy, Inc.	152,400		8,637,410
Western Gas Resources, Inc.	40,000		1,890,000
World Fuel Services Corp.	18,294		621,081
XTO Energy, Inc.	100		2,830
YUKOS Corp. sponsored ADR	100		4,200
			122,999,850
TOTAL ENERGY			284,502,691
FINANCIALS - 5.7%
Capital Markets - 0.2%
A.G. Edwards, Inc.	100		3,623
Charles Schwab Corp.	100		1,184
E*TRADE Group, Inc. (a)	100		1,265
Eaton Vance Corp. (non-vtg.)	100		3,664
Federated Investors, Inc. Class B (non-vtg.)	100		2,936
Franklin Resources, Inc.	100		5,206
International Assets Holding Corp. (a)	100		594
Investment Technology Group, Inc. (a)	100		1,615
Investors Financial Services Corp.	100		3,841
Mitsubishi Securities Co. Ltd.	538,000		5,888,432
T. Rowe Price Group, Inc.	200		9,482
			5,921,842
Commercial Banks - 0.9%
Banco Itau Holding Financeira SA sponsored ADR	100		4,877
BOK Financial Corp.	100		3,872
Boston Private Financial Holdings, Inc.	142,900		3,549,636
Bryn Mawr Bank Corp.	20		490
Common Stocks - continued
	Shares		Value (Note 1)
FINANCIALS - continued
Commercial Banks - continued
Cathay General Bancorp	10		$ 557
Charter One Financial, Inc.	100		3,455
City National Corp.	100		6,212
CVB Financial Corp.	110		2,122
East West Bancorp, Inc.	100		5,368
First Tennessee National Corp.	100		4,410
Great Southern Bancorp, Inc.	100		4,637
Hancock Holding Co.	150		8,186
Harleysville National Corp., Pennsylvania	125		3,763
Independent Bank Corp., Massachusetts	100		2,882
International Bancshares Corp.	100		4,715
Kookmin Bank sponsored ADR	100		3,784
Lakeland Financial Corp.	100		3,532
M&T Bank Corp.	100		9,830
Marshall & Ilsley Corp.	100		3,825
Nara Bancorp, Inc.	137,190		3,745,287
National Commerce Financial Corp.	100		2,728
North Fork Bancorp, Inc., New York	100		4,047
Pacific Capital Bancorp	100		3,682
PrivateBancorp, Inc.	100		4,552
Resource Bankshares Corp.	150		4,730
SouthTrust Corp.	100		3,273
State Bancorp, Inc., New York	100		2,426
State Bank of India	70,900		836,814
Sterling Bancshares, Inc.	10		133
Sumitomo Trust & Banking Ltd.	1,643,000		9,707,886
Synovus Financial Corp.	100		2,892
TCF Financial Corp.	100		5,135
Texas Regional Bancshares, Inc. Class A	100		3,700
Tompkins Trustco, Inc.	100		4,605
UCBH Holdings, Inc.	100		3,897
UnionBanCal Corp.	100		5,754
Valley National Bancorp	100		2,920
West Coast Bancorp, Oregon	100		2,134
Westcorp	100		3,655
Wintrust Financial Corp.	60,400		2,724,040
Zions Bancorp	100		6,133
			20,706,576
Consumer Finance - 0.0%
American Express Co.	100		4,823
Capital One Financial Corp.	100		6,129
First Cash Financial Services, Inc. (a)	100		2,564
Student Loan Corp.	100		14,600
			28,116
Diversified Financial Services - 0.0%
Deutsche Boerse AG	100		5,453
eSpeed, Inc. Class A (a)	100		2,341
Moody's Corp.	100		6,055
Power Financial Corp.	100		3,818

	Shares		Value (Note 1)
Principal Financial Group, Inc.	100		$ 3,307
TSX Group, Inc.	100		3,307
			24,281
Insurance - 2.1%
ACE Ltd.	100		4,142
AFLAC, Inc.	2,800		101,304
Arthur J. Gallagher & Co.	100		3,249
Erie Indemnity Co. Class A	100		4,238
Great-West Lifeco, Inc.	100		3,508
Hilb, Rogal & Hamilton Co.	100		3,207
MBIA, Inc.	22,700		1,344,521
Mercury General Corp.	34,500		1,605,975
MetLife, Inc.	100		3,367
Ohio Casualty Corp. (a)	100		1,736
Old Republic International Corp.	150		3,804
PartnerRe Ltd.	100		5,805
Progressive Corp.	63,900		5,341,401
Protective Life Corp.	69,300		2,345,112
Reinsurance Group of America, Inc.	456,400		17,639,860
StanCorp Financial Group, Inc.	100		6,288
UICI (a)	100		1,328
UnumProvident Corp.	100		1,577
W.R. Berkley Corp.	654,275		22,866,911
Zenith National Insurance Corp.	300		9,765
			51,297,098
Real Estate - 2.1%
Equity Residential (SBI)	100		2,951
Pan Pacific Retail Properties, Inc.	200,000		9,530,000
Plum Creek Timber Co., Inc.	132,400		4,031,580
ProLogis	298,200		9,569,238
Simon Property Group, Inc.	595,700		27,604,738
			50,738,507
Thrifts & Mortgage Finance - 0.4%
Doral Financial Corp.	99,300		3,205,404
Farmer Mac Class C (non-vtg.) (a)	134,600		4,301,816
Golden West Financial Corp., Delaware	14,970		1,544,754
MGIC Investment Corp.	100		5,694
NetBank, Inc.	57,700		770,295
New York Community Bancorp, Inc.	100		3,805
R&G Financial Corp. Class B	100		3,980
Sterling Financial Corp. (a)	100		3,423
W Holding Co., Inc.	153		2,847
			9,842,018
TOTAL FINANCIALS			138,558,438
HEALTH CARE - 21.3%
Biotechnology - 8.9%
Actelion Ltd. (Reg.) (a)	100		10,763
Affymetrix, Inc. (a)	100		2,461
Bachem Holding AG (B Shares)	100		5,115
Biogen Idec, Inc. (a)	315		11,586
Common Stocks - continued
	Shares		Value (Note 1)
HEALTH CARE - continued
Biotechnology - continued
BioSource International, Inc. (a)	100		$ 677
Caliper Technologies Corp. (a)	100		658
Cell Genesys, Inc. (a)	100		1,294
Celltech Group PLC sponsored ADR (a)	100		1,336
Charles River Laboratories International, Inc. (a)	1,097,200		37,666,876
Ciphergen Biosystems, Inc. (a)	100		1,124
Connetics Corp. (a)	100		1,816
Dendreon Corp. (a)	146,900		1,184,014
Digene Corp. (a)	31,900		1,279,190
Enzon Pharmaceuticals, Inc. (a)	100		1,200
Exact Sciences Corp. (a)	100		1,012
Gen-Probe, Inc. (a)	200		7,294
Genencor International, Inc. (a)	100		1,575
Genentech, Inc. (a)	100		9,357
Gilead Sciences, Inc. (a)	100		5,814
Global Bio-Chem Technology Group Co. Ltd.	1,528,000		944,716
Harvard Bioscience, Inc. (a)(c)	2,802,200		24,939,580
IDEXX Laboratories, Inc. (a)	138,400		6,405,152
Ilex Oncology, Inc. (a)	100		2,125
ImmunoGen, Inc. (a)	100		505
Invitrogen Corp. (a)	1,187,700		83,139,000
Kosan Biosciences, Inc. (a)	100		986
Martek Biosciences (a)	27,700		1,799,669
MedImmune, Inc. (a)	100		2,540
Myriad Genetics, Inc. (a)	100		1,286
Nabi Biopharmaceuticals (a)	55,300		702,863
Neogen Corp. (a)	15,545		385,050
ONYX Pharmaceuticals, Inc. (a)	23,400		660,582
PRAECIS Pharmaceuticals, Inc. (a)	214,900		1,383,956
QIAGEN NV (a)	3,571,000		42,709,160
Seattle Genetics, Inc. (a)	100		858
Serologicals Corp. (a)	12,300		228,780
Strategic Diagnostics, Inc. (a)	626,000		2,960,980
Tanox, Inc. (a)	100		1,485
Techne Corp. (a)	242,300		9,154,094
Telik, Inc. (a)	65,800		1,514,058
Trimeris, Inc. (a)	100		2,098
United Therapeutics Corp. (a)	100		2,295
			217,134,980
Health Care Equipment & Supplies - 2.2%
Abaxis, Inc. (a)	184,800		3,348,576
Advanced Medical Optics, Inc. (a)	100		1,965
Advanced Neuromodulation Systems, Inc. (a)	150		6,897
Alcon, Inc.	100		6,054
Align Technology, Inc. (a)	100		1,652
Apogent Technologies, Inc. (a)	100		2,304
Arthrocare Corp. (a)	100		2,450
Becton, Dickinson & Co.	100		4,114

	Shares		Value (Note 1)
Biacore International AB sponsored ADR	100		$ 2,292
Bio-Rad Laboratories, Inc. Class A (a)	100		5,767
Biomet, Inc.	100		3,641
Biosite, Inc. (a)	100		2,895
Bruker BioSciences Corp. (a)	163		742
C.R. Bard, Inc.	100		8,125
Candela Corp. (a)	240,900		4,379,562
Cardiodynamics International Corp. (a)	100		597
Chromavision Medical Systems, Inc. (a)	100		319
Closure Medical Corp. (a)	13,300		451,269
CNS., Inc.	100		1,370
Cooper Companies, Inc.	100		4,713
CTI Molecular Imaging, Inc. (a)	100		1,691
Cyberonics, Inc. (a)	100		3,201
Cytyc Corp. (a)	100		1,376
DENTSPLY International, Inc.	100		4,517
Diagnostic Products Corp.	100		4,591
Edwards Lifesciences Corp. (a)	935,000		28,124,800
Epix Medical, Inc. (a)	229,800		3,741,144
Guidant Corp.	3,800		228,760
HealthTronics Surgical Services, Inc. (a)	63,800		398,750
ICU Medical, Inc. (a)	18,400		630,752
Illumina, Inc. (a)	100		705
Immucor, Inc. (a)	21,400		436,346
INAMED Corp. (a)	150		7,209
Integra LifeSciences Holdings Corp. (a)	98,400		2,817,192
Interpore International, Inc. (a)	100		1,300
Kensey Nash Corp. (a)	100		2,325
Merit Medical Systems, Inc. (a)	133		2,968
Millipore Corp. (a)	76,000		3,271,800
Molecular Devices Corp. (a)	100		1,899
Nobel Biocare Holding AG (Switzerland)	100		10,098
Nutraceutical International Corp. (a)	100		1,102
Osteotech, Inc. (a)	100		880
PolyMedica Corp.	200		5,262
Schick Technologies, Inc. (a)	52,700		389,980
Sola International, Inc. (a)	80,200		1,507,760
Sonic Innovations, Inc. (a)	161,800		1,043,610
SonoSight, Inc. (a)	100		2,144
St. Jude Medical, Inc. (a)	100		6,135
SurModics, Inc. (a)	100		2,390
Synovis Life Technologies, Inc. (a)	100		2,034
Synthes-Stratec, Inc.	100		98,678
Tecan Group AG	100		4,821
Therasense, Inc. (a)	100		2,030
Thoratec Corp. (a)	100		1,301
TriPath Imaging, Inc. (a)	100		780
Varian Medical Systems, Inc. (a)	58,100		4,014,710
Ventana Medical Systems, Inc. (a)	100		3,940
VSM MedTech Ltd. (a)	100		347
Wilson Greatbatch Technologies, Inc. (a)	100		4,227
Wright Medical Group, Inc. (a)	100		3,044
Common Stocks - continued
	Shares		Value (Note 1)
HEALTH CARE - continued
Health Care Equipment & Supplies - continued
Young Innovations, Inc.	100		$ 3,600
Zimmer Holdings, Inc. (a)	100		7,040
			55,032,543
Health Care Providers & Services - 8.3%
Accredo Health, Inc. (a)	100		3,161
AdvancePCS Class A (a)	587,600		30,943,016
Advisory Board Co. (a)	100		3,491
American Healthways, Inc. (a)	120,200		2,869,174
AMERIGROUP Corp. (a)	49,400		2,106,910
AmSurg Corp. (a)	100		3,789
Anthem, Inc. (a)	100		7,500
Caremark Rx, Inc. (a)	1,231,100		31,183,763
Cerner Corp. (a)	560,200		21,203,570
CIGNA Corp.	100		5,750
Computer Programs & Systems, Inc.	100		2,012
Covance, Inc. (a)	60,000		1,608,000
Coventry Health Care, Inc. (a)	81,800		5,275,282
Dendrite International, Inc. (a)	100		1,567
Dynacq Healthcare, Inc. (a)	100		768
Eclipsys Corp. (a)	100		1,164
eResearchTechnology, Inc. (a)	22,500		571,950
Express Scripts, Inc. (a)	46,200		3,069,066
First Health Group Corp. (a)	9,800		190,708
Health Management Associates, Inc. Class A	652,200		15,652,800
HealthExtras, Inc. (a)	100		1,340
ICON PLC sponsored ADR (a)	36,100		1,573,960
IDX Systems Corp. (a)	100		2,682
IMS Health, Inc.	1,757,800		43,698,908
Inveresk Research Group, Inc. (a)	357,600		8,843,448
iSoft Group PLC	602,200		3,986,631
Laboratory Corp. of America Holdings (a)	100		3,695
Lifeline Systems, Inc. (a)	200		3,800
Lincare Holdings, Inc. (a)	90,000		2,702,700
McKesson Corp.	3,500		112,560
MIM Corp. (a)	100		703
NDCHealth Corp.	100		2,562
Odyssey Healthcare, Inc. (a)	200		5,852
Omnicare, Inc.	100		4,039
Orthodontic Centers of America, Inc. (a)	100		805
Oxford Health Plans, Inc.	100		4,350
PAREXEL International Corp. (a)	100		1,626
Patterson Dental Co. (a)	100		6,416
Pediatrix Medical Group, Inc. (a)	100		5,509
Per-Se Technologies, Inc. (a)	100		1,526
Pharmaceutical Product Development, Inc. (a)	421,100		11,357,067
Quest Diagnostics, Inc.	200		14,622
Renal Care Group, Inc. (a)	100		4,120
ResCare, Inc. (a)	1,188,803		9,629,304

	Shares		Value (Note 1)
Tripos, Inc. (a)	100		$ 669
TriZetto Group, Inc. (a)	100		645
Vital Images, Inc. (a)	68,100		1,214,904
WebMD Corp. (a)	451,300		4,057,187
WellPoint Health Networks, Inc. (a)	100		9,699
			201,954,770
Pharmaceuticals - 1.9%
Able Laboratories, Inc. (a)	100		1,807
Allergan, Inc.	100		7,681
Alpharma, Inc. Class A	100		2,010
Altana AG sponsored ADR	100		6,030
American Pharmaceutical Partners, Inc. (a)	150		5,040
Bentley Pharmaceuticals, Inc. (a)	100		1,330
Caraco Pharmaceutical Laboratories Ltd. (a)	100		748
Cipla Ltd.	100		2,887
Dr. Reddy's Laboratories Ltd. ADR	238,300		7,542,195
Endo Pharmaceuticals Holdings, Inc. (a)	200		3,852
Flamel Technologies SA sponsored ADR (a)	100		2,679
Forest Laboratories, Inc. (a)	200		12,360
Guilford Pharmaceuticals, Inc. (a)	524,500		3,556,110
King Pharmaceuticals, Inc. (a)	100		1,526
KV Pharmaceutical Co. Class A (a)	150		3,825
Mylan Laboratories, Inc.	151,350		3,823,101
Novo Nordisk AS Series B	100		4,065
Perrigo Co.	347,200		5,457,984
Pharmaceutical Resources, Inc. (a)	7,700		501,655
Pure World, Inc. (a)	100		251
Ranbaxy Laboratories Ltd. sponsored GDR	270,300		6,892,650
Salix Pharmaceuticals Ltd. (a)	100		2,267
SICOR, Inc. (a)	231,800		6,304,960
Stada Arzneimittel AG	190,365		11,776,649
SuperGen, Inc. (a)	100		1,100
Teva Pharmaceutical Industries Ltd. sponsored ADR	100		5,671
Watson Pharmaceuticals, Inc. (a)	100		4,600
			45,925,033
TOTAL HEALTH CARE			520,047,326
INDUSTRIALS - 5.2%
Aerospace & Defense - 1.2%
Alliant Techsystems, Inc. (a)	100		5,776
Applied Signal Technology, Inc.	100		2,301
Cubic Corp.	100		2,300
DRS Technologies, Inc. (a)	204,900		5,692,122
Embraer - Empresa Brasileira de Aeronautica SA sponsored ADR	100		3,503
Engineered Support Systems, Inc.	225		12,389
General Dynamics Corp.	100		9,039
Herley Industries, Inc. (a)	100		2,070
Common Stocks - continued
	Shares		Value (Note 1)
INDUSTRIALS - continued
Aerospace & Defense - continued
Invision Technologies, Inc. (a)	100		$ 3,357
KVH Industries, Inc. (a)	100		2,747
L-3 Communications Holdings, Inc. (a)	383,800		19,711,968
Rockwell Collins, Inc.	100		3,003
United Defense Industries, Inc. (a)	75,000		2,391,000
			27,841,575
Air Freight & Logistics - 0.0%
C.H. Robinson Worldwide, Inc.	3,250		123,208
CNF, Inc.	100		3,390
Expeditors International of Washington, Inc.	4,400		165,704
FedEx Corp.	100		6,750
Forward Air Corp. (a)	100		2,750
UTI Worldwide, Inc.	100		3,793
			305,595
Airlines - 0.0%
Southwest Airlines Co.	100		1,614
Building Products - 0.0%
American Woodmark Corp.	100		5,505
Quixote Corp.	100		2,441
Simpson Manufacturing Co. Ltd. (a)	100		5,086
Trex Co., Inc. (a)	100		3,798
			16,830
Commercial Services & Supplies - 2.4%
Administaff, Inc. (a)	100		1,738
Apollo Group, Inc.:
- University of Phoenix Online (a)	100		6,893
Class A (a)	200		13,600
Avery Dennison Corp.	100		5,602
Benesse Corp.	100		2,453
Bennett Environmental, Inc. (a)	409,600		8,455,973
Bright Horizons Family Solutions, Inc. (a)(c)	685,300		28,782,600
Career Education Corp. (a)	200		8,014
ChoicePoint, Inc. (a)	206,600		7,869,394
Cintas Corp.	100		5,013
Coinstar, Inc. (a)	100		1,806
Corinthian Colleges, Inc. (a)	100		5,556
Corporate Executive Board Co. (a)	100		4,667
CoStar Group, Inc. (a)	100		4,168
Danka Business Systems PLC sponsored ADR (a)	17,000		74,800
DeVry, Inc. (a)	3,900		98,007
Education Management Corp. (a)	200		6,208
FTI Consulting, Inc. (a)	150		3,506
Fullcast Co. Ltd.	2,500		7,784,391
Gevity HR, Inc.	100		2,224
GFK AG	100		2,871
H&R Block, Inc.	100		5,537
Herman Miller, Inc.	100		2,427

	Shares		Value (Note 1)
HON Industries, Inc.	100		$ 4,332
Ionics, Inc. (a)	100		3,185
ITT Educational Services, Inc. (a)	100		4,697
Labor Ready, Inc. (a)	100		1,310
National Research Corp. (a)	100		1,619
On Assignment, Inc. (a)	124,300		647,603
Princeton Review, Inc. (a)	24,402		237,920
Resources Connection, Inc. (a)	100		2,731
Right Management Consultants, Inc. (a)	100		1,866
Ritchie Brothers Auctioneers, Inc.	100		5,310
Robert Half International, Inc. (a)	24,200		564,828
Stericycle, Inc. (a)	100		4,670
Strayer Education, Inc.	100		10,883
Tetra Tech, Inc. (a)	182,800		4,544,408
Trojan Technologies Corp. (a)	100		567
West Corp. (a)	100		2,323
			59,185,700
Construction & Engineering - 0.3%
Dycom Industries, Inc. (a)	62,600		1,678,932
EMCOR Group, Inc. (a)	100		4,390
Granite Construction, Inc.	100		2,349
Jacobs Engineering Group, Inc. (a)	113,800		5,463,538
			7,149,209
Electrical Equipment - 0.3%
AstroPower, Inc. (a)	100		65
Fujikura Ltd.	1,000		5,927
Johnson Electric Holdings Ltd.	500		638
REPower Systems AG	121,500		2,919,146
Rockwell Automation, Inc.	142,500		5,073,000
			7,998,776
Industrial Conglomerates - 0.0%
Alleghany Corp.	100		22,250
Teleflex, Inc.	100		4,833
			27,083
Machinery - 0.9%
AGCO Corp. (a)	100		2,014
Cascade Corp.	200		4,460
Ceradyne, Inc. (a)	100		3,406
CNH Global NV	100		1,660
CUNO, Inc. (a)	99,900		4,498,497
Dionex Corp. (a)	100		4,602
ESCO Technologies, Inc. (a)	100		4,365
Graco, Inc.	445,800		17,876,580
Husky Injection Molding Systems Ltd. (a)	100		432
Illinois Tool Works, Inc.	100		8,391
Joy Global, Inc.	100		2,615
Middleby Corp.	100		4,047
PACCAR, Inc.	100		8,512
Pentair, Inc.	100		4,570
Trinity Industries, Inc.	100		3,084
Common Stocks - continued
	Shares		Value (Note 1)
INDUSTRIALS - continued
Machinery - continued
Wabash National Corp. (a)	100		$ 2,930
Zenon Environmental, Inc. (a)	100		1,446
			22,431,611
Marine - 0.1%
Alexander & Baldwin, Inc.	48,700		1,640,703
Road & Rail - 0.0%
Canadian National Railway Co.	100		6,321
Heartland Express, Inc.	100		2,419
Knight Transportation, Inc. (a)	100		2,565
Old Dominion Freight Lines, Inc. (a)	100		3,408
			14,713
Trading Companies & Distributors - 0.0%
Fastenal Co.	200		9,988
Richelieu Hardware Ltd.	100		1,467
			11,455
TOTAL INDUSTRIALS			126,624,864
INFORMATION TECHNOLOGY - 8.9%
Communications Equipment - 0.4%
3Com Corp. (a)	100		817
Avocent Corp. (a)	100		3,652
Black Box Corp.	100		4,607
Comtech Telecommunications Corp. (a)	100		2,887
ECtel Ltd. (a)	100		496
Emulex Corp. (a)	100		2,668
Harris Corp.	100		3,795
InterDigital Communication Corp. (a)	100		2,064
Loral Space & Communications Ltd.	67,810		21,360
NETGEAR, Inc.	800		12,792
NetScreen Technologies, Inc. (a)	200		4,950
Packeteer, Inc. (a)	10		170
PC-Tel, Inc. (a)	133,300		1,414,313
Plantronics, Inc. (a)	100		3,265
Polycom, Inc. (a)	200		3,904
QLogic Corp. (a)	81		4,180
QUALCOMM, Inc.	100		5,393
Research in Motion Ltd. (a)	100		6,685
Scientific-Atlanta, Inc.	100		2,730
SeaChange International, Inc. (a)	275,400		4,241,160
SpectraLink Corp.	100		1,917
UTStarcom, Inc. (a)	80,700		2,991,549
ViaSat, Inc. (a)	100		1,914
			8,737,268
Computers & Peripherals - 0.5%
ActivCard Corp. (a)	273,800		2,157,544
Ambit Microsystems Corp.	2,575,000		6,786,293
Applied Films Corp. (a)	100		3,302
Avid Technology, Inc. (a)	100		4,800
Compal Electronics, Inc.	1,000		1,369

	Shares		Value (Note 1)
Drexler Technology Corp. (a)	256,926		$ 3,512,178
EMC Corp. (a)	6,300		81,396
iCAD, Inc. (a)	100		528
Lexmark International, Inc. Class A (a)	100		7,864
M-Systems Flash Disk Pioneers Ltd. (a)	900		15,552
Moser-Baer India Ltd.	200		1,503
Network Appliance, Inc. (a)	100		2,053
Overland Storage, Inc. (a)	100		1,880
Psion PLC (a)	100		149
SanDisk Corp. (a)	100		6,114
Stratasys, Inc. (a)	150		4,089
Synaptics, Inc. (a)	100		1,498
			12,588,112
Electronic Equipment & Instruments - 5.3%
Anritsu Corp. (a)	1,087,000		7,289,238
Brightpoint, Inc. (a)	150		2,588
CDW Corp.	71,400		4,124,064
CellStar Corp. (a)	100		1,263
Cognex Corp.	100		2,824
Excel Technology, Inc. (a)	100		3,286
Fargo Electronics, Inc. (a)	100		1,272
Flir Systems, Inc. (a)	115,745		4,224,693
Global Imaging Systems, Inc. (a)	100		3,175
Hon Hai Precision Industries Co. Ltd.	4,757,000		18,700,221
I. D. Systems Inc. (a)	100		685
Identix, Inc. (a)	100		445
INFICON Holding AG (a)	100		8,465
Itron, Inc. (a)	100		1,836
Landauer, Inc.	100		4,078
Lexar Media, Inc. (a)	100		1,743
LoJack Corp. (a)	100		806
Metrologic Instruments, Inc. (a)	200		5,400
Mettler-Toledo International, Inc. (a)	173,000		7,302,330
MOCON, Inc.	100		810
MTS Systems Corp.	100		1,923
Nam Tai Electronics, Inc.	5,630		158,090
National Instruments Corp.	100		4,547
ScanSource, Inc. (a)	100		4,562
Symbol Technologies, Inc.	3,312,400		55,946,436
Trimble Navigation Ltd. (a)	100		3,724
Universal Display Corp. (a)	100		1,367
Varian, Inc. (a)	100		4,173
Viisage Technology, Inc. (a)	100		360
Waters Corp. (a)	978,720		32,454,355
			130,258,759
Internet Software & Services - 0.1%
Aquantive, Inc. (a)	100		1,025
Ariba, Inc. (a)	100		300
AsiaInfo Holdings, Inc. (a)	100		668
Ask Jeeves, Inc. (a)	100		1,812
Autobytel, Inc. (a)	100		908
CNET Networks, Inc. (a)	100		682
Digital Impact, Inc. (a)	100		288
Common Stocks - continued
	Shares		Value (Note 1)
INFORMATION TECHNOLOGY - continued
Internet Software & Services - continued
Digital Insight Corp. (a)	10		$ 249
Digital River, Inc. (a)	100		2,210
Dwango Co. Ltd.	1		8,760
EarthLink, Inc. (a)	100		1,000
FreeMarkets, Inc. (a)	100		669
Internet Commerce Corp. Class A (a)	100		110
iPass, Inc.	100		1,603
ITXC Corp. (a)	10		43
j2 Global Communications, Inc. (a)	200		4,954
LookSmart Ltd. (a)	100		155
Netease.com, Inc. sponsored ADR (a)	100		3,690
NetRatings, Inc. (a)	10		114
NIC, Inc. (a)	10		80
PEC Solutions, Inc. (a)	100		1,695
Quovadx, Inc. (a)	10		49
Raindance Communications, Inc. (a)	10		28
Retek, Inc. (a)	100		928
Sina Corp. (a)	100		3,375
Sohu.com, Inc. (a)	39,000		1,170,390
Supportsoft, Inc. (a)	147,910		1,945,017
United Online, Inc. (a)	150		2,519
ValueClick, Inc. (a)	100		908
Websense, Inc. (a)	100		2,924
Yahoo!, Inc. (a)	100		4,517
			3,161,670
IT Services - 0.9%
Affiliated Computer Services, Inc. Class A (a)	214,500		11,681,670
Alliance Data Systems Corp. (a)	100		2,768
Anteon International Corp. (a)	100		3,605
CACI International, Inc. Class A (a)	300		14,586
Certegy, Inc.	86,000		2,820,800
CheckFree Corp. (a)	100		2,765
Cognizant Technology Solutions Corp. Class A (a)	300		13,692
Concord EFS, Inc. (a)	100		1,484
DST Systems, Inc. (a)	85,200		3,557,952
Hewitt Associates, Inc. Class A (a)	100		2,990
iGate Corp. (a)	100		785
Infosys Technologies Ltd. sponsored ADR	100		9,570
infoUSA, Inc. (a)	100		742
InteliData Technologies Corp. (a)	100		165
Intrado, Inc. (a)	100		2,195
Mastek Ltd.	492,375		3,597,440
Maximus, Inc. (a)	100		3,913
Paychex, Inc.	100		3,720
Satyam Computer Services Ltd.	100		805
SRA International, Inc. Class A (a)	200		8,620
SunGard Data Systems, Inc. (a)	200		5,542
Syntel, Inc.	100		2,471
The BISYS Group, Inc. (a)	100		1,488

	Shares		Value (Note 1)
Total System Services, Inc.	100		$ 3,113
Tyler Technologies, Inc. (a)	100		963
			21,743,844
Office Electronics - 0.6%
Zebra Technologies Corp. Class A (a)	230,850		15,321,515
Semiconductors & Semiconductor Equipment - 0.2%
Agere Systems, Inc. Class A (a)	100		305
Analog Devices, Inc.	100		4,565
ARM Holdings PLC sponsored ADR (a)	100		690
ASM Pacific Technology Ltd.	500		2,190
ATI Technologies, Inc. (a)	100		1,502
Broadcom Corp. Class A (a)	100		3,409
Cabot Microelectronics Corp. (a)	60,100		2,944,900
Hi/fn, Inc. (a)	8		95
International Rectifier Corp. (a)	100		4,941
Intersil Corp. Class A	57,000		1,416,450
KLA-Tencor Corp. (a)	100		5,867
Lam Research Corp. (a)	100		3,230
Linear Technology Corp.	100		4,207
Marvell Technology Group Ltd. (a)	200		7,586
Micrel, Inc. (a)	100		1,558
Microchip Technology, Inc.	100		3,336
Novellus Systems, Inc. (a)	100		4,205
NVIDIA Corp. (a)	5,000		116,250
Omnivision Technologies, Inc. (a)	200		11,050
PLX Technology, Inc. (a)	100		885
RF Micro Devices, Inc. (a)	100		1,005
Silicon Image, Inc. (a)	100		723
Standard Microsystems Corp. (a)	100		2,530
Tundra Semiconductor Corp. Ltd. (a)	100		2,078
Zoran Corp. (a)	100		1,739
			4,545,296
Software - 0.9%
Activision, Inc. (a)	150		2,730
Adobe Systems, Inc.	100		3,930
Ansys, Inc. (a)	100		3,970
Barra, Inc.	100		3,549
BEA Systems, Inc. (a)	100		1,230
Borland Software Corp. (a)	100		973
Business Objects SA sponsored ADR (a)	100		3,467
Cadence Design Systems, Inc. (a)	100		1,798
Check Point Software Technologies Ltd. (a)	100		1,682
Citrix Systems, Inc. (a)	100		2,121
Cognos, Inc. (a)	100		3,054
Concur Technologies, Inc. (a)	113,000		1,093,840
Dassault Systemes SA sponsored ADR	100		4,590
Digimarc Corp. (a)	100		1,330
Electronic Arts, Inc. (a)	153,200		7,319,896
EPIQ Systems, Inc. (a)	100		1,713
Evolving Systems, Inc. (a)	100		1,330
FactSet Research Systems, Inc.	100		3,821
Hudson Soft Co. Ltd.	100		1,092
Common Stocks - continued
	Shares		Value (Note 1)
INFORMATION TECHNOLOGY - continued
Software - continued
Insignia Systems, Inc. (a)	100		$ 262
Intuit, Inc. (a)	100		5,291
KFX, Inc. (a)	65,600		495,280
Kronos, Inc. (a)	150		5,942
Macrovision Corp. (a)	66,400		1,499,976
Magma Design Automation, Inc. (a)	100		2,334
Manhattan Associates, Inc. (a)	100		2,764
Mercury Interactive Corp. (a)	100		4,864
Merge Technologies, Inc. (a)	100		1,764
Network Associates, Inc. (a)	100		1,504
PeopleSoft, Inc. (a)	100		2,280
Plato Learning, Inc. (a)	77,400		816,570
Quality Systems, Inc. (a)	100		4,459
Quest Software, Inc. (a)	100		1,420
Red Hat, Inc. (a)	100		1,877
Renaissance Learning, Inc. (a)	203,870		4,909,190
Roxio, Inc. (a)	100		479
RSA Security, Inc. (a)	100		1,420
ScanSoft, Inc. (a)	100		532
Secure Computing Corp. (a)	125,700		2,251,287
Symantec Corp. (a)	200		6,930
Synopsys, Inc. (a)	100		3,376
TALX Corp.	100		2,303
Trend Micro, Inc. sponsored ADR (a)	100		2,630
Vastera, Inc. (a)	776,799		3,107,196
WatchGuard Technologies, Inc. (a)	10		58
Wind River Systems, Inc. (a)	100		876
			21,588,980
TOTAL INFORMATION TECHNOLOGY			217,945,444
MATERIALS - 22.7%
Chemicals - 0.8%
American Vanguard Corp.	100		3,727
Balchem Corp.	100		2,280
BOC Group PLC	100		1,524
Ecolab, Inc.	383,600		10,499,132
Headwaters, Inc. (a)	100		1,962
International Flavors & Fragrances, Inc.	100		3,492
Minerals Technologies, Inc.	41,800		2,476,650
Novozymes AS Series B	18,800		684,769
Potash Corp. of Saskatchewan	100		8,652
Praxair, Inc.	200		7,640
Quaker Chemical Corp.	100		3,075
Sigma Aldrich Corp.	100		5,718
Sinopec Shanghai Petrochemical Co. Ltd.:
(H Shares)	2,000		889
sponsored ADR	110,100		5,093,226
Spartech Corp.	100		2,464

	Shares		Value (Note 1)
Terra Nitrogen Co. LP	100		$ 496
Valspar Corp.	100		4,942
			18,800,638
Construction Materials - 0.0%
Anhui Conch Cement Co. Ltd. Class H	1,000,000		1,288,062
Cemex SA de CV sponsored ADR	100		2,620
Cheung Kong Infrastructure Holdings Ltd.	1,000		2,241
Florida Rock Industries, Inc.	100		5,485
James Hardie Industries NV	100		517
Vulcan Materials Co.	100		4,757
			1,303,682
Containers & Packaging - 0.0%
Aptargroup, Inc.	100		3,900
IPL, Inc. Class A	100		713
			4,613
Metals & Mining - 21.4%
Agnico-Eagle Mines Ltd.	1,180,230		14,220,625
Agnico-Eagle Mines Ltd. warrants 11/14/07 (a)	23,350		61,878
Alumina Ltd.	1,236,600		6,109,189
Apex Silver Mines Ltd. (a)	100		2,090
Arch Coal, Inc.	51,200		1,595,904
AUR Resources, Inc. (a)	3,187,800		16,587,766
Barrick Gold Corp.	100		2,259
BHP Steel Ltd.	1,037,200		4,367,566
China Steel Corp.	3,698,000		3,070,777
Commercial Metals Co.	100		3,040
Compania de Minas Buenaventura SA sponsored ADR	1,405,000		39,733,400
CONSOL Energy, Inc.	292,800		7,583,520
Freeport-McMoRan Copper & Gold, Inc. Class B	1,194,200		50,311,646
Glamis Gold Ltd. (a)	94,100		1,616,210
Goldcorp, Inc.	50,000		794,789
Golden Star Resources Ltd. (a)	250,000		1,746,068
Harmony Gold Mining Co. Ltd.	1,049,100		17,012,009
High River Gold Mines Ltd. (a)	1,989,600		2,990,842
Inmet Mining Corp. (a)	658,400		8,856,830
International Steel Group, Inc. (a)	2,500		97,375
IPSCO, Inc.	1,165,900		21,615,707
JFE Holdings, Inc.	162,900		4,468,827
Kinross Gold Corp. (a)	3,698,666		29,425,095
Meridian Gold, Inc. (a)	3,540,900		51,672,246
Newmont Mining Corp.	2,814,180		136,797,283
Nippon Steel Corp.	2,951,000		6,365,662
Nucor Corp.	333,700		18,687,200
Peabody Energy Corp.	39,600		1,651,716
Placer Dome, Inc.	100		1,786
POSCO sponsored ADR	16,500		560,505
Quanex Corp.	100		4,610
Schnitzer Steel Industries, Inc. Class A	100		6,050
Sons of Gwalia Ltd. ADR (a)	100		1,335
Common Stocks - continued
	Shares		Value (Note 1)
MATERIALS - continued
Metals & Mining - continued
Steel Dynamics, Inc. (a)	577,800		$ 13,572,522
Steel Technologies, Inc.	100		1,769
Stillwater Mining Co. (a)	700,300		6,701,871
Teck Cominco Ltd. Class B (sub. vtg.)	1,550,900		26,218,962
United States Steel Corp.	452,000		15,829,040
Usinas Siderurgicas de Minas Gerais SA (Usiminas) (PN-A)	351,000		4,121,200
WMC Resources Ltd. (a)	1,074,100		4,547,179
Xstrata PLC	155,900		1,753,763
			520,768,111
Paper & Forest Products - 0.5%
Aracruz Celulose SA sponsored ADR	100		3,504
Lee & Man Paper Manufacturing Ltd.	4,500,000		3,564,712
Sino-Forest Corp. Class A (sub. vtg.) (a)	2,043,700		8,129,426
			11,697,642
TOTAL MATERIALS			552,574,686
TELECOMMUNICATION SERVICES - 2.1%
Diversified Telecommunication Services - 0.8%
BCE, Inc.	100		2,228
Covad Communications Group, Inc. (a)	1,615,200		5,814,720
General Communications, Inc. Class A (a)	100		870
Golden Telecom, Inc. (a)	114,800		3,185,700
Hungarian Telephone & Cable Corp. (a)	100		986
Matav Rt. sponsored ADR	100		1,871
Philippine Long Distance Telephone Co. (a)	100		1,746
Philippine Long Distance Telephone Co. sponsored ADR (a)	23,000		400,660
PT Telkomunikasi Indonesia Tbk sponsored ADR	565,900		9,292,078
Rostelecom sponsored ADR	100		1,252
Telefonica del Peru SA sponsored ADR	100		393
Warwick Valley Telephone Co.	300		8,877
			18,711,381
Wireless Telecommunication Services - 1.3%
Advanced Info Service PCL (For. Reg.)	100		215
America Movil SA de CV sponsored ADR	187,200		5,118,048
At Road, Inc. (a)	524,827		6,980,199
Boston Communications Group, Inc. (a)	100		929
Mobile TeleSystems OJSC sponsored ADR	51,800		4,289,040
MTN Group Ltd. (a)	1,625,000		6,909,468
Nextel Communications, Inc. Class A (a)	100		2,806
Nextel Partners, Inc. Class A (a)	100		1,345
NII Holdings, Inc. Class B (a)	118,900		8,873,507

	Shares		Value (Note 1)
Telephone & Data Systems, Inc.	100		$ 6,255
Vimpel Communications sponsored ADR (a)	100		7,350
			32,189,162
TOTAL TELECOMMUNICATION SERVICES			50,900,543
UTILITIES - 2.2%
Electric Utilities - 0.2%
Ameren Corp.	100		4,600
Black Hills Corp.	100		2,983
Cinergy Corp.	100		3,881
Empire District Electric Co.	100		2,193
FPL Group, Inc.	100		6,542
Otter Tail Corp.	100		2,673
PPL Corp.	100		4,375
Wisconsin Energy Corp.	109,500		3,662,775
			3,690,022
Gas Utilities - 1.3%
KeySpan Corp.	498,700		18,352,160
Southwestern Energy Co. (a)	567,200		13,556,080
			31,908,240
Multi-Utilities & Unregulated Power - 0.7%
Energy East Corp.	100		2,240
Equitable Resources, Inc.	137,600		5,905,792
Public Service Enterprise Group, Inc.	100		4,380
Questar Corp.	5,600		196,840
Sierra Pacific Resources (a)	1,574,202		11,554,643
			17,663,895
TOTAL UTILITIES			53,262,157
TOTAL COMMON STOCKS (Cost $1,746,053,597)		2,359,227,440
Money Market Funds - 8.0%
	Shares		Value (Note 1)
Fidelity Cash Central Fund, 1.07% (b)	120,496,229		$ 120,496,229
Fidelity Securities Lending Cash Central Fund, 1.09% (b)	74,639,803		74,639,803
TOTAL MONEY MARKET FUNDS (Cost $195,136,032)		195,136,032
TOTAL INVESTMENT PORTFOLIO - 104.8% (Cost $1,941,189,629)			2,554,363,472
NET OTHER ASSETS - (4.8)%			(118,130,570)
NET ASSETS - 100%		$ 2,436,232,902

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $1,346,102,981 and $812,756,440, respectively.

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

United States of America	74.0%
Canada	10.5%
Japan	2.9%
Cayman Islands	2.3%
Netherlands	1.8%
Peru	1.6%
Taiwan	1.1%
South Africa	1.0%
Others (individually less than 1%)	4.8%
	100.0%

Transactions during the period with companies which are or were affiliates are as follows:

Affiliate	Purchase Cost	Sales Cost	Dividend Income	Value
Bright Horizons Family Solutions, Inc.	$ 948,299	$ -	$ -	$ 28,782,600
Drexler Technology Corp.	4,314,828	7,087,239	-	-
Harvard Bioscience, Inc.	3,124,014	-	-	24,939,580
TOTALS	$ 8,387,141	$ 7,087,239	$ -	$ 53,722,180

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $127,019,000 of which $26,601,000 and $100,418,000 will expire on December 31, 2009 and 2010, respectively.

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

Mid Cap Portfolio

Fidelity Variable Insurance Products: Mid Cap Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003
Assets
Investment in securities, at value (including securities loaned of $71,513,615) (cost $1,941,189,629) - See accompanying schedule		$ 2,554,363,472
Foreign currency held at value (cost $221,076)		221,562
Receivable for investments sold		253,008
Receivable for fund shares sold		4,211,212
Dividends receivable		929,002
Interest receivable		96,529
Prepaid expenses		10,632
Other receivables		223,302
Total assets		2,560,308,719

Liabilities
Payable to custodian bank	$ 90,935
Payable for investments purchased	42,834,335
Payable for fund shares redeemed	4,497,598
Accrued management fee	1,119,712
Distribution fees payable	281,147
Other affiliated payables	175,463
Other payables and accrued expenses	436,824
Collateral on securities loaned, at value	74,639,803
Total liabilities		124,075,817
Net Assets		$ 2,436,232,902
Net Assets consist of:
Paid in capital		$ 1,954,001,002
Undistributed net investment income		76,412
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(130,685,298)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		612,840,786
Net Assets		$ 2,436,232,902
Initial Class: Net Asset Value, offering price and redemption price per share ($678,479,712 ÷ 28,085,774 shares)		$ 24.16
Service Class: Net Asset Value, offering price and redemption price per share ($580,179,200 ÷ 24,077,057 shares)		$ 24.10
Service Class 2: Net Asset Value, offering price and redemption price per share ($1,177,573,990 ÷ 49,114,767 shares)		$ 23.98

Statement of Operations

	Year ended December 31, 2003
Investment Income
Dividends		$ 8,156,287
Interest		1,682,720
Security lending		1,107,677
Total income		10,946,684

Expenses
Management fee	$ 9,876,195
Transfer agent fees	1,193,037
Distribution fees	2,322,333
Accounting and security lending fees	387,360
Non-interested trustees' compensation	6,625
Custodian fees and expenses	148,211
Audit	34,735
Legal	7,989
Miscellaneous	356,244
Total expenses before reductions	14,332,729
Expense reductions	(422,778)	13,909,951
Net investment income (loss)		(2,963,267)
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities (Net of foreign taxes of $23,455, including realized gain (loss) of ($1,657,190) on sales of affiliated issuers)	30,189,715
Foreign currency transactions	(39,777)
Futures contracts	61,870
Total net realized gain (loss)		30,211,808
Change in net unrealized appreciation (depreciation) on: Investment securities (Net of deferred foreign taxes of $336,495)	575,217,151
Assets and liabilities in foreign currencies	2,087
Futures contracts	4,181
Total change in net unrealized appreciation (depreciation)		575,223,419
Net gain (loss)		605,435,227
Net increase (decrease) in net assets resulting from operations		$ 602,471,960

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

Annual Report

Fidelity Variable Insurance Products: Mid Cap Portfolio
Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ (2,963,267)	$ 5,367,275
Net realized gain (loss)	30,211,808	(100,092,133)
Change in net unrealized appreciation (depreciation)	575,223,419	(54,350,719)
Net increase (decrease) in net assets resulting from operations	602,471,960	(149,075,577)
Distributions to shareholders from net investment income	(5,082,393)	(10,315,464)
Share transactions - net increase (decrease)	440,089,337	406,189,773
Total increase (decrease) in net assets	1,037,478,904	246,798,732

Net Assets
Beginning of period	1,398,753,998	1,151,955,266
End of period (including undistributed net investment income of $76,412 and undistributed net investment income of $4,928,520, respectively)	$ 2,436,232,902	$ 1,398,753,998

Other Information
Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	4,434,612	4,691,539	24,537,608
Reinvested	131,528	76,717	95,288
Redeemed	(5,011,471)	(2,353,097)	(5,472,778)
Net increase (decrease)	(445,331)	2,415,159	19,160,118

Dollars Sold	$ 95,795,053	$ 94,175,028	$ 482,784,357
Reinvested	2,207,036	1,285,007	1,590,350
Redeemed	(89,867,137)	(43,168,976)	(104,711,381)
Net increase (decrease)	$ 8,134,952	$ 52,291,059	$ 379,663,326
Share Transactions	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	7,049,981	6,655,084	22,666,360
Reinvested	277,413	161,340	101,720
Redeemed	(8,136,461)	(3,917,197)	(3,604,685)
Net increase (decrease)	(809,067)	2,899,227	19,163,395
Dollars Sold	$ 134,875,925	$ 125,174,947	$ 416,253,061
Reinvested	5,301,369	3,078,362	1,935,732
Redeemed	(145,105,795)	(70,148,866)	(65,174,962)
Net increase (decrease)	$ (4,928,501)	$ 58,104,443	$ 353,013,831
Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 2,207,036	$ 1,285,007	$ 1,590,350
From net realized gain	-	-	-
Total	$ 2,207,036	$ 1,285,007	$ 1,590,350
	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 5,301,369	$ 3,078,362	$ 1,935,733
From net realized gain	-	-	-
Total	$ 5,301,369	$ 3,078,362	$ 1,935,733

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

Mid Cap Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 17.51	$ 19.60	$ 20.26	$ 15.25	$ 10.31
Income from Investment Operations
Net investment income (loss)^C	(.01)	.09	.20	.19	-^E
Net realized and unrealized gain (loss)	6.74	(2.00)	(.86)	4.95	5.05
Total from investment operations	6.73	(1.91)	(.66)	5.14	5.05
Distributions from net investment income	(.08)	(.18)	-	(.08)	-
Distributions from net realized gain	-	-	-	-	(.09)
Distributions in excess of net realized gain	-	-	-	(.05)	(.02)
Total distributions	(.08)	(.18)	-	(.13)	(.11)
Net asset value, end of period	$ 24.16	$ 17.51	$ 19.60	$ 20.26	$ 15.25
Total Return^A,B	38.64%	(9.82)%	(3.26)%	33.78%	49.04%
Ratios to Average Net Assets^D
Expenses before expense reductions	.70%	.70%	.69%	.74%	3.34%
Expenses net of voluntary waivers, if any	.70%	.70%	.69%	.74%	1.00%
Expenses net of all reductions	.68%	.63%	.62%	.69%	.97%
Net investment income (loss)	(.04)%	.51%	1.06%	1.01%	.01%
Supplemental Data
Net assets, end of period (000 omitted)	$ 678,480	$ 499,557	$ 574,934	$ 589,026	$ 1,744
Portfolio turnover rate	51%	135%	144%	245%	163%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

^EAmount represents less than $.01 per share.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 17.46	$ 19.54	$ 20.22	$ 15.24	$ 10.31
Income from Investment Operations
Net investment income (loss)^C	(.03)	.08	.18	.17	(.01)
Net realized and unrealized gain (loss)	6.73	(2.00)	(.86)	4.93	5.05
Total from investment operations	6.70	(1.92)	(.68)	5.10	5.04
Distributions from net investment income	(.06)	(.16)	-	(.07)	-
Distributions from net realized gain	-	-	-	-	(.09)
Distributions in excess of net realized gain	-	-	-	(.05)	(.02)
Total distributions	(.06)	(.16)	-	(.12)	(.11)
Net asset value, end of period	$ 24.10	$ 17.46	$ 19.54	$ 20.22	$ 15.24
Total Return^A,B	38.52%	(9.90)%	(3.36) %	33.54%	48.94%
Ratios to Average Net Assets^D
Expenses before expense reductions	.80%	.80%	.79%	.84%	3.41%
Expenses net of voluntary waivers, if any	.80%	.80%	.79%	.84%	1.10%
Expenses net of all reductions	.78%	.73%	.72%	.79%	1.07%
Net investment income (loss)	(.14)%	.41%	.96%	.92%	(.09)%
Supplemental Data
Net assets, end of period (000 omitted)	$ 580,179	$ 378,264	$ 366,665	$ 282,941	$ 25,908
Portfolio turnover rate	51%	135%	144%	245%	163%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 17.39	$ 19.49	$ 20.20	$ 14.82
Income from Investment Operations
Net investment income (loss)^E	(.06)	.05	.15	.14
Net realized and unrealized gain (loss)	6.70	(1.99)	(.86)	5.35
Total from investment operations	6.64	(1.94)	(.71)	5.49
Distributions from net investment income	(.05)	(.16)	-	(.06)
Distributions in excess of net realized gain	-	-	-	(.05)
Total distributions	(.05)	(.16)	-	(.11)
Net asset value, end of period	$ 23.98	$ 17.39	$ 19.49	$ 20.20
Total Return^B,C,D	38.31%	(10.02)%	(3.51)%	37.12%
Ratios to Average Net Assets^G
Expenses before expense reductions	.95%	.95%	.94%	.99%^A
Expenses net of voluntary waivers, if any	.95%	.95%	.94%	.99%^A
Expenses net of all reductions	.93%	.88%	.88%	.94%^A
Net investment income (loss)	(.29)%	.25%	.81%	.76%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 1,177,574	$ 520,933	$ 210,356	$ 73,039
Portfolio turnover rate	51%	135%	144%	245%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period January 12, 2000 (commencement of operations) to December 31, 2000.

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

Mid Cap Portfolio

Notes to Financial Statements

For the period ended December 31, 2003

1. Significant Accounting Policies.

Mid Cap Portfolio (the fund) is a fund of Variable Insurance Products Fund III (the trust) (referred to in this report as Fidelity Variable Insurance Products: Mid Cap Portfolio) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The fund offers the following classes of shares: Initial Class shares, Service Class shares and Service Class 2 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent and temporary book and tax differences. These adjustments have no impact on net assets or the results of operations. Temporary differences will reverse in a subsequent period. These differences are primarily due to futures transactions, foreign currency transactions, passive foreign investment companies (PFIC), net operating losses, capital loss carryforwards and losses deferred due to wash sales.

Annual Report

Notes to Financial Statements - continued

1. Significant Accounting Policies - continued

The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:

Unrealized appreciation	$ 636,837,158	\|
Unrealized depreciation	(27,585,955)
Net unrealized appreciation (depreciation)	609,251,203
Capital loss carryforward	(127,019,315)

Cost for federal income tax purposes	$ 1,945,112,269

The tax character of distributions paid was as follows:

	December 31, 2003	December 31, 2002
Ordinary Income	$ 5,082,393	$ 10,315,464

2. Operating Policies.

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% 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 annual management fee rate was .58% of the fund's average net assets.

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

Service Class	$ 432,418	\|
Service Class 2	1,889,915
	$ 2,322,333

Mid Cap Portfolio

4. Fees and Other Transactions with Affiliates - continued

For the period, the total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class	$ 354,798	\|
Service Class	302,125
Service Class 2	536,114
	$ 1,193,037

5. Committed Line of Credit.

6. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. 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. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.

7. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of the fund provided services to the fund in addition to trade execution. These services included payments of certain expenses on behalf of the fund totaling $418,696 for the period. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody expenses by $4,082.

8. Other Information.

At the end of the period, FMR or its affiliates were the owners of record of 23% of the total outstanding shares of the fund and two unaffiliated shareholders were the owners of record of 45% of the total outstanding shares of the fund.

9. Transactions with Affiliated Companies.

An affiliated company is a company which the fund has ownership of at least 5% of the voting securities. Information regarding transactions with affiliated companies is included in "Other Information" at the end of the fund's Schedule of Investments.

Annual Report

Report of Independent Auditors

To the Trustees of Variable Insurance Products Fund III and the Shareholders of Mid Cap Portfolio:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Mid Cap Portfolio (a fund of Variable Insurance Products Fund III) at December 31, 2003 and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Mid Cap Portfolio's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Boston, Massachusetts

February 13, 2004

Annual Report

Trustees and Officers

The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-221-5207.

Interested Trustees*:

Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Edward C. Johnson 3d (73)**
	Year of Election or Appointment: 1994 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc.
Abigail P. Johnson (42)**
	Year of Election or Appointment: 2001 Senior Vice President of VIP Mid Cap (2001). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds.
Laura B. Cronin (49)
	Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002).
Robert L. Reynolds (51)
	Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000).

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trusts or various entities under common control with FMR.

** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.

Annual Report

Non-Interested Trustees

Name, Age; Principal Occupation
J. Michael Cook (61)
	Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), Rockwell Automation (2000), and The Dow Chemical Company (2000). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Board of the Directorship Search Group, Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater.
Ralph F. Cox (71)
	Year of Election or Appointment: 1994 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin.
Robert M. Gates (60)
	Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), and Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001). He also serves as a member of the Advisory Board of VoteHere.net (secure internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy.
George H. Heilmeier (67)
	Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002) and Compaq (1994-2002).
Donald J. Kirk (71)
	Year of Election or Appointment: 1994 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations).
Marie L. Knowles (57)
	Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing), URS Corporation (multidisciplinary engineering, 1999), and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (59)
	Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Chairman and as a Director (1998) of Acterna Corporation (communications test equipment). He is also Co-Chairman of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Eaton Corporation (diversified industrial) and the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations.
Marvin L. Mann (70)
	Year of Election or Appointment: 1994 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals) where he served as CEO until April 1998 and retired as Chairman May 1999, and remains a member of the Board. Prior to 1991, he held the positions of Vice President of International Business Machines Corporation (IBM) and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Board member of Imation Corp. (imaging and information storage) and Acterna Corporation (communications test equipment, 1999). He is also a member of the Director Services Committee of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama.
William O. McCoy (70)
	Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), Progress Energy, Inc. (electric utility), and Acterna Corporation (communications test equipment, 1999). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998).
William S. Stavropoulos (64)
	Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman of the Board, President and CEO (2002), and Chairman of the Executive Committee (2000) and a Director of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000) and Chief Executive Officer (1995-2000). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council, World Business Council for Sustainable Development, and the University of Notre Dame Advisory Council for the College of Science.

Annual Report

Advisory Board Members and Executive Officers:

Name, Age; Principal Occupation
Peter S. Lynch (60)
	Year of Election or Appointment: 2003 Member of the Advisory Board of Variable Insurance Products Fund III. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity^® Magellan^® Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
Cornelia M. Small (59)
	Year of Election or Appointment: 2004 Member of the Advisory Board of Variable Insurance Products Fund III. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors (1998-1999) of Scudder Kemper Investments. In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
John B. McDowell (45)
	Year of Election or Appointment: 2002 Vice President of VIP Mid Cap. Mr. McDowell also serves as Vice President of certain Equity Funds (2002). He is Senior Vice President of FMR (1999), FMR Co., Inc. (2001), and Fidelity Management Trust Company (FMTC). Since joining Fidelity Investments in 1985, Mr. McDowell has worked as a research analyst and manager.
Eric D. Roiter (55)
	Year of Election or Appointment: 1998 Secretary of VIP Mid Cap. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003).
Stuart Fross (44)
	Year of Election or Appointment: 2003 Assistant Secretary of VIP Mid Cap. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR.
Maria F. Dwyer (45)
	Year of Election or Appointment: 2002 President and Treasurer of VIP Mid Cap. Ms. Dwyer also serves as President and Treasurer of other Fidelity funds (2002) and is a Vice President (1999) and an employee (1996) of FMR.
Timothy F. Hayes (53)
	Year of Election or Appointment: 2002 Chief Financial Officer of VIP Mid Cap. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998).
John R. Hebble (45)
	Year of Election or Appointment: 2003 Deputy Treasurer of VIP Mid Cap. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003).
John H. Costello (57)
	Year of Election or Appointment: 1998 Assistant Treasurer of VIP Mid Cap. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Francis V. Knox, Jr. (56)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Mid Cap. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002).
Mark Osterheld (48)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Mid Cap. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Thomas J. Simpson (45)
	Year of Election or Appointment: 2000 Assistant Treasurer of VIP Mid Cap. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995).

