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)

245 Summer St., Boston, Massachusetts 02210

(Address of principal executive offices) (Zip code)

Marc Bryant, Secretary

245 Summer St.

Boston, Massachusetts 02210

(Name and address of agent for service)

Registrant's telephone number, including area code:

617-563-7000


Date of fiscal year end:	December 31

Date of reporting period:	December 31, 2017

Item 1.

Reports to Stockholders

Fidelity® Variable Insurance Products:

Balanced Portfolio

Annual Report

December 31, 2017

Contents

Performance
Management's Discussion of Fund Performance
Investment Summary
Investments
Financial Statements
Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
Trustees and Officers
Shareholder Expense Example
Distributions
Board Approval of Investment Advisory Contracts and Management Fees

To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.

You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

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

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

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

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

A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.

For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.

Performance: The Bottom Line

Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) 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

For the periods ended December 31, 2017	Past 1 year	Past 5 years	Past 10 years
Initial Class	16.43%	10.63%	7.11%
Service Class	16.25%	10.49%	6.97%
Service Class 2	16.12%	10.35%	6.84%
Investor Class	16.28%	10.54%	7.02%

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in VIP Balanced Portfolio - Initial Class on December 31, 2007.

The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.

	Period Ending Values
	$19,866	VIP Balanced Portfolio - Initial Class
	$22,603	S&P 500® Index

Management's Discussion of Fund Performance

Market Recap: U.S. equities gained 21.83% in 2017, as the S&P 500^® index rose steadily and closed the year just shy of an all-time high after a particularly strong three-month finish. Early on, equities rallied on optimism for President Trump’s pro-business agenda but leveled off in March amid fading optimism and stalled efforts by Congress to repeal and replace the Affordable Care Act. Upward momentum soon returned and continued through year-end with consumer sentiment and other market indicators staying positive. Sector-wise, information technology fared best by a wide margin, rising 39% amid strong earnings growth from several major index constituents. A 24% gain in materials was spurred by increased demand, especially from China. Conversely, the defensive energy and telecom services sectors returned about -1% each. In fixed income, the Bloomberg Barclays U.S. Aggregate Bond Index gained 3.54% after spending the majority of the year in recovery mode from its steep post-election sell-off in late 2016. Within the Bloomberg Barclays index, investment-grade corporate bonds led all major market segments, up 6.42%. U.S. Treasuries rose 2.31%, outperforming most sovereign bonds. Outside the index, riskier, non-core fixed-income segments led the broader market, while Treasury Inflation-Protected Securities (TIPS) gained 3.01%, according to Bloomberg Barclays.

Comments from Co-Portfolio Manager Robert Stansky: For the year, the fund’s share classes returned about 16%, topping the 14.21% return of the Fidelity Balanced 60/40 Composite Index℠. The fund’s performance versus the Composite index benefited from asset allocation, with an overweighting in stocks and an underweighting in bonds both helping. Security selection also boosted relative performance. The equity subportfolio topped its benchmark, the S&P 500^® index. Versus that benchmark, stock selection in the information technology sector added the most value. Autodesk, a maker of design software and one of the subportfolio’s largest holdings, contributed meaningfully. A non-benchmark stake in China-based online advertising provider 58.com also proved rewarding. Conversely, picks in health care and positioning in energy weighed on relative performance, as did a small cash position in a strongly advancing stock market. Within the industrials sleeve, the decision to largely avoid commercial jet manufacturer and defense contractor Boeing made this stock the equity subportfolio’s largest relative detractor, given Boeing’s 95% return. The investment-grade bond subportfolio outpaced its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index. The subportfolio’s overweighting in investment-grade corporate bonds was a meaningful positive, as this group outperformed U.S. government bonds and agency mortgage-backed securities – more-conservative investments in which the subportfolio was significantly underweighted. Good choices among corporates, especially financial institutions, added further value. In contrast, the subportfolio’s underweighting in industrials and – within that sector – underweighted exposure to certain large technology names detracted.

The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report 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.

Note to shareholders: On August 3, 2017, Nicola Stafford became Co-Manager of the fund, succeeding Peter Dixon in overseeing the consumer discretionary sleeve. On November 17, 2017, Richard Malnight assumed Co-Manager responsibilities for the fund’s materials sleeve, succeeding Tobias Welo.

Investment Summary (Unaudited)

The information in the following tables is based on the combined investments of the Fund and its pro-rata share of the investments of Fidelity's Fixed-Income Central Funds.

Top Five Stocks as of December 31, 2017

	% of fund's net assets
Alphabet, Inc. Class C	2.0
Bank of America Corp.	1.6
Amazon.com, Inc.	1.5
Autodesk, Inc.	1.4
UnitedHealth Group, Inc.	1.3
	7.8

Top Five Bond Issuers as of December 31, 2017

(with maturities greater than one year)	% of fund's net assets
U.S. Treasury Obligations	12.8
Fannie Mae	3.2
Freddie Mac	1.8
Ginnie Mae	1.1
Petroleos Mexicanos	0.6
	19.5

Top Five Market Sectors as of December 31, 2017

	% of fund's net assets
Information Technology	14.7
Financials	14.2
Consumer Discretionary	10.3
Health Care	9.8
Industrials	7.0

Asset Allocation (% of fund's net assets)

As of December 31, 2017^*
	Stocks and Equity Futures	67.1%
	Bonds	31.0%
	Short-Term Investments and Net Other Assets (Liabilities)	1.4%
	Other Investments	0.5%

* Foreign investments - 9.6%

An unaudited holdings listing for the Fund, which presents direct holdings as well as the pro-rata share of any securities and other investments held indirectly through its investment in underlying non-money market Fidelity Central Funds, is available at fidelity.com and/or institutional.fidelity.com, as applicable.

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

Percentages in the above tables are adjusted for the effect of TBA Sale Commitments.

Investments December 31, 2017

Showing Percentage of Net Assets

Common Stocks - 66.2%
	Shares	Value
CONSUMER DISCRETIONARY - 9.2%
Auto Components - 0.2%
Aptiv PLC	77,700	$6,591,291
Delphi Technologies PLC (a)	25,900	1,358,973
		7,950,264
Automobiles - 0.3%
Tesla, Inc. (a)	33,438	10,410,921
Diversified Consumer Services - 0.4%
ServiceMaster Global Holdings, Inc. (a)	324,006	16,611,788
Hotels, Restaurants & Leisure - 1.3%
Cedar Fair LP (depositary unit)	78,900	5,127,711
Compass Group PLC	483,486	10,444,458
Marriott International, Inc. Class A	70,191	9,527,024
Starbucks Corp.	115,690	6,644,077
U.S. Foods Holding Corp. (a)	281,600	8,991,488
Wyndham Worldwide Corp.	102,977	11,931,945
		52,666,703
Household Durables - 0.0%
PICO Holdings, Inc. (a)	40,108	513,382
PICO Holdings, Inc. (a)	8,460	108,288
		621,670
Internet & Direct Marketing Retail - 2.0%
Amazon.com, Inc. (a)	51,610	60,356,347
JD.com, Inc. sponsored ADR (a)	170,600	7,066,252
Netflix, Inc. (a)	69,200	13,283,632
		80,706,231
Leisure Products - 0.1%
Mattel, Inc. (b)	267,500	4,114,150
Media - 2.1%
Charter Communications, Inc. Class A (a)	52,164	17,525,017
Comcast Corp. Class A	581,090	23,272,655
DISH Network Corp. Class A (a)	11,200	534,800
MDC Partners, Inc. Class A (a)	285,421	2,782,855
The Walt Disney Co.	247,400	26,597,974
Time Warner, Inc.	116,300	10,637,961
		81,351,262
Multiline Retail - 0.3%
Dollar Tree, Inc. (a)	107,600	11,546,556
Specialty Retail - 2.1%
Home Depot, Inc.	190,208	36,050,122
L Brands, Inc.	76,294	4,594,425
Lowe's Companies, Inc.	149,100	13,857,354
O'Reilly Automotive, Inc. (a)	26,000	6,254,040
TJX Companies, Inc.	200,740	15,348,580
Ulta Beauty, Inc.	24,800	5,546,768
		81,651,289
Textiles, Apparel & Luxury Goods - 0.4%
NIKE, Inc. Class B	282,930	17,697,272

TOTAL CONSUMER DISCRETIONARY		365,328,106

CONSUMER STAPLES - 5.5%
Beverages - 1.3%
Anheuser-Busch InBev SA NV	40,600	4,532,642
Constellation Brands, Inc. Class A (sub. vtg.)	43,800	10,011,366
Molson Coors Brewing Co. Class B	12,800	1,050,496
Monster Beverage Corp. (a)	121,926	7,716,697
The Coca-Cola Co.	573,586	26,316,126
		49,627,327
Food & Staples Retailing - 0.9%
CVS Health Corp.	260,580	18,892,050
Kroger Co.	375,469	10,306,624
Rite Aid Corp. (a)(b)	384,510	757,485
Walgreens Boots Alliance, Inc.	71,120	5,164,734
		35,120,893
Food Products - 0.6%
Blue Buffalo Pet Products, Inc. (a)(b)	37,200	1,219,788
Bunge Ltd.	87,928	5,898,210
Mondelez International, Inc.	297,500	12,733,000
The Hain Celestial Group, Inc. (a)	7,139	302,622
The Kraft Heinz Co.	7,200	559,872
The Simply Good Foods Co.	127,800	1,822,428
TreeHouse Foods, Inc. (a)	65,900	3,259,414
		25,795,334
Household Products - 0.5%
Colgate-Palmolive Co.	213,444	16,104,350
Kimberly-Clark Corp.	16,700	2,015,022
Spectrum Brands Holdings, Inc.	22,300	2,506,520
		20,625,892
Personal Products - 0.5%
Avon Products, Inc. (a)	1,166,500	2,507,975
Coty, Inc. Class A	274,404	5,457,896
Edgewell Personal Care Co. (a)	35,500	2,108,345
Estee Lauder Companies, Inc. Class A	64,492	8,205,962
Unilever NV (Certificaten Van Aandelen) (Bearer)	18,100	1,019,084
		19,299,262
Tobacco - 1.7%
Altria Group, Inc.	95,008	6,784,521
British American Tobacco PLC sponsored ADR	430,741	28,855,340
Philip Morris International, Inc.	284,256	30,031,646
		65,671,507

TOTAL CONSUMER STAPLES		216,140,215

ENERGY - 4.2%
Energy Equipment & Services - 0.3%
Baker Hughes, a GE Co. Class A	153,600	4,859,904
Hess Midstream Partners LP	54,900	1,087,569
NCS Multistage Holdings, Inc.	128,200	1,889,668
Oceaneering International, Inc.	47,700	1,008,378
Schlumberger Ltd.	47,000	3,167,330
		12,012,849
Oil, Gas & Consumable Fuels - 3.9%
Amyris, Inc. (a)(b)	9,767	36,626
Anadarko Petroleum Corp.	183,949	9,867,024
Black Stone Minerals LP	101,900	1,828,086
Boardwalk Pipeline Partners, LP	215,000	2,775,650
Cabot Oil & Gas Corp.	172,660	4,938,076
Centennial Resource Development, Inc.:
Class A (a)	51,600	1,021,680
Class A (c)	72,000	1,425,600
Chevron Corp.	101,700	12,731,823
Cimarex Energy Co.	49,485	6,037,665
ConocoPhillips Co.	288,900	15,857,721
Devon Energy Corp.	238,600	9,878,040
EOG Resources, Inc.	85,800	9,258,678
Extraction Oil & Gas, Inc. (a)	58,888	842,687
Extraction Oil & Gas, Inc. (c)	73,849	1,056,779
Exxon Mobil Corp.	220,700	18,459,348
Newfield Exploration Co. (a)	194,900	6,145,197
Parsley Energy, Inc. Class A (a)	229,600	6,759,424
PDC Energy, Inc. (a)	61,900	3,190,326
Phillips 66 Co.	106,826	10,805,450
Pioneer Natural Resources Co.	46,100	7,968,385
PrairieSky Royalty Ltd.	112,434	2,867,648
Reliance Industries Ltd.	169,931	2,451,675
Suncor Energy, Inc.	217,380	7,980,976
Suncor Energy, Inc.	9,100	334,152
Valero Energy Corp.	97,300	8,942,843
		153,461,559

TOTAL ENERGY		165,474,408

FINANCIALS - 10.3%
Banks - 5.0%
Bank of America Corp.	2,089,187	61,672,800
Citigroup, Inc.	475,454	35,378,532
Huntington Bancshares, Inc.	1,677,738	24,427,865
JPMorgan Chase & Co.	125,000	13,367,500
KeyCorp	297,400	5,998,558
PNC Financial Services Group, Inc.	128,300	18,512,407
Societe Generale Series A	53,400	2,753,066
SunTrust Banks, Inc.	129,100	8,338,569
Synovus Financial Corp.	35,742	1,713,471
Wells Fargo & Co.	417,200	25,311,524
		197,474,292
Capital Markets - 1.9%
Affiliated Managers Group, Inc.	11,300	2,319,325
BlackRock, Inc. Class A	31,972	16,424,336
CBOE Holdings, Inc.	44,425	5,534,911
Credit Suisse Group AG	119,081	2,123,896
E*TRADE Financial Corp. (a)	257,600	12,769,232
Goldman Sachs Group, Inc.	24,100	6,139,716
IntercontinentalExchange, Inc.	102,400	7,225,344
Northern Trust Corp.	98,500	9,839,165
State Street Corp.	128,200	12,513,602
		74,889,527
Consumer Finance - 1.5%
Capital One Financial Corp.	422,131	42,035,805
Imperial Holdings, Inc. warrants 4/11/19 (a)	6,565	0
OneMain Holdings, Inc. (a)	235,901	6,131,067
SLM Corp. (a)	235,852	2,665,128
Synchrony Financial	226,000	8,725,860
		59,557,860
Diversified Financial Services - 0.4%
Berkshire Hathaway, Inc.:
Class A (a)	17	5,059,200
Class B (a)	29,900	5,926,778
KBC Ancora	38,000	2,393,245
Kimbell Royalty Partners LP	56,900	924,625
On Deck Capital, Inc. (a)	65,000	373,100
		14,676,948
Insurance - 1.5%
American International Group, Inc.	46,900	2,794,302
Chubb Ltd.	88,230	12,893,051
Hartford Financial Services Group, Inc.	147,500	8,301,300
Marsh & McLennan Companies, Inc.	109,733	8,931,169
MetLife, Inc.	199,800	10,101,888
The Travelers Companies, Inc.	129,100	17,511,124
WMI Holdings Corp. (a)	57	48
		60,532,882

TOTAL FINANCIALS		407,131,509

HEALTH CARE - 9.0%
Biotechnology - 2.4%
Alexion Pharmaceuticals, Inc. (a)	82,250	9,836,278
Amgen, Inc.	184,509	32,086,115
Biogen, Inc.(a)	60,291	19,206,904
BioMarin Pharmaceutical, Inc. (a)	26,800	2,389,756
Celgene Corp. (a)	36,000	3,756,960
Regeneron Pharmaceuticals, Inc. (a)	17,800	6,692,088
Shire PLC sponsored ADR	30,400	4,715,648
TESARO, Inc. (a)	38,200	3,165,634
Vertex Pharmaceuticals, Inc. (a)	89,300	13,382,498
		95,231,881
Health Care Equipment & Supplies - 2.3%
Abbott Laboratories	418,100	23,860,967
Becton, Dickinson & Co.	93,000	19,907,580
Boston Scientific Corp. (a)	728,880	18,068,935
Intuitive Surgical, Inc. (a)	31,300	11,422,622
Medtronic PLC	64,256	5,188,672
ResMed, Inc.	96,900	8,206,461
Wright Medical Group NV (a)	153,600	3,409,920
		90,065,157
Health Care Providers & Services - 2.1%
DaVita HealthCare Partners, Inc. (a)	73,900	5,339,275
Henry Schein, Inc. (a)	50,548	3,532,294
Humana, Inc.	49,700	12,329,079
McKesson Corp.	70,700	11,025,665
UnitedHealth Group, Inc.	237,400	52,337,204
		84,563,517
Health Care Technology - 0.2%
Cerner Corp. (a)	115,500	7,783,545
Life Sciences Tools & Services - 0.7%
Agilent Technologies, Inc.	162,700	10,896,019
Thermo Fisher Scientific, Inc.	85,117	16,162,016
		27,058,035
Pharmaceuticals - 1.3%
Allergan PLC	65,923	10,783,684
AstraZeneca PLC sponsored ADR	133,600	4,635,920
Bristol-Myers Squibb Co.	251,060	15,384,957
Jazz Pharmaceuticals PLC (a)	36,300	4,887,795
Merck & Co., Inc.	47,700	2,684,079
Mylan NV (a)	88,000	3,723,280
Roche Holding AG (participation certificate)	19,608	4,957,988
Sanofi SA sponsored ADR	79,300	3,409,900
		50,467,603

TOTAL HEALTH CARE		355,169,738

INDUSTRIALS - 6.6%
Aerospace & Defense - 1.1%
Axon Enterprise, Inc. (a)	257,016	6,810,924
Lockheed Martin Corp.	16,950	5,441,798
Northrop Grumman Corp.	41,740	12,810,423
Orbital ATK, Inc.	4,090	537,835
Raytheon Co.	68,860	12,935,351
Rockwell Collins, Inc.	10,100	1,369,762
The Boeing Co.	2,180	642,904
United Technologies Corp.	41,210	5,257,160
		45,806,157
Air Freight & Logistics - 0.1%
United Parcel Service, Inc. Class B	46,777	5,573,480
Airlines - 1.2%
American Airlines Group, Inc.	538,419	28,013,941
JetBlue Airways Corp. (a)	376,890	8,419,723
United Continental Holdings, Inc. (a)	162,150	10,928,910
		47,362,574
Building Products - 0.4%
Allegion PLC	153,936	12,247,148
Johnson Controls International PLC	51,315	1,955,615
		14,202,763
Commercial Services & Supplies - 0.1%
Waste Management, Inc.	30,330	2,617,479
Construction & Engineering - 0.3%
AECOM (a)	306,865	11,400,035
Electrical Equipment - 1.2%
AMETEK, Inc.	159,289	11,543,674
Fortive Corp.	167,065	12,087,153
Sensata Technologies Holding BV (a)	357,550	18,274,381
Sunrun, Inc. (a)(b)	824,090	4,862,131
Vivint Solar, Inc. (a)	539,919	2,186,672
		48,954,011
Industrial Conglomerates - 0.7%
3M Co.	12,470	2,935,064
General Electric Co.	816,734	14,252,008
Honeywell International, Inc.	63,840	9,790,502
		26,977,574
Machinery - 0.1%
Caterpillar, Inc.	16,115	2,539,402
Marine - 0.0%
A.P. Moller - Maersk A/S Series B	134	234,106
Professional Services - 0.0%
Nielsen Holdings PLC	7,410	269,724
Road & Rail - 1.1%
Avis Budget Group, Inc. (a)	151,239	6,636,367
CSX Corp.	342,450	18,838,175
Norfolk Southern Corp.	129,380	18,747,162
		44,221,704
Trading Companies & Distributors - 0.3%
HD Supply Holdings, Inc. (a)	309,850	12,403,296

TOTAL INDUSTRIALS		262,562,305

INFORMATION TECHNOLOGY - 14.7%
Communications Equipment - 0.0%
CommScope Holding Co., Inc. (a)	36,700	1,388,361
Electronic Equipment & Components - 0.5%
Dell Technologies, Inc. (a)	6,800	552,704
Jabil, Inc.	625,118	16,409,348
Samsung SDI Co. Ltd.	9,725	1,863,228
		18,825,280
Internet Software & Services - 4.8%
58.com, Inc. ADR (a)	226,538	16,213,325
Alibaba Group Holding Ltd. sponsored ADR (a)	101,000	17,415,430
Alphabet, Inc. Class C (a)	74,249	77,694,153
Box, Inc. Class A (a)	327,061	6,907,528
Facebook, Inc. Class A (a)	229,904	40,568,860
GoDaddy, Inc. (a)	21,900	1,101,132
MINDBODY, Inc. (a)	309,115	9,412,552
NetEase, Inc. ADR	11,100	3,830,277
New Relic, Inc. (a)	85,068	4,914,378
Okta, Inc.	22,400	573,664
Shopify, Inc. (a)	15,100	1,525,100
Twilio, Inc. Class A (a)	186,400	4,399,040
Velti PLC (a)(c)	284,296	142
Yext, Inc. (b)	585,800	7,047,174
		191,602,755
IT Services - 0.9%
Cognizant Technology Solutions Corp. Class A	171,500	12,179,930
FleetCor Technologies, Inc. (a)	48,700	9,371,341
Leidos Holdings, Inc.	53,500	3,454,495
PayPal Holdings, Inc. (a)	145,300	10,696,986
Vantiv, Inc. (a)	8,500	625,175
		36,327,927
Semiconductors & Semiconductor Equipment - 2.1%
Advanced Micro Devices, Inc. (a)	30,800	316,624
Analog Devices, Inc.	55,400	4,932,262
Broadcom Ltd.	33,800	8,683,220
Himax Technologies, Inc. sponsored ADR	70,041	729,827
Micron Technology, Inc. (a)	204,300	8,400,816
Nanya Technology Corp.	605,000	1,553,949
NVIDIA Corp.	72,200	13,970,700
ON Semiconductor Corp. (a)	497,005	10,407,285
Qorvo, Inc. (a)	234,200	15,597,720
Qualcomm, Inc.	188,097	12,041,970
Semtech Corp. (a)	152,810	5,226,102
		81,860,475
Software - 5.7%
Activision Blizzard, Inc.	80,467	5,095,170
Adobe Systems, Inc. (a)	44,631	7,821,136
Autodesk, Inc. (a)	523,361	54,863,934
Citrix Systems, Inc. (a)	452,518	39,821,584
Electronic Arts, Inc. (a)	36,500	3,834,690
Fortinet, Inc. (a)	7,200	314,568
HubSpot, Inc. (a)	54,410	4,809,844
Microsoft Corp.	580,500	49,655,970
Oracle Corp.	118,800	5,616,864
Parametric Technology Corp. (a)	211,811	12,871,754
Red Hat, Inc. (a)	13,941	1,674,314
Salesforce.com, Inc. (a)	190,300	19,454,369
ServiceNow, Inc. (a)	14,900	1,942,811
Symantec Corp.	168,135	4,717,868
Totvs SA	205,000	1,847,231
Workday, Inc. Class A (a)	18,400	1,872,016
Zendesk, Inc. (a)	249,972	8,459,052
		224,673,175
Technology Hardware, Storage & Peripherals - 0.7%
Apple, Inc.	171,412	29,008,053

TOTAL INFORMATION TECHNOLOGY		583,686,026

MATERIALS - 1.8%
Chemicals - 1.6%
CF Industries Holdings, Inc.	24,800	1,054,992
DowDuPont, Inc.	329,677	23,479,596
FMC Corp.	14,200	1,344,172
International Flavors & Fragrances, Inc.	8,400	1,281,924
LyondellBasell Industries NV Class A	128,700	14,198,184
Monsanto Co.	3,600	420,408
Platform Specialty Products Corp. (a)	253,300	2,512,736
Praxair, Inc.	30,200	4,671,336
Sherwin-Williams Co.	8,700	3,567,348
The Chemours Co. LLC	134,700	6,743,082
Tronox Ltd. Class A	5,400	110,754
Westlake Chemical Corp.	33,604	3,579,834
		62,964,366
Construction Materials - 0.1%
Eagle Materials, Inc.	24,950	2,826,835
Summit Materials, Inc.	58,900	1,851,816
		4,678,651
Containers & Packaging - 0.0%
Ball Corp.	37,500	1,419,375
Metals & Mining - 0.1%
Freeport-McMoRan, Inc. (a)	141,800	2,688,528

TOTAL MATERIALS		71,750,920

REAL ESTATE - 1.8%
Equity Real Estate Investment Trusts (REITs) - 1.7%
Altisource Residential Corp. Class B	201,200	2,386,232
American Homes 4 Rent Class A	161,200	3,520,608
American Tower Corp.	103,482	14,763,777
Boston Properties, Inc.	48,200	6,267,446
Colony NorthStar, Inc.	253,283	2,889,959
Corporate Office Properties Trust (SBI)	73,400	2,143,280
Corrections Corp. of America	26,400	594,000
DDR Corp.	87,400	783,104
Equinix, Inc.	14,300	6,481,046
Equity Lifestyle Properties, Inc.	12,400	1,103,848
Extra Space Storage, Inc.	27,573	2,411,259
Gaming & Leisure Properties	14,600	540,200
General Growth Properties, Inc.	100,300	2,346,017
Healthcare Trust of America, Inc.	114,500	3,439,580
Omega Healthcare Investors, Inc.	11,300	311,202
Outfront Media, Inc.	62,320	1,445,824
Pennsylvania Real Estate Investment Trust (SBI) (b)	70,800	841,812
Prologis, Inc.	106,700	6,883,217
Spirit Realty Capital, Inc.	240,600	2,064,348
Store Capital Corp.	165,700	4,314,828
Sun Communities, Inc.	4,400	408,232
VEREIT, Inc.	184,500	1,437,255
		67,377,074
Real Estate Management & Development - 0.1%
CBRE Group, Inc. (a)	125,106	5,418,341

TOTAL REAL ESTATE		72,795,415

TELECOMMUNICATION SERVICES - 1.3%
Diversified Telecommunication Services - 1.2%
AT&T, Inc.	664,571	25,838,520
Verizon Communications, Inc.	388,072	20,540,651
Zayo Group Holdings, Inc. (a)	75,600	2,782,080
		49,161,251
Wireless Telecommunication Services - 0.1%
T-Mobile U.S., Inc. (a)	64,031	4,066,609

TOTAL TELECOMMUNICATION SERVICES		53,227,860

UTILITIES - 1.8%
Electric Utilities - 1.0%
Exelon Corp.	270,635	10,665,725
FirstEnergy Corp.	86,800	2,657,816
Great Plains Energy, Inc.	64,914	2,092,827
NextEra Energy, Inc.	115,651	18,063,530
PG&E Corp.	125,050	5,605,992
		39,085,890
Independent Power and Renewable Electricity Producers - 0.2%
NRG Energy, Inc.	169,600	4,830,208
NRG Yield, Inc. Class C	57,702	1,090,568
The AES Corp.	299,700	3,245,751
		9,166,527
Multi-Utilities - 0.6%
Dominion Resources, Inc.	110,817	8,982,826
Public Service Enterprise Group, Inc.	74,600	3,841,900
SCANA Corp.	12,100	481,338
Sempra Energy	97,895	10,466,933
		23,772,997

TOTAL UTILITIES		72,025,414

TOTAL COMMON STOCKS
(Cost $2,023,914,970)		2,625,291,916
	Principal Amount	Value

Convertible Bonds - 0.0%
ENERGY - 0.0%
Oil, Gas & Consumable Fuels - 0.0%
Amyris, Inc. 9.5% 4/15/19 pay-in-kind
(Cost $1,089,899)	$1,452,000	1,016,400

U.S. Treasury Obligations - 0.0%
U.S. Treasury Bills, yield at date of purchase 1.24% to 1.3% 2/15/18 to 3/15/18 (d)
(Cost $728,147)	730,000	728,174
	Shares	Value

Fixed-Income Funds - 31.9%
Fidelity High Income Central Fund 2 (e)	820,913	$93,485,616
Fidelity VIP Investment Grade Central Fund (e)	11,150,486	1,173,700,179
TOTAL FIXED-INCOME FUNDS
(Cost $1,240,635,011)		1,267,185,795

Money Market Funds - 2.1%
Fidelity Cash Central Fund, 1.36% (f)	76,285,941	76,301,199
Fidelity Securities Lending Cash Central Fund 1.36% (f)(g)	8,251,671	8,253,321
TOTAL MONEY MARKET FUNDS
(Cost $84,543,599)		84,554,520
TOTAL INVESTMENT IN SECURITIES - 100.2%
(Cost $3,350,911,626)		3,978,776,805
NET OTHER ASSETS (LIABILITIES) - (0.2)%		(9,549,104)
NET ASSETS - 100%		$3,969,227,701

Futures Contracts
	Number of contracts	Expiration Date	Notional Amount	Value	Unrealized Appreciation/(Depreciation)
Purchased
Equity Index Contracts
CME E-mini S&P 500 Index Contracts (United States)	281	March 2018	$37,597,800	$619,114	$619,114

The notional amount of futures purchased as a percentage of Net Assets is 0.9%

Legend

(a) Non-income producing

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

(c) 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 $2,482,521 or 0.1% of net assets.

(d) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At period end, the value of securities pledged amounted to $728,174.

(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. A complete unaudited schedule of portfolio holdings for each Fidelity Central Fund is filed with the SEC for the first and third quarters of each fiscal year on Form N-Q and is available upon request or at the SEC's website at www.sec.gov. An unaudited holdings listing for the Fund, which presents direct holdings as well as the pro-rata share of securities and other investments held indirectly through its investment in underlying non-money market Fidelity Central Funds is available at fidelity.com and/or institutional.fidelity.com, as applicable. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.

(f) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.

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

Additional information on each restricted holding is as follows:

Security	Acquisition Date	Acquisition Cost
Centennial Resource Development, Inc. Class A	12/28/16	$1,046,880
Extraction Oil & Gas, Inc.	12/12/16	$1,347,744
Velti PLC	4/19/13	$426,444

Affiliated Central Funds

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

Fund	Income earned
Fidelity Cash Central Fund	$984,247
Fidelity High Income Central Fund 2	5,808,913
Fidelity Securities Lending Cash Central Fund	385,634
Fidelity VIP Investment Grade Central Fund	35,711,705
Total	$42,890,499

Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations if applicable.

Additional information regarding the Fund's fiscal year to date purchases and sales, including the ownership percentage, of the non Money Market Central Funds is as follows:

Fund	Value, beginning of period	Purchases	Sales Proceeds	Realized Gain/Loss	Change in Unrealized appreciation (depreciation)	Value, end of period	% ownership, end of period
Fidelity High Income Central Fund 2	$85,572,854	$5,808,829	$--	$--	$2,103,933	$93,485,616	10.5%
Fidelity VIP Investment Grade Central Fund	958,344,998	204,608,704	--	--	10,746,477	1,173,700,179	20.9%
Total	$1,043,917,852	$210,417,533	$--	$--	$12,850,410	$1,267,185,795

Investment Valuation

The following is a summary of the inputs used, as of December 31, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.

	Valuation Inputs at Reporting Date:
Description	Total	Level 1	Level 2	Level 3
Investments in Securities:
Equities:
Consumer Discretionary	$365,328,106	$365,328,106	$--	$--
Consumer Staples	216,140,215	210,588,489	5,551,726	--
Energy	165,474,408	165,474,408	--	--
Financials	407,131,509	402,254,547	4,876,962	--
Health Care	355,169,738	350,211,750	4,957,988	--
Industrials	262,562,305	262,562,305	--	--
Information Technology	583,686,026	583,686,026	--	--
Materials	71,750,920	71,750,920	--	--
Real Estate	72,795,415	72,795,415	--	--
Telecommunication Services	53,227,860	53,227,860	--	--
Utilities	72,025,414	72,025,414	--	--
Corporate Bonds	1,016,400	--	1,016,400	--
U.S. Government and Government Agency Obligations	728,174	--	728,174	--
Fixed-Income Funds	1,267,185,795	1,267,185,795	--	--
Money Market Funds	84,554,520	84,554,520	--	--
Total Investments in Securities:	$3,978,776,805	$3,961,645,555	$17,131,250	$--
Derivative Instruments:
Assets
Futures Contracts	$619,114	$619,114	$--	$--
Total Assets	$619,114	$619,114	$--	$--
Total Derivative Instruments:	$619,114	$619,114	$--	$--

Value of Derivative Instruments

The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of December 31, 2017. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements.

Primary Risk Exposure / Derivative Type	Value
	Asset	Liability
Equity Risk
Futures Contracts(a)	$619,114	$0
Total Equity Risk	619,114	0
Total Value of Derivatives	$619,114	$0

(a) Reflects gross cumulative appreciation (depreciation) on futures contracts as presented in the Schedule of Investments. In the Statement of Assets and Liabilities, the period end daily variation margin is included in receivable or payable for daily variation margin on futures contracts, and the net cumulative appreciation (depreciation) is included in net unrealized appreciation (depreciation).

Other Information

The composition of credit quality ratings as a percentage of Total Net Assets (Unaudited) is as follows. The information in the following tables is based on the combined investments of the Fund and its pro-rata share of the investments of Fidelity's Fixed-Income Central Funds.

U.S. Government and U.S. Government Agency Obligations	19.0%
AAA,AA,A	1.9%
BBB	6.1%
BB	2.6%
B	1.3%
CCC,CC,C	0.6%
Not Rated	0.0%
Equities	66.2%
Short-Term Investments and Net Other Assets	2.3%
	100.0%

We have used ratings from Moody's Investors Service, Inc. Where Moody's^® ratings are not available, we have used S&P^® ratings. All ratings are as of the date indicated and do not reflect subsequent changes. Percentages are adjusted for the effect of futures contracts, if applicable.

Percentages shown as 0.0% may reflect amounts less than 0.05%.

