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 811-07205
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)
Cynthia Lo Bessette, 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, 2022 |
Item 1.
Reports to Stockholders
Fidelity® Variable Insurance Products:
Value Strategies Portfolio
Annual Report
December 31, 2022
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity® Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2023 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-PORT 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.
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 | |||
Periods ended December 31, 2022 | Past 1 year | Past 5 years | Past 10 years |
| Initial Class | -7.03% | 8.38% | 10.22% |
| Service Class | -7.19% | 8.27% | 10.11% |
| Service Class 2 | -7.35% | 8.10% | 9.94% |
| Investor Class | -7.11% | 8.29% | 10.13% |
| $10,000 Over 10 Years |
Let's say hypothetically that $10,000 was invested in VIP Value Strategies Portfolio - Initial Class, a class of the fund, on December 31, 2012. 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. |
 |
Market Recap:
U.S. equities returned -18.11% in 2022, according to the S&P 500 ® index, as a multitude of risk factors challenged the global economy. It was the index's lowest calendar-year return since 2008 and first retreat since 2018. High inflation prompted the Federal Reserve to aggressively tighten monetary policy, and market interest rates eclipsed their highest level in a decade, stoking recession fears and sending stocks into bear market territory. Since March, the Fed hiked its benchmark rate seven times, by 4.25 percentage points - the fastest-ever pace of monetary tightening - while also shrinking its massive portfolio. Against this backdrop, the S&P 500 ® posted its worst year-to-date result (-23.87%) in 20 years through September, a seasonally weak month that stayed true to form, with volatility spiking due to growing certainty the Fed would persist in its effort to cool inflation, even at the expense of economic growth. Three of the index's worst monthly returns ever were recorded in 2022, as it shed 8% to 9% in April, June and September. Gains of similar proportion were made in July and October, amid optimism on inflation and policy easing. November (+6%) began with a rate hike of 0.75% and ended on a high note when the Fed signaled its intent to slow its pace of rate rises. For the year, value stocks handily outpaced growth. This headwind was pronounced in the growthier communication services (-40%), consumer discretionary (-37%) and information technology (-28%) sectors. In sharp contrast, energy (+66%) shined.
Comments from Portfolio Manager Matt Friedman:
For the fiscal year ending December 31, 2022, the fund's share classes returned roughly -7%, outperforming the -12.03% result of the benchmark Russell Midcap ® Value Index. The top contributor to performance versus the benchmark were stock picks in health care. Strong picks in the financials sector, primarily driven by the diversified financials industry, also boosted the fund's relative result. Also boosting performance was an overweighting and stock picks in energy. The fund's top individual relative contributor was an overweighting in Hess, which gained 92% the past year. The company was among our largest holdings. The fund's non-benchmark position in Canadian National Resources, the biggest holding in the fund, gained about 38%. We trimmed positions in both Hess and Canadian Natural Resources. The fund's non-benchmark investment in Cigna, one of the fund's largest holdings, gained roughly 46%. We reduced our exposure to the stock. In contrast, the biggest detractor from performance versus the benchmark was security selection in materials. Weak picks in real estate also hampered the fund's relative result. Also hindering the fund's relative performance was stock selection in the consumer discretionary sector, primarily within the retailing industry. Our non-benchmark position in Cushman & Wakefield was the fund's biggest individual relative detractor, due to its -44% result. This was among our largest holdings. Also hurting performance was our outsized stake in Signature Bank, which returned -64%. We added to our investment the past 12 months. Another key detractor was our out-of-benchmark position in Unisys (-75%). We pared our stake. Notable changes in positioning include increased exposure to the energy sector and a lower allocation to real estate.
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.