Annual Report

Distributions

A percentage of the dividends distributed during the fiscal year for the following classes qualifies for the dividends-received deduction for corporate shareholders:

Initial Class	100%
Service Class	100%
Service Class 2	100%

The fund will notify shareholders in January 2004 of amounts for use in preparing 2003 income tax returns.

Annual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Far East) Inc.

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors (U.K.) Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Shareholder Servicing Agent

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA

Custodian

Brown Brothers Harriman & Co.
Boston, MA

VIPMID-ANN-0204
1.735273.104

Fidelity® Variable Insurance Products:

Value Strategies Portfolio

Annual Report

December 31, 2003

(2_fidelity_logos) (Registered_Trademark)

Performance	<Click Here>	How the fund has done over time.
Management's Discussion	<Click Here>	The manager's review of fund performance, strategy and outlook.
Investment Summary	<Click Here>	A summary of the fund's investments at period end.
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.
Auditors' Opinion	<Click Here>
Trustees and Officers	<Click Here>
Distributions	<Click Here>

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

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

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

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

(Recycle graphic) This report is printed on recycled paper using soy-based inks.

Neither the fund nor Fidelity Distributors Corporation is a bank.

Value Strategies Portfolio

Fidelity Variable Insurance Products: Value Strategies Portfolio

Performance: The Bottom Line

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Life of fund ^A
Fidelity VIP: Value Strategies - Initial Class	57.91%	12.70%
Fidelity VIP: Value Strategies - Service Class^B	57.79%	12.58%
Fidelity VIP: Value Strategies - Service Class 2^C	57.36%	12.80%

^A From February 20, 2002.

^BPerformance for Service Class shares reflects an asset-based service fee (12b-1 fee).

^CPerformance for Service Class 2 shares reflects an asset-based service fee (12b-1 fee).

$10,000 Over Life of Fund

Let's say hypothetically that $10,000 was invested in Fidelity® Variable Insurance Products: Value Strategies Portfolio - Initial Class on February 20, 2002, when the fund started. The chart shows how the value of your investment would have changed, and also shows how the Russell Midcap® Value Index did over the same period.

Annual Report

Fidelity Variable Insurance Products: Value Strategies Portfolio

Management's Discussion of Fund Performance

Comments from Harris Leviton, Portfolio Manager of Fidelity® Variable Insurance Products: Value Strategies Portfolio

For the 12 months ending December 31, 2003, Fidelity Variable Insurance Products: Value Strategies Portfolio easily topped the 38.07% return for the Russell® Midcap Value Index and the 35.40% return for the Lipper^SM Variable Annuity Mid-Cap Funds Average. Good stock picking and overweightings in the information technology, consumer discretionary and industrials sectors contributed significantly to the fund's performance relative to its index. Many small- and mid-cap tech holdings - such as chip manufacturer Advanced Micro Devices, communications equipment maker Terayon and software firm Retek - became top contributors when the economic environment improved. Several homebuilding stocks - including Beazer Homes and Lennar - also performed well as demand for newly constructed homes remained strong. By contrast, video game stocks Nintendo, Take-Two Interactive and THQ were among the biggest detractors, as the industry generally suffered from weaker-than-expected sales during the 2002 holiday season. In addition, Jones Apparel Group was hurt by lower 2004 profit expectations when the company resolved a licensing dispute with Polo Ralph Lauren by ending production of its Lauren women's clothing line.

Annual Report

Fidelity Variable Insurance Products: Value Strategies Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Tyco International Ltd.	4.8
Take-Two Interactive Software, Inc.	3.8
WMS Industries, Inc.	3.3
ACE Ltd.	2.8
Beazer Homes USA, Inc.	2.8
	17.5
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Information Technology	40.3
Consumer Discretionary	27.0
Industrials	12.6
Financials	9.6
Consumer Staples	2.9

Asset Allocation as of December 31, 2003
% of fund's net assets *
	Stocks	96.8%
	Bonds	0.7%
	Short-Term Investments and Net Other Assets	2.5%

* Foreign investments 13.5%

Annual Report

Fidelity Variable Insurance Products: Value Strategies Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 96.7%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 26.7%
Auto Components - 2.3%
Aftermarket Technology Corp. (a)	500		$ 6,860
American Axle & Manufacturing Holdings, Inc. (a)	169,000		6,830,980
ArvinMeritor, Inc.	22,500		542,700
Dura Automotive Systems, Inc. Class A (a)	35,100		448,227
Lear Corp.	23,600		1,447,388
			9,276,155
Automobiles - 3.1%
DaimlerChrysler AG (Reg.)	41,500		1,918,130
Ford Motor Co.	218,200		3,491,200
Nissan Motor Co. Ltd.	644,500		7,237,735
			12,647,065
Hotels, Restaurants & Leisure - 6.3%
AFC Enterprises, Inc. (a)	178,100		3,472,950
Ameristar Casinos, Inc. (a)	107,400		2,628,078
Buffalo Wild Wings, Inc.	900		23,355
Isle of Capri Casinos, Inc. (a)	35,200		755,744
Jack in the Box, Inc. (a)	255,200		5,451,072
Mikohn Gaming Corp. (a)	15,800		71,100
WMS Industries, Inc. (a)	512,400		13,424,880
			25,827,179
Household Durables - 7.9%
Beazer Homes USA, Inc.	117,093		11,435,302
Cavco Industries, Inc. (a)	475		11,400
Centex Corp.	22,300		2,400,595
D.R. Horton, Inc.	97,950		4,237,317
Jarden Corp. (a)	44,650		1,220,731
Lennar Corp.:
Class A	72,300		6,940,800
Class B	5,620		513,668
Libbey, Inc.	27,000		768,960
M/I Schottenstein Homes, Inc.	1,800		70,290
Maytag Corp.	51,600		1,437,060
Whirlpool Corp.	50,200		3,647,030
			32,683,153
Specialty Retail - 3.6%
American Eagle Outfitters, Inc. (a)	266,400		4,368,960
Big Dog Holdings, Inc. (a)	4,300		16,039
Borders Group, Inc.	298,300		6,538,736
Circuit City Stores, Inc.	334,000		3,383,420
Wet Seal, Inc. Class A (a)	42,100		416,369
			14,723,524

	Shares		Value (Note 1)
Textiles Apparel & Luxury Goods - 3.5%
Jones Apparel Group, Inc.	272,300		$ 9,593,129
Maxwell Shoe Co., Inc. Class A (a)	293,750		4,984,938
			14,578,067
TOTAL CONSUMER DISCRETIONARY			109,735,143
CONSUMER STAPLES - 2.9%
Food & Staples Retailing - 1.4%
Koninklijke Ahold NV sponsored ADR	124,500		966,120
Safeway, Inc. (a)	216,000		4,732,560
			5,698,680
Food Products - 1.0%
Campbell Soup Co.	72,600		1,945,680
Fresh Del Monte Produce, Inc.	54,500		1,298,735
Tyson Foods, Inc. Class A	54,200		717,608
			3,962,023
Household Products - 0.2%
WD-40 Co.	20,000		707,200
Personal Products - 0.3%
Nu Skin Enterprises, Inc. Class A	83,000		1,418,470
TOTAL CONSUMER STAPLES			11,786,373
FINANCIALS - 9.6%
Insurance - 7.8%
ACE Ltd.	278,300		11,527,186
Allstate Corp.	85,100		3,661,002
American Equity Investment Life Holding Co.	318,400		3,174,448
AmerUs Group Co.	32,200		1,126,034
Everest Re Group Ltd.	10,600		896,760
Infinity Property & Casualty Corp.	43,600		1,440,980
MetLife, Inc.	160,300		5,397,301
Montpelier Re Holdings Ltd.	1,200		44,040
Safety Insurance Group, Inc.	41,500		710,065
Travelers Property Casualty Corp. Class A	226,900		3,807,382
			31,785,198
Thrifts & Mortgage Finance - 1.8%
BankAtlantic Bancorp, Inc. Class A (non-vtg.)	78,800		1,497,200
Sovereign Bancorp, Inc.	253,400		6,018,250
			7,515,450
TOTAL FINANCIALS			39,300,648
HEALTH CARE - 1.5%
Health Care Equipment & Supplies - 0.6%
Baxter International, Inc.	6,300		192,276
Sola International, Inc. (a)	113,900		2,141,320
			2,333,596
Common Stocks - continued
	Shares		Value (Note 1)
HEALTH CARE - continued
Health Care Providers & Services - 0.4%
HealthSouth Corp. (a)	297,700		$ 1,366,443
Laboratory Corp. of America Holdings (a)	5,000		184,750
			1,551,193
Pharmaceuticals - 0.5%
King Pharmaceuticals, Inc. (a)	48,800		744,688
Pain Therapeutics, Inc. (a)	225,600		1,567,920
			2,312,608
TOTAL HEALTH CARE			6,197,397
INDUSTRIALS - 12.6%
Building Products - 0.5%
NCI Building Systems, Inc. (a)	6,900		164,910
York International Corp.	54,400		2,001,920
			2,166,830
Commercial Services & Supplies - 2.8%
Central Parking Corp.	130,900		1,954,337
Hall Kinion & Associates, Inc. (a)	153,900		777,195
Hudson Highland Group, Inc. (a)	16,667		397,508
Labor Ready, Inc. (a)	47,200		618,320
Monster Worldwide, Inc. (a)	218,200		4,791,672
Vedior NV (Certificaten Van Aandelen)	196,558		3,065,904
			11,604,936
Construction & Engineering - 1.2%
Chicago Bridge & Iron Co. NV	89,100		2,574,990
Granite Construction, Inc.	100,200		2,353,698
			4,928,688
Electrical Equipment - 0.0%
TB Wood's Corp.	1,000		8,200
Industrial Conglomerates - 4.8%
Tyco International Ltd.	741,300		19,644,450
Machinery - 3.1%
Columbus McKinnon Corp. (a)	33,300		288,045
EnPro Industries, Inc. (a)	40		558
Milacron, Inc.	40,300		168,051
Navistar International Corp. (a)	187,100		8,960,219
Timken Co.	168,400		3,378,104
			12,794,977
Road & Rail - 0.2%
Genesee & Wyoming, Inc. Class A (a)	17,400		548,100
TOTAL INDUSTRIALS			51,696,181
INFORMATION TECHNOLOGY - 39.9%
Communications Equipment - 7.0%
ADC Telecommunications, Inc. (a)	1,367,300		4,060,881
AudioCodes Ltd. (a)	166,000		1,733,040
Cable Design Technologies Corp. (a)	305,800		2,749,142

	Shares		Value (Note 1)
Endwave Corp. (a)	15,200		$ 112,480
Enterasys Networks, Inc. (a)	425,700		1,596,375
Marconi Corp. PLC (a)	214,822		2,270,830
NMS Communications Corp. (a)	290,000		1,809,600
Performance Technologies, Inc. (a)	266,800		3,801,900
Telefonaktiebolaget LM Ericsson ADR (a)	262,780		4,651,206
Terayon Communication Systems, Inc. (a)	1,271,500		5,721,750
Turnstone Systems, Inc.	185,400		21,321
			28,528,525
Computers & Peripherals - 3.7%
EMC Corp. (a)	837,670		10,822,696
PalmOne, Inc. (a)	379,600		4,460,300
			15,282,996
Electronic Equipment & Instruments - 1.1%
Agilysys, Inc.	45,500		507,325
AVX Corp.	101,700		1,690,254
RadiSys Corp. (a)	13,300		224,238
Richardson Electronics Ltd.	43,300		532,157
Solectron Corp. (a)	240,000		1,418,400
			4,372,374
Internet Software & Services - 6.5%
Ariba, Inc. (a)	580,873		1,742,619
Art Technology Group, Inc. (a)	356,400		545,292
Interwoven, Inc. (a)	217,775		2,752,676
ITXC Corp. (a)	15,100		65,232
Kana Software, Inc. (a)	235,500		793,635
Keynote Systems, Inc. (a)	165,000		1,963,500
Primus Knowledge Solutions, Inc. (a)	138,700		872,423
Retek, Inc. (a)	301,500		2,797,920
Selectica, Inc. (a)	305,300		1,306,684
SonicWALL, Inc. (a)	558,500		4,356,300
Vignette Corp. (a)	4,245,800		9,637,966
			26,834,247
Semiconductors & Semiconductor Equipment - 9.4%
Advanced Micro Devices, Inc. (a)	665,700		9,918,930
Agere Systems, Inc. Class A (a)	660,000		2,013,000
Applied Micro Circuits Corp. (a)	589,100		3,522,818
ASM International NV (Nasdaq) (a)	62,200		1,258,928
ASML Holding NV (NY Shares) (a)	171,900		3,446,595
Atmel Corp. (a)	768,000		4,615,680
Chartered Semiconductor Manufacturing Ltd. ADR (a)	52,200		525,654
Conexant Systems, Inc. (a)	114,600		569,562
Hi/fn, Inc. (a)	222,600		2,648,940
Integrated Device Technology, Inc. (a)	39,700		681,649
Mindspeed Technologies, Inc. (a)	39,733		272,171
MIPS Technologies, Inc. (a)	164,100		893,525
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR (a)	463,359		4,744,796
Common Stocks - continued
	Shares		Value (Note 1)
INFORMATION TECHNOLOGY - continued
Semiconductors & Semiconductor Equipment - continued
Transwitch Corp. (a)	557,800		$ 1,282,940
United Microelectronics Corp. sponsored ADR (a)	480,663		2,379,282
			38,774,470
Software - 12.2%
Activision, Inc. (a)	153,550		2,794,610
Actuate Corp. (a)	844,700		2,627,017
Aspen Technology, Inc. (a)	150,500		1,544,130
Atari, Inc. (a)	425,300		1,786,260
BindView Development Corp. (a)	311,200		1,173,224
i2 Technologies, Inc. (a)	2,236,200		3,712,092
Midway Games, Inc. (a)	32,600		126,488
Nintendo Co. Ltd.	41,500		3,892,196
Open Solutions, Inc.	42,800		751,996
PalmSource, Inc. (a)	16,600		361,714
Siebel Systems, Inc. (a)	327,300		4,539,651
Take-Two Interactive Software, Inc. (a)	540,900		15,583,329
THQ, Inc. (a)	570,000		9,638,700
Ulticom, Inc. (a)	172,500		1,664,625
			50,196,032
TOTAL INFORMATION TECHNOLOGY			163,988,644
MATERIALS - 2.5%
Chemicals - 0.7%
Celanese AG	41,500		1,688,635
Eastman Chemical Co.	3,600		142,308
FMC Corp. (a)	11,100		378,843
Millennium Chemicals, Inc.	35,900		455,212
			2,664,998
Construction Materials - 1.5%
Centex Construction Products, Inc.	15,500		934,185
Martin Marietta Materials, Inc.	17,100		803,187
Texas Industries, Inc.	89,600		3,315,200
U.S. Concrete, Inc. (a)	168,100		1,084,245
			6,136,817
Containers & Packaging - 0.1%
Owens-Illinois, Inc. (a)	38,300		455,387
Metals & Mining - 0.2%
Steel Dynamics, Inc. (a)	37,700		885,573
TOTAL MATERIALS			10,142,775
TELECOMMUNICATION SERVICES - 0.8%
Diversified Telecommunication Services - 0.6%
Covad Communications Group, Inc. (a)	210,000		756,000

	Shares		Value (Note 1)
Qwest Communications International, Inc. (a)	326,000		$ 1,408,320
Time Warner Telecom, Inc. Class A (a)	41,100		416,343
			2,580,663
Wireless Telecommunication Services - 0.2%
Telesystem International Wireless, Inc. (a)	107,400		898,312
TOTAL TELECOMMUNICATION SERVICES			3,478,975
UTILITIES - 0.2%
Electric Utilities - 0.0%
PG&E Corp. (a)	11,100		308,247
Multi-Utilities & Unregulated Power - 0.2%
Sierra Pacific Resources (a)	99,600		731,064
TOTAL UTILITIES			1,039,311
TOTAL COMMON STOCKS (Cost $337,454,780)		397,365,447
Convertible Preferred Stocks - 0.1%

UTILITIES - 0.1%
Electric Utilities - 0.1%
TXU Corp. 8.125% PRIDES	14,800		498,582
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $451,862)		498,582

Convertible Bonds - 0.7%
	Principal Amount
CONSUMER DISCRETIONARY - 0.3%
Hotels, Restaurants & Leisure - 0.3%
WMS Industries, Inc. 2.75% 7/15/10 (c)	$ 780,000		1,197,300
HEALTH CARE - 0.0%
Biotechnology - 0.0%
Alexion Pharmaceuticals, Inc. 5.75% 3/15/07	200,000		184,000
INDUSTRIALS - 0.0%
Aerospace & Defense - 0.0%
SPACEHAB, Inc. 8% 10/15/07	10,000		8,300
INFORMATION TECHNOLOGY - 0.4%
Communications Equipment - 0.4%
Natural MicroSystems Corp. 5% 10/15/05	920,000		857,900
Terayon Communication Systems, Inc. 5% 8/1/07	720,000		648,000
			1,505,900
Convertible Bonds - continued
	Principal Amount		Value (Note1)
Electronic Equipment & Instruments - 0.0%
Richardson Electronics Ltd. 8.25% 6/15/06	$ 8,000		$ 7,840
TOTAL INFORMATION TECHNOLOGY			1,513,740
TOTAL CONVERTIBLE BONDS (Cost $2,172,780)		2,903,340

Money Market Funds - 3.1%
	Shares
Fidelity Securities Lending Cash Central Fund, 1.09% (b) (Cost $12,732,425)	12,732,425	12,732,425
Cash Equivalents - 6.8%
	Maturity Amount
Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 0.81%, dated 12/31/03 due 1/2/04) (Cost $27,758,000)	$ 27,759,244	27,758,000

TOTAL INVESTMENT PORTFOLIO - 107.4%

(Cost $380,569,847)

441,257,794

NET OTHER ASSETS - (7.4)%

(30,246,702)

NET ASSETS - 100%

$ 411,011,092

Security Type Abbreviation
PRIDES	-	Preferred Redeemable Increased Dividend Equity Securities

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $1,197,300 or 0.3% of net assets.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $351,071,993 and $72,690,526, respectively.

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

United States of America	86.5%
Bermuda	3.0
Japan	2.8
Netherlands	2.6
Taiwan	1.8
Sweden	1.1
Others (individually less than 1%)	2.2
	100.0%

Income Tax Information

The fund hereby designates approximately $157,000 as a capital gain dividend for the purpose of the dividend paid deduction.

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

Value Strategies Portfolio

Fidelity Variable Insurance Products: Value Strategies Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (including securities loaned of $12,354,995 and repurchase agreements of $27,758,000) (cost $380,569,847) - See accompanying schedule		$ 441,257,794
Cash		44
Receivable for investments sold		192,201
Receivable for fund shares sold		6,744,427
Dividends receivable		112,238
Interest receivable		39,167
Prepaid expenses		1,052
Other receivables		32,151
Total assets		448,379,074

Liabilities
Payable for investments purchased	$ 23,911,355
Payable for fund shares redeemed	450,460
Accrued management fee	172,445
Distribution fees payable	39,935
Other affiliated payables	33,487
Other payables and accrued expenses	27,875
Collateral on securities loaned, at value	12,732,425
Total liabilities		37,367,982
Net Assets		$ 411,011,092
Net Assets consist of:
Paid in capital		$ 351,558,068
Undistributed net investment income		128,153
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(1,361,412)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		60,686,283
Net Assets		$ 411,011,092
Initial Class: Net Asset Value, offering price and redemption price per share ($161,704,799 ÷ 13,029,899 shares)		$ 12.41
Service Class: Net Asset Value, offering price and redemption price per share ($83,145,985 ÷ 6,712,891 shares)		$ 12.39
Service Class 2: Net Asset Value, offering price and redemption price per share ($166,160,308 ÷ 13,344,090 shares)		$ 12.45

Statement of Operations

	Year ended December 31, 2003

Investment Income
Dividends		$ 870,655
Interest		259,449
Security lending		34,316
Total income		1,164,420

Expenses
Management fee	$ 891,689
Transfer agent fees	114,217
Distribution fees	280,926
Accounting and security lending fees	74,964
Non-interested trustees' compensation	520
Custodian fees and expenses	29,608
Audit	32,418
Legal	462
Miscellaneous	12,125
Total expenses before reductions	1,436,929
Expense reductions	(49,465)	1,387,464
Net investment income (loss)		(223,044)
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	1,634,275
Foreign currency transactions	(2,102)
Total net realized gain (loss)		1,632,173
Change in net unrealized appreciation (depreciation) on: Investment securities	63,506,825
Assets and liabilities in foreign currencies	(1,804)
Total change in net unrealized appreciation (depreciation)		63,505,021
Net gain (loss)		65,137,194
Net increase (decrease) in net assets resulting from operations		$ 64,914,150

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

Annual Report

Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	February 20, 2002 (commencement of operations) to December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ (223,044)	$ (11,920)
Net realized gain (loss)	1,632,173	(442,711)
Change in net unrealized appreciation (depreciation)	63,505,021	(2,818,738)
Net increase (decrease) in net assets resulting from operations	64,914,150	(3,273,369)
Distributions to shareholders from net realized gain	(2,216,760)	-
Share transactions - net increase (decrease)	293,844,002	57,743,069
Total increase (decrease) in net assets	356,541,392	54,469,700

Net Assets
Beginning of period	54,469,700	-
End of period (including undistributed net investment income of $128,153 and undistributed net investment income of $18,306, respectively)	$ 411,011,092	$ 54,469,700

Other Information: Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	13,024,673	15,243,169	10,088,331
Reinvested	76,091	40,651	62,471
Redeemed	(221,515)	(9,807,881)	(2,282,005)
Net increase (decrease)	12,879,249	5,475,939	7,868,797

Dollars Sold	$ 159,105,532	$ 160,018,555	$ 101,065,362
Reinvested	940,484	501,633	774,643
Redeemed	(2,714,031)	(102,413,068)	(23,435,108)
Net increase (decrease)	$ 157,331,985	$ 58,107,120	$ 78,404,897

Share Transactions	February 20, 2002 (commencement of operations) to December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	150,919	2,908,629	5,628,326
Redeemed	(269)	(1,671,677)	(153,033)
Net increase (decrease)	150,650	1,236,952	5,475,293

Dollars Sold	$ 1,507,905	$ 25,196,970	$ 46,032,283
Redeemed	(2,188)	(13,786,884)	(1,205,017)
Net increase (decrease)	$ 1,505,717	$ 11,410,086	$ 44,827,266

Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net realized gain	$ 940,484	$ 501,633	$ 774,643

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

Value Strategies Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002^F
Selected Per-Share Data
Net asset value, beginning of period	$ 7.91	$ 10.00
Income from Investment Operations
Net investment income (loss)^E	-^H	.01
Net realized and unrealized gain (loss)	4.58	(2.10)
Total from investment operations	4.58	(2.09)
Distributions from net realized gain	(.08)	-
Net asset value, end of period	$ 12.41	$ 7.91
Total Return^B,C,D	57.91%	(20.90)%
Ratios to Average Net Assets^G
Expenses before expense reductions	.76%	1.43%^A
Expenses net of voluntary waivers, if any	.76%	1.00%^A
Expenses net of all reductions	.73%	.95%^A
Net investment income (loss)	.02%	.13%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 161,705	$ 1,191
Portfolio turnover rate	47%	65%^A

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period February 20, 2002 (commencement of operations) to December 31, 2002.

^H Amount represents less than $.01 per share.

Financial Highlights - Service Class

Years ended December 31,	2003	2002^F
Selected Per-Share Data
Net asset value, beginning of period	$ 7.90	$ 10.00
Income from Investment Operations
Net investment income (loss)^E	(.01)	-^H
Net realized and unrealized gain (loss)	4.58	(2.10)
Total from investment operations	4.57	(2.10)
Distributions from net realized gain	(.08)	-
Net asset value, end of period	$ 12.39	$ 7.90
Total Return^B,C,D	57.79%	(21.00)%
Ratios to Average Net Assets^G
Expenses before expense reductions	.84%	1.52%^A
Expenses net of voluntary waivers, if any	.84%	1.10%^A
Expenses net of all reductions	.81%	1.05%^A
Net investment income (loss)	(.06)%	.03%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 83,146	$ 9,774
Portfolio turnover rate	47%	65%^A

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period February 20, 2002 (commencement of operations) to December 31, 2002.

^H Amount represents less than $.01 per share.

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

Annual Report

Financial Statements - continued

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002^F
Selected Per-Share Data
Net asset value, beginning of period	$ 7.95	$ 10.00
Income from Investment Operations
Net investment income (loss)^E	(.02)	(.01)
Net realized and unrealized gain (loss)	4.58	(2.04)
Total from investment operations	4.56	(2.05)
Distributions from net realized gain	(.06)	-
Net asset value, end of period	$ 12.45	$ 7.95
Total Return^B,C,D	57.36%	(20.50)%
Ratios to Average Net Assets^G
Expenses before expense reductions	.99%	1.68%^A
Expenses net of voluntary waivers, if any	.99%	1.25%^A
Expenses net of all reductions	.96%	1.21%^A
Net investment income (loss)	(.21)%	(.12)%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 166,160	$ 43,505
Portfolio turnover rate	47%	65%^A

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period February 20, 2002 (commencement of operations) to December 31, 2002.

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

Value Strategies Portfolio

Notes to Financial Statements

For the period ended December 31, 2003

1. Significant Accounting Policies.

Value Strategies Portfolio (the fund) is a fund of Variable Insurance Products Fund III (the trust) (referred to in this report as Fidelity Variable Insurance Products: Value Strategies Portfolio) and is authorized to issue an unlimited number of shares. The trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The fund offers the following classes of shares: Initial Class shares, Service Class shares and Service Class 2 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.

Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. Debt securities for which quotations are readily available are valued at their most recent bid prices (sales prices if the principal market is an exchange) in the principal market in which such securities are normally traded, as determined by recognized dealers in such securities, or securities are valued on the basis of information provided by a pricing service. Pricing services use valuation matrices that incorporate both dealer-supplied valuations and valuation models. If an event that is expected to materially affect the value of a security occurs after the close of an exchange or market on which that security trades, but prior to the NAV calculation, then that security will be fair valued taking the event into account. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.

Expenses. Most expenses of the trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.

Annual Report

Notes to Financial Statements - continued

1. Significant Accounting Policies - continued

Income Tax Information and Distributions to Shareholders - continued

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Capital accounts within the financial statements are adjusted for permanent and temporary book and tax differences. These adjustments have no impact on net assets or the results of operations. Temporary differences will reverse in a subsequent period. These differences are primarily due to foreign currency transactions, market discount and losses deferred due to wash sales.

The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows:

Unrealized appreciation	$ 68,747,969	\|
Unrealized depreciation	(10,499,113)
Net unrealized appreciation (depreciation)	58,248,856
Undistributed ordinary income	586,866
Undistributed long-term capital gain	617,304

Cost for federal income tax purposes	$ 383,008,938

The tax character of distributions paid was as follows:

	December 31, 2003	December 31, 2002
Ordinary Income	$ 2,059,984	$ -
Long-term Capital Gains	156,776	-
Total	$ 2,216,760	$ -

2. Operating Policies.

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the fund's average net assets and a group fee rate that averaged .28% 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 annual management fee rate was .58% of the fund's average net assets.

Value Strategies Portfolio

4. Fees and Other Transactions with Affiliates - continued

Distribution and Service Plan - continued

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

Service Class	$ 39,634	\|
Service Class 2	241,292
	$ 280,926

For the period, the total transfer agent fees paid by each class to FIIOC, including out of pocket expenses, were as follows:

Initial Class	$ 16,217	\|
Service Class	28,163
Service Class 2	69,837
	$ 114,217

5. Committed Line of Credit.

6. Security Lending.

The fund lends portfolio securities from time to time in order to earn additional income. 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. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on the fund's Statement of Assets and Liabilities.

7. Expense Reductions.

8. Other Information.

At the end of the period, FMR or its affiliates were the owners of record of 39% of the total outstanding shares of the fund and two unaffiliated shareholders were the owners of record of 55% of the total outstanding shares of the fund.

Annual Report

Independent Auditors' Report

To the Trustees of Variable Insurance Products Fund III and Shareholders of Value Strategies Portfolio:

We have audited the accompanying statement of assets and liabilities of Value Strategies Portfolio (the Fund), a fund of Variable Insurance Products Fund III, including the portfolio of investments, as of December 31, 2003, and the related statement of operations for the year then ended, and the statement of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Value Strategies Portfolio as of December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 18, 2004

Annual Report

Trustees and Officers

The fund's Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-221-5207.

Interested Trustees*:

Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Edward C. Johnson 3d (73)**
	Year of Election or Appointment: 1994 Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc.
Abigail P. Johnson (42)**
	Year of Election or Appointment: 2001 Senior Vice President of VIP Value Strategies (2002). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds.
Laura B. Cronin (49)
	Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002).
Robert L. Reynolds (51)
	Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000).

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trust or various entities under common control with FMR.

** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.

Annual Report

Non-Interested Trustees:

Name, Age; Principal Occupation
J. Michael Cook (61)
	Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), Rockwell Automation (2000) and The Dow Chemical Company (2000). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Board of the Directorship Search Group, Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater.
Ralph F. Cox (71)
	Year of Election or Appointment: 1994 Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin.
Robert M. Gates (60)
	Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), and Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001). He also serves as a member of the Advisory Board of VoteHere.net (secure internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy.
George H. Heilmeier (67)
	Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002) and Compaq (1994-2002).
Donald J. Kirk (71)
	Year of Election or Appointment: 1994 Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations).
Marie L. Knowles (57)
	Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing), URS Corporation (multidisciplinary engineering, 1999), and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (59)
	Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Chairman and as a Director (1998) of Acterna Corporation (communications test equipment). He is also Co-Chairman of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Eaton Corporation (diversified industrial) and the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations.
Marvin L. Mann (70)
	Year of Election or Appointment: 1994 Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals) where he served as CEO until April 1998 and retired as Chairman May 1999, and remains a member of the Board. Prior to 1991, he held the positions of Vice President of International Business Machines Corporation (IBM) and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Board member of Imation Corp. (imaging and information storage) and Acterna Corporation (communications test equipment, 1999). He is also a member of the Director Services Committee of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama.
William O. McCoy (70)
	Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), Progress Energy, Inc. (electric utility), and Acterna Corporation (communications test equipment, 1999). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998).
William S. Stavropoulos (64)
	Year of Election or Appointment: 2002 Mr. Stavropoulos is Chairman of the Board, President and CEO (2002), and Chairman of the Executive Committee (2000) and a Director of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000) and Chief Executive Officer (1995-2000). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council, World Business Council for Sustainable Development, and the University of Notre Dame Advisory Council for the College of Science.

Annual Report

Advisory Board Members and Executive Officers:

Name, Age; Principal Occupation
Peter S. Lynch (60)
	Year of Election or Appointment: 2003 Member of the Advisory Board of Variable Insurance Products Fund III. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity® Magellan® Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
Cornelia M. Small (59)
	Year of Election or Appointment: 2004 Member of the Advisory Board of Variable Insurance Products Fund III. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors (1998-1999) of Scudder Kemper Investments. In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
John B. McDowell (45)
	Year of Election or Appointment: 2002 Vice President of VIP Value Strategies. Mr. McDowell also serves as Vice President of certain Equity Funds (2002). He is Senior Vice President of FMR (1999), FMR Co., Inc. (2001), and Fidelity Management Trust Company (FMTC). Since joining Fidelity Investments in 1985, Mr. McDowell has worked as a research analyst and manager.
Harris B. Leviton (42)
	Year of Election or Appointment: 2002 Vice President of VIP Value Strategies and another fund advised by FMR. Prior to assuming his current responsibilities, Mr. Leviton managed a variety of Fidelity funds.
Eric D. Roiter (55)
	Year of Election or Appointment: 2002 Secretary of VIP Value Strategies. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003).
Stuart Fross (44)
	Year of Election or Appointment: 2003 Assistant Secretary of VIP Value Strategies. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR.
Maria F. Dwyer (45)
	Year of Election or Appointment: 2002 President and Treasurer of VIP Value Strategies. Ms. Dwyer also serves as President and Treasurer of other Fidelity funds (2002) and is a Vice President (1999) and an employee (1996) of FMR.
Timothy F. Hayes (53)
	Year of Election or Appointment: 2002 Chief Financial Officer of VIP Value Strategies. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998).
John R. Hebble (45)
	Year of Election or Appointment: 2003 Deputy Treasurer of VIP Value Strategies. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003).
John H. Costello (57)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Value Strategies. Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Francis V. Knox, Jr. (56)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Value Strategies. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002).
Mark Osterheld (48)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Value Strategies. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Thomas J. Simpson (45)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Value Strategies. Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995).

Annual Report

Distributions

The Board of Trustees of Value Strategies Portfolio voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities:

Fund	Pay Date	Record Date	Capital Gains
Initial Class	02/13/04	02/13/04	$.031
Service Class	02/13/04	02/13/04	$.031
Service Class 2	02/13/04	02/13/04	$.031

The fund will notify shareholders in January 2004 of amounts for use in preparing 2003 income tax returns.

Annual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.

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

Fidelity Management & Research (Far East) Inc.

Fidelity Investments Japan Limited

Fidelity International Investment Advisors

Fidelity International Investment Advisors
(U.K.) Limited

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Shareholder Servicing Agent

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA

Custodian

Mellon Bank, N.A.
Pittsburgh, PA

VIPVS-ANN-0204
1.781994.101

Fidelity® Variable Insurance Products

Asset Manager: Growth® Portfolio

Balanced Portfolio

Growth & Income Portfolio

Growth Opportunities Portfolio

Investment Grade Bond Portfolio

Mid Cap Portfolio

Money Market Portfolio

Annual Report

December 31, 2003

(2_fidelity_logos) (Registered_Trademark)

Asset Manager: Growth Portfolio	4 5 6 7 20	Performance Management's Discussion Investment Summary Investments Financial Statements
Balanced Portfolio	24 25 26 27 40	Performance Management's Discussion Investment Summary Investments Financial Statements
Growth & Income Portfolio	44 45 46 47 49	Performance Management's Discussion Investment Summary Investments Financial Statements
Growth Opportunities Portfolio	53 54 55 56 60	Performance Management's Discussion Investment Summary Investments Financial Statements
Investment Grade Bond Portfolio	64 65 66 67 74	Performance Management's Discussion Investment Summary Investments Financial Statements
Mid Cap Portfolio	78 79 80 81 93	Performance Management's Discussion Investment Summary Investments Financial Statements
Money Market Portfolio	97 98 102	Performance Investments Financial Statements
Notes to Financial Statements	106	Notes to the Financial Statements
Auditors' Opinion	113
Trustees and Officers	117
Distributions	123

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

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

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

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

(Recycle graphic) This report is printed on recycled paper using soy-based inks.

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

Mutual fund shares are not deposits or obligations of, or guaranteed by, any depository institution. Shares are not insured by the FDIC,
Federal Reserve Board or any other agency, and are subject to investment risks, including possible loss of principal amount invested.

Neither the funds nor Fidelity Distributors Corporation is a bank.

Annual Report

Fidelity Variable Insurance Products: Asset Manager: Growth Portfolio

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. Performance numbers are net of all underlying fund operating expenses, but do not include any insurance charges imposed by your insurance company's separate account. If performance information included the effect of these additional charges, the total returns would be lower. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Life of fund ^A
Fidelity VIP: Asset Mgr: Growth - Initial Class	23.34%	-0.54%	8.67%
Fidelity VIP: Asset Mgr: Growth - Service Class ^B	23.15%	-0.65%	8.56%
Fidelity VIP: Asset Mgr: Growth - Service Class 2 ^C	23.03%	-0.78%	8.48%

^A From January 3, 1995

^CThe initial offering of Service Class 2 shares took place on January 12, 2000. Performance for Service Class 2 shares reflects an asset-based service fee (12b-1 fee). Returns from November 3, 1997 to January 12, 2000 are those of Service Class which reflect a different 12b-1 fee. Service Class 2 returns prior to November 3, 1997 are those of Initial Class and do not include the effects of a 12b-1 fee. Had Service Class 2's 12b-1 fee been reflected, returns prior to January 12, 2000 would have been lower.

$10,000 Over Life of Fund

Let's say hypothetically that $10,000 was invested in Fidelity® Variable Insurance Products: Asset Manager: Growth® Portfolio - Initial Class on January 3, 1995. The chart shows how the value of your investment would have changed, and also shows how the S&P® Index did over the same period.

Annual Report

Fidelity Variable Insurance Products: Asset Manager: Growth Portfolio

Management's Discussion of Fund Performance

Comments from Richard Habermann and Ford O'Neil, Co-Managers of Fidelity® Variable Insurance Products: Asset Manager: Growth Portfolio

During the past year, the fund easily outpaced both the Fidelity Asset Manager: Growth Composite Index, which rose 20.80%, and the Lipper^SM Variable Annuity Flexible Portfolio Funds Average, which returned 18.05%. Our asset allocation decisions largely drove the fund's results. After underweighting equities early in 2003 as they retreated, we shifted to an overweighting during the spring and added to it somewhat during the summer as stocks bounced higher. Having increased our emphasis on high-yield securities during the fall of 2002 further boosted returns as that market rebounded sharply in 2003. The fund's above-average weighting in cash, however, detracted a bit. Despite gaining more than 26%, the fund's equities trailed the S&P 500® mainly due to overweighting lagging health care stocks, including drug distributor Cardinal Health and major drug makers such as Merck. Shying away from top-performing tech stocks such as Intel also hurt. Conversely, our aggressive positioning in financials contributed, led by sizable positions in such capital-markets-sensitive stocks as Merrill Lynch and Morgan Stanley. Avoiding poor-performing stable-growth consumer staples such as Wal-Mart, a big holding of the S&P®, also contributed to the fund's performance relative to the composite index. In fixed-income, the fund benefited mainly from a focus on beaten-down corporate bonds that staged big recoveries, with its high-yield and investment-grade holdings soundly beating the Lehman Brothers Aggregate Bond Index. The strategic cash portion of the fund topped its benchmark as well.

Annual Report

Fidelity Variable Insurance Products: Asset Manager: Growth Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Cardinal Health, Inc.	4.1
American International Group, Inc.	3.9
Clear Channel Communications, Inc.	3.7
Johnson & Johnson	2.9
Citigroup, Inc.	2.9
	17.5

Top Five Market Sectors as of December 31, 2003
(stocks only)	% of fund's net assets
Financials	16.0
Health Care	13.8
Consumer Discretionary	8.7
Information Technology	6.9
Consumer Staples	6.3

Asset Allocation as of December 31, 2003
% of fund's net assets *
	Stocks and Equity Futures	70.9%
	Bonds	19.6%
	Short-Term Investments and Net Other Assets	9.5%

* Foreign investments

3.6%

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

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

Annual Report

Fidelity Variable Insurance Products: Asset Manager: Growth Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 66.0%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 8.7%
Hotels, Restaurants & Leisure - 0.2%
McDonald's Corp.	25,300		$ 628,199
Media - 5.3%
Clear Channel Communications, Inc.	277,200		12,981,276
McGraw-Hill Companies, Inc.	7,600		531,392
Time Warner, Inc. (a)	283,000		5,091,170
			18,603,838
Multiline Retail - 0.2%
Barneys, Inc. warrants 4/1/08 (a)	170		3,400
Kohl's Corp. (a)	16,400		737,016
			740,416
Specialty Retail - 2.9%
Home Depot, Inc.	264,000		9,369,360
Limited Brands, Inc.	19,500		351,585
Office Depot, Inc. (a)	5,400		90,234
Staples, Inc. (a)	13,800		376,740
			10,187,919
Textiles Apparel & Luxury Goods - 0.1%
NIKE, Inc. Class B	3,300		225,918
TOTAL CONSUMER DISCRETIONARY			30,386,290
CONSUMER STAPLES - 6.3%
Beverages - 1.7%
PepsiCo, Inc.	58,600		2,731,932
The Coca-Cola Co.	63,700		3,232,775
			5,964,707
Food & Staples Retailing - 1.8%
CVS Corp.	118,300		4,272,996
Safeway, Inc. (a)	90,200		1,976,282
			6,249,278
Food Products - 0.5%
Kraft Foods, Inc. Class A	10,500		338,310
Unilever NV (NY Shares)	23,900		1,551,110
			1,889,420
Household Products - 0.6%
Colgate-Palmolive Co.	4,100		205,205
Procter & Gamble Co.	17,100		1,707,948
			1,913,153
Personal Products - 0.8%
Alberto-Culver Co. Class B	44,900		2,832,292
Tobacco - 0.9%
Altria Group, Inc.	60,000		3,265,200
TOTAL CONSUMER STAPLES			22,114,050
ENERGY - 4.6%
Energy Equipment & Services - 2.3%
BJ Services Co. (a)	13,600		488,240
Cooper Cameron Corp. (a)	6,700		312,220

	Shares		Value (Note 1)
Diamond Offshore Drilling, Inc.	67,100		$ 1,376,221
ENSCO International, Inc.	49,200		1,336,764
GlobalSantaFe Corp.	70,100		1,740,583
Grant Prideco, Inc. (a)	10,700		139,314
Nabors Industries Ltd. (a)	12,100		502,150
Rowan Companies, Inc. (a)	13,000		301,210
Transocean, Inc. (a)	75,100		1,803,151
			7,999,853
Oil & Gas - 2.3%
ChevronTexaco Corp.	34,300		2,963,177
ConocoPhillips	60,523		3,968,493
Exxon Mobil Corp.	22,800		934,800
			7,866,470
TOTAL ENERGY			15,866,323
FINANCIALS - 16.0%
Capital Markets - 2.2%
Merrill Lynch & Co., Inc.	38,400		2,252,160
Morgan Stanley	93,500		5,410,845
			7,663,005
Commercial Banks - 1.8%
Bank of America Corp.	31,100		2,501,373
Bank One Corp.	51,200		2,334,208
Synovus Financial Corp.	22,800		659,376
Wachovia Corp.	15,337		714,551
			6,209,508
Diversified Financial Services - 2.9%
Citigroup, Inc.	203,600		9,882,744
Insurance - 6.3%
AFLAC, Inc.	36,200		1,309,716
Allmerica Financial Corp. (a)	31,800		978,486
AMBAC Financial Group, Inc.	13,000		902,070
American International Group, Inc.	207,000		13,719,960
China Life Insurance Co. Ltd. ADR (a)	1,000		32,970
Hartford Financial Services Group, Inc.	37,100		2,190,013
MBIA, Inc.	12,000		710,760
MetLife, Inc.	36,900		1,242,423
PartnerRe Ltd.	5,500		319,275
St. Paul Companies, Inc.	6,900		273,585
Travelers Property Casualty Corp. Class B	20,140		341,776
			22,021,034
Thrifts & Mortgage Finance - 2.8%
Fannie Mae	113,600		8,526,816
MGIC Investment Corp.	19,400		1,104,636
New York Community Bancorp, Inc.	5,500		209,275
			9,840,727
TOTAL FINANCIALS			55,617,018
Common Stocks - continued
	Shares		Value (Note 1)
HEALTH CARE - 13.8%
Health Care Equipment & Supplies - 1.0%
Baxter International, Inc.	115,600		$ 3,528,112
Health Care Providers & Services - 4.4%
Cardinal Health, Inc.	237,850		14,546,895
Fountain View, Inc. (k)	224		3,754
Medco Health Solutions, Inc. (a)	19,259		654,613
UnitedHealth Group, Inc.	5,300		308,354
			15,513,616
Pharmaceuticals - 8.4%
Johnson & Johnson	196,100		10,130,526
Merck & Co., Inc.	198,600		9,175,320
Pfizer, Inc.	102,500		3,621,325
Recordati Spa	5,813		112,790
Schering-Plough Corp.	82,753		1,439,075
Wyeth	112,100		4,758,645
			29,237,681
TOTAL HEALTH CARE			48,279,409
INDUSTRIALS - 4.3%
Aerospace & Defense - 0.4%
United Technologies Corp.	12,800		1,213,056
Commercial Services & Supplies - 0.3%
Aramark Corp. Class B	9,900		271,458
ChoicePoint, Inc. (a)	19,800		754,182
			1,025,640
Industrial Conglomerates - 3.0%
General Electric Co.	237,480		7,357,130
Tyco International Ltd.	122,700		3,251,550
			10,608,680
Machinery - 0.4%
Ingersoll-Rand Co. Ltd. Class A	22,300		1,513,724
Road & Rail - 0.2%
CSX Corp.	11,200		402,528
Union Pacific Corp.	2,900		201,492
			604,020
TOTAL INDUSTRIALS			14,965,120
INFORMATION TECHNOLOGY - 6.9%
Communications Equipment - 0.8%
Cisco Systems, Inc. (a)	23,086		560,759
Comverse Technology, Inc. (a)	48,500		853,115
Motorola, Inc.	88,120		1,239,848
			2,653,722
Computers & Peripherals - 1.3%
Dell, Inc. (a)	44,200		1,501,032
Hewlett-Packard Co.	108,300		2,487,651
Sun Microsystems, Inc. (a)	133,700		600,313
			4,588,996

	Shares		Value (Note 1)
Electronic Equipment & Instruments - 0.8%
Celestica, Inc. (sub. vtg.) (a)	21,800		$ 328,714
Flextronics International Ltd. (a)	34,300		509,012
Jabil Circuit, Inc. (a)	16,600		469,780
Sanmina-SCI Corp. (a)	36,400		459,004
Solectron Corp. (a)	126,900		749,979
Thermo Electron Corp. (a)	10,700		269,640
			2,786,129
IT Services - 0.6%
Affiliated Computer Services, Inc. Class A (a)	11,000		599,060
First Data Corp.	36,700		1,508,003
			2,107,063
Semiconductors & Semiconductor Equipment - 0.6%
Intel Corp.	14,000		450,800
KLA-Tencor Corp. (a)	2,200		129,074
Lam Research Corp. (a)	5,100		164,730
Linear Technology Corp.	3,100		130,417
Micron Technology, Inc. (a)	10,000		134,700
Novellus Systems, Inc. (a)	2,300		96,715
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR (a)	38,484		394,076
United Microelectronics Corp. sponsored ADR (a)	76,809		380,205
Xilinx, Inc. (a)	2,100		81,354
			1,962,071
Software - 2.8%
Microsoft Corp.	330,300		9,096,462
VERITAS Software Corp. (a)	21,300		791,508
			9,887,970
TOTAL INFORMATION TECHNOLOGY			23,985,951
MATERIALS - 0.6%
Chemicals - 0.2%
Dow Chemical Co.	19,900		827,243
Metals & Mining - 0.3%
Alcan, Inc.	16,500		770,432
Alcoa, Inc.	6,100		231,800
			1,002,232
Paper & Forest Products - 0.1%
Bowater, Inc.	4,100		189,871
International Paper Co.	3,200		137,952
			327,823
TOTAL MATERIALS			2,157,298
TELECOMMUNICATION SERVICES - 4.1%
Diversified Telecommunication Services - 3.8%
BellSouth Corp.	61,800		1,748,940
Ono Finance PLC rights 5/31/09 (a)(f)	310		3
Qwest Communications International, Inc. (a)	369,200		1,594,944
Common Stocks - continued
	Shares		Value (Note 1)
TELECOMMUNICATION SERVICES - continued
Diversified Telecommunication Services - continued
SBC Communications, Inc.	221,000		$ 5,761,470
Verizon Communications, Inc.	113,800		3,992,104
			13,097,461
Wireless Telecommunication Services - 0.3%
Nextel Communications, Inc. Class A (a)	37,700		1,057,862
TOTAL TELECOMMUNICATION SERVICES			14,155,323
UTILITIES - 0.7%
Electric Utilities - 0.7%
Allegheny Energy, Inc. (a)	15,400		196,504
FirstEnergy Corp.	26,900		946,880
PG&E Corp. (a)	24,600		683,142
TXU Corp.	11,100		263,292
Wisconsin Energy Corp.	8,200		274,290
			2,364,108
Gas Utilities - 0.0%
NiSource, Inc.	10,200		223,788
TOTAL UTILITIES			2,587,896
TOTAL COMMON STOCKS (Cost $208,536,437)		230,114,678
Preferred Stocks - 0.0%

Convertible Preferred Stocks - 0.0%
TELECOMMUNICATION SERVICES - 0.0%
Diversified Telecommunication Services - 0.0%
Cincinnati Bell, Inc. Series B, 6.75%	1,300		53,300
Nonconvertible Preferred Stocks - 0.0%
FINANCIALS - 0.0%
Insurance - 0.0%
American Annuity Group Capital Trust II 8.875% (a)	60		59,973
TELECOMMUNICATION SERVICES - 0.0%
Diversified Telecommunication Services - 0.0%
NTL Europe, Inc. Series A, 10.00%	11		88
TOTAL NONCONVERTIBLE PREFERRED STOCKS			60,061
TOTAL PREFERRED STOCKS (Cost $97,969)		113,361

Corporate Bonds - 14.1%
	Principal Amount		Value (Note 1)
Convertible Bonds - 0.6%
CONSUMER DISCRETIONARY - 0.1%
Specialty Retail - 0.1%
Gap, Inc. 5.75% 3/15/09 (f)	$ 180,000		277,238
FINANCIALS - 0.0%
Diversified Financial Services - 0.0%
IOS Capital LLC 5% 5/1/07 (f)	205,000		217,044
INDUSTRIALS - 0.3%
Industrial Conglomerates - 0.3%
Tyco International Group SA 3.125% 1/15/23	720,000		982,800
INFORMATION TECHNOLOGY - 0.2%
Communications Equipment - 0.2%
Brocade Communications Systems, Inc. 2% 1/1/07	290,000		258,448
CIENA Corp. 3.75% 2/1/08	430,000		392,375
			650,823
TOTAL CONVERTIBLE BONDS			2,127,905
Nonconvertible Bonds - 13.5%
CONSUMER DISCRETIONARY - 3.3%
Auto Components - 0.2%
DaimlerChrysler NA Holding Corp. 7.2% 9/1/09	50,000		55,839
Dana Corp.:
9% 8/15/11	95,000		112,338
10.125% 3/15/10	190,000		219,450
Keystone Automotive Operations, Inc. 9.75% 11/1/13 (f)	40,000		43,200
Lear Corp. 8.11% 5/15/09	40,000		46,300
Stoneridge, Inc. 11.5% 5/1/12	10,000		11,750
United Components, Inc. 9.375% 6/15/13	50,000		54,500
			543,377
Automobiles - 0.1%
Case New Holland, Inc. 9.25% 8/1/11 (f)	190,000		212,800
General Motors Corp.:
7.2% 1/15/11	125,000		137,436
8.25% 7/15/23	20,000		22,708
8.375% 7/15/33	25,000		29,020
			401,964
Hotels, Restaurants & Leisure - 1.0%
Bally Total Fitness Holding Corp.:
9.875% 10/15/07	75,000		67,688
10.5% 7/15/11	215,000		217,150
Domino's, Inc. 8.25% 7/1/11 (f)	70,000		75,600
Florida Panthers Holdings, Inc. 9.875% 4/15/09	250,000		266,250
Gaylord Entertainment Co. 8% 11/15/13 (f)	60,000		63,000
Herbst Gaming, Inc. 10.75% 9/1/08	60,000		67,500
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
CONSUMER DISCRETIONARY - continued
Hotels, Restaurants & Leisure - continued
Host Marriott LP 7.125% 11/1/13 (f)	$ 250,000		$ 256,250
Intrawest Corp. 7.5% 10/15/13 (f)	70,000		71,400
Mandalay Resort Group 6.5% 7/31/09	180,000		186,300
Morton's Restaurant Group, Inc. 7.5% 7/1/10 (f)	40,000		37,600
Penn National Gaming, Inc. 6.875% 12/1/11 (f)	190,000		188,575
Premier Parks, Inc. 9.75% 6/15/07	108,000		113,508
Six Flags, Inc.:
8.875% 2/1/10	75,000		76,969
9.625% 6/1/14 (f)	240,000		250,800
Starwood Hotels & Resorts Worldwide, Inc. 7.375% 5/1/07	265,000		284,875
Station Casinos, Inc. 8.375% 2/15/08	205,000		219,863
Sun International Hotels Ltd./Sun International North America, Inc. 8.875% 8/15/11	250,000		272,500
Tricon Global Restaurants, Inc. 8.875% 4/15/11	200,000		242,000
Waterford Gaming LLC/Waterford Gaming Finance Corp. 8.625% 9/15/12 (f)	60,000		63,450
Wheeling Island Gaming, Inc. 10.125% 12/15/09	90,000		96,750
Wynn Las Vegas LLC/ Wynn Las Vegas Capital Corp. 12% 11/1/10	290,000		342,200
			3,460,228
Household Durables - 0.1%
KB Home 8.625% 12/15/08	180,000		199,800
Simmons Co. 7.875% 1/15/14 (f)	40,000		40,200
Standard Pacific Corp. 9.25% 4/15/12	120,000		133,800
Telex Communications, Inc. 11.5% 10/15/08 (f)	60,000		63,600
WCI Communities, Inc. 7.875% 10/1/13 (f)	60,000		63,300
			500,700
Leisure Equipment & Products - 0.1%
The Hockey Co. 11.25% 4/15/09	175,000		200,375
Media - 1.6%
Advanstar Communications, Inc. 10.75% 8/15/10 (f)	70,000		75,775
AMC Entertainment, Inc. 9.5% 2/1/11	195,000		203,775
American Media Operations, Inc. 10.25% 5/1/09	20,000		21,250
AOL Time Warner, Inc. 7.625% 4/15/31	50,000		57,688
British Sky Broadcasting Group PLC (BSkyB) yankee 8.2% 7/15/09	110,000		130,956