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

Financial Statements

Statement of Assets and Liabilities

		December 31, 2017
Assets
Investment in securities, at value (including securities loaned of $7,930,413) — See accompanying schedule: Unaffiliated issuers (cost $2,025,733,016)	$2,627,036,490
Fidelity Central Funds (cost $1,325,178,610)	1,351,740,315
Total Investment in Securities (cost $3,350,911,626)		$3,978,776,805
Segregated cash with brokers for derivative instruments		572,833
Cash		39,989
Receivable for investments sold		673,966
Receivable for fund shares sold		1,483,304
Dividends receivable		2,666,068
Interest receivable		29,121
Distributions receivable from Fidelity Central Funds		125,313
Prepaid expenses		6,335
Other receivables		612,442
Total assets		3,984,986,176
Liabilities
Payable for investments purchased	$4,762,131
Payable for fund shares redeemed	576,931
Accrued management fee	1,289,690
Distribution and service plan fees payable	203,068
Payable for daily variation margin on futures contracts	136,285
Other affiliated payables	514,379
Other payables and accrued expenses	23,279
Collateral on securities loaned	8,252,712
Total liabilities		15,758,475
Net Assets		$3,969,227,701
Net Assets consist of:
Paid in capital		$3,190,779,408
Undistributed net investment income		10,358,333
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		139,604,474
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		628,485,486
Net Assets		$3,969,227,701
Initial Class:
Net Asset Value, offering price and redemption price per share ($231,977,257 ÷ 12,365,964 shares)		$18.76
Service Class:
Net Asset Value, offering price and redemption price per share ($7,933,310 ÷ 425,306 shares)		$18.65
Service Class 2:
Net Asset Value, offering price and redemption price per share ($979,052,173 ÷ 53,419,435 shares)		$18.33
Investor Class:
Net Asset Value, offering price and redemption price per share ($2,750,264,961 ÷ 147,760,902 shares)		$18.61

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

Statement of Operations

		Year ended December 31, 2017
Investment Income
Dividends		$37,249,240
Interest		381,778
Income from Fidelity Central Funds		37,929,677
Total income		75,560,695
Expenses
Management fee	$14,440,628
Transfer agent fees	4,504,965
Distribution and service plan fees	2,133,522
Accounting and security lending fees	1,305,968
Custodian fees and expenses	98,512
Independent trustees' fees and expenses	14,310
Audit	82,501
Legal	17,181
Miscellaneous	28,011
Total expenses before reductions	22,625,598
Expense reductions	(158,284)	22,467,314
Net investment income (loss)		53,093,381
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investment securities:
Unaffiliated issuers	192,757,094
Fidelity Central Funds	(662)
Foreign currency transactions	(14,048)
Futures contracts	7,643,952
Capital gain distributions from Fidelity Central Funds	4,960,822
Total net realized gain (loss)		205,347,158
Change in net unrealized appreciation (depreciation) on:
Investment securities:
Unaffiliated issuers	272,716,567
Fidelity Central Funds	12,851,074
Assets and liabilities in foreign currencies	13,648
Futures contracts	1,010,471
Total change in net unrealized appreciation (depreciation)		286,591,760
Net gain (loss)		491,938,918
Net increase (decrease) in net assets resulting from operations		$545,032,299

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

Statement of Changes in Net Assets

	Year ended December 31, 2017	Year ended December 31, 2016
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$53,093,381	$47,471,078
Net realized gain (loss)	205,347,158	49,611,242
Change in net unrealized appreciation (depreciation)	286,591,760	115,374,812
Net increase (decrease) in net assets resulting from operations	545,032,299	212,457,132
Distributions to shareholders from net investment income	(51,635,324)	(40,091,074)
Distributions to shareholders from net realized gain	(92,982,089)	(73,621,115)
Total distributions	(144,617,413)	(113,712,189)
Share transactions - net increase (decrease)	316,715,388	155,546,730
Total increase (decrease) in net assets	717,130,274	254,291,673
Net Assets
Beginning of period	3,252,097,427	2,997,805,754
End of period	$3,969,227,701	$3,252,097,427
Other Information
Undistributed net investment income end of period	$10,358,333	$7,691,858

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

Financial Highlights

VIP Balanced Portfolio Initial Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$16.77	$16.27	$16.93	$17.76	$15.76
Income from Investment Operations
Net investment income (loss)^A	.28	.27	.26	.27	.26
Net realized and unrealized gain (loss)	2.44	.85	(.16)	1.37	2.76
Total from investment operations	2.72	1.12	.10	1.64	3.02
Distributions from net investment income	(.27)	(.22)	(.26)	(.25)	(.27)
Distributions from net realized gain	(.46)	(.40)	(.50)	(2.22)	(.76)
Total distributions	(.73)	(.62)	(.76)	(2.47)	(1.02)^B
Net asset value, end of period	$18.76	$16.77	$16.27	$16.93	$17.76
Total Return^C,^D	16.43%	7.26%	.59%	10.26%	19.66%
Ratios to Average Net Assets^E,^F
Expenses before reductions	.50%	.51%	.51%	.51%	.53%
Expenses net of fee waivers, if any	.50%	.51%	.51%	.51%	.52%
Expenses net of all reductions	.50%	.51%	.51%	.51%	.52%
Net investment income (loss)	1.56%	1.66%	1.54%	1.63%	1.54%
Supplemental Data
Net assets, end of period (000 omitted)	$231,977	$209,201	$212,589	$220,897	$207,796
Portfolio turnover rate^G	45%	43%	54%	56%	95%

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

^B Total distributions of $1.02 per share is comprised of distributions from net investment income of $.268 and distributions from net realized gain of $.755 per share.

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

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

^E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. Based on their most recent shareholder report date, the expenses of any underlying non-money market Fidelity Central Funds range from less than .005% to .01%.

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

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

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

VIP Balanced Portfolio Service Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$16.69	$16.20	$16.86	$17.70	$15.71
Income from Investment Operations
Net investment income (loss)^A	.26	.25	.24	.25	.24
Net realized and unrealized gain (loss)	2.41	.85	(.15)	1.36	2.75
Total from investment operations	2.67	1.10	.09	1.61	2.99
Distributions from net investment income	(.26)	(.21)	(.25)	(.23)	(.24)
Distributions from net realized gain	(.46)	(.40)	(.50)	(2.22)	(.76)
Total distributions	(.71)^B	(.61)	(.75)	(2.45)	(1.00)
Net asset value, end of period	$18.65	$16.69	$16.20	$16.86	$17.70
Total Return^C,^D	16.25%	7.16%	.51%	10.09%	19.50%
Ratios to Average Net Assets^E,^F
Expenses before reductions	.60%	.61%	.62%	.65%	.66%
Expenses net of fee waivers, if any	.60%	.61%	.61%	.65%	.66%
Expenses net of all reductions	.60%	.61%	.61%	.65%	.66%
Net investment income (loss)	1.46%	1.56%	1.43%	1.50%	1.41%
Supplemental Data
Net assets, end of period (000 omitted)	$7,933	$4,865	$4,619	$3,267	$3,474
Portfolio turnover rate^G	45%	43%	54%	56%	95%

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

^B Total distributions of $.71 per share is comprised of distributions from net investment income of $.255 and distributions from net realized gain of $.458 per share.

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

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

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

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

VIP Balanced Portfolio Service Class 2

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$16.41	$15.95	$16.61	$17.47	$15.53
Income from Investment Operations
Net investment income (loss)^A	.23	.22	.21	.23	.21
Net realized and unrealized gain (loss)	2.38	.83	(.15)	1.34	2.71
Total from investment operations	2.61	1.05	.06	1.57	2.92
Distributions from net investment income	(.23)	(.19)	(.22)	(.22)	(.23)
Distributions from net realized gain	(.46)	(.40)	(.50)	(2.22)	(.76)
Total distributions	(.69)	(.59)	(.72)	(2.43)^B	(.98)^C
Net asset value, end of period	$18.33	$16.41	$15.95	$16.61	$17.47
Total Return^D,^E	16.12%	6.98%	.36%	10.02%	19.28%
Ratios to Average Net Assets^F,^G
Expenses before reductions	.75%	.76%	.76%	.76%	.78%
Expenses net of fee waivers, if any	.75%	.76%	.76%	.76%	.77%
Expenses net of all reductions	.75%	.76%	.76%	.76%	.77%
Net investment income (loss)	1.31%	1.41%	1.29%	1.38%	1.29%
Supplemental Data
Net assets, end of period (000 omitted)	$979,052	$687,973	$555,924	$521,880	$436,060
Portfolio turnover rate^H	45%	43%	54%	56%	95%

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

^B Total distributions of $2.43 per share is comprised of distributions from net investment income of $.216 and distributions from net realized gain of $2.217 per share.

^C Total distributions of $.98 per share is comprised of distributions from net investment income of $.227 and distributions from net realized gain of $.755 per share.

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

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

^F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. Based on their most recent shareholder report date, the expenses of any underlying non-money market Fidelity Central Funds range from less than .005% to .01%.

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

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

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

VIP Balanced Portfolio Investor Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$16.65	$16.16	$16.82	$17.66	$15.68
Income from Investment Operations
Net investment income (loss)^A	.26	.25	.24	.26	.25
Net realized and unrealized gain (loss)	2.41	.85	(.15)	1.36	2.74
Total from investment operations	2.67	1.10	.09	1.62	2.99
Distributions from net investment income	(.25)	(.21)	(.25)	(.24)	(.26)
Distributions from net realized gain	(.46)	(.40)	(.50)	(2.22)	(.76)
Total distributions	(.71)	(.61)	(.75)	(2.46)	(1.01)^B
Net asset value, end of period	$18.61	$16.65	$16.16	$16.82	$17.66
Total Return^C,^D	16.28%	7.18%	.52%	10.18%	19.54%
Ratios to Average Net Assets^E,^F
Expenses before reductions	.58%	.59%	.59%	.59%	.61%
Expenses net of fee waivers, if any	.58%	.59%	.59%	.59%	.60%
Expenses net of all reductions	.58%	.59%	.59%	.59%	.60%
Net investment income (loss)	1.48%	1.58%	1.46%	1.55%	1.46%
Supplemental Data
Net assets, end of period (000 omitted)	$2,750,265	$2,350,058	$2,224,674	$2,052,258	$1,783,149
Portfolio turnover rate^G	45%	43%	54%	56%	95%

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

^B Total distributions of $1.01 per share is comprised of distributions from net investment income of $.255 and distributions from net realized gain of $.755 per share.

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

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

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

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

Notes to Financial Statements

For the period ended December 31, 2017

1. Organization.

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

2. Investments in Fidelity Central Funds.

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

Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the Fund. These strategies are consistent with the investment objectives of the Fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the Fund. The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%. The following summarizes the Fund's investment in each non-money market Fidelity Central Fund.

Fidelity Central Fund	Investment Manager	Investment Objective	Investment Practices	Expense Ratio^(a)
Fidelity High Income Central Fund 2	FMR Co., Inc. (FMRC)	Seeks a high level of income and may also seek capital appreciation by investing primarily in debt securities, preferred stocks, and convertible securities, with an emphasis on lower-quality debt securities.	Foreign Securities Loans & Direct Debt Instruments Restricted Securities	.01%
Fidelity VIP Investment Grade Central Fund	Fidelity Investments Money Management, Inc. (FIMM)	Seeks a high level of current income by normally investing in investment-grade debt securities and repurchase agreements.	Delayed Delivery & When Issued Securities Repurchase Agreements Restricted Securities Swaps	Less than.005%

(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.

An unaudited holdings listing for the Fund, which presents direct holdings as well as the pro-rata share of any securities and other investments held indirectly through each Fund's investment in underlying non-money market Fidelity Central Funds, is available at fidelity.com and/or institutional.fidelity.com, as applicable. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.

3. Significant Accounting Policies.

The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:

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

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

Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)

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

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

Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of December 31, 2017 is included at the end of the Fund's Schedule of Investments.

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

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

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

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

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

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of December 31, 2017, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

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

Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.

Book-tax differences are primarily due to short-term gain distributions from the Underlying Funds, futures contracts, foreign currency transactions, passive foreign investment companies (PFIC), market discount, partnerships, deferred trustees compensation and losses deferred due to wash sales.

As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:

Gross unrealized appreciation	$668,246,071
Gross unrealized depreciation	(62,723,327)
Net unrealized appreciation (depreciation)	$605,522,744
Tax Cost	$3,373,254,061

The tax-based components of distributable earnings as of period end were as follows:

Undistributed ordinary income	$19,522,284
Undistributed long-term capital gain	$157,003,421
Net unrealized appreciation (depreciation) on securities and other investments	$605,523,937

The tax character of distributions paid was as follows:

	December 31, 2017	December 31, 2016
Ordinary Income	$98,378,811	$ 41,439,707
Long-term Capital Gains	46,238,602	72,272,482
Total	$144,617,413	$ 113,712,189

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.

New Accounting Pronouncement. In March 2017, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU), ASU 2017-08, which amends the amortization period for certain callable debt securities that are held at a premium. The amendment requires the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount. The ASU is effective for annual periods beginning after December 15, 2018. Management is currently evaluating the potential impact of these changes to the financial statements.

4. Derivative Instruments.

Risk Exposures and the Use of Derivative Instruments. The Fund's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified asset based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.

The Fund used derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.

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

Equity Risk

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

Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, may involve risk of loss in excess of any initial investment and collateral received and amounts recognized in the Statement of Assets and Liabilities. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.

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

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

Any open futures contracts at period end are presented in the Schedule of Investments under the caption "Futures Contracts". The notional amount at value reflects each contract's exposure to the underlying instrument or index at period end and is representative of volume of activity during the period. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments. Cash deposited to meet initial margin requirements is presented as segregated cash with brokers for derivative instruments in the Statement of Assets and Liabilities.

5. Purchases and Sales of Investments.

Purchases and sales of securities (including the Fixed-Income Central Funds), other than short-term securities, aggregated $1,890,931,905 and $1,604,114,919, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. Fidelity Management & Research Company (the investment adviser) 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 an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .39% of the Fund's average net assets.

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

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

Service Class	$6,196
Service Class 2	2,127,326
	$2,133,522

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class pays a fee for transfer agent services, typesetting and printing and mailing of shareholder reports, excluding mailing of proxy statements, equal to an annual rate of class-level average net assets. The annual rate for Investor Class is .15% and the annual rate for all other classes is .07%. For the period, transfer agent fees for each class were as follows:

Initial Class	$147,084
Service Class	4,083
Service Class 2	560,882
Investor Class	3,792,916
	$4,504,965

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

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $47,095 for the period.

Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.

Other. During the period, the investment adviser reimbursed the Fund for certain losses in the amount of $4,414.

7. Committed Line of Credit.

The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $11,096 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.

8. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $252,210. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $385,634, including $6,007 from securities loaned to FCM.

9. Expense Reductions.

Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $129,153 for the period.

In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $29,131.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

	Year ended December 31, 2017	Year ended December 31, 2016
From net investment income
Initial Class	$3,243,572	$2,731,972
Service Class	101,845	60,138
Service Class 2	11,604,068	7,938,842
Investor Class	36,685,839	29,360,122
Total	$51,635,324	$40,091,074
From net realized gain
Initial Class	$5,633,686	$5,088,372
Service Class	160,151	105,659
Service Class 2	21,652,928	13,741,804
Investor Class	65,535,324	54,685,280
Total	$92,982,089	$73,621,115

11. Share Transactions.

Transactions for each class of shares were as follows:

	Shares	Shares	Dollars	Dollars
	Year ended December 31, 2017	Year ended December 31, 2016	Year ended December 31, 2017	Year ended December 31, 2016
Initial Class
Shares sold	812,069	1,190,454	$14,561,871	$19,542,488
Reinvestment of distributions	494,430	508,731	8,877,258	7,820,344
Shares redeemed	(1,412,700)	(2,291,938)	(25,426,926)	(37,399,408)
Net increase (decrease)	(106,201)	(592,753)	$(1,987,797)	$(10,036,576)
Service Class
Shares sold	190,521	72,296	$3,412,168	$1,167,509
Reinvestment of distributions	14,557	10,818	261,996	165,797
Shares redeemed	(71,307)	(76,747)	(1,262,031)	(1,218,697)
Net increase (decrease)	133,771	6,367	$2,412,133	$114,609
Service Class 2
Shares sold	14,242,309	10,983,630	$248,563,621	$177,679,347
Reinvestment of distributions	1,888,180	1,437,467	33,256,996	21,680,646
Shares redeemed	(4,636,485)	(5,359,696)	(81,689,596)	(85,052,676)
Net increase (decrease)	11,494,004	7,061,401	$200,131,021	$114,307,317
Investor Class
Shares sold	6,902,746	6,410,977	$121,791,858	$103,317,005
Reinvestment of distributions	5,730,852	5,507,570	102,221,163	84,045,402
Shares redeemed	(6,021,946)	(8,445,108)	(107,852,990)	(136,201,027)
Net increase (decrease)	6,611,652	3,473,439	$116,160,031	$51,161,380

12. Other.

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

At the end of the period, the investment adviser or its affiliates were the owners of record of 74% of the total outstanding shares of the Fund

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of VIP Balanced Portfolio (the "Fund"), a fund of Variable Insurance Products Fund III, including the schedule of investments, as of December 31, 2017, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2017, and 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 the 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.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2017, by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 15, 2018
We have served as the auditor of one or more of the Fidelity investment companies since 1999.

Trustees and Officers

The Trustees, Members of the Advisory Board (if any), and 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Each of the Trustees oversees 190 funds.

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. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the fund is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or 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 1-877-208-0098.

Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.

In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.

Board Structure and Oversight Function. James C. Curvey is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Ned C. Lautenbach serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.

Fidelity^® funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and sector funds. The asset allocation funds may invest in Fidelity^® funds overseen by the fund's Board. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity^® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity^® funds overseen by each Board.

The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged FMR and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through FMR, its affiliates, and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations, Audit, and Compliance Committees. In addition, the Independent Trustees have worked with FMR to enhance the Board's oversight of investment and financial risks, legal and regulatory risks, technology risks, and operational risks, including the development of additional risk reporting to the Board. For example, a working group comprised of Independent Trustees and FMR has worked and continues to work to review the Fidelity^® funds' valuation-related activities, reporting and risk management. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity^® funds. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."

Interested Trustees*:

Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

Mr. Curvey also serves as Trustee of other Fidelity^® funds. Mr. Curvey is a Director of Fidelity Research & Analysis Co. (investment adviser firm, 2009-present), and Vice Chairman (2007-present) and Director of FMR LLC (diversified financial services company). In addition, Mr. Curvey serves as an Overseer for the Boston Symphony Orchestra and a member of the board of Artis-Naples, Naples, Florida, and as a Trustee for Brewster Academy, Wolfeboro, New Hampshire. Previously, Mr. Curvey served as a Director of Fidelity Investments Money Management, Inc. (investment adviser firm, 2009-2014) and a Director of FMR and FMR Co., Inc. (investment adviser firms, 2007-2014).

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

Mr. Morrison also serves as Trustee of other funds. He serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2017-present) and Fidelity Management & Research Company (FMR) (investment adviser firm, 2016-present), a Director of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2014-present), Director of Fidelity SelectCo, LLC (investment adviser firm, 2014-present), President, Asset Management (2014-present), and is an employee of Fidelity Investments. Previously, Mr. Morrison served as Vice President of Fidelity's Fixed Income and Asset Allocation Funds (2012-2014), President, Fixed Income (2011-2014), Vice President of Fidelity's Money Market Funds (2005-2009), President, Money Market Group Leader of FMR (investment adviser firm, 2009), and Senior Vice President, Money Market Group of FMR (2004-2009). Mr. Morrison also served as Vice President of Fidelity's Bond Funds (2002-2005), certain Balanced Funds (2002-2005), and certain Asset Allocation Funds (2002-2007), and as Senior Vice President (2002-2005) of Fidelity's Bond Division.

* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.

+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.

Independent Trustees:

Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

Mr. Dirks also serves as Trustee of other Fidelity^® funds. Prior to his retirement in May 2003, Mr. Dirks was Chief Operating Officer and a member of the Board of The Depository Trust & Clearing Corporation (DTCC). He also served as President, Chief Operating Officer, and Board member of The Depository Trust Company (DTC) and President and Board member of the National Securities Clearing Corporation (NSCC). In addition, Mr. Dirks served as Chief Executive Officer and Board member of the Government Securities Clearing Corporation, Chief Executive Officer and Board member of the Mortgage-Backed Securities Clearing Corporation, as a Trustee and a member of the Finance Committee of Manhattan College (2005-2008), as a Trustee and a member of the Finance Committee of AHRC of Nassau County (2006-2008), as a member of the Independent Directors Council (IDC) Governing Council (2010-2015), and as a member of the Board of Directors for The Brookville Center for Children’s Services, Inc. (2009-2017). Mr. Dirks is a member of the Finance Committee (2016-present) and Board of Directors (2017-present) of the Asolo Repertory Theatre.

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

Mr. Lacy also serves as Trustee of other Fidelity^® funds. Mr. Lacy serves as a Director of Bristol-Myers Squibb Company (global pharmaceuticals, 2008-present). He is a Trustee of the California Chapter of The Nature Conservancy (2015-present) and a Director of the Center for Advanced Study in the Behavioral Sciences at Stanford University (2015-present). In addition, Mr. Lacy served as Senior Adviser (2007-2014) of Oak Hill Capital Partners, L.P. (private equity) and also served as Chief Executive Officer (2005) and Vice Chairman (2005-2006) of Sears Holdings Corporation (retail) and Chief Executive Officer and Chairman of the Board of Sears, Roebuck and Co. (retail, 2000-2005). Previously, Mr. Lacy served as Chairman (2014-2017) and a member (2010-2017) of the Board of Directors of Dave & Buster’s Entertainment, Inc. (restaurant and entertainment complexes), as Chairman (2008-2011) and a member (2006-2015) of the Board of Trustees of the National Parks Conservation Association, and as a member of the Board of Directors for The Hillman Companies, Inc. (hardware wholesalers, 2010-2014), Earth Fare, Inc. (retail grocery, 2010-2014), and The Western Union Company (global money transfer, 2006-2011).

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Mr. Lautenbach also serves as Trustee of other Fidelity^® funds. Mr. Lautenbach currently serves as Vice Chair of the Board of Governors, State University System of Florida (2013-present) and is a member of the Council on Foreign Relations (1994-present). He is also a member and has most recently served as Chairman of the Board of Directors of Artis-Naples (2012-present). Previously, Mr. Lautenbach served as a member and then Lead Director of the Board of Directors of Eaton Corporation (diversified industrial, 1997-2016). He was also a Partner and Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007). In addition, Mr. Lautenbach also had a 30-year career with IBM (technology company) during which time he served as Senior Vice President and a member of the Corporate Executive Committee (1968-1998).

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

Mr. Mauriello also serves as Trustee of other Fidelity^® funds. Prior to his retirement in January 2006, Mr. Mauriello served in numerous senior management positions including Deputy Chairman and Chief Operating Officer (2004-2005), and Vice Chairman of Financial Services (2002-2004) of KPMG LLP US (professional services, 1965-2005). Mr. Mauriello currently serves as a member of the Board of Directors of XL Group plc. (global insurance and re-insurance, 2006-present) and the Independent Directors Council (IDC) Governing Council (2015-present). Previously, Mr. Mauriello served as a Director of the Hamilton Funds of the Bank of New York (2006-2007) and of Arcadia Resources Inc. (health care services and products, 2007-2012).

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

Ms. Small also serves as Trustee of other Fidelity^® funds. Ms. Small is a member of the Board of Directors (2009-present) and Chair of the Investment Committee (2010-present) of the Teagle Foundation. Ms. Small also serves on the Investment Committee of the Berkshire Taconic Community Foundation (2008-present). Previously, Ms. Small served as Chairperson (2002-2008) and a member of the Investment Committee and Chairperson (2008-2012) and a member of the Board of Trustees of Smith College. In addition, Ms. Small served as Chief Investment Officer, Director of Global Equity Investments, and a member of the Board of Directors of Scudder, Stevens & Clark and Scudder Kemper Investments.

William S. Stavropoulos (1939)

Year of Election or Appointment: 2002

Trustee

Vice Chairman of the Independent Trustees

Mr. Stavropoulos also serves as Trustee of other Fidelity^® funds. Mr. Stavropoulos serves as President and Founder of the Michigan Baseball Foundation, the Great Lakes Loons (2007-present). Mr. Stavropoulos is Chairman Emeritus of the Board of Directors of The Dow Chemical Company, where he previously served in numerous senior management positions, including President, CEO (1995-2000; 2002-2004), Chairman of the Executive Committee (2000-2006), and as a member of the Board of Directors (1990-2006). Currently, Mr. Stavropoulos is Chairman of the Board of Directors of Univar Inc. (global distributor of commodity and specialty chemicals), a Director of Teradata Corporation (data warehousing and technology solutions), and a member of the Advisory Board for Metalmark Capital LLC (private equity investment, 2005-present). Mr. Stavropoulos is an operating advisor to Clayton, Dubilier & Rice, LLC (private equity investment). In addition, Mr. Stavropoulos is a member of the University of Notre Dame Advisory Council for the College of Science, a Trustee of the Rollin L. Gerstacker Foundation, and a Director of Artis-Naples in Naples, Florida. Previously, Mr. Stavropoulos served as a Director of Chemical Financial Corporation (bank holding company, 1993-2012) and Tyco International, Ltd. (multinational manufacturing and services, 2007-2012).

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

Mr. Thomas also serves as Trustee of other Fidelity^® funds. Mr. Thomas serves as Non-Executive Chairman of the Board of Directors of Fortune Brands Home and Security (home and security products, 2011-present), as a member of the Board of Directors (2004-present) and Presiding Director (2013-present) of Interpublic Group of Companies, Inc. (marketing communication), and as a member of the Board of Trustees of the University of Florida (2013-present). Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions), and a Director of Fortune Brands, Inc. (consumer products, 2000-2011).

Advisory Board Members and Officers:

Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

Mr. Lynch also serves as Member of the Advisory Board of other Fidelity^® funds. Mr. Lynch is Vice Chairman and a Director of FMR (investment adviser firm) and FMR Co., Inc. (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served on the Special Olympics International Board of Directors (1997-2006).

Elizabeth Paige Baumann (1968)

Year of Election or Appointment: 2017

Anti-Money Laundering (AML) Officer

Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

Mr. Davis also serves as Assistant Treasurer of other funds. Mr. Davis serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2016

Assistant Treasurer

Mr. Deberghes also serves as an officer of other funds. He serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present), and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

Ms. Dorsey also serves as an officer of other funds. Ms. Dorsey serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2008-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.

Colm A. Hogan (1973)

Year of Election or Appointment: 2016

Deputy Treasurer

Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight, serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).

Rieco E. Mello (1969)

Year of Election or Appointment: 2017

Assistant Treasurer

Mr. Mello also serves as Assistant Treasurer of other funds. Mr. Mello serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (1995-present).

Melissa M. Reilly (1971)

Year of Election or Appointment: 2014

Vice President of certain Equity Funds

Ms. Reilly also serves as Vice President of other funds. Ms. Reilly is an employee of Fidelity Investments (2004-present).

Kenneth B. Robins (1969)

Year of Election or Appointment: 2016

Chief Compliance Officer

Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Compliance Officer of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2016-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served as Executive Vice President of Fidelity Investments Money Management, Inc. (investment adviser firm, 2013-2016) and served in other fund officer roles.

Stacie M. Smith (1974)

Year of Election or Appointment: 2016

President and Treasurer

Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FMR Capital, Inc. (2017-present), is an employee of Fidelity Investments (2009-present), and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity^® funds (2013-2016).

Marc L. Spector (1972)

Year of Election or Appointment: 2016

Assistant Treasurer

Mr. Spector also serves as an officer of other funds. Mr. Spector serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).

Renee Stagnone (1975)

Year of Election or Appointment: 2016

Assistant Treasurer

Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity^® funds (2013-2016).

Shareholder Expense Example

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2017 to December 31, 2017).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

	Annualized Expense Ratio-^A	Beginning Account Value July 1, 2017	Ending Account Value December 31, 2017	Expenses Paid During Period-^B July 1, 2017 to December 31, 2017
Initial Class	.50%
Actual		$1,000.00	$1,073.00	$2.61
Hypothetical-^C		$1,000.00	$1,022.68	$2.55
Service Class	.60%
Actual		$1,000.00	$1,072.40	$3.13
Hypothetical-^C		$1,000.00	$1,022.18	$3.06
Service Class 2	.75%
Actual		$1,000.00	$1,071.70	$3.92
Hypothetical-^C		$1,000.00	$1,021.42	$3.82
Investor Class	.58%
Actual		$1,000.00	$1,072.40	$3.03
Hypothetical-^C		$1,000.00	$1,022.28	$2.96

^A Annualized expense ratio reflects expenses net of applicable fee waivers.

^B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). In addition to the expenses noted above, the Fund also indirectly bears its proportional share of the expenses of the underlying Fidelity Central Funds. Annualized expenses of the underlying non-money market Fidelity Central Funds as of their most recent fiscal half year range from less than .005% to .01%.

^C 5% return per year before expenses

Distributions (Unaudited)

The Board of Trustees of VIP Balanced 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
VIP Balanced Portfolio
Initial Class	02/09/18	02/09/18	$0.051	$0.781
Service Class	02/09/18	02/09/18	$0.048	$0.781
Service Class 2	02/09/18	02/09/18	$0.044	$0.781
Investor Class	02/09/18	02/09/18	$0.049	$0.781

The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2017, $157,028,308, or, if subsequently determined to be different, the net capital gain of such year.

A total of 6.43% 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.

Initial Class designates 2% and 34%; Service Class designates 2% and 35%; Service Class 2 designates 2% and 37%; and Investor Class designates 2% and 35%; of the dividends distributed in February and December, respectively during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.

Board Approval of Investment Advisory Contracts and Management Fees

VIP Balanced Portfolio

Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity Management & Research Company (FMR) and the sub-advisory agreements (together, the Advisory Contracts) for the fund. FMR and the sub-advisers are referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.

The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. The Board has established various standing committees (Committees), each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to review matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.

At its July 2017 meeting, the Board unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with the fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as the fund grows, and whether any economies of scale are appropriately shared with fund shareholders.

In considering whether to renew the Advisory Contracts for the fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of the fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that the fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, which is part of the Fidelity family of funds.

Amendment to Group Fee Rate. The Board also approved an amendment to the management contract for the fund to add an additional breakpoint to the group fee schedule, effective October 1, 2017. The Board noted that the additional breakpoint would result in lower management fee rates as Fidelity's assets under management increase.

Nature, Extent, and Quality of Services Provided. The Board considered Fidelity's staffing as it relates to the fund, including the backgrounds of investment personnel of Fidelity, and also considered the fund's investment objective, strategies, and related investment philosophy. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of the fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.

Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of Fidelity's investment staff, including its size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.

Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.

The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.

In 2014, the Board formed an ad hoc Committee on Transfer Agency Fees to review the variety of transfer agency fee structures throughout the industry and Fidelity's competitive positioning with respect to industry participants.

Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including: (i) continuing to dedicate additional resources to Fidelity's investment research process, and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) launching new share classes of existing funds; (v) eliminating purchase minimums and broadening eligibility requirements for certain lower-priced share classes; (vi) reducing management fees and total expenses for certain growth equity funds and index funds; (vii) lowering expense caps for certain existing funds and classes to reduce expenses borne by shareholders; (viii) eliminating short-term redemption fees for certain funds; (ix) introducing a new pricing structure for certain funds of funds that is expected to reduce overall expenses paid by shareholders; (x) rationalizing product lines and gaining increased efficiencies through proposals for fund mergers and share class consolidations; (xi) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; and (xii) implementing enhancements to further strengthen Fidelity's product line to increase investors' probability of success in achieving their investment goals, including retirement income goals.

Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history. The Board noted that there were portfolio management changes for the fund in January 2014, January 2015, July 2015, October 2015, and October 2016.

The Board took into account discussions with representatives of the Investment Advisers about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for the fund for different time periods, measured against a securities market index ("benchmark index") and a peer group of funds with similar objectives ("peer group"), if any. In its evaluation of fund investment performance, the Board gave particular attention to information indicating changes in performance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for any overperformance or underperformance.

In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, and compared to peer groups, as applicable, over the same periods, taking into account relevant factors including the following: general market conditions; issuer-specific information; and fund cash flows and other factors.

The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative calendar year total return information for the fund and an appropriate benchmark index and peer group for the most recent one-, three-, and five-year periods, as shown below. Returns are shown compared to the 25th percentile (top of box, 75% beaten) and 75th percentile (bottom of box, 25% beaten) of the peer universe.

VIP Balanced Portfolio

Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should continue to benefit the shareholders of the fund.

Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' competitive analysis of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.

Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group is broader than the Lipper peer group used by the Board for performance comparisons because the Total Mapped Group combines several Lipper investment objective categories while the Lipper peer group does not. The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.

VIP Balanced Portfolio

The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2016.

The Board noted that, in 2014, the Board and the boards of other Fidelity funds formed the ad hoc Committee on Group Fee to conduct an in-depth review of the "group fee" component of the management fee of funds with such management fee structures. The Committee's focus included the mechanics of the group fee, the competitive landscape of group fee structures, Fidelity funds with no group fee component and investment products not included in group fee assets. The Board also considered that, for funds subject to the group fee, FMR agreed to voluntarily waive fees over a specified period of time in amounts designed to account for assets converted from certain funds to certain collective investment trusts.

The Board also noted that, in 2013, the ad hoc Committee on Management Fees was formed to conduct an in-depth review of the management fee rates of Fidelity's active equity mutual funds. The Committee focused on the following areas: (i) standard fee structures; (ii) research consumption and trading evolution; (iii) management fee competitiveness/profitability by category; and (iv) factors that drive institutional pricing.

Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.

Total Expense Ratio. In its review of each class's total expense ratio, the Board considered the fund's management fee rate as well as other fund or class expenses, as applicable, such as transfer agent fees, pricing and bookkeeping fees, fund-paid 12b-1 fees, and custodial, legal, and audit fees. The Board also noted that Fidelity may agree to waive fees and expenses from time to time, and the extent to which, if any, it has done so for the fund. As part of its review, the Board also considered the current and historical total expense ratios of each class of the fund compared to competitive fund median expenses. Each class of the fund is compared to those funds and classes in the Total Mapped Group (used by the Board for management fee comparisons) that have a similar sales load structure.

The Board noted that the total expense ratio of each class ranked below the competitive median for 2016.

Fees Charged to Other Fidelity Clients. The Board also considered Fidelity fee structures and other information with respect to clients of Fidelity, such as other funds advised or subadvised by Fidelity, pension plan clients, and other institutional clients with similar mandates. The Board noted that an ad hoc joint committee created by it and the boards of other Fidelity funds periodically (most recently in 2013) reviews and compares Fidelity's institutional investment advisory business with its business of providing services to the Fidelity funds, including the differences in services provided, fees charged, and costs incurred, as well as competition in their respective marketplaces.

Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered.

Costs of the Services and Profitability. The Board considered the revenues earned and the expenses incurred by Fidelity in conducting the business of developing, marketing, distributing, managing, administering and servicing the fund and servicing the fund's shareholders. The Board also considered the level of Fidelity's profits in respect of all the Fidelity funds.

On an annual basis, Fidelity presents to the Board information about the profitability of its relationships with the fund. Fidelity calculates profitability information for each fund, as well as aggregate profitability information for groups of Fidelity funds and all Fidelity funds, using a series of detailed revenue and cost allocation methodologies which originate with the books and records of Fidelity on which Fidelity's audited financial statements are based. The Audit Committee of the Board reviews any significant changes from the prior year's methodologies.

PricewaterhouseCoopers LLP (PwC), independent registered public accounting firm and auditor to Fidelity and certain Fidelity funds, has been engaged annually by the Board as part of the Board's assessment of Fidelity's profitability analysis. PwC's engagement includes the review and assessment of the methodologies used by Fidelity in determining the revenues and expenses attributable to Fidelity's mutual fund business, and completion of agreed-upon procedures in respect of the mathematical accuracy of the fund profitability information and its conformity to established allocation methodologies. After considering PwC's reports issued under the engagement and information provided by Fidelity, the Board concluded that while other allocation methods may also be reasonable, Fidelity's profitability methodologies are reasonable in all material respects.

The Board also reviewed Fidelity's non-fund businesses and potential fall-out benefits related to the mutual fund business as well as cases where Fidelity's affiliates may benefit from or be related to the fund's business.

The Board considered the costs of the services provided by and the profits realized by Fidelity in connection with the operation of the fund and was satisfied that the profitability was not excessive.