Top Holdings (% of Fund's net assets) | ||
| Canadian Natural Resources Ltd. | 2.6 | |
| PG&E Corp. | 2.1 | |
| Hess Corp. | 2.1 | |
| Halliburton Co. | 1.9 | |
| Cigna Corp. | 1.8 | |
| East West Bancorp, Inc. | 1.6 | |
| Flex Ltd. | 1.5 | |
| Ameriprise Financial, Inc. | 1.5 | |
| The Travelers Companies, Inc. | 1.5 | |
| Cushman & Wakefield PLC | 1.5 | |
| 18.1 | ||
| Market Sectors (% of Fund's net assets) | ||
| Industrials | 16.8 | |
| Financials | 16.6 | |
| Consumer Discretionary | 11.8 | |
| Materials | 10.1 | |
| Energy | 9.5 | |
| Utilities | 8.6 | |
| Real Estate | 7.9 | |
| Health Care | 7.0 | |
| Information Technology | 5.5 | |
| Consumer Staples | 3.6 | |
| Communication Services | 2.3 | |
Asset Allocation (% of Fund's net assets) |
 |
Foreign investments - 18.2% |
Geographic Diversification (% of Fund's net assets) |
 |
* Includes Short-Term investments and Net Other Assets (Liabilities). Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable. |
Showing Percentage of Net Assets
| Common Stocks - 99.7% | |||
| Shares | Value ($) | ||
| COMMUNICATION SERVICES - 2.3% | |||
| Diversified Telecommunication Services - 0.8% | |||
| Cellnex Telecom SA (a) | 144,500 | 4,793,246 | |
| Interactive Media & Services - 0.5% | |||
| Ziff Davis, Inc. (b) | 42,900 | 3,393,390 | |
| Media - 1.0% | |||
| Interpublic Group of Companies, Inc. | 117,900 | 3,927,249 | |
| Nexstar Broadcasting Group, Inc. Class A | 15,700 | 2,747,971 | |
| 6,675,220 | |||
TOTAL COMMUNICATION SERVICES | 14,861,856 | ||
| CONSUMER DISCRETIONARY - 11.8% | |||
| Auto Components - 1.3% | |||
| Adient PLC (b) | 140,700 | 4,880,883 | |
| Autoliv, Inc. | 48,900 | 3,744,762 | |
| 8,625,645 | |||
| Diversified Consumer Services - 0.8% | |||
| Adtalem Global Education, Inc. (b) | 149,411 | 5,304,091 | |
| Hotels, Restaurants & Leisure - 0.7% | |||
| Caesars Entertainment, Inc. (b) | 110,600 | 4,600,960 | |
| Household Durables - 2.1% | |||
| Mohawk Industries, Inc. (b) | 37,702 | 3,853,898 | |
| Taylor Morrison Home Corp. (b) | 106,800 | 3,241,380 | |
| Tempur Sealy International, Inc. | 191,700 | 6,581,061 | |
| 13,676,339 | |||
| Internet & Direct Marketing Retail - 0.8% | |||
| eBay, Inc. | 121,500 | 5,038,605 | |
| Leisure Products - 0.5% | |||
| Mattel, Inc. (b) | 190,300 | 3,394,952 | |
| Multiline Retail - 1.6% | |||
| Dollar Tree, Inc. (b) | 45,600 | 6,449,664 | |
| Kohl's Corp. | 86,300 | 2,179,075 | |
| Nordstrom, Inc. (c) | 101,900 | 1,644,666 | |
| 10,273,405 | |||
| Specialty Retail - 3.3% | |||
| American Eagle Outfitters, Inc. (c) | 468,002 | 6,533,308 | |
| Lithia Motors, Inc. Class A (sub. vtg.) (c) | 17,200 | 3,521,528 | |
| Rent-A-Center, Inc. | 121,900 | 2,748,845 | |
| Sally Beauty Holdings, Inc. (b) | 207,900 | 2,602,908 | |
| Victoria's Secret & Co. (b) | 164,900 | 5,900,122 | |