	Principal Amount		Value (Note 1)
Charter Communications Holdings LLC/Charter Communications Holdings Capital Corp.:
0% 5/15/11 (d)	$ 180,000		$ 120,600
8.625% 4/1/09	335,000		288,100
10% 4/1/09	585,000		520,650
Clear Channel Communications, Inc. 7.65% 9/15/10	50,000		58,527
Comcast Corp. 7.05% 3/15/33	30,000		32,634
Corus Entertainment, Inc. 8.75% 3/1/12	260,000		286,000
Cox Communications, Inc. 7.125% 10/1/12	40,000		46,137
CSC Holdings, Inc.:
7.625% 4/1/11	465,000		483,600
7.625% 7/15/18	90,000		93,150
7.875% 2/15/18	35,000		36,925
9.875% 2/15/13	100,000		104,000
EchoStar DBS Corp.:
9.125% 1/15/09	259,000		290,080
10.375% 10/1/07	175,000		191,844
Entravision Communications Corp. 8.125% 3/15/09	275,000		293,563
LBI Media Holdings, Inc. 0% 10/15/13 (d)(f)	150,000		97,875
News America Holdings, Inc. 7.75% 12/1/45	50,000		59,117
Nextmedia Operating, Inc. 10.75% 7/1/11	100,000		113,750
PEI Holdings, Inc. 11% 3/15/10	165,000		191,400
PRIMEDIA, Inc. 7.625% 4/1/08	640,000		641,600
Radio One, Inc. 8.875% 7/1/11	335,000		368,500
Telewest PLC 11% 10/1/07 (c)	425,000		267,750
Videotron LTEE 6.875% 1/15/14 (f)	50,000		51,500
Vivendi Universal SA:
6.25% 7/15/08 (f)	90,000		94,950
9.25% 4/15/10	370,000		438,450
			5,660,146
Multiline Retail - 0.0%
Barneys, Inc. 9% 4/1/08	170,000		163,200
Specialty Retail - 0.2%
Asbury Automotive Group, Inc.:
8% 3/15/14 (f)	165,000		165,825
9% 6/15/12	20,000		21,200
Boise Cascade Corp.:
6.5% 11/1/10	100,000		104,000
7% 11/1/13	100,000		104,500
General Nutrition Centers, Inc. 8.5% 12/1/10 (f)	40,000		40,900
Hollywood Entertainment Corp. 9.625% 3/15/11	70,000		74,725
Reddy Ice Group, Inc. 8.875% 8/1/11 (f)	30,000		31,950
Sonic Automotive, Inc. 8.625% 8/15/13 (f)	90,000		95,400
			638,500
TOTAL CONSUMER DISCRETIONARY			11,568,490
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
CONSUMER STAPLES - 0.6%
Beverages - 0.0%
Miller Brewing Co. 5.5% 8/15/13 (f)	$ 45,000		$ 45,974
Food & Staples Retailing - 0.1%
Kroger Co. 6.8% 4/1/11	65,000		72,746
Neighborcare, Inc. 6.875% 11/15/13 (f)	130,000		132,600
Rite Aid Corp. 6.875% 8/15/13	70,000		66,500
			271,846
Food Products - 0.4%
Central Garden & Pet Co. 9.125% 2/1/13	50,000		55,375
Chiquita Brands International, Inc. 10.56% 3/15/09	130,000		144,950
Corn Products International, Inc.:
8.25% 7/15/07	235,000		258,500
8.45% 8/15/09	50,000		55,875
Dean Foods Co.:
6.9% 10/15/17	40,000		40,800
8.15% 8/1/07	231,000		254,100
Doane Pet Care Co.:
9.75% 5/15/07	190,000		171,000
10.75% 3/1/10	180,000		187,200
Hines Nurseries, Inc. 10.25% 10/1/11 (f)	30,000		32,700
Land O'Lakes, Inc.:
8.75% 11/15/11	65,000		55,250
9% 12/15/10 (f)	130,000		130,000
Michael Foods, Inc. 8% 11/15/13 (f)	40,000		41,800
United Agriculture Products, Inc. 8.25% 12/15/11 (f)	50,000		51,750
			1,479,300
Household Products - 0.0%
Johnsondiversey Holdings, Inc. 0% 5/15/13 (d)(f)	120,000		91,800
Personal Products - 0.1%
Revlon Consumer Products Corp. 12% 12/1/05	275,000		276,375
Tobacco - 0.0%
Altria Group, Inc. 7% 11/4/13	30,000		32,004
TOTAL CONSUMER STAPLES			2,197,299
ENERGY - 1.0%
Energy Equipment & Services - 0.2%
Grant Prideco, Inc.:
9% 12/15/09	50,000		54,875
9.625% 12/1/07	110,000		122,650
Hanover Compressor Co. 8.625% 12/15/10	40,000		41,700
Key Energy Services, Inc. 8.375% 3/1/08	100,000		107,250
Kinder Morgan, Inc. 6.5% 9/1/12	25,000		27,587

	Principal Amount		Value (Note 1)
Seabulk International, Inc. 9.5% 8/15/13	$ 105,000		$ 109,200
SESI LLC 8.875% 5/15/11	30,000		32,250
			495,512
Oil & Gas - 0.8%
Chesapeake Energy Corp. 8.125% 4/1/11	75,000		83,625
Forest Oil Corp. 8% 12/15/11	120,000		129,000
General Maritime Corp. 10% 3/15/13	220,000		248,600
GulfTerra Energy Partners LP/GulfTerra Energy Finance Corp. 10.625% 12/1/12	41,000		50,840
Petro-Canada yankee 7% 11/15/28	50,000		55,427
Plains Exploration & Production Co. LP Series B, 8.75% 7/1/12	225,000		246,938
Range Resources Corp. 7.375% 7/15/13	135,000		135,000
Teekay Shipping Corp. 8.875% 7/15/11	505,000		573,175
The Coastal Corp.:
6.375% 2/1/09	65,000		58,013
6.5% 5/15/06	147,000		140,753
6.5% 6/1/08	315,000		286,256
7.5% 8/15/06	530,000		514,763
7.75% 6/15/10	230,000		217,063
9.625% 5/15/12	55,000		54,450
Vintage Petroleum, Inc. 8.25% 5/1/12	90,000		97,650
			2,891,553
TOTAL ENERGY			3,387,065
FINANCIALS - 2.1%
Capital Markets - 0.1%
Amvescap PLC 5.9% 1/15/07	25,000		27,017
Credit Suisse First Boston (USA), Inc. 6.5% 1/15/12	20,000		22,260
Equinox Holdings Ltd. 9% 12/15/09 (f)	30,000		30,900
Goldman Sachs Group, Inc. 6.6% 1/15/12	125,000		139,691
J.P. Morgan Chase & Co. 5.35% 3/1/07	30,000		32,109
Merrill Lynch & Co., Inc. 4% 11/15/07	100,000		102,425
Morgan Stanley:
5.3% 3/1/13	25,000		25,538
6.6% 4/1/12	40,000		44,674
			424,614
Commercial Banks - 0.1%
Bank of America Corp. 6.25% 4/15/12	70,000		77,166
Bank One NA, Chicago 3.7% 1/15/08	50,000		50,587
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
FINANCIALS - continued
Commercial Banks - continued
Chase Manhattan Corp. New 6.375% 4/1/08	$ 20,000		$ 22,039
Fleet Financial Group, Inc. 7.125% 4/15/06	40,000		44,078
			193,870
Consumer Finance - 0.1%
American General Finance Corp. 5.875% 7/14/06	95,000		102,517
Capital One Bank 4.875% 5/15/08	50,000		51,458
Ford Motor Credit Co.:
7.375% 10/28/09	5,000		5,491
7.375% 2/1/11	100,000		108,994
Household Finance Corp.:
6.375% 10/15/11	15,000		16,518
6.375% 11/27/12	50,000		54,853
7% 5/15/12	5,000		5,702
Household International, Inc. 8.875% 2/15/08	25,000		28,094
MBNA America Bank NA 6.625% 6/15/12	30,000		33,084
MBNA Corp. 7.5% 3/15/12	45,000		52,282
			458,993
Diversified Financial Services - 1.6%
Ahold Finance USA, Inc. 8.25% 7/15/10	290,000		309,938
American Airlines, Inc. pass thru trust certificates:
6.817% 5/23/11	170,000		153,850
6.977% 11/23/22	16,088		14,560
7.377% 5/23/19	158,576		112,589
7.379% 5/23/16	37,296		26,480
7.8% 4/1/08	70,000		64,750
8.608% 10/1/12	120,000		109,800
10.18% 1/2/13	65,000		50,700
Arch Western Finance LLC 6.75% 7/1/13 (f)	165,000		168,300
ASIF Global Financing XVIII 3.85% 11/26/07 (f)	5,000		5,082
Continental Airlines, Inc. pass thru trust certificates:
6.795% 8/2/18	174,423		148,259
6.9% 1/2/17	152,150		126,285
7.373% 12/15/15	179,488		154,360
7.568% 12/1/06	60,000		49,800
7.73% 9/15/12	25,742		21,623
8.312% 10/2/12	131,338		112,951
8.388% 5/1/22	44,174		36,443
Couche Tard U.S. LP /Couche Tard Financing Corp. 7.5% 12/15/13 (f)	80,000		84,400
Delta Air Lines, Inc. pass thru trust certificates:
7.299% 9/18/06	30,000		27,600

	Principal Amount		Value (Note 1)
7.57% 11/18/10	$ 20,000		$ 20,719
7.711% 9/18/11	15,000		12,975
7.779% 11/18/05	70,000		65,100
7.779% 1/2/12	106,019		90,646
7.92% 5/18/12	275,000		248,993
10.06% 1/2/16	80,000		63,200
Deutsche Telekom International Finance BV:
5.25% 7/22/13	20,000		20,204
8.75% 6/15/30	75,000		95,807
Dex Media West LLC/Dex Media West Finance Co.:
8.5% 8/15/10 (f)	60,000		66,900
9.875% 8/15/13 (f)	70,000		80,850
El Paso Energy Partners LP/El Paso Energy Partners Finance Corp. 8.5% 6/1/11	154,000		173,250
Entercom Radio LLC/Entercom Capital, Inc. 7.625% 3/1/14	30,000		32,325
Gemstone Investor Ltd./Gemstone Investor, Inc. 7.71% 10/31/04 (f)	30,000		30,300
Gerdau AmeriSteel Corp./GUSAP Partners 10.375% 7/15/11 (f)	170,000		189,975
Huntsman Advanced Materials LLC:
10% 7/15/08 (f)(j)	100,000		103,000
11% 7/15/10 (f)	80,000		87,800
Kraton Polymers LLC/Kraton Polymers Capital Corp. 8.125% 1/15/14 (f)	30,000		31,350
Level 3 Financing, Inc. 10.75% 10/15/11 (f)	130,000		137,800
National Beef Packing Co. LLC/National Beef Finance Corp. 10.5% 8/1/11 (f)	50,000		51,500
Nexstar Finance, Inc. 7% 1/15/14 (f)	60,000		60,300
NiSource Finance Corp. 7.875% 11/15/10	80,000		95,151
Northwest Airlines, Inc. pass thru trust certificates:
7.248% 7/2/14	128,622		92,607
7.626% 4/1/10	34,526		29,347
7.691% 4/1/17	18,345		15,226
7.95% 9/1/16	18,386		15,628
8.304% 9/1/10	102,729		88,347
Pemex Project Funding Master Trust:
6.125% 8/15/08	50,000		52,500
7.875% 2/1/09 (j)	100,000		112,900
Petronas Capital Ltd. 7% 5/22/12 (f)	55,000		62,652
Power Contract Financing LLC 6.256% 2/1/10 (f)	160,000		164,800
Rabobank Capital Funding Trust II 5.26% 12/31/49 (f)(j)	100,000		100,138
Sensus Metering Systems, Inc. 8.625% 12/15/13 (f)	40,000		41,000
Sheridan Group, Inc. 10.25% 8/15/11 (f)	70,000		74,200
Ship Finance International Ltd. 8.5% 12/15/13 (f)	590,000		590,000
Sprint Capital Corp. 6.875% 11/15/28	75,000		73,187
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
FINANCIALS - continued
Diversified Financial Services - continued
Suburban Propane Partners LP/Suburban Energy Finance Corp. 6.875% 12/15/13 (f)	$ 40,000		$ 40,400
Telecom Italia Capital 5.25% 11/15/13 (f)	50,000		50,100
Tom Brown, Inc./Tom Brown Resources Funding Corp. 7.25% 9/15/13	30,000		31,650
U.S. Airways pass thru trust certificates 6.85% 7/30/19	57,067		53,785
Universal City Development Partners Ltd./UCDP Finance, Inc. 11.75% 4/1/10 (f)	300,000		350,250
Verizon Global Funding Corp. 7.25% 12/1/10	30,000		34,542
			5,609,174
Insurance - 0.0%
Principal Life Global Funding I 6.25% 2/15/12 (f)	25,000		27,230
Real Estate - 0.2%
Boston Properties, Inc. 6.25% 1/15/13	30,000		32,191
CenterPoint Properties Trust 6.75% 4/1/05	100,000		105,130
Duke Realty LP 6.875% 3/15/05	100,000		105,888
EOP Operating LP 7.75% 11/15/07	50,000		57,318
Regency Centers LP 6.75% 1/15/12	45,000		49,585
Senior Housing Properties Trust 8.625% 1/15/12	245,000		267,050
			617,162
Thrifts & Mortgage Finance - 0.0%
Countrywide Home Loans, Inc. 5.5% 8/1/06	80,000		85,453
Washington Mutual, Inc.:
4.375% 1/15/08	20,000		20,561
5.625% 1/15/07	50,000		53,888
			159,902
TOTAL FINANCIALS			7,490,945
HEALTH CARE - 0.4%
Health Care Equipment & Supplies - 0.0%
Kinetic Concepts, Inc. 7.375% 5/15/13 (f)	90,000		94,050
Health Care Providers & Services - 0.4%
AmeriPath, Inc. 10.5% 4/1/13	255,000		275,400
Fountain View, Inc. 9.25% 8/19/08 (e)	419,253		415,060
Genesis HealthCare Corp. 8% 10/15/13 (f)	30,000		31,200
Mariner Health Care, Inc. 8.25% 12/15/13 (f)	70,000		70,875
National Nephrology Associates, Inc. 9% 11/1/11 (f)	40,000		41,800

	Principal Amount		Value (Note 1)
Psychiatric Solutions, Inc. 10.625% 6/15/13	$ 115,000		$ 129,375
Tenet Healthcare Corp.:
5.375% 11/15/06	35,000		34,169
6.375% 12/1/11	40,000		38,200
Triad Hospitals, Inc. 8.75% 5/1/09	205,000		221,913
			1,257,992
TOTAL HEALTH CARE			1,352,042
INDUSTRIALS - 0.8%
Aerospace & Defense - 0.2%
BE Aerospace, Inc.:
8% 3/1/08	70,000		64,750
8.5% 10/1/10 (f)	20,000		21,400
8.875% 5/1/11	140,000		129,500
9.5% 11/1/08	160,000		156,800
Raytheon Co. 6.75% 8/15/07	50,000		55,396
Transdigm, Inc. 8.375% 7/15/11	60,000		63,900
Vought Aircraft Industries, Inc. 8% 7/15/11 (f)	90,000		92,250
			583,996
Airlines - 0.1%
Delta Air Lines, Inc.:
equipment trust certificates 8.54% 1/2/07	47,704		42,456
7.9% 12/15/09	30,000		24,600
8.3% 12/15/29	190,000		124,450
NWA Trust 10.23% 6/21/14	58,338		52,505
			244,011
Building Products - 0.0%
Jacuzzi Brands, Inc. 9.625% 7/1/10 (f)	70,000		77,000
Commercial Services & Supplies - 0.1%
Allied Waste North America, Inc. 7.625% 1/1/06	185,000		194,713
American Color Graphics, Inc. 10% 6/15/10	160,000		162,800
Great Lakes Dredge & Dock Corp. 7.75% 12/15/13 (f)	50,000		51,500
			409,013
Electrical Equipment - 0.0%
General Cable Corp. 9.5% 11/15/10 (f)	40,000		43,200
Industrial Conglomerates - 0.1%
Koppers, Inc. 9.875% 10/15/13 (f)	40,000		44,100
Tyco International Group SA yankee:
6.375% 10/15/11	35,000		37,406
6.75% 2/15/11	100,000		109,250
			190,756
Machinery - 0.1%
AGCO Corp. 9.5% 5/1/08	60,000		65,550
Cummins, Inc. 9.5% 12/1/10 (f)	80,000		92,000
Dresser, Inc. 9.375% 4/15/11	30,000		32,625
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
INDUSTRIALS - continued
Machinery - continued
Dunlop Standard Aerospace Holdings PLC yankee 11.875% 5/15/09	$ 55,000		$ 58,850
Terex Corp. 7.375% 1/15/14 (f)	180,000		181,800
			430,825
Marine - 0.0%
OMI Corp. 7.625% 12/1/13 (f)	50,000		50,250
Road & Rail - 0.2%
Kansas City Southern Railway Co.:
7.5% 6/15/09	290,000		297,250
9.5% 10/1/08	40,000		43,400
TFM SA de CV yankee 11.75% 6/15/09	360,000		368,100
			708,750
TOTAL INDUSTRIALS			2,737,801
INFORMATION TECHNOLOGY - 0.7%
Communications Equipment - 0.1%
L-3 Communications Corp. 6.125% 1/15/14 (f)	100,000		101,000
Marconi Corp. PLC 8% 4/30/08 (f)	100,000		102,000
Motorola, Inc. 6.5% 11/15/28	25,000		24,748
Nortel Networks Corp. 6.125% 2/15/06	145,000		146,450
			374,198
IT Services - 0.2%
Dex Media, Inc.:
0% 11/15/13 (d)(f)	125,000		87,500
8% 11/15/13 (f)	220,000		231,000
Iron Mountain, Inc. 6.625% 1/1/16	360,000		351,000
			669,500
Office Electronics - 0.2%
Xerox Corp.:
7.125% 6/15/10	515,000		547,188
7.625% 6/15/13	180,000		192,600
			739,788
Semiconductors & Semiconductor Equipment - 0.2%
AMI Semiconductor, Inc. 10.75% 2/1/13	52,000		61,880
Amkor Technology, Inc.:
7.75% 5/15/13	60,000		64,500
9.25% 2/15/08	20,000		22,750
10.5% 5/1/09	10,000		10,725
ON Semiconductor Corp./Semiconductor Components Industries LLC 12% 3/15/10	130,000		154,050
Semiconductor Note Partners Trust 0% 8/4/11 (f)	40,000		43,000
Viasystems, Inc. 10.5% 1/15/11 (f)	165,000		176,550
			533,455
TOTAL INFORMATION TECHNOLOGY			2,316,941

	Principal Amount		Value (Note 1)
MATERIALS - 1.3%
Chemicals - 0.5%
Avecia Group PLC 11% 7/1/09	$ 340,000		$ 311,100
Berry Plastics Corp. 10.75% 7/15/12 (f)	90,000		103,500
Compass Minerals Group, Inc. 10% 8/15/11	250,000		280,000
Equistar Chemicals LP/Equistar Funding Corp.:
10.625% 5/1/11 (f)	140,000		154,000
10.625% 5/1/11	55,000		60,088
Geon Co. 6.875% 12/15/05	25,000		24,125
Lyondell Chemical Co.:
9.625% 5/1/07	45,000		47,475
9.875% 5/1/07	135,000		141,750
11.125% 7/15/12	10,000		10,900
Nalco Co. 7.75% 11/15/11 (f)	70,000		74,375
PolyOne Corp.:
8.875% 5/1/12	120,000		109,800
10.625% 5/15/10	70,000		70,000
Resolution Performance Products LLC 8% 12/15/09 (f)	90,000		92,700
The Scotts Co. 6.625% 11/15/13 (f)	70,000		71,400
			1,551,213
Containers & Packaging - 0.4%
Applied Extrusion Technologies, Inc. 10.75% 7/1/11	60,000		48,900
Blue Ridge Paper Products, Inc. 9.5% 12/15/08 (f)	80,000		80,800
BWAY Corp. 10% 10/15/10	80,000		87,000
Crown Cork & Seal, Inc.:
7.375% 12/15/26	15,000		13,500
8% 4/15/23	70,000		65,100
Owens-Brockway Glass Container, Inc. 8.875% 2/15/09	435,000		474,150
Owens-Illinois, Inc.:
7.15% 5/15/05	170,000		175,100
7.5% 5/15/10	70,000		71,575
7.8% 5/15/18	30,000		29,250
8.1% 5/15/07	150,000		158,250
Sealed Air Corp.:
5.625% 7/15/13 (f)	5,000		5,116
6.875% 7/15/33 (f)	15,000		15,877
Sweetheart Cup Co., Inc. 9.5% 1/15/07 (f)	50,000		51,000
Tekni-Plex, Inc. 8.75% 11/15/13 (f)	170,000		177,013
			1,452,631
Metals & Mining - 0.1%
Compass Minerals International, Inc. 0% 12/15/12 (d)	245,000		193,550
Falconbridge Ltd. yankee 7.35% 6/5/12	25,000		28,237
Massey Energy Co. 6.625% 11/15/10 (f)	70,000		71,575
Steel Dynamics, Inc. 9.5% 3/15/09	35,000		38,500
			331,862
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
MATERIALS - continued
Paper & Forest Products - 0.3%
Buckeye Technologies, Inc. 8.5% 10/1/13	$ 65,000		$ 68,900
Georgia-Pacific Corp.:
8% 1/15/24 (f)	120,000		122,400
9.5% 12/1/11	275,000		319,000
International Paper Co.:
4.25% 1/15/09	5,000		5,020
5.5% 1/15/14	20,000		20,057
Millar Western Forest Products Ltd. 7.75% 11/15/13 (f)	40,000		41,500
Norske Skog Canada Ltd. 8.625% 6/15/11	140,000		145,600
Stone Container Corp.:
8.375% 7/1/12	170,000		185,300
9.75% 2/1/11	205,000		225,500
Weyerhaeuser Co. 6.75% 3/15/12	25,000		27,274
			1,160,551
TOTAL MATERIALS			4,496,257
TELECOMMUNICATION SERVICES - 1.4%
Diversified Telecommunication Services - 0.6%
ACC Escrow Corp. 10% 8/1/11 (f)	100,000		110,500
AT&T Corp. 8.75% 11/15/31	35,000		40,900
Cincinnati Bell, Inc. 8.375% 1/15/14 (f)	60,000		63,750
France Telecom SA:
9% 3/1/11	25,000		30,027
9.75% 3/1/31	50,000		66,434
MCI Communications Corp.:
7.125% 6/15/27 (c)	55,000		44,344
7.75% 3/15/24 (c)	10,000		8,100
7.75% 3/23/25 (c)	15,000		12,113
8.25% 1/20/23 (c)	35,000		28,175
Qwest Corp. 9.125% 3/15/12 (e)(f)	140,000		160,650
Qwest Services Corp. 13.5% 12/15/10 (f)	800,000		968,000
SBC Communications, Inc. 6.25% 3/15/11	35,000		38,313
Telecomunicaciones de Puerto Rico, Inc. 6.65% 5/15/06	55,000		59,612
Telefonica Europe BV 7.75% 9/15/10	50,000		59,362
Telewest Communications PLC yankee 11.25% 11/1/08 (c)	260,000		163,150
TELUS Corp. yankee 8% 6/1/11	100,000		116,929
Triton PCS, Inc.:
8.75% 11/15/11	85,000		83,088
9.375% 2/1/11	15,000		15,075
Verizon New York, Inc. 6.875% 4/1/12	50,000		55,325
			2,123,847

	Principal Amount		Value (Note 1)
Wireless Telecommunication Services - 0.8%
American Tower Corp. 9.375% 2/1/09	$ 245,000		$ 259,700
AT&T Wireless Services, Inc. 8.75% 3/1/31	60,000		74,030
Crown Castle International Corp.:
7.5% 12/1/13 (f)	110,000		111,100
7.5% 12/1/13 (f)	120,000		121,200
9.5% 8/1/11	35,000		38,150
10.75% 8/1/11	110,000		124,300
DirecTV Holdings LLC/DirecTV Financing, Inc. 8.375% 3/15/13	190,000		218,975
Dobson Communications Corp. 8.875% 10/1/13	120,000		122,400
Millicom International Cellular SA 10% 12/1/13 (f)	120,000		126,000
Nextel Communications, Inc.:
7.375% 8/1/15	850,000		909,500
9.375% 11/15/09	30,000		32,700
9.5% 2/1/11	65,000		73,775
Nextel Partners, Inc. 8.125% 7/1/11	230,000		243,800
Rogers Wireless, Inc. 9.625% 5/1/11	230,000		273,700
Western Wireless Corp. 9.25% 7/15/13	140,000		148,400
			2,877,730
TOTAL TELECOMMUNICATION SERVICES			5,001,577
UTILITIES - 1.9%
Electric Utilities - 0.7%
Allegheny Energy Supply Co. LLC 8.75% 4/15/12 (f)	100,000		95,000
CMS Energy Corp.:
7.5% 1/15/09	160,000		165,200
7.625% 11/15/04	260,000		267,800
7.75% 8/1/10 (f)	265,000		278,581
8.5% 4/15/11	40,000		42,950
8.9% 7/15/08	60,000		65,025
9.875% 10/15/07	275,000		304,906
Dominion Resources, Inc. 6.25% 6/30/12	35,000		37,962
DTE Energy Co. 7.05% 6/1/11	15,000		16,820
Duke Capital Corp. 6.75% 2/15/32	55,000		55,541
FirstEnergy Corp. 6.45% 11/15/11	20,000		20,729
Illinois Power Co.:
7.5% 6/15/09	65,000		71,500
11.5% 12/15/10	200,000		242,000
Nevada Power Co.:
6.2% 4/15/04	25,000		25,156
10.875% 10/15/09	50,000		57,250
Pacific Gas & Electric Co.:
7.05% 3/1/24	55,000		55,275
10.375% 11/1/05 (f)(j)	430,000		434,300
PG&E Corp. 6.875% 7/15/08 (f)	80,000		86,600
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
UTILITIES - continued
Electric Utilities - continued
Public Service Co. of Colorado 7.875% 10/1/12	$ 25,000		$ 30,342
Southern California Edison Co. 7.625% 1/15/10	120,000		139,068
			2,492,005
Gas Utilities - 0.4%
ANR Pipeline, Inc. 8.875% 3/15/10	70,000		78,663
Consolidated Natural Gas Co. 6.85% 4/15/11	25,000		28,419
Dynegy Holdings, Inc.:
9.875% 7/15/10 (f)	120,000		135,600
10.125% 7/15/13 (f)	180,000		207,000
El Paso Energy Corp.:
6.95% 12/15/07	95,000		91,319
7.375% 12/15/12	35,000		32,156
Northwest Pipeline Corp.:
6.625% 12/1/07	80,000		80,800
8.125% 3/1/10	70,000		77,350
Sonat, Inc. 6.75% 10/1/07	35,000		32,900
Southern Natural Gas Co. 8.875% 3/15/10	90,000		101,138
Transcontinental Gas Pipe Line Corp.:
6.125% 1/15/05	100,000		101,000
6.25% 1/15/08	215,000		220,913
Williams Holdings of Delaware, Inc. 6.25% 2/1/06	40,000		41,000
			1,228,258
Multi-Utilities & Unregulated Power - 0.8%
AES Corp.:
8.75% 5/15/13 (f)	340,000		379,950
8.875% 2/15/11	46,000		50,198
9.375% 9/15/10	161,000		178,710
9.5% 6/1/09	248,000		275,280
Calpine Corp.:
6.9% 7/15/07 (f)(j)	353,937		345,089
8.5% 7/15/10 (f)	30,000		29,100
El Paso Corp. 7.875% 6/15/12	290,000		274,050
NRG Energy, Inc. 8% 12/15/13 (f)	230,000		241,500
Reliant Resources, Inc. 9.25% 7/15/10 (f)	145,000		151,888
Western Resources, Inc.:
7.125% 8/1/09	50,000		53,938
9.75% 5/1/07	180,000		204,300
Williams Companies, Inc.:
6.5% 8/1/06	140,000		144,900
6.75% 1/15/06	180,000		185,400
7.125% 9/1/11	185,000		195,638

	Principal Amount		Value (Note 1)
7.5% 1/15/31	$ 10,000		$ 10,125
7.625% 7/15/19	180,000		189,000
			2,909,066
TOTAL UTILITIES			6,629,329
TOTAL NONCONVERTIBLE BONDS			47,177,746
TOTAL CORPORATE BONDS (Cost $44,696,383)		49,305,651
U.S. Government and Government Agency Obligations - 2.5%

U.S. Government Agency Obligations - 0.3%
Fannie Mae:
5.5% 3/15/11	35,000		37,744
6.25% 2/1/11	130,000		143,709
Federal Home Loan Bank:
3.625% 11/14/08	390,000		392,241
5.8% 9/2/08	35,000		38,543
Freddie Mac:
3.625% 9/15/08	36,000		36,238
4% 6/12/13	87,000		81,209
5.875% 3/21/11	170,000		184,267
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS			913,951
U.S. Treasury Inflation Protected Obligations - 0.0%
U.S. Treasury Inflation-Indexed Notes 1.875% 7/15/13	201,462		200,014
U.S. Treasury Obligations - 2.2%
U.S. Treasury Bills, yield at date of purchase 0.87% to 0.93% 2/19/04 to 3/11/04 (i)	1,030,000		1,028,508
U.S. Treasury Bonds:
6.25% 5/15/30	585,000		675,081
6.625% 2/15/27	50,000		59,721
8% 11/15/21	289,000		390,308
U.S. Treasury Notes:
1.875% 11/30/05	1,295,000		1,297,428
4.875% 2/15/12	3,625,000		3,839,100
6.5% 2/15/10	365,000		424,141
TOTAL U.S. TREASURY OBLIGATIONS			7,714,287
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $8,711,548)		8,828,252
U.S. Government Agency - Mortgage Securities - 2.2%

Fannie Mae - 1.9%
4.5% 10/1/33	249,638		239,003
5% 7/1/18	915,586		935,010
5.5% 1/1/34 (g)	1,331,356		1,348,414
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount		Value (Note 1)
Fannie Mae - continued
6% 4/1/13 to 4/1/33	$ 740,049		$ 776,598
6.5% 11/1/09 to 4/1/33	1,752,215		1,840,918
6.5% 1/1/19 (g)(h)	178,981		189,720
6.5% 1/1/19 (g)	500,000		530,000
6.5% 1/1/34 (g)	211,220		220,857
6.5% 1/1/34 (g)	250,000		261,406
7.5% 5/1/24 to 2/1/28	61,544		65,997
TOTAL FANNIE MAE			6,407,923
Freddie Mac - 0.1%
5% 1/1/34 (g)	400,000		395,000
7.5% 8/1/28	14,354		15,468
TOTAL FREDDIE MAC			410,468
Government National Mortgage Association - 0.2%
6.5% 8/15/27	149,568		158,173
7% 7/15/28 to 7/15/32	262,115		279,619
7.5% 1/15/26 to 8/15/28	161,746		173,757
8.5% 11/15/30	54,597		59,374
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION			670,923
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $7,358,932)		7,489,314
Asset-Backed Securities - 0.1%

Capital One Multi-Asset Execution Trust Series 2003-B4 Class B4, 1.9625% 7/15/11 (j)	25,000		25,012
Citibank Credit Card Issuance Trust Series 2002-C1 Class C1, 2.16% 2/9/09 (j)	50,000		50,586
Discover Card Master Trust I Series 2003-4 Class B1, 1.47% 5/16/11 (j)	30,000		30,000
Ford Credit Auto Owner Trust Series 2001-B Class B, 5.71% 9/15/05	35,000		35,671
Household Private Label Credit Card Master Note Trust I Series 2002-1 Class A, 5.5% 1/18/11	125,000		134,353
TOTAL ASSET-BACKED SECURITIES (Cost $265,364)		275,622
Collateralized Mortgage Obligations - 0.1%
	Principal Amount		Value (Note 1)
U.S. Government Agency - 0.1%
Fannie Mae planned amortization class:
Series 1999-54 Class PH, 6.5% 11/18/29	$ 100,000		$ 106,069
Series 1999-57 Class PH, 6.5% 12/25/29	100,000		105,436
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $182,430)		211,505
Commercial Mortgage Securities - 0.4%

Asset Securitization Corp. sequential pay Series 1995-MD4 Class A1, 7.1% 8/13/29	49,423		52,973
CBM Funding Corp. sequential pay Series 1996-1:
Class A3PI, 7.08% 11/1/07	75,390		81,484
Class B, 7.48% 2/1/08	80,000		88,995
CS First Boston Mortgage Securities Corp. Series 1998-C1 Class D, 7.17% 5/17/40	15,000		15,915
Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1 Class D, 7.231% 6/15/31	140,000		145,600
First Chicago/Lennar Trust I Series 1997-CHL1 Class E, 7.9822% 4/29/39 (f)(j)	320,000		259,600
FMAC Loan Receivables Trust weighted average coupon Series 1997-A Class E, 0% 4/15/19 (c)(f)(j)	250,000		0
GS Mortgage Securities Corp. II Series 1998-GLII Class E, 7.1905% 4/13/31 (j)	45,000		45,773
Leafs CMBS I Ltd./Leafs CMBS I Corp. Series 2002-1A Class B, 4.13% 11/20/37 (f)	100,000		92,574
LTC Commercial Mortgage pass thru certificates:
sequential pay Series 1998-1 Class A, 6.029% 5/28/30 (f)	53,933		54,202
Series 1996-1 Class E, 9.16% 4/15/28	500,000		374,239
Thirteen Affiliates of General Growth Properties, Inc. Series 1:
Class D2, 6.992% 11/15/07 (f)	140,000		154,148
Class E2, 7.224% 11/15/07 (f)	100,000		109,099
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $1,790,022)		1,474,602
Municipal Securities - 0.0%
	Principal Amount		Value (Note 1)
Illinois Gen. Oblig. 5.1% 6/1/33	$ 40,000		$ 36,779
Oregon Gen. Oblig. 5.892% 6/1/27	10,000		10,406
TOTAL MUNICIPAL SECURITIES (Cost $50,000)		47,185
Foreign Government and Government Agency Obligations - 0.0%

Chilean Republic:
6.875% 4/28/09	50,000		56,549
7.125% 1/11/12	40,000		45,750
TOTAL FOREIGN GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $90,136)		102,299
Floating Rate Loans - 0.4%

FINANCIALS - 0.1%
Diversified Financial Services - 0.1%
Olympus Cable Holdings LLC Tranche B term loan 6% 9/30/10 (j)	355,000		338,138
TELECOMMUNICATION SERVICES - 0.1%
Diversified Telecommunication Services - 0.1%
Qwest Corp. Tranche A term loan 6.5% 6/30/07 (j)	400,000		419,500
UTILITIES - 0.2%
Multi-Utilities & Unregulated Power - 0.2%
AES Corp. term loan 5.2643% 4/30/08 (j)	600,000		604,500
TOTAL FLOATING RATE LOANS (Cost $1,290,103)		1,362,138

Fixed-Income Funds - 0.2%
	Shares
Fidelity Ultra-Short Central Fund (Cost $749,983)	7,536		750,360
Money Market Funds - 14.2%
	Shares		Value (Note 1)
Fidelity Cash Central Fund, 1.07% (b) (Cost $49,421,815)	49,421,815		$ 49,421,815
TOTAL INVESTMENT PORTFOLIO - 100.2% (Cost $323,241,122)			349,496,782
NET OTHER ASSETS - (0.2)%			(825,651)
NET ASSETS - 100%		$ 348,671,131

Futures Contracts
	Expiration Date	Underlying Face Amount at Value	Unrealized Appreciation/ (Depreciation)
Equity Index Contracts
59 S&P 500 Index Contracts	March 2004	$ 16,381,350	$ 396,421

The face value of futures purchased as a percentage of net assets - 4.7%

Swap Agreements
		Notional Amount
Interest Rate Swap
Receive quarterly a fixed rate equal to 3.098% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.	April 2007	$ 275,000	2,597
Receive quarterly a fixed rate equal to 3.1422% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.	April 2007	235,000	2,631
		510,000	5,228
Swap Agreements - continued
	Expiration Date	Notional Amount	Unrealized Appreciation/(Depreciation)
Total Return Swap
Receive monthly a return equal to Lehman Brothers CMBS AAA 8.5+ and pay monthly a floating rate based on 1-month LIBOR minus 65 basis points with Lehman Brothers, Inc.	Oct. 2004	$ 75,000	$ 8
Receive monthly a return equal to Lehman Brothers CMBS AAA 8.5+ and pay monthly a floating rate based on 1-month LIBOR minus 70 basis points with Lehman Brothers, Inc.	Feb. 2004	75,000	866
Receive quarterly a return equal to Banc of America LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 75 basis points with Bank of America	May 2004	75,000	135
Receive quarterly a return equal to Banc of America LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 80 basis points with Bank of America	April 2004	100,000	1,700
		325,000	2,709
		$ 835,000	$ 7,937

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(d) Debt obligation initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end.

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

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

(h) A portion of the security is subject to a forward commitment to sell.

(i) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $1,028,508.

(j) The coupon rate shown on floating or adjustable rate securities represents the rate at period end.

(k) 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 $3,754 or 0.0% of net assets.

Additional information on each holding is as follows:

Security	Acquisition Date	Acquisition Cost
Fountain View, Inc.	8/19/03	$ 2

Other Information

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

U.S.Government and U.S.Government Agency Obligations	4.5%
AAA,AA,A	0.5%
BBB	0.7%
BB	3.6%
B	7.5%
CCC,CC,C	2.5%
Not Rated	0.3%
Equities	70.7%
Short-Term Investments and Net Other Assets	9.7%
	100.0%

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

The fund invested in loans and loan participations, trade claims or other receivables. At period end the value of these investments amounted to $1,362,138 or 0.4% of net assets.

Purchases and sales of securities, other than short-term securities, aggregated $181,940,865 and $218,757,788, respectively, of which long-term U.S. government and government agency obligations aggregated $38,857,498 and $36,398,269, respectively.

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $74,491,000 of which $54,731,000, $11,142,000 and $8,618,000 will expire on December 31, 2009, 2010 and 2011, respectively.

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

Annual Report

Fidelity Variable Insurance Products: Asset Manager: Growth Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (cost $323,241,122) - See accompanying schedule		$ 349,496,782
Commitment to sell securities on a delayed delivery basis	(20,242)
Receivable for securities sold on a delayed delivery basis	20,251	9
Receivable for investments sold, regular delivery		1,305,827
Cash		15,492
Receivable for fund shares sold		25,271
Dividends receivable		339,222
Interest receivable		1,206,002
Receivable for daily variation on futures contracts		42,775
Unrealized gain on swap agreements		7,937
Prepaid expenses		1,930
Other receivables		6,954
Total assets		352,448,201

Liabilities
Payable for investments purchased Regular delivery	$ 308,727
Delayed delivery	2,943,803
Payable for fund shares redeemed	279,214
Accrued management fee	164,432
Distribution fees payable	1,881
Other affiliated payables	29,847
Other payables and accrued expenses	49,166
Total liabilities		3,777,070
Net Assets		$ 348,671,131
Net Assets consist of:
Paid in capital		$ 391,790,132
Undistributed net investment income		8,517,550
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(78,296,602)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		26,660,051
Net Assets		$ 348,671,131
Initial Class: Net Asset Value, offering price and redemption price per share ($335,285,308 ÷ 27,185,861 shares)		$ 12.33
Service Class: Net Asset Value, offering price and redemption price per share ($6,691,678 ÷ 546,053 shares)		$ 12.25
Service Class 2: Net Asset Value, offering price and redemption price per share ($6,694,145 ÷ 549,033 shares)		$ 12.19

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

Annual Report

Fidelity Variable Insurance Products: Asset Manager: Growth Portfolio
Financial Statements - continued

Statement of Operations

	Year ended December 31, 2003

Investment Income
Dividends		$ 3,710,949
Interest		5,823,595
Security lending		1,253
Total income		9,535,797

Expenses
Management fee	$ 1,816,560
Transfer agent fees	225,944
Distribution fees	19,249
Accounting and security lending fees	119,820
Non-interested trustees' compensation	1,538
Custodian fees and expenses	27,103
Audit	54,304
Legal	1,810
Miscellaneous	36,234
Total expenses before reductions	2,302,562
Expense reductions	(32,780)	2,269,782
Net investment income (loss)		7,266,015
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	(9,572,550)
Foreign currency transactions	(3)
Futures contracts	2,629,684
Swap agreements	(884)
Total net realized gain (loss)		(6,943,753)
Change in net unrealized appreciation (depreciation) on: Investment securities	65,043,723
Assets and liabilities in foreign currencies	(186)
Futures contracts	464,605
Swap agreements	7,937
Delayed delivery commitments	9
Total change in net unrealized appreciation (depreciation)		65,516,088
Net gain (loss)		58,572,335
Net increase (decrease) in net assets resulting from operations		$ 65,838,350

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

Asset Manager: Growth Portfolio

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ 7,266,015	$ 9,879,530
Net realized gain (loss)	(6,943,753)	(13,307,507)
Change in net unrealized appreciation (depreciation)	65,516,088	(59,841,478)
Net increase (decrease) in net assets resulting from operations	65,838,350	(63,269,455)
Distributions to shareholders from net investment income	(8,995,679)	(10,416,607)
Share transactions - net increase (decrease)	(2,618,363)	(45,895,376)
Total increase (decrease) in net assets	54,224,308	(119,581,438)

Net Assets
Beginning of period	294,446,823	414,028,261
End of period (including undistributed net investment income of $8,517,550 and undistributed net investment income of $11,827,058, respectively)	$ 348,671,131	$ 294,446,823

Other Information:
Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	2,762,140	14,055	234,611
Reinvested	904,884	18,903	12,490
Redeemed	(4,008,936)	(81,582)	(93,999)
Net increase (decrease)	(341,912)	(48,624)	153,102
Dollars Sold	$ 30,831,473	$ 157,481	$ 2,571,962
Reinvested	8,695,938	180,711	119,030
Redeemed	(43,277,864)	(881,741)	(1,015,353)
Net increase (decrease)	$ (3,750,453)	$ (543,549)	$ 1,675,639

Share Transactions	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	2,002,299	59,590	86,311
Reinvested	852,581	19,176	10,444
Redeemed	(7,128,518)	(249,039)	(120,333)
Net increase (decrease)	(4,273,638)	(170,273)	(23,578)
Dollars Sold	$ 22,203,801	$ 701,545	$ 952,932
Reinvested	10,068,980	225,322	122,305
Redeemed	(76,233,884)	(2,697,681)	(1,238,696)
Net increase (decrease)	$ (43,961,103)	$ (1,770,814)	$ (163,459)

Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 8,695,938	$ 180,711	$ 119,030
From net realized gain	-	-	-
Total	$ 8,695,938	$ 180,711	$ 119,030
	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 10,068,980	$ 225,322	$ 122,305
From net realized gain	-	-	-
Total	$ 10,068,980	$ 225,322	$ 122,305

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

Annual Report

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 10.33	$ 12.56	$ 14.41	$ 18.38	$ 17.03
Income from Investment Operations
Net investment income (loss)^C	.26	.32	.32	.42	.40
Net realized and unrealized gain (loss)	2.06	(2.23)	(1.31)	(2.52)	2.04
Total from investment operations	2.32	(1.91)	(.99)	(2.10)	2.44
Distributions from net investment income	(.32)	(.32)	(.39)	(.37)	(.41)
Distributions from net realized gain	-	-	(.47)	(1.50)	(.68)
Total distributions	(.32)	(.32)	(.86)	(1.87)	(1.09)
Net asset value, end of period	$ 12.33	$ 10.33	$ 12.56	$ 14.41	$ 18.38
Total Return^{A, B}	23.34%	(15.53)%	(7.39)%	(12.47)%	15.26%
Ratios to Average Net Assets^D
Expenses before expense reductions	.73%	.73%	.73%	.69%	.71%
Expenses net of voluntary waivers, if any	.73%	.73%	.73%	.69%	.71%
Expenses net of all reductions	.72%	.69%	.72%	.68%	.70%
Net investment income (loss)	2.33%	2.88%	2.55%	2.61%	2.38%
Supplemental Data
Net assets, end of period (000 omitted)	$ 335,285	$ 284,298	$ 399,273	$ 482,165	$ 580,555
Portfolio turnover rate	65%	149%	111%	147%	92%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 10.27	$ 12.47	$ 14.32	$ 18.28	$ 16.96
Income from Investment Operations
Net investment income (loss)^C	.24	.30	.31	.40	.38
Net realized and unrealized gain (loss)	2.05	(2.20)	(1.32)	(2.50)	2.03
Total from investment operations	2.29	(1.90)	(1.01)	(2.10)	2.41
Distributions from net investment income	(.31)	(.30)	(.37)	(.36)	(.41)
Distributions from net realized gain	-	-	(.47)	(1.50)	(.68)
Total distributions	(.31)	(.30)	(.84)	(1.86)	(1.09)
Net asset value, end of period	$ 12.25	$ 10.27	$ 12.47	$ 14.32	$ 18.28
Total Return^{A, B}	23.15%	(15.54)%	(7.57)%	(12.54)%	15.13%
Ratios to Average Net Assets^D
Expenses before expense reductions	.85%	.84%	.83%	.80%	.82%
Expenses net of voluntary waivers, if any	.85%	.84%	.83%	.80%	.82%
Expenses net of all reductions	.84%	.80%	.82%	.79%	.81%
Net investment income (loss)	2.21%	2.77%	2.44%	2.50%	2.27%
Supplemental Data
Net assets, end of period (000 omitted)	$ 6,692	$ 6,105	$ 9,542	$ 12,449	$ 10,825
Portfolio turnover rate	65%	149%	111%	147%	92%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 10.21	$ 12.43	$ 14.30	$ 17.78
Income from Investment Operations
Net investment income (loss)^E	.22	.28	.28	.34
Net realized and unrealized gain (loss)	2.05	(2.21)	(1.30)	(1.96)
Total from investment operations	2.27	(1.93)	(1.02)	(1.62)
Distributions from net investment income	(.29)	(.29)	(.38)	(.36)
Distributions from net realized gain	-	-	(.47)	(1.50)
Total distributions	(.29)	(.29)	(.85)	(1.86)
Net asset value, end of period	$ 12.19	$ 10.21	$ 12.43	$ 14.30
Total Return^{B, C, D}	23.03%	(15.83)%	(7.66)%	(10.21)%
Ratios to Average Net Assets^G
Expenses before expense reductions	1.05%	1.03%	1.00%	.97%^A
Expenses net of voluntary waivers, if any	1.05%	1.03%	1.00%	.97%^A
Expenses net of all reductions	1.04%	.99%	.99%	.95%^A
Net investment income (loss)	2.01%	2.58%	2.28%	2.33%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 6,694	$ 4,044	$ 5,213	$ 3,091
Portfolio turnover rate	65%	149%	111%	147%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period January 12, 2000 (commencement of sale of shares) to December 31, 2000.

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

Asset Manager: Growth Portfolio

Fidelity Variable Insurance Products: Balanced Portfolio

Performance: The Bottom Line

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Life of fund^A
Fidelity ® VIP: Balanced - Initial Class	17.72%	1.14%	7.43%
Fidelity VIP: Balanced - Service Class^B	17.53%	1.03%	7.33%
Fidelity VIP: Balanced - Service Class 2^C	17.41%	0.91%	7.26%

^A From January 3, 1995.

$10,000 Over Life of Fund

Annual Report

Fidelity Variable Insurance Products: Balanced Portfolio

Management's Discussion of Fund Performance

Comments from Louis Salemy, Lead Portfolio Manager of Fidelity® Variable Insurance Products: Balanced Portfolio

Annual Report

Fidelity Variable Insurance Products: Balanced Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Omnicom Group, Inc.	4.0
Gillette Co.	3.6
Morgan Stanley	3.3
BellSouth Corp.	3.3
Wells Fargo & Co.	2.9
	17.1
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Financials	17.2
Consumer Discretionary	15.1
Consumer Staples	11.2
Telecommunication Services	6.6
Industrials	4.5

Asset Allocation as of December 31, 2003
% of fund's net assets*
	Stocks	55.1%
	Bonds	35.8%
	Short-Term Investments and Net Other Assets	8.9%
	Other Investments	0.2%
* Foreign investments		5.1%

Annual Report

Fidelity Variable Insurance Products: Balanced Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 55.1%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 12.3%
Hotels, Restaurants & Leisure - 0.4%
Carnival Corp. unit	21,100		$ 838,303
Starwood Hotels & Resorts Worldwide, Inc. unit	15,100		543,147
			1,381,450
Household Durables - 0.1%
Garmin Ltd.	3,800		207,024
Media - 9.7%
Comcast Corp. Class A (special) (a)	39,600		1,238,688
E.W. Scripps Co. Class A	55,400		5,215,356
EchoStar Communications Corp. Class A (a)	294,800		10,023,200
News Corp. Ltd. ADR	63,500		2,292,350
Omnicom Group, Inc.	158,600		13,850,527
Pegasus Communications Corp. Class A (a)	25,600		718,848
Tribune Co.	6,400		330,240
			33,669,209
Multiline Retail - 1.4%
Barneys, Inc. warrants 4/1/08 (a)	120		2,400
Dollar Tree Stores, Inc. (a)	32,200		967,932
Kohl's Corp. (a)	82,200		3,694,068
Nordstrom, Inc.	4,300		147,490
			4,811,890
Specialty Retail - 0.4%
Hollywood Entertainment Corp. (a)	114,200		1,570,250
Textiles Apparel & Luxury Goods - 0.3%
Liz Claiborne, Inc.	29,000		1,028,340
TOTAL CONSUMER DISCRETIONARY			42,668,163
CONSUMER STAPLES - 10.6%
Beverages - 0.8%
Anheuser-Busch Companies, Inc.	11,100		584,748
The Coca-Cola Co.	41,900		2,126,425
			2,711,173
Food & Staples Retailing - 3.3%
Costco Wholesale Corp. (a)	21,200		788,216
Sysco Corp.	27,500		1,023,825
Wal-Mart Stores, Inc.	132,900		7,050,345
Walgreen Co.	69,900		2,542,962
			11,405,348
Food Products - 0.6%
McCormick & Co., Inc. (non-vtg.)	62,400		1,878,240
Unilever PLC sponsored ADR	10,400		391,040
			2,269,280

	Shares		Value (Note 1)
Household Products - 1.6%
Colgate-Palmolive Co.	42,300		$ 2,117,115
Kimberly-Clark Corp.	55,800		3,297,222
			5,414,337
Personal Products - 3.6%
Gillette Co.	336,600		12,363,318
Tobacco - 0.7%
Altria Group, Inc.	45,950		2,500,599
TOTAL CONSUMER STAPLES			36,664,055
ENERGY - 2.7%
Oil & Gas - 2.7%
BP PLC sponsored ADR	63,600		3,138,660
Exxon Mobil Corp.	155,932		6,393,212
			9,531,872
FINANCIALS - 13.3%
Capital Markets - 7.1%
Goldman Sachs Group, Inc.	54,000		5,331,420
Merrill Lynch & Co., Inc.	134,800		7,906,020
Morgan Stanley	198,400		11,481,408
			24,718,848
Commercial Banks - 3.3%
Bank One Corp.	30,500		1,390,495
Wells Fargo & Co.	171,000		10,070,190
			11,460,685
Consumer Finance - 0.5%
American Express Co.	34,100		1,644,643
Insurance - 2.2%
Allstate Corp.	42,200		1,815,444
American International Group, Inc.	65,550		4,344,654
PartnerRe Ltd.	19,200		1,114,560
Travelers Property Casualty Corp. Class B	22,800		386,916
			7,661,574
Real Estate - 0.2%
Equity Office Properties Trust	28,000		802,200
TOTAL FINANCIALS			46,287,950
HEALTH CARE - 2.9%
Biotechnology - 0.5%
Amgen, Inc. (a)	29,400		1,816,920
Health Care Equipment & Supplies - 0.9%
Alcon, Inc.	20,800		1,259,232
Medtronic, Inc.	33,200		1,613,852
			2,873,084
Common Stocks - continued
	Shares		Value (Note 1)
HEALTH CARE - continued
Pharmaceuticals - 1.5%
Allergan, Inc.	16,500		$ 1,267,365
Pfizer, Inc.	113,600		4,013,488
			5,280,853
TOTAL HEALTH CARE			9,970,857
INDUSTRIALS - 3.8%
Aerospace & Defense - 1.1%
EADS NV	19,200		455,259
Lockheed Martin Corp.	19,500		1,002,300
Northrop Grumman Corp.	13,900		1,328,840
United Technologies Corp.	10,200		966,654
			3,753,053
Airlines - 0.8%
Continental Airlines, Inc. Class B (a)	97,900		1,592,833
MAIR Holdings, Inc. (a)	2,493		18,149
Northwest Airlines Corp. (a)	47,800		603,236
Southwest Airlines Co.	31,200		503,568
			2,717,786
Building Products - 0.1%
American Standard Companies, Inc. (a)	4,200		422,940
Commercial Services & Supplies - 0.3%
Avery Dennison Corp.	15,600		873,912
Industrial Conglomerates - 1.1%
General Electric Co.	122,600		3,798,148
Machinery - 0.0%
Illinois Tool Works, Inc.	2,100		176,211
Road & Rail - 0.4%
Union Pacific Corp.	19,900		1,382,652
TOTAL INDUSTRIALS			13,124,702
INFORMATION TECHNOLOGY - 3.7%
Communications Equipment - 1.2%
Cisco Systems, Inc. (a)	164,300		3,990,847
Nokia Corp. sponsored ADR	4,200		71,400
			4,062,247
Computers & Peripherals - 0.0%
Diebold, Inc.	300		16,161
Lexmark International, Inc. Class A (a)	2,400		188,736
			204,897
IT Services - 0.4%
Paychex, Inc.	39,600		1,473,120
Software - 2.1%
Microsoft Corp.	261,500		7,201,710
TOTAL INFORMATION TECHNOLOGY			12,941,974

	Shares		Value (Note 1)
MATERIALS - 0.1%
Chemicals - 0.1%
PPG Industries, Inc.	4,200		$ 268,884
Praxair, Inc.	800		30,560
			299,444
TELECOMMUNICATION SERVICES - 5.2%
Diversified Telecommunication Services - 5.2%
BellSouth Corp.	403,900		11,430,370
SBC Communications, Inc.	113,970		2,971,198
Verizon Communications, Inc.	101,100		3,546,588
			17,948,156
Wireless Telecommunication Services - 0.0%
DigitalGlobe, Inc. (f)	163		163
TOTAL TELECOMMUNICATION SERVICES			17,948,319
UTILITIES - 0.5%
Electric Utilities - 0.5%
Entergy Corp.	32,900		1,879,577
FPL Group, Inc.	400		26,168
			1,905,745
TOTAL COMMON STOCKS (Cost $160,919,358)		191,343,081
Nonconvertible Preferred Stocks - 0.0%

CONSUMER DISCRETIONARY - 0.0%
Media - 0.0%
CSC Holdings, Inc.:
(depositary shares) Series M, 11.125%	620		66,030
Series H, 11.75%	835		88,928
PRIMEDIA, Inc. Series D, 10.00%	80		7,760
			162,718
TOTAL NONCONVERTIBLE PREFERRED STOCKS (Cost $157,622)		162,718
Corporate Bonds - 13.2%
	Principal Amount
Convertible Bonds - 0.1%
INFORMATION TECHNOLOGY - 0.1%
Electronic Equipment & Instruments - 0.1%
Celestica, Inc. liquid yield option note 0% 8/1/20	$ 410,000		219,350
TELECOMMUNICATION SERVICES - 0.0%
Wireless Telecommunication Services - 0.0%
Nextel Communications, Inc. 5.25% 1/15/10	150,000		152,250
TOTAL CONVERTIBLE BONDS			371,600
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - 13.1%
CONSUMER DISCRETIONARY - 2.8%
Auto Components - 0.1%
DaimlerChrysler NA Holding Corp. 7.2% 9/1/09	$ 150,000		$ 167,516
Dana Corp.:
6.25% 3/1/04	50,000		50,000
6.5% 3/1/09	30,000		31,200
9% 8/15/11	30,000		35,475
Keystone Automotive Operations, Inc. 9.75% 11/1/13 (f)	30,000		32,400
Navistar International Corp. 8% 2/1/08	35,000		35,875
Stoneridge, Inc. 11.5% 5/1/12	15,000		17,625
United Components, Inc. 9.375% 6/15/13	30,000		32,700
			402,791
Automobiles - 0.4%
Case New Holland, Inc. 9.25% 8/1/11 (f)	110,000		123,200
General Motors Corp.:
7.2% 1/15/11	500,000		549,743
8.25% 7/15/23	350,000		397,393
8.375% 7/15/33	120,000		139,298
			1,209,634
Hotels, Restaurants & Leisure - 0.5%
Bally Total Fitness Holding Corp.:
9.875% 10/15/07	70,000		63,175
10.5% 7/15/11	220,000		222,200
Domino's, Inc. 8.25% 7/1/11 (f)	40,000		43,200
Friendly Ice Cream Corp. 10.5% 12/1/07	170,000		176,163
Gaylord Entertainment Co. 8% 11/15/13 (f)	40,000		42,000
Herbst Gaming, Inc. 10.75% 9/1/08	60,000		67,500
Intrawest Corp. 7.5% 10/15/13 (f)	40,000		40,800
Mandalay Resort Group 6.5% 7/31/09	95,000		98,325
Mohegan Tribal Gaming Authority:
6.375% 7/15/09	80,000		82,200
8.375% 7/1/11	20,000		21,800
Morton's Restaurant Group, Inc. 7.5% 7/1/10 (f)	30,000		28,200
Penn National Gaming, Inc. 6.875% 12/1/11 (f)	110,000		109,175
Premier Parks, Inc. 9.75% 6/15/07	121,000		127,171
Six Flags, Inc.:
8.875% 2/1/10	30,000		30,788
9.625% 6/1/14 (f)	140,000		146,300
Sun International Hotels Ltd./Sun International North America, Inc. 8.875% 8/15/11	55,000		59,950
Tricon Global Restaurants, Inc. 7.65% 5/15/08	40,000		45,400
Venetian Casino Resort LLC/Las Vegas Sands, Inc. 11% 6/15/10	125,000		144,375