Economies of Scale. The Board considered whether there have been economies of scale in respect of the management of the Fidelity funds, whether the Fidelity funds (including the fund) have appropriately benefited from any such economies of scale, and whether there is potential for realization of any further economies of scale. The Board considered the extent to which the fund will benefit from economies of scale as assets grow through increased services to the fund, through waivers or reimbursements, or through fee or expense ratio reductions. The Board also noted that a committee (the Economies of Scale Committee) created by it and the boards of other Fidelity funds periodically (most recently in 2013) analyzes whether Fidelity attains economies of scale in respect of the management and servicing of the Fidelity funds, whether the Fidelity funds have appropriately benefited from such economies of scale, and whether there is potential for realization of any further economies of scale.

The Board recognized that the fund's management contract incorporates a "group fee" structure, which provides for lower group fee rates as total group assets increase, and for higher group fee rates as total group assets decrease (with "group assets" defined to include fund assets under FMR's management plus the assets of sector funds previously under FMR's management). FMR calculates the group fee rates based on a tiered asset "breakpoint" schedule that varies based on asset class. The Board considered that the group fee is designed to deliver the benefits of economies of scale to fund shareholders when total Fidelity fund assets increase, even if assets of any particular fund are unchanged or have declined, because some portion of Fidelity's costs are attributable to services provided to all Fidelity funds, and all funds benefit if those costs can be allocated among more assets. The Board concluded that, given the group fee structure, fund shareholders will benefit from lower management fees as group assets increase at the fund complex level, regardless of whether Fidelity achieves any such economies of scale.

The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.

Additional Information Requested by the Board. In order to develop fully the factual basis for consideration of the Fidelity funds' advisory contracts, the Board requested and received additional information on certain topics, including: (i) fund performance trends, in particular the underperformance of certain funds, and Fidelity's long-term strategies for certain funds; (ii) Fidelity's fund profitability methodology, profitability trends for certain funds, and the impact of certain factors on fund profitability results, including the impact of market trends on actively managed funds; (iii) the use of performance fees and the calculation of performance adjustments, including the impact of underperformance and fund outflows on performance adjustments; (iv) metrics for evaluating index fund performance; (v) Fidelity's group fee structure, including the group fee breakpoint schedules; (vi) the terms of Fidelity's contractual and voluntary expense cap arrangements with the funds; (vii) the methodology with respect to evaluating competitive fund data and peer group classifications and fee comparisons; (viii) the expense structures for different funds and classes; (ix) Fidelity's arrangements with affiliated sub-advisers on behalf of the funds; (x) information regarding other accounts managed by Fidelity, including institutional accounts and collective investment trusts; (xi) recent changes to the fee structure for certain funds of funds; and (xii) the impact of the Department of Labor's new fiduciary rule on the funds' comparative expense information.

Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee structures are fair and reasonable, and that the fund's Advisory Contracts should be renewed.

Fidelity Investments

VIPBAL-ANN-0218
1.540208.120

Fidelity® Variable Insurance Products:

Dynamic Capital Appreciation Portfolio

Annual Report

December 31, 2017

Contents

Performance
Management's Discussion of Fund Performance
Investment Summary
Investments
Financial Statements
Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
Trustees and Officers
Shareholder Expense Example
Distributions
Board Approval of Investment Advisory Contracts and Management Fees

You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

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

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

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

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.

Performance: The Bottom Line

Average Annual Total Returns

For the periods ended December 31, 2017	Past 1 year	Past 5 years	Past 10 years
Initial Class	23.89%	14.68%	8.42%
Service Class	23.76%	14.57%	8.32%
Service Class 2	23.50%	14.40%	8.15%
Investor Class	23.74%	14.59%	8.34%

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in VIP Dynamic Capital Appreciation Portfolio - Initial Class on December 31, 2007.

The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.

	Period Ending Values
	$22,439	VIP Dynamic Capital Appreciation Portfolio - Initial Class
	$22,603	S&P 500® Index

Management's Discussion of Fund Performance

Market Recap: U.S. equities gained 21.83% in 2017, as the S&P 500^® index rose steadily and closed the year just shy of an all-time high after a particularly strong three-month finish. Early on, equities rallied on optimism for President Trump’s pro-business agenda but leveled off in March amid fading optimism and stalled efforts by Congress to repeal and replace the Affordable Care Act. Upward momentum soon returned and continued through year-end with consumer sentiment and other market indicators staying positive. The lone exception was a brief cooldown in August, when geopolitical tension escalated and uncertainty grew regarding the future of health care, tax reform and the debt ceiling. Sector-wise, information technology fared best by a wide margin, rising 39% amid strong earnings growth from several major index constituents. A 24% gain in materials was spurred by increased demand, especially from China. Consumer discretionary gained 23%, despite many brick-and-mortar retailers suffering from online competition, and financials edged the broader market on an uptick in bond yields. Conversely, the defensive energy and telecom services sectors returned about -1% each. Rising interest rates held back real estate (+11%), while consumer staples (+13%) and utilities (+12%) struggled due to investors’ general preference for risk assets.

Comments from Portfolio Manager Fergus Shiel: For the fiscal year, the fund’s share classes gained roughly 24%, topping the benchmark S&P 500^®. Versus the benchmark, stock selection in information technology, industrials, materials and financials lifted performance. A large underweighting in consumer staples also helped, given this group’s lagging return. Overall, active management added value in nine of 11 market sectors this period. Vertex Pharmaceuticals, a biotechnology firm focused on developing treatments for cystic fibrosis, was the fund’s top relative contributor. The stock more than doubled in value this period, rewarding our large overweighted position. Overweighting publishing-software developer Adobe Systems – the fund’s fifth-largest holding at the end of December – also paid off, as did underweighting struggling benchmark name General Electric, which I sold during the period. Foreign stock exposure contributed overall, aided in part by a broadly weaker U.S. dollar. Conversely, positioning in the retailing and media segments of the consumer discretionary sector detracted, as did stock selection in energy. The biggest relative detractor by far was J.C. Penney. Our out-of-benchmark stake here suffered a steady erosion in value, with a particularly sharp drop in August. A sizable non-index position in Netherlands-based telecommunications provider Altice also hampered our relative result this period.

Investment Summary (Unaudited)

Top Ten Stocks as of December 31, 2017

	% of fund's net assets
Apple, Inc.	5.4
Las Vegas Sands Corp.	3.0
Morgan Stanley	2.9
CME Group, Inc.	2.8
Adobe Systems, Inc.	2.7
Alphabet, Inc. Class C	2.6
Goldman Sachs Group, Inc.	2.4
PayPal Holdings, Inc.	2.4
Amgen, Inc.	2.3
FMC Corp.	2.2
	28.7

Top Five Market Sectors as of December 31, 2017

	% of fund's net assets
Information Technology	29.3
Financials	17.9
Consumer Discretionary	12.2
Industrials	10.2
Health Care	9.4

Asset Allocation (% of fund's net assets)

As of December 31, 2017^*
	Stocks	96.2%
	Short-Term Investments and Net Other Assets (Liabilities)	3.8%

* Foreign investments - 11.8%

Investments December 31, 2017

Showing Percentage of Net Assets

Common Stocks - 96.2%
	Shares	Value
CONSUMER DISCRETIONARY - 12.2%
Auto Components - 0.4%
BorgWarner, Inc.	12,700	$648,843
Diversified Consumer Services - 0.2%
Adtalem Global Education, Inc.	9,320	391,906
Hotels, Restaurants & Leisure - 6.7%
Carnival Corp.	2,900	192,473
Dalata Hotel Group PLC (a)	222,640	1,684,284
Las Vegas Sands Corp.	68,271	4,744,152
Marriott International, Inc. Class A	6,300	855,099
Marriott Vacations Worldwide Corp.	1,900	256,899
Penn National Gaming, Inc. (a)	12,800	401,024
Royal Caribbean Cruises Ltd.	8,700	1,037,736
Wyndham Worldwide Corp.	14,243	1,650,336
		10,822,003
Media - 1.2%
Altice NV Class A (a)(b)	41,297	433,366
Interpublic Group of Companies, Inc.	55,000	1,108,800
Schibsted ASA (B Shares)	14,226	377,715
		1,919,881
Multiline Retail - 2.1%
B&M European Value Retail S.A.	95,548	546,462
Dollar General Corp.	16,200	1,506,762
JC Penney Corp., Inc. (a)(b)	286,500	905,340
Ollie's Bargain Outlet Holdings, Inc. (a)	6,400	340,800
		3,299,364
Specialty Retail - 1.6%
Five Below, Inc. (a)	17,900	1,187,128
Home Depot, Inc.	7,100	1,345,663
		2,532,791

TOTAL CONSUMER DISCRETIONARY		19,614,788

CONSUMER STAPLES - 1.4%
Food & Staples Retailing - 1.4%
Wal-Mart Stores, Inc.	22,000	2,172,500
ENERGY - 6.0%
Energy Equipment & Services - 0.9%
Halliburton Co.	23,500	1,148,445
Shelf Drilling Ltd. (c)	31,800	251,748
		1,400,193
Oil, Gas & Consumable Fuels - 5.1%
Anadarko Petroleum Corp.	22,400	1,201,536
Cabot Oil & Gas Corp.	10,600	303,160
Cheniere Energy, Inc. (a)	10,500	565,320
Chesapeake Energy Corp. (a)(b)	90,000	356,400
ConocoPhillips Co.	9,200	504,988
Encana Corp.	46,500	619,845
EOG Resources, Inc.	4,200	453,222
Marathon Oil Corp.	84,700	1,433,971
Pioneer Natural Resources Co.	2,100	362,985
Southwestern Energy Co. (a)	261,279	1,457,937
Whiting Petroleum Corp. (a)	37,625	996,310
		8,255,674

TOTAL ENERGY		9,655,867

FINANCIALS - 17.9%
Banks - 3.4%
Bank of America Corp.	106,043	3,130,389
Citigroup, Inc.	21,100	1,570,051
PNC Financial Services Group, Inc.	5,501	793,739
		5,494,179
Capital Markets - 14.5%
BlackRock, Inc. Class A	1,000	513,710
CBOE Holdings, Inc.	15,336	1,910,712
Charles Schwab Corp.	14,675	753,855
CME Group, Inc.	30,800	4,498,340
E*TRADE Financial Corp. (a)	24,000	1,189,680
Goldman Sachs Group, Inc.	15,138	3,856,557
Moody's Corp.	5,100	752,811
Morgan Stanley	87,200	4,575,384
MSCI, Inc.	12,271	1,552,772
S&P Global, Inc.	11,800	1,998,920
T. Rowe Price Group, Inc.	15,600	1,636,908
		23,239,649

TOTAL FINANCIALS		28,733,828

HEALTH CARE - 9.4%
Biotechnology - 4.4%
Alexion Pharmaceuticals, Inc. (a)	9,600	1,148,064
Amgen, Inc.	21,300	3,704,070
Epizyme, Inc. (a)	20,500	257,275
Vertex Pharmaceuticals, Inc. (a)	13,400	2,008,124
		7,117,533
Health Care Equipment & Supplies - 1.8%
Abiomed, Inc. (a)	5,633	1,055,681
Align Technology, Inc. (a)	2,000	444,380
Intuitive Surgical, Inc. (a)	2,400	875,856
Varian Medical Systems, Inc. (a)	4,800	533,520
		2,909,437
Health Care Providers & Services - 0.9%
Cigna Corp.	3,600	731,124
UnitedHealth Group, Inc.	3,500	771,610
		1,502,734
Health Care Technology - 0.4%
Medidata Solutions, Inc. (a)	9,485	601,064
Life Sciences Tools & Services - 1.4%
Agilent Technologies, Inc.	19,000	1,272,430
ICON PLC (a)	4,300	482,245
Mettler-Toledo International, Inc. (a)	700	433,664
		2,188,339
Pharmaceuticals - 0.5%
The Medicines Company (a)(b)	30,000	820,200

TOTAL HEALTH CARE		15,139,307

INDUSTRIALS - 10.2%
Aerospace & Defense - 0.5%
The Boeing Co.	3,000	884,730
Airlines - 2.2%
Air Canada (a)	48,000	988,258
Delta Air Lines, Inc.	14,900	834,400
Ryanair Holdings PLC sponsored ADR (a)	7,012	730,580
Southwest Airlines Co.	14,800	968,660
		3,521,898
Building Products - 1.8%
A.O. Smith Corp.	15,000	919,200
Allegion PLC	9,500	755,820
Kingspan Group PLC (Ireland)	29,190	1,275,035
		2,950,055
Commercial Services & Supplies - 1.8%
Cintas Corp.	5,800	903,814
Copart, Inc. (a)	29,000	1,252,510
Waste Connection, Inc. (United States)	9,432	669,106
		2,825,430
Machinery - 2.7%
Caterpillar, Inc.	6,200	976,996
Cummins, Inc.	3,600	635,904
Deere & Co.	4,200	657,342
Graco, Inc.	17,100	773,262
Manitowoc Co., Inc. (a)	15,149	595,962
Parker Hannifin Corp.	3,100	618,698
		4,258,164
Marine - 0.7%
Irish Continental Group PLC unit	166,000	1,147,249
Road & Rail - 0.5%
CSX Corp.	4,300	236,543
Norfolk Southern Corp.	4,000	579,600
		816,143

TOTAL INDUSTRIALS		16,403,669

INFORMATION TECHNOLOGY - 29.3%
Communications Equipment - 0.6%
Cisco Systems, Inc.	23,500	900,050
Electronic Equipment & Components - 0.3%
Trimble, Inc. (a)	12,700	516,128
Internet Software & Services - 7.9%
Alibaba Group Holding Ltd. sponsored ADR (a)	12,600	2,172,618
Alphabet, Inc. Class C (a)	4,000	4,185,600
CarGurus, Inc. Class A (b)	11,500	344,770
Coupa Software, Inc. (a)	7,300	227,906
Facebook, Inc. Class A (a)	12,111	2,137,107
GoDaddy, Inc. (a)	19,300	970,404
LogMeIn, Inc.	7,700	881,650
MINDBODY, Inc. (a)	5,200	158,340
New Relic, Inc. (a)	4,300	248,411
Okta, Inc.	12,841	328,858
The Trade Desk, Inc. (a)	8,900	406,997
VeriSign, Inc. (a)	5,900	675,196
		12,737,857
IT Services - 4.6%
EPAM Systems, Inc. (a)	9,300	999,099
Fiserv, Inc. (a)	4,900	642,537
PayPal Holdings, Inc. (a)	51,489	3,790,620
Visa, Inc. Class A	16,800	1,915,536
		7,347,792
Semiconductors & Semiconductor Equipment - 2.4%
NVIDIA Corp.	9,200	1,780,200
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR	29,200	1,157,780
Texas Instruments, Inc.	9,100	950,404
		3,888,384
Software - 8.1%
Adobe Systems, Inc. (a)	24,600	4,310,904
ANSYS, Inc. (a)	4,900	723,191
Atlassian Corp. PLC (a)	7,200	327,744
Electronic Arts, Inc. (a)	17,385	1,826,468
Intuit, Inc.	4,100	646,898
Microsoft Corp.	39,500	3,378,830
Paycom Software, Inc. (a)(b)	7,300	586,409
Take-Two Interactive Software, Inc. (a)	7,300	801,394
Varonis Systems, Inc. (a)	8,100	393,255
		12,995,093
Technology Hardware, Storage & Peripherals - 5.4%
Apple, Inc.	51,019	8,633,944

TOTAL INFORMATION TECHNOLOGY		47,019,248

MATERIALS - 7.9%
Chemicals - 5.0%
DowDuPont, Inc.	27,344	1,947,440
FMC Corp.	36,864	3,489,546
LyondellBasell Industries NV Class A	5,602	618,013
Potash Corp. of Saskatchewan, Inc.	27,800	570,154
The Chemours Co. LLC	16,504	826,190
The Mosaic Co.	23,400	600,444
		8,051,787
Construction Materials - 0.0%
Loma Negra Compania Industrial Argentina SA ADR (a)	4,100	94,464
Containers & Packaging - 0.6%
Avery Dennison Corp.	8,000	918,880
Metals & Mining - 2.3%
Freeport-McMoRan, Inc. (a)	31,296	593,372
Glencore Xstrata PLC	231,364	1,218,267
Rio Tinto PLC	23,700	1,243,245
Vale SA sponsored ADR	52,600	643,298
		3,698,182

TOTAL MATERIALS		12,763,313

REAL ESTATE - 0.4%
Equity Real Estate Investment Trusts (REITs) - 0.4%
Equinix, Inc.	1,400	634,508
TELECOMMUNICATION SERVICES - 1.5%
Wireless Telecommunication Services - 1.5%
T-Mobile U.S., Inc. (a)	37,619	2,389,183
TOTAL COMMON STOCKS
(Cost $118,676,808)		154,526,211

Money Market Funds - 5.6%
Fidelity Cash Central Fund, 1.36% (d)	5,990,820	5,992,019
Fidelity Securities Lending Cash Central Fund 1.36% (d)(e)	3,009,497	3,010,099
TOTAL MONEY MARKET FUNDS
(Cost $9,001,771)		9,002,118
TOTAL INVESTMENT IN SECURITIES - 101.8%
(Cost $127,678,579)		163,528,329
NET OTHER ASSETS (LIABILITIES) - (1.8)%		(2,967,382)
NET ASSETS - 100%		$160,560,947

Legend

(a) Non-income producing

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

(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 end of the period, the value of these securities amounted to $251,748 or 0.2% of net assets.

(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.

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

Affiliated Central Funds

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

Fund	Income earned
Fidelity Cash Central Fund	$31,179
Fidelity Securities Lending Cash Central Fund	60,879
Total	$92,058

Investment Valuation

	Valuation Inputs at Reporting Date:
Description	Total	Level 1	Level 2	Level 3
Investments in Securities:
Equities:
Consumer Discretionary	$19,614,788	$19,614,788	$--	$--
Consumer Staples	2,172,500	2,172,500	--	--
Energy	9,655,867	9,655,867	--	--
Financials	28,733,828	28,733,828	--	--
Health Care	15,139,307	15,139,307	--	--
Industrials	16,403,669	16,403,669	--	--
Information Technology	47,019,248	47,019,248	--	--
Materials	12,763,313	11,520,068	1,243,245	--
Real Estate	634,508	634,508	--	--
Telecommunication Services	2,389,183	2,389,183	--	--
Money Market Funds	9,002,118	9,002,118	--	--
Total Investments in Securities:	$163,528,329	$162,285,084	$1,243,245	$--

Other Information

Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):

United States of America	88.2%
Ireland	3.7%
Canada	1.7%
Cayman Islands	1.6%
United Kingdom	1.0%
Others (Individually Less Than 1%)	3.8%
	100.0%

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

Financial Statements

Statement of Assets and Liabilities

		December 31, 2017
Assets
Investment in securities, at value (including securities loaned of $2,863,936) — See accompanying schedule: Unaffiliated issuers (cost $118,676,808)	$154,526,211
Fidelity Central Funds (cost $9,001,771)	9,002,118
Total Investment in Securities (cost $127,678,579)		$163,528,329
Cash		32,990
Foreign currency held at value (cost $255)		255
Receivable for fund shares sold		14,904
Dividends receivable		153,780
Distributions receivable from Fidelity Central Funds		12,460
Prepaid expenses		261
Other receivables		3,567
Total assets		163,746,546
Liabilities
Payable for investments purchased	$15,170
Payable for fund shares redeemed	49,693
Accrued management fee	72,031
Distribution and service plan fees payable	3,663
Other affiliated payables	21,931
Other payables and accrued expenses	14,175
Collateral on securities loaned	3,008,936
Total liabilities		3,185,599
Net Assets		$160,560,947
Net Assets consist of:
Paid in capital		$110,313,375
Undistributed net investment income		250,283
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		14,147,610
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		35,849,679
Net Assets		$160,560,947
Initial Class:
Net Asset Value, offering price and redemption price per share ($24,565,559 ÷ 1,702,268 shares)		$14.43
Service Class:
Net Asset Value, offering price and redemption price per share ($630,820 ÷ 44,161 shares)		$14.28
Service Class 2:
Net Asset Value, offering price and redemption price per share ($17,293,987 ÷ 1,230,488 shares)		$14.05
Investor Class:
Net Asset Value, offering price and redemption price per share ($118,070,581 ÷ 8,196,721 shares)		$14.40

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

Statement of Operations

		Year ended December 31, 2017
Investment Income
Dividends		$2,147,065
Income from Fidelity Central Funds		92,058
Total income		2,239,123
Expenses
Management fee	$844,851
Transfer agent fees	194,000
Distribution and service plan fees	43,299
Accounting and security lending fees	60,860
Custodian fees and expenses	53,764
Independent trustees' fees and expenses	617
Audit	48,610
Legal	5,608
Miscellaneous	1,214
Total expenses before reductions	1,252,823
Expense reductions	(13,434)	1,239,389
Net investment income (loss)		999,734
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investment securities:
Unaffiliated issuers	17,092,637
Fidelity Central Funds	544
Foreign currency transactions	5,653
Total net realized gain (loss)		17,098,834
Change in net unrealized appreciation (depreciation) on:
Investment securities:
Unaffiliated issuers	15,038,500
Fidelity Central Funds	40
Assets and liabilities in foreign currencies	394
Total change in net unrealized appreciation (depreciation)		15,038,934
Net gain (loss)		32,137,768
Net increase (decrease) in net assets resulting from operations		$33,137,502

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

Statement of Changes in Net Assets

	Year ended December 31, 2017	Year ended December 31, 2016
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$999,734	$1,590,420
Net realized gain (loss)	17,098,834	7,524,898
Change in net unrealized appreciation (depreciation)	15,038,934	(7,131,032)
Net increase (decrease) in net assets resulting from operations	33,137,502	1,984,286
Distributions to shareholders from net investment income	(1,182,691)	(1,308,115)
Distributions to shareholders from net realized gain	(9,964,289)	(8,053,857)
Total distributions	(11,146,980)	(9,361,972)
Share transactions - net increase (decrease)	(16,928,196)	(60,590,752)
Total increase (decrease) in net assets	5,062,326	(67,968,438)
Net Assets
Beginning of period	155,498,621	223,467,059
End of period	$160,560,947	$155,498,621
Other Information
Undistributed net investment income end of period	$250,283	$434,761

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

Financial Highlights

VIP Dynamic Capital Appreciation Portfolio Initial Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$12.53	$12.85	$13.56	$12.76	$10.02
Income from Investment Operations
Net investment income (loss)^A	.10	.12	.13	.06	.05
Net realized and unrealized gain (loss)	2.77	.17	.04	1.30	3.70
Total from investment operations	2.87	.29	.17	1.36	3.75
Distributions from net investment income	(.12)	(.11)	(.12)	(.06)	(.04)
Distributions from net realized gain	(.86)	(.49)	(.77)	(.50)	(.97)
Total distributions	(.97)^B	(.61)^C	(.88)^D	(.56)	(1.01)
Net asset value, end of period	$14.43	$12.53	$12.85	$13.56	$12.76
Total Return^E,^F	23.89%	2.88%	1.30%	10.92%	38.53%
Ratios to Average Net Assets^G,^H
Expenses before reductions	.72%	.71%	.70%	.72%	.77%
Expenses net of fee waivers, if any	.72%	.71%	.70%	.72%	.77%
Expenses net of all reductions	.71%	.70%	.69%	.71%	.76%
Net investment income (loss)	.73%	.99%	.97%	.47%	.47%
Supplemental Data
Net assets, end of period (000 omitted)	$24,566	$25,141	$37,281	$38,705	$35,050
Portfolio turnover rate^I	116%	123%	129%	122%	136%

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

^B Total distributions of $.97 per share is comprised of distributions from net investment income of $.117 and distributions from net realized gain of $.856 per share.

^C Total distributions of $.61 per share is comprised of distributions from net investment income of $.111 and distributions from net realized gain of $.494 per share.

^D Total distributions of $.88 per share is comprised of distributions from net investment income of $.115 and distributions from net realized gain of $.767 per share.

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

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

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

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

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

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

VIP Dynamic Capital Appreciation Portfolio Service Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$12.41	$12.74	$13.45	$12.66	$9.95
Income from Investment Operations
Net investment income (loss)^A	.08	.11	.12	.05	.04
Net realized and unrealized gain (loss)	2.75	.16	.03	1.29	3.67
Total from investment operations	2.83	.27	.15	1.34	3.71
Distributions from net investment income	(.10)	(.10)	(.10)	(.05)	(.03)
Distributions from net realized gain	(.86)	(.49)	(.77)	(.50)	(.97)
Total distributions	(.96)	(.60)^B	(.86)^C	(.55)	(1.00)
Net asset value, end of period	$14.28	$12.41	$12.74	$13.45	$12.66
Total Return^D,^E	23.76%	2.76%	1.16%	10.88%	38.39%
Ratios to Average Net Assets^F,^G
Expenses before reductions	.82%	.81%	.80%	.81%	.86%
Expenses net of fee waivers, if any	.82%	.81%	.80%	.81%	.86%
Expenses net of all reductions	.81%	.80%	.79%	.80%	.85%
Net investment income (loss)	.63%	.89%	.87%	.37%	.38%
Supplemental Data
Net assets, end of period (000 omitted)	$631	$530	$642	$946	$518
Portfolio turnover rate^H	116%	123%	129%	122%	136%

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

^B Total distributions of $.60 per share is comprised of distributions from net investment income of $.103 and distributions from net realized gain of $.494 per share.

^C Total distributions of $.86 per share is comprised of distributions from net investment income of $.096 and distributions from net realized gain of $.767 per share.

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

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

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

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

VIP Dynamic Capital Appreciation Portfolio Service Class 2

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$12.23	$12.56	$13.27	$12.50	$9.83
Income from Investment Operations
Net investment income (loss)^A	.06	.09	.09	.03	.03
Net realized and unrealized gain (loss)	2.70	.16	.05	1.27	3.62
Total from investment operations	2.76	.25	.14	1.30	3.65
Distributions from net investment income	(.08)	(.09)	(.08)	(.03)	(.01)
Distributions from net realized gain	(.86)	(.49)	(.77)	(.50)	(.97)
Total distributions	(.94)	(.58)	(.85)	(.53)	(.98)
Net asset value, end of period	$14.05	$12.23	$12.56	$13.27	$12.50
Total Return^B,^C	23.50%	2.66%	1.02%	10.66%	38.25%
Ratios to Average Net Assets^D,^E
Expenses before reductions	.97%	.96%	.95%	.97%	1.02%
Expenses net of fee waivers, if any	.97%	.96%	.95%	.97%	1.01%
Expenses net of all reductions	.96%	.95%	.94%	.96%	1.00%
Net investment income (loss)	.48%	.74%	.72%	.22%	.22%
Supplemental Data
Net assets, end of period (000 omitted)	$17,294	$16,830	$20,128	$24,336	$24,512
Portfolio turnover rate^F	116%	123%	129%	122%	136%

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

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

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

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

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

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

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

VIP Dynamic Capital Appreciation Portfolio Investor Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$12.51	$12.83	$13.54	$12.75	$10.01
Income from Investment Operations
Net investment income (loss)^A	.09	.11	.12	.05	.05
Net realized and unrealized gain (loss)	2.76	.17	.04	1.29	3.69
Total from investment operations	2.85	.28	.16	1.34	3.74
Distributions from net investment income	(.11)	(.10)	(.11)	(.05)	(.04)
Distributions from net realized gain	(.86)	(.49)	(.77)	(.50)	(.97)
Total distributions	(.96)^B	(.60)^C	(.87)^D	(.55)	(1.00)^E
Net asset value, end of period	$14.40	$12.51	$12.83	$13.54	$12.75
Total Return^F,^G	23.74%	2.81%	1.22%	10.79%	38.52%
Ratios to Average Net Assets^H,^I
Expenses before reductions	.80%	.79%	.78%	.79%	.84%
Expenses net of fee waivers, if any	.80%	.79%	.78%	.79%	.84%
Expenses net of all reductions	.79%	.78%	.77%	.79%	.83%
Net investment income (loss)	.65%	.90%	.89%	.39%	.40%
Supplemental Data
Net assets, end of period (000 omitted)	$118,071	$112,998	$165,416	$142,646	$105,425
Portfolio turnover rate^J	116%	123%	129%	122%	136%

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

^B Total distributions of $.96 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.856 per share.

^C Total distributions of $.60 per share is comprised of distributions from net investment income of $.102 and distributions from net realized gain of $.494 per share.

^D Total distributions of $.87 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.767 per share.

^E Total distributions of $1.00 per share is comprised of distributions from net investment income of $.037 and distributions from net realized gain of $.967 per share.

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

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

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

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

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

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

Notes to Financial Statements

For the period ended December 31, 2017

1. Organization.

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

2. Investments in Fidelity Central Funds.

The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.

A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.

3. Significant Accounting Policies.

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

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

Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)

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

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

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

As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:

Gross unrealized appreciation	$38,191,020
Gross unrealized depreciation	(2,446,434)
Net unrealized appreciation (depreciation)	$35,744,586
Tax Cost	$127,783,743

The tax-based components of distributable earnings as of period end were as follows:

Undistributed ordinary income	$1,045,391
Undistributed long-term capital gain	$13,457,666
Net unrealized appreciation (depreciation) on securities and other investments	$35,744,515

The tax character of distributions paid was as follows:

	December 31, 2017	December 31, 2016
Ordinary Income	$3,966,791	$ 1,308,115
Long-term Capital Gains	7,180,189	8,053,857
Total	$11,146,980	$ 9,361,972

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $176,285,424 and $207,177,104, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. Fidelity Management & Research Company (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .54% of the Fund's average net assets.

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

Service Class	$582
Service Class 2	42,717
	$43,299

Initial Class	$15,993
Service Class	383
Service Class 2	11,264
Investor Class	166,360
	$194,000

6. Committed Line of Credit.

The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $498 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $23,984. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $60,879, including $3,045 from securities loaned to FCM.

8. Expense Reductions.

In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $1,431.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

	Year ended December 31, 2017	Year ended December 31, 2016
From net investment income
Initial Class	$206,090	$227,944
Service Class	4,494	4,366
Service Class 2	104,118	120,531
Investor Class	867,989	955,274
Total	$1,182,691	$1,308,115
From net realized gain
Initial Class	$1,569,703	$1,329,712
Service Class	36,618	20,796
Service Class 2	1,110,356	764,648
Investor Class	7,247,612	5,938,701
Total	$9,964,289	$8,053,857

10. Share Transactions.

Transactions for each class of shares were as follows:

	Shares	Shares	Dollars	Dollars
	Year ended December 31, 2017	Year ended December 31, 2016	Year ended December 31, 2017	Year ended December 31, 2016
Initial Class
Shares sold	65,875	59,307	$892,174	$723,273
Reinvestment of distributions	136,528	141,572	1,775,793	1,557,656
Shares redeemed	(506,242)	(1,095,052)	(6,689,844)	(13,190,380)
Net increase (decrease)	(303,839)	(894,173)	$(4,021,877)	$(10,909,451)
Service Class
Shares sold	591	417	$7,664	$5,102
Reinvestment of distributions	3,182	2,298	41,112	25,162
Shares redeemed	(2,340)	(10,325)	(30,745)	(128,470)
Net increase (decrease)	1,433	(7,610)	$18,031	$(98,206)
Service Class 2
Shares sold	73,561	126,153	$956,582	$1,469,996
Reinvestment of distributions	95,875	82,574	1,214,474	885,179
Shares redeemed	(315,290)	(434,340)	(4,107,906)	(5,103,920)
Net increase (decrease)	(145,854)	(225,613)	$(1,936,850)	$(2,748,745)
Investor Class
Shares sold	353,146	340,788	$4,681,623	$4,141,529
Reinvestment of distributions	624,674	628,496	8,115,601	6,893,975
Shares redeemed	(1,813,505)	(4,825,288)	(23,784,724)	(57,869,854)
Net increase (decrease)	(835,685)	(3,856,004)	$(10,987,500)	$(46,834,350)

11. Other.

At the end of the period, the investment adviser or its affiliates were the owners of record of 89% of the total outstanding shares of the Fund.

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of VIP Dynamic Capital Appreciation Portfolio (the "Fund"), a fund of Variable Insurance Products Fund III, including the schedule of investments, as of December 31, 2017, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2017, and 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 the 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.

Basis for Opinion

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 13, 2018

We have served as the auditor of one or more of the Fidelity investment companies since 1999.

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 1-877-208-0098.

Interested Trustees*:

Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.

Independent Trustees:

Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

William S. Stavropoulos (1939)

Year of Election or Appointment: 2002

Trustee

Vice Chairman of the Independent Trustees

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

Advisory Board Members and Officers:

Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

Elizabeth Paige Baumann (1968)

Year of Election or Appointment: 2017

Anti-Money Laundering (AML) Officer

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2016

Assistant Treasurer

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Colm A. Hogan (1973)

Year of Election or Appointment: 2016

Deputy Treasurer

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

Rieco E. Mello (1969)

Year of Election or Appointment: 2017

Assistant Treasurer

Mr. Mello also serves as Assistant Treasurer of other funds. Mr. Mello serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (1995-present).

Melissa M. Reilly (1971)

Year of Election or Appointment: 2014

Vice President of certain Equity Funds

Ms. Reilly also serves as Vice President of other funds. Ms. Reilly is an employee of Fidelity Investments (2004-present).

Kenneth B. Robins (1969)

Year of Election or Appointment: 2016

Chief Compliance Officer

Stacie M. Smith (1974)

Year of Election or Appointment: 2016

President and Treasurer

Marc L. Spector (1972)

Year of Election or Appointment: 2016

Assistant Treasurer

Renee Stagnone (1975)

Year of Election or Appointment: 2016

Assistant Treasurer

Shareholder Expense Example

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2017 to December 31, 2017).

Actual Expenses

Hypothetical Example for Comparison Purposes

	Annualized Expense Ratio-^A	Beginning Account Value July 1, 2017	Ending Account Value December 31, 2017	Expenses Paid During Period-^B July 1, 2017 to December 31, 2017
Initial Class	.72%
Actual		$1,000.00	$1,129.60	$3.86
Hypothetical-^C		$1,000.00	$1,021.58	$3.67
Service Class	.82%
Actual		$1,000.00	$1,129.40	$4.40
Hypothetical-^C		$1,000.00	$1,021.07	$4.18
Service Class 2	.97%
Actual		$1,000.00	$1,128.50	$5.20
Hypothetical-^C		$1,000.00	$1,020.32	$4.94
Investor Class	.80%
Actual		$1,000.00	$1,129.10	$4.29
Hypothetical-^C		$1,000.00	$1,021.17	$4.08

^A Annualized expense ratio reflects expenses net of applicable fee waivers.

^B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

^C 5% return per year before expenses

Distributions (Unaudited)

The Board of Trustees of VIP Dynamic Capital Appreciation 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
VIP Dynamic Capital Appreciation Portfolio
Initial Class	02/09/18	02/09/18	$0.025	$1.289
Investor Class	02/09/18	02/09/18	$0.023	$1.289
Service Class	02/09/18	02/09/18	$0.023	$1.289
Service Class 2	02/09/18	02/09/18	$0.019	$1.289

The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2017, $13,457,666, or, if subsequently determined to be different, the net capital gain of such year.