| 21,306,711 | |||
| Textiles, Apparel & Luxury Goods - 0.7% | |||
| Capri Holdings Ltd. (b) | 75,300 | 4,316,196 | |
TOTAL CONSUMER DISCRETIONARY | 76,536,904 | ||
| CONSUMER STAPLES - 3.6% | |||
| Beverages - 0.9% | |||
| Primo Water Corp. | 366,200 | 5,690,748 | |
| Food & Staples Retailing - 1.3% | |||
| U.S. Foods Holding Corp. (b) | 251,600 | 8,559,432 | |
| Food Products - 1.4% | |||
| Darling Ingredients, Inc. (b) | 141,563 | 8,860,428 | |
TOTAL CONSUMER STAPLES | 23,110,608 | ||
| ENERGY - 9.5% | |||
| Energy Equipment & Services - 2.9% | |||
| Halliburton Co. | 307,500 | 12,100,125 | |
| Liberty Oilfield Services, Inc. Class A | 236,204 | 3,781,626 | |
| Valaris Ltd. (b) | 41,500 | 2,806,230 | |
| 18,687,981 | |||
| Oil, Gas & Consumable Fuels - 6.6% | |||
| Canadian Natural Resources Ltd. | 310,700 | 17,253,718 | |
| Hess Corp. | 94,300 | 13,373,626 | |
| HF Sinclair Corp. | 101,600 | 5,272,024 | |
| Tourmaline Oil Corp. | 138,300 | 6,978,328 | |
| 42,877,696 | |||
TOTAL ENERGY | 61,565,677 | ||
| FINANCIALS - 16.6% | |||
| Banks - 3.7% | |||
| East West Bancorp, Inc. | 159,800 | 10,530,820 | |
| First Citizens Bancshares, Inc. | 8,200 | 6,218,552 | |
| Signature Bank | 62,100 | 7,155,162 | |
| 23,904,534 | |||
| Capital Markets - 3.8% | |||
| Ameriprise Financial, Inc. | 31,500 | 9,808,155 | |
| Lazard Ltd. Class A | 150,814 | 5,228,721 | |
| LPL Financial | 44,000 | 9,511,480 | |
| 24,548,356 | |||
| Consumer Finance - 1.8% | |||
| OneMain Holdings, Inc. | 130,700 | 4,353,617 | |
| SLM Corp. | 421,500 | 6,996,900 | |
| 11,350,517 | |||
| Diversified Financial Services - 1.3% | |||
| Apollo Global Management, Inc. | 136,100 | 8,681,819 | |
| Insurance - 5.2% | |||
| American Financial Group, Inc. | 33,000 | 4,530,240 | |
| Arch Capital Group Ltd. (b) | 129,500 | 8,130,010 | |
| Assurant, Inc. | 57,800 | 7,228,468 | |
| Reinsurance Group of America, Inc. | 29,205 | 4,149,738 | |
| The Travelers Companies, Inc. | 52,200 | 9,786,978 | |
| 33,825,434 | |||
| Thrifts & Mortgage Finance - 0.8% | |||
| Walker & Dunlop, Inc. | 63,400 | 4,975,632 | |
TOTAL FINANCIALS | 107,286,292 | ||
| HEALTH CARE - 7.0% | |||
| Biotechnology - 1.0% | |||
| United Therapeutics Corp. (b) | 23,900 | 6,646,351 | |
| Health Care Providers & Services - 4.4% | |||
| AdaptHealth Corp. (b) | 240,700 | 4,626,254 | |
| Centene Corp. (b) | 81,800 | 6,708,418 | |
| Cigna Corp. | 35,600 | 11,795,704 | |
| Tenet Healthcare Corp. (b) | 103,500 | 5,049,765 | |
| 28,180,141 | |||
| Life Sciences Tools & Services - 0.4% | |||
| Syneos Health, Inc. (b) | 76,300 | 2,798,684 | |
| Pharmaceuticals - 1.2% | |||
| Jazz Pharmaceuticals PLC (b) | 47,000 | 7,487,570 | |
TOTAL HEALTH CARE | 45,112,746 | ||
| INDUSTRIALS - 16.8% | |||
| Air Freight & Logistics - 0.9% | |||