	Principal Amount		Value (Note 1)
Waterford Gaming LLC/Waterford Gaming Finance Corp. 8.625% 9/15/12 (f)	$ 29,000		$ 30,668
Wheeling Island Gaming, Inc. 10.125% 12/15/09	100,000		107,500
			1,686,890
Household Durables - 0.1%
Beazer Homes USA, Inc. 8.375% 4/15/12	20,000		22,050
D.R. Horton, Inc. 8.5% 4/15/12	10,000		11,350
Simmons Co. 7.875% 1/15/14 (f)	30,000		30,150
Standard Pacific Corp. 7.75% 3/15/13	150,000		159,750
Telex Communications, Inc. 11.5% 10/15/08 (f)	40,000		42,400
WCI Communities, Inc. 7.875% 10/1/13 (f)	40,000		42,200
William Lyon Homes, Inc. 10.75% 4/1/13	95,000		107,825
			415,725
Internet & Catalog Retail - 0.0%
J. Crew Operating Corp. 10.375% 10/15/07	120,000		123,600
Leisure Equipment & Products - 0.0%
The Hockey Co. 11.25% 4/15/09	100,000		114,500
Media - 1.5%
Advanstar Communications, Inc. 10.75% 8/15/10 (f)	40,000		43,300
AMC Entertainment, Inc.:
9.5% 3/15/09	35,000		36,050
9.875% 2/1/12	35,000		38,325
American Media Operations, Inc. 10.25% 5/1/09	60,000		63,750
AOL Time Warner, Inc. 7.625% 4/15/31	200,000		230,754
British Sky Broadcasting Group PLC (BSkyB) yankee 8.2% 7/15/09	650,000		773,831
CBD Media LLC/ CBD Finance, Inc. 8.625% 6/1/11 (f)	20,000		21,850
Charter Communications Holdings LLC/Charter Communications Holdings Capital Corp.:
0% 5/15/11 (d)	116,000		77,720
9.625% 11/15/09	270,000		236,925
Clear Channel Communications, Inc. 7.65% 9/15/10	200,000		234,108
Comcast Corp. 7.05% 3/15/33	150,000		163,172
Continental Cablevision, Inc. 9% 9/1/08	200,000		241,158
Corus Entertainment, Inc. 8.75% 3/1/12	240,000		264,000
Cox Communications, Inc. 7.125% 10/1/12	195,000		224,916
CSC Holdings, Inc.:
7.625% 4/1/11	170,000		176,800
7.875% 2/15/18	45,000		47,475
9.875% 2/15/13	125,000		130,000
Diamond Holdings PLC yankee 9.125% 2/1/08	50,000		51,750
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
CONSUMER DISCRETIONARY - continued
Media - continued
EchoStar DBS Corp. 10.375% 10/1/07	$ 345,000		$ 378,206
LBI Media Holdings, Inc. 0% 10/15/13 (d)(f)	90,000		58,725
LBI Media, Inc. 10.125% 7/15/12	230,000		261,625
LodgeNet Entertainment Corp. 9.5% 6/15/13	20,000		21,800
News America Holdings, Inc.:
7.375% 10/17/08	200,000		228,185
7.75% 12/1/45	100,000		118,235
PEI Holdings, Inc. 11% 3/15/10	40,000		46,400
PRIMEDIA, Inc.:
7.625% 4/1/08	260,000		260,650
8.875% 5/15/11	15,000		15,600
Rogers Cablesystems Ltd. yankee 11% 12/1/15	10,000		11,600
Telewest PLC:
11% 10/1/07 (c)	30,000		18,900
yankee 9.625% 10/1/06 (c)	90,000		55,350
Time Warner, Inc. 6.625% 5/15/29	105,000		107,906
Videotron LTEE 6.875% 1/15/14 (f)	30,000		30,900
Vivendi Universal SA 6.25% 7/15/08 (f)	265,000		279,575
Yell Finance BV 0% 8/1/11 (d)	85,000		77,775
			5,027,316
Multiline Retail - 0.0%
Barneys, Inc. 9% 4/1/08	120,000		115,200
Specialty Retail - 0.2%
Asbury Automotive Group, Inc.:
8% 3/15/14 (f)	110,000		110,550
9% 6/15/12	15,000		15,900
Boise Cascade Corp.:
6.5% 11/1/10	60,000		62,400
7% 11/1/13	60,000		62,700
Gap, Inc. 10.55% 12/15/08	15,000		18,469
General Nutrition Centers, Inc. 8.5% 12/1/10 (f)	30,000		30,675
Reddy Ice Group, Inc. 8.875% 8/1/11 (f)	20,000		21,300
Sonic Automotive, Inc. 8.625% 8/15/13 (f)	60,000		63,600
United Auto Group, Inc. 9.625% 3/15/12	90,000		100,800
			486,394
TOTAL CONSUMER DISCRETIONARY			9,582,050
CONSUMER STAPLES - 0.6%
Beverages - 0.1%
Miller Brewing Co. 5.5% 8/15/13 (f)	210,000		214,545
Food & Staples Retailing - 0.2%
Kroger Co. 6.8% 4/1/11	195,000		218,239
Neighborcare, Inc. 6.875% 11/15/13 (f)	80,000		81,600
Rite Aid Corp.:
6% 12/15/05 (f)	35,000		35,000

	Principal Amount		Value (Note 1)
8.125% 5/1/10	$ 60,000		$ 63,900
9.5% 2/15/11	60,000		67,800
The Great Atlantic & Pacific Tea Co. 7.75% 4/15/07	120,000		111,000
			577,539
Food Products - 0.2%
Corn Products International, Inc. 8.25% 7/15/07	175,000		192,500
Del Monte Corp. 9.25% 5/15/11	145,000		159,500
Doane Pet Care Co.:
9.75% 5/15/07	125,000		112,500
10.75% 3/1/10	45,000		46,800
Hines Nurseries, Inc. 10.25% 10/1/11 (f)	20,000		21,800
Land O'Lakes, Inc.:
8.75% 11/15/11	40,000		34,000
9% 12/15/10 (f)	80,000		80,000
Michael Foods, Inc. 8% 11/15/13 (f)	30,000		31,350
United Agriculture Products, Inc. 8.25% 12/15/11 (f)	30,000		31,050
			709,500
Household Products - 0.0%
Fort James Corp. 6.875% 9/15/07	20,000		21,000
Johnsondiversey Holdings, Inc. 0% 5/15/13 (d)(f)	80,000		61,200
			82,200
Personal Products - 0.0%
Jafra Cosmetics International, Inc./Distribuidora Comercial Jafra SA de CV 10.75% 5/15/11	40,000		43,200
Revlon Consumer Products Corp. 12% 12/1/05	125,000		125,625
			168,825
Tobacco - 0.1%
Altria Group, Inc. 7% 11/4/13	175,000		186,689
Philip Morris Companies, Inc. 7.75% 1/15/27	275,000		296,716
			483,405
TOTAL CONSUMER STAPLES			2,236,014
ENERGY - 0.4%
Energy Equipment & Services - 0.1%
DI Industries, Inc. 8.875% 7/1/07	12,000		12,330
Grant Prideco, Inc. 9% 12/15/09	20,000		21,950
Hanover Compressor Co. 8.625% 12/15/10	30,000		31,275
Kinder Morgan, Inc. 6.5% 9/1/12	100,000		110,350
Seabulk International, Inc. 9.5% 8/15/13	60,000		62,400
Universal Compression, Inc. 7.25% 5/15/10	115,000		119,025
			357,330
Oil & Gas - 0.3%
Chesapeake Energy Corp. 7.5% 9/15/13	70,000		75,688
El Paso Production Holding Co. 7.75% 6/1/13 (f)	180,000		176,850
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
ENERGY - continued
Oil & Gas - continued
General Maritime Corp. 10% 3/15/13	$ 125,000		$ 141,250
GulfTerra Energy Partners LP/GulfTerra Energy Finance Corp. 10.625% 12/1/12	20,000		24,800
Nuevo Energy Co.:
9.375% 10/1/10	20,000		21,900
9.5% 6/1/08	13,000		13,650
Overseas Shipholding Group, Inc. 8.25% 3/15/13	110,000		117,700
Plains Exploration & Production Co. LP:
Series B, 8.75% 7/1/12	60,000		65,850
8.75% 7/1/12	50,000		54,875
Range Resources Corp. 7.375% 7/15/13	80,000		80,000
Teekay Shipping Corp. 8.875% 7/15/11	200,000		227,000
The Coastal Corp.:
6.375% 2/1/09	10,000		8,925
6.5% 5/15/06	25,000		23,938
6.5% 6/1/08	75,000		68,156
7.5% 8/15/06	80,000		77,700
7.75% 6/15/10	45,000		42,469
			1,220,751
TOTAL ENERGY			1,578,081
FINANCIALS - 3.8%
Capital Markets - 0.4%
Amvescap PLC yankee 6.6% 5/15/05	35,000		37,055
Credit Suisse First Boston (USA), Inc. 6.5% 1/15/12	200,000		222,604
Equinox Holdings Ltd. 9% 12/15/09 (f)	20,000		20,600
Goldman Sachs Group, Inc. 6.6% 1/15/12	410,000		458,187
J.P. Morgan Chase & Co. 5.35% 3/1/07	125,000		133,787
Merrill Lynch & Co., Inc.:
3.125% 7/15/08	105,000		103,152
4% 11/15/07	150,000		153,637
4.125% 1/15/09	50,000		50,547
Morgan Stanley:
5.3% 3/1/13	100,000		102,151
6.6% 4/1/12	160,000		178,694
			1,460,414
Commercial Banks - 0.3%
Bank of America Corp. 6.25% 4/15/12	125,000		137,797
Bank One NA, Chicago 3.7% 1/15/08	220,000		222,581
Chase Manhattan Corp. New 6.375% 4/1/08	75,000		82,647
Fleet Financial Group, Inc. 7.125% 4/15/06	140,000		154,274
Korea Development Bank 7.375% 9/17/04	60,000		61,743

	Principal Amount		Value (Note 1)
PNC Funding Corp. 5.75% 8/1/06	$ 155,000		$ 166,409
Popular North America, Inc. 6.125% 10/15/06	145,000		157,612
			983,063
Consumer Finance - 0.6%
American General Finance Corp.:
2.75% 6/15/08	20,000		19,253
5.875% 7/14/06	480,000		517,982
AmeriCredit Corp. 9.875% 4/15/06	25,000		25,938
Capital One Bank 4.875% 5/15/08	125,000		128,644
Ford Motor Credit Co. 7.375% 10/28/09	525,000		576,535
Household Finance Corp.:
6.375% 10/15/11	260,000		286,308
6.375% 11/27/12	50,000		54,853
7% 5/15/12	40,000		45,615
Household International, Inc. 8.875% 2/15/08	150,000		168,564
MBNA Corp.:
6.25% 1/17/07	120,000		130,643
7.5% 3/15/12	175,000		203,321
			2,157,656
Diversified Financial Services - 1.9%
Ahold Finance USA, Inc.:
6.25% 5/1/09	65,000		64,431
6.875% 5/1/29	50,000		44,500
8.25% 7/15/10	145,000		154,969
Alliance Capital Management LP 5.625% 8/15/06	150,000		159,894
American Airlines, Inc. pass thru trust certificates:
6.817% 5/23/11	115,000		104,075
6.977% 11/23/22	12,066		10,920
7.377% 5/23/19	104,326		74,072
7.379% 5/23/16	33,152		23,538
8.608% 10/1/12	75,000		68,625
10.18% 1/2/13	45,000		35,100
Arch Western Finance LLC 6.75% 7/1/13 (f)	125,000		127,500
BRL Universal Equipment 2001 A LP/BRL Universal Equipment Corp. 8.875% 2/15/08	120,000		129,300
CMS Energy X-TRAS pass thru trust certificates 7% 1/15/05	75,000		75,000
Continental Airlines, Inc. pass thru trust certificates:
6.748% 9/15/18	7,926		6,499
6.9% 1/2/17	76,075		63,142
7.373% 12/15/15	96,389		82,895
7.568% 12/1/06	40,000		33,200
7.73% 9/15/12	30,423		25,555
8.312% 10/2/12	39,401		33,885
8.321% 11/1/06	10,000		9,750
8.388% 5/1/22	22,087		18,222
Couche Tard U.S. LP /Couche Tard Financing Corp. 7.5% 12/15/13 (f)	50,000		52,750
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
FINANCIALS - continued
Diversified Financial Services - continued
Delta Air Lines, Inc. pass thru trust certificates:
7.299% 9/18/06	$ 20,000		$ 18,400
7.57% 11/18/10	45,000		46,617
7.779% 1/2/12	345,713		295,585
7.92% 5/18/12	50,000		45,271
Deutsche Telekom International Finance BV:
5.25% 7/22/13	90,000		90,920
8.75% 6/15/30	250,000		319,357
Dex Media West LLC/Dex Media West Finance Co.:
8.5% 8/15/10 (f)	40,000		44,600
9.875% 8/15/13 (f)	40,000		46,200
El Paso Energy Partners LP/El Paso Energy Partners Finance Corp. 8.5% 6/1/11	17,000		19,125
Gemstone Investor Ltd./Gemstone Investor, Inc. 7.71% 10/31/04 (f)	90,000		90,900
Gerdau AmeriSteel Corp./GUSAP Partners 10.375% 7/15/11 (f)	130,000		145,275
Huntsman Advanced Materials LLC 11% 7/15/10 (f)	40,000		43,900
Kraton Polymers LLC/Kraton Polymers Capital Corp. 8.125% 1/15/14 (f)	20,000		20,900
Level 3 Financing, Inc. 10.75% 10/15/11 (f)	80,000		84,800
MSW Energy Holding LLC/MSW Energy Finance Co., Inc. 8.5% 9/1/10	20,000		21,800
National Beef Packing Co. LLC/National Beef Finance Corp. 10.5% 8/1/11 (f)	30,000		30,900
Nexstar Finance, Inc. 7% 1/15/14 (f)	40,000		40,200
NiSource Finance Corp. 7.875% 11/15/10	395,000		469,809
Northern Telecom Capital Corp. 7.875% 6/15/26	45,000		45,000
Northwest Airlines, Inc. pass thru trust certificates:
7.068% 7/2/17	25,212		21,682
7.626% 4/1/10	21,579		18,342
7.67% 1/2/15	21,851		17,808
Pemex Project Funding Master Trust:
6.125% 8/15/08	400,000		420,000
7.875% 2/1/09 (i)	180,000		203,220
Petronas Capital Ltd. 7% 5/22/12 (f)	395,000		449,953
Power Contract Financing LLC 6.256% 2/1/10 (f)	90,000		92,700
Qwest Capital Funding, Inc.:
5.875% 8/3/04	120,000		120,300
7% 8/3/09	60,000		58,800
7.75% 8/15/06	270,000		279,450
Rabobank Capital Funding Trust II 5.26% 12/31/49 (f)(i)	215,000		215,298
Sensus Metering Systems, Inc. 8.625% 12/15/13 (f)	30,000		30,750
Sheridan Group, Inc. 10.25% 8/15/11 (f)	40,000		42,400

	Principal Amount		Value (Note 1)
Ship Finance International Ltd. 8.5% 12/15/13 (f)	$ 360,000		$ 360,000
Sprint Capital Corp. 6.875% 11/15/28	295,000		287,870
Suburban Propane Partners LP/Suburban Energy Finance Corp. 6.875% 12/15/13 (f)	30,000		30,300
Telecom Italia Capital 5.25% 11/15/13 (f)	250,000		250,498
Tom Brown, Inc./Tom Brown Resources Funding Corp. 7.25% 9/15/13	20,000		21,100
U.S. West Capital Funding, Inc. 6.375% 7/15/08	45,000		43,763
Universal City Development Partners Ltd./UCDP Finance, Inc. 11.75% 4/1/10 (f)	110,000		128,425
Verizon Global Funding Corp. 7.25% 12/1/10	140,000		161,194
Western Financial Bank 9.625% 5/15/12	25,000		27,813
			6,599,047
Insurance - 0.1%
Principal Life Global Funding I:
5.125% 6/28/07 (f)	100,000		107,070
6.25% 2/15/12 (f)	85,000		92,582
			199,652
Real Estate - 0.3%
Boston Properties, Inc. 6.25% 1/15/13	125,000		134,130
BRE Properties, Inc. 5.95% 3/15/07	250,000		268,024
CenterPoint Properties Trust 6.75% 4/1/05	100,000		105,130
EOP Operating LP 7% 7/15/11	200,000		225,682
ERP Operating LP 7.1% 6/23/04	200,000		204,931
LNR Property Corp. 7.625% 7/15/13	50,000		52,000
ProLogis 6.7% 4/15/04	55,000		55,860
Senior Housing Properties Trust:
7.875% 4/15/15	40,000		42,000
8.625% 1/15/12	80,000		87,200
			1,174,957
Thrifts & Mortgage Finance - 0.2%
Countrywide Home Loans, Inc. 5.5% 8/1/06	170,000		181,587
Washington Mutual, Inc.:
4.375% 1/15/08	90,000		92,523
5.625% 1/15/07	250,000		269,441
			543,551
TOTAL FINANCIALS			13,118,340
HEALTH CARE - 0.2%
Health Care Equipment & Supplies - 0.0%
Kinetic Concepts, Inc. 7.375% 5/15/13 (f)	50,000		52,250
Health Care Providers & Services - 0.2%
AmeriPath, Inc. 10.5% 4/1/13	125,000		135,000
Fountain View, Inc. 9.25% 8/19/08 (e)	115,000		113,850
Genesis HealthCare Corp. 8% 10/15/13 (f)	20,000		20,800
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
HEALTH CARE - continued
Health Care Providers & Services - continued
Mariner Health Care, Inc. 8.25% 12/15/13 (f)	$ 40,000		$ 40,500
National Nephrology Associates, Inc. 9% 11/1/11 (f)	30,000		31,350
Psychiatric Solutions, Inc. 10.625% 6/15/13	75,000		84,375
Rotech Healthcare, Inc. 9.5% 4/1/12	75,000		78,000
Tenet Healthcare Corp. 6.375% 12/1/11	25,000		23,875
			527,750
TOTAL HEALTH CARE			580,000
INDUSTRIALS - 0.7%
Aerospace & Defense - 0.2%
BE Aerospace, Inc.:
8% 3/1/08	75,000		69,375
8.5% 10/1/10 (f)	20,000		21,400
8.875% 5/1/11	40,000		37,000
9.5% 11/1/08	10,000		9,800
Orbital Sciences Corp. 9% 7/15/11	60,000		64,200
Raytheon Co. 8.3% 3/1/10	250,000		299,977
Transdigm, Inc. 8.375% 7/15/11	40,000		42,600
			544,352
Airlines - 0.1%
Delta Air Lines, Inc.:
7.9% 12/15/09	10,000		8,200
8.3% 12/15/29	30,000		19,650
Northwest Airlines, Inc.:
7.875% 3/15/08	255,000		211,650
9.875% 3/15/07	30,000		27,600
			267,100
Building Products - 0.0%
FastenTech, Inc. 11.5% 5/1/11 (f)	50,000		53,500
Jacuzzi Brands, Inc. 9.625% 7/1/10 (f)	55,000		60,500
Nortek, Inc.:
9.125% 9/1/07	10,000		10,325
9.25% 3/15/07	20,000		20,600
			144,925
Commercial Services & Supplies - 0.0%
Allied Waste North America, Inc.:
7.625% 1/1/06	30,000		31,575
10% 8/1/09	10,000		10,850
American Color Graphics, Inc. 10% 6/15/10	85,000		86,488
Great Lakes Dredge & Dock Corp. 7.75% 12/15/13 (f)	30,000		30,900
			159,813
Electrical Equipment - 0.0%
General Cable Corp. 9.5% 11/15/10 (f)	30,000		32,400

	Principal Amount		Value (Note 1)
Industrial Conglomerates - 0.2%
Koppers, Inc. 9.875% 10/15/13 (f)	$ 30,000		$ 33,075
Tyco International Group SA yankee:
5.8% 8/1/06	55,000		58,163
6.375% 2/15/06	15,000		15,975
6.75% 2/15/11	400,000		437,000
7% 6/15/28	35,000		36,356
			580,569
Machinery - 0.2%
Cummins, Inc. 9.5% 12/1/10 (f)	50,000		57,500
Dresser, Inc. 9.375% 4/15/11	30,000		32,625
Dunlop Standard Aerospace Holdings PLC yankee 11.875% 5/15/09	170,000		181,900
Terex Corp.:
7.375% 1/15/14 (f)	110,000		111,100
9.25% 7/15/11	195,000		214,500
			597,625
Marine - 0.0%
OMI Corp. 7.625% 12/1/13 (f)	40,000		40,200
Road & Rail - 0.0%
TFM SA de CV yankee:
10.25% 6/15/07	20,000		21,000
11.75% 6/15/09	60,000		61,350
			82,350
TOTAL INDUSTRIALS			2,449,334
INFORMATION TECHNOLOGY - 0.5%
Communications Equipment - 0.1%
L-3 Communications Corp. 6.125% 1/15/14 (f)	70,000		70,700
Marconi Corp. PLC 8% 4/30/08 (f)	70,000		71,400
Motorola, Inc. 6.5% 11/15/28	110,000		108,892
Nortel Networks Corp. 6.125% 2/15/06	80,000		80,800
Northern Telecom Ltd. yankee 6.875% 9/1/23	30,000		28,500
			360,292
Electronic Equipment & Instruments - 0.0%
Jabil Circuit, Inc. 5.875% 7/15/10	40,000		42,000
Solectron Corp. 7.375% 3/1/06	115,000		119,313
			161,313
IT Services - 0.1%
Dex Media, Inc.:
0% 11/15/13 (d)(f)	80,000		56,000
8% 11/15/13 (f)	150,000		157,500
Iron Mountain, Inc. 6.625% 1/1/16	210,000		204,750
			418,250
Office Electronics - 0.1%
Xerox Corp.:
7.125% 6/15/10	150,000		159,375
7.15% 8/1/04	5,000		5,113
7.2% 4/1/16	120,000		121,200
7.625% 6/15/13	70,000		74,900
			360,588
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
INFORMATION TECHNOLOGY - continued
Semiconductors & Semiconductor Equipment - 0.2%
AMI Semiconductor, Inc. 10.75% 2/1/13	$ 39,000		$ 46,410
Amkor Technology, Inc.:
7.75% 5/15/13	175,000		188,125
9.25% 2/15/08	20,000		22,750
10.5% 5/1/09	35,000		37,538
SCG Holding Corp./Semiconductor Components Industries LLC 12% 8/1/09	80,000		86,000
Semiconductor Note Partners Trust 0% 8/4/11 (f)	30,000		32,250
Viasystems, Inc. 10.5% 1/15/11 (f)	110,000		117,700
			530,773
TOTAL INFORMATION TECHNOLOGY			1,831,216
MATERIALS - 1.1%
Chemicals - 0.3%
Avecia Group PLC 11% 7/1/09	75,000		68,625
Berry Plastics Corp. 10.75% 7/15/12 (f)	60,000		69,000
Equistar Chemicals LP/Equistar Funding Corp.:
10.625% 5/1/11 (f)	90,000		99,000
10.625% 5/1/11	35,000		38,238
Geon Co. 6.875% 12/15/05	15,000		14,475
Huntsman International LLC 9.875% 3/1/09 (f)	60,000		65,700
Lyondell Chemical Co.:
9.625% 5/1/07	30,000		31,650
9.875% 5/1/07	55,000		57,750
11.125% 7/15/12	5,000		5,450
Methanex Corp. yankee 7.75% 8/15/05	155,000		163,525
Millennium America, Inc.:
9.25% 6/15/08	40,000		43,800
9.25% 6/15/08 (f)	30,000		32,850
Nalco Co. 7.75% 11/15/11 (f)	50,000		53,125
PolyOne Corp.:
8.875% 5/1/12	65,000		59,475
10.625% 5/15/10	35,000		35,000
Resolution Performance Products LLC:
8% 12/15/09 (f)	60,000		61,800
9.5% 4/15/10	35,000		35,875
13.5% 11/15/10	10,000		8,650
The Scotts Co. 6.625% 11/15/13 (f)	50,000		51,000
			994,988
Construction Materials - 0.0%
Texas Industries, Inc. 10.25% 6/15/11	140,000		161,000
Containers & Packaging - 0.4%
Anchor Glass Container Corp. 11% 2/15/13	60,000		69,750
Applied Extrusion Technologies, Inc. 10.75% 7/1/11	40,000		32,600
Blue Ridge Paper Products, Inc. 9.5% 12/15/08 (f)	55,000		55,550

	Principal Amount		Value (Note 1)
BWAY Corp. 10% 10/15/10	$ 40,000		$ 43,500
Crown Cork & Seal, Inc.:
7.375% 12/15/26	10,000		9,000
8% 4/15/23	45,000		41,850
Jefferson Smurfit Corp. U.S. 7.5% 6/1/13	130,000		131,300
Owens-Brockway Glass Container, Inc.:
7.75% 5/15/11	50,000		52,250
8.25% 5/15/13	105,000		113,925
8.75% 11/15/12	25,000		27,750
8.875% 2/15/09	185,000		201,650
Owens-Illinois, Inc.:
7.15% 5/15/05	45,000		46,350
7.35% 5/15/08	295,000		292,050
7.5% 5/15/10	20,000		20,450
7.8% 5/15/18	45,000		43,875
Sealed Air Corp.:
5.625% 7/15/13 (f)	30,000		30,699
6.875% 7/15/33 (f)	60,000		63,510
Sweetheart Cup Co., Inc. 9.5% 1/15/07 (f)	30,000		30,600
Tekni-Plex, Inc. 8.75% 11/15/13 (f)	115,000		119,744
			1,426,403
Metals & Mining - 0.1%
Compass Minerals International, Inc. 0% 12/15/12 (d)	80,000		63,200
Falconbridge Ltd. yankee 7.35% 6/5/12	100,000		112,946
Massey Energy Co. 6.625% 11/15/10 (f)	40,000		40,900
Steel Dynamics, Inc. 9.5% 3/15/09	35,000		38,500
			255,546
Paper & Forest Products - 0.3%
Buckeye Technologies, Inc. 8.5% 10/1/13	40,000		42,400
Georgia-Pacific Corp.:
7.375% 12/1/25	35,000		33,994
7.5% 5/15/06	120,000		126,600
8% 1/15/24 (f)	80,000		81,600
8.125% 5/15/11	120,000		132,150
8.875% 5/15/31	20,000		21,800
9.625% 3/15/22	25,000		26,000
International Paper Co.:
4.25% 1/15/09	35,000		35,143
5.5% 1/15/14	95,000		95,273
Millar Western Forest Products Ltd. 7.75% 11/15/13 (f)	20,000		20,750
Norske Skog Canada Ltd. 8.625% 6/15/11	150,000		156,000
Weyerhaeuser Co. 6.75% 3/15/12	100,000		109,094
			880,804
TOTAL MATERIALS			3,718,741
TELECOMMUNICATION SERVICES - 1.3%
Diversified Telecommunication Services - 0.7%
ACC Escrow Corp. 10% 8/1/11 (f)	100,000		110,500
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
TELECOMMUNICATION SERVICES - continued
Diversified Telecommunication Services - continued
AT&T Corp. 8.75% 11/15/31	$ 150,000		$ 175,284
Cincinnati Bell, Inc. 8.375% 1/15/14 (f)	40,000		42,500
France Telecom SA:
9% 3/1/11	150,000		180,162
9.75% 3/1/31	200,000		265,735
MCI Communications Corp.:
7.125% 6/15/27 (c)	35,000		28,219
7.75% 3/15/24 (c)	10,000		8,100
7.75% 3/23/25 (c)	10,000		8,075
8.25% 1/20/23 (c)	25,000		20,125
Qwest Corp. 9.125% 3/15/12 (e)(f)	85,000		97,538
Qwest Services Corp.:
13% 12/15/07 (f)	45,000		52,650
13.5% 12/15/10 (f)	75,000		90,750
SBC Communications, Inc. 6.25% 3/15/11	180,000		197,040
Telecomunicaciones de Puerto Rico, Inc. 6.65% 5/15/06	120,000		130,064
Telefonica Europe BV 7.75% 9/15/10	200,000		237,447
TELUS Corp. yankee 7.5% 6/1/07	310,000		346,935
Triton PCS, Inc.:
8.75% 11/15/11	60,000		58,650
9.375% 2/1/11	280,000		281,400
Verizon New York, Inc. 6.875% 4/1/12	200,000		221,301
			2,552,475
Wireless Telecommunication Services - 0.6%
American Tower Corp. 9.375% 2/1/09	205,000		217,300
AT&T Wireless Services, Inc. 8.75% 3/1/31	290,000		357,810
Crown Castle International Corp.:
7.5% 12/1/13 (f)	150,000		151,500
9.375% 8/1/11	40,000		44,200
9.5% 8/1/11	155,000		168,950
10.75% 8/1/11	25,000		28,250
DirecTV Holdings LLC/DirecTV Financing, Inc. 8.375% 3/15/13	70,000		80,675
Dobson Communications Corp. 8.875% 10/1/13	70,000		71,400
Millicom International Cellular SA 10% 12/1/13 (f)	80,000		84,000
Nextel Communications, Inc.:
7.375% 8/1/15	250,000		267,500
9.375% 11/15/09	95,000		103,550
9.5% 2/1/11	50,000		56,750
Nextel Partners, Inc. 8.125% 7/1/11	80,000		84,800
Rogers Wireless, Inc. 9.625% 5/1/11	40,000		47,600
Western Wireless Corp. 9.25% 7/15/13	100,000		106,000
			1,870,285
TOTAL TELECOMMUNICATION SERVICES			4,422,760

	Principal Amount		Value (Note 1)
UTILITIES - 1.7%
Electric Utilities - 0.7%
Allegheny Energy Supply Co. LLC:
8.75% 4/15/12 (f)	$ 270,000		$ 256,013
10.25% 11/15/07 (f)	58,792		61,732
13% 11/15/07 (f)(i)	6,204		6,235
CMS Energy Corp.:
7.625% 11/15/04	150,000		154,500
7.75% 8/1/10 (f)	145,000		152,431
8.5% 4/15/11	85,000		91,269
8.9% 7/15/08	20,000		21,675
9.875% 10/15/07	115,000		127,506
Detroit Edison Co. 6.125% 10/1/10	165,000		181,016
Dominion Resources, Inc. 6.25% 6/30/12	160,000		173,539
Duke Capital Corp. 6.75% 2/15/32	210,000		212,067
Edison International 6.875% 9/15/04	35,000		35,910
FirstEnergy Corp. 6.45% 11/15/11	85,000		88,098
Illinois Power Co.:
7.5% 6/15/09	155,000		170,500
11.5% 12/15/10	100,000		121,000
Nevada Power Co.:
6.2% 4/15/04	20,000		20,125
10.875% 10/15/09	65,000		74,425
Niagara Mohawk Power Corp. 8.875% 5/15/07	75,000		87,936
Pacific Gas & Electric Co. 6.25% 3/1/04	60,000		60,300
PG&E Corp. 6.875% 7/15/08 (f)	45,000		48,713
Public Service Co. of Colorado 7.875% 10/1/12	115,000		139,575
TECO Energy, Inc. 10.5% 12/1/07	105,000		123,113
			2,407,678
Gas Utilities - 0.3%
Consolidated Natural Gas Co. 6.85% 4/15/11	70,000		79,573
Dynegy Holdings, Inc.:
9.875% 7/15/10 (f)	70,000		79,100
10.125% 7/15/13 (f)	110,000		126,500
El Paso Energy Corp. 6.95% 12/15/07	95,000		91,319
Sonat, Inc.:
6.625% 2/1/08	65,000		59,638
6.75% 10/1/07	70,000		65,800
6.875% 6/1/05	280,000		275,800
Southern Natural Gas Co. 8.875% 3/15/10	40,000		44,950
Texas Eastern Transmission Corp. 7.3% 12/1/10	185,000		212,510
Transcontinental Gas Pipe Line Corp. 6.125% 1/15/05	20,000		20,200
Williams Holdings of Delaware, Inc. 6.25% 2/1/06	10,000		10,250
			1,065,640
Corporate Bonds - continued
	Principal Amount		Value (Note 1)
Nonconvertible Bonds - continued
UTILITIES - continued
Multi-Utilities & Unregulated Power - 0.7%
AES Corp.:
8.375% 8/15/07	$ 50,000		$ 50,625
8.5% 11/1/07	29,000		29,435
8.75% 6/15/08	30,000		32,100
8.75% 5/15/13 (f)	170,000		189,975
8.875% 2/15/11	54,000		58,928
9% 5/15/15 (f)	90,000		101,700
9.375% 9/15/10	16,000		17,760
9.5% 6/1/09	144,000		159,840
10% 12/12/05 (f)	26,925		27,800
Calpine Corp.:
6.9% 7/15/07 (f)(i)	204,488		199,375
8.5% 7/15/10 (f)	20,000		19,400
El Paso Corp.:
7% 5/15/11	90,000		83,025
7.875% 6/15/12	35,000		33,075
NRG Energy, Inc. 8% 12/15/13 (f)	140,000		147,000
Reliant Resources, Inc.:
9.25% 7/15/10 (f)	60,000		62,850
9.5% 7/15/13 (f)	20,000		21,150
Western Resources, Inc. 9.75% 5/1/07	90,000		102,150
Williams Companies, Inc.:
6.5% 8/1/06	50,000		51,750
6.75% 1/15/06	80,000		82,400
7.125% 9/1/11	245,000		259,088
7.5% 1/15/31	10,000		10,125
7.625% 7/15/19	105,000		110,250
7.875% 9/1/21	80,000		84,500
8.125% 3/15/12	340,000		374,000
8.625% 6/1/10	80,000		89,600
8.75% 3/15/32	25,000		27,750
			2,425,651
TOTAL UTILITIES			5,898,969
TOTAL NONCONVERTIBLE BONDS			45,415,505
TOTAL CORPORATE BONDS (Cost $41,714,357)		45,787,105
U.S. Government and Government Agency Obligations - 6.7%

U.S. Government Agency Obligations - 1.5%
Fannie Mae:
5.5% 3/15/11	315,000		339,699
6.25% 2/1/11	345,000		381,382
Federal Home Loan Bank:
3.625% 11/14/08	1,760,000		1,770,113
5.8% 9/2/08	155,000		170,692

	Principal Amount		Value (Note 1)
Freddie Mac:
3.625% 9/15/08	$ 163,000		$ 164,079
4% 6/12/13	1,575,000		1,470,155
6.25% 7/15/32	166,000		180,527
6.625% 9/15/09	475,000		543,196
6.75% 3/15/31	244,000		281,793
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS			5,301,636
U.S. Treasury Inflation Protected Obligations - 0.3%
U.S. Treasury Inflation-Indexed Notes 1.875% 7/15/13	1,007,310		1,000,069
U.S. Treasury Obligations - 4.9%
U.S. Treasury Bonds:
6.25% 5/15/30	2,530,000		2,919,580
6.625% 2/15/27	50,000		59,721
8% 11/15/21	100,000		135,055
U.S. Treasury Notes:
1.875% 11/30/05	3,570,000		3,576,694
3.25% 8/15/07	150,000		153,006
4.375% 5/15/07	375,000		397,104
6.5% 2/15/10	8,240,000		9,575,135
TOTAL U.S. TREASURY OBLIGATIONS			16,816,295
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $22,905,630)		23,118,000
U.S. Government Agency - Mortgage Securities - 11.2%

Fannie Mae - 9.9%
4% 1/1/19 (g)	6,100,000		5,941,781
4.5% 7/1/33 to 10/1/33	4,228,642		4,048,498
5% 11/1/17 to 8/1/18	5,384,430		5,498,612
5.5% 2/1/11 to 11/1/17	245,639		255,005
5.5% 1/1/34 (g)	4,435,130		4,491,955
6% 4/1/09 to 10/1/32	2,703,603		2,832,250
6.5% 6/1/09 to 7/1/32 (h)	5,488,241		5,792,652
6.5% 1/1/34 (g)	4,360,591		4,559,543
7% 12/1/24 to 2/1/28	207,952		221,146
7.5% 10/1/26 to 8/1/28	692,674		741,300
TOTAL FANNIE MAE			34,382,742
Freddie Mac - 0.0%
7.5% 1/1/27	52,032		56,037
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount		Value (Note 1)
Government National Mortgage Association - 1.3%
6% 1/1/34 (g)	$ 1,661,547		$ 1,725,932
6.5% 10/15/27 to 8/15/32	1,401,871		1,479,531
7% 1/15/28 to 7/15/32	928,361		989,652
7.5% 6/15/27 to 3/15/28	187,037		200,974
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION			4,396,089
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $38,394,224)		38,834,868
Asset-Backed Securities - 1.1%

American Express Credit Account Master Trust:
Series 1999-2 Class B, 6.1% 12/15/06	200,000		203,556
Series 2001-6 Class B, 1.5125% 12/15/08 (i)	200,000		200,571
Capital One Master Trust:
Series 2001-3A Class A, 5.45% 3/16/09	140,000		148,107
Series 2001-4 Class B, 1.5325% 4/16/07 (i)	200,000		200,133
Capital One Multi-Asset Execution Trust:
Series 2003-A4 Class A4, 3.65% 7/15/11	116,000		115,797
Series 2003-B4 Class B4, 1.9625% 7/15/11 (i)	105,000		105,050
Chase Manhattan Auto Owner Trust Series 2001-A:
Class A4, 5.07% 2/15/08	430,000		442,832
Class CTFS, 5.06% 2/15/08	32,653		33,419
Citibank Credit Card Issuance Trust Series 2002-C1 Class C1, 2.16% 2/9/09 (i)	250,000		252,931
Discover Card Master Trust I:
Series 2001-6 Class A, 5.75% 12/15/08	600,000		646,354
Series 2003-4 Class B1, 1.47% 5/16/11 (i)	155,000		155,000
Ford Credit Auto Owner Trust:
Series 2001-B Class B, 5.71% 9/15/05	90,000		91,725
Series 2001-C Class B, 5.54% 12/15/05	100,000		102,151
Honda Auto Receivables Owner Trust Series 2001-2:
Class A3, 4.67% 3/18/05	39,613		39,770
Class A4, 5.09% 10/18/06	145,000		147,032
MBNA Credit Card Master Note Trust Series 2001-A1 Class A1, 5.75% 10/15/08	200,000		215,096
Sears Credit Account Master Trust II:
Series 2000-2 Class A, 6.75% 9/16/09	365,000		392,399
Series 2001-2 Class B, 1.4525% 6/16/08 (i)	200,000		199,742
TOTAL ASSET-BACKED SECURITIES (Cost $3,566,313)		3,691,665
Commercial Mortgage Securities - 0.8%
	Principal Amount		Value (Note 1)

CS First Boston Mortgage Securities Corp.:
sequential pay Series 2000-C1 Class A2, 7.545% 4/14/62	$ 500,000		$ 582,898
Series 1997-C2 Class D, 7.27% 1/17/35	150,000		167,826
Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1 Class A2, 6.538% 6/15/31	105,000		114,994
DLJ Commercial Mortgage Corp. sequential pay Series 2000-CF1 Class A1B, 7.62% 6/10/33	500,000		585,113
GS Mortgage Securities Corp. II:
Series 1998-GLII Class E, 7.1905% 4/13/31 (i)	120,000		122,061
Series 2003-C1 Class A2A, 3.59% 1/10/40	125,000		125,443
J.P. Morgan Commercial Mortgage Finance Corp. sequential pay Series 2000-C9 Class A2, 7.77% 10/15/32	225,000		263,534
Leafs CMBS I Ltd./Leafs CMBS I Corp. Series 2002-1A:
Class B, 4.13% 11/20/37 (f)	110,000		101,832
Class C, 4.13% 11/20/37 (f)	110,000		97,539
Thirteen Affiliates of General Growth Properties, Inc. sequential pay Series 1 Class A2, 6.602% 11/15/07 (f)	500,000		550,044
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $2,468,971)		2,711,284
Municipal Securities - 0.1%

Illinois Gen. Oblig. 5.1% 6/1/33	170,000		156,310
Oregon Gen. Oblig. 5.892% 6/1/27	50,000		52,028
TOTAL MUNICIPAL SECURITIES (Cost $220,000)		208,338
Foreign Government and Government Agency Obligations - 0.2%

Chilean Republic:
5.5% 1/15/13	150,000		154,275
6.875% 4/28/09	150,000		169,646
7.125% 1/11/12	160,000		183,000
State of Israel 4.625% 6/15/13	30,000		28,688
United Mexican States 4.625% 10/8/08	150,000		151,875
TOTAL FOREIGN GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $636,338)		687,484
Floating Rate Loans - 0.2%
	Principal Amount		Value (Note 1)
TELECOMMUNICATION SERVICES - 0.1%
Diversified Telecommunication Services - 0.1%
Qwest Corp. Tranche A term loan 6.5% 6/30/07 (i)	$ 200,000		$ 209,750
UTILITIES - 0.1%
Multi-Utilities & Unregulated Power - 0.1%
AES Corp. term loan 5.2643% 4/30/08 (i)	300,000		302,250
TOTAL FLOATING RATE LOANS (Cost $499,688)		512,000
Fixed-Income Funds - 1.4%
	Shares
Fidelity Ultra-Short Central Fund (Cost $4,999,984)	50,241		5,002,496
Money Market Funds - 14.7%

Fidelity Cash Central Fund, 1.07% (b) (Cost $51,170,599)	51,170,599		51,170,599

TOTAL INVESTMENT PORTFOLIO - 104.7%

(Cost $327,653,084)

363,229,638

NET OTHER ASSETS - (4.7)%

(16,185,079)

NET ASSETS - 100%

$ 347,044,559

Swap Agreements
	Expiration Date	Notional Amount	Unrealized Appreciation/ (Depreciation)
Interest Rate Swap
Receive quarterly a fixed rate equal to 2.735% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.	Oct. 2006	$ 350,000	$ 1,522
Receive quarterly a fixed rate equal to 3.098% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.	April 2007	1,550,000	14,639
Receive quarterly a fixed rate equal to 3.1422% and pay quarterly a floating rate based on 3-month LIBOR with JPMorgan Chase, Inc.	April 2007	1,320,000	14,779
TOTAL INTEREST RATE SWAP		3,220,000	30,940

	Expiration Date	Notional Amount	Unrealized Appreciation/ (Depreciation)
Total Return Swap
Receive monthly a return equal to Lehman Brothers CMBS AAA 8.5+ and pay monthly a floating rate based on 1-month LIBOR minus 65 basis points with Lehman Borthers, Inc.	Oct. 2004	$ 500,000	$ 55
Receive monthly a return equal to Lehman Brothers CMBS AAA 8.5+ and pay monthly a floating rate based on 1-month LIBOR minus 70 basis points with Lehman Brothers, Inc.	Feb. 2004	500,000	5,772
Receive quarterly a return equal to Banc of America LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 75 basis points with Bank of America	May 2004	500,000	898
Receive quarterly a return equal to Banc of America LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 80 basis points with Bank of America	April 2004	500,000	8,498
TOTAL TOTAL RETURN SWAP		2,000,000	15,223
		$ 5,220,000	$ 46,163

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(d) Debt obligation initially issued in zero coupon form which converts to coupon form at a specified rate and date. The rate shown is the rate at period end.

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

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

(h) A portion of the security is subject to a forward commitment to sell.

(i) The coupon rate shown on floating or adjustable rate securities represents the rate at period end.

Other Information

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

U.S.Government and U.S.Government Agency Obligations	18.0%
AAA,AA,A	4.9
BBB	4.0
BB	1.6
B	5.0
CCC,CC,C	0.8
Not Rated	0.2
Equities	55.1
Short-Term Investments and Net Other Assets	10.4
	100.0%

We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings.

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 $4,990 for the period.

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $19,804,000 of which $10,146,000 and $9,658,000 will expire on December 31, 2009 and 2010, respectively.

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

Balanced Portfolio

Fidelity Variable Insurance Products: Balanced Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (cost $327,653,084) - See accompanying schedule		$ 363,229,638
Commitment to sell securities on a delayed delivery basis	$ (1,049,470)
Receivable for securities sold on a delayed delivery basis	1,049,934	464
Cash		7,711
Receivable for fund shares sold		88,433
Dividends receivable		177,776
Interest receivable		1,360,630
Unrealized gain on swap agreements		46,163
Prepaid expenses		1,887
Other receivables		4,469
Total assets		364,917,171

Liabilities
Payable for investments purchased Regular delivery	823,907
Delayed delivery	16,706,217
Payable for fund shares redeemed	124,582
Accrued management fee	121,234
Distribution fees payable	7,745
Other affiliated payables	29,684
Other payables and accrued expenses	59,243
Total liabilities		17,872,612

Net Assets		$ 347,044,559
Net Assets consist of:
Paid in capital		$ 324,879,627
Undistributed net investment income		7,087,612
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(20,545,861)
Net unrealized appreciation (depreciation) on investments		35,623,181
Net Assets		$ 347,044,559

Initial Class: Net Asset Value, offering price and redemption price per share ($295,656,410 ÷ 21,305,700 shares)		$ 13.88

Service Class: Net Asset Value, offering price and redemption price per share ($21,902,862 ÷ 1,585,468 shares)		$ 13.81

Service Class 2: Net Asset Value, offering price and redemption price per share ($29,485,287 ÷ 2,144,587 shares)		$ 13.75

Statement of Operations

	Year ended December 31, 2003

Investment Income
Dividends		$ 2,656,923
Interest		6,182,656
Total income		8,839,579

Expenses
Management fee	$ 1,310,786
Transfer agent fees	215,147
Distribution fees	79,307
Accounting fees and expenses	119,009
Non-interested trustees' compensation	1,492
Custodian fees and expenses	23,741
Audit	54,479
Legal	1,737
Miscellaneous	58,941
Total expenses before reductions	1,864,639
Expense reductions	(12,082)	1,852,557
Net investment income (loss)		6,987,022
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	3,035,827
Foreign currency transactions	126
Swap agreements	26,393
Total net realized gain (loss)		3,062,346
Change in net unrealized appreciation (depreciation) on: Investment securities	38,952,800
Assets and liabilities in foreign currencies	(320)
Swap agreements	46,163
Delayed delivery commitments	464
Total change in net unrealized appreciation (depreciation)		38,999,107
Net gain (loss)		42,061,453
Net increase (decrease) in net assets resulting from operations		$ 49,048,475

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

Annual Report

Fidelity Variable Insurance Products: Balanced Portfolio
Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ 6,987,022	$ 8,209,006
Net realized gain (loss)	3,062,346	(9,031,439)
Change in net unrealized appreciation (depreciation)	38,999,107	(27,890,095)
Net increase (decrease) in net assets resulting from operations	49,048,475	(28,712,528)
Distributions to shareholders from net investment income	(7,974,845)	(8,837,001)
Share transactions - net increase (decrease)	32,311,069	4,349,125
Total increase (decrease) in net assets	73,384,699	(33,200,404)

Net Assets
Beginning of period	273,659,860	306,860,264
End of period (including undistributed net investment income of $7,087,612 and undistributed net investment income of $8,300,210, respectively)	$ 347,044,559	$ 273,659,860

Other Information:
Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	4,747,709	87,816	932,305
Reinvested	599,512	50,167	45,486
Redeemed	(3,372,673)	(205,767)	(374,801)
Net increase (decrease)	1,974,548	(67,784)	602,990

Dollars Sold	$ 61,609,403	$ 1,115,888	$ 11,910,142
Reinvested	6,882,396	573,909	518,540
Redeemed	(42,908,423)	(2,600,420)	(4,790,366)
Net increase (decrease)	$ 25,583,376	$ (910,623)	$ 7,638,316

Share Transactions	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	3,458,033	233,061	650,930
Reinvested	586,697	54,643	37,261
Redeemed	(4,004,430)	(497,329)	(380,772)
Net increase (decrease)	40,300	(209,625)	307,419

Dollars Sold	$ 44,057,181	$ 3,005,489	$ 8,292,512
Reinvested	7,644,656	709,812	482,533
Redeemed	(49,132,561)	(6,145,338)	(4,565,159)
Net increase (decrease)	$ 2,569,276	$ (2,430,037)	$ 4,209,886

Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 6,882,396	$ 573,909	$ 518,540
From net realized gain	-	-	-
Total	$ 6,882,396	$ 573,909	$ 518,540
	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 7,644,656	$ 709,812	$ 482,533
From net realized gain	-	-	-
Total	$ 7,644,656	$ 709,812	$ 482,533

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

Balanced Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 12.16	$ 13.72	$ 14.45	$ 16.00	$ 16.11
Income from Investment Operations
Net investment income (loss)^C	.30	.36	.42	.48	.45
Net realized and unrealized gain (loss)	1.78	(1.53)	(.63)	(1.15)	.24
Total from investment operations	2.08	(1.17)	(.21)	(.67)	.69
Distributions from net investment income	(.36)	(.39)	(.52)	(.48)	(.37)
Distributions from net realized gain	-	-	-	(.35)	(.43)
Distributions in excess of net realized gain	-	-	-	(.05)	-
Total distributions	(.36)	(.39)	(.52)	(.88)	(.80)
Net asset value, end of period	$ 13.88	$ 12.16	$ 13.72	$ 14.45	$ 16.00
Total Return^{A, B}	17.72%	(8.72)%	(1.58)%	(4.30)%	4.55%
Ratios to Average Net Assets^D
Expenses before expense reductions	.59%	.57%	.57%	.58%	.57%
Expenses net of voluntary waivers, if any	.59%	.57%	.57%	.58%	.57%
Expenses net of all reductions	.58%	.55%	.55%	.56%	.55%
Net investment income (loss)	2.32%	2.84%	3.11%	3.18%	2.87%
Supplemental Data
Net assets, end of period (000 omitted)	$ 295,656	$ 235,064	$ 264,608	$ 250,802	$ 325,371
Portfolio turnover rate	102%	134%	126%	126%	108%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 12.11	$ 13.66	$ 14.39	$ 15.94	$ 16.07
Income from Investment Operations
Net investment income (loss)^C	.28	.34	.41	.46	.43
Net realized and unrealized gain (loss)	1.77	(1.51)	(.64)	(1.14)	.24
Total from investment operations	2.05	(1.17)	(.23)	(.68)	.67
Distributions from net investment income	(.35)	(.38)	(.50)	(.47)	(.37)
Distributions from net realized gain	-	-	-	(.35)	(.43)
Distributions in excess of net realized gain	-	-	-	(.05)	-
Total distributions	(.35)	(.38)	(.50)	(.87)	(.80)
Net asset value, end of period	$ 13.81	$ 12.11	$ 13.66	$ 14.39	$ 15.94
Total Return^{A, B}	17.53%	(8.75)%	(1.72)%	(4.38)%	4.43%
Ratios to Average Net Assets^D
Expenses before expense reductions	.69%	.67%	.67%	.68%	.67%
Expenses net of voluntary waivers, if any	.69%	.67%	.67%	.68%	.67%
Expenses net of all reductions	.68%	.65%	.65%	.66%	.66%
Net investment income (loss)	2.22%	2.74%	3.01%	3.08%	2.77%
Supplemental Data
Net assets, end of period (000 omitted)	$ 21,903	$ 20,019	$ 25,455	$ 27,563	$ 27,054
Portfolio turnover rate	102%	134%	126%	126%	108%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 12.05	$ 13.61	$ 14.37	$ 15.59
Income from Investment Operations
Net investment income (loss)^E	.26	.32	.38	.40
Net realized and unrealized gain (loss)	1.77	(1.51)	(.63)	(.75)
Total from investment operations	2.03	(1.19)	(.25)	(.35)
Distributions from net investment income	(.33)	(.37)	(.51)	(.47)
Distributions from net realized gain	-	-	-	(.35)
Distributions in excess of net realized gain	-	-	-	(.05)
Total distributions	(.33)	(.37)	(.51)	(.87)
Net asset value, end of period	$ 13.75	$ 12.05	$ 13.61	$ 14.37
Total Return^{B, C, D}	17.41%	(8.93)%	(1.87)%	(2.37)%
Ratios to Average Net Assets^G
Expenses before expense reductions	.84%	.83%	.83%	.85%^A
Expenses net of voluntary waivers, if any	.84%	.83%	.83%	.85%^A
Expenses net of all reductions	.84%	.81%	.81%	.83%^A
Net investment income (loss)	2.06%	2.58%	2.85%	2.91%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 29,485	$ 18,577	$ 16,798	$ 4,797
Portfolio turnover rate	102%	134%	126%	126%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period January 12, 2000 (commencement of sale of shares) to December 31, 2000.

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

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

Balanced Portfolio

Fidelity Variable Insurance Products: Growth & Income Portfolio

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. Performance numbers are net of all underlying fund operating expenses, but do not include any insurance charges imposed by your insurance company's separate account. If performance information included the effect of these additional charges, the total returns would have been lower. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Life of fund ^A
Fidelity® VIP: Growth & Income - Initial Class	23.77%	-0.18%	7.45%
Fidelity VIP: Growth & Income - Service Class^B	23.60%	-0.29%	7.33%
Fidelity VIP: Growth & Income - Service Class 2 ^C	23.44%	-0.41%	7.24%

^A From December 31, 1996.