Initial Class designates 93%, and 47%; Investor Class designates 98%, and 48%; Service Class designates 98%, and 48%; and Service Class 2 designates 100%, and 51%; of the dividends distributed in February and December, 2017, respectively during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.

Board Approval of Investment Advisory Contracts and Management Fees

VIP Dynamic Capital Appreciation Portfolio

The Board has discussed the fund's underperformance (based on the December 31, 2016 data presented herein) with FMR, including the fund's investment strategy, the portfolio management team, and broader trends in the market that may have impacted the fund's performance, and has engaged with FMR to consider what steps might be taken to remediate the fund's underperformance. The Board noted that the fund's performance has improved since the period shown.

Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should continue to benefit the shareholders of the fund.

Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.

VIP Dynamic Capital Appreciation Portfolio

The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2016.

Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.

The Board noted that the total expense ratio of each of Initial Class, Investor Class, and Service Class ranked below the competitive median for 2016 and the total expense ratio of Service Class 2 ranked above the competitive median for 2016. The Board considered that, in general, various factors can affect total expense ratios. The Board noted that the total expense ratio of Service Class 2 was above the competitive median because of its 12b-1 fees. The Board noted that the fund offers multiple classes, each of which has a different 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expense ratios of the classes vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.

Based on its review of total expense ratios and fees charged to other Fidelity clients, the Board concluded that, although Service Class 2 was above the median of the universe presented for comparison, the total expense ratio of each class of the fund was reasonable in light of the services that the fund and its shareholders receive and the other factors considered.

The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.

Fidelity Investments

VIPDCA-ANN-0218
1.751799.117

Fidelity® Variable Insurance Products:

Growth & Income Portfolio

Annual Report

December 31, 2017

Contents

Performance
Management's Discussion of Fund Performance
Investment Summary
Investments
Financial Statements
Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
Trustees and Officers
Shareholder Expense Example
Distributions
Board Approval of Investment Advisory Contracts and Management Fees

You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

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

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

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

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.

Performance: The Bottom Line

Average Annual Total Returns

For the periods ended December 31, 2017	Past 1 year	Past 5 years	Past 10 years
Initial Class	16.90%	14.37%	7.22%
Service Class	16.77%	14.26%	7.12%
Service Class 2	16.61%	14.09%	6.95%
Investor Class	16.83%	14.28%	7.13%

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in VIP Growth & Income Portfolio - Initial Class on December 31, 2007.

The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.

	Period Ending Values
	$20,081	VIP Growth & Income Portfolio - Initial Class
	$22,603	S&P 500® Index

Management's Discussion of Fund Performance

Market Recap: U.S. equities gained 21.83% in 2017, as the S&P 500^® index rose steadily and closed the year just shy of an all-time high after a particularly strong three-month finish. Early on, equities rallied on optimism for President Trump’s pro-business agenda but leveled off in March amid fading optimism and stalled efforts by Congress to repeal and replace the Affordable Care Act. Upward momentum soon returned and continued through year-end with consumer sentiment and other market indicators staying positive. The lone exception was a brief cooldown in August, when geopolitical tension escalated and uncertainty grew regarding the future of health care, tax reform and the debt ceiling. Sector-wise, information technology fared best by a wide margin, rising 39% amid strong earnings growth from several major index constituents. A 24% gain in materials was spurred by increased demand, especially from China. Consumer discretionary gained 23%, despite many brick-and-mortar retailers suffering from online competition, and financials edged the broader market on an uptick in bond yields. Conversely, the defensive energy and telecom services sectors returned about -1% each. Rising interest rates held back real estate (+11%), while consumer staples (+13%) and utilities (+12%) struggled due to investors’ general preference for risk assets.

Comments from Portfolio Manager Matthew Fruhan: For the year, the fund’s share classes gained roughly 17%, significantly trailing the benchmark S&P 500^® index. The fund’s underperformance of the benchmark was shaped by a market environment that favored highly priced growth stocks, a headwind for my valuation-conscious, dividend-oriented strategy. More specifically, weak stock picking in industrials hampered our result, especially a sizable stake in industrial conglomerate General Electric, our largest individual detractor in 2017. Also, in the strong-performing information technology sector, poor security selection and a significant underweight notably detracted. Stock picking in health care hurt, especially a non-benchmark position in Israeli drugmaker Teva Pharmaceutical Industries. It also hurt to overweight the weak energy sector. Here, notable detractors included an investment in energy exploration company Apache. However, lacking exposure to benchmark component Exxon Mobil helped our relative result in light of the stock’s poor performance. On the positive side, security selection in financials contributed, especially Bank of America, a large bank benefiting from higher interest rates. It was the fund’s largest holding on December 31. Another relative contributor was not holding poor-performing telecommunication services provider and benchmark stock AT&T, which did not fit my investment approach.

Investment Summary (Unaudited)

Top Ten Stocks as of December 31, 2017

	% of fund's net assets
Bank of America Corp.^(a)	3.6
Microsoft Corp.^(a)	3.6
JPMorgan Chase & Co.^(a)	3.0
Citigroup, Inc.^(a)	3.0
Comcast Corp. Class A	2.2
Apple, Inc.^(a)	2.2
Wells Fargo & Co.	2.1
ConocoPhillips Co.	1.9
Chevron Corp.	1.9
State Street Corp.	1.9
	25.4

(a) Security or a portion of the security is pledged as collateral for call options written.

Top Five Market Sectors as of December 31, 2017

	% of fund's net assets
Financials	22.8
Information Technology	16.4
Energy	12.8
Health Care	12.2
Industrials	11.9

Asset Allocation (% of fund's net assets)

As of December 31, 2017 ^,^*
	Stocks	98.9%
	Bonds	0.1%
	Short-Term Investments and Net Other Assets (Liabilities)	1.0%

* Written options - (0.1)%

** Foreign investments - 10.6%

Investments December 31, 2017

Showing Percentage of Net Assets

Common Stocks - 98.6%
	Shares	Value
CONSUMER DISCRETIONARY - 7.6%
Auto Components - 0.2%
Gentex Corp.	112,700	$2,361,065
Hotels, Restaurants & Leisure - 0.4%
Cedar Fair LP (depositary unit)	6,000	389,940
DineEquity, Inc.	21,300	1,080,549
Dunkin' Brands Group, Inc.	54,300	3,500,721
Marriott International, Inc. Class A	4,000	542,920
		5,514,130
Media - 3.7%
Comcast Corp. Class A	793,762	31,790,168
Interpublic Group of Companies, Inc.	299,000	6,027,840
Omnicom Group, Inc.	36,800	2,680,144
The Walt Disney Co.	67,200	7,224,672
Time Warner, Inc.	52,700	4,820,469
Viacom, Inc. Class B (non-vtg.)	35,400	1,090,674
		53,633,967
Multiline Retail - 0.6%
Dollar General Corp.	30,800	2,864,708
Macy's, Inc.	51,300	1,292,247
Target Corp. (a)	72,477	4,729,124
		8,886,079
Specialty Retail - 2.7%
L Brands, Inc. (a)	143,400	8,635,548
Lowe's Companies, Inc. (a)	178,517	16,591,370
Ross Stores, Inc.	44,900	3,603,225
TJX Companies, Inc.	96,600	7,386,036
Williams-Sonoma, Inc. (b)	45,300	2,342,010
		38,558,189

TOTAL CONSUMER DISCRETIONARY		108,953,430

CONSUMER STAPLES - 9.6%
Beverages - 2.0%
Coca-Cola European Partners PLC	18,000	717,300
Dr. Pepper Snapple Group, Inc.	25,500	2,475,030
Molson Coors Brewing Co. Class B	85,500	7,016,985
The Coca-Cola Co.	387,553	17,780,932
		27,990,247
Food & Staples Retailing - 2.3%
CVS Health Corp.	187,264	13,576,640
Kroger Co. (a)	236,700	6,497,415
Wal-Mart Stores, Inc.	130,600	12,896,750
		32,970,805
Food Products - 0.8%
Campbell Soup Co.	54,400	2,617,184
Kellogg Co.	48,100	3,269,838
Snyders-Lance, Inc.	19,500	976,560
The J.M. Smucker Co.	39,400	4,895,056
		11,758,638
Household Products - 2.0%
Kimberly-Clark Corp.	32,600	3,933,516
Procter & Gamble Co. (a)	204,350	18,775,678
Reckitt Benckiser Group PLC	52,600	4,907,237
		27,616,431
Personal Products - 0.4%
Coty, Inc. Class A	27,900	554,931
Unilever NV (NY Reg.)	90,700	5,108,224
		5,663,155
Tobacco - 2.1%
Altria Group, Inc.	293,700	20,973,117
British American Tobacco PLC sponsored ADR	140,100	9,385,299
		30,358,416

TOTAL CONSUMER STAPLES		136,357,692

ENERGY - 12.8%
Energy Equipment & Services - 0.9%
Baker Hughes, a GE Co. Class A	164,600	5,207,944
Nabors Industries Ltd.	150,100	1,025,183
National Oilwell Varco, Inc.	107,900	3,886,558
Oceaneering International, Inc.	133,200	2,815,848
Schlumberger Ltd.	4,200	283,038
		13,218,571
Oil, Gas & Consumable Fuels - 11.9%
Anadarko Petroleum Corp.	52,400	2,810,736
Apache Corp.	220,200	9,296,844
BP PLC sponsored ADR	27,300	1,147,419
Cabot Oil & Gas Corp.	217,600	6,223,360
Cenovus Energy, Inc.	1,034,924	9,451,812
Cenovus Energy, Inc.	7,000	63,910
Chevron Corp.	212,518	26,605,128
ConocoPhillips Co.	504,005	27,664,834
Golar LNG Ltd.	112,300	3,347,663
Imperial Oil Ltd.	224,400	7,003,351
Kinder Morgan, Inc.	541,800	9,790,326
Legacy Reserves LP (c)	179,888	289,620
Phillips 66 Co.	25,200	2,548,980
Suncor Energy, Inc.	707,360	25,970,298
Teekay LNG Partners LP	76,500	1,541,475
The Williams Companies, Inc.	680,590	20,751,189
Valero Energy Corp.	47,800	4,393,298
Williams Partners LP	287,805	11,161,078
		170,061,321

TOTAL ENERGY		183,279,892

FINANCIALS - 22.8%
Banks - 15.4%
Bank of America Corp. (a)	1,740,932	51,392,314
Citigroup, Inc. (a)	567,418	42,221,573
Cullen/Frost Bankers, Inc.	3,000	283,950
JPMorgan Chase & Co. (a)	395,832	42,330,274
M&T Bank Corp.	4,200	718,158
PNC Financial Services Group, Inc. (a)	87,972	12,693,480
Regions Financial Corp. (a)	391,600	6,766,848
SunTrust Banks, Inc.	294,464	19,019,430
U.S. Bancorp	256,398	13,737,805
Wells Fargo & Co.	497,069	30,157,176
		219,321,008
Capital Markets - 6.5%
Apollo Global Management LLC Class A	98,300	3,290,101
Charles Schwab Corp. (a)	161,084	8,274,885
KKR & Co. LP	477,393	10,053,897
Morgan Stanley	220,183	11,553,002
Northern Trust Corp. (a)	161,245	16,106,763
Oaktree Capital Group LLC Class A	43,900	1,848,190
S&P Global, Inc.	35,900	6,081,460
State Street Corp.	268,679	26,225,757
TD Ameritrade Holding Corp.	10,100	516,413
The Blackstone Group LP	285,600	9,144,912
		93,095,380
Insurance - 0.7%
Marsh & McLennan Companies, Inc.	57,042	4,642,648
MetLife, Inc.	97,800	4,944,768
		9,587,416
Thrifts & Mortgage Finance - 0.2%
Radian Group, Inc.	123,550	2,546,366

TOTAL FINANCIALS		324,550,170

HEALTH CARE - 12.0%
Biotechnology - 2.5%
Alexion Pharmaceuticals, Inc. (c)	52,700	6,302,393
Amgen, Inc.	122,344	21,275,622
Biogen, Inc. (c)	10,900	3,472,413
Gilead Sciences, Inc.	8,600	616,104
Intercept Pharmaceuticals, Inc. (c)	22,258	1,300,312
Shire PLC sponsored ADR	17,100	2,652,552
		35,619,396
Health Care Equipment & Supplies - 1.4%
Becton, Dickinson & Co.	3,500	749,210
Boston Scientific Corp. (c)	100,800	2,498,832
ConvaTec Group PLC (d)	97,500	270,519
Danaher Corp.	68,500	6,358,170
Fisher & Paykel Healthcare Corp.	73,285	745,297
Medtronic PLC	41,985	3,390,289
ResMed, Inc.	20,600	1,744,614
Steris PLC	11,300	988,411
Zimmer Biomet Holdings, Inc.	30,400	3,668,368
		20,413,710
Health Care Providers & Services - 3.7%
Aetna, Inc.	9,800	1,767,822
AmerisourceBergen Corp.	54,500	5,004,190
Anthem, Inc.	35,600	8,010,356
Cardinal Health, Inc.	146,700	8,988,309
Cigna Corp.	38,890	7,898,170
Fresenius Medical Care AG & Co. KGaA sponsored ADR	33,500	1,760,425
Humana, Inc.	12,400	3,076,068
McKesson Corp.	56,688	8,840,494
Patterson Companies, Inc. (b)	58,443	2,111,546
UnitedHealth Group, Inc.	24,300	5,357,178
		52,814,558
Pharmaceuticals - 4.4%
Allergan PLC	18,200	2,977,156
AstraZeneca PLC sponsored ADR	113,500	3,938,450
Bayer AG	24,400	3,032,023
Bristol-Myers Squibb Co. (a)	22,300	1,366,544
Eisai Co. Ltd.	2,600	148,051
GlaxoSmithKline PLC sponsored ADR	553,994	19,650,167
Innoviva, Inc. (c)	43,800	621,522
Johnson & Johnson (a)	147,059	20,547,083
Novartis AG sponsored ADR	7,925	665,383
Sanofi SA	43,466	3,742,074
Teva Pharmaceutical Industries Ltd. sponsored ADR (b)	332,303	6,297,142
		62,985,595

TOTAL HEALTH CARE		171,833,259

INDUSTRIALS - 11.8%
Aerospace & Defense - 2.2%
General Dynamics Corp.	17,700	3,601,065
Meggitt PLC	38,842	252,878
Rolls-Royce Holdings PLC	235,500	2,693,124
The Boeing Co. (a)	12,317	3,632,406
United Technologies Corp.	162,887	20,779,495
		30,958,968
Air Freight & Logistics - 1.7%
C.H. Robinson Worldwide, Inc. (a)	80,800	7,198,472
Expeditors International of Washington, Inc.	56,395	3,648,193
United Parcel Service, Inc. Class B	115,072	13,710,829
		24,557,494
Commercial Services & Supplies - 0.1%
KAR Auction Services, Inc.	15,400	777,854
Ritchie Brothers Auctioneers, Inc. (b)	44,900	1,344,500
		2,122,354
Construction & Engineering - 0.1%
Fluor Corp.	28,200	1,456,530
Electrical Equipment - 0.7%
Acuity Brands, Inc.	26,600	4,681,600
Hubbell, Inc. Class B	36,679	4,964,136
		9,645,736
Industrial Conglomerates - 1.7%
General Electric Co.	1,392,150	24,293,018
Machinery - 1.1%
Donaldson Co., Inc.	26,600	1,302,070
Flowserve Corp.	157,200	6,622,836
Snap-On, Inc.	23,000	4,008,900
Wabtec Corp.	42,200	3,436,346
Zardoya Otis SA	21,800	238,549
		15,608,701
Professional Services - 0.4%
Intertrust NV (d)	68,700	1,288,376
Nielsen Holdings PLC	110,300	4,014,920
		5,303,296
Road & Rail - 2.9%
CSX Corp. (a)	209,947	11,549,184
J.B. Hunt Transport Services, Inc. (a)	104,582	12,024,838
Norfolk Southern Corp.	48,793	7,070,106
Union Pacific Corp.	80,400	10,781,640
		41,425,768
Trading Companies & Distributors - 0.9%
Brenntag AG	4,800	303,917
Bunzl PLC	22,200	621,047
Fastenal Co.	76,800	4,200,192
Howden Joinery Group PLC	40,900	257,772
MSC Industrial Direct Co., Inc. Class A	24,100	2,329,506
Watsco, Inc.	31,192	5,303,888
		13,016,322

TOTAL INDUSTRIALS		168,388,187

INFORMATION TECHNOLOGY - 16.4%
Communications Equipment - 1.5%
Cisco Systems, Inc. (a)	540,204	20,689,813
Electronic Equipment & Components - 0.1%
Avnet, Inc.	24,200	958,804
Philips Lighting NV (d)	22,800	837,111
		1,795,915
Internet Software & Services - 2.7%
Alphabet, Inc.:
Class A (c)	19,218	20,244,241
Class C (c)	18,083	18,922,051
		39,166,292
IT Services - 3.1%
Accenture PLC Class A	18,500	2,832,165
Cognizant Technology Solutions Corp. Class A	3,900	276,978
MasterCard, Inc. Class A (a)	45,010	6,812,714
Paychex, Inc. (a)	203,931	13,883,622
Unisys Corp. (c)	214,196	1,745,697
Visa, Inc. Class A	164,076	18,707,946
		44,259,122
Semiconductors & Semiconductor Equipment - 2.0%
Maxim Integrated Products, Inc.	26,400	1,380,192
Qualcomm, Inc.	401,661	25,714,337
United Microelectronics Corp. sponsored ADR	267,700	639,803
Xilinx, Inc.	11,500	775,330
		28,509,662
Software - 4.8%
Micro Focus International PLC	107,031	3,645,934
Microsoft Corp. (a)	598,213	51,171,140
Oracle Corp.	181,891	8,599,806
SAP SE sponsored ADR	39,700	4,460,692
		67,877,572
Technology Hardware, Storage & Peripherals - 2.2%
Apple, Inc. (a)	186,158	31,503,518

TOTAL INFORMATION TECHNOLOGY		233,801,894

MATERIALS - 2.1%
Chemicals - 1.9%
CF Industries Holdings, Inc. (a)	108,700	4,624,098
LyondellBasell Industries NV Class A	82,000	9,046,240
Monsanto Co.	27,819	3,248,703
Potash Corp. of Saskatchewan, Inc.	339,200	6,956,703
PPG Industries, Inc.	4,500	525,690
The Scotts Miracle-Gro Co. Class A	20,900	2,236,091
		26,637,525
Containers & Packaging - 0.1%
WestRock Co.	33,200	2,098,572
Metals & Mining - 0.1%
BHP Billiton Ltd. sponsored ADR (b)	6,600	303,534
Reliance Steel & Aluminum Co.	14,200	1,218,218
		1,521,752

TOTAL MATERIALS		30,257,849

REAL ESTATE - 1.0%
Equity Real Estate Investment Trusts (REITs) - 1.0%
American Tower Corp.	15,800	2,254,186
CoreSite Realty Corp.	26,600	3,029,740
Equinix, Inc.	4,800	2,175,456
Omega Healthcare Investors, Inc.	28,200	776,628
Public Storage	15,800	3,302,200
Sabra Health Care REIT, Inc.	50,600	949,762
Spirit Realty Capital, Inc.	138,500	1,188,330
		13,676,302
TELECOMMUNICATION SERVICES - 1.3%
Diversified Telecommunication Services - 1.3%
Verizon Communications, Inc.	343,680	18,190,982
UTILITIES - 1.2%
Electric Utilities - 1.1%
Exelon Corp.	324,700	12,796,427
PPL Corp.	65,000	2,011,750
Southern Co.	8,100	389,529
		15,197,706
Multi-Utilities - 0.1%
Public Service Enterprise Group, Inc.	24,600	1,266,900

TOTAL UTILITIES		16,464,606

TOTAL COMMON STOCKS
(Cost $999,634,194)		1,405,754,263

Preferred Stocks - 0.3%
Convertible Preferred Stocks - 0.3%
HEALTH CARE - 0.1%
Health Care Equipment & Supplies - 0.1%
Becton, Dickinson & Co. Series A 6.125%	37,600	2,187,192
INDUSTRIALS - 0.1%
Commercial Services & Supplies - 0.1%
Stericycle, Inc. 2.25%	21,800	1,156,490
UTILITIES - 0.1%
Independent Power and Renewable Electricity Producers - 0.1%
Dynegy, Inc. 7.00%	11,300	891,005

TOTAL CONVERTIBLE PREFERRED STOCKS		4,234,687

Nonconvertible Preferred Stocks - 0.0%
INDUSTRIALS - 0.0%
Aerospace & Defense - 0.0%
Rolls-Royce Holdings PLC (C Shares)	54,387,170	73,431
TOTAL PREFERRED STOCKS
(Cost $4,421,034)		4,308,118
	Principal Amount	Value

Convertible Bonds - 0.1%
HEALTH CARE - 0.1%
Pharmaceuticals - 0.1%
Bayer Capital Corp. BV 5.625% 11/22/19(d)
(Cost $1,175,020)	EUR 1,100,000	1,496,706
	Shares	Value

Money Market Funds - 1.8%
Fidelity Cash Central Fund, 1.36% (e)	15,849,253	15,852,423
Fidelity Securities Lending Cash Central Fund 1.36% (e)(f)	9,934,009	9,935,996
TOTAL MONEY MARKET FUNDS
(Cost $25,787,426)		25,788,419
TOTAL INVESTMENT IN SECURITIES - 100.8%
(Cost $1,031,017,674)		1,437,347,506
NET OTHER ASSETS (LIABILITIES) - (0.8)%		(10,913,808)
NET ASSETS - 100%		$1,426,433,698

Written Options
	Counterparty	Number of Contracts	Notional Amount	Exercise Price	Expiration Date	Value
Call Options
Apple, Inc.	Chicago Board Options Exchange	102	$1,726,146	$185.00	2/16/18	$(11,577)
Bank of America Corp.	Chicago Board Options Exchange	2,812	8,301,024	30.00	1/19/18	(116,698)
Bristol-Myers Squibb Co.	Chicago Board Options Exchange	176	1,078,528	65.00	1/19/18	(5,104)
C.H. Robinson Worldwide, Inc.	Chicago Board Options Exchange	120	1,069,080	92.50	2/16/18	(21,900)
CF Industries Holdings, Inc.	Chicago Board Options Exchange	103	438,162	40.00	2/16/18	(37,338)
Charles Schwab Corp.	Chicago Board Options Exchange	157	806,509	55.00	3/16/18	(14,523)
Cisco Systems, Inc.	Chicago Board Options Exchange	540	2,068,200	41.00	3/16/18	(17,820)
Cisco Systems, Inc.	Chicago Board Options Exchange	540	2,068,200	40.00	3/16/18	(29,970)
Citigroup, Inc.	Chicago Board Options Exchange	563	4,189,283	80.00	2/16/18	(26,743)
CSX Corp.	Chicago Board Options Exchange	353	1,941,853	60.00	2/16/18	(17,121)
CSX Corp.	Chicago Board Options Exchange	353	1,941,853	62.50	2/16/18	(6,707)
J.B. Hunt Transport Services, Inc.	Chicago Board Options Exchange	103	1,184,294	120.00	2/16/18	(17,510)
Johnson& Johnson	Chicago Board Options Exchange	148	2,067,856	145.00	2/16/18	(13,098)
JPMorgan Chase & Co.	Chicago Board Options Exchange	622	6,651,668	115.00	3/16/18	(57,846)
Kroger Co.	Chicago Board Options Exchange	251	688,995	28.00	2/16/18	(20,080 )
Kroger Co.	Chicago Board Options Exchange	475	1,303,875	29.00	2/16/18	(22,563)
L Brands, Inc.	Chicago Board Options Exchange	143	861,146	65.00	2/16/18	(23,238)
Lowe's Companies, Inc.	Chicago Board Options Exchange	204	1,895,976	85.00	1/19/18	(165,750)
MasterCard, Inc. Class A	Chicago Board Options Exchange	78	1,180,608	150.00	1/19/18	(24,843)
Microsoft Corp.	Chicago Board Options Exchange	297	2,540,538	90.00	2/16/18	(29,255)
Northern Trust Corp.	Chicago Board Options Exchange	157	1,568,273	110.00	4/20/18	(17,662)
Paychex, Inc.	Chicago Board Options Exchange	226	1,538,608	70.00	1/19/18	(6,780)
PNC Financial Services Group, Inc.	Chicago Board Options Exchange	79	1,139,891	145.00	2/16/18	(29,230)
Procter & Gamble Co.	Chicago Board Options Exchange	211	1,938,668	92.50	2/16/18	(27,429)
Regions Financial Corp.	Chicago Board Options Exchange	388	670,464	18.00	2/16/18	(14,355)
Target Corp.	Chicago Board Options Exchange	142	926,550	65.00	3/16/18	(48,990)
Target Corp.	Chicago Board Options Exchange	139	906,975	70.00	3/16/18	(21,336)
The Boeing Co.	Chicago Board Options Exchange	57	1,680,987	300.00	3/16/18	(54,150)
TOTAL WRITTEN OPTIONS						$(899,616)

Currency Abbreviations

EUR – European Monetary Unit

Legend

(a) Security or a portion of the security is pledged as collateral for call options written. At period end, the value of securities pledged amounted to $54,374,210.

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

(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $3,892,712 or 0.3% of net assets.

(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.

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

Affiliated Central Funds

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

Fund	Income earned
Fidelity Cash Central Fund	$149,708
Fidelity Securities Lending Cash Central Fund	35,679
Total	$185,387

Investment Valuation

	Valuation Inputs at Reporting Date:
Description	Total	Level 1	Level 2	Level 3
Investments in Securities:
Equities:
Consumer Discretionary	$108,953,430	$108,953,430	$--	$--
Consumer Staples	136,357,692	131,450,455	4,907,237	--
Energy	183,279,892	183,279,892	--	--
Financials	324,550,170	324,550,170	--	--
Health Care	174,020,451	165,059,162	8,961,289	--
Industrials	169,618,108	168,461,618	1,156,490	--
Information Technology	233,801,894	233,801,894	--	--
Materials	30,257,849	30,257,849	--	--
Real Estate	13,676,302	13,676,302	--	--
Telecommunication Services	18,190,982	18,190,982	--	--
Utilities	17,355,611	16,464,606	891,005	--
Corporate Bonds	1,496,706	--	1,496,706	--
Money Market Funds	25,788,419	25,788,419	--	--
Total Investments in Securities:	$1,437,347,506	$1,419,934,779	$17,412,727	$--
Derivative Instruments:
Liabilities
Written Options	$(899,616)	$(899,616)	$--	$--
Total Liabilities	$(899,616)	$(899,616)	$--	$--
Total Derivative Instruments:	$(899,616)	$(899,616)	$--	$--

Value of Derivative Instruments

Primary Risk Exposure / Derivative Type	Value
	Asset	Liability
Equity Risk
Written Options(a)	$0	$(899,616)
Total Equity Risk	0	(899,616)
Total Value of Derivatives	$0	$(899,616)

(a) Gross value is presented in the Statement of Assets and Liabilities in the written options, at value line-item.

Other Information

Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):

United States of America	89.4%
Canada	3.6%
United Kingdom	3.2%
Netherlands	1.2%
Others (Individually Less Than 1%)	2.6%
	100.0%

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

Financial Statements

Statement of Assets and Liabilities

		December 31, 2017
Assets
Investment in securities, at value (including securities loaned of $9,639,742) — See accompanying schedule: Unaffiliated issuers (cost $1,005,230,248)	$1,411,559,087
Fidelity Central Funds (cost $25,787,426)	25,788,419
Total Investment in Securities (cost $1,031,017,674)		$1,437,347,506
Cash		19,871
Receivable for investments sold		1,582,932
Receivable for fund shares sold		1,071,590
Dividends receivable		1,573,958
Interest receivable		37,425
Distributions receivable from Fidelity Central Funds		18,274
Prepaid expenses		2,254
Other receivables		6,153
Total assets		1,441,659,963
Liabilities
Payable for investments purchased	$2,588,960
Payable for fund shares redeemed	1,008,252
Accrued management fee	519,731
Distribution and service plan fees payable	122,507
Written options, at value (premium received $914,999)	899,616
Other affiliated payables	136,373
Other payables and accrued expenses	13,676
Collateral on securities loaned	9,937,150
Total liabilities		15,226,265
Net Assets		$1,426,433,698
Net Assets consist of:
Paid in capital		$948,519,164
Distributions in excess of net investment income		(387,052)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		71,954,918
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		406,346,668
Net Assets		$1,426,433,698
Initial Class:
Net Asset Value, offering price and redemption price per share ($433,702,063 ÷ 19,094,899 shares)		$22.71
Service Class:
Net Asset Value, offering price and redemption price per share ($125,660,863 ÷ 5,579,357 shares)		$22.52
Service Class 2:
Net Asset Value, offering price and redemption price per share ($546,277,618 ÷ 24,581,967 shares)		$22.22
Investor Class:
Net Asset Value, offering price and redemption price per share ($320,793,154 ÷ 14,179,781 shares)		$22.62

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

Statement of Operations

		Year ended December 31, 2017
Investment Income
Dividends		$29,877,826
Interest		218,566
Income from Fidelity Central Funds		185,387
Total income		30,281,779
Expenses
Management fee	$5,773,173
Transfer agent fees	1,103,263
Distribution and service plan fees	1,258,248
Accounting and security lending fees	415,361
Custodian fees and expenses	51,846
Independent trustees' fees and expenses	5,066
Audit	67,695
Legal	11,864
Miscellaneous	9,584
Total expenses before reductions	8,696,100
Expense reductions	(34,066)	8,662,034
Net investment income (loss)		21,619,745
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investment securities:
Unaffiliated issuers	81,368,271
Fidelity Central Funds	(2,486)
Foreign currency transactions	7,020
Written options	2,121,800
Total net realized gain (loss)		83,494,605
Change in net unrealized appreciation (depreciation) on:
Investment securities:
Unaffiliated issuers	93,280,416
Fidelity Central Funds	(132)
Assets and liabilities in foreign currencies	9,566
Written options	4,890,358
Total change in net unrealized appreciation (depreciation)		98,180,208
Net gain (loss)		181,674,813
Net increase (decrease) in net assets resulting from operations		$203,294,558

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

Statement of Changes in Net Assets

	Year ended December 31, 2017	Year ended December 31, 2016
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$21,619,745	$18,088,807
Net realized gain (loss)	83,494,605	20,057,226
Change in net unrealized appreciation (depreciation)	98,180,208	113,422,450
Net increase (decrease) in net assets resulting from operations	203,294,558	151,568,483
Distributions to shareholders from net investment income	(15,754,100)	(17,117,243)
Distributions to shareholders from net realized gain	(30,718,448)	(60,942,871)
Total distributions	(46,472,548)	(78,060,114)
Share transactions - net increase (decrease)	139,165,465	41,331,938
Total increase (decrease) in net assets	295,987,475	114,840,307
Net Assets
Beginning of period	1,130,446,223	1,015,605,916
End of period	$1,426,433,698	$1,130,446,223
Other Information
Distributions in excess of net investment income end of period	$(387,052)	$(2,262,708)

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

Financial Highlights

VIP Growth & Income Portfolio Initial Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$20.15	$18.88	$20.78	$19.14	$14.59
Income from Investment Operations
Net investment income (loss)^A	.38	.35	.40	.38	.33
Net realized and unrealized gain (loss)	2.96	2.38	(.86)	1.63	4.55
Total from investment operations	3.34	2.73	(.46)	2.01	4.88
Distributions from net investment income	(.28)	(.32)	(.42)^B	(.36)	(.33)
Distributions from net realized gain	(.51)	(1.14)	(1.01)^B	(.01)	–
Total distributions	(.78)^C	(1.46)	(1.44)^D	(.37)	(.33)
Net asset value, end of period	$22.71	$20.15	$18.88	$20.78	$19.14
Total Return^E,^F	16.90%	16.08%	(2.27)%	10.47%	33.56%
Ratios to Average Net Assets^G,^H
Expenses before reductions	.55%	.56%	.56%	.57%	.57%
Expenses net of fee waivers, if any	.55%	.56%	.56%	.57%	.57%
Expenses net of all reductions	.55%	.56%	.56%	.57%	.57%
Net investment income (loss)	1.78%	1.91%	1.99%	1.90%	1.92%
Supplemental Data
Net assets, end of period (000 omitted)	$433,702	$375,639	$370,704	$406,311	$385,028
Portfolio turnover rate^I	35%	34%	35%	45%	48%

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

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

^C Total distributions of $.78 per share is comprised of distributions from net investment income of $.275 and distributions from net realized gain of $.507 per share.

^D Total distributions of $1.44 per share is comprised of distributions from net investment income of $.422 and distributions from net realized gain of $.1.013 per share.

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

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

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

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

VIP Growth & Income Portfolio Service Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$19.99	$18.75	$20.64	$19.01	$14.49
Income from Investment Operations
Net investment income (loss)^A	.35	.33	.37	.36	.31
Net realized and unrealized gain (loss)	2.94	2.35	(.85)	1.62	4.53
Total from investment operations	3.29	2.68	(.48)	1.98	4.84
Distributions from net investment income	(.25)	(.31)	(.40)^B	(.34)	(.32)
Distributions from net realized gain	(.51)	(1.14)	(1.01)^B	(.01)	–
Total distributions	(.76)	(1.44)^C	(1.41)	(.35)	(.32)
Net asset value, end of period	$22.52	$19.99	$18.75	$20.64	$19.01
Total Return^D,^E	16.77%	15.94%	(2.35)%	10.39%	33.46%
Ratios to Average Net Assets^F,^G
Expenses before reductions	.65%	.66%	.66%	.66%	.67%
Expenses net of fee waivers, if any	.65%	.66%	.66%	.66%	.67%
Expenses net of all reductions	.65%	.66%	.66%	.66%	.67%
Net investment income (loss)	1.68%	1.81%	1.89%	1.80%	1.82%
Supplemental Data
Net assets, end of period (000 omitted)	$125,661	$119,952	$116,035	$135,893	$139,248
Portfolio turnover rate^H	35%	34%	35%	45%	48%

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

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

^C Total distributions of $1.44 per share is comprised of distributions from net investment income of $.308 and distributions from net realized gain of $1.135 per share.