| FedEx Corp. | 32,100 | 5,559,720 | |
| Building Products - 1.3% | |||
| Builders FirstSource, Inc. (b) | 134,700 | 8,739,336 | |
| Commercial Services & Supplies - 0.8% | |||
| The Brink's Co. | 101,500 | 5,451,565 | |
| Construction & Engineering - 4.2% | |||
| Fluor Corp. (b) | 258,000 | 8,942,280 | |
| Granite Construction, Inc. | 142,100 | 4,983,447 | |
| MDU Resources Group, Inc. | 172,300 | 5,227,582 | |
| Willscot Mobile Mini Holdings (b) | 172,800 | 7,805,376 | |
| 26,958,685 | |||
| Electrical Equipment - 1.8% | |||
| Regal Rexnord Corp. | 56,500 | 6,778,870 | |
| Sensata Technologies, Inc. PLC | 115,900 | 4,680,042 | |
| 11,458,912 | |||
| Machinery - 3.8% | |||
| Allison Transmission Holdings, Inc. | 119,900 | 4,987,840 | |
| Crane Holdings Co. | 51,900 | 5,213,355 | |
| Flowserve Corp. | 260,100 | 7,979,868 | |
| Kennametal, Inc. | 258,500 | 6,219,510 | |
| 24,400,573 | |||
| Professional Services - 1.0% | |||
| Manpower, Inc. | 81,300 | 6,764,973 | |
| Road & Rail - 2.2% | |||
| RXO, Inc. (b) | 136,000 | 2,339,200 | |
| TFI International, Inc. (Canada) | 54,200 | 5,428,406 | |
| U-Haul Holding Co. (non-vtg.) | 35,965 | 1,977,356 | |
| XPO, Inc. (b) | 132,400 | 4,407,596 | |
| 14,152,558 | |||
| Trading Companies & Distributors - 0.8% | |||
| Beacon Roofing Supply, Inc. (b) | 100,600 | 5,310,674 | |
TOTAL INDUSTRIALS | 108,796,996 | ||
| INFORMATION TECHNOLOGY - 5.5% | |||
| Communications Equipment - 0.5% | |||
| Lumentum Holdings, Inc. (b) | 59,300 | 3,093,681 | |
| Electronic Equipment & Components - 2.2% | |||
| Flex Ltd. (b) | 468,800 | 10,060,448 | |
| Vontier Corp. | 234,800 | 4,538,684 | |
| 14,599,132 | |||
| IT Services - 2.1% | |||
| Fidelity National Information Services, Inc. | 95,100 | 6,452,535 | |
| SS&C Technologies Holdings, Inc. | 103,200 | 5,372,592 | |
| Unisys Corp. (b) | 330,077 | 1,686,693 | |
| 13,511,820 | |||
| Software - 0.7% | |||
| NCR Corp. (b) | 183,300 | 4,291,053 | |
TOTAL INFORMATION TECHNOLOGY | 35,495,686 | ||
| MATERIALS - 10.1% | |||
| Chemicals - 3.7% | |||
| Axalta Coating Systems Ltd. (b) | 189,500 | 4,826,565 | |
| Methanex Corp. (c) | 118,400 | 4,482,624 | |
| Olin Corp. | 125,201 | 6,628,141 | |
| Tronox Holdings PLC | 238,000 | 3,262,980 | |
| Westlake Corp. | 48,800 | 5,003,952 | |
| 24,204,262 | |||
| Construction Materials - 0.5% | |||
| Eagle Materials, Inc. | 24,800 | 3,294,680 | |
| Containers & Packaging - 2.1% | |||
| Crown Holdings, Inc. | 71,300 | 5,861,573 | |
| O-I Glass, Inc. (b) | 284,600 | 4,715,822 | |
| WestRock Co. | 88,300 | 3,104,628 | |
| 13,682,023 | |||
| Metals & Mining - 3.0% | |||
| ArcelorMittal SA Class A unit GDR | 148,800 | 3,901,536 | |
| Arconic Corp. (b) | 315,700 | 6,680,212 | |
| Constellium NV (b) | 376,100 | 4,449,263 | |