$10,000 Over Life of Fund

Annual Report

Fidelity Variable Insurance Products: Growth & Income Portfolio

Management's Discussion of Fund Performance

Comments from Louis Salemy, Portfolio Manager of Fidelity® Variable Insurance Products: Growth & Income Portfolio

Annual Report

Fidelity Variable Insurance Products: Growth & Income Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Omnicom Group, Inc.	6.5
Gillette Co.	5.8
BellSouth Corp.	5.3
Morgan Stanley	5.2
EchoStar Communications Corp. Class A	4.8
	27.6
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Financials	21.2
Consumer Discretionary	20.0
Consumer Staples	16.9
Telecommunication Services	8.4
Industrials	6.0

Asset Allocation as of December 31, 2003
% of fund's net assets *
	Stocks	88.5%
	Short-Term Investments and Net Other Assets	11.5%

* Foreign investments

4.4%

Annual Report

Fidelity Variable Insurance Products: Growth & Income Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 88.5%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 20.0%
Hotels, Restaurants & Leisure - 0.6%
Carnival Corp. unit	152,200		$ 6,046,906
Starwood Hotels & Resorts Worldwide, Inc. unit	96,100		3,456,717
			9,503,623
Household Durables - 0.1%
Garmin Ltd.	26,410		1,438,817
Media - 15.9%
Comcast Corp. Class A (special) (a)	266,200		8,326,736
E.W. Scripps Co. Class A	384,300		36,178,002
EchoStar Communications Corp. Class A (a)	2,107,100		71,641,400
News Corp. Ltd. ADR	469,100		16,934,510
Omnicom Group, Inc.	1,100,600		96,115,398
Pegasus Communications Corp. Class A (a)	142,909		4,012,885
Tribune Co.	44,500		2,296,200
			235,505,131
Multiline Retail - 2.2%
Dollar Tree Stores, Inc. (a)	216,500		6,507,990
Kohl's Corp. (a)	570,400		25,633,776
Nordstrom, Inc.	29,700		1,018,710
			33,160,476
Specialty Retail - 0.7%
Hollywood Entertainment Corp. (a)	751,700		10,335,875
Textiles Apparel & Luxury Goods - 0.5%
Liz Claiborne, Inc.	205,800		7,297,668
TOTAL CONSUMER DISCRETIONARY			297,241,590
CONSUMER STAPLES - 16.9%
Beverages - 1.2%
Anheuser-Busch Companies, Inc.	74,800		3,940,464
The Coca-Cola Co.	290,400		14,737,800
			18,678,264
Food & Staples Retailing - 5.3%
Costco Wholesale Corp. (a)	152,400		5,666,232
Sysco Corp.	164,700		6,131,781
Wal-Mart Stores, Inc.	921,900		48,906,795
Walgreen Co.	485,000		17,644,300
			78,349,108
Food Products - 0.8%
McCormick & Co., Inc. (non-vtg.)	421,100		12,675,110
Household Products - 2.6%
Colgate-Palmolive Co.	309,200		15,475,460
Kimberly-Clark Corp.	387,000		22,867,830
			38,343,290
Personal Products - 5.8%
Gillette Co.	2,335,300		85,775,569

	Shares		Value (Note 1)
Tobacco - 1.2%
Altria Group, Inc.	318,960		$ 17,357,803
TOTAL CONSUMER STAPLES			251,179,144
ENERGY - 4.6%
Oil & Gas - 4.6%
BP PLC sponsored ADR	471,100		23,248,785
Exxon Mobil Corp.	1,082,056		44,364,296
			67,613,081
FINANCIALS - 21.2%
Capital Markets - 11.4%
Goldman Sachs Group, Inc.	374,500		36,974,385
Merrill Lynch & Co., Inc.	935,100		54,843,615
Morgan Stanley	1,332,700		77,123,349
			168,941,349
Commercial Banks - 5.2%
Bank One Corp.	180,300		8,219,877
Wells Fargo & Co.	1,186,400		69,867,096
			78,086,973
Consumer Finance - 0.8%
American Express Co.	236,700		11,416,041
Insurance - 3.5%
Allstate Corp.	288,500		12,411,270
American International Group, Inc.	454,905		30,151,103
PartnerRe Ltd.	111,600		6,478,380
Travelers Property Casualty Corp. Class B	141,300		2,397,861
			51,438,614
Real Estate - 0.3%
Equity Office Properties Trust	165,800		4,750,170
TOTAL FINANCIALS			314,633,147
HEALTH CARE - 4.5%
Biotechnology - 0.9%
Amgen, Inc. (a)	215,000		13,287,000
Health Care Equipment & Supplies - 1.2%
Advanced Medical Optics, Inc. (a)	1		20
Alcon, Inc.	124,300		7,525,122
Medtronic, Inc.	227,200		11,044,192
			18,569,334
Pharmaceuticals - 2.4%
Allergan, Inc.	98,500		7,565,785
Pfizer, Inc.	788,400		27,854,172
			35,419,957
TOTAL HEALTH CARE			67,276,291
INDUSTRIALS - 6.0%
Aerospace & Defense - 1.5%
EADS NV	135,200		3,205,783
Lockheed Martin Corp.	115,500		5,936,700
Common Stocks - continued
	Shares		Value (Note 1)
INDUSTRIALS - continued
Aerospace & Defense - continued
Northrop Grumman Corp.	83,100		$ 7,944,360
United Technologies Corp.	58,500		5,544,045
			22,630,888
Airlines - 1.4%
Continental Airlines, Inc. Class B (a)	668,500		10,876,495
MAIR Holdings, Inc. (a)	435,200		3,168,256
Northwest Airlines Corp. (a)	320,000		4,038,400
Southwest Airlines Co.	179,500		2,897,130
			20,980,281
Building Products - 0.2%
American Standard Companies, Inc. (a)	29,300		2,950,510
Commercial Services & Supplies - 0.4%
Avery Dennison Corp.	92,400		5,176,248
Industrial Conglomerates - 1.8%
General Electric Co.	850,800		26,357,784
Machinery - 0.1%
Illinois Tool Works, Inc.	14,500		1,216,695
Road & Rail - 0.6%
Union Pacific Corp.	136,200		9,463,176
TOTAL INDUSTRIALS			88,775,582
INFORMATION TECHNOLOGY - 5.9%
Communications Equipment - 1.9%
Cisco Systems, Inc. (a)	1,139,700		27,683,313
Foundry Networks, Inc. (a)	300		8,208
Nokia Corp. sponsored ADR	27,900		474,300
			28,165,821
Computers & Peripherals - 0.1%
Diebold, Inc.	2,300		123,901
Lexmark International, Inc. Class A (a)	14,000		1,100,960
			1,224,861
IT Services - 0.6%
Paychex, Inc.	241,819		8,995,667
Software - 3.3%
Microsoft Corp.	1,814,800		49,979,592
TOTAL INFORMATION TECHNOLOGY			88,365,941
MATERIALS - 0.1%
Chemicals - 0.1%
PPG Industries, Inc.	28,900		1,850,178
Praxair, Inc.	4,600		175,720
			2,025,898

	Shares		Value (Note 1)
Containers & Packaging - 0.0%
Ball Corp.	6		$ 357
TOTAL MATERIALS			2,026,255
TELECOMMUNICATION SERVICES - 8.4%
Diversified Telecommunication Services - 8.4%
BellSouth Corp.	2,802,600		79,313,580
SBC Communications, Inc.	790,530		20,609,117
Verizon Communications, Inc.	701,500		24,608,620
			124,531,317
UTILITIES - 0.9%
Electric Utilities - 0.9%
Entergy Corp.	228,300		13,042,779
FPL Group, Inc.	2,800		183,176
			13,225,955
TOTAL COMMON STOCKS (Cost $1,174,667,456)		1,314,868,303
Money Market Funds - 13.2%

Fidelity Cash Central Fund, 1.07% (b)	192,721,736		192,721,736
Fidelity Securities Lending Cash Central Fund, 1.09% (b)	3,255,875		3,255,875
TOTAL MONEY MARKET FUNDS (Cost $195,977,611)		195,977,611
TOTAL INVESTMENT PORTFOLIO - 101.7% (Cost $1,370,645,067)			1,510,845,914
NET OTHER ASSETS - (1.7)%			(25,777,628)
NET ASSETS - 100%		$ 1,485,068,286

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $468,088,420 and $267,385,284, respectively.

Income Tax Information

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

Growth & Income Portfolio

Fidelity Variable Insurance Products: Growth & Income Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (including securities loaned of $3,104,535) (cost $1,370,645,067) - See accompanying schedule		$ 1,510,845,914
Receivable for fund shares sold		654,942
Dividends receivable		1,158,009
Interest receivable		172,140
Prepaid expenses		7,722
Other receivables		28,733
Total assets		1,512,867,460

Liabilities
Payable for investments purchased	$ 22,903,336
Payable for fund shares redeemed	803,077
Accrued management fee	574,873
Distribution fees payable	96,439
Other affiliated payables	110,046
Other payables and accrued expenses	55,528
Collateral on securities loaned, at value	3,255,875
Total liabilities		27,799,174

Net Assets		$ 1,485,068,286
Net Assets consist of:
Paid in capital		$ 1,502,091,257
Undistributed net investment income		12,027,562
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(169,251,380)
Net unrealized appreciation (depreciation) on investments		140,200,847
Net Assets		$ 1,485,068,286
Initial Class: Net Asset Value, offering price and redemption price per share ($785,493,956 ÷ 59,249,650 shares)		$ 13.26

Service Class: Net Asset Value, offering price and redemption price per share ($357,585,122 ÷ 27,133,909 shares)		$ 13.18

Service Class 2: Net Asset Value, offering price and redemption price per share ($341,989,208 ÷ 26,133,761 shares)		$ 13.09

Statement of Operations

	Year ended December 31, 2003

Investment Income
Dividends		$ 17,031,170
Interest		2,596,201
Security lending		24,914
Total income		19,652,285

Expenses
Management fee	$ 5,872,983
Transfer agent fees	846,160
Distribution fees	851,782
Accounting and security lending fees	297,038
Non-interested trustees' compensation	4,861
Custodian fees and expenses	18,218
Audit	38,843
Legal	7,697
Miscellaneous	183,971
Total expenses before reductions	8,121,553
Expense reductions	(33,216)	8,088,337
Net investment income (loss)		11,563,948
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	(8,956,799)
Foreign currency transactions	(366)
Total net realized gain (loss)		(8,957,165)
Change in net unrealized appreciation (depreciation) on investment securities		256,023,394
Net gain (loss)		247,066,229
Net increase (decrease) in net assets resulting from operations		$ 258,630,177

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

Annual Report

Fidelity Variable Insurance Products: Growth & Income Portfolio
Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ 11,563,948	$ 14,033,270
Net realized gain (loss)	(8,957,165)	(105,954,322)
Change in net unrealized appreciation (depreciation)	256,023,394	(123,219,077)
Net increase (decrease) in net assets resulting from operations	258,630,177	(215,140,129)
Distributions to shareholders from net investment income	(12,772,749)	(15,060,404)
Share transactions - net increase (decrease)	210,037,372	8,584,266
Total increase (decrease) in net assets	455,894,800	(221,616,267)

Net Assets
Beginning of period	1,029,173,486	1,250,789,753
End of period (including undistributed net investment income of $12,027,562 and undistributed net investment income of $13,960,647, respectively)	$ 1,485,068,286	$ 1,029,173,486

Other Information:
Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	8,588,135	4,730,597	14,305,974
Reinvested	791,445	298,276	164,516
Redeemed	(8,881,933)	(1,062,769)	(1,468,648)
Net increase (decrease)	497,647	3,966,104	13,001,842

Dollars Sold	$ 102,662,499	$ 56,731,473	$ 170,921,383
Reinvested	8,080,656	3,030,479	1,661,614
Redeemed	(103,784,385)	(12,033,144)	(17,233,203)
Net increase (decrease)	$ 6,958,770	$ 47,728,808	$ 155,349,794

Share Transactions	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	5,547,232	3,741,835	8,546,664
Reinvested	858,112	262,919	83,941
Redeemed	(15,376,984)	(2,273,174)	(1,333,545)
Net increase (decrease)	(8,971,640)	1,731,580	7,297,060

Dollars Sold	$ 65,703,944	$ 44,246,058	$ 98,819,591
Reinvested	10,743,568	3,275,965	1,040,871
Redeemed	(175,367,574)	(25,009,314)	(14,868,843)
Net increase (decrease)	$ (98,920,062)	$ 22,512,709	$ 84,991,619

Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 8,080,656	$ 3,030,479	$ 1,661,614
From net realized gain	-	-	-
Total	$ 8,080,656	$ 3,030,479	$ 1,661,614

	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 10,743,568	$ 3,275,965	$ 1,040,871
From net realized gain	-	-	-
Total	$ 10,743,568	$ 3,275,965	$ 1,040,871

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

Growth & Income Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 10.86	$ 13.19	$ 15.26	$ 17.30	$ 16.15
Income from Investment Operations
Net investment income (loss)^C	.12	.15	.18	.20	.18
Net realized and unrealized gain (loss)	2.42	(2.32)	(1.45)	(.81)	1.27
Total from investment operations	2.54	(2.17)	(1.27)	(.61)	1.45
Distributions from net investment income	(.14)	(.16)	(.19)	(.19)	(.10)
Distributions from net realized gain	-	-	(.61)	(1.24)	(.20)
Total distributions	(.14)	(.16)	(.80)	(1.43)	(.30)
Net asset value, end of period	$ 13.26	$ 10.86	$ 13.19	$ 15.26	$ 17.30
Total Return^{A, B}	23.77%	(16.61)%	(8.75)%	(3.62)%	9.17%
Ratios to Average Net Assets^D
Expenses before expense reductions	.59%	.59%	.58%	.58%	.60%
Expenses net of voluntary waivers, if any	.59%	.59%	.58%	.58%	.60%
Expenses net of all reductions	.59%	.58%	.56%	.57%	.59%
Net investment income (loss)	1.02%	1.30%	1.34%	1.26%	1.08%
Supplemental Data
Net assets, end of period (000 omitted)	$ 785,494	$ 638,124	$ 893,359	$ 1,011,393	$ 1,259,396
Portfolio turnover rate	25%	43%	58%	72%	58%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 10.80	$ 13.12	$ 15.19	$ 17.24	$ 16.11
Income from Investment Operations
Net investment income (loss)^C	.11	.14	.16	.18	.16
Net realized and unrealized gain (loss)	2.40	(2.31)	(1.44)	(.80)	1.27
Total from investment operations	2.51	(2.17)	(1.28)	(.62)	1.43
Distributions from net investment income	(.13)	(.15)	(.18)	(.19)	(.10)
Distributions from net realized gain	-	-	(.61)	(1.24)	(.20)
Total distributions	(.13)	(.15)	(.79)	(1.43)	(.30)
Net asset value, end of period	$ 13.18	$ 10.80	$ 13.12	$ 15.19	$ 17.24
Total Return^{A, B}	23.60%	(16.69)%	(8.85)%	(3.69)%	9.06%
Ratios to Average Net Assets^D
Expenses before expense reductions	.69%	.69%	.68%	.69%	.70%
Expenses net of voluntary waivers, if any	.69%	.69%	.68%	.69%	.70%
Expenses net of all reductions	.69%	.68%	.66%	.68%	.69%
Net investment income (loss)	.92%	1.20%	1.24%	1.16%	.98%
Supplemental Data
Net assets, end of period (000 omitted)	$ 357,585	$ 250,160	$ 281,194	$ 212,994	$ 95,600
Portfolio turnover rate	25%	43%	58%	72%	58%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 10.73	$ 13.07	$ 15.17	$ 16.94
Income from Investment Operations
Net investment income (loss)^E	.09	.12	.14	.15
Net realized and unrealized gain (loss)	2.39	(2.30)	(1.44)	(.49)
Total from investment operations	2.48	(2.18)	(1.30)	(.34)
Distributions from net investment income	(.12)	(.16)	(.19)	(.19)
Distributions from net realized gain	-	-	(.61)	(1.24)
Total distributions	(.12)	(.16)	(.80)	(1.43)
Net asset value, end of period	$ 13.09	$ 10.73	$ 13.07	$ 15.17
Total Return^{B, C, D}	23.44%	(16.84)%	(9.01)%	(2.11)%
Ratios to Average Net Assets^G
Expenses before expense reductions	.85%	.85%	.84%	.85%^A
Expenses net of voluntary waivers, if any	.85%	.85%	.84%	.85%^A
Expenses net of all reductions	.84%	.84%	.82%	.84%^A
Net investment income (loss)	.76%	1.05%	1.08%	1.00%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 341,989	$ 140,890	$ 76,237	$ 13,025
Portfolio turnover rate	25%	43%	58%	72%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period January 12, 2000 (commencement of sale of shares) to December 31, 2000.

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

Growth & Income Portfolio

Fidelity Variable Insurance Products: Growth Opportunities Portfolio

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. Performance numbers are net of all underlying fund operating expenses, but do not include any insurance charges imposed by your insurance company's separate account. If performance information included the effect of these additional charges, the total returns would have been lower. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Life of fund ^A
Fidelity ® VIP: Growth Opportunities - Initial Class	29.87%	-5.56%	7.44%
Fidelity VIP: Growth Opportunities - Service Class ^B	29.66%	-5.65%	7.37%
Fidelity VIP: Growth Opportunities - Service Class 2 ^C	29.40%	-5.78%	7.29%

^A From January 3, 1995

$10,000 Over Life of Fund

Annual Report

Fidelity Variable Insurance Products: Growth Opportunities Portfolio

Management's Discussion of Fund Performance

Comments from Bettina Doulton, Portfolio Manager of Fidelity® Variable Insurance Products: Growth Opportunities Portfolio

Annual Report

Fidelity Variable Insurance Products: Growth Opportunities Portfolio

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Microsoft Corp.	3.5
General Electric Co.	3.1
Citigroup, Inc.	3.0
Pfizer, Inc.	2.9
Viacom, Inc. Class B (non-vtg.)	2.2
	14.7
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Consumer Discretionary	18.3
Information Technology	18.2
Financials	13.3
Health Care	13.0
Industrials	10.2

Asset Allocation as of December 31, 2003
% of fund's net assets *
	Stocks and Equity Futures	98.2%
	Short-Term Investments and Net Other Assets	1.8%

* Foreign investments

6.9%

Annual Report

Fidelity Variable Insurance Products: Growth Opportunities Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 93.7%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 18.3%
Automobiles - 0.4%
Harley-Davidson, Inc.	68,200		$ 3,241,546
Hotels, Restaurants & Leisure - 2.2%
Carnival Corp. unit	22,800		905,844
Darden Restaurants, Inc.	43,100		906,824
Hilton Hotels Corp.	198,600		3,402,018
Krispy Kreme Doughnuts, Inc. (a)	48,500		1,775,100
Mandalay Resort Group	21,500		961,480
McDonald's Corp.	110,700		2,748,681
Panera Bread Co. Class A (a)	30,700		1,213,571
Starbucks Corp. (a)	51,200		1,692,672
Starwood Hotels & Resorts Worldwide, Inc. unit	102,500		3,686,925
			17,293,115
Internet & Catalog Retail - 0.5%
Amazon.com, Inc. (a)	38,400		2,021,376
InterActiveCorp (a)	55,800		1,893,294
			3,914,670
Media - 11.8%
Cablevision Systems Corp. - NY Group Class A (a)	126,700		2,963,513
Clear Channel Communications, Inc.	160,600		7,520,898
Comcast Corp. Class A (special) (a)	100,808		3,153,274
Dow Jones & Co., Inc.	66,500		3,315,025
Fox Entertainment Group, Inc. Class A (a)	324,400		9,456,260
Hughes Electronics Corp. (a)	70,055		1,159,410
Liberty Media Corp. Class A (a)	335,800		3,992,662
Meredith Corp.	50,600		2,469,786
News Corp. Ltd.:
ADR	294,600		10,635,060
sponsored ADR	7,835		237,009
Omnicom Group, Inc.	33,600		2,934,288
Time Warner, Inc. (a)	811,200		14,593,488
Univision Communications, Inc. Class A (a)	210,300		8,346,807
Viacom, Inc. Class B (non-vtg.)	391,120		17,357,906
Walt Disney Co.	152,700		3,562,491
			91,697,877
Specialty Retail - 2.8%
Best Buy Co., Inc.	102,600		5,359,824
Circuit City Stores, Inc.	179,000		1,813,270
Home Depot, Inc.	150,900		5,355,441
Lowe's Companies, Inc.	23,300		1,290,587
Staples, Inc. (a)	212,200		5,793,060
Williams-Sonoma, Inc. (a)	49,900		1,735,023
			21,347,205

	Shares		Value (Note 1)
Textiles Apparel & Luxury Goods - 0.6%
Coach, Inc. (a)	32,800		$ 1,238,200
NIKE, Inc. Class B	47,100		3,224,466
			4,462,666
TOTAL CONSUMER DISCRETIONARY			141,957,079
CONSUMER STAPLES - 8.9%
Beverages - 2.8%
Anheuser-Busch Companies, Inc.	39,200		2,065,056
PepsiCo, Inc.	68,500		3,193,470
The Coca-Cola Co.	318,600		16,168,950
			21,427,476
Food & Staples Retailing - 1.2%
Costco Wholesale Corp. (a)	26,600		988,988
Sysco Corp.	67,200		2,501,856
Wal-Mart Stores, Inc.	106,100		5,628,605
			9,119,449
Food Products - 1.1%
Dean Foods Co. (a)	142,500		4,683,975
The J.M. Smucker Co.	80,078		3,626,733
			8,310,708
Household Products - 0.6%
Colgate-Palmolive Co.	73,900		3,698,695
Procter & Gamble Co.	10,820		1,080,702
			4,779,397
Personal Products - 2.4%
Avon Products, Inc.	23,222		1,567,253
Gillette Co.	470,970		17,298,728
			18,865,981
Tobacco - 0.8%
Altria Group, Inc.	114,320		6,221,294
TOTAL CONSUMER STAPLES			68,724,305
ENERGY - 5.5%
Energy Equipment & Services - 2.4%
Baker Hughes, Inc.	88,100		2,833,296
Cooper Cameron Corp. (a)	30,800		1,435,280
Helmerich & Payne, Inc.	25,200		703,836
Schlumberger Ltd. (NY Shares)	256,500		14,035,680
			19,008,092
Oil & Gas - 3.1%
BP PLC sponsored ADR	171,290		8,453,162
ConocoPhillips	47,930		3,142,770
Exxon Mobil Corp.	301,400		12,357,400
			23,953,332
TOTAL ENERGY			42,961,424
Common Stocks - continued
	Shares		Value (Note 1)
FINANCIALS - 13.3%
Capital Markets - 4.4%
Bank of New York Co., Inc.	32,300		$ 1,069,776
Charles Schwab Corp.	100,500		1,189,920
Goldman Sachs Group, Inc.	44,700		4,413,231
Lehman Brothers Holdings, Inc.	22,700		1,752,894
Merrill Lynch & Co., Inc.	215,000		12,609,750
Morgan Stanley	223,200		12,916,584
			33,952,155
Commercial Banks - 0.6%
Bank of America Corp.	38,100		3,064,383
Bank One Corp.	33,700		1,536,383
			4,600,766
Consumer Finance - 1.7%
American Express Co.	255,000		12,298,650
SLM Corp.	21,200		798,816
			13,097,466
Diversified Financial Services - 3.0%
Citigroup, Inc.	482,307		23,411,182
Insurance - 2.0%
AFLAC, Inc.	11,000		397,980
American International Group, Inc.	202,062		13,392,669
MetLife, Inc.	22,400		754,208
Travelers Property Casualty Corp. Class A	49,709		834,117
			15,378,974
Thrifts & Mortgage Finance - 1.6%
Fannie Mae	139,200		10,448,352
Freddie Mac	37,400		2,181,168
			12,629,520
TOTAL FINANCIALS			103,070,063
HEALTH CARE - 13.0%
Biotechnology - 0.2%
Celgene Corp. (a)	27,900		1,256,058
CV Therapeutics, Inc. (a)	16,000		234,560
			1,490,618
Health Care Equipment & Supplies - 2.2%
Alcon, Inc.	98,400		5,957,136
Bausch & Lomb, Inc.	64,700		3,357,930
Becton, Dickinson & Co.	97,000		3,990,580
C.R. Bard, Inc.	8,400		682,500
Medtronic, Inc.	40,500		1,968,705
St. Jude Medical, Inc. (a)	17,880		1,096,938
			17,053,789
Health Care Providers & Services - 0.8%
Cardinal Health, Inc.	14,205		868,778
McKesson Corp.	22,400		720,384

	Shares		Value (Note 1)
UnitedHealth Group, Inc.	39,900		$ 2,321,382
WebMD Corp. (a)	252,300		2,268,177
			6,178,721
Pharmaceuticals - 9.8%
Abbott Laboratories	178,830		8,333,478
AstraZeneca PLC sponsored ADR	44,600		2,157,748
Barr Laboratories, Inc. (a)	36,145		2,781,358
Bristol-Myers Squibb Co.	27,900		797,940
Eli Lilly & Co.	38,900		2,735,837
Forest Laboratories, Inc. (a)	27,700		1,711,860
Johnson & Johnson	256,500		13,250,790
Merck & Co., Inc.	153,700		7,100,940
Novartis AG sponsored ADR	134,700		6,181,383
Pfizer, Inc.	629,593		22,243,521
Schering-Plough Corp.	87,100		1,514,669
Watson Pharmaceuticals, Inc. (a)	32,700		1,504,200
Wyeth	142,500		6,049,125
			76,362,849
TOTAL HEALTH CARE			101,085,977
INDUSTRIALS - 10.2%
Aerospace & Defense - 1.8%
Boeing Co.	117,900		4,968,306
EADS NV	78,650		1,864,903
Honeywell International, Inc.	22,700		758,861
Lockheed Martin Corp.	54,370		2,794,618
Northrop Grumman Corp.	34,100		3,259,960
			13,646,648
Air Freight & Logistics - 1.3%
FedEx Corp.	68,400		4,617,000
United Parcel Service, Inc. Class B	79,100		5,896,905
			10,513,905
Airlines - 0.7%
Continental Airlines, Inc. Class B (a)	55,700		906,239
Southwest Airlines Co.	267,450		4,316,643
			5,222,882
Commercial Services & Supplies - 0.5%
Apollo Group, Inc. Class A (a)	22,300		1,516,400
Manpower, Inc.	33,300		1,567,764
Monster Worldwide, Inc. (a)	22,600		496,296
			3,580,460
Industrial Conglomerates - 4.6%
3M Co.	89,800		7,635,694
General Electric Co.	775,250		24,017,245
Tyco International Ltd.	162,200		4,298,300
			35,951,239
Machinery - 1.1%
Caterpillar, Inc.	50,200		4,167,604
Common Stocks - continued
	Shares		Value (Note 1)
INDUSTRIALS - continued
Machinery - continued
Danaher Corp.	23,500		$ 2,156,125
Parker Hannifin Corp.	33,200		1,975,400
			8,299,129
Road & Rail - 0.2%
CSX Corp.	34,290		1,232,383
Union Pacific Corp.	11,040		767,059
			1,999,442
TOTAL INDUSTRIALS			79,213,705
INFORMATION TECHNOLOGY - 18.2%
Communications Equipment - 4.1%
CIENA Corp. (a)	63,800		423,632
Cisco Systems, Inc. (a)	643,460		15,629,643
Corning, Inc. (a)	232,600		2,426,018
Juniper Networks, Inc. (a)	199,600		3,728,528
Motorola, Inc.	186,700		2,626,869
Nortel Networks Corp. (a)	369,600		1,563,409
QUALCOMM, Inc.	22,600		1,218,818
Scientific-Atlanta, Inc.	48,470		1,323,231
Sonus Networks, Inc. (a)	322,800		2,440,368
			31,380,516
Computers & Peripherals - 2.9%
Dell, Inc. (a)	190,900		6,482,964
Diebold, Inc.	46,300		2,494,181
EMC Corp. (a)	157,000		2,028,440
Hewlett-Packard Co.	183,000		4,203,510
International Business Machines Corp.	22,600		2,094,568
Lexmark International, Inc. Class A (a)	17,000		1,336,880
Maxtor Corp. (a)	90,500		1,004,550
Network Appliance, Inc. (a)	85,500		1,755,315
Sun Microsystems, Inc. (a)	211,200		948,288
			22,348,696
Electronic Equipment & Instruments - 0.2%
Agilent Technologies, Inc. (a)	49,400		1,444,456
Internet Software & Services - 0.4%
Yahoo!, Inc. (a)	72,700		3,283,859
IT Services - 0.2%
Hewitt Associates, Inc. Class A (a)	29,500		882,050
Paychex, Inc.	22,166		824,575
			1,706,625
Semiconductors & Semiconductor Equipment - 5.6%
Agere Systems, Inc. Class A (a)	54,900		167,445
Analog Devices, Inc.	115,300		5,263,445
Applied Materials, Inc. (a)	123,000		2,761,350
Intel Corp.	318,210		10,246,362
KLA-Tencor Corp. (a)	42,500		2,493,475
Lam Research Corp. (a)	81,700		2,638,910

	Shares		Value (Note 1)
Marvell Technology Group Ltd. (a)	27,877		$ 1,057,375
National Semiconductor Corp. (a)	141,300		5,568,633
Omnivision Technologies, Inc. (a)	9,100		502,775
Samsung Electronics Co. Ltd.	2,850		1,077,861
Teradyne, Inc. (a)	38,800		987,460
Texas Instruments, Inc.	260,100		7,641,738
Xilinx, Inc. (a)	75,300		2,917,122
			43,323,951
Software - 4.8%
Adobe Systems, Inc.	96,200		3,780,660
Microsoft Corp.	996,520		27,444,159
Oracle Corp. (a)	73,800		974,160
Red Hat, Inc. (a)	65,899		1,236,924
Symantec Corp. (a)	50,600		1,753,290
VERITAS Software Corp. (a)	63,788		2,370,362
			37,559,555
TOTAL INFORMATION TECHNOLOGY			141,047,658
MATERIALS - 4.2%
Chemicals - 2.1%
Dow Chemical Co.	196,300		8,160,191
E.I. du Pont de Nemours & Co.	44,900		2,060,461
International Flavors & Fragrances, Inc.	43,100		1,505,052
Praxair, Inc.	118,600		4,530,520
			16,256,224
Containers & Packaging - 0.1%
Pactiv Corp. (a)	39,800		951,220
Metals & Mining - 1.7%
Alcoa, Inc.	171,700		6,524,600
Phelps Dodge Corp. (a)	87,420		6,651,788
			13,176,388
Paper & Forest Products - 0.3%
International Paper Co.	54,700		2,358,117
TOTAL MATERIALS			32,741,949
TELECOMMUNICATION SERVICES - 2.0%
Diversified Telecommunication Services - 2.0%
BellSouth Corp.	42,800		1,211,240
NTL, Inc. (a)	10,800		753,300
SBC Communications, Inc.	266,060		6,936,184
Verizon Communications, Inc.	183,400		6,433,672
			15,334,396
UTILITIES - 0.1%
Electric Utilities - 0.1%
PG&E Corp. (a)	21,600		599,832
TOTAL COMMON STOCKS (Cost $597,451,356)		726,736,388

U.S. Treasury Obligations - 0.3%
	Principal Amount	Value (Note 1)
U.S. Treasury Bills, yield at date of purchase 0.87% 3/11/04 (c) (Cost $2,495,710)	$ 2,500,000	$ 2,495,928

Money Market Funds - 6.4%
	Shares
Fidelity Cash Central Fund, 1.07% (b) (Cost $49,407,853)	49,407,853		49,407,853
TOTAL INVESTMENT PORTFOLIO - 100.4% (Cost $649,354,919)			778,640,169
NET OTHER ASSETS - (0.4)%			(3,141,514)
NET ASSETS - 100%		$ 775,498,655

Futures Contracts
	Expiration Date	Underlying Face Amount at Value	Unrealized Appreciation/ (Depreciation)
Purchased
Equity Index Contracts
127 S&P 500 Index Contracts	March 2004	$ 35,261,550	$ 853,313

The face value of futures purchased as a percentage of net assets - 4.5%

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(c) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At the period end, the value of securities pledged amounted to $2,495,928.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $397,900,867 and $378,416,859, respectively.

Income Tax Information

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

Growth Opportunities Portfolio

Fidelity Variable Insurance Products: Growth Opportunities Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (cost $649,354,919) - See accompanying schedule		$ 778,640,169
Receivable for investments sold		2,922,920
Receivable for fund shares sold		405,301
Dividends receivable		813,790
Interest receivable		44,711
Receivable for daily variation on futures contracts		92,075
Prepaid expenses		4,155
Other receivables		62,315
Total assets		782,985,436

Liabilities
Payable for investments purchased	$ 6,235,221
Payable for fund shares redeemed	747,007
Accrued management fee	361,863
Distribution fees payable	30,301
Other affiliated payables	61,667
Other payables and accrued expenses	50,722
Total liabilities		7,486,781

Net Assets		$ 775,498,655
Net Assets consist of:
Paid in capital		$ 924,036,354
Undistributed net investment income		3,663,993
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(282,350,096)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		130,148,404
Net Assets		$ 775,498,655

Initial Class: Net Asset Value, offering price and redemption price per share ($490,709,558 ÷ 32,560,919 shares)		$ 15.07

Service Class: Net Asset Value, offering price and redemption price per share ($224,659,918 ÷ 14,914,814 shares)		$ 15.06

Service Class 2: Net Asset Value, offering price and redemption price per share ($60,129,179 ÷ 4,013,130 shares)		$ 14.98

Statement of Operations

	Year ended December 31, 2003

Investment Income
Dividends		$ 8,281,240
Interest		728,218
Security lending		10,959
Total income		9,020,417

Expenses
Management fee	$ 3,917,176
Transfer agent fees	480,549
Distribution fees	319,540
Accounting and security lending fees	211,274
Non-interested trustees' compensation	3,316
Custodian fees and expenses	20,923
Audit	38,405
Legal	4,692
Miscellaneous	206,799
Total expenses before reductions	5,202,674
Expense reductions	(161,542)	5,041,132
Net investment income (loss)		3,979,285
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	10,832,776
Foreign currency transactions	1,489
Futures contracts	7,370,564
Total net realized gain (loss)		18,204,829
Change in net unrealized appreciation (depreciation) on: Investment securities	151,661,594
Assets and liabilities in foreign currencies	6,103
Futures contracts	2,816,998
Total change in net unrealized appreciation (depreciation)		154,484,695
Net gain (loss)		172,689,524
Net increase (decrease) in net assets resulting from operations		$ 176,668,809

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

Annual Report

Fidelity Variable Insurance Products: Growth Opportunities Portfolio
Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ 3,979,285	$ 4,975,875
Net realized gain (loss)	18,204,829	(113,552,394)
Change in net unrealized appreciation (depreciation)	154,484,695	(95,136,556)
Net increase (decrease) in net assets resulting from operations	176,668,809	(203,713,075)
Distributions to shareholders from net investment income	(4,842,328)	(8,515,304)
Share transactions - net increase (decrease)	(29,607,058)	(130,074,012)
Total increase (decrease) in net assets	142,219,423	(342,302,391)

Net Assets
Beginning of period	633,279,232	975,581,623
End of period (including undistributed net investment income of $3,663,993 and undistributed net investment income of $4,525,392, respectively)	$ 775,498,655	$ 633,279,232

Other Information:
Share Transactions	Year ended December 31, 2003
Shares	Initial Class	Service Class	Service Class 2
Sold	4,861,113	1,609,284	1,388,002
Reinvested	309,123	114,933	19,452
Redeemed	(7,052,265)	(2,906,117)	(959,886)
Net increase (decrease)	(1,882,029)	(1,181,900)	447,568

Dollars Sold	$ 63,883,410	$ 21,117,379	$ 18,018,110
Reinvested	3,375,625	1,255,069	211,634
Redeemed	(88,846,190)	(36,517,831)	(12,104,264)
Net increase (decrease)	$ (21,587,155)	$ (14,145,383)	$ 6,125,480

Share Transactions	Year ended December 31, 2002
Shares	Initial Class	Service Class	Service Class 2
Sold	4,073,344	2,148,249	2,793,837
Reinvested	418,938	154,434	23,984
Redeemed	(13,173,878)	(4,639,853)	(2,220,662)
Net increase (decrease)	(8,681,596)	(2,337,170)	597,159

Dollars Sold	$ 53,351,268	$ 28,729,746	$ 36,310,489
Reinvested	5,974,043	2,200,701	340,561
Redeemed	(170,612,111)	(58,753,780)	(27,614,929)
Net increase (decrease)	$ (111,286,800)	$ (27,823,333)	$ 9,036,121
Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 3,375,625	$ 1,255,069	$ 211,634
From net realized gain	-	-	-
Total	$ 3,375,625	$ 1,255,069	$ 211,634
	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 5,974,042	$ 2,200,701	$ 340,561
From net realized gain	-	-	-
Total	$ 5,974,042	$ 2,200,701	$ 340,561

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

Growth Opportunities Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 11.71	$ 15.13	$ 17.74	$ 23.15	$ 22.88
Income from Investment Operations
Net investment income (loss)^C	.08	.09	.12	.06	.27
Net realized and unrealized gain (loss)	3.38	(3.37)	(2.67)	(3.77)	.66
Total from investment operations	3.46	(3.28)	(2.55)	(3.71)	.93
Distributions from net investment income	(.10)	(.14)	(.06)	(.29)	(.23)
Distributions from net realized gain	-	-	-	(1.41)	(.43)
Total distributions	(.10)	(.14)	(.06)	(1.70)	(.66)
Net asset value, end of period	$ 15.07	$ 11.71	$ 15.13	$ 17.74	$ 23.15
Total Return^A,B	29.87%	(21.84)%	(14.42)%	(17.07)%	4.27%
Ratios to Average Net Assets^D
Expenses before expense reductions	.72%	.70%	.69%	.68%	.69%
Expenses net of voluntary waivers, if any	.72%	.70%	.69%	.68%	.69%
Expenses net of all reductions	.70%	.66%	.67%	.66%	.68%
Net investment income (loss)	.64%	.68%	.79%	.31%	1.20%
Supplemental Data
Net assets, end of period (000 omitted)	$ 490,710	$ 403,476	$ 652,493	$ 951,875	$ 1,541,587
Portfolio turnover rate	62%	60%	89%	117%	42%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 11.70	$ 15.11	$ 17.71	$ 23.12	$ 22.86
Income from Investment Operations
Net investment income (loss)^C	.07	.08	.11	.04	.25
Net realized and unrealized gain (loss)	3.37	(3.37)	(2.67)	(3.76)	.66
Total from investment operations	3.44	(3.29)	(2.56)	(3.72)	.91
Distributions from net investment income	(.08)	(.12)	(.04)	(.28)	(.22)
Distributions from net realized gain	-	-	-	(1.41)	(.43)
Total distributions	(.08)	(.12)	(.04)	(1.69)	(.65)
Net asset value, end of period	$ 15.06	$ 11.70	$ 15.11	$ 17.71	$ 23.12
Total Return^A,B	29.66%	(21.92)%	(14.49)%	(17.13)%	4.18%
Ratios to Average Net Assets^D
Expenses before expense reductions	.82%	.80%	.79%	.79%	.79%
Expenses net of voluntary waivers, if any	.82%	.80%	.79%	.79%	.79%
Expenses net of all reductions	.80%	.77%	.77%	.76%	.78%
Net investment income (loss)	.54%	.58%	.69%	.21%	1.09%
Supplemental Data
Net assets, end of period (000 omitted)	$ 224,660	$ 188,318	$ 278,446	$ 345,960	$ 344,778
Portfolio turnover rate	62%	60%	89%	117%	42%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 11.64	$ 15.04	$ 17.68	$ 22.70
Income from Investment Operations
Net investment income (loss)^E	.05	.05	.08	.01
Net realized and unrealized gain (loss)	3.35	(3.34)	(2.66)	(3.34)
Total from investment operations	3.40	(3.29)	(2.58)	(3.33)
Distributions from net investment income	(.06)	(.11)	(.06)	(.28)
Distributions from net realized gain	-	-	-	(1.41)
Total distributions	(.06)	(.11)	(.06)	(1.69)
Net asset value, end of period	$ 14.98	$ 11.64	$ 15.04	$ 17.68
Total Return^B,C,D	29.40%	(22.01) %	(14.64) %	(15.74) %
Ratios to Average Net Assets^G
Expenses before expense reductions	.99%	.97%	.95%	.95%^A
Expenses net of voluntary waivers, if any	.99%	.97%	.95%	.95%^A
Expenses net of all reductions	.96%	.94%	.93%	.93%^A
Net investment income (loss)	.37%	.41%	.53%	.04%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 60,129	$ 41,486	$ 44,643	$ 25,827
Portfolio turnover rate	62%	60%	89%	117%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period January 12, 2000 (commencement of sale of shares) to December 31, 2000.

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

Growth Opportunities Portfolio

Fidelity Variable Insurance Products: Investment Grade Bond Portfolio

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. Performance numbers are net of all fund operating expenses, but do not include any insurance charges imposed by your insurance company's separate account. If performance information included the effect of these additional charges, the total returns would have been lower. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Past 10 years
Fidelity VIP: Investment Grade Bond - Initial Class	5.20%	6.74%	6.72%
Fidelity VIP: Investment Grade Bond - Service Class^A	5.06%	6.64%	6.67%
Fidelity VIP: Investment Grade Bond - Service Class 2^B	4.94%	6.48%	6.59%

^A The initial offering of Service Class shares took place on July 7, 2000. Performance for Service Class shares reflects an asset-based service fee (12b-1 fee), and returns prior to July 7, 2000 are those of Initial Class and do not include the effects of Service Class' 12b-1 fee. Had Service Class' 12b-1 fee been reflected, returns prior to July 7, 2000 would have been lower.

^B The initial offering of Service Class 2 shares took place on January 12, 2000. Performance for Service Class 2 shares reflects an asset-based service fee (12b-1 fee), and returns prior to January 12, 2000 are those of Initial Class and do not include the effects of Service Class 2's 12b-1 fee. Had Service Class 2's 12b-1 fee been reflected, returns prior to January 12, 2000 would have been lower.

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in Fidelity ® Variable Insurance Products: Investment Grade Bond Portfolio - Initial Class on December 31, 1993. The chart shows how the value of your investment would have changed, and also shows how the Lehman Brothers Aggregate Bond Index did over the same period.

Annual Report

Fidelity Variable Insurance Products: Investment Grade Bond Portfolio

Management's Discussion of Fund Performance

Comments from Ford O'Neil, Portfolio Manager of Fidelity® Variable Insurance Products: Investment Grade Bond Portfolio

It was an extremely volatile period for investment-grade bonds due to changing expectations about the pace of the economic recovery and the direction of interest rates. Early in 2003, bonds extended their three-plus-year bull run as continued low inflation and lingering drags on the economy caused investors to believe that rates would remain low for a long time. But heading into the summer, bond prices suffered steep declines as yields spiked higher amid signs that the economy was on the mend and the growing perception that the Federal Reserve Board's next move would be to raise interest rates. Bond prices subsequently recovered a bit with the Fed reaffirming its accommodative monetary policy, but yields remained moderately higher across the curve. Overall, bonds still returned 4.10%, according to the Lehman Brothers® Aggregate Bond Index. Investors' renewed appetite for risk and higher yields helped all spread sectors outpace Treasuries, which rose only 2.24%. Corporates had a stellar year, particularly lower-quality issues, as the Lehman Brothers Credit Bond Index gained 7.70%. Increased volatility tempered mortgage securities, while heightened regulatory scrutiny curbed agency bond performance. Still, the Lehman Brothers Mortgage-Backed Securities and U.S. Agency indexes climbed 3.07% and 2.59%, respectively.

During the past year, the fund comfortably beat the Lehman Brothers® Aggregate Bond Index, which rose 4.10%, while performing roughly in line with the Lipper^SM Variable Annuity Intermediate Investment Grade Debt Funds Average, which returned 5.14%. While sector and security selection largely drove fund results, yield-curve positioning also contributed. I had limited exposure to lagging government securities - namely Treasuries and agencies - and instead focused on higher-yielding spread sectors such as corporate bonds, which outperformed amid a more favorable environment for riskier assets. Corporates were particular standouts, as yield spreads tightened sharply from the record-wide levels achieved last fall. Solid industry and security selection within the sector played a key role in outpacing the Lehman Brothers Aggregate Bond Index. Thanks to Fidelity's strong research capabilities, I was able to increase positions in what I felt were improving credit-quality stories, while selling bonds that appeared fully priced. This strategy paid off, as several middle-to-lower-quality investment-grade holdings continued to rally. That said, there were a few holdings that didn't recover, but they were very small positions. Elsewhere, while mortgage securities struggled against a backdrop of increased volatility, we did well by generally owning the right bonds within the sector.

Annual Report

Fidelity Variable Insurance Products: Investment Grade Bond Portfolio

Investment Summary

Quality Diversification (% of fund's net assets)

As of December 31, 2003

	U.S. Government and U.S. Government Agency Obligations	59.0%
	AAA	7.8%
	AA	4.4%
	A	11.4%
	BBB	15.4%
	BB and Below	1.6%
	Not Rated	0.3%
	Short-Term Investments and Net Other Assets	0.1%

We have used ratings from Moody's® Investors Services, Inc. Where Moody's ratings are not available, we have used S&P® ratings. Securities rated BB or below were rated investment grade at the time of acquisition.

Average Years to Maturity as of December 31, 2003
Years	5.6

Average years to maturity is based on the average time remaining until principal payments are expected from each of the fund's bonds, weighted by dollar amount.

Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Financials	13.9
Consumer Discretionary	3.1
Telecommunication Services	2.9
Utilities	2.1
Consumer Staples	1.3

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

Annual Report

Fidelity Variable Insurance Products: Investment Grade Bond Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Nonconvertible Bonds - 24.5%
	Principal Amount		Value (Note 1)
CONSUMER DISCRETIONARY - 2.9%
Auto Components - 0.3%
DaimlerChrysler NA Holding Corp. 7.2% 9/1/09	$ 4,645,000		$ 5,187,425
Automobiles - 0.5%
General Motors Corp.:
7.2% 1/15/11	2,000,000		2,198,972
8.25% 7/15/23	2,510,000		2,849,877
8.375% 7/15/33	3,080,000		3,575,304
			8,624,153
Media - 2.1%
AOL Time Warner, Inc. 7.625% 4/15/31	2,500,000		2,884,420
British Sky Broadcasting Group PLC (BSkyB) yankee 8.2% 7/15/09	5,985,000		7,125,196
Clear Channel Communications, Inc. 7.65% 9/15/10	5,000,000		5,852,705
Continental Cablevision, Inc. 9% 9/1/08	4,000,000		4,823,164
Cox Communications, Inc. 7.75% 11/1/10	3,350,000		3,990,721
News America Holdings, Inc. 7.75% 12/1/45	6,500,000		7,685,269
Time Warner, Inc. 6.625% 5/15/29	1,745,000		1,793,302
			34,154,777
TOTAL CONSUMER DISCRETIONARY			47,966,355
CONSUMER STAPLES - 1.3%
Beverages - 0.3%
Miller Brewing Co. 5.5% 8/15/13 (a)	4,780,000		4,883,454
Food & Staples Retailing - 0.1%
Kroger Co. 6.8% 4/1/11	2,285,000		2,557,317
Food Products - 0.3%
ConAgra Foods, Inc. 6.75% 9/15/11	3,870,000		4,337,779
Tobacco - 0.6%
Altria Group, Inc. 7% 11/4/13	3,125,000		3,333,734
Philip Morris Companies, Inc.:
7.65% 7/1/08	5,000,000		5,534,020
7.75% 1/15/27	1,000,000		1,078,968
			9,946,722
TOTAL CONSUMER STAPLES			21,725,272
ENERGY - 0.1%
Energy Equipment & Services - 0.1%
Kinder Morgan, Inc. 6.5% 9/1/12	1,740,000		1,920,088
FINANCIALS - 13.6%
Capital Markets - 2.6%
Amvescap PLC yankee 6.6% 5/15/05	1,890,000		2,000,943
BankBoston Corp. 6.625% 12/1/05	4,420,000		4,804,151
Credit Suisse First Boston (USA), Inc.:
4.625% 1/15/08	3,400,000		3,539,414
6.5% 1/15/12	3,520,000		3,917,834

	Principal Amount		Value (Note 1)
Goldman Sachs Group, Inc.:
4.125% 1/15/08	$ 3,270,000		$ 3,352,738
5.7% 9/1/12	2,935,000		3,084,544
J.P. Morgan Chase & Co.:
4% 2/1/08	1,065,000		1,083,550
5.35% 3/1/07	1,515,000		1,621,497
5.75% 1/2/13	3,500,000		3,690,708
Merita Bank Ltd. yankee 6.5% 1/15/06	1,500,000		1,614,504
Merrill Lynch & Co., Inc. 4% 11/15/07	7,475,000		7,656,261
Morgan Stanley 6.6% 4/1/12	5,695,000		6,360,398
			42,726,542
Commercial Banks - 1.2%
Bank One Corp. 6.5% 2/1/06	1,245,000		1,351,430
Bank One NA, Chicago 3.7% 1/15/08	5,075,000		5,134,530
Chase Manhattan Corp. New 6.375% 4/1/08	900,000		991,764
Corporacion Andina de Fomento 5.2% 5/21/13	1,560,000		1,552,702
Fleet Financial Group, Inc. 7.125% 4/15/06	980,000		1,079,916
Korea Development Bank 7.375% 9/17/04	515,000		529,963
PNC Funding Corp. 5.75% 8/1/06	4,440,000		4,766,824
Popular North America, Inc. 6.125% 10/15/06	2,145,000		2,331,574
Wells Fargo Bank NA, San Francisco 7.55% 6/21/10	900,000		1,066,725
			18,805,428
Consumer Finance - 3.3%
American General Finance Corp.:
2.75% 6/15/08	145,000		139,588
5.875% 7/14/06	5,195,000		5,606,075
Capital One Bank 4.875% 5/15/08	4,295,000		4,420,212
Ford Motor Credit Co.:
7.375% 10/28/09	6,870,000		7,544,366
7.875% 6/15/10	6,350,000		7,095,268
General Motors Acceptance Corp. 7.75% 1/19/10	5,650,000		6,404,603
Household Finance Corp.:
6.375% 10/15/11	5,290,000		5,825,263
6.375% 11/27/12	2,635,000		2,890,737
6.75% 5/15/11	4,000,000		4,502,972
7% 5/15/12	840,000		957,909
Household International, Inc. 8.875% 2/15/08	3,775,000		4,242,194
MBNA Corp.:
6.25% 1/17/07	1,905,000		2,073,958
7.5% 3/15/12	3,005,000		3,491,308
			55,194,453
Diversified Financial Services - 4.2%
Alliance Capital Management LP 5.625% 8/15/06	2,475,000		2,638,244
ASIF Global Financing XVIII 3.85% 11/26/07 (a)	60,000		60,988
Nonconvertible Bonds - continued
	Principal Amount		Value (Note 1)
FINANCIALS - continued
Diversified Financial Services - continued
Citigroup, Inc. 3.5% 2/1/08	$ 4,370,000		$ 4,386,374
Delta Air Lines, Inc. pass thru trust certificates:
7.57% 11/18/10	315,000		326,322
7.92% 5/18/12	3,700,000		3,350,084
Deutsche Telekom International Finance BV:
5.25% 7/22/13	2,340,000		2,363,912
8.75% 6/15/30	5,750,000		7,345,211
NiSource Finance Corp. 7.875% 11/15/10	8,105,000		9,640,014
Pemex Project Funding Master Trust:
6.125% 8/15/08	3,630,000		3,811,500
7.375% 12/15/14	2,000,000		2,135,000
7.875% 2/1/09 (c)	1,200,000		1,354,800
Petronas Capital Ltd. 7% 5/22/12 (a)	8,320,000		9,477,495
Rabobank Capital Funding Trust II 5.26% 12/31/49 (a)(c)	2,870,000		2,873,972
Sprint Capital Corp. 6.875% 11/15/28	7,040,000		6,869,857
Telecom Italia Capital 5.25% 11/15/13 (a)	4,500,000		4,508,960
Verizon Global Funding Corp. 7.25% 12/1/10	7,895,000		9,090,200
			70,232,933
Insurance - 0.4%
Principal Life Global Funding I:
2.8% 6/26/08 (a)	1,850,000		1,789,829
5.125% 6/28/07 (a)	3,000,000		3,212,100
6.25% 2/15/12 (a)	1,350,000		1,470,417
			6,472,346
Real Estate - 1.1%
Arden Realty LP 7% 11/15/07	5,000,000		5,525,605
AvalonBay Communities, Inc. 5% 8/1/07	2,315,000		2,432,854
Boston Properties, Inc. 6.25% 1/15/13	3,000,000		3,219,129
CenterPoint Properties Trust 6.75% 4/1/05	510,000		536,165
EOP Operating LP 7% 7/15/11	1,725,000		1,946,511
ERP Operating LP 7.1% 6/23/04	1,000,000		1,024,657
Mack-Cali Realty LP 7.75% 2/15/11	2,700,000		3,145,408
ProLogis 6.7% 4/15/04	460,000		467,192
			18,297,521
Thrifts & Mortgage Finance - 0.8%
Countrywide Home Loans, Inc.:
5.5% 8/1/06	4,500,000		4,806,711
5.5% 2/1/07	2,500,000		2,678,738
Washington Mutual Bank 6.875% 6/15/11	3,000,000		3,401,919
Washington Mutual, Inc. 4.375% 1/15/08	2,330,000		2,395,319
			13,282,687
TOTAL FINANCIALS			225,011,910

	Principal Amount		Value (Note 1)
INDUSTRIALS - 0.8%
Aerospace & Defense - 0.1%
Raytheon Co. 5.5% 11/15/12	$ 1,500,000		$ 1,521,689
Industrial Conglomerates - 0.7%
Tyco International Group SA yankee 6.75% 2/15/11	11,000,000		12,017,500
TOTAL INDUSTRIALS			13,539,189
INFORMATION TECHNOLOGY - 0.5%
Communications Equipment - 0.5%
Motorola, Inc.:
6.5% 11/15/28	6,685,000		6,617,655
6.75% 2/1/06	2,000,000		2,154,570
			8,772,225
MATERIALS - 0.5%
Containers & Packaging - 0.2%
Sealed Air Corp.:
5.625% 7/15/13 (a)	745,000		762,352
6.875% 7/15/33 (a)	1,565,000		1,656,545
			2,418,897
Metals & Mining - 0.1%
Falconbridge Ltd. yankee 7.35% 6/5/12	900,000		1,016,517
Paper & Forest Products - 0.2%
International Paper Co.:
4.25% 1/15/09	635,000		637,603
5.5% 1/15/14	1,595,000		1,599,581
Weyerhaeuser Co. 6.75% 3/15/12	1,675,000		1,827,325
			4,064,509
TOTAL MATERIALS			7,499,923
TELECOMMUNICATION SERVICES - 2.8%
Diversified Telecommunication Services - 2.4%
AT&T Corp. 8.75% 11/15/31	2,990,000		3,494,003
France Telecom SA 9.75% 3/1/31	6,550,000		8,702,821
Koninklijke KPN NV yankee 8.375% 10/1/30	4,500,000		5,704,718
SBC Communications, Inc. 6.25% 3/15/11	3,005,000		3,289,465
Telecomunicaciones de Puerto Rico, Inc. 6.65% 5/15/06	965,000		1,045,928
Telefonica Europe BV 7.75% 9/15/10	5,000,000		5,936,170
TELUS Corp. yankee:
7.5% 6/1/07	4,830,000		5,405,466
8% 6/1/11	3,150,000		3,683,254
Verizon New York, Inc. 6.875% 4/1/12	2,335,000		2,583,694
			39,845,519
Nonconvertible Bonds - continued
	Principal Amount		Value (Note 1)
TELECOMMUNICATION SERVICES - continued
Wireless Telecommunication Services - 0.4%
AT&T Wireless Services, Inc.:
7.875% 3/1/11	$ 2,580,000		$ 2,985,437
8.75% 3/1/31	3,455,000		4,262,879
			7,248,316
TOTAL TELECOMMUNICATION SERVICES			47,093,835
UTILITIES - 2.0%
Electric Utilities - 1.3%
Detroit Edison Co. 6.125% 10/1/10	2,350,000		2,578,107
DTE Energy Co. 7.05% 6/1/11	2,004,000		2,247,167
Duke Capital Corp.:
6.25% 2/15/13	805,000		849,139
6.75% 2/15/32	4,610,000		4,655,376
FirstEnergy Corp. 6.45% 11/15/11	2,770,000		2,870,961
MidAmerican Energy Holdings, Inc.:
4.625% 10/1/07	1,795,000		1,856,201
5.875% 10/1/12	1,955,000		2,049,876
Monongahela Power Co. 5% 10/1/06	2,260,000		2,299,550
Public Service Co. of Colorado 7.875% 10/1/12	2,470,000		2,997,834
			22,404,211
Gas Utilities - 0.5%
Consolidated Natural Gas Co.:
5.375% 11/1/06	2,190,000		2,347,698
6.85% 4/15/11	445,000		505,856
Ras Laffan Liquid Natural Gas Co. Ltd. yankee 8.294% 3/15/14 (a)	4,370,000		5,112,900
			7,966,454
Multi-Utilities & Unregulated Power - 0.2%
Williams Companies, Inc.:
7.125% 9/1/11	2,320,000		2,453,400
7.5% 1/15/31	505,000		511,313
			2,964,713
TOTAL UTILITIES			33,335,378
TOTAL NONCONVERTIBLE BONDS (Cost $374,086,142)		406,864,175
U.S. Government and Government Agency Obligations - 12.6%

U.S. Government Agency Obligations - 3.6%
Fannie Mae:
5.125% 1/2/14	10,000,000		10,034,780
5.5% 3/15/11	1,170,000		1,261,739
Federal Home Loan Bank 5.8% 9/2/08	8,515,000		9,377,025

	Principal Amount		Value (Note 1)
Freddie Mac:
2.875% 9/15/05	$ 3,380,000		$ 3,441,797
3.625% 9/15/08	8,905,000		8,963,924
4% 6/12/13	4,640,000		4,331,124
5.75% 1/15/12	7,740,000		8,431,894
5.875% 3/21/11	6,035,000		6,541,469
6.25% 7/15/32	1,001,000		1,088,600
6.625% 9/15/09	3,000,000		3,430,713
6.75% 3/15/31	1,479,000		1,708,082
Government Loan Trusts (assets of Trust guaranteed by U.S. Government through Agency for International Development) Series 1-B, 8.5% 4/1/06	741,168		800,468
Guaranteed Export Trust Certificates (assets of Trust guaranteed by U.S. Government through Export-Import Bank):
Series 1993-C, 5.2% 10/15/04	889		915
Series 1993-D, 5.23% 5/15/05	2,553		2,606
Series 1994-A, 7.12% 4/15/06	2,831		3,002
Guaranteed Trade Trust Certificates (assets of Trust guaranteed by U.S. Government through Export-Import Bank) Series 1994-B, 7.5% 1/26/06	2,682		2,883
Private Export Funding Corp. secured 6.86% 4/30/04	114,592		116,581
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS			59,537,602
U.S. Treasury Inflation Protected Obligations - 1.4%
U.S. Treasury Inflation-Indexed Notes 1.875% 7/15/13	24,225,806		24,051,671
U.S. Treasury Obligations - 7.6%
U.S. Treasury Bonds:
6.25% 5/15/30	70,310,000		81,136,615
8% 11/15/21	890,000		1,201,987
U.S. Treasury Notes:
3.25% 8/15/07	5,600,000		5,712,218
6.125% 8/15/07	5,000,000		5,595,900
6.5% 2/15/10	27,950,000		32,478,766
TOTAL U.S. TREASURY OBLIGATIONS			126,125,486
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $204,854,366)		209,714,759
U.S. Government Agency - Mortgage Securities - 44.8%