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

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

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

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

VIP Growth & Income Portfolio Service Class 2

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$19.74	$18.54	$20.43	$18.82	$14.35
Income from Investment Operations
Net investment income (loss)^A	.32	.30	.34	.32	.28
Net realized and unrealized gain (loss)	2.90	2.33	(.85)	1.61	4.48
Total from investment operations	3.22	2.63	(.51)	1.93	4.76
Distributions from net investment income	(.23)	(.29)	(.37)^B	(.31)	(.29)
Distributions from net realized gain	(.51)	(1.14)	(1.01)^B	(.01)	–
Total distributions	(.74)	(1.43)	(1.38)	(.32)	(.29)
Net asset value, end of period	$22.22	$19.74	$18.54	$20.43	$18.82
Total Return^C,^D	16.61%	15.81%	(2.54)%	10.23%	33.25%
Ratios to Average Net Assets^E,^F
Expenses before reductions	.80%	.81%	.81%	.81%	.82%
Expenses net of fee waivers, if any	.80%	.81%	.81%	.81%	.82%
Expenses net of all reductions	.80%	.81%	.81%	.81%	.82%
Net investment income (loss)	1.53%	1.66%	1.74%	1.65%	1.67%
Supplemental Data
Net assets, end of period (000 omitted)	$546,278	$356,194	$290,102	$330,608	$342,586
Portfolio turnover rate^G	35%	34%	35%	45%	48%

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

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

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

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

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

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

VIP Growth & Income Portfolio Investor Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$20.07	$18.82	$20.71	$19.09	$14.55
Income from Investment Operations
Net investment income (loss)^A	.36	.33	.38	.36	.32
Net realized and unrealized gain (loss)	2.96	2.37	(.85)	1.62	4.54
Total from investment operations	3.32	2.70	(.47)	1.98	4.86
Distributions from net investment income	(.26)	(.31)	(.40)^B	(.35)	(.32)
Distributions from net realized gain	(.51)	(1.14)	(1.01)^B	(.01)	–
Total distributions	(.77)	(1.45)	(1.42)^C	(.36)	(.32)
Net asset value, end of period	$22.62	$20.07	$18.82	$20.71	$19.09
Total Return^D,^E	16.83%	15.96%	(2.32)%	10.33%	33.52%
Ratios to Average Net Assets^F,^G
Expenses before reductions	.63%	.64%	.64%	.65%	.65%
Expenses net of fee waivers, if any	.63%	.64%	.64%	.65%	.65%
Expenses net of all reductions	.63%	.64%	.64%	.64%	.65%
Net investment income (loss)	1.70%	1.83%	1.91%	1.82%	1.84%
Supplemental Data
Net assets, end of period (000 omitted)	$320,793	$278,661	$238,765	$259,462	$192,195
Portfolio turnover rate^H	35%	34%	35%	45%	48%

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

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

^C Total distributions of $1.42 per share is comprised of distributions from net investment income of $.404 and distributions from net realized gain of $1.013 per share.

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

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

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

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

Notes to Financial Statements

For the period ended December 31, 2017

1. Organization.

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

2. Investments in Fidelity Central Funds.

3. Significant Accounting Policies.

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

Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)

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

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

Exchange-traded options are valued using last sale price or, in the absence of a sale, the last offering price and are categorized as Level 1 in hierarchy. Options traded over-the-counter are valued using broker-supplied valuations and are categorized as Level 2 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.

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

Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), equity debt classifications, certain conversion ratio adjustments, partnerships, security level mergers and exchanges and losses deferred due to wash sales.

As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes on an unconsolidated basis were as follows:

Gross unrealized appreciation	$455,190,722
Gross unrealized depreciation	(53,024,818)
Net unrealized appreciation (depreciation)	$402,165,904
Tax Cost	$1,034,281,986

The tax-based components of distributable earnings as of period end were as follows:

Undistributed ordinary income	$7,454,758
Undistributed long-term capital gain	$71,574,045
Net unrealized appreciation (depreciation) on securities and other investments	$398,885,731

The tax character of distributions paid was as follows:

	December 31, 2017	December 31, 2016
Ordinary Income	$25,988,189	$ 17,117,243
Long-term Capital Gains	20,484,359	60,942,871
Total	$46,472,548	$ 78,060,114

4. Derivative Instruments.

Risk Exposures and the Use of Derivative Instruments. The Fund's investment objective allows the Fund to enter into various types of derivative contracts, including options. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified asset based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.

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

Equity Risk

The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Derivative counterparty credit risk is managed through formal evaluation of the creditworthiness of all potential counterparties. On certain OTC derivatives such as options, the Fund attempts to reduce its exposure to counterparty credit risk by entering into an International Swaps and Derivatives Association, Inc. (ISDA) Master Agreement with each of its counterparties. The ISDA Master Agreement gives the Fund the right to terminate all transactions traded under such agreement upon the deterioration in the credit quality of the counterparty beyond specified levels. The ISDA Master Agreement gives each party the right, upon an event of default by the other party or a termination of the agreement, to close out all transactions traded under such agreement and to net amounts owed under each transaction to one net payable by one party to the other. To mitigate counterparty credit risk on bi-lateral OTC derivatives, the Fund receives collateral in the form of cash or securities once net unrealized appreciation on outstanding derivative contracts under an ISDA Master Agreement exceeds certain applicable thresholds, subject to certain minimum transfer provisions. The collateral received is held in segregated accounts with the Fund's custodian bank in accordance with the collateral agreements entered into between the Fund, the counterparty and the Fund's custodian bank. The Fund could experience delays and costs in gaining access to the collateral even though it is held by the Fund's custodian bank. The Fund's maximum risk of loss from counterparty credit risk related to bi-lateral OTC derivatives is generally the aggregate unrealized appreciation and unpaid counterparty payments in excess of any collateral pledged by the counterparty to the Fund. The Fund may be required to pledge collateral for the benefit of the counterparties on bi-lateral OTC derivatives in an amount not less than each counterparty's unrealized appreciation on outstanding derivative contracts, subject to certain minimum transfer provisions, and any such pledged collateral is identified in the Schedule of Investments. Counterparty credit risk related to exchange-traded options may be mitigated by the protection provided by the exchange on which they trade.

Options. Options give the purchaser the right, but not the obligation, to buy (call) or sell (put) an underlying security or financial instrument at an agreed exercise or strike price between or on certain dates. Options obligate the seller (writer) to buy (put) or sell (call) an underlying instrument at the exercise or strike price or cash settle an underlying derivative instrument if the holder exercises the option on or before the expiration date.

The Fund used exchange-traded and OTC written covered call options to manage its exposure to the market. When the Fund writes a covered call option, the Fund holds the underlying instrument which must be delivered to the holder upon the exercise of the option.

Upon entering into a written options contract, the Fund will receive a premium. Premiums received are reflected as a liability on the Statement of Assets and Liabilities. Options are valued daily and any unrealized appreciation (depreciation) is reflected on the Statement of Assets and Liabilities. When a written option is exercised, the premium is added to the proceeds from the sale of the underlying instrument in determining the gain or loss realized on that investment. When an option is closed the Fund will realize a gain or loss depending on whether the proceeds or amount paid for the closing sale transaction are greater or less than the premium received. When an option expires, gains and losses are realized to the extent of premiums received. The net realized gain (loss) on closed and expired written options and the change in net unrealized appreciation (depreciation) on written options are presented in the Statement of Operations.

Writing call options tends to decrease exposure to the underlying instrument and risk of loss is the change in value in excess of the premium received.

Any open options at period end are presented in the Schedule of Investments under the caption "Written Options" and are representative of volume of activity during the period.

5. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities aggregated $575,640,318 and $452,284,808, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee. Fidelity Management & Research Company (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .44% of the Fund's average net assets.

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

Service Class	$121,390
Service Class 2	1,136,858
	$1,258,248

Initial Class	$276,139
Service Class	80,024
Service Class 2	299,736
Investor Class	447,364
	$1,103,263

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Consolidated Statement of Operations. The commissions paid to these affiliated firms were $8,227 for the period.

7. Committed Line of Credit.

The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,897 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.

8. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $35,679, including $472 from securities loaned to FCM.

9. Expense Reductions.

In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $10,095.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

	Year ended December 31, 2017	Year ended December 31, 2016
From net investment income
Initial Class	$5,228,746	$5,948,497
Service Class	1,414,210	1,825,191
Service Class 2	5,501,998	5,114,614
Investor Class	3,609,146	4,228,941
Total	$15,754,100	$17,117,243
From net realized gain
Initial Class	$10,137,759	$22,208,671
Service Class	2,951,737	6,932,182
Service Class 2	10,324,815	17,563,645
Investor Class	7,304,137	14,238,373
Total	$30,718,448	$60,942,871

11. Share Transactions.

Transactions for each class of shares were as follows:

	Shares	Shares	Dollars	Dollars
	Year ended December 31, 2017	Year ended December 31, 2016	Year ended December 31, 2017	Year ended December 31, 2016
Initial Class
Shares sold	3,638,273	1,795,563	$75,520,410	$33,082,383
Reinvestment of distributions	725,450	1,674,735	15,366,505	28,157,168
Shares redeemed	(3,911,431)	(4,462,581)	(82,622,575)	(82,426,585)
Net increase (decrease)	452,292	(992,283)	$8,264,340	$(21,187,034)
Service Class
Shares sold	170,901	212,574	$3,505,982	$3,929,712
Reinvestment of distributions	208,012	525,159	4,365,947	8,757,373
Shares redeemed	(800,940)	(926,473)	(16,738,169)	(16,914,248)
Net increase (decrease)	(422,027)	(188,740)	$(8,866,240)	$(4,227,163)
Service Class 2
Shares sold	8,889,928	5,989,891	$182,366,391	$111,049,985
Reinvestment of distributions	759,302	1,371,267	15,826,813	22,678,259
Shares redeemed	(3,111,368)	(4,961,413)	(64,300,255)	(90,185,943)
Net increase (decrease)	6,537,862	2,399,745	$133,892,949	$43,542,301
Investor Class
Shares sold	2,213,496	2,638,403	$46,040,962	$50,668,587
Reinvestment of distributions	517,295	1,097,665	10,913,283	18,467,314
Shares redeemed	(2,432,976)	(2,540,649)	(51,079,829)	(45,932,067)
Net increase (decrease)	297,815	1,195,419	$5,874,416	$23,203,834

12. Other.

At the end of the period, the investment adviser or its affiliates were the owners of record of 27% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 38% of the total outstanding shares of the Fund.

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of VIP Growth & Income Portfolio (the "Fund"), a fund of Variable Insurance Products Fund III, including the schedule of investments, as of December 31, 2017, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2017, and 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 the 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.

Basis for Opinion

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 12, 2018

We have served as the auditor of one or more of the Fidelity investment companies since 1999.

Trustees and Officers

The Trustees, Members of the Advisory Board (if any), and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs 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, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Each of the Trustees oversees 190 funds.

The fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.

Interested Trustees*:

Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trusts or various entities under common control with FMR.

Independent Trustees:

Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

William S. Stavropoulos (1939)

Year of Election or Appointment: 2002

Trustee

Vice Chairman of the Independent Trustees

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

Advisory Board Members and Officers:

Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

Elizabeth Paige Baumann (1968)

Year of Election or Appointment: 2017

Anti-Money Laundering (AML) Officer

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2016

Assistant Treasurer

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

Thomas C. Hense (1964)

Year of Election or Appointment: 2008, 2010, or 2015

Vice President

Mr. Hense serves as Vice President of Fidelity Advisor^® Multi-Asset Income Fund (2015) and other funds (High Income (2008), Small Cap (2008), and Value (2010) funds), and is an employee of Fidelity Investments (1993-present). Previously, Mr. Hense served as a portfolio manager for Fidelity's Institutional Money Management Group (Pyramis) (2003-2008).

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Colm A. Hogan (1973)

Year of Election or Appointment: 2016

Deputy Treasurer

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

Rieco E. Mello (1969)

Year of Election or Appointment: 2017

Assistant Treasurer

Mr. Mello also serves as Assistant Treasurer of other funds. Mr. Mello serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (1995-present).

Kenneth B. Robins (1969)

Year of Election or Appointment: 2016

Chief Compliance Officer

Stacie M. Smith (1974)

Year of Election or Appointment: 2016

President and Treasurer

Marc L. Spector (1972)

Year of Election or Appointment: 2016

Assistant Treasurer

Renee Stagnone (1975)

Year of Election or Appointment: 2016

Assistant Treasurer

Shareholder Expense Example

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2017 to December 31, 2017).

Actual Expenses

Hypothetical Example for Comparison Purposes

	Annualized Expense Ratio-^A	Beginning Account Value July 1, 2017	Ending Account Value December 31, 2017	Expenses Paid During Period-^B July 1, 2017 to December 31, 2017
Initial Class	.55%
Actual		$1,000.00	$1,103.90	$2.92
Hypothetical-^C		$1,000.00	$1,022.43	$2.80
Service Class	.65%
Actual		$1,000.00	$1,103.40	$3.45
Hypothetical-^C		$1,000.00	$1,021.93	$3.31
Service Class 2	.80%
Actual		$1,000.00	$1,102.40	$4.24
Hypothetical-^C		$1,000.00	$1,021.17	$4.08
Investor Class	.63%
Actual		$1,000.00	$1,103.60	$3.34
Hypothetical-^C		$1,000.00	$1,022.03	$3.21

^A Annualized expense ratio reflects expenses net of applicable fee waivers.

^B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

^C 5% return per year before expenses

Distributions (Unaudited)

The Board of Trustees of VIP Growth & Income 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
VIP Growth & Income Portfolio
Initial Class	02/09/18	02/09/18	$0.051	$1.217
Service Class	02/09/18	02/09/18	$0.047	$1.217
Service Class 2	02/09/18	02/09/18	$0.042	$1.217
Investor Class	02/09/18	02/09/18	$0.048	$1.217

The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2017, $71,752,825, or, if subsequently determined to be different, the net capital gain of such year.

Initial Class designates 87% and 99%; Service Class designates 93% and 100%; Service Class 2 designates 100% and 100%; Investor Class designates 91% and 100%; of the dividends distributed in February and December, 2017, respectively during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.

Board Approval of Investment Advisory Contracts and Management Fees

VIP Growth & Income Portfolio

Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should continue to benefit the shareholders of the fund.

Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.

VIP Growth & Income Portfolio

The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2016.

Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.

The Board noted that the total expense ratio of each class ranked below the competitive median for 2016.

The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.

Fidelity Investments

VIPGI-ANN-0218
1.540026.120

Fidelity® Variable Insurance Products:

Growth Opportunities Portfolio

Annual Report

December 31, 2017

Contents

Performance
Management's Discussion of Fund Performance
Investment Summary
Investments
Financial Statements
Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
Trustees and Officers
Shareholder Expense Example
Distributions
Board Approval of Investment Advisory Contracts and Management Fees

You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

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

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

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

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.

Performance: The Bottom Line

Average Annual Total Returns

For the periods ended December 31, 2017	Past 1 year	Past 5 years	Past 10 years
Initial Class	34.47%	17.14%	8.16%
Service Class	34.36%	17.03%	8.05%
Service Class 2	34.17%	16.85%	7.89%
Investor Class	34.38%	17.04%	8.06%

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in VIP Growth Opportunities Portfolio - Initial Class on December 31, 2007.

The chart shows how the value of your investment would have changed, and also shows how the Russell 1000® Growth Index performed over the same period.

	Period Ending Values
	$21,906	VIP Growth Opportunities Portfolio - Initial Class
	$25,930	Russell 1000® Growth Index

Management's Discussion of Fund Performance

Market Recap: U.S. equities gained 21.83% in 2017, as the S&P 500^® index rose steadily and closed the year just shy of an all-time high after a particularly strong three-month finish. Early on, equities rallied on optimism for President Trump’s pro-business agenda but leveled off in March amid fading optimism and stalled efforts by Congress to repeal and replace the Affordable Care Act. Upward momentum soon returned and continued through year-end with consumer sentiment and other market indicators staying positive. The lone exception was a brief cooldown in August, when geopolitical tension escalated and uncertainty grew regarding the future of health care, tax reform and the debt ceiling. Sector-wise, information technology fared best by a wide margin, rising 39% amid strong earnings growth from several major index constituents. A 24% gain in materials was spurred by increased demand, especially from China. Consumer discretionary gained 23%, despite many brick-and-mortar retailers suffering from online competition, and financials edged the broader market on an uptick in bond yields. Conversely, the defensive energy and telecom services sectors returned about -1% each. Rising interest rates held back real estate (+11%), while consumer staples (+13%) and utilities (+12%) struggled due to investors’ general preference for risk assets.

Comments from Portfolio Manager Kyle Weaver: For the year, the fund’s share classes gained roughly 34%, handily topping the 30.21% advance of the benchmark Russell 1000^® Growth Index. Versus the benchmark, stock picking in the consumer discretionary sector was the largest positive, followed by choices in consumer staples, real estate and financials. In information technology, my picks detracted, but this negative was more than offset by my decision to overweight this top-performing group. Overall, active management added value in eight of 11 market sectors. The biggest individual relative contributor was electric-vehicle manufacturer Tesla, whose stock was lifted by growing optimism about prospects for its Model 3 sedan, launched in July. A small private investment in JUUL Labs also paid off. We saw the value of our non-benchmark position in this leading e-cigarette maker rise along with the growing popularity of tobacco-free smoking. Options-market exchange CBOE Global Markets was another contributor. Conversely, positioning in industrials hampered our relative result, and overweighting the energy sector detracted modestly. At the stock level, Allergan –removed from the fund’s benchmark in June – was our biggest relative detractor. An overweighting in Alexion Pharmaceuticals further disappointed, along with a non-benchmark stake in Spirit Airlines.

Investment Summary (Unaudited)

Top Ten Stocks as of December 31, 2017

	% of fund's net assets
Apple, Inc.	6.4
Microsoft Corp.	4.7
Alphabet, Inc. Class C	4.5
Facebook, Inc. Class A	3.8
Amazon.com, Inc.	3.8
American Tower Corp.	2.5
Alphabet, Inc. Class A	2.4
T-Mobile U.S., Inc.	2.2
Salesforce.com, Inc.	2.1
LyondellBasell Industries NV Class A	1.9
	34.3

Top Five Market Sectors as of December 31, 2017

	% of fund's net assets
Information Technology	49.3
Health Care	13.9
Consumer Discretionary	12.4
Consumer Staples	5.4
Materials	4.4

Asset Allocation (% of fund's net assets)

As of December 31, 2017^*
	Stocks	99.9%
	Short-Term Investments and Net Other Assets (Liabilities)	0.1%

* Foreign investments - 13.9%

Investments December 31, 2017

Showing Percentage of Net Assets

Common Stocks - 98.8%
	Shares	Value
CONSUMER DISCRETIONARY - 12.4%
Automobiles - 1.6%
Tesla, Inc. (a)(b)	35,897	$11,176,531
Hotels, Restaurants & Leisure - 1.2%
Compass Group PLC	1,600	34,564
Starbucks Corp.	30,064	1,726,576
U.S. Foods Holding Corp. (a)	204,165	6,518,988
		8,280,128
Household Durables - 0.2%
Roku, Inc. Class A (b)	31,400	1,625,892
Internet & Direct Marketing Retail - 6.4%
Amazon.com, Inc. (a)	22,773	26,632,340
Blue Apron Holdings, Inc.:
Class A	1,039	4,187
Class B	83,090	331,504
Groupon, Inc. (a)(b)	370,800	1,891,080
Netflix, Inc. (a)	37,300	7,160,108
Priceline Group, Inc. (a)	750	1,303,305
Vipshop Holdings Ltd. ADR (a)	358,700	4,203,964
Wayfair LLC Class A (a)	47,502	3,812,986
		45,339,474
Media - 1.7%
Charter Communications, Inc. Class A (a)	27,063	9,092,085
Comcast Corp. Class A	36,078	1,444,924
Naspers Ltd. Class N	600	167,355
The Walt Disney Co.	3,000	322,530
Vivendi SA	43,900	1,180,938
		12,207,832
Multiline Retail - 0.4%
Dollar Tree, Inc. (a)	28,200	3,026,142
Specialty Retail - 0.6%
Home Depot, Inc.	14,010	2,655,315
TJX Companies, Inc.	23,300	1,781,518
		4,436,833
Textiles, Apparel & Luxury Goods - 0.3%
lululemon athletica, Inc. (a)	23,272	1,828,946

TOTAL CONSUMER DISCRETIONARY		87,921,778

CONSUMER STAPLES - 4.7%
Beverages - 0.7%
Constellation Brands, Inc. Class A (sub. vtg.)	11,500	2,628,555
Monster Beverage Corp. (a)	23,195	1,468,012
The Coca-Cola Co.	21,069	966,646
		5,063,213
Food & Staples Retailing - 1.8%
Costco Wholesale Corp.	10,900	2,028,708
CVS Health Corp.	15,200	1,102,000
Performance Food Group Co. (a)	292,308	9,675,395
		12,806,103
Food Products - 0.0%
Kerry Group PLC Class A	1,100	123,405
Personal Products - 0.3%
Unilever NV (Certificaten Van Aandelen) (Bearer)	30,600	1,722,872
Tobacco - 1.9%
British American Tobacco PLC (United Kingdom)	155,800	10,555,532
JUUL Labs, Inc. (c)	560	12,331
Philip Morris International, Inc.	25,500	2,694,075
		13,261,938

TOTAL CONSUMER STAPLES		32,977,531

ENERGY - 1.8%
Oil, Gas & Consumable Fuels - 1.8%
Petronet LNG Ltd.	905,861	3,614,788
Reliance Industries Ltd.	493,733	7,123,320
Teekay LNG Partners LP	49,100	989,365
Williams Partners LP	29,200	1,132,376
		12,859,849
FINANCIALS - 4.2%
Banks - 0.3%
HDFC Bank Ltd. sponsored ADR	23,400	2,379,078
Capital Markets - 3.6%
BlackRock, Inc. Class A	14,700	7,551,537
CBOE Holdings, Inc.	57,400	7,151,466
Charles Schwab Corp.	82,200	4,222,614
MSCI, Inc.	3,000	379,620
S&P Global, Inc.	2,300	389,620
TD Ameritrade Holding Corp.	115,100	5,885,063
		25,579,920
Consumer Finance - 0.3%
Synchrony Financial	46,700	1,803,087

TOTAL FINANCIALS		29,762,085

HEALTH CARE - 13.9%
Biotechnology - 8.3%
ACADIA Pharmaceuticals, Inc. (a)	16,818	506,390
Acorda Therapeutics, Inc. (a)	14,500	311,025
Agios Pharmaceuticals, Inc. (a)	16,000	914,720
Alexion Pharmaceuticals, Inc. (a)	86,552	10,350,754
Alkermes PLC (a)	20,700	1,132,911
Alnylam Pharmaceuticals, Inc. (a)	19,103	2,427,036
Amgen, Inc.	64,759	11,261,590
Amicus Therapeutics, Inc. (a)	57,300	824,547
AnaptysBio, Inc.	13,000	1,309,360
aTyr Pharma, Inc. (a)(d)	22,036	77,126
BioMarin Pharmaceutical, Inc. (a)	26,800	2,389,756
bluebird bio, Inc. (a)	14,930	2,659,033
Blueprint Medicines Corp. (a)	1,400	105,574
Coherus BioSciences, Inc. (a)	21,800	191,840
Epizyme, Inc. (a)	6,900	86,595
Five Prime Therapeutics, Inc. (a)	13,600	298,112
Insmed, Inc. (a)	88,142	2,748,268
Intercept Pharmaceuticals, Inc. (a)	2,500	146,050
Ionis Pharmaceuticals, Inc. (a)	79,406	3,994,122
Neurocrine Biosciences, Inc. (a)	41,788	3,242,331
Opko Health, Inc. (a)	1	5
Prothena Corp. PLC (a)	25,802	967,317
Regeneron Pharmaceuticals, Inc. (a)	10,000	3,759,600
Rigel Pharmaceuticals, Inc. (a)	111,406	432,255
Sage Therapeutics, Inc. (a)	6,300	1,037,673
Sarepta Therapeutics, Inc. (a)	19,600	1,090,544
Sienna Biopharmaceuticals, Inc. (b)	10,920	198,198
Spark Therapeutics, Inc. (a)	30,500	1,568,310
TESARO, Inc. (a)(b)	28,900	2,394,943
Vertex Pharmaceuticals, Inc. (a)	15,500	2,322,830
Xencor, Inc. (a)	15,300	335,376
		59,084,191
Health Care Equipment & Supplies - 1.6%
Boston Scientific Corp. (a)	301,200	7,466,748
Danaher Corp.	17,900	1,661,478
Insulet Corp. (a)	23,800	1,642,200
Intuitive Surgical, Inc. (a)	1,800	656,892
		11,427,318
Health Care Providers & Services - 2.3%
Anthem, Inc.	25,200	5,670,252
Cigna Corp.	10,500	2,132,445
Humana, Inc.	9,000	2,232,630
OptiNose, Inc. (b)	12,100	228,690
UnitedHealth Group, Inc.	25,700	5,665,822
		15,929,839
Health Care Technology - 0.3%
athenahealth, Inc. (a)	17,756	2,362,258
Pharmaceuticals - 1.4%
Akcea Therapeutics, Inc. (b)	59,200	1,027,712
Allergan PLC	35,063	5,735,606
Bristol-Myers Squibb Co.	20,300	1,243,984
Innoviva, Inc. (a)	52,400	743,556
Theravance Biopharma, Inc. (a)(b)	35,000	976,150
		9,727,008

TOTAL HEALTH CARE		98,530,614

INDUSTRIALS - 3.5%
Air Freight & Logistics - 0.2%
FedEx Corp.	4,400	1,097,976
Airlines - 1.7%
JetBlue Airways Corp. (a)	15,300	341,802
Spirit Airlines, Inc. (a)	254,900	11,432,265
		11,774,067
Commercial Services & Supplies - 0.1%
Copart, Inc. (a)	9,400	405,986
Electrical Equipment - 0.2%
Sunrun, Inc. (a)(b)	262,100	1,546,390
Machinery - 0.3%
Allison Transmission Holdings, Inc.	18,700	805,409
Caterpillar, Inc.	9,500	1,497,010
		2,302,419
Professional Services - 0.2%
TransUnion Holding Co., Inc. (a)	27,500	1,511,400
Trading Companies & Distributors - 0.8%
Bunzl PLC	208,000	5,818,822

TOTAL INDUSTRIALS		24,457,060

INFORMATION TECHNOLOGY - 49.0%
Communications Equipment - 0.9%
Carvana Co. Class A (b)	316,400	6,049,568
Internet Software & Services - 15.4%
2U, Inc. (a)	4,700	303,197
Alibaba Group Holding Ltd. sponsored ADR (a)	34,500	5,948,835
Alphabet, Inc.:
Class A (a)	16,202	17,067,187
Class C (a)	30,263	31,667,203
CarGurus, Inc. Class A (b)	1,100	32,978
Cloudera, Inc. (b)	6,366	105,166
Criteo SA sponsored ADR (a)	66,200	1,723,186
Facebook, Inc. Class A (a)	151,310	26,700,163
GoDaddy, Inc. (a)	112,820	5,672,590
IAC/InterActiveCorp (a)	11,000	1,345,080
MongoDB, Inc. Class B	41,407	1,106,064
NetEase, Inc. ADR	1,200	414,084
The Trade Desk, Inc. (a)(b)	151,400	6,923,522
Wix.com Ltd. (a)	178,807	10,290,343
		109,299,598
IT Services - 9.6%
Accenture PLC Class A	3,000	459,270
Alliance Data Systems Corp.	39,800	10,088,504
Cognizant Technology Solutions Corp. Class A	110,164	7,823,847
EPAM Systems, Inc. (a)	35,600	3,824,508
Euronet Worldwide, Inc. (a)	42,700	3,598,329
FleetCor Technologies, Inc. (a)	5,800	1,116,094
Global Payments, Inc.	61,000	6,114,640
Luxoft Holding, Inc. (a)	140,200	7,809,140
MasterCard, Inc. Class A	52,400	7,931,264
PayPal Holdings, Inc. (a)	70,700	5,204,934
Vantiv, Inc. (a)	37,900	2,787,545
Visa, Inc. Class A	98,600	11,242,372
		68,000,447
Semiconductors & Semiconductor Equipment - 4.1%
Analog Devices, Inc.	32,600	2,902,378
Broadcom Ltd.	36,100	9,274,090
Cavium, Inc. (a)	5,400	452,682
Micron Technology, Inc. (a)	115,700	4,757,584
NVIDIA Corp.	26,300	5,089,050
ON Semiconductor Corp. (a)	87,100	1,823,874
Qualcomm, Inc.	53,300	3,412,266
SolarEdge Technologies, Inc. (a)	29,035	1,090,264
		28,802,188
Software - 12.6%
Activision Blizzard, Inc.	100,200	6,344,664
Adobe Systems, Inc. (a)	49,500	8,674,380
Altair Engineering, Inc. Class A (a)	2,900	69,368
Autodesk, Inc. (a)	60,100	6,300,283
Citrix Systems, Inc. (a)	12,100	1,064,800
Electronic Arts, Inc. (a)	31,100	3,267,366
Intuit, Inc.	11,200	1,767,136
Microsoft Corp.	385,749	32,996,969
Red Hat, Inc. (a)	17,400	2,089,740
Salesforce.com, Inc. (a)	144,377	14,759,661
ServiceNow, Inc. (a)	56,300	7,340,957
Workday, Inc. Class A (a)	45,200	4,598,648
		89,273,972
Technology Hardware, Storage & Peripherals - 6.4%
Apple, Inc.	266,743	45,140,918

TOTAL INFORMATION TECHNOLOGY		346,566,691

MATERIALS - 4.4%
Chemicals - 3.7%
DowDuPont, Inc.	67,305	4,793,462
LG Chemical Ltd.	9,186	3,485,495
LyondellBasell Industries NV Class A	122,900	13,558,328
The Chemours Co. LLC	88,200	4,415,292
		26,252,577
Containers & Packaging - 0.7%
Ball Corp.	127,700	4,833,445

TOTAL MATERIALS		31,086,022

REAL ESTATE - 2.7%
Equity Real Estate Investment Trusts (REITs) - 2.5%
American Tower Corp.	122,800	17,519,876
Real Estate Management & Development - 0.2%
Redfin Corp. (b)	1,200	37,584
Redfin Corp.	50,716	1,509,004
		1,546,588

TOTAL REAL ESTATE		19,066,464

TELECOMMUNICATION SERVICES - 2.2%
Wireless Telecommunication Services - 2.2%
T-Mobile U.S., Inc. (a)	246,100	15,629,811
TOTAL COMMON STOCKS
(Cost $424,841,079)		698,857,905

Preferred Stocks - 1.1%
Convertible Preferred Stocks - 1.1%
CONSUMER STAPLES - 0.7%
Tobacco - 0.7%
PAX Labs, Inc. Series C (a)(c)(e)	215,881	4,753,700
FINANCIALS - 0.1%
Insurance - 0.1%
Clover Health Series D (c)(e)	65,670	579,866
INFORMATION TECHNOLOGY - 0.3%
Internet Software & Services - 0.3%
Uber Technologies, Inc. Series D, 8.00% (a)(c)(e)	66,008	2,304,999
Software - 0.0%
Cloudflare, Inc. Series D 8.00% (a)(c)(e)	5,997	32,924
TOTAL INFORMATION TECHNOLOGY		2,337,923

TOTAL CONVERTIBLE PREFERRED STOCKS		7,671,489

Nonconvertible Preferred Stocks - 0.0%
CONSUMER STAPLES - 0.0%
Tobacco - 0.0%
PAX Labs, Inc. Series A (c)(e)	215,881	278,486
TOTAL PREFERRED STOCKS
(Cost $2,507,702)		7,949,975

Money Market Funds - 3.9%
Fidelity Cash Central Fund, 1.36% (f)	468,981	469,075
Fidelity Securities Lending Cash Central Fund 1.36% (f)(g)	27,007,181	27,012,582
TOTAL MONEY MARKET FUNDS
(Cost $27,478,957)		27,481,657
TOTAL INVESTMENT IN SECURITIES - 103.8%
(Cost $454,827,738)		734,289,537
NET OTHER ASSETS (LIABILITIES) - (3.8)%		(26,833,902)
NET ASSETS - 100%		$707,455,635

Legend

(a) Non-income producing

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

(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $7,949,975 or 1.1% of net assets.

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

Additional information on each restricted holding is as follows:

Security	Acquisition Date	Acquisition Cost
Cloudflare, Inc. Series D 8.00%	11/5/14	$36,735
Clover Health Series D	6/7/17	$615,840
PAX Labs, Inc. Series A	5/22/15	$159,752
PAX Labs, Inc. Series C	5/22/15	$671,390
Uber Technologies, Inc. Series D, 8.00%	6/6/14	$1,023,986

Affiliated Central Funds

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

Fund	Income earned
Fidelity Cash Central Fund	$64,934
Fidelity Securities Lending Cash Central Fund	1,158,834
Total	$1,223,768

Investment Valuation

	Valuation Inputs at Reporting Date:
Description	Total	Level 1	Level 2	Level 3
Investments in Securities:
Equities:
Consumer Discretionary	$87,921,778	$87,590,274	$331,504	$--
Consumer Staples	38,009,717	31,242,328	1,722,872	5,044,517
Energy	12,859,849	12,859,849	--	--
Financials	30,341,951	29,762,085	--	579,866
Health Care	98,530,614	98,530,614	--	--
Industrials	24,457,060	24,457,060	--	--
Information Technology	348,904,614	345,460,627	1,106,064	2,337,923
Materials	31,086,022	31,086,022	--	--
Real Estate	19,066,464	17,557,460	1,509,004	--
Telecommunication Services	15,629,811	15,629,811	--	--
Money Market Funds	27,481,657	27,481,657	--	--
Total Investments in Securities:	$734,289,537	$721,657,787	$4,669,444	$7,962,306

The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:

Investments in Securities:
Beginning Balance	$6,224,800
Net Realized Gain (Loss) on Investment Securities	--
Net Unrealized Gain (Loss) on Investment Securities	3,699,353
Cost of Purchases	777,328
Proceeds of Sales	(2,739,175)
Amortization/Accretion	--
Transfers into Level 3	--
Transfers out of Level 3	--
Ending Balance	$7,962,306
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at December 31, 2017	$3,265,865

The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliation are included in Net Gain (Loss) on the Fund's Statement of Operations.

Other Information

Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):

United States of America	86.1%
United Kingdom	2.3%
Netherlands	2.2%
India	1.8%
Cayman Islands	1.6%
Israel	1.4%
Singapore	1.3%
Ireland	1.2%
British Virgin Islands	1.1%
Others (Individually Less Than 1%)	1.0%
	100.0%

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

Financial Statements

Statement of Assets and Liabilities

		December 31, 2017
Assets
Investment in securities, at value (including securities loaned of $25,924,074) — See accompanying schedule: Unaffiliated issuers (cost $427,348,781)	$706,807,880
Fidelity Central Funds (cost $27,478,957)	27,481,657
Total Investment in Securities (cost $454,827,738)		$734,289,537
Receivable for investments sold		275,631
Receivable for fund shares sold		442,460
Dividends receivable		281,161
Distributions receivable from Fidelity Central Funds		304,858
Prepaid expenses		1,104
Other receivables		5,097
Total assets		735,599,848
Liabilities
Payable to custodian bank	$275,585
Payable for fund shares redeemed	403,106
Accrued management fee	318,430
Distribution and service plan fees payable	48,516
Other affiliated payables	76,289
Other payables and accrued expenses	13,562
Collateral on securities loaned	27,008,725
Total liabilities		28,144,213
Net Assets		$707,455,635
Net Assets consist of:
Paid in capital		$387,197,683
Undistributed net investment income		617,177
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		40,177,584
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		279,463,191
Net Assets		$707,455,635
Initial Class:
Net Asset Value, offering price and redemption price per share ($167,740,148 ÷ 4,649,364 shares)		$36.08
Service Class:
Net Asset Value, offering price and redemption price per share ($102,730,141 ÷ 2,852,332 shares)		$36.02
Service Class 2:
Net Asset Value, offering price and redemption price per share ($193,945,385 ÷ 5,448,588 shares)		$35.60
Investor Class:
Net Asset Value, offering price and redemption price per share ($243,039,961 ÷ 6,774,580 shares)		$35.88

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

Statement of Operations

		Year ended December 31, 2017
Investment Income
Dividends		$5,435,040
Income from Fidelity Central Funds (including $1,158,834 from security lending)		1,223,768
Total income		6,658,808
Expenses
Management fee	$3,411,253
Transfer agent fees	586,543
Distribution and service plan fees	496,273
Accounting and security lending fees	234,828
Custodian fees and expenses	30,779
Independent trustees' fees and expenses	2,428
Audit	66,444
Legal	12,541
Miscellaneous	5,085
Total expenses before reductions	4,846,174
Expense reductions	(26,241)	4,819,933
Net investment income (loss)		1,838,875
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investment securities:
Unaffiliated issuers	53,402,435
Fidelity Central Funds	1,155
Foreign currency transactions	19,017
Total net realized gain (loss)		53,422,607
Change in net unrealized appreciation (depreciation) on:
Investment securities:
Unaffiliated issuers	123,984,573
Fidelity Central Funds	1,509
Assets and liabilities in foreign currencies	1,635
Total change in net unrealized appreciation (depreciation)		123,987,717
Net gain (loss)		177,410,324
Net increase (decrease) in net assets resulting from operations		$179,249,199

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

Statement of Changes in Net Assets

	Year ended December 31, 2017	Year ended December 31, 2016
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$1,838,875	$1,550,111
Net realized gain (loss)	53,422,607	64,520,465
Change in net unrealized appreciation (depreciation)	123,987,717	(70,613,183)
Net increase (decrease) in net assets resulting from operations	179,249,199	(4,542,607)
Distributions to shareholders from net investment income	(1,339,660)	(1,170,788)
Distributions to shareholders from net realized gain	(76,691,219)	(13,837,937)
Total distributions	(78,030,879)	(15,008,725)
Share transactions - net increase (decrease)	87,470,716	(199,072,390)
Total increase (decrease) in net assets	188,689,036	(218,623,722)
Net Assets
Beginning of period	518,766,599	737,390,321
End of period	$707,455,635	$518,766,599
Other Information
Undistributed net investment income end of period	$617,177	$347,887

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

Financial Highlights

VIP Growth Opportunities Portfolio Initial Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$31.06	$31.75	$33.51	$29.96	$21.80
Income from Investment Operations
Net investment income (loss)^A	.13	.11	.10	.07	.08
Net realized and unrealized gain (loss)	9.54	(.10)	1.70	3.58	8.18
Total from investment operations	9.67	.01	1.80	3.65	8.26
Distributions from net investment income	(.10)	(.10)	(.06)	(.07)	(.08)
Distributions from net realized gain	(4.54)	(.60)	(3.49)	(.03)	(.01)
Total distributions	(4.65)^B	(.70)	(3.56)^C	(.10)	(.10)^D
Net asset value, end of period	$36.08	$31.06	$31.75	$33.51	$29.96
Total Return^E,^F	34.47%	.37%	5.61%	12.20%	37.90%
Ratios to Average Net Assets^G,^H
Expenses before reductions	.67%	.68%	.67%	.68%	.68%
Expenses net of fee waivers, if any	.66%	.68%	.67%	.68%	.68%
Expenses net of all reductions	.66%	.68%	.66%	.68%	.68%
Net investment income (loss)	.40%	.36%	.30%	.21%	.31%
Supplemental Data
Net assets, end of period (000 omitted)	$167,740	$133,393	$176,056	$158,791	$163,798
Portfolio turnover rate^I	54%	65%	63%^J	11%	25%

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

^B Total distributions of $4.65 per share is comprised of distributions from net investment income of $.104 and distributions from net realized gain of $4.543 per share.

^C Total distributions of $3.56 per share is comprised of distributions from net investment income of $.064 and distributions from net realized gain of $3.492 per share.

^D Total distributions of $.10 per share is comprised of distributions from net investment income of $.082 and distributions from net realized gain of $.014 per share.

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

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

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

^J The portfolio turnover rate does not include the assets acquired in the merger.

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

VIP Growth Opportunities Portfolio Service Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$31.01	$31.70	$33.46	$29.91	$21.76
Income from Investment Operations
Net investment income (loss)^A	.10	.08	.07	.04	.05
Net realized and unrealized gain (loss)	9.52	(.09)	1.68	3.58	8.17
Total from investment operations	9.62	(.01)	1.75	3.62	8.22
Distributions from net investment income	(.07)	(.07)	(.02)	(.04)	(.05)
Distributions from net realized gain	(4.54)	(.60)	(3.49)	(.03)	(.01)
Total distributions	(4.61)	(.68)^B	(3.51)	(.07)	(.07)^C
Net asset value, end of period	$36.02	$31.01	$31.70	$33.46	$29.91
Total Return^D,^E	34.36%	.28%	5.48%	12.10%	37.78%
Ratios to Average Net Assets^F,^G
Expenses before reductions	.77%	.78%	.77%	.77%	.78%
Expenses net of fee waivers, if any	.76%	.78%	.77%	.77%	.78%
Expenses net of all reductions	.76%	.78%	.76%	.77%	.78%
Net investment income (loss)	.30%	.26%	.20%	.11%	.21%
Supplemental Data
Net assets, end of period (000 omitted)	$102,730	$92,664	$113,812	$141,833	$160,835
Portfolio turnover rate^H	54%	65%	63%^I	11%	25%

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

^B Total distributions of $.68 per share is comprised of distributions from net investment income of $.073 and distributions from net realized gain of $.602 per share.

^C Total distributions of $.07 per share is comprised of distributions from net investment income of $.052 and distributions from net realized gain of $.014 per share.

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

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

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

^I The portfolio turnover rate does not include the assets acquired in the merger.

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

VIP Growth Opportunities Portfolio Service Class 2

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$30.71	$31.40	$33.20	$29.68	$21.60
Income from Investment Operations
Net investment income (loss)^A	.05	.03	.02	(.01)	.01
Net realized and unrealized gain (loss)	9.42	(.10)	1.67	3.56	8.10
Total from investment operations	9.47	(.07)	1.69	3.55	8.11
Distributions from net investment income	(.04)	(.02)	–^B	–^B	(.01)
Distributions from net realized gain	(4.54)	(.60)	(3.49)	(.02)	(.01)
Total distributions	(4.58)	(.62)	(3.49)	(.03)^C	(.03)^D
Net asset value, end of period	$35.60	$30.71	$31.40	$33.20	$29.68
Total Return^E,^F	34.17%	.10%	5.34%	11.95%	37.54%
Ratios to Average Net Assets^G,^H
Expenses before reductions	.91%	.93%	.92%	.93%	.94%
Expenses net of fee waivers, if any	.91%	.93%	.92%	.93%	.93%
Expenses net of all reductions	.91%	.93%	.91%	.93%	.93%
Net investment income (loss)	.15%	.11%	.05%	(.04)%	.06%
Supplemental Data
Net assets, end of period (000 omitted)	$193,945	$117,623	$177,404	$83,545	$81,360
Portfolio turnover rate^I	54%	65%	63%^J	11%	25%

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

^B Amount represents less than $.005 per share.

^C Total distributions of $.03 per share is comprised of distributions from net investment income of $.002 and distributions from net realized gain of $.023 per share.

^D Total distributions of $.03 per share is comprised of distributions from net investment income of $.012 and distributions from net realized gain of $.014 per share.

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

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

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

^J The portfolio turnover rate does not include the assets acquired in the merger.

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

VIP Growth Opportunities Portfolio Investor Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$30.91	$31.60	$33.37	$29.84	$21.72
Income from Investment Operations
Net investment income (loss)^A	.10	.08	.07	.04	.06
Net realized and unrealized gain (loss)	9.49	(.09)	1.70	3.57	8.14
Total from investment operations	9.59	(.01)	1.77	3.61	8.20
Distributions from net investment income	(.08)	(.07)	(.05)	(.05)	(.07)
Distributions from net realized gain	(4.54)	(.60)	(3.49)	(.03)	(.01)
Total distributions	(4.62)	(.68)^B	(3.54)	(.08)	(.08)
Net asset value, end of period	$35.88	$30.91	$31.60	$33.37	$29.84
Total Return^C,^D	34.38%	.28%	5.54%	12.09%	37.77%
Ratios to Average Net Assets^E,^F
Expenses before reductions	.75%	.76%	.75%	.76%	.77%
Expenses net of fee waivers, if any	.75%	.76%	.75%	.76%	.76%
Expenses net of all reductions	.74%	.76%	.74%	.76%	.76%
Net investment income (loss)	.32%	.28%	.22%	.13%	.23%
Supplemental Data
Net assets, end of period (000 omitted)	$243,040	$175,086	$270,119	$136,782	$122,334
Portfolio turnover rate^G	54%	65%	63%^H	11%	25%

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

^B Total distributions of $.68 per share is comprised of distributions from net investment income of $.073 and distributions from net realized gain of $.602 per share.

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

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

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

^H The portfolio turnover rate does not include the assets acquired in the merger.

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

Notes to Financial Statements

For the period ended December 31, 2017

1. Organization.

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

2. Investments in Fidelity Central Funds.

3. Significant Accounting Policies.

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

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

Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)

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

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

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

The following provides information on Level 3 securities held by the Fund that were valued at period end based on unobservable inputs. These amounts exclude valuations provided by a broker.

Asset Type	Fair Value	Valuation Technique(s)	Unobservable Input	Amount or Range/Weighted Average	Impact to Valuation from an Increase in Input^(a)
Equities	$7,962,306	Market comparable	Enterprise value/Sales multiple (EV/S)	1.1 – 8.2 / 4.9	Increase
			Discount rate	10.0%	Decrease
			Discount for lack of marketability	20.0%	Decrease
			Premium rate	38.9%	Increase
		Market approach	Transaction price	$32.97 - $48.77 / $40.87	Increase

(a) Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of December 31, 2017, as well as a roll forward of Level 3 investments, is included at the end of the Fund's Schedule of Investments.

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

As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:

Gross unrealized appreciation	$289,250,744
Gross unrealized depreciation	(10,445,748)
Net unrealized appreciation (depreciation)	$278,804,996
Tax Cost	$455,484,541

The tax-based components of distributable earnings as of period end were as follows:

Undistributed ordinary income	$2,672,406
Undistributed long-term capital gain	$38,990,680
Net unrealized appreciation (depreciation) on securities and other investments	$278,594,971

The tax character of distributions paid was as follows:

	December 31, 2017	December 31, 2016
Ordinary Income	$11,798,986	$ 1,170,788
Long-term Capital Gains	66,231,893	13,837,937
Total	$78,030,879	$ 15,008,725

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $347,691,259 and $334,639,090, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. Fidelity Management & Research Company (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .54% of the Fund's average net assets.

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

Service Class	$100,403
Service Class 2	395,870
	$496,273

Initial Class	$101,497
Service Class	66,187
Service Class 2	104,366
Investor Class	314,493
	$586,543

Other. During the period, the investment adviser reimbursed the Fund for certain losses in the amount of $4,770.

6. Committed Line of Credit.

The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,862 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $256,088. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds, and includes $94,268 from securities loaned to FCM.

8. Expense Reductions.

In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $4,725.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

	Year ended December 31, 2017	Year ended December 31, 2016
From net investment income
Initial Class	$467,469	$441,232
Service Class	195,674	222,177
Service Class 2	167,345	71,358
Investor Class	509,172	436,021
Total	$1,339,660	$1,170,788
From net realized gain
Initial Class	$19,304,343	$3,227,176
Service Class	13,271,356	2,124,607
Service Class 2	18,454,911	3,498,766
Investor Class	25,660,609	4,987,388
Total	$76,691,219	$13,837,937

10. Share Transactions.

Transactions for each class of shares were as follows:

	Shares	Shares	Dollars	Dollars
	Year ended December 31, 2017	Year ended December 31, 2016	Year ended December 31, 2017	Year ended December 31, 2016
Initial Class
Shares sold	445,185	280,329	$14,355,522	$8,217,274
Reinvestment of distributions	659,000	135,711	19,771,812	3,668,408
Shares redeemed	(749,981)	(1,666,374)	(24,550,558)	(50,097,985)
Net increase (decrease)	354,204	(1,250,334)	$9,576,776	$(38,212,303)
Service Class
Shares sold	102,330	68,666	$3,372,479	$2,044,301
Reinvestment of distributions	451,195	87,295	13,467,030	2,346,784
Shares redeemed	(689,399)	(757,522)	(22,685,483)	(22,707,390)
Net increase (decrease)	(135,874)	(601,561)	$(5,845,974)	$(18,316,305)
Service Class 2
Shares sold	2,032,671	1,537,082	$66,122,296	$44,979,886
Reinvestment of distributions	626,806	135,723	18,622,256	3,570,124
Shares redeemed	(1,040,672)	(3,493,410)	(34,075,785)	(104,002,667)
Net increase (decrease)	1,618,805	(1,820,605)	$50,668,767	$(55,452,657)
Investor Class
Shares sold	1,044,502	180,117	$33,953,637	$5,259,727
Reinvestment of distributions	875,462	202,876	26,169,781	5,423,409
Shares redeemed	(809,925)	(3,267,048)	(27,052,271)	(97,774,261)
Net increase (decrease)	1,110,039	(2,884,055)	$33,071,147	$(87,091,125)

11. Other.

At the end of the period, the investment adviser or its affiliates were the owners of record of 48% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 27% of the total outstanding shares of the Fund.

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of VIP Growth Opportunities Portfolio (the "Fund"), a fund of Variable Insurance Products Fund III, including the schedule of investments, as of December 31, 2017, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2017, and 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 the 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.

Basis for Opinion

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 14, 2018

We have served as the auditor of one or more of the Fidelity investment companies since 1999.

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 1-877-208-0098.

Interested Trustees*:

Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.

Independent Trustees:

Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

William S. Stavropoulos (1939)

Year of Election or Appointment: 2002

Trustee

Vice Chairman of the Independent Trustees

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

Advisory Board Members and Officers:

Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

Elizabeth Paige Baumann (1968)

Year of Election or Appointment: 2017

Anti-Money Laundering (AML) Officer

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2016

Assistant Treasurer

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Colm A. Hogan (1973)

Year of Election or Appointment: 2016

Deputy Treasurer

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

Rieco E. Mello (1969)

Year of Election or Appointment: 2017

Assistant Treasurer

Mr. Mello also serves as Assistant Treasurer of other funds. Mr. Mello serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (1995-present).

Melissa M. Reilly (1971)

Year of Election or Appointment: 2014

Vice President of certain Equity Funds

Ms. Reilly also serves as Vice President of other funds. Ms. Reilly is an employee of Fidelity Investments (2004-present).

Kenneth B. Robins (1969)

Year of Election or Appointment: 2016

Chief Compliance Officer

Stacie M. Smith (1974)

Year of Election or Appointment: 2016

President and Treasurer

Marc L. Spector (1972)

Year of Election or Appointment: 2016

Assistant Treasurer

Renee Stagnone (1975)

Year of Election or Appointment: 2016

Assistant Treasurer

Shareholder Expense Example

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2017 to December 31, 2017).

Actual Expenses

Hypothetical Example for Comparison Purposes

	Annualized Expense Ratio-^A	Beginning Account Value July 1, 2017	Ending Account Value December 31, 2017	Expenses Paid During Period-^B July 1, 2017 to December 31, 2017
Initial Class	.66%
Actual		$1,000.00	$1,121.20	$3.53
Hypothetical-^C		$1,000.00	$1,021.88	$3.36
Service Class	.76%
Actual		$1,000.00	$1,120.80	$4.06
Hypothetical-^C		$1,000.00	$1,021.37	$3.87
Service Class 2	.91%
Actual		$1,000.00	$1,120.20	$4.86
Hypothetical-^C		$1,000.00	$1,020.62	$4.63
Investor Class	.74%
Actual		$1,000.00	$1,121.00	$3.96
Hypothetical-^C		$1,000.00	$1,021.48	$3.77

^A Annualized expense ratio reflects expenses net of applicable fee waivers.

^B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

^C 5% return per year before expenses

Distributions (Unaudited)

The Board of Trustees of VIP Growth Opportunities 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
VIP Growth Opportunities Portfolio
Initial Class	02/09/18	02/09/18	$0.048	$2.064
Service Class	02/09/18	02/09/18	$0.042	$2.064
Service Class 2	02/09/18	02/09/18	$0.034	$2.064
Investor Class	02/09/18	02/09/18	$0.044	$2.064

The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2017, $39,000,824, or, if subsequently determined to be different, the net capital gain of such year.

Initial Class designates 85%, and 28%; Service Class designates 100%, and 29%; Service Class 2 designates 100%, and 30%; and Investor Class designates 100%, and 29% of the dividends distributed in February and December, 2017, respectively during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.

Board Approval of Investment Advisory Contracts and Management Fees

VIP Growth Opportunities Portfolio

Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should continue to benefit the shareholders of the fund.

Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.

VIP Growth Opportunities Portfolio

The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2016.

Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.

The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.

Fidelity Investments

VIPGRO-ANN-0218
1.540209.120

Fidelity® Variable Insurance Products:

Mid Cap Portfolio

Annual Report

December 31, 2017

Contents

Performance
Management's Discussion of Fund Performance
Investment Summary
Investments
Financial Statements
Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
Trustees and Officers
Shareholder Expense Example
Distributions
Board Approval of Investment Advisory Contracts and Management Fees

You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

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

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

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

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.

Performance: The Bottom Line

Average Annual Total Returns

For the periods ended December 31, 2017	Past 1 year	Past 5 years	Past 10 years
Initial Class	20.81%	14.12%	8.06%
Service Class	20.70%	14.01%	7.96%
Service Class 2	20.54%	13.84%	7.80%
Investor Class	20.72%	14.03%	7.97%

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in VIP Mid Cap Portfolio - Initial Class on December 31, 2007.

The chart shows how the value of your investment would have changed, and also shows how the S&P MidCap 400® Index performed over the same period.

	Period Ending Values
	$21,718	VIP Mid Cap Portfolio - Initial Class
	$25,857	S&P MidCap 400® Index

Management's Discussion of Fund Performance

Market Recap: U.S. equities gained 21.83% in 2017, as the S&P 500^® index rose steadily and closed the year just shy of an all-time high after a particularly strong three-month finish. Early on, equities rallied on optimism for President Trump’s pro-business agenda but leveled off in March amid fading optimism and stalled efforts by Congress to repeal and replace the Affordable Care Act. Upward momentum soon returned and continued through year-end with consumer sentiment and other market indicators staying positive. The lone exception was a brief cooldown in August, when geopolitical tension escalated and uncertainty grew regarding the future of health care, tax reform and the debt ceiling. Sector-wise, information technology fared best by a wide margin, rising 39% amid strong earnings growth from several major index constituents. A 24% gain in materials was spurred by increased demand, especially from China. Consumer discretionary gained 23%, despite many brick-and-mortar retailers suffering from online competition, and financials edged the broader market on an uptick in bond yields. Conversely, the defensive energy and telecom services sectors returned about -1% each. Rising interest rates held back real estate (+11%), while consumer staples (+13%) and utilities (+12%) struggled due to investors’ general preference for risk assets.

Comments from Portfolio Manager Thomas Allen: For the year, the fund’s share classes gained roughly 21%, well ahead of the 16.24% advance of the benchmark S&P MidCap 400^® Index. Versus the benchmark, stock selection and industry positioning both contributed to the fund’s performance. Stock choices and an underweighting in the weak real estate sector were especially helpful, along with picks in financials, consumer discretionary and information technology. Within consumer discretionary, homebuilder PulteGroup was the fund’s top contributor, with our position here rising about 83% for the year. Two other homebuilders, Lennar and Toll Brothers, were further down our list of contributors. Homebuilders continued to emerge from extremely depressed conditions during the Great Recession of 2007–2009. Within software & services, three holdings stood out as strong contributors. This group included gaming and entertainment company Activision Blizzard, as well as Total System Services and Global Payments, both part of the larger theme of cash-to-digital conversion in which I actively invested this period. Conversely, selections in health care and industrials notably detracted, while positioning in energy hurt to a lesser extent. A stake in Israel-based Teva Pharmaceutical Industries was the fund’s largest detractor the past year. I thought investors unreasonably punished this stock, so I added aggressively to the position. DineEquity, where I also increased the fund’s exposure, further hampered performance. With the exception of Toll Brothers, all of the stocks mentioned were out-of-benchmark holdings.

Investment Summary (Unaudited)

Top Ten Stocks as of December 31, 2017

	% of fund's net assets
Essent Group Ltd.	1.3
Electronic Arts, Inc.	1.3
Total System Services, Inc.	1.0
Reinsurance Group of America, Inc.	1.0
Akamai Technologies, Inc.	1.0
FleetCor Technologies, Inc.	1.0
Activision Blizzard, Inc.	0.9
S&P Global, Inc.	0.9
Genpact Ltd.	0.9
Polaris Industries, Inc.	0.9
	10.2

Top Five Market Sectors as of December 31, 2017

	% of fund's net assets
Information Technology	21.8
Financials	19.8
Health Care	14.1
Industrials	12.0
Consumer Discretionary	11.8

Asset Allocation (% of fund's net assets)

As of December 31, 2017^*
	Stocks	99.9%
	Short-Term Investments and Net Other Assets (Liabilities)	0.1%

* Foreign investments - 17.2%

Investments December 31, 2017

Showing Percentage of Net Assets

Common Stocks - 99.8%
	Shares	Value
CONSUMER DISCRETIONARY - 11.8%
Auto Components - 0.5%
Aptiv PLC	171,361	$14,536,554
Delphi Technologies PLC (a)	58,420	3,065,297
Gentex Corp.	1,249,692	26,181,047
		43,782,898
Distributors - 0.1%
LKQ Corp. (a)	222,600	9,053,142
Diversified Consumer Services - 0.6%
Houghton Mifflin Harcourt Co. (a)	2,850,700	26,511,510
New Oriental Education & Technology Group, Inc. sponsored ADR	234,996	22,089,624
		48,601,134
Hotels, Restaurants & Leisure - 2.7%
Bojangles', Inc. (a)	225,700	2,663,260
Darden Restaurants, Inc.	172,400	16,553,848
DineEquity, Inc. (b)(c)	1,261,000	63,970,530
Jubilant Foodworks Ltd.	75,070	2,070,893
Las Vegas Sands Corp.	547,688	38,058,839
Texas Roadhouse, Inc. Class A	391,000	20,597,880
The Restaurant Group PLC	166,500	676,648
Wyndham Worldwide Corp.	561,500	65,061,005
Yum China Holdings, Inc.	676,000	27,053,520
		236,706,423
Household Durables - 2.4%
D.R. Horton, Inc.	203,000	10,367,210
iRobot Corp. (a)(b)	74,480	5,712,616
Lennar Corp.:
Class A	582,200	36,818,328
Class B	13,430	694,062
Maisons du Monde SA (d)	18,250	826,622
Mohawk Industries, Inc. (a)	22,500	6,207,750
NVR, Inc. (a)	1,214	4,258,979
Panasonic Corp.	2,183,800	31,870,195
PulteGroup, Inc.	1,889,400	62,822,550
SodaStream International Ltd. (a)	8,918	627,292
Toll Brothers, Inc.	981,700	47,141,234
		207,346,838
Leisure Products - 1.0%
Polaris Industries, Inc. (b)	641,947	79,595,009
Vista Outdoor, Inc. (a)	615,200	8,963,464
		88,558,473
Media - 1.4%
China Literature Ltd. (a)(d)	421	4,491
Interpublic Group of Companies, Inc.	2,182,685	44,002,930
Lions Gate Entertainment Corp.:
Class A (a)(b)	460,150	15,557,672
Class B	460,150	14,605,161
Naspers Ltd. Class N	73,200	20,417,313
News Corp. Class A	742,300	12,032,683
Omnicom Group, Inc.	292,500	21,302,775
		127,923,025
Multiline Retail - 0.5%
Dollar Tree, Inc. (a)	418,500	44,909,235
Specialty Retail - 0.8%
AutoZone, Inc. (a)	21,432	15,246,082
Foot Locker, Inc.	435,987	20,439,071
GNC Holdings, Inc. Class A	2,400	8,856
Murphy U.S.A., Inc. (a)	56,462	4,537,286
Party City Holdco, Inc. (a)(b)	438,400	6,115,680
Williams-Sonoma, Inc. (b)	409,300	21,160,810
		67,507,785
Textiles, Apparel & Luxury Goods - 1.8%
Deckers Outdoor Corp. (a)	82,850	6,648,713
G-III Apparel Group Ltd. (a)	1,337,144	49,327,242
Michael Kors Holdings Ltd. (a)	499,800	31,462,410
Page Industries Ltd.	19,804	7,923,322
PVH Corp.	471,400	64,680,794
VF Corp.	25,876	1,914,824
		161,957,305

TOTAL CONSUMER DISCRETIONARY		1,036,346,258

CONSUMER STAPLES - 2.8%
Beverages - 0.3%
C&C Group PLC	2,695,822	9,218,559
Dr. Pepper Snapple Group, Inc.	222,825	21,627,395
		30,845,954
Food & Staples Retailing - 0.2%
Conviviality PLC	1,088,600	5,934,210
Kroger Co.	33,600	922,320
Sprouts Farmers Market LLC (a)	446,310	10,867,649
		17,724,179
Food Products - 2.2%
Britannia Industries Ltd.	15,000	1,106,497
Ezaki Glico Co. Ltd.	521,200	25,996,397
Hostess Brands, Inc. Class A (a)	994,700	14,731,507
Ingredion, Inc.	104,805	14,651,739
Nomad Foods Ltd. (a)	1,161,980	19,649,082
The J.M. Smucker Co.	486,300	60,417,912
TreeHouse Foods, Inc. (a)	327,700	16,208,042
Tyson Foods, Inc. Class A	499,700	40,510,679
		193,271,855
Household Products - 0.1%
Essity AB Class B	272,000	7,725,860

TOTAL CONSUMER STAPLES		249,567,848

ENERGY - 5.8%
Energy Equipment & Services - 2.5%
Baker Hughes, a GE Co. Class A	413,081	13,069,883
Dril-Quip, Inc. (a)	496,200	23,668,740
Ensco PLC Class A (b)	6,984,100	41,276,031
Frank's International NV	1,496,000	9,948,400
Halliburton Co.	1,023,700	50,028,219
Nabors Industries Ltd.	2,353,400	16,073,722
National Oilwell Varco, Inc.	625,000	22,512,500
Noble Corp. (a)	642,700	2,905,004
Oceaneering International, Inc.	569,700	12,043,458
Precision Drilling Corp. (a)	5,772,900	17,497,811
Superior Energy Services, Inc. (a)	1,388,800	13,374,144
		222,397,912
Oil, Gas & Consumable Fuels - 3.3%
Anadarko Petroleum Corp.	1,258,200	67,489,848
Andeavor	88,609	10,131,553
Apache Corp.	566,096	23,900,573
Cabot Oil & Gas Corp.	264,100	7,553,260
Cheniere Energy, Inc. (a)	632,988	34,080,074
Cimarex Energy Co.	307,252	37,487,817
Newfield Exploration Co. (a)	434,800	13,709,244
PDC Energy, Inc. (a)	152,500	7,859,850
Southwestern Energy Co. (a)	3,570,850	19,925,343
Suncor Energy, Inc.	1,138,400	41,795,672
Teekay LNG Partners LP	390,086	7,860,233
World Fuel Services Corp.	511,600	14,396,424
		286,189,891

TOTAL ENERGY		508,587,803

FINANCIALS - 19.7%
Banks - 9.2%
Banco Comercial Portugues SA (Reg.) (a)	99,640,327	32,518,538
Bank of the Ozarks, Inc.	239,900	11,623,155
BankUnited, Inc.	532,261	21,673,668
Boston Private Financial Holdings, Inc.	1,593,316	24,616,732
CIT Group, Inc.	1,193,700	58,765,851
Comerica, Inc.	531,829	46,168,075
Commerce Bancshares, Inc.	586,504	32,750,383
CVB Financial Corp.	1,068,000	25,162,080
East West Bancorp, Inc.	100,700	6,125,581
First Citizen Bancshares, Inc.	66,900	26,960,700
First Commonwealth Financial Corp.	1,056,900	15,134,808
First Republic Bank	398,600	34,534,704
FNB Corp., Pennsylvania	793,300	10,963,406
Great Western Bancorp, Inc.	133,957	5,331,489
Hanmi Financial Corp.	393,396	11,939,569
Heartland Financial U.S.A., Inc.	58,740	3,151,401
Hilltop Holdings, Inc.	47,000	1,190,510
Huntington Bancshares, Inc.	5,024,416	73,155,497
Investors Bancorp, Inc.	1,196,700	16,610,196
KeyCorp	1,166,800	23,534,356
Lakeland Financial Corp.	739,519	35,859,276
M&T Bank Corp.	250,400	42,815,896
Old National Bancorp, Indiana	151,900	2,650,655
Prosperity Bancshares, Inc.	475,800	33,339,306
Regions Financial Corp.	1,966,000	33,972,480
Signature Bank (a)	220,100	30,210,926
SunTrust Banks, Inc.	812,965	52,509,409
TCF Financial Corp.	1,722,525	35,311,763
UMB Financial Corp.	499,859	35,949,859
Union Bankshares Corp.	236,400	8,550,588
Univest Corp. of Pennsylvania	91,595	2,569,240
Valley National Bancorp	1,251,500	14,041,830
Wintrust Financial Corp.	45,741	3,767,686
		813,459,613
Capital Markets - 3.6%
Affiliated Managers Group, Inc.	349,000	71,632,250
Ameriprise Financial, Inc.	98,713	16,728,892
CBOE Holdings, Inc.	108,700	13,542,933
CRISIL Ltd.	78,365	2,301,051
E*TRADE Financial Corp. (a)	26,400	1,308,648
Federated Investors, Inc. Class B (non-vtg.)	31,600	1,140,128
Greenhill & Co., Inc. (b)	2,700	52,650
Invesco Ltd.	406,800	14,864,472
Lazard Ltd. Class A	112,545	5,908,613
Legg Mason, Inc.	397,300	16,678,654
Moody's Corp.	155,500	22,953,355
OM Asset Management Ltd.	75,433	1,263,503
Raymond James Financial, Inc.	368,495	32,906,604
S&P Global, Inc.	476,030	80,639,482
Stifel Financial Corp.	511,700	30,476,852
		312,398,087
Consumer Finance - 1.3%
Capital One Financial Corp.	444,700	44,283,226
Discover Financial Services	163,300	12,561,036
Kruk SA	82,900	6,227,711
OneMain Holdings, Inc. (a)	185,300	4,815,947
SLM Corp. (a)	983,446	11,112,940
Synchrony Financial	996,400	38,471,004
		117,471,864
Insurance - 4.0%
AFLAC, Inc.	831,600	72,997,848
Bajaj Finserv Ltd.	54,608	4,474,024
Chubb Ltd.	152,839	22,334,363
Direct Line Insurance Group PLC	1,130,433	5,825,712
First American Financial Corp.	258,000	14,458,320
Hiscox Ltd.	1,665,560	32,921,785
Hyundai Fire & Marine Insurance Co. Ltd.	295,241	13,000,423
Primerica, Inc.	304,720	30,944,316
Principal Financial Group, Inc.	973,900	68,718,384
Reinsurance Group of America, Inc.	570,124	88,899,435
The Travelers Companies, Inc.	7,000	949,480
		355,524,090
Mortgage Real Estate Investment Trusts - 0.2%
Ladder Capital Corp. Class A	1,297,012	17,678,274
Thrifts & Mortgage Finance - 1.4%
Essent Group Ltd. (a)	2,706,800	117,529,253
Housing Development Finance Corp. Ltd.	262,668	7,037,396
		124,566,649

TOTAL FINANCIALS		1,741,098,577

HEALTH CARE - 14.1%
Biotechnology - 2.6%
Alexion Pharmaceuticals, Inc. (a)	598,800	71,610,492
AMAG Pharmaceuticals, Inc. (a)	746,400	9,889,800
Amgen, Inc.	274,500	47,735,550
BioMarin Pharmaceutical, Inc. (a)	169,400	15,105,398
Bioverativ, Inc.	65,400	3,526,368
Myriad Genetics, Inc. (a)	28,600	982,267
Regeneron Pharmaceuticals, Inc. (a)	29,600	11,128,416
REGENXBIO, Inc. (a)	427,700	14,221,025
United Therapeutics Corp. (a)	383,500	56,738,825
		230,938,141
Health Care Equipment & Supplies - 5.1%
Becton, Dickinson & Co.	135,300	28,962,318
Boston Scientific Corp. (a)	2,785,718	69,057,949
ConvaTec Group PLC (d)	3,159,444	8,766,061
ConvaTec Group PLC ADR	788,800	8,818,784
Dentsply Sirona, Inc.	543,200	35,758,856
Hill-Rom Holdings, Inc.	262,011	22,084,907
Hologic, Inc. (a)	729,524	31,187,151
LivaNova PLC (a)	178,293	14,249,177
Medtronic PLC	563,000	45,462,250
ResMed, Inc.	188,848	15,993,537
Steris PLC	895,100	78,294,397
The Cooper Companies, Inc.	108,383	23,614,488
Zimmer Biomet Holdings, Inc.	544,900	65,753,083
		448,002,958
Health Care Providers & Services - 3.3%
Cardinal Health, Inc.	760,147	46,574,207
Centene Corp. (a)	1,738	175,329
Cigna Corp.	132,200	26,848,498
DaVita HealthCare Partners, Inc. (a)	515,400	37,237,650
Envision Healthcare Corp.	730,300	25,239,168
HCA Holdings, Inc. (a)	100,835	8,857,346
Laboratory Corp. of America Holdings (a)	138,300	22,060,233
McKesson Corp.	333,350	51,985,933
MEDNAX, Inc. (a)	19,200	1,026,048
Premier, Inc. (a)	341,800	9,977,142
Ryman Healthcare Group Ltd.	913,189	6,853,605
Spire Healthcare Group PLC (d)	2,542,173	8,704,350
UnitedHealth Group, Inc.	26,619	5,868,425
Universal Health Services, Inc. Class B	331,300	37,552,855
		288,960,789
Life Sciences Tools & Services - 1.5%
Agilent Technologies, Inc.	696,106	46,618,219
Bruker Corp.	792,900	27,212,328
Cambrex Corp. (a)	2,300	110,400
Charles River Laboratories International, Inc. (a)	9,900	1,083,555
Thermo Fisher Scientific, Inc.	323,363	61,400,166
		136,424,668
Pharmaceuticals - 1.6%
Catalent, Inc. (a)	529,400	21,747,752
Endo International PLC (a)	824,500	6,389,875
Jazz Pharmaceuticals PLC (a)	433,271	58,339,940
Perrigo Co. PLC	151,900	13,239,604
Teva Pharmaceutical Industries Ltd. sponsored ADR (b)	2,175,556	41,226,786
Theravance Biopharma, Inc. (a)	10,605	295,773
		141,239,730