Fannie Mae - 36.4%
4% 1/1/19 (b)	59,939,232		58,384,558
4.5% 6/1/33 to 7/1/33	9,906,249		9,484,389
5% 10/1/17 to 8/1/18	48,064,946		49,082,375
5% 1/1/19 (b)	7,390,994		7,536,504
U.S. Government Agency - Mortgage Securities - continued
	Principal Amount		Value (Note 1)
Fannie Mae - continued
5% 1/1/34 (b)	$ 10,000,000		$ 9,896,875
5.5% 8/1/14 to 5/1/18	100,373,625		104,166,050
5.5% 1/1/34 (b)	104,134,456		105,468,679
6% 2/1/13 to 12/1/31	12,720,865		13,348,117
6% 1/1/19 (b)	10,000,000		10,487,500
6.5% 8/1/08 to 2/1/33	159,318,564		167,646,707
6.5% 1/1/19 (b)	12,076,956		12,801,573
6.5% 1/1/34 (b)	45,974,129		48,071,699
7% 3/1/15 to 8/1/32	3,036,797		3,224,495
7.5% 8/1/08 to 11/1/31	5,661,631		6,059,292
8% 3/1/30	4,428		4,788
8.5% 3/1/25 to 6/1/25	5,290		5,770
TOTAL FANNIE MAE			605,669,371
Freddie Mac - 3.0%
5% 1/1/34 (b)	50,000,000		49,375,000
8.5% 3/1/20 to 1/1/28	569,256		620,707
TOTAL FREDDIE MAC			49,995,707
Government National Mortgage Association - 5.4%
6% 8/15/08 to 8/15/29	7,948,002		8,288,248
6% 1/1/34 (b)	38,667,795		40,166,172
6.5% 10/15/27 to 8/15/32	3,821,678		4,036,349
7% 1/15/28 to 8/15/32	32,770,776		34,935,893
7.5% 3/15/06 to 10/15/28	1,331,929		1,435,188
8% 2/15/17	37,095		40,862
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION			88,902,712
TOTAL U.S. GOVERNMENT AGENCY - MORTGAGE SECURITIES (Cost $737,831,992)		744,567,790
Asset-Backed Securities - 3.7%

American Express Credit Account Master Trust Series 1999-2 Class B, 6.1% 12/15/06	1,500,000		1,526,673
AmeriCredit Automobile Receivables Trust:
Series 2003-AM Class A4A, 3.1% 11/6/09	1,705,000		1,714,491
Series 2003-BX:
Class A4A, 2.72% 1/6/10	2,115,000		2,118,320
Class A4B, 1.55% 1/6/10 (c)	1,570,000		1,583,664
Capital One Master Trust Series 2001-3A Class A, 5.45% 3/16/09	1,390,000		1,470,488
Capital One Multi-Asset Execution Trust:
Series 2003-A4 Class A4, 3.65% 7/15/11	1,144,000		1,142,000
Series 2003-B4 Class B4, 1.9625% 7/15/11 (c)	2,230,000		2,231,053

	Principal Amount		Value (Note 1)
Chase Manhattan Auto Owner Trust Series 2001-A:
Class A4, 5.07% 2/15/08	$ 4,900,000		$ 5,046,221
Class CTFS, 5.06% 2/15/08	369,225		377,891
Citibank Credit Card Issuance Trust Series 2002-C1 Class C1, 2.16% 2/9/09 (c)	4,500,000		4,552,766
Discover Card Master Trust I:
Series 2001-6 Class A, 5.75% 12/15/08	7,000,000		7,540,799
Series 2003-4 Class B1, 1.47% 5/16/11 (c)	2,620,000		2,620,000
Ford Credit Auto Owner Trust:
Series 2001-B Class B, 5.71% 9/15/05	755,000		769,468
Series 2001-C Class B, 5.54% 12/15/05	1,400,000		1,430,111
Honda Auto Receivables Owner Trust Series 2001-2:
Class A3, 4.67% 3/18/05	451,878		453,671
Class A4, 5.09% 10/18/06	1,640,000		1,662,978
Household Private Label Credit Card Master Note Trust I Series 2002-1 Class A, 5.5% 1/18/11	4,875,000		5,239,766
MBNA Credit Card Master Note Trust:
Series 2001-A1 Class A1, 5.75% 10/15/08	1,800,000		1,935,868
Series 2001-B2 Class B2, 1.5225% 1/15/09 (c)	12,100,000		12,138,134
Series 2003-B3 Class B3, 1.5375% 1/18/11 (c)	1,810,000		1,810,440
Series 2003-B5 Class B5, 1.5325% 2/15/11 (c)	725,000		728,362
Railcar Trust Series 1992-1 Class A, 7.75% 6/1/04	73,580		75,011
Sears Credit Account Master Trust II Series 2000-2 Class A, 6.75% 9/16/09	2,255,000		2,424,272
TOTAL ASSET-BACKED SECURITIES (Cost $58,940,495)			60,592,447
Collateralized Mortgage Obligations - 0.4%

Private Sponsor - 0.2%
Residential Finance LP/Residential Finance Development Corp. floater Series 2003-CB1:
Class B3, 2.62% 6/10/35 (a)(c)	1,225,210		1,228,273
Class B4, 2.82% 6/10/35 (a)(c)	1,096,241		1,098,981
Class B5, 3.42% 6/10/35 (a)(c)	749,015		750,888
Class B6, 3.92% 6/10/35 (a)(c)	441,472		442,576
TOTAL PRIVATE SPONSOR			3,520,718
Collateralized Mortgage Obligations - continued
	Principal Amount		Value (Note 1)
U.S. Government Agency - 0.2%
Ginnie Mae guaranteed REMIC pass thru securities sequential pay Series 2003-22 Class B, 3.963% 5/16/32	$ 3,295,000		$ 3,252,458
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $6,805,057)		6,773,176
Commercial Mortgage Securities - 3.9%

Chase Commercial Mortgage Securities Corp. Series 2001-245 Class A2, 6.4842% 2/12/16 (a)(c)	1,345,000		1,467,249
Chase Manhattan Bank-First Union National Bank Commercial Mortgage Trust sequential pay Series 1999-1 Class A2, 7.439% 8/15/31	5,000,000		5,817,650
Commercial Resecuritization Trust sequential pay Series 1999-ABC1 Class A, 6.74% 1/27/09 (a)	3,159,035		3,338,705
CS First Boston Mortgage Securities Corp.:
sequential pay:
Series 1997-C2 Class A3, 6.55% 1/17/35	2,075,000		2,295,110
Series 2000-C1 Class A2, 7.545% 4/14/62	1,100,000		1,282,376
Series 1997-C2 Class D, 7.27% 1/17/35	1,750,000		1,957,966
Series 1998-C1 Class C, 6.78% 5/17/40	5,000,000		5,483,968
Series 2001-CKN5 Class AX, 1.2471% 9/15/34 (a)(c)(e)	31,472,455		2,175,842
Series 2003-TF2A Class A2, 1.4825% 11/15/14 (a)(c)	2,500,000		2,500,000
Deutsche Mortgage & Asset Receiving Corp. sequential pay Series 1998-C1:
Class A2, 6.538% 6/15/31	1,930,000		2,113,696
Class D, 7.231% 6/15/31	925,000		962,000
DLJ Commercial Mortgage Corp. sequential pay Series 2000-CF1 Class A1B, 7.62% 6/10/33	3,000,000		3,510,678
Equitable Life Assurance Society of the United States Series 174:
Class B1, 7.33% 5/15/06 (a)	500,000		550,061
Class C1, 7.52% 5/15/06 (a)	500,000		551,142
GGP Mall Properties Trust sequential pay Series 2001-C1A Class A2, 5.007% 11/15/11 (a)	3,438,968		3,616,438
Ginnie Mae guaranteed REMIC pass thru securities sequential pay Series 2002-83 Class B, 4.6951% 12/16/24	1,860,000		1,908,668

	Principal Amount		Value (Note 1)
GS Mortgage Securities Corp. II:
Series 1998-GLII Class E, 7.1905% 4/13/31 (c)	$ 245,000		$ 249,208
Series 2003-C1 Class A2A, 3.59% 1/10/40	3,220,000		3,231,417
J.P. Morgan Commercial Mortgage Finance Corp. sequential pay Series 2000-C9 Class A2, 7.77% 10/15/32	3,745,000		4,386,377
LB-UBS Commercial Mortgage Trust sequential pay:
Series 2000-C3 Class A2, 7.95% 1/15/10	2,180,000		2,574,784
Series 2001-C3 Class A1, 6.058% 6/15/20	5,505,228		5,956,000
Leafs CMBS I Ltd./Leafs CMBS I Corp. Series 2002-1A:
Class B, 4.13% 11/20/37 (a)	2,600,000		2,406,930
Class C, 4.13% 11/20/37 (a)	2,600,000		2,305,469
Thirteen Affiliates of General Growth Properties, Inc. sequential pay Series 1 Class A2, 6.602% 11/15/07 (a)	2,500,000		2,750,222
Trizechahn Office Properties Trust Series 2001-TZHA Class E3, 7.253% 3/15/13 (a)	1,390,000		1,457,378
TOTAL COMMERCIAL MORTGAGE SECURITIES (Cost $61,696,252)		64,849,334
Municipal Securities - 0.3%

Illinois Gen. Oblig. 5.1% 6/1/33	4,395,000		4,041,071
Oregon Gen. Oblig. 5.892% 6/1/27	935,000		972,914
TOTAL MUNICIPAL SECURITIES (Cost $5,330,000)		5,013,985
Foreign Government and Government Agency Obligations - 1.6%

Chilean Republic:
6.875% 4/28/09	2,300,000		2,601,231
7.125% 1/11/12	8,520,000		9,744,750
Quebec Province 7% 1/30/07	1,000,000		1,122,420
State of Israel 4.625% 6/15/13	725,000		693,281
United Mexican States:
4.625% 10/8/08	3,835,000		3,882,938
8% 9/24/22	8,000,000		8,752,000
TOTAL FOREIGN GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS (Cost $24,370,154)		26,796,620
Supranational Obligations - 0.1%

Corporacion Andina de Fomento 6.875% 3/15/12 (Cost $1,706,548)	1,725,000		1,913,994
Fixed-Income Funds - 11.4%
	Shares		Value (Note 1)
Fidelity Ultra-Short Central Fund (d) (Cost $189,752,518)	1,909,521		$ 190,130,996
Cash Equivalents - 16.9%
	Maturity Amount
Investments in repurchase agreements (Collateralized by U.S. Government Obligations, in a joint trading account at 1.02%, dated 12/31/03 due 1/2/04) (Cost $281,206,000)	$ 281,221,937		281,206,000

TOTAL INVESTMENT
PORTFOLIO - 120.2%

(Cost $1,946,579,524)

1,998,423,276

NET OTHER ASSETS - (20.2)%

(336,290,367)

NET ASSETS - 100%

$ 1,662,132,909

Swap Agreements
	Expiration Date	Notional Amount	Unrealized Appreciation/ (Depreciation)
Credit Default Swap
Receive quarterly notional amount multiplied by .44% and pay JPMorgan Chase, Inc. upon default event of Lockheed Martin Corp., par value of the notional amount of Lockheed Martin Corp. 8.2% 12/1/09	Dec. 2008	$ 2,000,000	$ (5,547)
Receive quarterly notional amount multiplied by .87% and pay Merrill Lynch, Inc. upon default of Raytheon Co., par value of the notional amount of Raytheon Co. 5.375% 4/1/13	June 2008	5,000,000	67,982
TOTAL CREDIT DEFAULT SWAP		7,000,000	62,435

	Expiration Date	Notional Amount	Unrealized Appreciation/ (Depreciation)
Interest Rate Swap
Receive quarterly a fixed rate equal to 2.735% and pay quarterly a floating rate based on 3-month LIBOR with Morgan Stanley, Inc.	Oct. 2006	$ 42,000,000	$ 182,738
Receive quarterly a fixed rate equal to 3.273% and pay quarterly a floating rate based on 3-month LIBOR with Goldman Sachs	April 2008	19,000,000	32,677
Receive quarterly a fixed rate equal to 3.5146% and pay quarterly a floating rate based on 3-month LIBOR with Merrill Lynch, Inc.	Nov. 2008	2,000,000	(1,069)
TOTAL INTEREST RATE SWAP		63,000,000	214,346
Total Return Swap
Receive monthly a return equal to Lehman Brothers CMBS AAA 8.5+ and pay monthly a floating rate based on 1-month LIBOR minus 65 basis points with Lehman Brothers, Inc.	Oct. 2004	10,000,000	1,106
Receive monthly a return equal to Lehman Brothers CMBS AAA 8.5+ and pay monthly a floating rate based on 1-month LIBOR minus 70 basis points with Lehman Brothers, Inc.	Feb. 2004	10,000,000	115,435
Receive quarterly a return equal to Banc of America securities LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 75 basis points with Bank of America	May 2004	10,000,000	17,950
Receive quarterly a return equal to Banc of America securities LLC AAA 10Yr Commercial Mortgage-Backed Securities Daily Index and pay quarterly a floating rate based on 3-month LIBOR minus 80 basis points with Bank of America	April 2004	10,000,000	169,958
TOTAL TOTAL RETURN SWAP		40,000,000	304,449
		$ 110,000,000	$ 581,230

Legend

(a) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the period end, the value of these securities amounted to $62,449,166 or 3.8% of net assets.

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

(d) A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

(e) Security represents right to receive monthly interest payments on an underlying pool of mortgages. Principal shown is the par amount of the mortgage pool.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $4,280,925,957 and $4,603,835,480, respectively, of which long-term U.S. government and government agency obligations aggregated $3,878,564,503 and $4,021,351,546, respectively.

The fund participated in the interfund lending program as a lender. The average daily loan balance during the period for which the loan was outstanding amounted to $17,669,667. The weighted average interest rate was 1.15%. Interest earned from the interfund lending program amounted to $3,391 and is included in interest income on the Statement of Operations. At period end, there were no interfund loans outstanding.

Income Tax Information

The fund hereby designates approximately $9,273,000 as a capital gain dividend for the purpose of the dividend paid deduction.

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

Annual Report

Fidelity Variable Insurance Products: Investment Grade Bond Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (including repurchase agreements of $281,206,000) (cost $1,946,579,524) - See accompanying schedule		$ 1,998,423,276
Commitment to sell securities on a delayed delivery basis	$ (14,203,663)
Receivable for securities sold on a delayed delivery basis	14,209,944	6,281
Cash		975
Receivable for fund shares sold		1,852,779
Interest receivable		12,594,184
Unrealized gain on swap agreements		581,230
Prepaid expenses		11,452
Total assets		2,013,470,177

Liabilities
Payable for investments purchased on a delayed delivery basis	342,026,321
Payable for fund shares redeemed	8,473,832
Accrued management fee	597,969
Distribution fees payable	24,986
Other affiliated payables	121,877
Other payables and accrued expenses	92,283
Total liabilities		351,337,268

Net Assets		$ 1,662,132,909
Net Assets consist of:
Paid in capital		$ 1,496,537,119
Undistributed net investment income		68,804,726
Accumulated undistributed net realized gain (loss) on investments		44,359,801
Net unrealized appreciation (depreciation) on investments		52,431,263
Net Assets		$ 1,662,132,909

Initial Class: Net Asset Value, offering price and redemption price per share ($1,528,416,704 ÷ 111,986,357 shares)		$ 13.65

Service Class: Net Asset Value, offering price and redemption price per share ($18,305,429 ÷ 1,345,239 shares)		$ 13.61

Service Class 2: Net Asset Value, offering price and redemption price per share ($115,410,776 ÷ 8,550,395 shares)		$ 13.50

Statement of Operations

	Year ended December 31, 2003

Investment Income
Interest		$ 78,487,358
Security lending		31,974
Total income		78,519,332

Expenses
Management fee	$ 8,402,508
Transfer agent fees	1,332,740
Distribution fees	238,141
Accounting and security lending fees	426,768
Non-interested trustees' compensation	9,619
Custodian fees and expenses	103,247
Audit	60,276
Legal	7,488
Miscellaneous	126,602
Total expenses before reductions	10,707,389
Expense reductions	(2,213)	10,705,176
Net investment income (loss)		67,814,156
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities	45,139,347
Swap agreements	1,190,566
Total net realized gain (loss)		46,329,913
Change in net unrealized appreciation (depreciation) on: Investment securities	(17,938,709)
Swap agreements	581,230
Delayed delivery commitments	6,281
Total change in net unrealized appreciation (depreciation)		(17,351,198)
Net gain (loss)		28,978,715
Net increase (decrease) in net assets resulting from operations		$ 96,792,871

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

Annual Report

Fidelity Variable Insurance Products: Investment Grade Bond Portfolio
Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ 67,814,156	$ 81,834,457
Net realized gain (loss)	46,329,913	32,349,066
Change in net unrealized appreciation (depreciation)	(17,351,198)	59,508,829
Net increase (decrease) in net assets resulting from operations	96,792,871	173,692,352
Distributions to shareholders from net investment income	(82,217,412)	(58,817,521)
Distributions to shareholders from net realized gain	(28,967,100)	-
Total distributions	(111,184,512)	(58,817,521)
Share transactions - net increase (decrease)	(361,117,397)	458,501,562
Total increase (decrease) in net assets	(375,509,038)	573,376,393
Net Assets
Beginning of period	2,037,641,947	1,464,265,554
End of period (including undistributed net investment income of $68,804,726 and undistributed net investment income of $82,446,651, respectively)	$ 1,662,132,909	$ 2,037,641,947

Other Information: Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	23,978,195	1,752,061	7,214,822
Reinvested	8,213,993	2,020	300,111
Redeemed	(63,630,168)	(480,248)	(4,242,792)
Net increase (decrease)	(31,437,980)	1,273,833	3,272,141

Dollars Sold	$ 320,978,012	$ 23,516,680	$ 95,735,008
Reinvested	107,274,755	26,323	3,883,434
Redeemed	(849,723,435)	(6,448,689)	(56,359,485)
Net increase (decrease)	$ (421,470,668)	$ 17,094,314	$ 43,258,957

Share Transactions	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	65,347,675	145,315	7,935,513
Reinvested	4,614,396	357	68,663
Redeemed	(38,454,755)	(83,223)	(4,147,148)
Net increase (decrease)	31,507,316	62,449	3,857,028

Dollars Sold	$ 848,704,131	$ 1,843,036	$ 102,465,637
Reinvested	57,956,815	4,479	856,227
Redeemed	(498,597,688)	(1,048,248)	(53,682,827)
Net increase (decrease)	$ 408,063,258	$ 799,267	$ 49,639,037

Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 79,353,928	$ 19,279	$ 2,844,205
From net realized gain	27,920,827	7,044	1,039,229
Total	$ 107,274,755	$ 26,323	$ 3,883,434
	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 57,956,815	$ 4,479	$ 856,227
From net realized gain	-	-	-
Total	$ 57,956,815	$ 4,479	$ 856,227

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

Investment Grade Bond Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 13.70	$ 12.92	$ 12.59	$ 12.16	$ 12.96
Income from Investment Operations
Net investment income (loss)^C	.467	.610	.685^E	.771	.743
Net realized and unrealized gain (loss)	.213	.680	.335^E	.499	(.873)
Total from investment operations	.680	1.290	1.020	1.270	(.130)
Distributions from net investment income	(.540)	(.510)	(.690)	(.840)	(.510)
Distributions from net realized gain	(.190)	-	-	-	(.160)
Total distributions	(.730)	(.510)	(.690)	(.840)	(.670)
Net asset value, end of period	$ 13.65	$ 13.70	$ 12.92	$ 12.59	$ 12.16
Total Return^{A, B}	5.20%	10.34%	8.46%	11.22%	(1.05)%
Ratios to Average Net Assets^D
Expenses before expense reductions	.54%	.54%	.54%	.54%	.54%
Expenses net of voluntary waivers, if any	.54%	.54%	.54%	.54%	.54%
Expenses net of all reductions	.54%	.53%	.54%	.54%	.54%
Net investment income (loss)	3.48%	4.71%	5.47%^E	6.50%	6.07%
Supplemental Data
Net assets, end of period (000 omitted)	$ 1,528,417	$ 1,965,036	$ 1,445,925	$ 739,911	$ 658,852
Portfolio turnover rate	218%	192%	278%	154%	87%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

^E Effective January 1, 2001, the fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and discount on all debt securities. Per-share data and ratios for periods prior to adoption have not been restated to reflect this change.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 13.66	$ 12.89	$ 12.58	$ 11.80
Income from Investment Operations
Net investment income (loss)^E	.448	.591	.674^H	.377
Net realized and unrealized gain (loss)	.212	.679	.326^H	.403
Total from investment operations	.660	1.270	1.000	.780
Distributions from net investment income	(.520)	(.500)	(.690)	-
Distributions from net realized gain	(.190)	-	-	-
Total distributions	(.710)	(.500)	(.690)	-
Net asset value, end of period	$ 13.61	$ 13.66	$ 12.89	$ 12.58
Total Return^{B, C, D}	5.06%	10.20%	8.30%	6.61%
Ratios to Average Net Assets^G
Expenses before expense reductions	.64%	.64%	.64%	.64%^A
Expenses net of voluntary waivers, if any	.64%	.64%	.64%	.64%^A
Expenses net of all reductions	.64%	.64%	.64%	.64%^A
Net investment income (loss)	3.38%	4.60%	5.37%^H	6.40%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 18,305	$ 975	$ 115	$ 107
Portfolio turnover rate	218%	192%	278%	154%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period July 7, 2000 (commencement of sale of shares) to December 31, 2000.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 13.57	$ 12.82	$ 12.54	$ 12.06
Income from Investment Operations
Net investment income (loss)^E	.427	.571	.643^H	.686
Net realized and unrealized gain (loss)	.213	.679	.327^H	.634
Total from investment operations	.640	1.250	.970	1.320
Distributions from net investment income	(.520)	(.500)	(.690)	(.840)
Distributions from net realized gain	(.190)	-	-	-
Total distributions	(.710)	(.500)	(.690)	(.840)
Net asset value, end of period	$ 13.50	$ 13.57	$ 12.82	$ 12.54
Total Return^{B, C, D}	4.94%	10.09%	8.08%	11.69%
Ratios to Average Net Assets^G
Expenses before expense reductions	.79%	.79%	.82%	1.75%^A
Expenses net of voluntary waivers, if any	.79%	.79%	.82%	1.05%^A
Expenses net of all reductions	.79%	.79%	.82%	1.05%^A
Net investment income (loss)	3.23%	4.45%	5.19%^H	5.99%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 115,411	$ 71,631	$ 18,225	$ 229
Portfolio turnover rate	218%	192%	278%	154%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period January 12, 2000 (commencement of sale of shares) to December 31, 2000.

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

Investment Grade Bond Portfolio

Fidelity Variable Insurance Products: Mid Cap Portfolio

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. During periods of reimbursement by Fidelity, a fund's total return will be greater than it would be had the reimbursement not occurred. Performance numbers are net of all fund operating expenses, but do not include any insurance charges imposed by your insurance company's separate account. If performance information included the effect of these additional charges, the total returns would have been lower. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Life of fund ^A
Fidelity ® VIP: Mid Cap Portfolio - Initial Class	38.64%	19.25%	19.93%
Fidelity VIP: Mid Cap Portfolio - Service Class ^B	38.52%	19.13%	19.81%
Fidelity VIP: Mid Cap Portfolio - Service Class 2 ^C	38.31%	18.98%	19.66%

^A From December 28, 1998.

^B Performance for Service Class shares reflects an asset based distribution fee (12b-1).

$10,000 Over Life of Fund

Annual Report

Fidelity Variable Insurance Products: Mid Cap Portfolio

Management's Discussion of Fund Performance

Comments from Tom Allen, Portfolio Manager of Fidelity® Variable Insurance Products: Mid Cap Portfolio

Fidelity Variable Insurance Products: Mid Cap Portfolio

Annual Report

Investment Summary

Top Five Stocks as of December 31, 2003
	% of fund's net assets
Newmont Mining Corp.	5.6
Invitrogen Corp.	3.4
Symbol Technologies, Inc.	2.3
Meridian Gold, Inc.	2.1
Freeport-McMoRan Copper & Gold, Inc. Class B	2.1
	15.5
Top Five Market Sectors as of December 31, 2003
	% of fund's net assets
Materials	22.7
Health Care	21.3
Consumer Discretionary	14.0
Energy	11.7
Information Technology	8.9

Asset Allocation as of December 31, 2003
% of fund's net assets*
	Stocks	96.8%
	Short-Term Investments and Net Other Assets	3.2%

*Foreign
investments 26.0%

Annual Report

Fidelity Variable Insurance Products: Mid Cap Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Common Stocks - 96.8%
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - 14.0%
Auto Components - 1.1%
Autoliv, Inc.	77,900		$ 2,932,935
China Yuchai International Ltd.	100		3,060
Gentex Corp.	391,500		17,288,640
IMPCO Technologies, Inc. (a)	203,100		1,771,032
Johnson Controls, Inc.	100		11,612
Starcraft Corp.	100		3,252
Superior Industries International, Inc.	121,800		5,300,736
			27,311,267
Automobiles - 0.0%
Fiat Spa sponsord ADR	100		774
Harley-Davidson, Inc.	100		4,753
Monaco Coach Corp. (a)	200		4,760
Thor Industries, Inc.	100		5,622
			15,909
Distributors - 0.0%
Advanced Marketing Services, Inc.	100		1,140
Educational Development Corp.	100		1,103
Li & Fung Ltd.	2,000		3,426
			5,669
Hotels, Restaurants & Leisure - 2.7%
Applebee's International, Inc.	100		3,927
GTECH Holdings Corp.	22		1,067
Krispy Kreme Doughnuts, Inc. (a)	93,000		3,403,800
Outback Steakhouse, Inc.	849,600		37,560,816
P.F. Chang's China Bistro, Inc. (a)	100		5,088
Panera Bread Co. Class A (a)	100		3,953
Red Robin Gourmet Burgers, Inc. (a)	92,000		2,800,480
Sonic Corp. (a)	670,750		20,538,365
Starbucks Corp. (a)	100		3,306
Total Entertainment Restaurant Corp. (a)	100		1,208
			64,322,010
Household Durables - 2.9%
Alba PLC	718,435		8,146,018
CFM, Inc. (a)	100		843
Fedders Corp.	100		720
Fedders Corp. rights 1/16/04 (a)	100		6
Garmin Ltd.	565,100		30,786,648
Harman International Industries, Inc.	320,000		23,673,600
Hovnanian Enterprises, Inc. Class A (a)	100		8,706
Lennar Corp.:
Class A	100		9,600
Class B	10		914
Mohawk Industries, Inc. (a)	100		7,054
Sekisui House Ltd.	800,000		8,305,851
Techtronic Industries Co.	2,000		5,552
The Stanley Works	100		3,787
William Lyon Homes, Inc. (a)	100		6,277
			70,955,576

	Shares		Value (Note 1)
Internet & Catalog Retail - 0.0%
1-800-FLOWERS.com, Inc. Class A (a)	200		$ 2,212
Alloy, Inc. (a)	100		521
Drugstore.com, Inc. (a)	100		551
eBay, Inc. (a)	100		6,459
GSI Commerce, Inc. (a)	100		976
InterActiveCorp (a)	487		16,524
J. Jill Group, Inc. (a)	100		1,271
Netflix, Inc. (a)	200		10,938
Sportsmans Guide, Inc. (a)	100		1,715
			41,167
Leisure Equipment & Products - 0.0%
Arctic Cat, Inc.	100		2,470
Leapfrog Enterprises, Inc. Class A (a)	100		2,653
Mega Bloks, Inc. (a)	100		1,773
Oakley, Inc.	100		1,384
Polaris Industries, Inc.	100		8,858
SCP Pool Corp. (a)	150		4,902
SHIMANO, Inc.	100		2,082
			24,122
Media - 1.1%
Astral Media, Inc. Class A (non-vtg.)	408,000		8,822,387
Catalina Marketing Corp. (a)	443,000		8,930,880
Chum Ltd. Class B (non-vtg.)	100		4,857
Cumulus Media, Inc. Class A (a)	100		2,200
E.W. Scripps Co. Class A	100		9,414
EchoStar Communications Corp. Class A (a)	100		3,400
Entercom Communications Corp. Class A (a)	100		5,296
Entravision Communications Corp. Class A (a)	100		1,110
Fox Entertainment Group, Inc. Class A (a)	100		2,915
Getty Images, Inc. (a)	100		5,013
Grupo Televisa SA de CV sponsored ADR	191,900		7,649,134
Harris Interactive, Inc. (a)	100		830
Hughes Electronics Corp. (a)	82		1,357
Modern Times Group AB (MTG) (B Shares) (a)	66,100		1,391,415
News Corp. Ltd. sponsored ADR	9		272
Omnicom Group, Inc.	100		8,733
Pixar (a)	100		6,929
Radio One, Inc. Class A (a)	100		1,955
Reader's Digest Association, Inc. (non-vtg.)	100		1,466
Saga Communications, Inc. Class A (a)	100		1,853
SBS Broadcasting SA (a)	100		3,260
Scholastic Corp. (a)	100		3,404
TiVo, Inc. (a)	100		740
Torstar Corp. Class B	100		2,236
Univision Communications, Inc. Class A (a)	100		3,969
Common Stocks - continued
	Shares		Value (Note 1)
CONSUMER DISCRETIONARY - continued
Media - continued
Washington Post Co. Class B	100		$ 79,140
Westwood One, Inc. (a)	100		3,421
			26,947,586
Multiline Retail - 0.2%
99 Cents Only Stores (a)	143,700		3,912,951
Big Lots, Inc. (a)	100		1,421
Dollar General Corp.	100		2,099
Dollar Tree Stores, Inc. (a)	100		3,006
Family Dollar Stores, Inc.	100		3,588
Fred's, Inc. Class A	100		3,098
Kohl's Corp. (a)	100		4,494
Tuesday Morning Corp. (a)	44,200		1,337,050
			5,267,707
Specialty Retail - 4.4%
Abercrombie & Fitch Co. Class A (a)	100		2,471
AC Moore Arts & Crafts, Inc. (a)	580,300		11,176,578
Advance Auto Parts, Inc. (a)	100		8,140
AutoZone, Inc. (a)	100		8,521
Bed Bath & Beyond, Inc. (a)	100		4,335
Best Buy Co., Inc.	200		10,448
Cache, Inc. (a)	100		2,083
CarMax, Inc. (a)	473,700		14,651,541
Chico's FAS, Inc. (a)	42,700		1,577,765
Christopher & Banks Corp.	84,751		1,655,187
Claire's Stores, Inc.	205,900		3,879,156
Cole National Corp. Class A (a)	100		2,000
Cost Plus, Inc. (a)	26,900		1,102,900
Deb Shops, Inc.	100		2,150
Forzani Group Ltd. Class A (a)	100		1,253
Genesco, Inc. (a)	100		1,513
Group 1 Automotive, Inc. (a)	100		3,619
Guitar Center, Inc. (a)	100		3,258
Hibbett Sporting Goods, Inc. (a)	100		2,980
Hot Topic, Inc. (a)	1,141,450		33,627,117
Jos. A. Bank Clothiers, Inc. (a)	100		3,469
KOMERI Co. Ltd.	528,900		12,301,889
Michaels Stores, Inc.	100		4,420
Nitori Co. Ltd.	148,200		9,270,872
O'Reilly Automotive, Inc. (a)	100		3,836
Pacific Sunwear of California, Inc. (a)	199,300		4,209,216
Peacock Group PLC	1,258,300		4,313,895
PETsMART, Inc.	100		2,380
Pier 1 Imports, Inc.	100		2,186
RONA, Inc. (a)	100,000		2,404,409
Ross Stores, Inc.	296,600		7,839,138
Select Comfort Corp. (a)	100		2,476
Sharper Image Corp. (a)	100		3,265
Shimamura Co. Ltd.	100		6,828
Sports Authority, Inc. (a)	100		3,840
Staples, Inc. (a)	100		2,730

	Shares		Value (Note 1)
Talbots, Inc.	100		$ 3,078
TBC Corp. (a)	100		2,581
The Bombay Company, Inc. (a)	100		814
Tiffany & Co., Inc.	100		4,520
TJX Companies, Inc.	100		2,205
Too, Inc. (a)	100		1,688
Tractor Supply Co. (a)	100		3,889
Urban Outfitters, Inc. (a)	200		7,410
Weight Watchers International, Inc. (a)	100		3,837
Williams-Sonoma, Inc. (a)	200		6,954
			108,134,840
Textiles Apparel & Luxury Goods - 1.6%
Adidas-Salomon AG	100		11,359
Brown Shoe Co., Inc.	100		3,793
Coach, Inc. (a)	200		7,550
Columbia Sportswear Co. (a)	626,200		34,127,900
Compagnie Financiere Richemont unit	100		2,394
DHB Industries, Inc. (a)	100		700
Fossil, Inc. (a)	145,300		4,069,853
Gildan Activewear, Inc. Class A (sub. vtg.) (a)	100		3,088
K-Swiss, Inc. Class A	200		4,812
Kenneth Cole Productions, Inc. Class A	100		2,940
Liz Claiborne, Inc.	100		3,546
NIKE, Inc. Class B	100		6,846
Quiksilver, Inc. (a)	200		3,546
Ted Baker PLC	25,000		154,678
The Swatch Group AG (Bearer)	100		11,972
Timberland Co. Class A (a)	100		5,207
Vans, Inc. (a)	100		1,141
			38,421,325
TOTAL CONSUMER DISCRETIONARY			341,447,178
CONSUMER STAPLES - 3.0%
Beverages - 0.0%
Boston Beer Co., Inc. Class A (a)	100		1,814
Companhia de Bebidas das Americas (AmBev) sponsored ADR	29,100		742,341
Fomento Economico Mexicano SA de CV sponsored ADR	100		3,688
Grupo Modelo SA de CV Series C	100		241
Harbin Brewery Group Ltd.	2,000		805
Tsingtao Brewery Co. Ltd. (H Shares)	1,000		1,172
			750,061
Food & Staples Retailing - 0.2%
Companhia Brasileira de Distribuicao Grupo Pao de Acucar sponsored ADR	100		2,515
Costco Wholesale Corp. (a)	100		3,718
Plant Co. Ltd. (a)	30,100		468,620
United Natural Foods, Inc. (a)	100		3,591
Whole Foods Market, Inc.	64,100		4,303,033
			4,781,477
Common Stocks - continued
	Shares		Value (Note 1)
CONSUMER STAPLES - continued
Food Products - 2.5%
Central Garden & Pet Co. Class A (a)	100		$ 2,803
Delta & Pine Land Co.	152,200		3,865,880
Fresh Del Monte Produce, Inc.	100		2,383
Green Mountain Coffee Roasters, Inc. (a)	245,895		5,660,503
Hershey Foods Corp.	244,300		18,808,657
Horizon Organic Holding Corp. (a)	40,600		972,370
IAWS Group PLC (Ireland)	50		610
Lindt & Spruengli AG (participation certificate)	100		83,038
McCormick & Co., Inc. (non-vtg.)	473,600		14,255,360
Peet's Coffee & Tea, Inc. (a)	100		1,741
PT Indofood Sukses Makmur	34,620,000		3,289,315
Sensient Technologies Corp.	100		1,977
Smithfield Foods, Inc. (a)	637,600		13,198,320
Tootsie Roll Industries, Inc.	100		3,600
Yakult Honsha Co. Ltd.	1,000		15,709
			60,162,266
Household Products - 0.0%
Uni-Charm Corp.	100		4,943
Personal Products - 0.3%
Alberto-Culver Co. Class B	100		6,308
Hengan International Group Co. Ltd. (a)	9,002,000		4,840,969
Kose Corp.	77,600		2,809,283
NBTY, Inc. (a)	100		2,686
USANA Health Sciences, Inc. (a)	200		6,120
			7,665,366
TOTAL CONSUMER STAPLES			73,364,113
ENERGY - 11.7%
Energy Equipment & Services - 6.6%
BJ Services Co. (a)	622,810		22,358,879
Cal Dive International, Inc. (a)	135,000		3,254,850
Carbo Ceramics, Inc.	115,700		5,929,625
Cooper Cameron Corp. (a)	154,000		7,176,400
Core Laboratories NV (a)	100		1,669
Global Industries Ltd. (a)	342,000		1,761,300
GlobalSantaFe Corp.	490,350		12,175,391
Helmerich & Payne, Inc.	96,000		2,681,280
Matrix Service Co. (a)	200		3,630
Nabors Industries Ltd. (a)	38,800		1,610,200
National-Oilwell, Inc. (a)	430,600		9,628,216
Noble Corp. (a)	200,800		7,184,624
NS Group, Inc. (a)	130,300		1,263,910
Oceaneering International, Inc. (a)	877,400		24,567,200
Pason Systems, Inc.	296,300		5,756,059
Pioneer Drilling Co. (a)	13,900		67,415
Pride International, Inc. (a)	519,500		9,683,480
Smith International, Inc. (a)	233,890		9,711,113
Tidewater, Inc.	580,150		17,334,882

	Shares		Value (Note 1)
Varco International, Inc. (a)	656,648		$ 13,546,638
W-H Energy Services, Inc. (a)	358,400		5,806,080
			161,502,841
Oil & Gas - 5.1%
Apache Corp.	500,220		40,567,842
Burlington Resources, Inc.	109,600		6,069,648
China Petroleum & Chemical Corp. sponsored ADR	100		4,441
Comstock Resources, Inc. (a)	373,200		7,202,760
Golar LNG Ltd. (a)	145,600		2,084,084
Golar LNG Ltd. (Nasdaq) (a)	70		1,000
Niko Resources Ltd.	138,000		2,882,979
Nuevo Energy Co. (a)	117,800		2,847,226
OAO Gazprom sponsored ADR	100		2,590
Petro-Canada	100		4,927
PetroChina Co. Ltd. sponsored ADR	100		5,705
PetroKazakhstan, Inc. Class A (a)	1,292,100		29,154,924
Petroleo Brasileiro SA Petrobras sponsored ADR	100		2,924
Pioneer Natural Resources Co. (a)	309,500		9,882,335
Pogo Producing Co.	169,600		8,191,680
Suncor Energy, Inc.	117,200		2,936,324
Surgutneftegaz JSC sponsored ADR	100		2,940
Talisman Energy, Inc.	152,400		8,637,410
Western Gas Resources, Inc.	40,000		1,890,000
World Fuel Services Corp.	18,294		621,081
XTO Energy, Inc.	100		2,830
YUKOS Corp. sponsored ADR	100		4,200
			122,999,850
TOTAL ENERGY			284,502,691
FINANCIALS - 5.7%
Capital Markets - 0.2%
A.G. Edwards, Inc.	100		3,623
Charles Schwab Corp.	100		1,184
E*TRADE Group, Inc. (a)	100		1,265
Eaton Vance Corp. (non-vtg.)	100		3,664
Federated Investors, Inc. Class B (non-vtg.)	100		2,936
Franklin Resources, Inc.	100		5,206
International Assets Holding Corp. (a)	100		594
Investment Technology Group, Inc. (a)	100		1,615
Investors Financial Services Corp.	100		3,841
Mitsubishi Securities Co. Ltd.	538,000		5,888,432
T. Rowe Price Group, Inc.	200		9,482
			5,921,842
Commercial Banks - 0.9%
Banco Itau Holding Financeira SA sponsored ADR	100		4,877
BOK Financial Corp.	100		3,872
Boston Private Financial Holdings, Inc.	142,900		3,549,636
Bryn Mawr Bank Corp.	20		490
Common Stocks - continued
	Shares		Value (Note 1)
FINANCIALS - continued
Commercial Banks - continued
Cathay General Bancorp	10		$ 557
Charter One Financial, Inc.	100		3,455
City National Corp.	100		6,212
CVB Financial Corp.	110		2,122
East West Bancorp, Inc.	100		5,368
First Tennessee National Corp.	100		4,410
Great Southern Bancorp, Inc.	100		4,637
Hancock Holding Co.	150		8,186
Harleysville National Corp., Pennsylvania	125		3,763
Independent Bank Corp., Massachusetts	100		2,882
International Bancshares Corp.	100		4,715
Kookmin Bank sponsored ADR	100		3,784
Lakeland Financial Corp.	100		3,532
M&T Bank Corp.	100		9,830
Marshall & Ilsley Corp.	100		3,825
Nara Bancorp, Inc.	137,190		3,745,287
National Commerce Financial Corp.	100		2,728
North Fork Bancorp, Inc., New York	100		4,047
Pacific Capital Bancorp	100		3,682
PrivateBancorp, Inc.	100		4,552
Resource Bankshares Corp.	150		4,730
SouthTrust Corp.	100		3,273
State Bancorp, Inc., New York	100		2,426
State Bank of India	70,900		836,814
Sterling Bancshares, Inc.	10		133
Sumitomo Trust & Banking Ltd.	1,643,000		9,707,886
Synovus Financial Corp.	100		2,892
TCF Financial Corp.	100		5,135
Texas Regional Bancshares, Inc. Class A	100		3,700
Tompkins Trustco, Inc.	100		4,605
UCBH Holdings, Inc.	100		3,897
UnionBanCal Corp.	100		5,754
Valley National Bancorp	100		2,920
West Coast Bancorp, Oregon	100		2,134
Westcorp	100		3,655
Wintrust Financial Corp.	60,400		2,724,040
Zions Bancorp	100		6,133
			20,706,576
Consumer Finance - 0.0%
American Express Co.	100		4,823
Capital One Financial Corp.	100		6,129
First Cash Financial Services, Inc. (a)	100		2,564
Student Loan Corp.	100		14,600
			28,116
Diversified Financial Services - 0.0%
Deutsche Boerse AG	100		5,453
eSpeed, Inc. Class A (a)	100		2,341
Moody's Corp.	100		6,055
Power Financial Corp.	100		3,818

	Shares		Value (Note 1)
Principal Financial Group, Inc.	100		$ 3,307
TSX Group, Inc.	100		3,307
			24,281
Insurance - 2.1%
ACE Ltd.	100		4,142
AFLAC, Inc.	2,800		101,304
Arthur J. Gallagher & Co.	100		3,249
Erie Indemnity Co. Class A	100		4,238
Great-West Lifeco, Inc.	100		3,508
Hilb, Rogal & Hamilton Co.	100		3,207
MBIA, Inc.	22,700		1,344,521
Mercury General Corp.	34,500		1,605,975
MetLife, Inc.	100		3,367
Ohio Casualty Corp. (a)	100		1,736
Old Republic International Corp.	150		3,804
PartnerRe Ltd.	100		5,805
Progressive Corp.	63,900		5,341,401
Protective Life Corp.	69,300		2,345,112
Reinsurance Group of America, Inc.	456,400		17,639,860
StanCorp Financial Group, Inc.	100		6,288
UICI (a)	100		1,328
UnumProvident Corp.	100		1,577
W.R. Berkley Corp.	654,275		22,866,911
Zenith National Insurance Corp.	300		9,765
			51,297,098
Real Estate - 2.1%
Equity Residential (SBI)	100		2,951
Pan Pacific Retail Properties, Inc.	200,000		9,530,000
Plum Creek Timber Co., Inc.	132,400		4,031,580
ProLogis	298,200		9,569,238
Simon Property Group, Inc.	595,700		27,604,738
			50,738,507
Thrifts & Mortgage Finance - 0.4%
Doral Financial Corp.	99,300		3,205,404
Farmer Mac Class C (non-vtg.) (a)	134,600		4,301,816
Golden West Financial Corp., Delaware	14,970		1,544,754
MGIC Investment Corp.	100		5,694
NetBank, Inc.	57,700		770,295
New York Community Bancorp, Inc.	100		3,805
R&G Financial Corp. Class B	100		3,980
Sterling Financial Corp. (a)	100		3,423
W Holding Co., Inc.	153		2,847
			9,842,018
TOTAL FINANCIALS			138,558,438
HEALTH CARE - 21.3%
Biotechnology - 8.9%
Actelion Ltd. (Reg.) (a)	100		10,763
Affymetrix, Inc. (a)	100		2,461
Bachem Holding AG (B Shares)	100		5,115
Biogen Idec, Inc. (a)	315		11,586
Common Stocks - continued
	Shares		Value (Note 1)
HEALTH CARE - continued
Biotechnology - continued
BioSource International, Inc. (a)	100		$ 677
Caliper Technologies Corp. (a)	100		658
Cell Genesys, Inc. (a)	100		1,294
Celltech Group PLC sponsored ADR (a)	100		1,336
Charles River Laboratories International, Inc. (a)	1,097,200		37,666,876
Ciphergen Biosystems, Inc. (a)	100		1,124
Connetics Corp. (a)	100		1,816
Dendreon Corp. (a)	146,900		1,184,014
Digene Corp. (a)	31,900		1,279,190
Enzon Pharmaceuticals, Inc. (a)	100		1,200
Exact Sciences Corp. (a)	100		1,012
Gen-Probe, Inc. (a)	200		7,294
Genencor International, Inc. (a)	100		1,575
Genentech, Inc. (a)	100		9,357
Gilead Sciences, Inc. (a)	100		5,814
Global Bio-Chem Technology Group Co. Ltd.	1,528,000		944,716
Harvard Bioscience, Inc. (a)(c)	2,802,200		24,939,580
IDEXX Laboratories, Inc. (a)	138,400		6,405,152
Ilex Oncology, Inc. (a)	100		2,125
ImmunoGen, Inc. (a)	100		505
Invitrogen Corp. (a)	1,187,700		83,139,000
Kosan Biosciences, Inc. (a)	100		986
Martek Biosciences (a)	27,700		1,799,669
MedImmune, Inc. (a)	100		2,540
Myriad Genetics, Inc. (a)	100		1,286
Nabi Biopharmaceuticals (a)	55,300		702,863
Neogen Corp. (a)	15,545		385,050
ONYX Pharmaceuticals, Inc. (a)	23,400		660,582
PRAECIS Pharmaceuticals, Inc. (a)	214,900		1,383,956
QIAGEN NV (a)	3,571,000		42,709,160
Seattle Genetics, Inc. (a)	100		858
Serologicals Corp. (a)	12,300		228,780
Strategic Diagnostics, Inc. (a)	626,000		2,960,980
Tanox, Inc. (a)	100		1,485
Techne Corp. (a)	242,300		9,154,094
Telik, Inc. (a)	65,800		1,514,058
Trimeris, Inc. (a)	100		2,098
United Therapeutics Corp. (a)	100		2,295
			217,134,980
Health Care Equipment & Supplies - 2.2%
Abaxis, Inc. (a)	184,800		3,348,576
Advanced Medical Optics, Inc. (a)	100		1,965
Advanced Neuromodulation Systems, Inc. (a)	150		6,897
Alcon, Inc.	100		6,054
Align Technology, Inc. (a)	100		1,652
Apogent Technologies, Inc. (a)	100		2,304
Arthrocare Corp. (a)	100		2,450
Becton, Dickinson & Co.	100		4,114

	Shares		Value (Note 1)
Biacore International AB sponsored ADR	100		$ 2,292
Bio-Rad Laboratories, Inc. Class A (a)	100		5,767
Biomet, Inc.	100		3,641
Biosite, Inc. (a)	100		2,895
Bruker BioSciences Corp. (a)	163		742
C.R. Bard, Inc.	100		8,125
Candela Corp. (a)	240,900		4,379,562
Cardiodynamics International Corp. (a)	100		597
Chromavision Medical Systems, Inc. (a)	100		319
Closure Medical Corp. (a)	13,300		451,269
CNS., Inc.	100		1,370
Cooper Companies, Inc.	100		4,713
CTI Molecular Imaging, Inc. (a)	100		1,691
Cyberonics, Inc. (a)	100		3,201
Cytyc Corp. (a)	100		1,376
DENTSPLY International, Inc.	100		4,517
Diagnostic Products Corp.	100		4,591
Edwards Lifesciences Corp. (a)	935,000		28,124,800
Epix Medical, Inc. (a)	229,800		3,741,144
Guidant Corp.	3,800		228,760
HealthTronics Surgical Services, Inc. (a)	63,800		398,750
ICU Medical, Inc. (a)	18,400		630,752
Illumina, Inc. (a)	100		705
Immucor, Inc. (a)	21,400		436,346
INAMED Corp. (a)	150		7,209
Integra LifeSciences Holdings Corp. (a)	98,400		2,817,192
Interpore International, Inc. (a)	100		1,300
Kensey Nash Corp. (a)	100		2,325
Merit Medical Systems, Inc. (a)	133		2,968
Millipore Corp. (a)	76,000		3,271,800
Molecular Devices Corp. (a)	100		1,899
Nobel Biocare Holding AG (Switzerland)	100		10,098
Nutraceutical International Corp. (a)	100		1,102
Osteotech, Inc. (a)	100		880
PolyMedica Corp.	200		5,262
Schick Technologies, Inc. (a)	52,700		389,980
Sola International, Inc. (a)	80,200		1,507,760
Sonic Innovations, Inc. (a)	161,800		1,043,610
SonoSight, Inc. (a)	100		2,144
St. Jude Medical, Inc. (a)	100		6,135
SurModics, Inc. (a)	100		2,390
Synovis Life Technologies, Inc. (a)	100		2,034
Synthes-Stratec, Inc.	100		98,678
Tecan Group AG	100		4,821
Therasense, Inc. (a)	100		2,030
Thoratec Corp. (a)	100		1,301
TriPath Imaging, Inc. (a)	100		780
Varian Medical Systems, Inc. (a)	58,100		4,014,710
Ventana Medical Systems, Inc. (a)	100		3,940
VSM MedTech Ltd. (a)	100		347
Wilson Greatbatch Technologies, Inc. (a)	100		4,227
Wright Medical Group, Inc. (a)	100		3,044
Common Stocks - continued
	Shares		Value (Note 1)
HEALTH CARE - continued
Health Care Equipment & Supplies - continued
Young Innovations, Inc.	100		$ 3,600
Zimmer Holdings, Inc. (a)	100		7,040
			55,032,543
Health Care Providers & Services - 8.3%
Accredo Health, Inc. (a)	100		3,161
AdvancePCS Class A (a)	587,600		30,943,016
Advisory Board Co. (a)	100		3,491
American Healthways, Inc. (a)	120,200		2,869,174
AMERIGROUP Corp. (a)	49,400		2,106,910
AmSurg Corp. (a)	100		3,789
Anthem, Inc. (a)	100		7,500
Caremark Rx, Inc. (a)	1,231,100		31,183,763
Cerner Corp. (a)	560,200		21,203,570
CIGNA Corp.	100		5,750
Computer Programs & Systems, Inc.	100		2,012
Covance, Inc. (a)	60,000		1,608,000
Coventry Health Care, Inc. (a)	81,800		5,275,282
Dendrite International, Inc. (a)	100		1,567
Dynacq Healthcare, Inc. (a)	100		768
Eclipsys Corp. (a)	100		1,164
eResearchTechnology, Inc. (a)	22,500		571,950
Express Scripts, Inc. (a)	46,200		3,069,066
First Health Group Corp. (a)	9,800		190,708
Health Management Associates, Inc. Class A	652,200		15,652,800
HealthExtras, Inc. (a)	100		1,340
ICON PLC sponsored ADR (a)	36,100		1,573,960
IDX Systems Corp. (a)	100		2,682
IMS Health, Inc.	1,757,800		43,698,908
Inveresk Research Group, Inc. (a)	357,600		8,843,448
iSoft Group PLC	602,200		3,986,631
Laboratory Corp. of America Holdings (a)	100		3,695
Lifeline Systems, Inc. (a)	200		3,800
Lincare Holdings, Inc. (a)	90,000		2,702,700
McKesson Corp.	3,500		112,560
MIM Corp. (a)	100		703
NDCHealth Corp.	100		2,562
Odyssey Healthcare, Inc. (a)	200		5,852
Omnicare, Inc.	100		4,039
Orthodontic Centers of America, Inc. (a)	100		805
Oxford Health Plans, Inc.	100		4,350
PAREXEL International Corp. (a)	100		1,626
Patterson Dental Co. (a)	100		6,416
Pediatrix Medical Group, Inc. (a)	100		5,509
Per-Se Technologies, Inc. (a)	100		1,526
Pharmaceutical Product Development, Inc. (a)	421,100		11,357,067
Quest Diagnostics, Inc.	200		14,622
Renal Care Group, Inc. (a)	100		4,120
ResCare, Inc. (a)	1,188,803		9,629,304

	Shares		Value (Note 1)
Tripos, Inc. (a)	100		$ 669
TriZetto Group, Inc. (a)	100		645
Vital Images, Inc. (a)	68,100		1,214,904
WebMD Corp. (a)	451,300		4,057,187
WellPoint Health Networks, Inc. (a)	100		9,699
			201,954,770
Pharmaceuticals - 1.9%
Able Laboratories, Inc. (a)	100		1,807
Allergan, Inc.	100		7,681
Alpharma, Inc. Class A	100		2,010
Altana AG sponsored ADR	100		6,030
American Pharmaceutical Partners, Inc. (a)	150		5,040
Bentley Pharmaceuticals, Inc. (a)	100		1,330
Caraco Pharmaceutical Laboratories Ltd. (a)	100		748
Cipla Ltd.	100		2,887
Dr. Reddy's Laboratories Ltd. ADR	238,300		7,542,195
Endo Pharmaceuticals Holdings, Inc. (a)	200		3,852
Flamel Technologies SA sponsored ADR (a)	100		2,679
Forest Laboratories, Inc. (a)	200		12,360
Guilford Pharmaceuticals, Inc. (a)	524,500		3,556,110
King Pharmaceuticals, Inc. (a)	100		1,526
KV Pharmaceutical Co. Class A (a)	150		3,825
Mylan Laboratories, Inc.	151,350		3,823,101
Novo Nordisk AS Series B	100		4,065
Perrigo Co.	347,200		5,457,984
Pharmaceutical Resources, Inc. (a)	7,700		501,655
Pure World, Inc. (a)	100		251
Ranbaxy Laboratories Ltd. sponsored GDR	270,300		6,892,650
Salix Pharmaceuticals Ltd. (a)	100		2,267
SICOR, Inc. (a)	231,800		6,304,960
Stada Arzneimittel AG	190,365		11,776,649
SuperGen, Inc. (a)	100		1,100
Teva Pharmaceutical Industries Ltd. sponsored ADR	100		5,671
Watson Pharmaceuticals, Inc. (a)	100		4,600
			45,925,033
TOTAL HEALTH CARE			520,047,326
INDUSTRIALS - 5.2%
Aerospace & Defense - 1.2%
Alliant Techsystems, Inc. (a)	100		5,776
Applied Signal Technology, Inc.	100		2,301
Cubic Corp.	100		2,300
DRS Technologies, Inc. (a)	204,900		5,692,122
Embraer - Empresa Brasileira de Aeronautica SA sponsored ADR	100		3,503
Engineered Support Systems, Inc.	225		12,389
General Dynamics Corp.	100		9,039
Herley Industries, Inc. (a)	100		2,070
Common Stocks - continued
	Shares		Value (Note 1)
INDUSTRIALS - continued
Aerospace & Defense - continued
Invision Technologies, Inc. (a)	100		$ 3,357
KVH Industries, Inc. (a)	100		2,747
L-3 Communications Holdings, Inc. (a)	383,800		19,711,968
Rockwell Collins, Inc.	100		3,003
United Defense Industries, Inc. (a)	75,000		2,391,000
			27,841,575
Air Freight & Logistics - 0.0%
C.H. Robinson Worldwide, Inc.	3,250		123,208
CNF, Inc.	100		3,390
Expeditors International of Washington, Inc.	4,400		165,704
FedEx Corp.	100		6,750
Forward Air Corp. (a)	100		2,750
UTI Worldwide, Inc.	100		3,793
			305,595
Airlines - 0.0%
Southwest Airlines Co.	100		1,614
Building Products - 0.0%
American Woodmark Corp.	100		5,505
Quixote Corp.	100		2,441
Simpson Manufacturing Co. Ltd. (a)	100		5,086
Trex Co., Inc. (a)	100		3,798
			16,830
Commercial Services & Supplies - 2.4%
Administaff, Inc. (a)	100		1,738
Apollo Group, Inc.:
- University of Phoenix Online (a)	100		6,893
Class A (a)	200		13,600
Avery Dennison Corp.	100		5,602
Benesse Corp.	100		2,453
Bennett Environmental, Inc. (a)	409,600		8,455,973
Bright Horizons Family Solutions, Inc. (a)(c)	685,300		28,782,600
Career Education Corp. (a)	200		8,014
ChoicePoint, Inc. (a)	206,600		7,869,394
Cintas Corp.	100		5,013
Coinstar, Inc. (a)	100		1,806
Corinthian Colleges, Inc. (a)	100		5,556
Corporate Executive Board Co. (a)	100		4,667
CoStar Group, Inc. (a)	100		4,168
Danka Business Systems PLC sponsored ADR (a)	17,000		74,800
DeVry, Inc. (a)	3,900		98,007
Education Management Corp. (a)	200		6,208
FTI Consulting, Inc. (a)	150		3,506
Fullcast Co. Ltd.	2,500		7,784,391
Gevity HR, Inc.	100		2,224
GFK AG	100		2,871
H&R Block, Inc.	100		5,537
Herman Miller, Inc.	100		2,427

	Shares		Value (Note 1)
HON Industries, Inc.	100		$ 4,332
Ionics, Inc. (a)	100		3,185
ITT Educational Services, Inc. (a)	100		4,697
Labor Ready, Inc. (a)	100		1,310
National Research Corp. (a)	100		1,619
On Assignment, Inc. (a)	124,300		647,603
Princeton Review, Inc. (a)	24,402		237,920
Resources Connection, Inc. (a)	100		2,731
Right Management Consultants, Inc. (a)	100		1,866
Ritchie Brothers Auctioneers, Inc.	100		5,310
Robert Half International, Inc. (a)	24,200		564,828
Stericycle, Inc. (a)	100		4,670
Strayer Education, Inc.	100		10,883
Tetra Tech, Inc. (a)	182,800		4,544,408
Trojan Technologies Corp. (a)	100		567
West Corp. (a)	100		2,323
			59,185,700
Construction & Engineering - 0.3%
Dycom Industries, Inc. (a)	62,600		1,678,932
EMCOR Group, Inc. (a)	100		4,390
Granite Construction, Inc.	100		2,349
Jacobs Engineering Group, Inc. (a)	113,800		5,463,538
			7,149,209
Electrical Equipment - 0.3%
AstroPower, Inc. (a)	100		65
Fujikura Ltd.	1,000		5,927
Johnson Electric Holdings Ltd.	500		638
REPower Systems AG	121,500		2,919,146
Rockwell Automation, Inc.	142,500		5,073,000
			7,998,776
Industrial Conglomerates - 0.0%
Alleghany Corp.	100		22,250
Teleflex, Inc.	100		4,833
			27,083
Machinery - 0.9%
AGCO Corp. (a)	100		2,014
Cascade Corp.	200		4,460
Ceradyne, Inc. (a)	100		3,406
CNH Global NV	100		1,660
CUNO, Inc. (a)	99,900		4,498,497
Dionex Corp. (a)	100		4,602
ESCO Technologies, Inc. (a)	100		4,365
Graco, Inc.	445,800		17,876,580
Husky Injection Molding Systems Ltd. (a)	100		432
Illinois Tool Works, Inc.	100		8,391
Joy Global, Inc.	100		2,615
Middleby Corp.	100		4,047
PACCAR, Inc.	100		8,512
Pentair, Inc.	100		4,570
Trinity Industries, Inc.	100		3,084
Common Stocks - continued
	Shares		Value (Note 1)
INDUSTRIALS - continued
Machinery - continued
Wabash National Corp. (a)	100		$ 2,930
Zenon Environmental, Inc. (a)	100		1,446
			22,431,611
Marine - 0.1%
Alexander & Baldwin, Inc.	48,700		1,640,703
Road & Rail - 0.0%
Canadian National Railway Co.	100		6,321
Heartland Express, Inc.	100		2,419
Knight Transportation, Inc. (a)	100		2,565
Old Dominion Freight Lines, Inc. (a)	100		3,408
			14,713
Trading Companies & Distributors - 0.0%
Fastenal Co.	200		9,988
Richelieu Hardware Ltd.	100		1,467
			11,455
TOTAL INDUSTRIALS			126,624,864
INFORMATION TECHNOLOGY - 8.9%
Communications Equipment - 0.4%
3Com Corp. (a)	100		817
Avocent Corp. (a)	100		3,652
Black Box Corp.	100		4,607
Comtech Telecommunications Corp. (a)	100		2,887
ECtel Ltd. (a)	100		496
Emulex Corp. (a)	100		2,668
Harris Corp.	100		3,795
InterDigital Communication Corp. (a)	100		2,064
Loral Space & Communications Ltd.	67,810		21,360
NETGEAR, Inc.	800		12,792
NetScreen Technologies, Inc. (a)	200		4,950
Packeteer, Inc. (a)	10		170
PC-Tel, Inc. (a)	133,300		1,414,313
Plantronics, Inc. (a)	100		3,265
Polycom, Inc. (a)	200		3,904
QLogic Corp. (a)	81		4,180
QUALCOMM, Inc.	100		5,393
Research in Motion Ltd. (a)	100		6,685
Scientific-Atlanta, Inc.	100		2,730
SeaChange International, Inc. (a)	275,400		4,241,160
SpectraLink Corp.	100		1,917
UTStarcom, Inc. (a)	80,700		2,991,549
ViaSat, Inc. (a)	100		1,914
			8,737,268
Computers & Peripherals - 0.5%
ActivCard Corp. (a)	273,800		2,157,544
Ambit Microsystems Corp.	2,575,000		6,786,293
Applied Films Corp. (a)	100		3,302
Avid Technology, Inc. (a)	100		4,800
Compal Electronics, Inc.	1,000		1,369

	Shares		Value (Note 1)
Drexler Technology Corp. (a)	256,926		$ 3,512,178
EMC Corp. (a)	6,300		81,396
iCAD, Inc. (a)	100		528
Lexmark International, Inc. Class A (a)	100		7,864
M-Systems Flash Disk Pioneers Ltd. (a)	900		15,552
Moser-Baer India Ltd.	200		1,503
Network Appliance, Inc. (a)	100		2,053
Overland Storage, Inc. (a)	100		1,880
Psion PLC (a)	100		149
SanDisk Corp. (a)	100		6,114
Stratasys, Inc. (a)	150		4,089
Synaptics, Inc. (a)	100		1,498
			12,588,112
Electronic Equipment & Instruments - 5.3%
Anritsu Corp. (a)	1,087,000		7,289,238
Brightpoint, Inc. (a)	150		2,588
CDW Corp.	71,400		4,124,064
CellStar Corp. (a)	100		1,263
Cognex Corp.	100		2,824
Excel Technology, Inc. (a)	100		3,286
Fargo Electronics, Inc. (a)	100		1,272
Flir Systems, Inc. (a)	115,745		4,224,693
Global Imaging Systems, Inc. (a)	100		3,175
Hon Hai Precision Industries Co. Ltd.	4,757,000		18,700,221
I. D. Systems Inc. (a)	100		685
Identix, Inc. (a)	100		445
INFICON Holding AG (a)	100		8,465
Itron, Inc. (a)	100		1,836
Landauer, Inc.	100		4,078
Lexar Media, Inc. (a)	100		1,743
LoJack Corp. (a)	100		806
Metrologic Instruments, Inc. (a)	200		5,400
Mettler-Toledo International, Inc. (a)	173,000		7,302,330
MOCON, Inc.	100		810
MTS Systems Corp.	100		1,923
Nam Tai Electronics, Inc.	5,630		158,090
National Instruments Corp.	100		4,547
ScanSource, Inc. (a)	100		4,562
Symbol Technologies, Inc.	3,312,400		55,946,436
Trimble Navigation Ltd. (a)	100		3,724
Universal Display Corp. (a)	100		1,367
Varian, Inc. (a)	100		4,173
Viisage Technology, Inc. (a)	100		360
Waters Corp. (a)	978,720		32,454,355
			130,258,759
Internet Software & Services - 0.1%
Aquantive, Inc. (a)	100		1,025
Ariba, Inc. (a)	100		300
AsiaInfo Holdings, Inc. (a)	100		668
Ask Jeeves, Inc. (a)	100		1,812
Autobytel, Inc. (a)	100		908
CNET Networks, Inc. (a)	100		682
Digital Impact, Inc. (a)	100		288
Common Stocks - continued
	Shares		Value (Note 1)
INFORMATION TECHNOLOGY - continued
Internet Software & Services - continued
Digital Insight Corp. (a)	10		$ 249
Digital River, Inc. (a)	100		2,210
Dwango Co. Ltd.	1		8,760
EarthLink, Inc. (a)	100		1,000
FreeMarkets, Inc. (a)	100		669
Internet Commerce Corp. Class A (a)	100		110
iPass, Inc.	100		1,603
ITXC Corp. (a)	10		43
j2 Global Communications, Inc. (a)	200		4,954
LookSmart Ltd. (a)	100		155
Netease.com, Inc. sponsored ADR (a)	100		3,690
NetRatings, Inc. (a)	10		114
NIC, Inc. (a)	10		80
PEC Solutions, Inc. (a)	100		1,695
Quovadx, Inc. (a)	10		49
Raindance Communications, Inc. (a)	10		28
Retek, Inc. (a)	100		928
Sina Corp. (a)	100		3,375
Sohu.com, Inc. (a)	39,000		1,170,390
Supportsoft, Inc. (a)	147,910		1,945,017
United Online, Inc. (a)	150		2,519
ValueClick, Inc. (a)	100		908
Websense, Inc. (a)	100		2,924
Yahoo!, Inc. (a)	100		4,517
			3,161,670
IT Services - 0.9%
Affiliated Computer Services, Inc. Class A (a)	214,500		11,681,670
Alliance Data Systems Corp. (a)	100		2,768
Anteon International Corp. (a)	100		3,605
CACI International, Inc. Class A (a)	300		14,586
Certegy, Inc.	86,000		2,820,800
CheckFree Corp. (a)	100		2,765
Cognizant Technology Solutions Corp. Class A (a)	300		13,692
Concord EFS, Inc. (a)	100		1,484
DST Systems, Inc. (a)	85,200		3,557,952
Hewitt Associates, Inc. Class A (a)	100		2,990
iGate Corp. (a)	100		785
Infosys Technologies Ltd. sponsored ADR	100		9,570
infoUSA, Inc. (a)	100		742
InteliData Technologies Corp. (a)	100		165
Intrado, Inc. (a)	100		2,195
Mastek Ltd.	492,375		3,597,440
Maximus, Inc. (a)	100		3,913
Paychex, Inc.	100		3,720
Satyam Computer Services Ltd.	100		805
SRA International, Inc. Class A (a)	200		8,620
SunGard Data Systems, Inc. (a)	200		5,542
Syntel, Inc.	100		2,471
The BISYS Group, Inc. (a)	100		1,488

	Shares		Value (Note 1)
Total System Services, Inc.	100		$ 3,113
Tyler Technologies, Inc. (a)	100		963
			21,743,844
Office Electronics - 0.6%
Zebra Technologies Corp. Class A (a)	230,850		15,321,515
Semiconductors & Semiconductor Equipment - 0.2%
Agere Systems, Inc. Class A (a)	100		305
Analog Devices, Inc.	100		4,565
ARM Holdings PLC sponsored ADR (a)	100		690
ASM Pacific Technology Ltd.	500		2,190
ATI Technologies, Inc. (a)	100		1,502
Broadcom Corp. Class A (a)	100		3,409
Cabot Microelectronics Corp. (a)	60,100		2,944,900
Hi/fn, Inc. (a)	8		95
International Rectifier Corp. (a)	100		4,941
Intersil Corp. Class A	57,000		1,416,450
KLA-Tencor Corp. (a)	100		5,867
Lam Research Corp. (a)	100		3,230
Linear Technology Corp.	100		4,207
Marvell Technology Group Ltd. (a)	200		7,586
Micrel, Inc. (a)	100		1,558
Microchip Technology, Inc.	100		3,336
Novellus Systems, Inc. (a)	100		4,205
NVIDIA Corp. (a)	5,000		116,250
Omnivision Technologies, Inc. (a)	200		11,050
PLX Technology, Inc. (a)	100		885
RF Micro Devices, Inc. (a)	100		1,005
Silicon Image, Inc. (a)	100		723
Standard Microsystems Corp. (a)	100		2,530
Tundra Semiconductor Corp. Ltd. (a)	100		2,078
Zoran Corp. (a)	100		1,739
			4,545,296
Software - 0.9%
Activision, Inc. (a)	150		2,730
Adobe Systems, Inc.	100		3,930
Ansys, Inc. (a)	100		3,970
Barra, Inc.	100		3,549
BEA Systems, Inc. (a)	100		1,230
Borland Software Corp. (a)	100		973
Business Objects SA sponsored ADR (a)	100		3,467
Cadence Design Systems, Inc. (a)	100		1,798
Check Point Software Technologies Ltd. (a)	100		1,682
Citrix Systems, Inc. (a)	100		2,121
Cognos, Inc. (a)	100		3,054
Concur Technologies, Inc. (a)	113,000		1,093,840
Dassault Systemes SA sponsored ADR	100		4,590
Digimarc Corp. (a)	100		1,330
Electronic Arts, Inc. (a)	153,200		7,319,896
EPIQ Systems, Inc. (a)	100		1,713
Evolving Systems, Inc. (a)	100		1,330
FactSet Research Systems, Inc.	100		3,821
Hudson Soft Co. Ltd.	100		1,092
Common Stocks - continued
	Shares		Value (Note 1)
INFORMATION TECHNOLOGY - continued
Software - continued
Insignia Systems, Inc. (a)	100		$ 262
Intuit, Inc. (a)	100		5,291
KFX, Inc. (a)	65,600		495,280
Kronos, Inc. (a)	150		5,942
Macrovision Corp. (a)	66,400		1,499,976
Magma Design Automation, Inc. (a)	100		2,334
Manhattan Associates, Inc. (a)	100		2,764
Mercury Interactive Corp. (a)	100		4,864
Merge Technologies, Inc. (a)	100		1,764
Network Associates, Inc. (a)	100		1,504
PeopleSoft, Inc. (a)	100		2,280
Plato Learning, Inc. (a)	77,400		816,570
Quality Systems, Inc. (a)	100		4,459
Quest Software, Inc. (a)	100		1,420
Red Hat, Inc. (a)	100		1,877
Renaissance Learning, Inc. (a)	203,870		4,909,190
Roxio, Inc. (a)	100		479
RSA Security, Inc. (a)	100		1,420
ScanSoft, Inc. (a)	100		532
Secure Computing Corp. (a)	125,700		2,251,287
Symantec Corp. (a)	200		6,930
Synopsys, Inc. (a)	100		3,376
TALX Corp.	100		2,303
Trend Micro, Inc. sponsored ADR (a)	100		2,630
Vastera, Inc. (a)	776,799		3,107,196
WatchGuard Technologies, Inc. (a)	10		58
Wind River Systems, Inc. (a)	100		876
			21,588,980
TOTAL INFORMATION TECHNOLOGY			217,945,444
MATERIALS - 22.7%
Chemicals - 0.8%
American Vanguard Corp.	100		3,727
Balchem Corp.	100		2,280
BOC Group PLC	100		1,524
Ecolab, Inc.	383,600		10,499,132
Headwaters, Inc. (a)	100		1,962
International Flavors & Fragrances, Inc.	100		3,492
Minerals Technologies, Inc.	41,800		2,476,650
Novozymes AS Series B	18,800		684,769
Potash Corp. of Saskatchewan	100		8,652
Praxair, Inc.	200		7,640
Quaker Chemical Corp.	100		3,075
Sigma Aldrich Corp.	100		5,718
Sinopec Shanghai Petrochemical Co. Ltd.:
(H Shares)	2,000		889
sponsored ADR	110,100		5,093,226
Spartech Corp.	100		2,464

	Shares		Value (Note 1)
Terra Nitrogen Co. LP	100		$ 496
Valspar Corp.	100		4,942
			18,800,638
Construction Materials - 0.0%
Anhui Conch Cement Co. Ltd. Class H	1,000,000		1,288,062
Cemex SA de CV sponsored ADR	100		2,620
Cheung Kong Infrastructure Holdings Ltd.	1,000		2,241
Florida Rock Industries, Inc.	100		5,485
James Hardie Industries NV	100		517
Vulcan Materials Co.	100		4,757
			1,303,682
Containers & Packaging - 0.0%
Aptargroup, Inc.	100		3,900
IPL, Inc. Class A	100		713
			4,613
Metals & Mining - 21.4%
Agnico-Eagle Mines Ltd.	1,180,230		14,220,625
Agnico-Eagle Mines Ltd. warrants 11/14/07 (a)	23,350		61,878
Alumina Ltd.	1,236,600		6,109,189
Apex Silver Mines Ltd. (a)	100		2,090
Arch Coal, Inc.	51,200		1,595,904
AUR Resources, Inc. (a)	3,187,800		16,587,766
Barrick Gold Corp.	100		2,259
BHP Steel Ltd.	1,037,200		4,367,566
China Steel Corp.	3,698,000		3,070,777
Commercial Metals Co.	100		3,040
Compania de Minas Buenaventura SA sponsored ADR	1,405,000		39,733,400
CONSOL Energy, Inc.	292,800		7,583,520
Freeport-McMoRan Copper & Gold, Inc. Class B	1,194,200		50,311,646
Glamis Gold Ltd. (a)	94,100		1,616,210
Goldcorp, Inc.	50,000		794,789
Golden Star Resources Ltd. (a)	250,000		1,746,068
Harmony Gold Mining Co. Ltd.	1,049,100		17,012,009
High River Gold Mines Ltd. (a)	1,989,600		2,990,842
Inmet Mining Corp. (a)	658,400		8,856,830
International Steel Group, Inc. (a)	2,500		97,375
IPSCO, Inc.	1,165,900		21,615,707
JFE Holdings, Inc.	162,900		4,468,827
Kinross Gold Corp. (a)	3,698,666		29,425,095
Meridian Gold, Inc. (a)	3,540,900		51,672,246
Newmont Mining Corp.	2,814,180		136,797,283
Nippon Steel Corp.	2,951,000		6,365,662
Nucor Corp.	333,700		18,687,200
Peabody Energy Corp.	39,600		1,651,716
Placer Dome, Inc.	100		1,786
POSCO sponsored ADR	16,500		560,505
Quanex Corp.	100		4,610
Schnitzer Steel Industries, Inc. Class A	100		6,050
Sons of Gwalia Ltd. ADR (a)	100		1,335
Common Stocks - continued
	Shares		Value (Note 1)
MATERIALS - continued
Metals & Mining - continued
Steel Dynamics, Inc. (a)	577,800		$ 13,572,522
Steel Technologies, Inc.	100		1,769
Stillwater Mining Co. (a)	700,300		6,701,871
Teck Cominco Ltd. Class B (sub. vtg.)	1,550,900		26,218,962
United States Steel Corp.	452,000		15,829,040
Usinas Siderurgicas de Minas Gerais SA (Usiminas) (PN-A)	351,000		4,121,200
WMC Resources Ltd. (a)	1,074,100		4,547,179
Xstrata PLC	155,900		1,753,763
			520,768,111
Paper & Forest Products - 0.5%
Aracruz Celulose SA sponsored ADR	100		3,504
Lee & Man Paper Manufacturing Ltd.	4,500,000		3,564,712
Sino-Forest Corp. Class A (sub. vtg.) (a)	2,043,700		8,129,426
			11,697,642
TOTAL MATERIALS			552,574,686
TELECOMMUNICATION SERVICES - 2.1%
Diversified Telecommunication Services - 0.8%
BCE, Inc.	100		2,228
Covad Communications Group, Inc. (a)	1,615,200		5,814,720
General Communications, Inc. Class A (a)	100		870
Golden Telecom, Inc. (a)	114,800		3,185,700
Hungarian Telephone & Cable Corp. (a)	100		986
Matav Rt. sponsored ADR	100		1,871
Philippine Long Distance Telephone Co. (a)	100		1,746
Philippine Long Distance Telephone Co. sponsored ADR (a)	23,000		400,660
PT Telkomunikasi Indonesia Tbk sponsored ADR	565,900		9,292,078
Rostelecom sponsored ADR	100		1,252
Telefonica del Peru SA sponsored ADR	100		393
Warwick Valley Telephone Co.	300		8,877
			18,711,381
Wireless Telecommunication Services - 1.3%
Advanced Info Service PCL (For. Reg.)	100		215
America Movil SA de CV sponsored ADR	187,200		5,118,048
At Road, Inc. (a)	524,827		6,980,199
Boston Communications Group, Inc. (a)	100		929
Mobile TeleSystems OJSC sponsored ADR	51,800		4,289,040
MTN Group Ltd. (a)	1,625,000		6,909,468
Nextel Communications, Inc. Class A (a)	100		2,806
Nextel Partners, Inc. Class A (a)	100		1,345
NII Holdings, Inc. Class B (a)	118,900		8,873,507

	Shares		Value (Note 1)
Telephone & Data Systems, Inc.	100		$ 6,255
Vimpel Communications sponsored ADR (a)	100		7,350
			32,189,162
TOTAL TELECOMMUNICATION SERVICES			50,900,543
UTILITIES - 2.2%
Electric Utilities - 0.2%
Ameren Corp.	100		4,600
Black Hills Corp.	100		2,983
Cinergy Corp.	100		3,881
Empire District Electric Co.	100		2,193
FPL Group, Inc.	100		6,542
Otter Tail Corp.	100		2,673
PPL Corp.	100		4,375
Wisconsin Energy Corp.	109,500		3,662,775
			3,690,022
Gas Utilities - 1.3%
KeySpan Corp.	498,700		18,352,160
Southwestern Energy Co. (a)	567,200		13,556,080
			31,908,240
Multi-Utilities & Unregulated Power - 0.7%
Energy East Corp.	100		2,240
Equitable Resources, Inc.	137,600		5,905,792
Public Service Enterprise Group, Inc.	100		4,380
Questar Corp.	5,600		196,840
Sierra Pacific Resources (a)	1,574,202		11,554,643
			17,663,895
TOTAL UTILITIES			53,262,157
TOTAL COMMON STOCKS (Cost $1,746,053,597)		2,359,227,440
Money Market Funds - 8.0%
	Shares		Value (Note 1)
Fidelity Cash Central Fund, 1.07% (b)	120,496,229		$ 120,496,229
Fidelity Securities Lending Cash Central Fund, 1.09% (b)	74,639,803		74,639,803
TOTAL MONEY MARKET FUNDS (Cost $195,136,032)		195,136,032
TOTAL INVESTMENT PORTFOLIO - 104.8% (Cost $1,941,189,629)			2,554,363,472
NET OTHER ASSETS - (4.8)%			(118,130,570)
NET ASSETS - 100%		$ 2,436,232,902

Legend

(a) Non-income producing

(b) The rate quoted is the annualized seven-day yield of the fund at period end. A complete listing of the fund's holdings as of its most recent fiscal year end is available upon request.

Other Information

Purchases and sales of securities, other than short-term securities, aggregated $1,346,102,981 and $812,756,440, respectively.

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

United States of America	74.0%
Canada	10.5%
Japan	2.9%
Cayman Islands	2.3%
Netherlands	1.8%
Peru	1.6%
Taiwan	1.1%
South Africa	1.0%
Others (individually less than 1%)	4.8%
	100.0%

Transactions during the period with companies which are or were affiliates are as follows:

Affiliate	Purchase Cost	Sales Cost	Dividend Income	Value
Bright Horizons Family Solutions, Inc.	$ 948,299	$ -	$ -	$ 28,782,600
Drexler Technology Corp.	4,314,828	7,087,239	-	-
Harvard Bioscience, Inc.	3,124,014	-	-	24,939,580
TOTALS	$ 8,387,141	$ 7,087,239	$ -	$ 53,722,180

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $127,019,000 of which $26,601,000 and $100,418,000 will expire on December 31, 2009 and 2010, respectively.

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

Mid Cap Portfolio

Fidelity Variable Insurance Products: Mid Cap Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003
Assets
Investment in securities, at value (including securities loaned of $71,513,615) (cost $1,941,189,629) - See accompanying schedule		$ 2,554,363,472
Foreign currency held at value (cost $221,076)		221,562
Receivable for investments sold		253,008
Receivable for fund shares sold		4,211,212
Dividends receivable		929,002
Interest receivable		96,529
Prepaid expenses		10,632
Other receivables		223,302
Total assets		2,560,308,719

Liabilities
Payable to custodian bank	$ 90,935
Payable for investments purchased	42,834,335
Payable for fund shares redeemed	4,497,598
Accrued management fee	1,119,712
Distribution fees payable	281,147
Other affiliated payables	175,463
Other payables and accrued expenses	436,824
Collateral on securities loaned, at value	74,639,803
Total liabilities		124,075,817
Net Assets		$ 2,436,232,902
Net Assets consist of:
Paid in capital		$ 1,954,001,002
Undistributed net investment income		76,412
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		(130,685,298)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		612,840,786
Net Assets		$ 2,436,232,902
Initial Class: Net Asset Value, offering price and redemption price per share ($678,479,712 ÷ 28,085,774 shares)		$ 24.16
Service Class: Net Asset Value, offering price and redemption price per share ($580,179,200 ÷ 24,077,057 shares)		$ 24.10
Service Class 2: Net Asset Value, offering price and redemption price per share ($1,177,573,990 ÷ 49,114,767 shares)		$ 23.98

Statement of Operations

	Year ended December 31, 2003
Investment Income
Dividends		$ 8,156,287
Interest		1,682,720
Security lending		1,107,677
Total income		10,946,684

Expenses
Management fee	$ 9,876,195
Transfer agent fees	1,193,037
Distribution fees	2,322,333
Accounting and security lending fees	387,360
Non-interested trustees' compensation	6,625
Custodian fees and expenses	148,211
Audit	34,735
Legal	7,989
Miscellaneous	356,244
Total expenses before reductions	14,332,729
Expense reductions	(422,778)	13,909,951
Net investment income (loss)		(2,963,267)
Realized and Unrealized Gain (Loss) Net realized gain (loss) on:
Investment securities (Net of foreign taxes of $23,455, including realized gain (loss) of ($1,657,190) on sales of affiliated issuers)	30,189,715
Foreign currency transactions	(39,777)
Futures contracts	61,870
Total net realized gain (loss)		30,211,808
Change in net unrealized appreciation (depreciation) on: Investment securities (Net of deferred foreign taxes of $336,495)	575,217,151
Assets and liabilities in foreign currencies	2,087
Futures contracts	4,181
Total change in net unrealized appreciation (depreciation)		575,223,419
Net gain (loss)		605,435,227
Net increase (decrease) in net assets resulting from operations		$ 602,471,960

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

Annual Report

Fidelity Variable Insurance Products: Mid Cap Portfolio
Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$ (2,963,267)	$ 5,367,275
Net realized gain (loss)	30,211,808	(100,092,133)
Change in net unrealized appreciation (depreciation)	575,223,419	(54,350,719)
Net increase (decrease) in net assets resulting from operations	602,471,960	(149,075,577)
Distributions to shareholders from net investment income	(5,082,393)	(10,315,464)
Share transactions - net increase (decrease)	440,089,337	406,189,773
Total increase (decrease) in net assets	1,037,478,904	246,798,732

Net Assets
Beginning of period	1,398,753,998	1,151,955,266
End of period (including undistributed net investment income of $76,412 and undistributed net investment income of $4,928,520, respectively)	$ 2,436,232,902	$ 1,398,753,998

Other Information
Share Transactions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Shares Sold	4,434,612	4,691,539	24,537,608
Reinvested	131,528	76,717	95,288
Redeemed	(5,011,471)	(2,353,097)	(5,472,778)
Net increase (decrease)	(445,331)	2,415,159	19,160,118

Dollars Sold	$ 95,795,053	$ 94,175,028	$ 482,784,357
Reinvested	2,207,036	1,285,007	1,590,350
Redeemed	(89,867,137)	(43,168,976)	(104,711,381)
Net increase (decrease)	$ 8,134,952	$ 52,291,059	$ 379,663,326
Share Transactions	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Shares Sold	7,049,981	6,655,084	22,666,360
Reinvested	277,413	161,340	101,720
Redeemed	(8,136,461)	(3,917,197)	(3,604,685)
Net increase (decrease)	(809,067)	2,899,227	19,163,395
Dollars Sold	$ 134,875,925	$ 125,174,947	$ 416,253,061
Reinvested	5,301,369	3,078,362	1,935,732
Redeemed	(145,105,795)	(70,148,866)	(65,174,962)
Net increase (decrease)	$ (4,928,501)	$ 58,104,443	$ 353,013,831
Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 2,207,036	$ 1,285,007	$ 1,590,350
From net realized gain	-	-	-
Total	$ 2,207,036	$ 1,285,007	$ 1,590,350
	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 5,301,369	$ 3,078,362	$ 1,935,733
From net realized gain	-	-	-
Total	$ 5,301,369	$ 3,078,362	$ 1,935,733

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

Mid Cap Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 17.51	$ 19.60	$ 20.26	$ 15.25	$ 10.31
Income from Investment Operations
Net investment income (loss)^C	(.01)	.09	.20	.19	-^E
Net realized and unrealized gain (loss)	6.74	(2.00)	(.86)	4.95	5.05
Total from investment operations	6.73	(1.91)	(.66)	5.14	5.05
Distributions from net investment income	(.08)	(.18)	-	(.08)	-
Distributions from net realized gain	-	-	-	-	(.09)
Distributions in excess of net realized gain	-	-	-	(.05)	(.02)
Total distributions	(.08)	(.18)	-	(.13)	(.11)
Net asset value, end of period	$ 24.16	$ 17.51	$ 19.60	$ 20.26	$ 15.25
Total Return^A,B	38.64%	(9.82)%	(3.26)%	33.78%	49.04%
Ratios to Average Net Assets^D
Expenses before expense reductions	.70%	.70%	.69%	.74%	3.34%
Expenses net of voluntary waivers, if any	.70%	.70%	.69%	.74%	1.00%
Expenses net of all reductions	.68%	.63%	.62%	.69%	.97%
Net investment income (loss)	(.04)%	.51%	1.06%	1.01%	.01%
Supplemental Data
Net assets, end of period (000 omitted)	$ 678,480	$ 499,557	$ 574,934	$ 589,026	$ 1,744
Portfolio turnover rate	51%	135%	144%	245%	163%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

^EAmount represents less than $.01 per share.

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 17.46	$ 19.54	$ 20.22	$ 15.24	$ 10.31
Income from Investment Operations
Net investment income (loss)^C	(.03)	.08	.18	.17	(.01)
Net realized and unrealized gain (loss)	6.73	(2.00)	(.86)	4.93	5.05
Total from investment operations	6.70	(1.92)	(.68)	5.10	5.04
Distributions from net investment income	(.06)	(.16)	-	(.07)	-
Distributions from net realized gain	-	-	-	-	(.09)
Distributions in excess of net realized gain	-	-	-	(.05)	(.02)
Total distributions	(.06)	(.16)	-	(.12)	(.11)
Net asset value, end of period	$ 24.10	$ 17.46	$ 19.54	$ 20.22	$ 15.24
Total Return^A,B	38.52%	(9.90)%	(3.36) %	33.54%	48.94%
Ratios to Average Net Assets^D
Expenses before expense reductions	.80%	.80%	.79%	.84%	3.41%
Expenses net of voluntary waivers, if any	.80%	.80%	.79%	.84%	1.10%
Expenses net of all reductions	.78%	.73%	.72%	.79%	1.07%
Net investment income (loss)	(.14)%	.41%	.96%	.92%	(.09)%
Supplemental Data
Net assets, end of period (000 omitted)	$ 580,179	$ 378,264	$ 366,665	$ 282,941	$ 25,908
Portfolio turnover rate	51%	135%	144%	245%	163%

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

^C Calculated based on average shares outstanding during the period.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^F
Selected Per-Share Data
Net asset value, beginning of period	$ 17.39	$ 19.49	$ 20.20	$ 14.82
Income from Investment Operations
Net investment income (loss)^E	(.06)	.05	.15	.14
Net realized and unrealized gain (loss)	6.70	(1.99)	(.86)	5.35
Total from investment operations	6.64	(1.94)	(.71)	5.49
Distributions from net investment income	(.05)	(.16)	-	(.06)
Distributions in excess of net realized gain	-	-	-	(.05)
Total distributions	(.05)	(.16)	-	(.11)
Net asset value, end of period	$ 23.98	$ 17.39	$ 19.49	$ 20.20
Total Return^B,C,D	38.31%	(10.02)%	(3.51)%	37.12%
Ratios to Average Net Assets^G
Expenses before expense reductions	.95%	.95%	.94%	.99%^A
Expenses net of voluntary waivers, if any	.95%	.95%	.94%	.99%^A
Expenses net of all reductions	.93%	.88%	.88%	.94%^A
Net investment income (loss)	(.29)%	.25%	.81%	.76%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 1,177,574	$ 520,933	$ 210,356	$ 73,039
Portfolio turnover rate	51%	135%	144%	245%

^A Annualized

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

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

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

^E Calculated based on average shares outstanding during the period.

^F For the period January 12, 2000 (commencement of operations) to December 31, 2000.

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

Mid Cap Portfolio

Fidelity Variable Insurance Products: Money Market Portfolio

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of the class' dividend income and capital gains (the profits earned upon the sale of securities that have grown in value) and assuming a constant rate of performance each year. Performance numbers are net of all fund operating expenses, but do not include any insurance charges imposed by your insurance company's separate account. If performance information included the effect of these additional charges, the total returns would be lower. How a fund did yesterday is no guarantee of how it will do tomorrow.

Average Annual Total Returns

Periods ended December 31, 2003	Past 1 year	Past 5 years	Past 10 years
Fidelity VIP: Money Market - Initial Class	1.00%	3.65%	4.47%
Fidelity VIP: Money Market - Service Class^A	0.90%	3.59%	4.44%
Fidelity VIP: Money Market - Service Class 2^B	0.75%	3.46%	4.38%

^A The initial offering of Service Class shares took place on July 7, 2000. Performance for Service Class shares reflects an asset-based service fee (12b-1 fee), and returns prior to July 7, 2000 are those of Initial Class and do not include the effects of a 12b-1 fee. Had Service Class' 12b-1 fee been reflected, returns prior to July 7, 2000 would have been lower.

^B The initial offering of Service Class 2 shares took place on January 12, 2000. Performance for Service Class 2 shares reflects an asset-based service fee (12b-1 fee), and returns prior to January 12, 2000 are those of Initial Class and do not include the effects of a 12b-1 fee. Had Service Class 2's 12b-1 fee been reflected, returns prior to January 12, 2000 would have been lower.

Yield

	12/30/03	9/30/03	7/01/03	4/01/03	12/31/02
Fidelity VIP: Money Market - Initial Class	0.99%	0.90%	0.93%	1.06%	1.28%

Yield refers to the income paid by the fund over a given period. Yields for money market funds are usually for seven-day periods, expressed as annual percentage rates. A yield that assumes income earned is reinvested or compounded is called an effective yield. The chart above shows the fund's current seven-day yield at quarterly intervals over the past year.

Annual Report

Fidelity Variable Insurance Products: Money Market Portfolio

Investments December 31, 2003

Showing Percentage of Net Assets

Corporate Bonds - 1.3%

Due Date	Annualized Yield at Time of Purchase	Principal Amount		Value (Note 1)
Bell Trace Obligated Group
1/11/04	1.25% (b)	$ 11,800,000		$ 11,800,000
Conoco, Inc.
4/15/04	1.51	12,335,000		12,487,107
TOTAL CORPORATE BONDS				24,287,107
Certificates of Deposit - 20.1%
London Branch, Eurodollar, Foreign Banks - 10.6%
Credit Agricole Indosuez
8/5/04	1.39	10,000,000		10,000,000
8/5/04	1.40	10,000,000		10,000,000
12/6/04	1.55	20,000,000		20,000,000
Credit Lyonnais SA
3/12/04	1.12	25,000,000		25,000,483
Dresdner Bank AG
4/19/04	1.15	10,000,000		10,000,000
HBOS Treasury Services PLC
1/21/04	1.06	20,000,000		20,000,000
2/27/04	1.13	25,000,000		25,000,000
3/1/04	1.15	9,000,000		9,000,000
3/3/04	1.15	15,000,000		15,000,000
Landesbank Hessen-Thuringen
5/12/04	1.21	10,000,000		10,000,000
Unicredito Italiano Spa
3/5/04	1.12	5,000,000		4,999,955
WestLB AG
1/12/04	1.12	20,000,000		20,000,000
2/23/04	1.15	15,000,000		15,000,000
				194,000,438
New York Branch, Yankee Dollar, Foreign Banks - 9.5%
BNP Paribas SA
1/2/04	1.04 (b)	50,000,000		49,992,780
8/5/04	1.41	15,000,000		15,000,000
Canadian Imperial Bank of Commerce
1/15/04	1.18 (b)	20,000,000		20,000,000
Credit Agricole Indosuez
1/2/04	1.04 (b)	10,000,000		9,999,250
1/2/04	1.07 (b)	10,000,000		9,999,735
Royal Bank of Canada
1/2/04	1.04 (b)	15,000,000		14,998,481
Societe Generale
1/2/04	1.04 (b)	20,000,000		19,997,898

Due Date	Annualized Yield at Time of Purchase	Principal Amount		Value (Note 1)
1/2/04	1.05% (b)	$ 20,000,000		$ 19,999,639
1/2/04	1.11 (b)	15,000,000		14,996,030
				174,983,813
TOTAL CERTIFICATES OF DEPOSIT			368,984,251
Commercial Paper - 6.7%

Citibank Credit Card Master Trust I (Dakota Certificate Program)
1/22/04	1.12	23,750,000		23,734,483
DaimlerChrysler NA Holding Corp.
1/21/04	1.36	5,000,000		4,996,222
1/26/04	1.37	6,000,000		5,994,292
1/28/04	1.36	3,000,000		2,996,940
2/17/04	1.38	4,000,000		3,992,793
Dresdner U.S. Finance, Inc.
2/6/04	1.14	15,000,000		14,982,900
4/19/04	1.15	10,000,000		9,965,332
Grampian Funding Ltd.
2/4/04	1.10	10,000,000		9,989,611
Household Finance Corp.
3/9/04	1.13	25,000,000		24,947,111
John Deere Capital Corp.
1/16/04	1.20	2,000,000		1,999,000
Montauk Funding Corp.
1/26/04	1.10	5,000,000		4,996,181
Paradigm Funding LLC
1/22/04	1.11	15,000,000		14,990,288
TOTAL COMMERCIAL PAPER			123,585,153
Federal Agencies - 27.8%

Fannie Mae - 17.7%
Agency Coupons - 15.7%
3/10/04	1.11 (b)	20,000,000		20,000,000
3/23/04	1.10 (b)	25,000,000		24,992,468
8/30/04	1.25	25,000,000		25,000,000
8/30/04	1.30	25,000,000		25,000,000
9/24/04	1.50	25,000,000		25,000,000
10/1/04	1.55	25,000,000		25,000,000
11/2/04	1.35	25,000,000		25,000,000
11/9/04	1.40	25,000,000		25,000,000
11/15/04	1.43	15,000,000		15,000,000
11/26/04	1.54	14,500,000		14,500,000
12/3/04	1.52	20,000,000		20,000,000
12/10/04	1.59	10,000,000		10,000,000
12/20/04	1.49	15,000,000		15,000,000
12/30/04	1.64	20,000,000		20,000,000
				289,492,468
Federal Agencies - continued
Due Date	Annualized Yield at Time of Purchase	Principal Amount		Value (Note 1)
Fannie Mae - continued
Discount Notes - 2.0%
4/7/04	1.16%	$ 17,205,000		$ 17,151,688
6/14/04	1.21	10,000,000		9,945,000
11/12/04	1.50	10,000,000		9,870,089
				36,966,777
				326,459,245
Federal Home Loan Bank - 8.5%
Agency Coupons - 7.0%
1/19/04	1.08 (b)	6,000,000		5,997,196
1/25/04	1.06 (b)	17,000,000		16,987,094
3/15/04	1.09 (b)	20,000,000		19,992,496
3/21/04	1.10 (b)	36,000,000		35,989,114
7/6/04	1.23	50,000,000		49,999,999
				128,965,899
Discount Notes - 1.5%
4/23/04	1.12	27,500,000		27,404,185
				156,370,084
Freddie Mac - 1.6%
Agency Coupons - 1.6%
2/15/04	1.09	4,000,000		4,019,691
7/27/04	1.20	25,000,000		25,000,000
				29,019,691
TOTAL FEDERAL AGENCIES			511,849,020
Bank Notes - 0.5%

National City Bank, Indiana
1/2/04	1.04 (b)	10,000,000		9,997,974
Master Notes - 3.0%

General Motors Acceptance Corp. Mortgage Credit
1/2/04	1.67 (d)	15,000,000		14,999,305
Goldman Sachs Group, Inc.
1/27/04	1.20 (d)	36,000,000		36,000,000
2/17/04	1.18 (d)	5,000,000		5,000,000
TOTAL MASTER NOTES			55,999,305
Medium-Term Notes - 16.4%

American Express Credit Corp.
1/5/04	1.20 (b)	10,000,000		10,001,325
Bank of New York Co., Inc.
1/27/04	1.13 (a)(b)	15,000,000		15,000,000
Bank of Scotland Treasury Services PLC
1/23/04	1.18 (b)	10,000,000		10,000,367
Medium-Term Notes - continued
Due Date	Annualized Yield at Time of Purchase	Principal Amount		Value (Note 1)
Descartes Funding Trust
1/15/04	1.15% (b)	$ 5,000,000		$ 5,000,000
General Electric Capital Corp.
1/9/04	1.25 (b)	25,000,000		25,000,000
1/19/04	1.23 (b)	20,000,000		20,000,000
1/28/04	1.14 (b)	15,000,000		15,000,340
HBOS Treasury Services PLC
3/24/04	1.16 (b)	20,000,000		20,000,000
Household Finance Corp.
2/18/04	1.17 (b)	5,000,000		5,000,000
Landesbank Baden-Wuerttemberg
1/15/04	1.16 (b)	25,000,000		25,000,541
Morgan Stanley
1/15/04	1.28 (b)	20,000,000		20,000,000
1/27/04	1.15 (b)	10,000,000		10,000,000
National City Bank, Indiana
1/2/04	1.05 (b)	25,000,000		24,997,976
SLM Corp.
1/26/04	1.31 (b)	20,000,000		20,019,371
U.S. Bank NA, Minnesota
1/13/04	1.30 (b)	20,000,000		20,010,270
USAA Auto Owner Trust
7/15/04	1.03	2,473,644		2,473,644
Verizon Global Funding Corp.
3/15/04	1.26 (b)	15,000,000		15,000,470
3/15/04	1.62 (b)	30,000,000		30,000,000
Wachovia Bank NA
1/28/04	1.16 (b)	10,000,000		10,001,352
TOTAL MEDIUM-TERM NOTES			302,505,656
Short-Term Notes - 4.5%

Jackson National Life Insurance Co.
1/1/04	1.29 (b)(d)	7,000,000		7,000,000
Metropolitan Life Insurance Co.
1/2/04	1.35 (b)(d)	10,000,000		10,000,000
1/28/04	1.15 (b)	5,000,000		5,000,000
2/2/04	1.32 (b)(d)	5,000,000		5,000,000
Monumental Life Insurance Co.
1/1/04	1.31 (b)(d)	5,000,000		5,000,000
1/1/04	1.34 (b)(d)	5,000,000		5,000,000
New York Life Insurance Co.
1/2/04	1.29 (b)(d)	30,000,000		30,000,000
Pacific Life Insurance Co.
3/11/04	1.32 (b)(d)	5,000,000		5,000,000
Transamerica Occidental Life Insurance Co.
2/1/04	1.33 (b)(d)	10,000,000		10,000,000
TOTAL SHORT-TERM NOTES			82,000,000
Municipal Securities - 5.3%
		Principal Amount		Value (Note 1)

Alaska Hsg. Fin. Corp. Bonds Series A, 1.4%, tender 9/1/04 (FSA Insured) (b)		$ 10,000,000		$ 10,000,000
Kansas Dev. Fin. Auth. Lease Rev. (State of Kansas - Dept. of Administration - 7th and Harrison State Office Bldg. Proj.) Series 2002 J1, 1.32% (Liquidity Facility Kansas Pooled Money Invt. Board), VRDN (b)		7,975,000		7,975,000
Kansas Dev. Fin. Auth. Lease Rev. (State of Kansas - Dept. of Administration - 7th and Harrison State Office Bldg. Proj.) Series 2002 J2, 1.32% (Liquidity Facility Kansas Pooled Money Invt. Board), VRDN (b)		21,160,000		21,160,000
Massachusetts Health & Edl. Facilities Auth. Rev. (Partners Health Care Sys., Inc. Proj.) Series D6, 1.33%, VRDN (b)		14,765,000		14,765,000
New York State Hsg. Fin. Svc. Contract Rev. Series 2003 H, 1.15%, LOC Dexia Cr. Local de France, VRDN (b)		13,300,000		13,300,000
San Jose Redev. Agcy. Rev. Series A, 1.15%, LOC JPMorgan Chase Bank, VRDN (b)(c)		11,250,000		11,250,000
Waco Edl. Fin. Corp. Rev. (Baylor Univ. Proj.) Series A, 1.25% (XL Cap. Assurance, Inc. Insured), VRDN (b)		18,850,000		18,850,000
TOTAL MUNICIPAL SECURITIES			97,300,000

Repurchase Agreements - 14.6%
	Maturity Amount
In a joint trading account (Collateralized by U.S. Government Obligations dated 12/31/03 due 1/2/04 At 1.02%)	$ 140,008		140,000
With:
Banc of America Securities LLC At 1.13%, dated 12/31/03 due 1/2/04 (Collateralized by Corporate Obligations with Principal Amounts of $94,876,179, 1.65% - 3.9%, 11/15/07 - 3/25/38)	90,005,650		90,000,000
Deutsche Bank Securities, Inc. At 1.07%, dated 12/31/03 due 1/2/04 (Collateralized by Corporate Obligations with Principal Amounts of $82,102,000, 1.29% - 4%, 4/25/12 - 10/25/33)	81,004,815		81,000,000
Goldman Sachs & Co. At 1.12%, dated 12/29/03 due 1/30/04 (Collateralized by Corporate Obligations with Principal Amounts of $32,877,400, 6.38% - 9.87%, 2/15/04 - 6/30/08)	31,030,862		31,000,000
Repurchase Agreements - continued
	Maturity Amount		Value (Note 1)
With: - continued
J.P. Morgan Securities, Inc. At 1.13%, dated 12/22/03 due 2/23/04 (Collateralized by Corporate Obligations with Principal Amounts of $41,205,000, 5% - 8.38%, 6/15/07 - 2/1/13)	$ 41,081,078		$ 41,000,000
Morgan Stanley & Co. At 1.14%, dated 12/10/03 due 1/29/04 (Collateralized by Mortgage Loan Obligations with Principal Amounts of $28,707,367, 0% - 7.23%, 10/18/30 - 10/25/33)	25,039,583		25,000,000
TOTAL REPURCHASE AGREEMENTS		268,140,000

TOTAL INVESTMENT PORTFOLIO - 100.2%

1,844,648,466

NET OTHER ASSETS - (0.2)%			(4,534,913)
NET ASSETS - 100%		$ 1,840,113,553

Total Cost for Income Tax Purposes $ 1,844,648,466

Legend

(b) The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due dates on these types of securities reflect the next interest rate reset date or, when applicable, the final maturity date.

(d) 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 $132,999,305 or 7.2% of net assets.

Additional information on each holding is as follows:

Security	Acquisition Date	Cost
General Motors Acceptance Corp. Mortgage Credit 1.67%, 1/2/04	12/1/03	$ 14,999,305
Goldman Sachs Group, Inc.: 1.18%, 2/17/04	9/22/03	$ 5,000,000
1.2%, 1/27/04	8/12/03	$ 36,000,000
Jackson National Life Insurance Co. 1.29%, 1/1/04	3/31/03	$ 7,000,000
Metropolitan Life Insurance Co.: 1.32%, 2/2/04	2/24/03	$ 5,000,000
1.35%, 1/2/04	3/26/02	$ 10,000,000
Security	Acquisition Date	Cost
Monumental Life Insurance Co.: 1.31%, 1/1/04	9/17/98	$ 5,000,000
1.34%, 1/1/04	3/12/99	$ 5,000,000
New York Life Insurance Co. 1.29%, 1/2/04	2/28/02 - 12/19/02	$ 30,000,000
Pacific Life Insurance Co 1.32%, 3/11/04	3/10/03	$ 5,000,000
Transamerica Occidental Life Insurance Co. 1.33%, 2/1/04	4/28/00	$ 10,000,000

Other Information

The fund participated in the interfund lending program as a lender. The average daily loan balance during the period for which the loan was outstanding amounted to $13,330,000. The weighted average interest rate was 1.12%. Interest earned from the interfund lending program amounted to $1,244 and is included in interest income on the Statement of Operations. At period end, there were no interfund loans outstanding.

Income Tax Information

At December 31, 2003, the fund had a capital loss carryforward of approximately $109,000 all of which will expire on December 31, 2011.

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

Annual Report

Fidelity Variable Insurance Products: Money Market Portfolio

Financial Statements

Statement of Assets and Liabilities

	December 31, 2003

Assets
Investment in securities, at value (including repurchase agreements of $268,140,000) - See accompanying schedule		$ 1,844,648,466
Cash		7,549
Receivable for fund shares sold		864,332
Interest receivable		3,020,183
Prepaid expenses		13,620
Other receivables		10
Total assets		1,848,554,160

Liabilities
Payable for fund shares redeemed	$ 7,954,643
Accrued management fee	309,461
Distribution fees payable	2,393
Other affiliated payables	123,061
Other payables and accrued expenses	51,049
Total liabilities		8,440,607

Net Assets		$ 1,840,113,553
Net Assets consist of:
Paid in capital		$ 1,840,247,110
Accumulated net realized gain (loss) on investments		(133,557)
Net Assets		$ 1,840,113,553
Initial Class: Net Asset Value, offering price and redemption price per share ($1,817,439,610 ÷ 1,817,469,107 shares)		$ 1.00
Service Class: Net Asset Value, offering price and redemption price per share ($19,605,753 ÷ 19,605,966 shares)		$ 1.00
Service Class 2: Net Asset Value, offering price and redemption price per share ($3,068,190 ÷ 3,068,242 shares)		$ 1.00

Statement of Operations

	Year ended December 31, 2003

Investment Income
Interest		$ 30,949,823

Expenses
Management fee	$ 4,792,919
Transfer agent fees	1,623,832
Distribution fees	85,968
Accounting fees and expenses	224,863
Non-interested trustees' compensation	11,911
Custodian fees and expenses	51,369
Audit	53,750
Legal	9,407
Miscellaneous	121,482
Total expenses before reductions	6,975,501
Expense reductions	(1,652)	6,973,849
Net investment income		23,975,974
Net realized gain (loss) on investment securities		(133,557)
Net increase in net assets resulting from operations		$ 23,842,417

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

Annual Report

Financial Statements - continued

Statement of Changes in Net Assets

	Year ended December 31, 2003	Year ended December 31, 2002
Increase (Decrease) in Net Assets
Operations
Net investment income	$ 23,975,974	$ 46,410,100
Net realized gain (loss)	(133,557)	87,888
Net increase (decrease) in net assets resulting from operations	23,842,417	46,497,988
Distributions to shareholders from net investment income	(23,975,974)	(46,410,100)
Share transactions - net increase (decrease)	(920,442,277)	(39,187,088)
Total increase (decrease) in net assets	(920,575,834)	(39,099,200)

Net Assets
Beginning of period	2,760,689,387	2,799,788,587
End of period	$ 1,840,113,553	$ 2,760,689,387

Other Information: Share Transactions at net asset value of $1.00 per share	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
Sold	6,056,411,700	54,027,987	82,930,007
Reinvested	23,602,029	128,154	208,645
Redeemed	(6,967,511,919)	(42,565,009)	(127,673,871)
Net increase (decrease)	(887,498,190)	11,591,132	(44,535,219)

	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
Sold	6,692,494,433	8,278,271	505,243,362
Reinvested	45,541,480	125,174	705,271
Redeemed	(6,786,431,592)	(6,531,366)	(498,612,121)
Net increase (decrease)	(48,395,679)	1,872,079	7,336,512

Distributions	Year ended December 31, 2003
	Initial Class	Service Class	Service Class 2
From net investment income	$ 23,625,076	$ 137,269	$ 213,629

	Year ended December 31, 2002
	Initial Class	Service Class	Service Class 2
From net investment income	$ 45,579,655	$ 125,174	$ 705,271

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

Money Market Portfolio

Financial Highlights - Initial Class

Years ended December 31,	2003	2002	2001	2000	1999
Selected Per-Share Data
Net asset value, beginning of period	$ 1.00	$ 1.00	$ 1.00	$ 1.00	$ 1.00
Income from Investment Operations
Net investment income	.010	.017	.041	.062	.050
Distributions from net investment income	(.010)	(.017)	(.041)	(.062)	(.050)
Net asset value, end of period	$ 1.00	$ 1.00	$ 1.00	$ 1.00	$ 1.00
Total Return^A,B	1.00%	1.69%	4.18%	6.30%	5.17%
Ratios to Average Net Assets^C
Expenses before expense reductions	.29%	.29%	.28%	.33%	.27%
Expenses net of voluntary waivers, if any	.29%	.29%	.28%	.33%	.27%
Expenses net of all reductions	.29%	.29%	.28%	.33%	.27%
Net investment income	1.00%	1.68%	3.99%	6.18%	5.06%
Supplemental Data
Net assets, end of period (000 omitted)	$ 1,817,440	$ 2,705,069	$ 2,753,379	$ 2,233,342	$ 1,939,491

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

^B Total returns would have been lower had certain expenses not been reduced during the periods shown.

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

Financial Highlights - Service Class

Years ended December 31,	2003	2002	2001	2000^E
Selected Per-Share Data
Net asset value, beginning of period	$ 1.00	$ 1.00	$ 1.00	$ 1.00
Income from Investment Operations
Net investment income	.009	.016	.040	.031
Distributions from net investment income	(.009)	(.016)	(.040)	(.031)
Net asset value, end of period	$ 1.00	$ 1.00	$ 1.00	$ 1.00
Total Return^B,C,D	.90%	1.61%	4.10%	3.06%
Ratios to Average Net Assets^F
Expenses before expense reductions	.38%	.39%	.39%	.47%^A
Expenses net of voluntary waivers, if any	.38%	.39%	.39%	.45%^A
Expenses net of all reductions	.38%	.39%	.39%	.45%^A
Net investment income	.91%	1.58%	3.87%	6.28%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 19,606	$ 8,017	$ 6,143	$ 103

^A Annualized

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

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

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

^E For the period July 7, 2000 (commencement of sale of shares) to December 31, 2000.

^F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expense ratios before reductions for start-up periods may not be representative of longer-term operating periods. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

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

Annual Report

Financial Highlights - Service Class 2

Years ended December 31,	2003	2002	2001	2000^E
Selected Per-Share Data
Net asset value, beginning of period	$ 1.00	$ 1.00	$ 1.00	$ 1.00
Income from Investment Operations
Net investment income	.007	.014	.039	.058
Distributions from net investment income	(.007)	(.014)	(.039)	(.058)
Net asset value, end of period	$ 1.00	$ 1.00	$ 1.00	$ 1.00
Total Return^B,C,D	.75%	1.45%	3.96%	5.89%
Ratios to Average Net Assets^F
Expenses before expense reductions	.54%	.54%	.55%	.96%^A
Expenses net of voluntary waivers, if any	.54%	.54%	.55%	.60%^A
Expenses net of all reductions	.54%	.54%	.55%	.60%^A
Net investment income	.75%	1.43%	3.71%	5.94%^A
Supplemental Data
Net assets, end of period (000 omitted)	$ 3,068	$ 47,604	$ 40,267	$ 108

^A Annualized

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

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

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

^E For the period January 12, 2000 (commencement of sale of shares) to December 31, 2000.