TOTAL HEALTH CARE		1,245,566,286

INDUSTRIALS - 12.0%
Aerospace & Defense - 1.4%
Axon Enterprise, Inc. (a)	130,200	3,450,300
Elbit Systems Ltd.	87,109	11,610,759
Hexcel Corp.	88,700	5,486,095
Huntington Ingalls Industries, Inc.	240,900	56,780,130
MTU Aero Engines Holdings AG	5,514	988,426
Textron, Inc.	710,881	40,228,756
		118,544,466
Air Freight & Logistics - 1.0%
Air Transport Services Group, Inc. (a)	9,400	217,516
Atlas Air Worldwide Holdings, Inc. (a)	100	5,865
C.H. Robinson Worldwide, Inc.	197,200	17,568,548
FedEx Corp.	261,211	65,182,593
XPO Logistics, Inc. (a)	93,781	8,589,402
		91,563,924
Airlines - 1.2%
Allegiant Travel Co.	408,500	63,215,375
Copa Holdings SA Class A	71,600	9,598,696
Spirit Airlines, Inc. (a)	783,213	35,127,103
		107,941,174
Building Products - 0.4%
A.O. Smith Corp.	356,200	21,827,936
Johnson Controls International PLC	35,076	1,336,746
Lennox International, Inc.	42,557	8,862,921
Toto Ltd.	21,100	1,245,307
		33,272,910
Commercial Services & Supplies - 1.1%
Deluxe Corp.	233,498	17,941,986
HNI Corp.	42,500	1,639,225
KAR Auction Services, Inc.	208,582	10,535,477
Knoll, Inc.	1,699,006	39,145,098
Multi-Color Corp.	34,600	2,589,810
Novus Holdings Ltd.	25,318	12,073
Stericycle, Inc. (a)	376,500	25,598,235
		97,461,904
Construction & Engineering - 1.4%
EMCOR Group, Inc.	491,207	40,156,172
Fluor Corp.	320,600	16,558,990
Jacobs Engineering Group, Inc.	721,455	47,587,172
KBR, Inc.	973,623	19,306,944
		123,609,278
Electrical Equipment - 0.7%
AMETEK, Inc.	196,400	14,233,108
Melrose Industries PLC	915,939	2,624,182
Regal Beloit Corp.	618,277	47,360,018
		64,217,308
Industrial Conglomerates - 0.4%
Carlisle Companies, Inc.	54,700	6,216,655
ITT, Inc.	15,400	821,898
Smiths Group PLC	1,493,265	30,040,363
		37,078,916
Machinery - 2.8%
Allison Transmission Holdings, Inc.	216,800	9,337,576
Colfax Corp. (a)	785,600	31,125,472
Cummins, Inc.	13,875	2,450,880
Fanuc Corp.	100	23,990
Flowserve Corp.	502,400	21,166,112
IDEX Corp.	17,500	2,309,475
Ingersoll-Rand PLC	597,745	53,312,877
KION Group AG	151,500	13,084,328
Nabtesco Corp.	100	3,834
Pentair PLC	100,500	7,097,310
Proto Labs, Inc. (a)	9,022	929,266
Rexnord Corp. (a)	2,292,734	59,656,939
SMC Corp.	100	41,163
Wabtec Corp. (b)	470,546	38,316,561
Xylem, Inc.	131,800	8,988,760
		247,844,543
Professional Services - 0.4%
Dun & Bradstreet Corp.	301,105	35,653,843
Road & Rail - 0.2%
J.B. Hunt Transport Services, Inc.	41,600	4,783,168
Knight-Swift Transportation Holdings, Inc. Class A	83,216	3,638,204
Old Dominion Freight Lines, Inc.	58,100	7,643,055
		16,064,427
Trading Companies & Distributors - 1.0%
Air Lease Corp. Class A	764,294	36,754,898
HD Supply Holdings, Inc. (a)	367,700	14,719,031
Misumi Group, Inc.	746,800	21,739,552
Univar, Inc. (a)	90,000	2,786,400
WESCO International, Inc. (a)	107,000	7,292,050
		83,291,931

TOTAL INDUSTRIALS		1,056,544,624

INFORMATION TECHNOLOGY - 21.8%
Communications Equipment - 1.3%
CommScope Holding Co., Inc. (a)	926,790	35,060,466
F5 Networks, Inc. (a)	396,154	51,983,328
Harris Corp.	173,500	24,576,275
		111,620,069
Electronic Equipment & Components - 3.2%
Amphenol Corp. Class A	52,000	4,565,600
Avnet, Inc.	867,030	34,351,729
Belden, Inc.	724,700	55,925,099
CDW Corp.	790,401	54,924,965
IPG Photonics Corp. (a)	8,309	1,779,206
Jabil, Inc.	977,841	25,668,326
Keyence Corp.	100	56,020
Keysight Technologies, Inc. (a)	688,053	28,623,005
Methode Electronics, Inc. Class A	123,900	4,968,390
National Instruments Corp.	10,200	424,626
Samsung SDI Co. Ltd.	14,214	2,723,282
TE Connectivity Ltd.	382,766	36,378,081
Trimble, Inc. (a)	797,200	32,398,208
		282,786,537
Internet Software & Services - 2.1%
Akamai Technologies, Inc. (a)	1,336,600	86,932,464
Alibaba Group Holding Ltd. sponsored ADR (a)	32,800	5,655,704
Alphabet, Inc. Class C (a)	59,402	62,158,253
Carbonite, Inc. (a)	274,200	6,882,420
Tencent Holdings Ltd.	528,800	27,369,606
		188,998,447
IT Services - 9.1%
Blackhawk Network Holdings, Inc. (a)	1,048,594	37,382,376
Broadridge Financial Solutions, Inc.	60,303	5,462,246
Cognizant Technology Solutions Corp. Class A	392,893	27,903,261
Conduent, Inc.	1,998,189	32,290,734
CSRA, Inc.	1,670,800	49,990,336
EPAM Systems, Inc. (a)	346,700	37,245,981
Euronet Worldwide, Inc. (a)	905,977	76,346,682
ExlService Holdings, Inc. (a)	582,000	35,123,700
Fidelity National Information Services, Inc.	442,077	41,595,025
FleetCor Technologies, Inc. (a)	449,840	86,562,711
Genpact Ltd.	2,525,388	80,155,815
Global Payments, Inc.	359,876	36,073,970
Leidos Holdings, Inc.	541,300	34,951,741
Maximus, Inc.	373,600	26,742,288
PayPal Holdings, Inc. (a)	221,100	16,277,382
The Western Union Co.	1,066,948	20,282,681
Total System Services, Inc.	1,174,210	92,868,269
Vantiv, Inc. (a)(b)	430,938	31,695,490
Visa, Inc. Class A	301,800	34,411,236
		803,361,924
Semiconductors & Semiconductor Equipment - 3.0%
Analog Devices, Inc.	36,800	3,276,304
Applied Materials, Inc.	549,900	28,110,888
ASML Holding NV (Netherlands)	25,200	4,381,233
Cree, Inc. (a)	102,400	3,803,136
Maxim Integrated Products, Inc.	461,100	24,106,308
NVIDIA Corp.	260,633	50,432,486
ON Semiconductor Corp. (a)	548,100	11,477,214
Qualcomm, Inc.	763,900	48,904,878
Renesas Electronics Corp. (a)	589,000	6,863,608
Semtech Corp. (a)	1,042,651	35,658,664
Skyworks Solutions, Inc.	290,100	27,544,995
Synaptics, Inc. (a)	172,100	6,873,674
Teradyne, Inc.	362,100	15,161,127
		266,594,515
Software - 3.1%
Activision Blizzard, Inc.	1,297,400	82,151,368
Electronic Arts, Inc. (a)	1,072,990	112,728,329
Fair Isaac Corp.	222,300	34,056,360
Intuit, Inc.	172,597	27,232,355
Synopsys, Inc. (a)	167,949	14,315,973
		270,484,385
Technology Hardware, Storage & Peripherals - 0.0%
Xerox Corp.	50,937	1,484,814

TOTAL INFORMATION TECHNOLOGY		1,925,330,691

MATERIALS - 8.5%
Chemicals - 6.3%
Albemarle Corp. U.S.	366,556	46,878,847
Ashland Global Holdings, Inc.	280,726	19,987,691
Cabot Corp.	19,700	1,213,323
Celanese Corp. Class A	372,600	39,898,008
CF Industries Holdings, Inc.	1,010,700	42,995,178
Eastman Chemical Co.	531,500	49,238,160
H.B. Fuller Co.	493,575	26,588,885
Innospec, Inc.	121,109	8,550,295
LG Chemical Ltd.	114,192	43,328,502
LyondellBasell Industries NV Class A	717,000	79,099,440
Orion Engineered Carbons SA	89,579	2,293,222
PolyOne Corp.	822,960	35,798,760
PPG Industries, Inc.	170,800	19,952,856
The Chemours Co. LLC	917,700	45,940,062
The Mosaic Co.	3,065,600	78,663,296
W.R. Grace & Co.	67,300	4,719,749
Westlake Chemical Corp.	71,800	7,648,854
		552,795,128
Construction Materials - 0.1%
Taiheiyo Cement Corp. (e)	143,700	6,204,575
Containers & Packaging - 1.5%
Aptargroup, Inc.	178,530	15,403,568
Avery Dennison Corp.	13,677	1,570,940
Graphic Packaging Holding Co.	2,568,200	39,678,690
Packaging Corp. of America	176,400	21,265,020
WestRock Co.	885,000	55,940,850
		133,859,068
Metals & Mining - 0.6%
B2Gold Corp. (a)	7,476,000	23,076,277
Continental Gold, Inc. (a)	245,200	659,329
First Quantum Minerals Ltd.	610,100	8,547,224
Freeport-McMoRan, Inc. (a)	285,500	5,413,080
Guyana Goldfields, Inc. (a)	727,900	2,941,712
New Gold, Inc. (a)	2,039,120	6,699,734
Randgold Resources Ltd. sponsored ADR	97,032	9,595,494
Tahoe Resources, Inc.	367,400	1,762,468
		58,695,318

TOTAL MATERIALS		751,554,089

REAL ESTATE - 2.1%
Equity Real Estate Investment Trusts (REITs) - 1.2%
Extra Space Storage, Inc.	292,700	25,596,615
Hibernia (REIT) PLC	11,997,210	21,937,755
Outfront Media, Inc.	356,500	8,270,800
Safestore Holdings PLC	3,276,386	22,100,368
Store Capital Corp.	649,391	16,910,142
Urban Edge Properties	28,500	726,465
VEREIT, Inc.	1,777,950	13,850,231
		109,392,376
Real Estate Management & Development - 0.9%
BUWOG AG	288,329	9,946,107
CBRE Group, Inc. (a)	455,623	19,733,032
Goldcrest Co. Ltd.	88,700	1,791,712
Hysan Development Co. Ltd.	894,000	4,742,994
Jones Lang LaSalle, Inc.	109,615	16,324,962
Olav Thon Eiendomsselskap A/S	428,500	8,506,747
Sino Land Ltd.	3,151,758	5,583,152
Tai Cheung Holdings Ltd.	1,653,000	1,910,518
Wing Tai Holdings Ltd.	4,421,600	7,537,663
		76,076,887

TOTAL REAL ESTATE		185,469,263

UTILITIES - 1.2%
Electric Utilities - 0.4%
Exelon Corp.	287,700	11,338,257
Vistra Energy Corp.	1,191,100	21,820,952
		33,159,209
Independent Power and Renewable Electricity Producers - 0.8%
Dynegy, Inc. (a)	290,500	3,442,425
The AES Corp.	6,090,600	65,961,198
		69,403,623

TOTAL UTILITIES		102,562,832

TOTAL COMMON STOCKS
(Cost $6,700,754,215)		8,802,628,271

Nonconvertible Preferred Stocks - 0.1%
FINANCIALS - 0.1%
Capital Markets - 0.1%
GMAC Capital Trust I Series 2, 8.125%
(Cost $8,358,700)	405,466	10,521,843

Money Market Funds - 1.7%
Fidelity Cash Central Fund, 1.36% (f)	350,093	350,163
Fidelity Securities Lending Cash Central Fund 1.36% (f)(g)	152,955,682	152,986,273
TOTAL MONEY MARKET FUNDS
(Cost $153,317,808)		153,336,436
TOTAL INVESTMENT IN SECURITIES - 101.6%
(Cost $6,862,430,723)		8,966,486,550
NET OTHER ASSETS (LIABILITIES) - (1.6)%		(144,187,309)
NET ASSETS - 100%		$8,822,299,241

Legend

(a) Non-income producing

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

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

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

Affiliated Central Funds

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

Fund	Income earned
Fidelity Cash Central Fund	$71,474
Fidelity Securities Lending Cash Central Fund	813,103
Total	$884,577

Other Affiliated Issuers

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

Affiliate	Value, beginning of period	Purchases	Sales Proceeds	Dividend Income	Realized Gain (loss)	Change in Unrealized appreciation (depreciation)	Value, end of period
DineEquity, Inc.	$50,188,600	$33,862,723	$1,855,178	$4,480,430	$(1,117,511)	$(17,108,104)	$63,970,530
Total	$50,188,600	$33,862,723	$1,855,178	$4,480,430	$(1,117,511)	$(17,108,104)	$63,970,530

Investment Valuation

	Valuation Inputs at Reporting Date:
Description	Total	Level 1	Level 2	Level 3
Investments in Securities:
Equities:
Consumer Discretionary	$1,036,346,258	$1,004,476,063	$31,870,195	$--
Consumer Staples	249,567,848	249,567,848	--	--
Energy	508,587,803	508,587,803	--	--
Financials	1,751,620,420	1,751,620,420	--	--
Health Care	1,245,566,286	1,245,566,286	--	--
Industrials	1,056,544,624	1,056,520,634	23,990	--
Information Technology	1,925,330,691	1,893,579,852	31,750,839	--
Materials	751,554,089	751,554,089	--	--
Real Estate	185,469,263	185,469,263	--	--
Utilities	102,562,832	102,562,832	--	--
Money Market Funds	153,336,436	153,336,436	--	--
Total Investments in Securities:	$8,966,486,550	$8,902,841,526	$63,645,024	$--

Other Information

Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):

United States of America	82.8%
Bermuda	3.1%
United Kingdom	2.6%
Ireland	2.4%
Canada	1.6%
Japan	1.2%
Netherlands	1.0%
Others (Individually Less Than 1%)	5.3%
	100.0%

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

Financial Statements

Statement of Assets and Liabilities

		December 31, 2017
Assets
Investment in securities, at value (including securities loaned of $148,774,777) — See accompanying schedule: Unaffiliated issuers (cost $6,615,344,121)	$8,749,179,584
Fidelity Central Funds (cost $153,317,808)	153,336,436
Other affiliated issuers (cost $93,768,794)	63,970,530
Total Investment in Securities (cost $6,862,430,723)		$8,966,486,550
Foreign currency held at value (cost $1,655,384)		1,655,384
Receivable for investments sold		68,228,857
Receivable for fund shares sold		832,807
Dividends receivable		8,193,282
Distributions receivable from Fidelity Central Funds		63,449
Prepaid expenses		14,471
Other receivables		175,674
Total assets		9,045,650,474
Liabilities
Payable for investments purchased
Regular delivery	$55,668,836
Delayed delivery	3,015,852
Payable for fund shares redeemed	5,700,123
Accrued management fee	3,964,669
Distribution and service plan fees payable	1,311,255
Other affiliated payables	630,226
Other payables and accrued expenses	91,125
Collateral on securities loaned	152,969,147
Total liabilities		223,351,233
Net Assets		$8,822,299,241
Net Assets consist of:
Paid in capital		$5,982,955,366
Undistributed net investment income		11,169,812
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		724,157,237
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		2,104,016,826
Net Assets		$8,822,299,241
Initial Class:
Net Asset Value, offering price and redemption price per share ($1,463,407,348 ÷ 37,579,315 shares)		$38.94
Service Class:
Net Asset Value, offering price and redemption price per share ($629,726,890 ÷ 16,314,797 shares)		$38.60
Service Class 2:
Net Asset Value, offering price and redemption price per share ($6,070,379,929 ÷ 160,650,835 shares)		$37.79
Investor Class:
Net Asset Value, offering price and redemption price per share ($658,785,074 ÷ 17,012,526 shares)		$38.72

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

Statement of Operations

		Year ended December 31, 2017
Investment Income
Dividends (including $4,480,430 earned from other affiliated issuers)		$114,074,639
Interest		21,806
Income from Fidelity Central Funds		884,577
Total income		114,981,022
Expenses
Management fee	$46,031,374
Transfer agent fees	6,068,910
Distribution and service plan fees	15,171,082
Accounting and security lending fees	1,246,763
Custodian fees and expenses	160,990
Independent trustees' fees and expenses	33,470
Audit	59,660
Legal	32,782
Interest	27,805
Miscellaneous	68,944
Total expenses before reductions	68,901,780
Expense reductions	(432,403)	68,469,377
Net investment income (loss)		46,511,645
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investment securities:
Unaffiliated issuers	800,697,787
Fidelity Central Funds	(1,479)
Other affiliated issuers	(1,117,511)
Foreign currency transactions	(16,018)
Total net realized gain (loss)		799,562,779
Change in net unrealized appreciation (depreciation) on:
Investment securities:
Unaffiliated issuers	761,159,974
Fidelity Central Funds	13,558
Other affiliated issuers	(17,108,104)
Assets and liabilities in foreign currencies	3,100
Total change in net unrealized appreciation (depreciation)		744,068,528
Net gain (loss)		1,543,631,307
Net increase (decrease) in net assets resulting from operations		$1,590,142,952

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

Statement of Changes in Net Assets

	Year ended December 31, 2017	Year ended December 31, 2016
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$46,511,645	$39,459,390
Net realized gain (loss)	799,562,779	347,715,513
Change in net unrealized appreciation (depreciation)	744,068,528	522,347,999
Net increase (decrease) in net assets resulting from operations	1,590,142,952	909,522,902
Distributions to shareholders from net investment income	(45,709,222)	(28,421,672)
Distributions to shareholders from net realized gain	(394,785,154)	(494,682,420)
Total distributions	(440,494,376)	(523,104,092)
Share transactions - net increase (decrease)	(561,737,302)	(215,304,797)
Total increase (decrease) in net assets	587,911,274	171,114,013
Net Assets
Beginning of period	8,234,387,967	8,063,273,954
End of period	$8,822,299,241	$8,234,387,967
Other Information
Undistributed net investment income end of period	$11,169,812	$10,147,136

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

Financial Highlights

VIP Mid Cap Portfolio Initial Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$33.98	$32.65	$37.68	$36.39	$30.55
Income from Investment Operations
Net investment income (loss)^A	.26	.21	.17	.13	.18
Net realized and unrealized gain (loss)	6.59	3.27	(.59)	2.11	10.57
Total from investment operations	6.85	3.48	(.42)	2.24	10.75
Distributions from net investment income	(.26)	(.16)	(.16)^B	(.10)	(.19)
Distributions from net realized gain	(1.63)	(1.99)	(4.45)^B	(.85)	(4.72)
Total distributions	(1.89)	(2.15)	(4.61)	(.95)	(4.91)
Net asset value, end of period	$38.94	$33.98	$32.65	$37.68	$36.39
Total Return^C,^D	20.81%	12.23%	(1.39)%	6.29%	36.23%
Ratios to Average Net Assets^E,^F
Expenses before reductions	.63%	.63%	.63%	.64%	.64%
Expenses net of fee waivers, if any	.63%	.63%	.63%	.64%	.64%
Expenses net of all reductions	.62%	.63%	.63%	.63%	.63%
Net investment income (loss)	.74%	.68%	.49%	.35%	.52%
Supplemental Data
Net assets, end of period (000 omitted)	$1,463,407	$1,360,134	$1,382,527	$1,476,171	$1,489,788
Portfolio turnover rate^G	31%	30%	26%^H	142%	132%

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

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

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

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

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

^H The portfolio turnover rate does not include the assets acquired in the merger.

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

VIP Mid Cap Portfolio Service Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$33.70	$32.41	$37.44	$36.16	$30.39
Income from Investment Operations
Net investment income (loss)^A	.23	.18	.13	.09	.15
Net realized and unrealized gain (loss)	6.52	3.23	(.59)	2.10	10.49
Total from investment operations	6.75	3.41	(.46)	2.19	10.64
Distributions from net investment income	(.22)	(.14)	(.13)^B	(.06)	(.15)
Distributions from net realized gain	(1.63)	(1.99)	(4.45)^B	(.85)	(4.72)
Total distributions	(1.85)	(2.12)^C	(4.57)^D	(.91)	(4.87)
Net asset value, end of period	$38.60	$33.70	$32.41	$37.44	$36.16
Total Return^E,^F	20.70%	12.11%	(1.50)%	6.20%	36.06%
Ratios to Average Net Assets^G,^H
Expenses before reductions	.73%	.73%	.73%	.74%	.74%
Expenses net of fee waivers, if any	.73%	.73%	.73%	.74%	.74%
Expenses net of all reductions	.72%	.73%	.73%	.73%	.73%
Net investment income (loss)	.64%	.58%	.39%	.25%	.42%
Supplemental Data
Net assets, end of period (000 omitted)	$629,727	$566,378	$566,349	$622,227	$638,612
Portfolio turnover rate^I	31%	30%	26%^J	142%	132%

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

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

^C Total distributions of $2.12 per share is comprised of distributions from net investment income of $.137 and distributions from net realized gain of $1.987 per share.

^D Total distributions of $4.57 per share is comprised of distributions from net investment income of $.128 and distributions from net realized gain of $4.445 per share.

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

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

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

^J The portfolio turnover rate does not include the assets acquired in the merger.

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

VIP Mid Cap Portfolio Service Class 2

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$33.03	$31.83	$36.84	$35.60	$29.98
Income from Investment Operations
Net investment income (loss)^A	.17	.13	.08	.04	.09
Net realized and unrealized gain (loss)	6.39	3.16	(.57)	2.06	10.35
Total from investment operations	6.56	3.29	(.49)	2.10	10.44
Distributions from net investment income	(.17)	(.10)	(.08)^B	(.01)	(.10)
Distributions from net realized gain	(1.63)	(1.99)	(4.45)^B	(.85)	(4.72)
Total distributions	(1.80)	(2.09)	(4.52)^C	(.86)	(4.82)
Net asset value, end of period	$37.79	$33.03	$31.83	$36.84	$35.60
Total Return^D,^E	20.54%	11.92%	(1.63)%	6.03%	35.87%
Ratios to Average Net Assets^F,^G
Expenses before reductions	.88%	.88%	.88%	.88%	.89%
Expenses net of fee waivers, if any	.88%	.88%	.88%	.88%	.89%
Expenses net of all reductions	.87%	.88%	.88%	.88%	.88%
Net investment income (loss)	.49%	.43%	.24%	.10%	.27%
Supplemental Data
Net assets, end of period (000 omitted)	$6,070,380	$5,746,266	$5,591,030	$6,431,011	$6,574,623
Portfolio turnover rate^H	31%	30%	26%^I	142%	132%

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

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

^C Total distributions of $4.52 per share is comprised of distributions from net investment income of $.075 and distributions from net realized gain of $4.446 per share.

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

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

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

^I The portfolio turnover rate does not include the assets acquired in the merger.

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

VIP Mid Cap Portfolio Investor Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$33.80	$32.50	$37.53	$36.25	$30.46
Income from Investment Operations
Net investment income (loss)^A	.23	.19	.14	.10	.15
Net realized and unrealized gain (loss)	6.55	3.24	(.59)	2.10	10.52
Total from investment operations	6.78	3.43	(.45)	2.20	10.67
Distributions from net investment income	(.23)	(.14)	(.14)^B	(.07)	(.16)
Distributions from net realized gain	(1.63)	(1.99)	(4.45)^B	(.85)	(4.72)
Total distributions	(1.86)	(2.13)	(4.58)^C	(.92)	(4.88)
Net asset value, end of period	$38.72	$33.80	$32.50	$37.53	$36.25
Total Return^D,^E	20.72%	12.13%	(1.47)%	6.20%	36.08%
Ratios to Average Net Assets^F,^G
Expenses before reductions	.71%	.71%	.71%	.72%	.73%
Expenses net of fee waivers, if any	.71%	.71%	.71%	.72%	.72%
Expenses net of all reductions	.71%	.71%	.71%	.71%	.71%
Net investment income (loss)	.65%	.60%	.41%	.27%	.44%
Supplemental Data
Net assets, end of period (000 omitted)	$658,785	$561,609	$523,368	$503,509	$470,265
Portfolio turnover rate^H	31%	30%	26%^I	142%	132%

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

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

^C Total distributions of $4.58 per share is comprised of distributions from net investment income of $.137 and distributions from net realized gain of $4.446 per share.

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

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

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

^I The portfolio turnover rate does not include the assets acquired in the merger.

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

Notes to Financial Statements

For the period ended December 31, 2017

1. Organization.

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

2. Investments in Fidelity Central Funds.

3. Significant Accounting Policies.

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

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

Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)

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

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

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

Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), equity-debt classifications, partnerships, and losses deferred due to wash sales.

As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:

Gross unrealized appreciation	$2,487,195,151
Gross unrealized depreciation	(403,424,714)
Net unrealized appreciation (depreciation)	$2,083,770,437
Tax Cost	$6,882,716,113

The tax-based components of distributable earnings as of period end were as follows:

Undistributed ordinary income	$26,371,643
Undistributed long-term capital gain	$729,348,943
Net unrealized appreciation (depreciation) on securities and other investments	$2,083,731,597

The tax character of distributions paid was as follows:

	December 31, 2017	December 31, 2016
Ordinary Income	$104,079,726	$ 28,421,672
Long-term Capital Gains	336,414,650	494,682,420
Total	$440,494,376	$ 523,104,092

Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The securities purchased on a delayed delivery or when-issued basis are identified as such in the Fund's Schedule of Investments. 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.

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $2,602,503,223 and $3,494,426,060, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. Fidelity Management & Research Company (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .54% of the Fund's average net assets.

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

Service Class	$593,056
Service Class 2	14,578,026
	$15,171,082

Initial Class	$938,665
Service Class	390,947
Service Class 2	3,844,040
Investor Class	895,258
	$6,068,910

Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $95,676 for the period.

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

Borrower or Lender	Average Loan Balance	Weighted Average Interest Rate	Interest Expense
Borrower	$8,671,191	1.30%	$27,805

6. Committed Line of Credit.

The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $26,722 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $8,356,926. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $813,103, including $83,734 from securities loaned to FCM.

8. Expense Reductions.

In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $75,265.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

	Year ended December 31, 2017	Year ended December 31, 2016
From net investment income
Initial Class	$9,718,414	$6,509,193
Service Class	3,666,055	2,306,610
Service Class 2	28,439,685	17,226,607
Investor Class	3,885,068	2,379,262
Total	$45,709,222	$28,421,672
From net realized gain
Initial Class	$63,886,220	$83,439,215
Service Class	26,951,072	33,992,166
Service Class 2	276,605,196	345,471,270
Investor Class	27,342,666	31,779,769
Total	$394,785,154	$494,682,420

10. Share Transactions.

Transactions for each class of shares were as follows:

	Shares	Shares	Dollars	Dollars
	Year ended December 31, 2017	Year ended December 31, 2016	Year ended December 31, 2017	Year ended December 31, 2016
Initial Class
Shares sold	3,952,417	5,842,420	$137,971,182	$184,976,667
Reinvestment of distributions	2,099,113	3,268,042	73,604,634	89,948,408
Shares redeemed	(8,500,502)	(11,423,991)	(303,303,706)	(368,303,468)
Net increase (decrease)	(2,448,972)	(2,313,529)	$(91,727,890)	$(93,378,393)
Service Class
Shares sold	1,012,778	1,242,725	$35,927,536	$38,448,209
Reinvestment of distributions	881,418	1,331,661	30,617,127	36,298,776
Shares redeemed	(2,385,726)	(3,242,354)	(84,637,226)	(100,590,205)
Net increase (decrease)	(491,530)	(667,968)	$(18,092,563)	$(25,843,220)
Service Class 2
Shares sold	6,433,582	16,603,885	$221,648,957	$504,881,832
Reinvestment of distributions	8,992,050	13,620,413	305,044,881	362,697,877
Shares redeemed	(28,734,686)	(31,941,188)	(991,975,956)	(975,475,144)
Net increase (decrease)	(13,309,054)	(1,716,890)	$(465,282,118)	$(107,895,435)
Investor Class
Shares sold	921,541	958,357	$32,648,839	$30,135,517
Reinvestment of distributions	895,486	1,247,783	31,227,734	34,159,031
Shares redeemed	(1,418,346)	(1,694,440)	(50,511,304)	(52,482,297)
Net increase (decrease)	398,681	511,700	$13,365,269	$11,812,251

11. Other.

At the end of the period, the investment adviser or its affiliates were the owners of record of 11% of the total outstanding shares of the Fund.

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of VIP Mid Cap Portfolio (one of the funds constituting Variable Insurance Products Fund III, referred to hereafter as the “Fund”) as of December 31, 2017, the related statement of operations for the year ended December 31, 2017, the statement of changes in net assets for each of the two years in the period ended December 31, 2017, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2017 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2017, 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 ended December 31, 2017 and the financial highlights for each of the five years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Boston, Massachusetts
February 12, 2018

We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.

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 1-877-208-0098.

Interested Trustees*:

Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.

Independent Trustees:

Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

William S. Stavropoulos (1939)

Year of Election or Appointment: 2002

Trustee

Vice Chairman of the Independent Trustees

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

Advisory Board Members and Officers:

Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

Elizabeth Paige Baumann (1968)

Year of Election or Appointment: 2017

Anti-Money Laundering (AML) Officer

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2016

Assistant Treasurer

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Colm A. Hogan (1973)

Year of Election or Appointment: 2016

Deputy Treasurer

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

Rieco E. Mello (1969)

Year of Election or Appointment: 2017

Assistant Treasurer

Mr. Mello also serves as Assistant Treasurer of other funds. Mr. Mello serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (1995-present).

Melissa M. Reilly (1971)

Year of Election or Appointment: 2014

Vice President of certain Equity Funds

Ms. Reilly also serves as Vice President of other funds. Ms. Reilly is an employee of Fidelity Investments (2004-present).

Kenneth B. Robins (1969)

Year of Election or Appointment: 2016

Chief Compliance Officer

Stacie M. Smith (1974)

Year of Election or Appointment: 2016

President and Treasurer

Marc L. Spector (1972)

Year of Election or Appointment: 2016

Assistant Treasurer

Renee Stagnone (1975)

Year of Election or Appointment: 2016

Assistant Treasurer

Shareholder Expense Example

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2017 to December 31, 2017).

Actual Expenses

Hypothetical Example for Comparison Purposes

	Annualized Expense Ratio-^A	Beginning Account Value July 1, 2017	Ending Account Value December 31, 2017	Expenses Paid During Period-^B July 1, 2017 to December 31, 2017
Initial Class	.63%
Actual		$1,000.00	$1,109.10	$3.35
Hypothetical-^C		$1,000.00	$1,022.03	$3.21
Service Class	.73%
Actual		$1,000.00	$1,108.40	$3.88
Hypothetical-^C		$1,000.00	$1,021.53	$3.72
Service Class 2	.88%
Actual		$1,000.00	$1,107.70	$4.68
Hypothetical-^C		$1,000.00	$1,020.77	$4.48
Investor Class	.71%
Actual		$1,000.00	$1,108.50	$3.77
Hypothetical-^C		$1,000.00	$1,021.63	$3.62

^A Annualized expense ratio reflects expenses net of applicable fee waivers.

^B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

^C 5% return per year before expenses

Distributions (Unaudited)

The Board of Trustees of VIP Mid Cap 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
VIP Mid Cap Portfolio
Initial Class	02/09/18	02/09/18	$0.061	$3.270
Service Class	02/09/18	02/09/18	$0.055	$3.270
Service Class 2	02/09/18	02/09/18	$0.046	$3.270
Investor Class	02/09/18	02/09/18	$0.056	$3.270

The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2017, $729,348,943, or, if subsequently determined to be different, the net capital gain of such year.

Initial Class designates 94%, and 81%; Service Class designates 100%, and 86%; Service Class 2 designates 100%, and 96%; and Investor Class designates 98%, and 85%; of the dividends distributed in February and December 2017, respectively during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.

Board Approval of Investment Advisory Contracts and Management Fees

VIP Mid Cap Portfolio

Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should continue to benefit the shareholders of the fund.

Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.

VIP Mid Cap Portfolio

The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2016.

Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.

The Board noted that the total expense ratio of each class ranked below the competitive median for 2016.

The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.

Fidelity Investments

VIPMID-ANN-0218
1.735273.118

Fidelity® Variable Insurance Products:

Value Strategies Portfolio

Annual Report

December 31, 2017

Contents

Performance
Management's Discussion of Fund Performance
Investment Summary
Investments
Financial Statements
Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
Trustees and Officers
Shareholder Expense Example
Distributions
Board Approval of Investment Advisory Contracts and Management Fees

You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.

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

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

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

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.

Performance: The Bottom Line

Average Annual Total Returns

For the periods ended December 31, 2017	Past 1 year	Past 5 years	Past 10 years
Initial Class	19.36%	12.08%	7.19%
Service Class	19.21%	11.98%	7.08%
Service Class 2	19.08%	11.80%	6.92%
Investor Class	19.30%	12.00%	7.10%

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in VIP Value Strategies Portfolio - Initial Class on December 31, 2007.

The chart shows how the value of your investment would have changed, and also shows how the Russell Midcap® Value Index performed over the same period.

	Period Ending Values
	$20,028	VIP Value Strategies Portfolio - Initial Class
	$23,888	Russell Midcap® Value Index

Management's Discussion of Fund Performance

Market Recap: U.S. equities gained 21.83% in 2017, as the S&P 500^® index rose steadily and closed the year just shy of an all-time high after a particularly strong three-month finish. Early on, equities rallied on optimism for President Trump’s pro-business agenda but leveled off in March amid fading optimism and stalled efforts by Congress to repeal and replace the Affordable Care Act. Upward momentum soon returned and continued through year-end with consumer sentiment and other market indicators staying positive. The lone exception was a brief cooldown in August, when geopolitical tension escalated and uncertainty grew regarding the future of health care, tax reform and the debt ceiling. Sector-wise, information technology fared best by a wide margin, rising 39% amid strong earnings growth from several major index constituents. A 24% gain in materials was spurred by increased demand, especially from China. Consumer discretionary gained 23%, despite many brick-and-mortar retailers suffering from online competition, and financials edged the broader market on an uptick in bond yields. Conversely, the defensive energy and telecom services sectors returned about -1% each. Rising interest rates held back real estate (+11%), while consumer staples (+13%) and utilities (+12%) struggled due to investors’ general preference for risk assets.