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

Money Market Portfolio

Notes to Financial Statements

For the period ended December 31, 2003

1. Significant Accounting Policies.

Money Market Portfolio (the fund) is a fund of Variable Insurance Products Fund. Asset Manager: Growth Portfolio and Investment Grade Bond Portfolio (the funds) are funds of Variable Insurance Products Fund II. Balanced Portfolio, Growth & Income Portfolio, Growth Opportunities Portfolio, and Mid Cap Portfolio (the funds) are funds of Variable Insurance Products Fund III. The Variable Insurance Products Fund, Variable Insurance Products Fund II, and Variable Insurance Products Fund III (the trusts) (referred to in this report as Fidelity Variable Insurance Products) are registered under the Investment Company Act of 1940, as amended (the 1940 Act), as open-end management investment companies organized as Massachusetts business trusts. Each fund is authorized to issue an unlimited number of shares. Shares of each fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. Each fund offers three classes of shares: Initial Class shares, Service Class shares and Service Class 2 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 distribution and service plan fees incurred. Certain expense reductions also differ by class.

Security Valuation. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. Debt securities for which quotations are readily available are valued at their most recent bid prices (sales prices if the principal market is an exchange) in the principal market in which such securities are normally traded, as determined by recognized dealers in such securities, or securities are valued on the basis of information provided by a pricing service. Pricing services use valuation matrices that incorporate both dealer-supplied valuations and valuation models. If an event that is expected to materially affect the value of a security occurs after the close of an exchange or market on which that security trades, but prior to the NAV calculation, then that security will be fair valued taking the event into account. Securities (including restricted securities) for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures under the general supervision of the Board of Trustees. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.

As permitted under Rule 2a-7 of the 1940 Act, and certain conditions therein, securities owned by the money market fund are valued initially at cost and thereafter assume a constant amortization to maturity of any discount or premium.

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

Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the funds are 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. Asset Manager: Growth, Growth & Income and Mid Cap estimates the components of distributions received from Real Estate Investment Trusts (REITs). Distributions received in excess of income are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities, which is accrued using the interest method. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted according to the rate of inflation. Interest is accrued based on the principal value which is adjusted for inflation. Any increase in the principal amount of an inflation-indexed bond is recorded as interest income, even though the principal is not received until maturity. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured.

Annual Report

Notes to Financial Statements - continued

1. Significant Accounting Policies - continued

Expenses. Most expenses of each trust can be directly attributed to a fund. Expenses which cannot be directly attributed are apportioned among the funds in the trust.

Income Tax Information and Distributions to Shareholders. Each year, the funds intend to qualify as regulated investment companies by distributing all of their taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements. Foreign taxes are provided for based on each fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. For the Money Market Portfolio, dividends are declared daily and paid monthly from net investment income and distributions from realized gains, if any, are recorded on the ex-dividend date. Distributions from net investment income and realized gains are recorded on the ex-dividend date for all other funds. Income dividends and capital gain distributions are declared separately for each class.

Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. There were no significant book-to-tax differences during the period for the Money Market Portfolio. Capital accounts within the financial statements are adjusted for permanent and temporary book and tax differences. These adjustments have no impact on net assets or the results of operations. Temporary differences will reverse in a subsequent period. These differences are primarily due to futures transactions, foreign currency transactions, passive foreign investment companies (PFIC), defaulted bonds, prior period premium and discount on debt securities, market discount, financing transactions, non-taxable dividends, net operating losses, capital loss carryforwards and losses deferred due to wash sales.

The tax-basis components of distributable earnings and the federal tax cost as of period end were as follows for each fund:

	Cost for Federal Income Tax Purposes	Unrealized Appreciation	Unrealized Depreciation	Net Unrealized Appreciation/ (Depreciation)
Asset Manager: Growth	$ 325,979,774	$ 36,682,010	$ (13,165,002)	$ 23,517,008
Balanced	328,111,972	41,795,692	(6,678,026)	35,117,666
Growth & Income	1,373,575,386	218,916,802	(81,646,274)	137,270,528
Growth Opportunities	653,597,036	145,777,394	(20,734,261)	125,043,133
Investment Grade Bond	1,946,982,125	54,756,392	(3,315,241)	51,441,151
Mid Cap	1,945,112,269	636,837,158	(27,585,955)	609,251,203

	Undistributed Ordinary Income	Undistributed Long-term Capital Gain	Capital Loss Carryforward
Asset Manager: Growth	$ 7,855,332	$ -	$ (74,491,307)
Balanced	6,850,598	-	(19,803,393)
Growth & Income	12,128,444	-	(166,421,945)
Growth Opportunities	3,665,484	-	(277,246,288)
Investment Grade Bond	96,685,170	17,469,469	-
Mid Cap	-	-	(127,019,315)

The tax character of distributions paid was as follows:

December 31, 2003	Ordinary Income	Long-term Capital Gains	Total
Asset Manager: Growth	$ 8,995,679	$ -	$ 8,995,679
Balanced	7,974,845	-	7,974,845
Growth & Income	12,772,749	-	12,772,749
Growth Opportunities	4,842,328	-	4,842,328
Investment Grade Bond	101,912,282	9,272,230	111,184,512
Mid Cap	5,082,393	-	5,082,393
December 31, 2002	Ordinary Income	Long-term Capital Gains	Total
Asset Manager: Growth	$ 10,416,607	$ -	$ 10,416,607
Balanced	8,837,001	-	8,837,001
Growth & Income	15,060,404	-	15,060,404
Growth Opportunities	8,515,304	-	8,515,304
Investment Grade Bond	58,817,521	-	58,817,521
Mid Cap	10,315,464	-	10,315,464

Annual Report

Notes to Financial Statements - continued

2. Operating Policies.

Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the funds and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. Certain funds may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations, corporate obligations and mortgage loan obligations which may be below investment-grade quality and equity securities. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).

Delayed Delivery Transactions and When-Issued Securities. Each fund may purchase or sell 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. During the time a delayed delivery sell is outstanding, the contract is marked-to-market daily and equivalent deliverable securities are held for the transaction. The value of the securities purchased on a delayed delivery or when-issued basis are identified as such in each applicable fund's Schedule of Investments. Each fund may receive compensation for interest forgone in the purchase of a delayed delivery or when-issued security. With respect to purchase commitments, each 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.

Futures Contracts. Certain funds may use futures contracts to manage their exposure to the stock market. Buying futures tends to increase a fund's exposure to the underlying instrument, while selling futures tends to decrease a fund's exposure to the underlying instrument or hedge other fund investments. Futures contracts involve, to varying degrees, risk of loss in excess of any futures variation margin reflected in each applicable fund's Statement of Assets and Liabilities. The underlying face amount at value of any open futures contracts at period end is shown in each applicable fund's Schedule of Investments under the caption "Futures Contracts." This amount reflects each contract's exposure to the underlying instrument at period end. Losses may arise from changes in the value of the underlying instruments or if the counterparties do not perform under the contracts' terms. Gains (losses) are realized upon the expiration or closing of the futures contracts. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.

Restricted Securities. Certain funds 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 each applicable fund's Schedule of Investments.

Loans and Other Direct Debt Instruments. Certain funds may invest in loans and loan participations, trade claims or other receivables. These investments may include standby financing commitments that obligate the fund to supply additional cash to the borrower on demand. Loan participations involve a risk of insolvency of the lending bank or other financial intermediary. Information regarding loans and other direct debt instruments is included under the caption "Other Information" at the end of each applicable fund's Schedule of Investments.

Swap Agreements. Certain funds may invest in swaps for the purpose of managing their exposure to interest rate, credit or market risk.

Interest rate swaps are agreements to exchange cash flows periodically based on a notional principal amount, for example, the exchange of fixed rate interest payments for floating rate interest payments. Periodic payments received or made by each applicable fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively. The primary risk associated with interest rate swaps is that unfavorable changes in the fluctuation of interest rates could adversely impact each applicable fund.

Total return swaps are agreements to exchange the return generated by one instrument for the return generated by another instrument, for example, the agreement to pay interest in exchange for a market-linked return based on a notional amount. To the extent the total return of the index exceeds the offsetting interest obligation, each applicable fund will receive a payment from the counterparty. To the extent it is less, each applicable fund will make a payment to the counterparty. Periodic payments received or made by each applicable fund are recorded in the accompanying Statement of Operations as realized gains or losses, respectively.

Swaps are marked-to-market daily based on dealer-supplied valuations and changes in value are recorded as unrealized appreciation (depreciation). Gains or losses are realized upon early termination of the swap agreement. Collateral, in the form of cash or securities, may be required to be held in segregated accounts with each applicable fund's custodian in compliance with swap contracts. Risks may exceed amounts recognized on the Statement of Assets and Liabilities. These risks include changes in the returns of the underlying instruments, failure of the counterparties to perform under the contracts' terms and the possible lack of liquidity with respect to the swap agreements. Details of swap agreements open at period end are included in each applicable fund's Schedule of Investments under the caption "Swap Agreements."

Annual Report

2. Operating Policies - continued

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

3. Purchases and Sales of Investments.

Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of each applicable fund's Schedule of Investments.

4. Fees and Other Transactions with Affiliates.

Management Fee. FMR and its affiliates provide the funds with investment management related services for which the funds pay a monthly management fee.

For all funds except the Money Market Portfolio, the management fee is the sum of an individual fund fee rate applied to the average net assets of each fund and a group fee rate. The group fee rates differ for equity and fixed-income funds and are each based upon the average net assets of all the mutual funds advised by FMR. The group fee rates decrease as assets under management increase and increase as assets under management decrease. The annual individual fund fee rate is .30% of the fund's average net assets for Asset Manager: Growth, Growth Opportunities, Investment Grade Bond, and Mid Cap Portfolios, .20% for Growth & Income Portfolio, and .15% for Balanced Portfolio. The group fee rates averaged .28% for the equity funds and .13% for the fixed-income funds during the period.

For the Money Market Portfolio the management fee is calculated on the basis of a group fee rate plus a total income-based component. The group fee rate averaged .13% during the period. The total income-based component is calculated according to a graduated schedule providing for different rates based on the fund's gross annualized yield. The rate increases as the fund's gross yield increases. During the period the income-based portion of the management fee was $1,679,717 or an annual rate of .07% of the fund's average net assets.

For the period each fund's total annual management fee rate, expressed as a percentage of each fund's average net assets, was as follows:

Asset Manager: Growth	.58%	\|
Balanced	.43%
Growth & Income	.48%
Growth Opportunities	.58%
Investment Grade Bond	.43%
Mid Cap	.58%
Money Market	.20%

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

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

	Service Class	Service Class 2	Total
Asset Manager: Growth	$ 6,254	$ 12,995	$ 19,249
Balanced	$ 20,784	$ 58,523	$ 79,307
Growth & Income	$ 294,948	$ 556,834	$ 851,782
Growth Opportunities	$ 197,953	$ 121,587	$ 319,540
Investment Grade Bond	$ 4,794	$ 233,347	$ 238,141
Mid Cap	$ 432,418	$ 1,889,915	$ 2,322,333
Money Market	$ 14,917	$ 71,051	$ 85,968

Annual Report

Notes to Financial Statements - continued

4. Fees and Other Transactions with Affiliates - continued

Transfer Agent Fees. Fidelity Investment Institutional Operations Company, Inc. (FIIOC), an affiliate of FMR, is the funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each account. FIIOC pays a portion of the expenses related to the typesetting, printing and mailing of shareholder reports, except proxy statements. Each class pays a transfer agent fee excluding out-of-pocket expenses, equal to an annual rate of .07% of their month end net assets.

For the period, the total transfer agent fees paid by each class to FIIOC, including out-of-pocket expenses, were as follows:

Asset Manager: Growth		\|
Initial Class	$ 212,921
Service Class	5,674
Service Class 2	7,349
	$ 225,944
Balanced
Initial Class	$ 181,695
Service Class	15,125
Service Class 2	18,327
	$ 215,147
Growth & Income
Initial Class	$ 482,906
Service Class	203,338
Service Class 2	159,916
	$ 846,160
Growth Opportunities
Initial Class	$ 298,640
Service Class	139,421
Service Class 2	42,488
	$ 480,549
Investment Grade Bond
Initial Class	$ 1,261,000
Service Class	3,698
Service Class 2	68,042
	$ 1,332,740
Mid Cap
Initial Class	$ 354,798
Service Class	302,125
Service Class 2	536,114
	$ 1,193,037
Money Market
Initial Class	$ 1,595,167
Service Class	10,084
Service Class 2	18,581
	$ 1,623,832

Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of FMR, maintains each fund's accounting records and administers the security lending program. The security lending fee is based on the number and duration of lending transactions. The accounting fee is based on the level of average net assets for the month plus out-of-pocket expenses.

Annual Report

4. Fees and Other Transactions with Affiliates - continued

Central Funds. The funds may invest in affiliated Central Funds managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of FMR. The Central Funds are open-end investment companies available only to investment companies and other accounts managed by FMR and its affiliates. The Central Funds seek preservation of capital and current income and do not pay a management fee. Income distributions earned by the funds are recorded as income in the accompanying financial statements. Distributions from the Central Funds are noted in the table below:

	Income Distributions
Asset Manager: Growth	$ 384,532
Balanced	590,846
Growth & Income	1,875,429
Growth Opportunities	692,911
Investment Grade Bond	3,430,226
Mid Cap	1,668,961

Brokerage Commissions. Certain funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. The commissions paid to these affiliated firms are shown under the caption "Other Information" at the end of each applicable fund's Schedule of Investments.

Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the funds, 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 funds. Information regarding each applicable fund's participation in the program is included under the caption "Other Information" at the end of each applicable fund's Schedule of Investments.

5. Committed Line of Credit.

Certain funds participate with other funds managed by FMR in a $3.5 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 funds have agreed to pay commitment fees on their pro rata portion of the line of credit. During the period, there were no borrowings on this line of credit.

6. Security Lending.

Certain funds lend portfolio securities from time to time in order to earn additional income. Each applicable 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 funds and any additional required collateral is delivered to the funds 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. Cash collateral is invested in cash equivalents. The value of loaned securities and cash collateral at period end are disclosed on each applicable fund's Statement of Assets and Liabilities.

7. Expense Reductions.

Many of the brokers with whom FMR places trades on behalf of certain funds provided services to these funds in addition to trade execution. These services included payments of expenses on behalf of each applicable fund. In addition, through arrangements with each applicable fund's custodian, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. All of the applicable expense reductions are noted in the table below.

	Brokerage Service Arrangement	Custody expense reduction

Asset Manager: Growth	$ 31,638	$ 1,142
Balanced	10,789	1,293
Growth & Income	33,165	51
Growth Opportunities	161,467	75
Investment Grade Bond	-	2,213
Mid Cap	418,696	4,082
Money Market	-	1,652

Annual Report

Notes to Financial Statements - continued

8. Other Information.

At the end of the period, FMR or its affiliates and certain unaffiliated shareholders each were owners of record of more than 10% of the outstanding shares of the following funds:

	Affiliated %	Number of Unaffiliated Shareholders	Unaffiliated Shareholders %
Asset Manager: Growth	67%	-	-
Balanced	60%	1	26%
Growth & Income	22%	2	49%
Growth Opportunities	20%	1	48%
Investment Grade Bond	49%	1	10%
Mid Cap	23%	2	45%
Money Market	57%	1	11%

9. Transactions with Affiliated Companies.

Annual Report

Independent Auditors' Report

To the Trustees of Variable Insurance Products Fund III and Shareholders of Growth & Income Portfolio and Growth Opportunities Portfolio:

We have audited the accompanying statements of assets and liabilities of Growth & Income Portfolio and Growth Opportunities Portfolio (the Funds), funds of Variable Insurance Products Fund III, including the portfolios of investments, as of December 31, 2003, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Growth & Income Portfolio and Growth Opportunities Portfolio as of December 31, 2003, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 11, 2004

Annual Report

Independent Auditors' Report

To the Trustees of Variable Insurance Products Fund II and Variable Insurance Products Fund III and Shareholders of Asset Manager: Growth Portfolio, Investment Grade Bond Portfolio, and Balanced Portfolio:

We have audited the accompanying statements of assets and liabilities of Asset Manager: Growth Portfolio and Investment Grade Bond Portfolio (the Funds), funds of Variable Insurance Products Fund II, and Balanced Portfolio (the Fund), a fund of Variable Insurance Products Fund III, including the portfolios of investments, as of December 31, 2003, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Asset Manager: Growth Portfolio, Investment Grade Bond Portfolio, and Balanced Portfolio as of December 31, 2003, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Boston, Massachusetts

February 18, 2004

Annual Report

Report of Independent Auditors

To the Trustees of Variable Insurance Products Fund and the Shareholders of Money Market Portfolio:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Money Market Portfolio, (a fund of Variable Insurance Products Fund) at December 31, 2003, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Money Market Portfolio's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Boston, Massachusetts

February 12, 2004

Annual Report

Report of Independent Auditors

To the Trustees of Variable Insurance Products Fund III and the Shareholders of Mid Cap Portfolio:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Mid Cap Portfolio (a fund of Variable Insurance Products Fund III) at December 31, 2003, and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Mid Cap Portfolio's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Boston, Massachusetts

February 13, 2004

Annual Report

Trustees and Officers

The Trustees, Members of the Advisory Board, and executive officers of the trusts and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, and review each fund's performance. Except for William O. McCoy, each of the Trustees oversees 292 funds advised by FMR or an affiliate. Mr. McCoy oversees 294 funds advised by FMR or an affiliate.

The funds' Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-221-5207.

Interested Trustees*:

Correspondence intended for each Trustee who is an "interested person" (as defined in the 1940 Act) may be sent to Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109.

Name, Age; Principal Occupation
Edward C. Johnson 3d (73)**
	Year of Election or Appointment: 1981, 1988, or 1994 Trustee of Variable Insurance Products Fund (1981), Variable Insurance Products Fund II (1988), and Variable Insurance Products Fund III (1994). Mr. Johnson is Chairman of the Board of Trustees. Mr. Johnson serves as Chief Executive Officer, Chairman, and a Director of FMR Corp.; a Director and Chairman of the Board and of the Executive Committee of FMR; Chairman and a Director of Fidelity Management & Research (Far East) Inc.; Chairman (1998) and a Director of Fidelity Investments Money Management, Inc.; and Chairman (2001) and a Director (2000) of FMR Co., Inc.
Abigail P. Johnson (42)**
	Year of Election or Appointment: 2001 Senior Vice President of VIP Asset Manager: Growth (2001), VIP Balanced (2001), VIP Growth & Income (2001), VIP Growth Opportunities (2001), VIP Investment Grade Bond (2001), VIP Mid Cap (2001), and VIP Money Market (2001). Ms. Johnson also serves as Senior Vice President of other Fidelity funds (2001). She is President and a Director of FMR (2001), Fidelity Investments Money Management, Inc. (2001), FMR Co., Inc. (2001), and a Director of FMR Corp. Previously, Ms. Johnson managed a number of Fidelity funds.
Laura B. Cronin (49)
	Year of Election or Appointment: 2003 Ms. Cronin is an Executive Vice President (2002) and Chief Financial Officer (2002) of FMR Corp. and is a member of the Fidelity Management Committee (2003). Previously, Ms. Cronin served as Vice President of Finance of FMR (1997-1999), and Chief Financial Officer of FMR (1999-2001), Fidelity Personal Investments (2001), and Fidelity Brokerage Company (2001-2002).
Robert L. Reynolds (51)
	Year of Election or Appointment: 2003 Mr. Reynolds is a Director (2003) and Chief Operating Officer (2002) of FMR Corp. and is the head of the Fidelity Management Committee (2003). He also serves on the Board at Fidelity Investments Canada, Ltd. (2000). Previously, Mr. Reynolds served as President of Fidelity Investments Institutional Retirement Group (1996-2000).

* Trustees have been determined to be "Interested Trustees" by virtue of, among other things, their affiliation with the trusts or various entities under common control with FMR.

** Edward C. Johnson 3d, Trustee, is Abigail P. Johnson's father.

Annual Report

Non-Interested Trustees:

Name, Age; Principal Occupation
J. Michael Cook (61)
	Year of Election or Appointment: 2001 Prior to Mr. Cook's retirement in May 1999, he served as Chairman and Chief Executive Officer of Deloitte & Touche LLP (accounting/consulting), Chairman of the Deloitte & Touche Foundation, and a member of the Board of Deloitte Touche Tohmatsu. He currently serves as a Director of Comcast (telecommunications, 2002), International Flavors & Fragrances, Inc. (2000), Rockwell Automation (2000) and The Dow Chemical Company (2000). He is a Member of the Diversity Advisory Council of Marakon (2003) and the Advisory Board of the Directorship Search Group, Chairman Emeritus of the Board of Catalyst (a leading organization for the advancement of women in business), and is Chairman of the Accountability Advisory Council to the Comptroller General of the United States. He also serves as a Member of the Advisory Board of the Graduate School of Business of the University of Florida, his alma mater.
Ralph F. Cox (71)
	Year of Election or Appointment: 1991 or 1994 Trustee of Variable Insurance Products Fund (1991), Variable Insurance Products Fund II (1991), and Variable Insurance Products Fund III (1994). Mr. Cox is President of RABAR Enterprises (management consulting for the petroleum industry). Prior to February 1994, he was President of Greenhill Petroleum Corporation (petroleum exploration and production). Until March 1990, Mr. Cox was President and Chief Operating Officer of Union Pacific Resources Company (exploration and production). He is a Director of CH2M Hill Companies (engineering), and Abraxas Petroleum (petroleum exploration and production, 1999). In addition, he is a member of advisory boards of Texas A&M University and the University of Texas at Austin.
Robert M. Gates (60)
	Year of Election or Appointment: 1997 Dr. Gates is President of Texas A&M University (2002). He was Director of the Central Intelligence Agency (CIA) from 1991 to 1993. From 1989 to 1991, Dr. Gates served as Assistant to the President of the United States and Deputy National Security Advisor. Dr. Gates is a Director of NACCO Industries, Inc. (mining and manufacturing), and Parker Drilling Co., Inc. (drilling and rental tools for the energy industry, 2001). He also serves as a member of the Advisory Board of VoteHere.net (secure internet voting, 2001). Previously, Dr. Gates served as a Director of LucasVarity PLC (automotive components and diesel engines), a Director of TRW Inc. (automotive, space, defense, and information technology), and Dean of the George Bush School of Government and Public Service at Texas A&M University (1999-2001). Dr. Gates also is a Trustee of the Forum for International Policy.
George H. Heilmeier (67)
	Year of Election or Appointment: 2004 Dr. Heilmeier is Chairman Emeritus of Telcordia Technologies (communication software and systems), where prior to his retirement, he served as company Chairman and Chief Executive Officer. He currently serves on the Boards of Directors of The Mitre Corporation (systems engineering and information technology support for the government), INET Technologies Inc. (telecommunications network surveillance, 2001) and Teletech Holdings (customer management services, 1998). He is Chairman of the General Motors Technology Advisory Committee and a Life Fellow of the IEEE (2000). Dr. Heilmeier is a member of the Defense Science Board and the National Security Agency Advisory Board. He is also a member of the National Academy of Engineering, the American Academy of Arts and Sciences and The Board of Overseers of the School of Engineering and Applied Science of the University of Pennsylvania. Previously, Dr. Heilmeier served as a Director of TRW Inc. (automotive, space, defense, and information technology, 1992-2002) and Compaq (1994-2002).
Donald J. Kirk (71)
	Year of Election or Appointment: 1987, 1988, or 1994 Trustee of Variable Insurance Products Fund (1987), Variable Insurance Products Fund II (1988), and Variable Insurance Products Fund III (1994). Mr. Kirk is a Governor of the American Stock Exchange (2001), a Trustee and former Chairman of the Board of Trustees of the Greenwich Hospital Association, a Director of the Yale-New Haven Health Services Corp. (1998), and a Director Emeritus and former Chairman of the Board of Directors of National Arts Strategies Inc. Mr. Kirk was an Executive-in-Residence (1995-2000) and a Professor (1987-1995) at Columbia University Graduate School of Business. Prior to 1987, he was Chairman of the Financial Accounting Standards Board. Previously, Mr. Kirk served as a Governor of the National Association of Securities Dealers, Inc. (1996-2002), a member and Vice Chairman of the Public Oversight Board of the American Institute of Certified Public Accountants' SEC Practice Section (1995-2002), a Director of General Re Corporation (reinsurance, 1987-1998) and as a Director of Valuation Research Corp. (appraisals and valuations).
Marie L. Knowles (57)
	Year of Election or Appointment: 2001 Prior to Ms. Knowles' retirement in June 2000, she served as Executive Vice President and Chief Financial Officer of Atlantic Richfield Company (ARCO) (diversified energy, 1996-2000). From 1993 to 1996, she was a Senior Vice President of ARCO and President of ARCO Transportation Company. She served as a Director of ARCO from 1996 to 1998. She currently serves as a Director of Phelps Dodge Corporation (copper mining and manufacturing), URS Corporation (multidisciplinary engineering, 1999), and McKesson Corporation (healthcare service, 2002). Ms. Knowles is a Trustee of the Brookings Institution and the Catalina Island Conservancy and also serves as a member of the Advisory Board for the School of Engineering of the University of Southern California.
Ned C. Lautenbach (59)
	Year of Election or Appointment: 2000 Mr. Lautenbach has been a partner of Clayton, Dubilier & Rice, Inc. (private equity investment firm) since September 1998. Previously, Mr. Lautenbach was with the International Business Machines Corporation (IBM) from 1968 until his retirement in 1998. He was most recently Senior Vice President and Group Executive of Worldwide Sales and Services. From 1993 to 1995, he was Chairman of IBM World Trade Corporation, and from 1994 to 1998 was a member of IBM's Corporate Executive Committee. Mr. Lautenbach serves as Chairman and as a Director (1998) of Acterna Corporation (communications test equipment). He is also Co-Chairman of Covansys, Inc. (global provider of business and technology solutions, 2000). In addition, he is a Director of Eaton Corporation (diversified industrial) and the Philharmonic Center for the Arts in Naples, Florida (1999). He also is a member of the Council on Foreign Relations.
Marvin L. Mann (70)
	Year of Election or Appointment: 1993 or 1994 Trustee of Variable Insurance Products Fund (1993), Variable Insurance Products Fund II (1993), and Variable Insurance Products Fund III (1994). Mr. Mann is Chairman of the non-interested Trustees (2001). He is Chairman Emeritus of Lexmark International, Inc. (computer peripherals) where he served as CEO until April 1998 and retired as Chairman May 1999, and remains a member of the Board. Prior to 1991, he held the positions of Vice President of International Business Machines Corporation (IBM) and President and General Manager of various IBM divisions and subsidiaries. Mr. Mann is a Board member of Imation Corp. (imaging and information storage) and Acterna Corporation (communications test equipment, 1999). He is also a member of the Director Services Committee of the Investment Company Institute. In addition, Mr. Mann is a member of the President's Cabinet at the University of Alabama and the Board of Visitors of the Culverhouse College of Commerce and Business Administration at the University of Alabama.
William O. McCoy (70)
	Year of Election or Appointment: 1997 Prior to his retirement in December 1994, Mr. McCoy was Vice Chairman of the Board of BellSouth Corporation (telecommunications) and President of BellSouth Enterprises. He is currently a Director of Liberty Corporation (holding company), Duke Realty Corporation (real estate), Progress Energy, Inc. (electric utility), and Acterna Corporation (communications test equipment, 1999). He is also a partner of Franklin Street Partners (private investment management firm) and a member of the Research Triangle Foundation Board. In addition, Mr. McCoy served as the Interim Chancellor (1999-2000) and a member of the Board of Visitors (1994-1998) for the University of North Carolina at Chapel Hill and currently serves on the Board of Directors of the University of North Carolina Health Care System and the Board of Visitors of the Kenan-Flagler Business School (University of North Carolina at Chapel Hill). He also served as Vice President of Finance for the University of North Carolina (16-school system, 1995-1998).
William S. Stavropoulos (64)
	Year of Election or Appointment: 2001 or 2002 Trustee of Variable Insurance Products Fund (2001), Variable Insurance Products Fund II (2001), and Variable Insurance Products Fund III (2002). Mr. Stavropoulos is Chairman of the Board, President and CEO (2002), and Chairman of the Executive Committee (2000) and a Director of The Dow Chemical Company. Since joining The Dow Chemical Company in 1967, Mr. Stavropoulos served in numerous senior management positions, including President (1993-2000) and Chief Executive Officer (1995-2000). Currently, he is a Director of NCR Corporation (data warehousing and technology solutions), BellSouth Corporation (telecommunications), Chemical Financial Corporation, and Maersk Inc. (industrial conglomerate, 2002). He also serves as a member of the Board of Trustees of the American Enterprise Institute for Public Policy Research. In addition, Mr. Stavropoulos is a member of The Business Council, J.P. Morgan International Council, World Business Council for Sustainable Development, and the University of Notre Dame Advisory Council for the College of Science.

Annual Report

Advisory Board Members and Executive Officers:

Name, Age; Principal Occupation
Peter S. Lynch (60)
	Year of Election or Appointment: 2003 Member of the Advisory Board of Variable Insurance Products Fund, Variable Insurance Products Fund II, and Variable Insurance Products Fund III. Vice Chairman and a Director of FMR, and Vice Chairman (2001) and a Director (2000) of FMR Co., Inc. Previously, Mr. Lynch served as a Trustee of the Fidelity funds (1990-2003). Prior to May 31, 1990, he was a Director of FMR and Executive Vice President of FMR (a position he held until March 31, 1991), Vice President of Fidelity® Magellan® Fund and FMR Growth Group Leader, and Managing Director of FMR Corp. Mr. Lynch was also Vice President of Fidelity Investments Corporate Services. In addition, he serves as a Trustee of Boston College, Massachusetts Eye & Ear Infirmary, Historic Deerfield, John F. Kennedy Library, and the Museum of Fine Arts of Boston.
Cornelia M. Small (59)
	Year of Election or Appointment: 2004 Member of the Advisory Board of Variable Insurance Products Fund, Variable Insurance Products Fund II, and Variable Insurance Products Fund III. Ms. Small is a member (2000) and Chairperson (2002) of the Investment Committee, and a member (2002) of the Board of Trustees of Smith College. Previously, she served as Chief Investment Officer (1999-2000), Director of Global Equity Investments (1996-1999), and a member of the Board of Directors (1998-1999) of Scudder Kemper Investments. In addition, Ms. Small served as Co-Chair (2000-2003) of the Annual Fund for the Fletcher School of Law and Diplomacy.
Dwight D. Churchill (50)
	Year of Election or Appointment: 1997 or 2000 Vice President of VIP Investment Grade Bond (1997) and VIP Money Market (2000). He serves as Head of Fidelity's Fixed-Income Division (2000), Vice President of Fidelity's Money Market Funds (2000), Vice President of Fidelity's Bond Funds (1997), and Senior Vice President of FIMM (2000) and FMR (1997). Mr. Churchill joined Fidelity in 1993 as Vice President and Group Leader of Taxable Fixed-Income Investments.
Bart A. Grenier (44)
	Year of Election or Appointment: 2001 or 2002 Vice President of VIP Asset Manager: Growth (2001), VIP Balanced (2001), and VIP Growth & Income (2001). Mr. Grenier also serves as Vice President of certain Equity Funds (2001), a position he previously held from 1999 to 2000, and Vice President of certain High Income Funds (2002). He is Senior Vice President of FMR (1999) and FMR Co., Inc. (2001), and President and Director of Strategic Advisers, Inc. (2002). He also heads Fidelity's Asset Allocation Group (2000), Fidelity's Growth and Income Group (2001), Fidelity's Value Group (2001), and Fidelity's High Income Division (2001). Previously, Mr. Grenier served as President of Fidelity Ventures (2000), Vice President of certain High Income Funds (1997-2000), High Income Division Head (1997-2000), Group Leader of the Income-Growth and Asset Allocation-Income Groups (1996-2000), and Assistant Equity Division Head (1997-2000).
John B. McDowell (45)
	Year of Election or Appointment: 2002 Vice President of VIP Growth Opportunities and VIP Mid Cap. Mr. McDowell also serves as Vice President of certain Equity Funds (2002). He is Senior Vice President of FMR (1999), FMR Co., Inc. (2001), and Fidelity Management Trust Company (FMTC). Since joining Fidelity Investments in 1985, Mr. McDowell has worked as a research analyst and manager.
Charles S. Morrison (43)
	Year of Election or Appointment: 2002 Vice President of VIP Asset Manager: Growth, VIP Balanced, and VIP Investment Grade Bond. Mr. Morrison also serves as Vice President of Fidelity's Bond Funds (2002), and Vice President of certain Asset Allocation and Balanced Funds (2002). He serves as Vice President (2002) and Bond Group Leader (2002) of Fidelity Investments Fixed Income Division. Mr. Morrison is also Vice President of FIMM (2002) and FMR (2002). Mr. Morrison joined Fidelity in 1987 as a Corporate Bond Analyst in the Fixed Income Research Division.
David L. Murphy (55)
	Year of Election or Appointment: 2002 Vice President of VIP Asset Manager: Growth and VIP Money Market. Mr. Murphy also serves as Vice President of Fidelity's Money Market Funds (2002) and Vice President of certain Asset Allocation Funds (2003). He serves as Senior Vice President (2000) and Money Market Group Leader (2002) of the Fidelity Investments Fixed Income Division. Mr. Murphy is also a Senior Vice President of FIMM (2003) and a Vice President of FMR (2000). Previously, Mr. Murphy served as Bond Group Leader (2000-2002) and Vice President of Fidelity's Taxable Bond Funds (2000-2002) and Fidelity's Municipal Bond Funds (2001-2002). Mr. Murphy joined Fidelity in 1989 as a portfolio manager in the Bond Group.
Thomas J. Allen (43)
	Year of Election or Appointment: 2003 Vice President of VIP Mid Cap. Prior to assuming his current responsibilites, Mr. Allen worked as a research analyst and manager.
Bettina Doulton (39)
	Year of Election or Appointment: 2000 Vice President of VIP Growth Opportunities. Ms. Doulton also serves as Vice President of another fund advised by FMR. Prior to assuming her current responsibilities, Ms. Doulton managed a variety of Fidelity funds.
Richard C. Habermann (63)
	Year of Election or Appointment: 2001 Vice President of VIP Asset Manager: Growth. Mr. Habermann also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Habermann managed a variety of Fidelity funds.
Frederick D. Hoff, Jr. (39)
	Year of Election or Appointment: 2003 Vice President of VIP Asset Manager: Growth. Mr. Hoff also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Hoff worked as a portfolio manager.
Charles Mangum (39)
	Year of Election or Appointment: 2002 Vice President of VIP Asset Manager: Growth. Mr. Mangum also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Mangum managed a variety of Fidelity funds.
James K. Miller (40)
	Year of Election or Appointment: 2003 Vice President of VIP Money Market. Mr. Miller also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Miller worked as a taxable credit analyst and manager.
Ford O'Neil (41)
	Year of Election or Appointment: 2001 Vice President of VIP Asset Manager: Growth, VIP Balanced, and VIP Investment Grade Bond. Mr. O'Neil also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. O'Neil managed a variety of Fidelity funds.
Louis Salemy (42)
	Year of Election or Appointment: 2000 or 2002 Vice President of VIP Balanced (2002) and VIP Growth & Income (2000). Mr. Salemy also serves as Vice President of other funds advised by FMR. Prior to assuming his current responsibilities, Mr. Salemy managed a variety of Fidelity funds.
John J. Todd (54)
	Year of Election or Appointment: 1996 Vice President of VIP Asset Manager: Growth. Mr. Todd also serves as Vice President of other funds advised by FMR.
Eric D. Roiter (55)
	Year of Election or Appointment: 1998 Secretary of VIP Asset Manager: Growth, VIP Balanced, VIP Growth & Income, VIP Growth Opportunities, VIP Investment Grade Bond, VIP Mid Cap, and VIP Money Market. He also serves as Secretary of other Fidelity funds (1998); Vice President, General Counsel, and Clerk of FMR Co., Inc. (2001) and FMR (1998); Vice President and Clerk of FDC (1998); Assistant Clerk of Fidelity Management & Research (U.K.) Inc. (2001) and Fidelity Management & Research (Far East) Inc. (2001); and Assistant Secretary of Fidelity Investments Money Management Inc. (2001). Prior to joining Fidelity, Mr. Roiter was with the law firm of Debevoise & Plimpton, as an associate (1981-1984) and as a partner (1985-1997), and served as an Assistant General Counsel of the U.S. Securities and Exchange Commission (1979-1981). Mr. Roiter is an Adjunct Member, Faculty of Law, at Boston College Law School (2003).
Stuart Fross (44)
	Year of Election or Appointment: 2003 Assistant Secretary of VIP Asset Manager: Growth, VIP Balanced, VIP Growth & Income, VIP Growth Opportunities, VIP Investment Grade Bond, VIP Mid Cap, and VIP Money Market. Mr. Fross also serves as Assistant Secretary of other Fidelity funds (2003) and is an employee of FMR.
Maria F. Dwyer (45)
	Year of Election or Appointment: 2002 President and Treasurer of VIP Asset Manager: Growth, VIP Balanced, VIP Growth & Income, VIP Growth Opportunities, VIP Investment Grade Bond, VIP Mid Cap, and VIP Money Market. Ms. Dwyer also serves as President and Treasurer of other Fidelity funds (2002) and is a Vice President (1999) and an employee (1996) of FMR.
Timothy F. Hayes (53)
	Year of Election or Appointment: 2002 Chief Financial Officer of VIP Asset Manager: Growth, VIP Balanced, VIP Growth & Income, VIP Growth Opportunities, VIP Investment Grade Bond, VIP Mid Cap, and VIP Money Market. Mr. Hayes also serves as Chief Financial Officer of other Fidelity funds (2002). Recently he was appointed President of Fidelity Service Company (2003) where he also serves as a Director. Mr. Hayes also serves as President of Fidelity Investments Operations Group (FIOG, 2002), which includes Fidelity Pricing and Cash Management Services Group (FPCMS), where he was appointed President in 1998. Previously, Mr. Hayes served as Chief Financial Officer of Fidelity Investments Corporate Systems and Service Group (1998) and Fidelity Systems Company (1997-1998).
Jennifer S. Taub (37)
	Year of Election or Appointment: 2003 Assistant Vice President of VIP Investment Grade Bond and VIP Money Market. Ms. Taub is Assistant Vice President of Fidelity's Fixed-Income Funds (2003), Assistant Secretary of FIMM (2003), and is an employee of FMR.
John R. Hebble (45)
	Year of Election or Appointment: 2003 Deputy Treasurer of VIP Asset Manager: Growth, VIP Balanced, VIP Growth & Income, VIP Growth Opportunities, VIP Investment Grade Bond, VIP Mid Cap, and VIP Money Market. Mr. Hebble also serves as Deputy Treasurer of other Fidelity funds (2003), and is an employee of FMR. Before joining Fidelity Investments, Mr. Hebble worked at Deutsche Asset Management where he served as Director of Fund Accounting (2002-2003) and Assistant Treasurer of the Scudder Funds (1998-2003).
John H. Costello (57)
	Year of Election or Appointment: 1986, 1988, 1995, 1996, or 1998 Assistant Treasurer of VIP Asset Manager: Growth (1995), VIP Balanced (1995), VIP Growth & Income (1996), VIP Growth Opportunities (1995), VIP Investment Grade Bond (1988), VIP Mid Cap (1998), and VIP Money Market (1986). Mr. Costello also serves as Assistant Treasurer of other Fidelity funds and is an employee of FMR.
Francis V. Knox, Jr. (56)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Asset Manager: Growth, VIP Balanced, VIP Growth & Income, VIP Growth Opportunities, VIP Investment Grade Bond, VIP Mid Cap, and VIP Money Market. Mr. Knox also serves as Assistant Treasurer of other Fidelity funds (2002), and is a Vice President and an employee of FMR. Previously, Mr. Knox served as Vice President of Investment & Advisor Compliance (1990-2001), and Compliance Officer of Fidelity Management & Research (U.K.) Inc. (1992-2002), Fidelity Management & Research (Far East) Inc. (1991-2002), and FMR Corp. (1995-2002).
Mark Osterheld (48)
	Year of Election or Appointment: 2002 Assistant Treasurer of VIP Asset Manager: Growth, VIP Balanced, VIP Growth & Income, VIP Growth Opportunities, VIP Investment Grade Bond, VIP Mid Cap, and VIP Money Market. Mr. Osterheld also serves as Assistant Treasurer of other Fidelity funds (2002) and is an employee of FMR.
Thomas J. Simpson (45)
	Year of Election or Appointment: 1996, 1998, or 2000 Assistant Treasurer of VIP Money Market (1996), VIP Investment Grade Bond (1998), VIP Asset Manager: Growth (2000), VIP Balanced (2000), VIP Growth & Income (2000), VIP Growth Opportunities (2000), and VIP Mid Cap (2000). Mr. Simpson is Assistant Treasurer of other Fidelity funds (2000) and an employee of FMR (1996). Prior to joining FMR, Mr. Simpson was Vice President and Fund Controller of Liberty Investment Services (1987-1995).

Annual Report

Distributions

The Board of Trustees of Investment Grade Bond Portfolio voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:

	Pay Date	Record Date	Dividends	Capital Gains
Initial Class	2/13/04	2/13/04	$0.57	$0.41
Service Class	2/13/04	2/13/04	$0.58	$0.41
Service Class 2	2/13/04	2/13/04	$0.55	$0.41

A percentage of the dividends distributed during the fiscal year for the following fund was derived from interest on U.S. Government securities which is generally exempt from state income tax:

Balanced

9.96%

A percentage of the dividends distributed during the fiscal year for the following funds qualifies for the dividends-received deduction for corporate shareholders:

Asset Manager: Growth
Initial Class	37%
Service Class	39%
Service Class 2	39%
Balanced
Initial Class	25%
Service Class	26%
Service Class 2	28%
Growth & Income
Initial Class	92%
Service Class	99%
Service Class 2	100%
Growth Opportunities
Initial Class	100%
Service Class	100%
Service Class 2	100%
Mid Cap
Initial Class	100%
Service Class	100%
Service Class 2	100%

The funds will notify shareholders in January 2004 of amounts for use in preparing 2003 income tax returns.

Annual Report

Investment Adviser

Fidelity Management & Research Company
Boston, MA

Investment Sub-Advisers

FMR Co., Inc.
Asset Manager: Growth, Balanced,
Growth & Income, Growth Opportunities,
and Mid Cap Portfolios

Fidelity Investments Money Management, Inc.
Asset Manager: Growth, Balanced,
Investment Grade Bond, and Money Market Portfolios

Fidelity Management & Research (U.K.) Inc.
Asset Manager: Growth, Balanced, Growth & Income,
Growth Opportunities, and Mid Cap Portfolios

Fidelity Management & Research (Far East) Inc.
Asset Manager: Growth, Balanced, Growth & Income,
Growth Opportunities, and Mid Cap Portfolios

Fidelity Investments Japan Limited
Asset Manager: Growth, Balanced, Growth & Income,
Growth Opportunities, and Mid Cap Portfolios

Fidelity International Investment Advisors
Asset Manager: Growth, Balanced, Growth & Income,
Growth Opportunities, Investment Grade Bond, Mid Cap
and Money Market Portfolios

Fidelity International Investment Advisors (U.K.) Limited
Asset Manager: Growth, Balanced, Growth & Income,
Growth Opportunities, Investment Grade Bond, Mid Cap
and Money Market Portfolios

General Distributor

Fidelity Distributors Corporation
Boston, MA

Transfer and Shareholder Servicing Agent

Fidelity Investments Institutional Operations Company, Inc.
Boston, MA

Custodian

The Bank of New York, New York, NY
Investment Grade Bond and Money Market Portfolios

JPMorgan Chase Bank, New York, NY
Asset Manager: Growth, Balanced,
and Growth & Income Portfolios
Brown Brothers Harriman & Co., Boston, MA
Mid Cap Portfolio

Mellon Bank, N.A., Pittsburgh, PA
Growth Opportunities Portfolio

VIPGRP2-ANN-0204
1.768593.102

Item 2. Code of Ethics

As of the end of the period, December 31, 2003, Variable Insurance Products Fund III (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.

Item 3. Audit Committee Financial Expert

The Board of Trustees of the trust has determined that Marie L. Knowles and Donald J. Kirk are each audit committee financial experts, as defined in Item 3 of Form N-CSR. Ms. Knowles and Mr. Kirk are each independent for purposes of Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services

a) Audit Fees.

For the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Audit Fees billed by PricewaterhouseCoopers LLP (PwC) for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for Mid Cap Portfolio (the fund) and for all funds in the Fidelity Group of Funds are shown in the table below.

Fund	2003^A	2002^A
Mid Cap Portfolio	$26,000	$22,000
All funds in the Fidelity Group of Funds audited by PwC	$10,600,000	$7,900,000

^A	Aggregate amounts may reflect rounding.

For the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Audit Fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, "Deloitte") for professional services rendered for the audits of the financial statements, or services that are normally provided in connection with statutory and regulatory filings or engagements for those fiscal years, for Aggressive Growth Portfolio, Balanced Portfolio, Dynamic Capital Appreciation Portfolio, Growth & Income Portfolio, Value Strategies Portfolio, and Growth Opportunities Portfolio (the funds) and for all funds in the Fidelity Group of Funds are shown in the table below.

Fund	2003^A	2002^A
Aggressive Growth Portfolio	$36,000	$15,000
Balanced Portfolio	$46,000	$21,000
Dynamic Capital Appreciation Portfolio	$24,000	$18,000
Growth & Income Portfolio	$28,000	$20,000
Value Strategies Portfolio	$23,000	$18,000
Growth Opportunities Portfolio	$27,000	$20,000
All funds in the Fidelity Group of Funds audited by Deloitte	$4,500,000	$1,900,000

^A	Aggregate amounts may reflect rounding.

(b) Audit-Related Fees.

In each of the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Audit-Related Fees billed by PwC for services rendered for assurance and related services to the fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.

Fund	2003^{A, B}	2002 ^{A, B}
Mid Cap Portfolio	$0	$0

^A	Aggregate amounts may reflect rounding.

^B	Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

In each of the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Audit-Related Fees billed by Deloitte for services rendered for assurance and related services to each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.

Fund	2003^{A, B}	2002 ^{A, B}
Aggressive Growth Portfolio	$0	$0
Balanced Portfolio	$0	$0
Dynamic Capital Appreciation Portfolio	$0	$0
Growth & Income Portfolio	$0	$0
Value Strategies Portfolio	$0	$0
Growth Opportunities Portfolio	$0	$0

^A	Aggregate amounts may reflect rounding.

^B	Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

In each of the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Audit-Related Fees that were billed by PwC and Deloitte that were required to be approved by the Audit Committee for services rendered on behalf of Fidelity Management & Research Company (FMR) and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the funds ("Fund Service Providers") for assurance and related services that relate directly to the operations and financial reporting of each fund that are reasonably related to the performance of the audit or review of the fund's financial statements, but not reported as Audit Fees, are shown in the table below.

Billed By	2003 ^{A, B}	2002^{A, B}
PwC	$50,000	$0
Deloitte	$0	$0

^A	Aggregate amounts may reflect rounding.

^B	Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

Fees included in the audit-related category comprise assurance and related services (e.g., due diligence services) that are traditionally performed by the independent accountant. These audit-related services include due diligence related to mergers and acquisitions, accounting consultations and audits in connection with acquisitions, internal control reviews, attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.

In each of the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Tax Fees billed by PwC for professional services rendered for tax compliance, tax advice, and tax planning for the fund is shown in the table below.

Fund	2003^{A, B}	2002^{A, B}
Mid Cap Portfolio	$1,900	$1,800

^A	Aggregate amounts may reflect rounding.

^B	Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

In each of the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Tax Fees billed by Deloitte for professional services rendered for tax compliance, tax advice, and tax planning for each fund is shown in the table below.

Fund	2003^{A, B}	2002^{A, B}
Aggressive Growth Portfolio	$3,800	$3,500
Balanced Portfolio	$4,000	$3,200
Dynamic Capital Appreciation Portfolio	$3,800	$3,000
Growth & Income Portfolio	$4,000	$3,200
Value Strategies Portfolio	$3,500	$3,100
Growth Opportunities Portfolio	$4,000	$3,200

^A	Aggregate amounts may reflect rounding.

^B	Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

In each of the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Tax Fees billed by PwC and Deloitte that were required to be approved by the Audit Committee for professional services rendered on behalf of the Fund Service Providers for tax compliance, tax advice, and tax planning that relate directly to the operations and financial reporting of each fund is shown in the table below.

Billed By	2003^{A, B}	2002^{A, B}
PwC	$0	$0
Deloitte	$0	$0

^A	Aggregate amounts may reflect rounding.

^B	Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

Fees included in the Tax Fees category comprise all services performed by professional staff in the independent accountant's tax division except those services related to the audit. Typically, this category would include fees for tax compliance, tax planning, and tax advice. Tax compliance, tax advice, and tax planning services include preparation of original and amended tax returns, claims for refund and tax payment-planning services, assistance with tax audits and appeals, tax advice related to mergers and acquisitions and requests for rulings or technical advice from taxing authorities.

(d) All Other Fees.

In each of the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Other Fees billed by PwC for all other non-audit services rendered to the fund is shown in the table below.

Fund	2003^{A, B}	2002^{A, B}
Mid Cap Portfolio	$2,500	$1,800

^A	Aggregate amounts may reflect rounding.

^B	Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

In each of the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Other Fees billed by Deloitte for all other non-audit services rendered to the funds is shown in the table below.

Fund	2003^{A, B}	2002^{A, B}
Aggressive Growth Portfolio	$0	$0
Balanced Portfolio	$0	$0
Dynamic Capital Appreciation Portfolio	$0	$0
Growth & Income Portfolio	$0	$0
Value Strategies Portfolio	$0	$0
Growth Opportunities Portfolio	$0	$0

^A	Aggregate amounts may reflect rounding.

^B	Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

In each of the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate Other Fees billed by PwC and Deloitte that were required to be approved by the Audit Committee for all other non-audit services rendered on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund is shown in the table below.

Billed By	2003^{A, B}	2002^{A, B}
PwC	$190,000	$150,000
Deloitte	$210,000	$640,000

^A	Aggregate amounts may reflect rounding.

^B	Includes amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

Fees included in the All Other Fees category include services related to internal control reviews, strategy and other consulting, financial information systems design and implementation, consulting on other information systems, and other tax services unrelated to the fund.

(e) (1)

Audit Committee Pre-Approval Policies and Procedures:

The trust's Audit Committee must pre-approve all audit and non-audit services provided by the independent accountants relating to the operations or financial reporting of the funds. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.

The trust's Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee's consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity Fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund (Covered Service) are subject to approval by the Audit Committee before such service is provided. Non-audit services provided by a fund audit firm for a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund (Non-Covered Service) but that are expected to exceed $50,000 are also subject to pre-approval by the Audit Committee.

All Covered Services, as well as Non-Covered Services that are expected to exceed $50,000, must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Audit Committee to act in the Chair's absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee. Neither pre-approval nor advance notice of Non-Covered Service engagements for which fees are not expected to exceed $50,000 is required; such engagements are to be reported to the Audit Committee monthly.

(e) (2)

Services approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:

Audit-Related Fees:

There were no amounts that were approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended December 31, 2003 and December 31, 2002 on behalf of each fund. These percentages include amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

There were no amounts that were required to be approved by the Audit Committee pursuant to the de minimis exception for the fiscal years ended December 31, 2003 and December 31, 2002 on behalf of the Fund Service Providers that relate directly to the operations and financial reporting of each fund. These percentages include amounts related to non-audit services prior to May 6, 2003 that would have been subject to pre-approval if the SEC rules relating to the pre-approval of non-audit services had been in effect at that time.

Tax Fees:

All Other Fees:

(f) According to PwC for the fiscal year ended December 31, 2003, the percentage of hours spent on the audit of the fund's financial statements for the most recent fiscal year that were attributed to work performed by persons who are not full-time, permanent employees of PwC is as follows:

Fund	2003
Mid Cap Portfolio	0%

According to Deloitte for the fiscal year ended December 31, 2003, the percentage of hours spent on the audit of each fund's financial statements for the most recent fiscal year that were attributed to work performed by persons who are not full-time, permanent employees of Deloitte is as follows:

Fund	2003
Aggressive Growth Portfolio	0%
Balanced Portfolio	0%
Dynamic Capital Appreciation Portfolio	0%
Growth & Income Portfolio	0%
Value Strategies Portfolio	0%
Growth Opportunities Portfolio	0%

(g) For the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate fees billed by PwC of $1,900,000^A and $1,550,000^Afor non-audit services rendered on behalf of the funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.

	2003^A	2002^A
Covered Services	$250,000	$150,000
Non-Covered Services	$1,650,000	$1,400,000

For the fiscal years ended December 31, 2003 and December 31, 2002, the aggregate fees billed by Deloitte of $1,500,000^A and $1,550,000^Afor non-audit services rendered on behalf of the funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and Fund Service Providers relating to Covered Services and Non-Covered Services are shown in the table below.

	2003^A	2002^A
Covered Services	$250,000	$650,000
Non-Covered Services	$1,250,000	$900,000

^A	Aggregate amounts may reflect rounding.

(h) The trust's Audit Committee has considered Non-Covered Services that were not pre-approved that were provided by PwC and Deloitte to Fund Service Providers to be compatible with maintaining the independence of PwC and Deloitte in their audit of the funds, taking into account representations from PwC and Deloitte, in accordance with Independence Standards Board Standard No.1, regarding their independence from the funds and their related entities.

Item 5. Audit Committee of Listed Registrants

Not applicable.

Item 6. Reserved

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

Not applicable.

Item 8. Reserved

Item 9. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 10. Controls and Procedures

(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust's 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 trust's second fiscal half-year that has materially affected, or is reasonably likely to materially affect, the trust's internal control over financial reporting.

Item 11. Exhibits

(a)	(1)	Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH.
(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.
(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 III

By:	/s/Maria Dwyer
	Maria Dwyer
	President and Treasurer

Date:	February 23, 2004

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/Maria Dwyer
	Maria Dwyer
	President and Treasurer

Date:	February 23, 2004

By:	/s/Timothy F. Hayes
	Timothy F. Hayes
	Chief Financial Officer

Date:	February 23, 2004

Fidelity® Variable Insurance Products:

Contents

Performance: The Bottom Line

Management's Discussion of Fund Performance

Investment Summary

Investments December 31, 2003

Financial Statements

Notes to Financial Statements

Independent Auditors' Report

Trustees and Officers

Fidelity® Variable Insurance Products:

Contents

Performance: The Bottom Line

Management's Discussion of Fund Performance

Investment Summary

Investments December 31, 2003

Financial Statements

Notes to Financial Statements

Independent Auditors' Report

Trustees and Officers

Distributions

Fidelity® Variable Insurance Products:

Contents

Performance: The Bottom Line

Management's Discussion of Fund Performance

Investment Summary

Investments December 31, 2003

Financial Statements

Notes to Financial Statements

Independent Auditors' Report

Trustees and Officers

Fidelity® Variable Insurance Products:

Contents

Performance: The Bottom Line

Management's Discussion of Fund Performance

Investment Summary

Investments December 31, 2003

Financial Statements

Notes to Financial Statements

Independent Auditors' Report

Trustees and Officers

Distributions

Fidelity® Variable Insurance Products:

Contents

Performance: The Bottom Line

Management's Discussion of Fund Performance

Investment Summary

Investments December 31, 2003

Financial Statements

Notes to Financial Statements

Independent Auditors' Report

Trustees and Officers

Distributions

Fidelity® Variable Insurance Products:

Contents

Performance: The Bottom Line

Management's Discussion of Fund Performance

Investment Summary

Investments December 31, 2003

Financial Statements

Notes to Financial Statements

Report of Independent Auditors

Trustees and Officers

Distributions

Fidelity® Variable Insurance Products:

Contents

Performance: The Bottom Line

Management's Discussion of Fund Performance

Investment Summary

Investments December 31, 2003

Financial Statements

Notes to Financial Statements

Independent Auditors' Report

Trustees and Officers

Distributions

Fidelity® Variable Insurance Products

Contents

Performance: The Bottom Line

Management's Discussion of Fund Performance

Investment Summary