Comments from Portfolio Manager Matthew Friedman: For the year, the fund’s share classes gained about 19%, handily outpacing the 13.34% return of the benchmark Russell Midcap^® Value Index. Among sectors, choices in real estate were a big plus versus the benchmark. Here, it helped to hold a sizable non-benchmark stake in American Tower, owner and operator of wireless and broadcast communications towers. The stock rose on increased investment by wireless carriers in their 5G networks, as well as higher demand for tower leasing due to the growing use of smartphones and tablets. American Tower was our largest holding, on average, the past year. Our picks and an overweighting in the strong-performing materials sector also helped, including Westlake Chemical, the fund’s largest contributor in 2017. Westlake benefited from higher demand for its key products, as well as positive synergies from its 2016 acquisition of Axiall. Security selection in financials was beneficial, including our non-benchmark investment in private-equity firm Apollo Global Management. Conversely, choices in health care hurt most. The fund’s biggest individual detractor was untimely ownership of Israel-based Teva Pharmaceutical Industries, the world's largest maker of generic drugs. The non-benchmark stock was hurt by a combination of excess debt from the company's 2016 acquisition of Actavis' generics business and drug-pricing pressure stemming from poor industry fundamentals and turnover in the broader product cycle for generics. I sold our stake in Teva by period end. Another health care stock that hurt was medical staffing agency Envision Healthcare, which returned -45% for the fund the past 12 months.

Investment Summary (Unaudited)

Top Ten Stocks as of December 31, 2017

	% of fund's net assets
Synchrony Financial	2.8
Xcel Energy, Inc.	2.7
American Tower Corp.	2.6
Wells Fargo & Co.	2.6
Sempra Energy	2.4
Discover Financial Services	2.2
U.S. Bancorp	2.1
Extra Space Storage, Inc.	2.1
Westlake Chemical Corp.	2.0
Equity Lifestyle Properties, Inc.	1.9
	23.4

Top Five Market Sectors as of December 31, 2017

	% of fund's net assets
Financials	20.1
Real Estate	14.7
Industrials	10.8
Consumer Discretionary	10.4
Information Technology	9.7

Asset Allocation (% of fund's net assets)

As of December 31, 2017 ^*
	Stocks	99.2%
	Bonds	0.4%
	Short-Term Investments and Net Other Assets (Liabilities)	0.4%

* Foreign investments - 15.9%

Investments December 31, 2017

Showing Percentage of Net Assets

Common Stocks - 99.2%
	Shares	Value
CONSUMER DISCRETIONARY - 10.4%
Diversified Consumer Services - 2.1%
Houghton Mifflin Harcourt Co. (a)	385,510	$3,585,243
Service Corp. International	155,600	5,806,992
		9,392,235
Hotels, Restaurants & Leisure - 2.3%
U.S. Foods Holding Corp. (a)	181,400	5,792,102
Wyndham Worldwide Corp.	39,133	4,534,341
		10,326,443
Internet & Direct Marketing Retail - 0.9%
Liberty Interactive Corp. QVC Group (Venture Group) Series A (a)	75,600	4,100,544
Leisure Products - 0.8%
Mattel, Inc. (b)	222,200	3,417,436
Media - 3.0%
Liberty Global PLC Class C (a)	155,700	5,268,888
Omnicom Group, Inc.	56,600	4,122,178
Sinclair Broadcast Group, Inc. Class A (b)	115,900	4,386,815
		13,777,881
Specialty Retail - 1.3%
AutoZone, Inc. (a)	3,900	2,774,343
Signet Jewelers Ltd. (b)	57,400	3,245,970
		6,020,313

TOTAL CONSUMER DISCRETIONARY		47,034,852

CONSUMER STAPLES - 3.4%
Beverages - 1.1%
Cott Corp.	303,961	5,073,271
Food Products - 2.3%
Darling International, Inc. (a)	334,763	6,069,253
The J.M. Smucker Co.	35,100	4,360,824
		10,430,077

TOTAL CONSUMER STAPLES		15,503,348

ENERGY - 8.3%
Energy Equipment & Services - 0.9%
Baker Hughes, a GE Co. Class A	132,000	4,176,480
Oil, Gas & Consumable Fuels - 7.4%
Boardwalk Pipeline Partners, LP	333,423	4,304,491
Cabot Oil & Gas Corp.	114,500	3,274,700
Cheniere Energy, Inc. (a)	100,500	5,410,920
EQT Corp.	56,300	3,204,596
GasLog Ltd. (b)	216,078	4,807,736
Lundin Petroleum AB	174,700	3,999,544
Teekay Corp. (b)	455,992	4,249,845
Valero Energy Corp.	46,100	4,237,051
		33,488,883

TOTAL ENERGY		37,665,363

FINANCIALS - 20.1%
Banks - 5.5%
CIT Group, Inc.	73,200	3,603,636
U.S. Bancorp	182,316	9,768,491
Wells Fargo & Co.	191,630	11,626,192
		24,998,319
Capital Markets - 5.1%
Apollo Global Management LLC Class A	201,213	6,734,599
Legg Mason, Inc.	135,692	5,696,350
State Street Corp.	40,400	3,943,444
The Blackstone Group LP	219,300	7,021,986
		23,396,379
Consumer Finance - 5.7%
Discover Financial Services	128,600	9,891,912
OneMain Holdings, Inc. (a)	129,000	3,352,710
Synchrony Financial	325,100	12,552,112
		25,796,734
Diversified Financial Services - 0.7%
Donnelley Financial Solutions, Inc. (a)	163,000	3,176,870
Insurance - 3.1%
Chubb Ltd.	45,800	6,692,754
FNF Group	184,000	7,220,160
		13,912,914

TOTAL FINANCIALS		91,281,216

HEALTH CARE - 6.5%
Biotechnology - 2.3%
Amgen, Inc.	31,500	5,477,850
United Therapeutics Corp. (a)	32,500	4,808,375
		10,286,225
Health Care Providers & Services - 1.5%
Aetna, Inc.	20,800	3,752,112
Envision Healthcare Corp.	85,961	2,970,812
		6,722,924
Pharmaceuticals - 2.7%
Allergan PLC	13,400	2,191,972
Jazz Pharmaceuticals PLC (a)	59,200	7,971,280
Mallinckrodt PLC (a)	97,500	2,199,600
		12,362,852

TOTAL HEALTH CARE		29,372,001

INDUSTRIALS - 10.8%
Aerospace & Defense - 1.6%
Huntington Ingalls Industries, Inc.	11,100	2,616,270
KLX, Inc. (a)	72,300	4,934,475
		7,550,745
Airlines - 1.3%
American Airlines Group, Inc.	115,800	6,025,074
Commercial Services & Supplies - 1.0%
KAR Auction Services, Inc.	92,100	4,651,971
Construction & Engineering - 1.5%
AECOM (a)	178,900	6,646,135
Machinery - 1.5%
Allison Transmission Holdings, Inc.	156,500	6,740,455
Road & Rail - 0.9%
Knight-Swift Transportation Holdings, Inc. Class A	90,720	3,966,278
Trading Companies & Distributors - 3.0%
AerCap Holdings NV (a)	155,500	8,180,855
WESCO International, Inc. (a)	77,300	5,267,995
		13,448,850

TOTAL INDUSTRIALS		49,029,508

INFORMATION TECHNOLOGY - 9.7%
Communications Equipment - 1.1%
CommScope Holding Co., Inc. (a)	139,000	5,258,370
Electronic Equipment & Components - 1.8%
Jabil, Inc.	74,600	1,958,250
TE Connectivity Ltd.	63,700	6,054,048
		8,012,298
IT Services - 5.3%
Amdocs Ltd.	74,400	4,871,712
Cognizant Technology Solutions Corp. Class A	96,800	6,874,736
Conduent, Inc.	183,300	2,962,128
DXC Technology Co.	56,600	5,371,340
First Data Corp. Class A (a)	247,300	4,132,383
		24,212,299
Semiconductors & Semiconductor Equipment - 1.5%
Qualcomm, Inc.	106,600	6,824,532

TOTAL INFORMATION TECHNOLOGY		44,307,499

MATERIALS - 8.8%
Chemicals - 7.2%
DowDuPont, Inc.	116,918	8,326,900
Eastman Chemical Co.	85,800	7,948,512
LyondellBasell Industries NV Class A	66,608	7,348,195
Westlake Chemical Corp.	84,800	9,033,744
		32,657,351
Construction Materials - 0.8%
Eagle Materials, Inc.	33,700	3,818,210
Containers & Packaging - 0.8%
Sealed Air Corp.	70,900	3,495,370

TOTAL MATERIALS		39,970,931

REAL ESTATE - 14.7%
Equity Real Estate Investment Trusts (REITs) - 13.2%
American Tower Corp.	82,600	11,784,542
Douglas Emmett, Inc.	205,600	8,441,936
Equinix, Inc.	16,100	7,296,842
Equity Lifestyle Properties, Inc.	96,200	8,563,724
Extra Space Storage, Inc.	108,700	9,505,815
National Retail Properties, Inc.	175,700	7,577,941
Outfront Media, Inc.	286,200	6,639,840
		59,810,640
Real Estate Management & Development - 1.5%
CBRE Group, Inc. (a)	159,600	6,912,276

TOTAL REAL ESTATE		66,722,916

UTILITIES - 6.5%
Electric Utilities - 4.1%
Exelon Corp.	162,000	6,384,420
Xcel Energy, Inc.	254,600	12,248,806
		18,633,226
Multi-Utilities - 2.4%
Sempra Energy	100,361	10,730,598

TOTAL UTILITIES		29,363,824

TOTAL COMMON STOCKS
(Cost $363,049,740)		450,251,458
	Principal Amount	Value

Convertible Bonds - 0.4%
ENERGY - 0.4%
Oil, Gas & Consumable Fuels - 0.4%
Cobalt International Energy, Inc. 2.625% 12/1/19 (Cost $3,927,899)	6,240,000	1,641,900
	Shares	Value

Money Market Funds - 2.8%
Fidelity Cash Central Fund, 1.36% (c)	1,312,464	1,312,727
Fidelity Securities Lending Cash Central Fund 1.36% (c)(d)	11,466,896	11,469,189
TOTAL MONEY MARKET FUNDS
(Cost $12,780,769)		12,781,916
TOTAL INVESTMENT IN SECURITIES - 102.4%
(Cost $379,758,408)		464,675,274
NET OTHER ASSETS (LIABILITIES) - (2.4)%		(11,029,142)
NET ASSETS - 100%		$453,646,132

Legend

(a) Non-income producing

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

(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.

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

Affiliated Central Funds

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

Fund	Income earned
Fidelity Cash Central Fund	$37,099
Fidelity Securities Lending Cash Central Fund	111,995
Total	$149,094

Investment Valuation

	Valuation Inputs at Reporting Date:
Description	Total	Level 1	Level 2	Level 3
Investments in Securities:
Equities:
Consumer Discretionary	$47,034,852	$47,034,852	$--	$--
Consumer Staples	15,503,348	15,503,348	--	--
Energy	37,665,363	37,665,363	--	--
Financials	91,281,216	91,281,216	--	--
Health Care	29,372,001	29,372,001	--	--
Industrials	49,029,508	49,029,508	--	--
Information Technology	44,307,499	44,307,499	--	--
Materials	39,970,931	39,970,931	--	--
Real Estate	66,722,916	66,722,916	--	--
Utilities	29,363,824	29,363,824	--	--
Corporate Bonds	1,641,900	--	1,641,900	--
Money Market Funds	12,781,916	12,781,916	--	--
Total Investments in Securities:	$464,675,274	$463,033,374	$1,641,900	$--

Other Information

Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):

United States of America	84.1%
Netherlands	3.4%
Switzerland	2.9%
Ireland	2.7%
Bermuda	1.8%
United Kingdom	1.1%
Canada	1.1%
Bailiwick of Guernsey	1.1%
Others (Individually Less Than 1%)	1.8%
	100.0%

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

Financial Statements

Statement of Assets and Liabilities

		December 31, 2017
Assets
Investment in securities, at value (including securities loaned of $11,129,159) — See accompanying schedule: Unaffiliated issuers (cost $366,977,639)	$451,893,358
Fidelity Central Funds (cost $12,780,769)	12,781,916
Total Investment in Securities (cost $379,758,408)		$464,675,274
Receivable for investments sold		1,852,461
Receivable for fund shares sold		104,741
Dividends receivable		626,757
Interest receivable		94,500
Distributions receivable from Fidelity Central Funds		17,129
Prepaid expenses		756
Other receivables		3,739
Total assets		467,375,357
Liabilities
Payable for investments purchased	$1,685,286
Payable for fund shares redeemed	268,756
Accrued management fee	203,047
Distribution and service plan fees payable	45,274
Other affiliated payables	47,473
Other payables and accrued expenses	9,528
Collateral on securities loaned	11,469,861
Total liabilities		13,729,225
Net Assets		$453,646,132
Net Assets consist of:
Paid in capital		$353,444,804
Undistributed net investment income		2,186,758
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions		13,097,420
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies		84,917,150
Net Assets		$453,646,132
Initial Class:
Net Asset Value, offering price and redemption price per share ($99,323,657 ÷ 6,960,529 shares)		$14.27
Service Class:
Net Asset Value, offering price and redemption price per share ($22,859,060 ÷ 1,606,229 shares)		$14.23
Service Class 2:
Net Asset Value, offering price and redemption price per share ($210,353,834 ÷ 14,626,472 shares)		$14.38
Investor Class:
Net Asset Value, offering price and redemption price per share ($121,109,581 ÷ 8,542,963 shares)		$14.18

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

Statement of Operations

		Year ended December 31, 2017
Investment Income
Dividends		$7,840,689
Special dividends		1,596,000
Interest		956,440
Income from Fidelity Central Funds		149,094
Total income		10,542,223
Expenses
Management fee	$2,378,967
Transfer agent fees	382,663
Distribution and service plan fees	527,786
Accounting and security lending fees	171,407
Custodian fees and expenses	42,737
Independent trustees' fees and expenses	1,731
Audit	64,247
Legal	3,719
Interest	479
Miscellaneous	3,746
Total expenses before reductions	3,577,482
Expense reductions	(23,356)	3,554,126
Net investment income (loss)		6,988,097
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investment securities:
Unaffiliated issuers	32,468,495
Fidelity Central Funds	(1,349)
Foreign currency transactions	(1,098)
Total net realized gain (loss)		32,466,048
Change in net unrealized appreciation (depreciation) on:
Investment securities:
Unaffiliated issuers	37,104,488
Fidelity Central Funds	1,143
Assets and liabilities in foreign currencies	603
Total change in net unrealized appreciation (depreciation)		37,106,234
Net gain (loss)		69,572,282
Net increase (decrease) in net assets resulting from operations		$76,560,379

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

Statement of Changes in Net Assets

	Year ended December 31, 2017	Year ended December 31, 2016
Increase (Decrease) in Net Assets
Operations
Net investment income (loss)	$6,988,097	$6,019,672
Net realized gain (loss)	32,466,048	111,861,521
Change in net unrealized appreciation (depreciation)	37,106,234	(80,134,657)
Net increase (decrease) in net assets resulting from operations	76,560,379	37,746,536
Distributions to shareholders from net investment income	(5,807,215)	(4,176,551)
Distributions to shareholders from net realized gain	(103,711,038)	–
Total distributions	(109,518,253)	(4,176,551)
Share transactions - net increase (decrease)	65,856,165	(47,571,176)
Total increase (decrease) in net assets	32,898,291	(14,001,191)
Net Assets
Beginning of period	420,747,841	434,749,032
End of period	$453,646,132	$420,747,841
Other Information
Undistributed net investment income end of period	$2,186,758	$1,138,711

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

Financial Highlights

VIP Value Strategies Portfolio Initial Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$15.77	$14.54	$15.19	$14.37	$11.11
Income from Investment Operations
Net investment income (loss)^A	.25^B	.23	.18	.15	.12
Net realized and unrealized gain (loss)	2.35	1.17	(.64)	.83	3.26
Total from investment operations	2.60	1.40	(.46)	.98	3.38
Distributions from net investment income	(.22)	(.17)	(.18)	(.16)	(.12)
Distributions from net realized gain	(3.88)	–	(.01)	–	–
Total distributions	(4.10)	(.17)	(.19)	(.16)	(.12)
Net asset value, end of period	$14.27	$15.77	$14.54	$15.19	$14.37
Total Return^C,^D	19.36%	9.62%	(2.99)%	6.80%	30.49%
Ratios to Average Net Assets^E,^F
Expenses before reductions	.68%	.67%	.67%	.68%	.68%
Expenses net of fee waivers, if any	.68%	.67%	.67%	.68%	.68%
Expenses net of all reductions	.67%	.67%	.67%	.68%	.68%
Net investment income (loss)	1.74%^B	1.56%	1.19%	1.02%	.94%
Supplemental Data
Net assets, end of period (000 omitted)	$99,324	$93,648	$98,919	$107,742	$115,594
Portfolio turnover rate^G	53%	108%	25%	9%	28%

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

^B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.38%.

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

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

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

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

VIP Value Strategies Portfolio Service Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$15.74	$14.52	$15.16	$14.34	$11.08
Income from Investment Operations
Net investment income (loss)^A	.23^B	.21	.17	.14	.11
Net realized and unrealized gain (loss)	2.34	1.17	(.63)	.82	3.26
Total from investment operations	2.57	1.38	(.46)	.96	3.37
Distributions from net investment income	(.20)	(.16)	(.16)	(.14)	(.11)
Distributions from net realized gain	(3.88)	–	(.01)	–	–
Total distributions	(4.08)	(.16)	(.18)^C	(.14)	(.11)
Net asset value, end of period	$14.23	$15.74	$14.52	$15.16	$14.34
Total Return^D,^E	19.21%	9.48%	(3.05)%	6.69%	30.44%
Ratios to Average Net Assets^F,^G
Expenses before reductions	.78%	.77%	.77%	.77%	.78%
Expenses net of fee waivers, if any	.78%	.77%	.77%	.77%	.78%
Expenses net of all reductions	.77%	.77%	.77%	.77%	.78%
Net investment income (loss)	1.64%^B	1.46%	1.09%	.93%	.84%
Supplemental Data
Net assets, end of period (000 omitted)	$22,859	$21,949	$22,970	$29,109	$33,460
Portfolio turnover rate^H	53%	108%	25%	9%	28%

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

^C Total distributions of $.18 per share is comprised of distributions from net investment income of $.163 and distributions from net realized gain of $.012 per share.

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

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

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

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

VIP Value Strategies Portfolio Service Class 2

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$15.86	$14.64	$15.28	$14.46	$11.18
Income from Investment Operations
Net investment income (loss)^A	.21^B	.19	.15	.12	.09
Net realized and unrealized gain (loss)	2.37	1.17	(.64)	.82	3.28
Total from investment operations	2.58	1.36	(.49)	.94	3.37
Distributions from net investment income	(.18)	(.14)	(.14)	(.12)	(.09)
Distributions from net realized gain	(3.88)	–	(.01)	–	–
Total distributions	(4.06)	(.14)	(.15)	(.12)	(.09)
Net asset value, end of period	$14.38	$15.86	$14.64	$15.28	$14.46
Total Return^C,^D	19.08%	9.27%	(3.19)%	6.51%	30.18%
Ratios to Average Net Assets^E,^F
Expenses before reductions	.93%	.92%	.92%	.92%	.93%
Expenses net of fee waivers, if any	.92%	.92%	.92%	.92%	.93%
Expenses net of all reductions	.92%	.92%	.92%	.92%	.93%
Net investment income (loss)	1.49%^B	1.31%	.94%	.78%	.69%
Supplemental Data
Net assets, end of period (000 omitted)	$210,354	$187,876	$186,853	$220,494	$215,780
Portfolio turnover rate^G	53%	108%	25%	9%	28%

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

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

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

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

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

VIP Value Strategies Portfolio Investor Class

Years ended December 31,	2017	2016	2015	2014	2013
Selected Per–Share Data
Net asset value, beginning of period	$15.69	$14.47	$15.12	$14.31	$11.06
Income from Investment Operations
Net investment income (loss)^A	.23^B	.22	.17	.14	.11
Net realized and unrealized gain (loss)	2.34	1.16	(.64)	.82	3.25
Total from investment operations	2.57	1.38	(.47)	.96	3.36
Distributions from net investment income	(.21)	(.16)	(.17)	(.15)	(.11)
Distributions from net realized gain	(3.88)	–	(.01)	–	–
Total distributions	(4.08)^C	(.16)	(.18)	(.15)	(.11)
Net asset value, end of period	$14.18	$15.69	$14.47	$15.12	$14.31
Total Return^D,^E	19.30%	9.53%	(3.07)%	6.67%	30.45%
Ratios to Average Net Assets^F,^G
Expenses before reductions	.76%	.75%	.75%	.76%	.76%
Expenses net of fee waivers, if any	.76%	.75%	.75%	.76%	.76%
Expenses net of all reductions	.75%	.75%	.75%	.75%	.76%
Net investment income (loss)	1.66%^B	1.48%	1.11%	.94%	.86%
Supplemental Data
Net assets, end of period (000 omitted)	$121,110	$117,276	$126,007	$110,755	$115,468
Portfolio turnover rate^H	53%	108%	25%	9%	28%

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

^C Total distributions of $4.08 per share is comprised of distributions from net investment income of $.206 and distributions from net realized gain of $3.878 per share.

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

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

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

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

Notes to Financial Statements

For the period ended December 31, 2017

1. Organization.

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

2. Investments in Fidelity Central Funds.

3. Significant Accounting Policies.

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

Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)

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

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

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

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

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

As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:

Gross unrealized appreciation	$96,091,185
Gross unrealized depreciation	(9,646,955)
Net unrealized appreciation (depreciation)	$86,444,230
Tax Cost	$378,231,044

The tax-based components of distributable earnings as of period end were as follows:

Undistributed ordinary income	$1,211,795
Undistributed long term capital gain	$12,799,206
Net unrealized appreciation (depreciation) on securities and other investments	$86,444,514

The Fund intends to elect to defer to its next fiscal year $254,188 of capital losses recognized during the period November 1, 2017 to December 31, 2017.

The tax character of distributions paid was as follows:

	December 31, 2017	December 31, 2016
Ordinary Income	$25,324,641	$ 4,176,551
Long-term Capital Gains	84,193,612	–
Total	$109,518,253	$ 4,176,551

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $231,693,346 and $270,489,898, respectively.

5. Fees and Other Transactions with Affiliates.

Management Fee. Fidelity Management & Research Company (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .24% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .54% of the Fund's average net assets.

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

Service Class	$22,551
Service Class 2	505,235
	$527,786

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class pays a fee for transfer agent services, typesetting and printing and mailing of shareholder reports, excluding mailing of proxy statements, equal to an annual rate of of class-level average net assets. The annual rate for Investor Class is .15% and the annual rate for all other classes is .07%. For the period, transfer agent fees for each class were as follows:

Initial Class	$63,057
Service Class	14,866
Service Class 2	133,222
Investor Class	171,518
	$382,663

Borrower or Lender	Average Loan Balance	Weighted Average Interest Rate	Interest Expense
Borrower	$3,551,167	.81%	$479

6. Committed Line of Credit.

The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,383 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.

7. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $111,995, including $4,431 from securities loaned to FCM.

8. Expense Reductions.

In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $3,895.

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

	Year ended December 31, 2017	Year ended December 31, 2016
From net investment income
Initial Class	$1,416,724	$1,028,891
Service Class	308,631	219,057
Service Class 2	2,454,556	1,628,779
Investor Class	1,627,304	1,299,824
Total	$5,807,215	$4,176,551
From net realized gain
Initial Class	$23,069,664	$–
Service Class	5,452,821	–
Service Class 2	47,083,191	–
Investor Class	28,105,362	–
Total	$103,711,038	$–

10. Share Transactions.

Transactions for each class of shares were as follows:

	Shares	Shares	Dollars	Dollars
	Year ended December 31, 2017	Year ended December 31, 2016	Year ended December 31, 2017	Year ended December 31, 2016
Initial Class
Shares sold	717,848	821,158	$10,210,257	$11,762,517
Reinvestment of distributions	1,818,819	64,548	24,486,388	1,028,891
Shares redeemed	(1,514,816)	(1,749,152)	(21,515,582)	(25,984,549)
Net increase (decrease)	1,021,851	(863,446)	$13,181,063	$(13,193,141)
Service Class
Shares sold	61,164	80,499	$859,498	$1,151,667
Reinvestment of distributions	429,124	13,768	5,761,452	219,057
Shares redeemed	(278,675)	(281,967)	(3,907,293)	(4,123,665)
Net increase (decrease)	211,613	(187,700)	$2,713,657	$(2,752,941)
Service Class 2
Shares sold	1,087,305	1,130,913	$15,506,124	$16,766,591
Reinvestment of distributions	3,652,187	101,545	49,537,747	1,628,779
Shares redeemed	(1,955,576)	(2,155,697)	(28,029,450)	(31,103,249)
Net increase (decrease)	2,783,916	(923,239)	$37,014,421	$(12,707,879)
Investor Class
Shares sold	747,105	1,395,785	$10,512,977	$20,122,693
Reinvestment of distributions	2,222,365	81,956	29,732,667	1,299,824
Shares redeemed	(1,900,518)	(2,709,498)	(27,298,620)	(40,339,732)
Net increase (decrease)	1,068,952	(1,231,757)	$12,947,024	$(18,917,215)

11. Other.

At the end of the period, the investment adviser or its affiliates were the owners of record of 31% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 33% of the total outstanding shares of the Fund.

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of VIP Value Strategies Portfolio (the "Fund"), a fund of Variable Insurance Products Fund III, including the schedule of investments, as of December 31, 2017, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2017, and 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 the 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.

Basis for Opinion

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 14, 2018

We have served as the auditor of one or more of the Fidelity investment companies since 1999.

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 1-877-208-0098.

Interested Trustees*:

Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

* Determined to be an “Interested Trustee” by virtue of, among other things, his or her affiliation with the trust or various entities under common control with FMR.

Independent Trustees:

Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.

Name, Year of Birth; Principal Occupations and Other Relevant Experience+

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

William S. Stavropoulos (1939)

Year of Election or Appointment: 2002

Trustee

Vice Chairman of the Independent Trustees

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

Advisory Board Members and Officers:

Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

Elizabeth Paige Baumann (1968)

Year of Election or Appointment: 2017

Anti-Money Laundering (AML) Officer

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2016

Assistant Treasurer

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

Thomas C. Hense (1964)

Year of Election or Appointment: 2008, 2010, or 2015

Vice President

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Colm A. Hogan (1973)

Year of Election or Appointment: 2016

Deputy Treasurer

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

Rieco E. Mello (1969)

Year of Election or Appointment: 2017

Assistant Treasurer

Mr. Mello also serves as Assistant Treasurer of other funds. Mr. Mello serves as Assistant Treasurer of FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (1995-present).

Kenneth B. Robins (1969)

Year of Election or Appointment: 2016

Chief Compliance Officer

Stacie M. Smith (1974)

Year of Election or Appointment: 2016

President and Treasurer

Marc L. Spector (1972)

Year of Election or Appointment: 2016

Assistant Treasurer

Renee Stagnone (1975)

Year of Election or Appointment: 2016

Assistant Treasurer

Shareholder Expense Example

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2017 to December 31, 2017).

Actual Expenses

Hypothetical Example for Comparison Purposes

	Annualized Expense Ratio-^A	Beginning Account Value July 1, 2017	Ending Account Value December 31, 2017	Expenses Paid During Period-^B July 1, 2017 to December 31, 2017
Initial Class	.66%
Actual		$1,000.00	$1,089.00	$3.48
Hypothetical-^C		$1,000.00	$1,021.88	$3.36
Service Class	.76%
Actual		$1,000.00	$1,088.40	$4.00
Hypothetical-^C		$1,000.00	$1,021.37	$3.87
Service Class 2	.92%
Actual		$1,000.00	$1,087.70	$4.84
Hypothetical-^C		$1,000.00	$1,020.57	$4.69
Investor Class	.75%
Actual		$1,000.00	$1,088.80	$3.95
Hypothetical-^C		$1,000.00	$1,021.42	$3.82

^A Annualized expense ratio reflects expenses net of applicable fee waivers.

^B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

^C 5% return per year before expenses

Distributions (Unaudited)

The Board of Trustees of VIP 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, and dividends derived from net investment income:

	Pay Date	Record Date	Dividends	Capital Gains
Value Strategies Portfolio
Initial Class	02/09/18	02/09/18	$0.044	$0.409
Service Class	02/09/18	02/09/18	$0.041	$0.409
Service Class 2	02/09/18	02/09/18	$0.038	$0.409
Investor Class	02/09/18	02/09/18	$0.042	$0.409

The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2017, $13,248,508, or, if subsequently determined to be different, the net capital gain of such year.

Initial Class designates 74% and 24%; Service Class designates 78% and 24%; Service Class 2 designates 87% and 24% and Investor Class designates 78% and 24% of the dividends distributed in February and December, respectively during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.

Board Approval of Investment Advisory Contracts and Management Fees

VIP Value Strategies Portfolio

The Board has discussed the fund's underperformance with FMR, including the fund's investment strategy, the portfolio management team, and broader trends in the market that may have impacted the fund's performance, and has engaged with FMR to consider what steps might be taken to remediate the fund's underperformance. The Board noted that there was a portfolio management change for the fund in September 2016.

Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should continue to benefit the shareholders of the fund.

Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.

VIP Value Strategies Portfolio

The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2016.

Based on its review, the Board concluded that the fund's management fee is fair and reasonable in light of the services that the fund receives and the other factors considered.

The Board concluded, taking into account the analysis of the Economies of Scale Committee, that economies of scale, if any, are being appropriately shared between fund shareholders and Fidelity.

Fidelity Investments

VIPVS-ANN-0218
1.781994.115

Item 2.

Code of Ethics

As of the end of the period, December 31, 2017, 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 Joseph Mauriello is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Mauriello is independent for purposes of Item 3 of Form N-CSR.

Item 4.

Principal Accountant Fees and Services

Fees and Services

The following table presents fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, “Deloitte Entities”) in each of the last two fiscal years for services rendered to VIP Balanced Portfolio, VIP Dynamic Capital Appreciation Portfolio, VIP Growth & Income Portfolio, VIP Growth Opportunities Portfolio and VIP Value Strategies Portfolio (the “Funds”):

Services Billed by Deloitte Entities

December 31, 2017 Fees^A


	Audit Fees	Audit-Related Fees	Tax Fees	All Other Fees
VIP Balanced Portfolio	$57,000	$100	$6,800	$1,600
VIP Dynamic Capital Appreciation Portfolio	$38,000	$100	$6,300	$1,100
VIP Growth & Income Portfolio	$48,000	$100	$6,800	$1,400
VIP Growth Opportunities Portfolio	$50,000	$100	$5,300	$1,400
VIP Value Strategies Portfolio	$45,000	$100	$7,500	$1,300

December 31, 2016 Fees^A,B


	Audit Fees	Audit-Related Fees	Tax Fees	All Other Fees
VIP Balanced Portfolio	$57,000	$100	$6,700	$1,700
VIP Dynamic Capital Appreciation Portfolio	$38,000	$-	$6,300	$1,200
VIP Growth & Income Portfolio	$48,000	$100	$6,900	$1,400
VIP Growth Opportunities Portfolio	$62,000	$100	$5,300	$1,400
VIP Value Strategies Portfolio	$45,000	$100	$7,400	$1,400

^AAmounts may reflect rounding.

^BCertain amounts have been reclassified to align with current period presentation.

The following table presents fees billed by PricewaterhouseCoopers LLP (“PwC”) in each of the last two fiscal years for services rendered to VIP Mid Cap Portfolio (the “Fund”):

Services Billed by PwC

December 31, 2017 Fees^A


	Audit Fees	Audit-Related Fees	Tax Fees	All Other Fees
VIP Mid Cap Portfolio	$48,000	$4,400	$3,500	$2,100

December 31, 2016 Fees^A,B


	Audit Fees	Audit-Related Fees	Tax Fees	All Other Fees
VIP Mid Cap Portfolio	$51,000	$5,100	$3,500	$2,400

^AAmounts may reflect rounding.

^BCertain amounts have been reclassified to align with current period presentation.

The following table presents fees billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Funds and that are 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”):

Services Billed by Deloitte Entities


	December 31, 2017^A	December 31, 2016^A
Audit-Related Fees	$-	$35,000
Tax Fees	$25,000	$-
All Other Fees	$-	$-

^A Amounts may reflect rounding.

Services Billed by PwC


	December 31, 2017^A	December 31, 2016^A
Audit-Related Fees	$8,470,000	$6,240,000
Tax Fees	$160,000	$10,000
All Other Fees	$-	$-

^A Amounts may reflect rounding.

“Audit-Related Fees” represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.

“Tax Fees” represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.

“All Other Fees” represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.

Assurance services must be performed by an independent public accountant.

* * *

The aggregate non-audit fees billed by PwC and Deloitte Entities for services rendered to 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 any Fund Service Provider for each of the last two fiscal years of the Funds are as follows:


Billed By	December 31, 2017^A	December 31, 2016^A,B
Deloitte Entities	$345,000	$305,000
PwC	$10,725,000	$7,645,000

^A Amounts may reflect rounding.

^BCertain amounts have been reclassified to align with current period presentation.

The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC and Deloitte Entities to Fund Service Providers to be compatible with maintaining the independence of PwC and Deloitte Entities in their audits of the Funds, taking into account representations from PwC and Deloitte Entities, in accordance with Public Company Accounting Oversight Board rules, regarding their independence from the Funds and their related entities and FMR’s review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.

Audit Committee Pre-Approval Policies and Procedures

The trust’s Audit Committee must pre-approve all audit and non-audit services provided by a fund’s independent registered public accounting firm relating to the operations or financial reporting of the fund. 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 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.

All Covered Services 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 Chair 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.

Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.

Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X (“De Minimis Exception”)

There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Funds’ last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.

Item 5.

Audit Committee of Listed Registrants

Not applicable.

Item 6.

Investments

(a)

Not applicable.

(b)

Not applicable

Item 7.

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

Not applicable.

Item 8.

Portfolio Managers of Closed-End Management Investment Companies

Not applicable.

Item 9.

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

Not applicable.

Item 10.

Submission of Matters to a Vote of Security Holders

There were no material changes to the procedures by which shareholders may recommend nominees to the trust’s Board of Trustees.

Item 11.

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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust’s internal control over financial reporting.

Item 12.

Exhibits


(a)	(1)	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.
(a)	(3)	Not applicable.
(b)		Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT.

SIGNATURES

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

Variable Insurance Products Fund III


By:	/s/ Stacie M. Smith
	Stacie M. Smith
	President and Treasurer

Date:	February 22, 2018

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/Stacie M. Smith
	Stacie M. Smith
	President and Treasurer

Date:	February 22, 2018


By:	/s/Howard J. Galligan III
	Howard J. Galligan III
	Chief Financial Officer

Date:	February 22, 2018