| Freeport-McMoRan, Inc. | 117,700 | 4,472,600 | |
| 19,503,611 | |||
| Paper & Forest Products - 0.8% | |||
| Louisiana-Pacific Corp. | 84,500 | 5,002,400 | |
TOTAL MATERIALS | 65,686,976 | ||
| REAL ESTATE - 7.9% | |||
| Equity Real Estate Investment Trusts (REITs) - 5.1% | |||
| CubeSmart | 225,400 | 9,072,350 | |
| Equinix, Inc. | 5,800 | 3,799,174 | |
| Equity Lifestyle Properties, Inc. | 102,100 | 6,595,660 | |
| Prologis (REIT), Inc. | 43,747 | 4,931,599 | |
| Welltower, Inc. | 136,700 | 8,960,685 | |
| 33,359,468 | |||
| Real Estate Management & Development - 2.8% | |||
| Cushman & Wakefield PLC (b) | 771,500 | 9,612,890 | |
| Jones Lang LaSalle, Inc. (b) | 47,500 | 7,570,075 | |
| WeWork, Inc. (b)(c) | 540,500 | 772,915 | |
| 17,955,880 | |||
TOTAL REAL ESTATE | 51,315,348 | ||
| UTILITIES - 8.6% | |||
| Electric Utilities - 6.4% | |||
| Constellation Energy Corp. | 93,533 | 8,063,480 | |
| Edison International | 112,900 | 7,182,698 | |
| Entergy Corp. | 67,700 | 7,616,250 | |
| FirstEnergy Corp. | 110,400 | 4,630,176 | |
| PG&E Corp. (b) | 847,600 | 13,781,976 | |
| 41,274,580 | |||
| Independent Power and Renewable Electricity Producers - 2.2% | |||
| The AES Corp. | 333,300 | 9,585,708 | |
| Vistra Corp. | 201,300 | 4,670,160 | |
| 14,255,868 | |||
TOTAL UTILITIES | 55,530,448 | ||
| TOTAL COMMON STOCKS (Cost $549,433,759) | 645,299,537 | ||
| Money Market Funds - 2.4% | |||
| Shares | Value ($) | ||
| Fidelity Cash Central Fund 4.37% (d) | 1,879,441 | 1,879,817 | |
| Fidelity Securities Lending Cash Central Fund 4.37% (d)(e) | 13,677,749 | 13,679,117 | |
| TOTAL MONEY MARKET FUNDS (Cost $15,558,934) | 15,558,934 | ||
| TOTAL INVESTMENT IN SECURITIES - 102.1% (Cost $564,992,693) | 660,858,471 |
NET OTHER ASSETS (LIABILITIES) - (2.1)% | (13,740,610) |
| NET ASSETS - 100.0% | 647,117,861 |
Legend
| (a) | Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $4,793,246 or 0.7% of net assets. |
| (b) | Non-income producing |
| (c) | Security or a portion of the security is on loan at period end. |
| (d) | Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
| (e) | Investment made with cash collateral received from securities on loan. |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
| Affiliate | Value, beginning of period ($) | Purchases ($) | Sales Proceeds ($) | Dividend Income ($) | Realized Gain (loss) ($) | Change in Unrealized appreciation (depreciation) ($) | Value, end of period ($) | % ownership, end of period |
| Fidelity Cash Central Fund 4.37% | 13,966,133 | 225,157,370 | 237,243,686 | 72,411 | - | - | 1,879,817 | 0.0% |
| Fidelity Securities Lending Cash Central Fund 4.37% | 17,801,767 | 384,838,746 | 388,961,396 | 88,528 | - | - | 13,679,117 | 0.0% |
| Total | 31,767,900 | 609,996,116 | 626,205,082 | 160,939 | - | - | 15,558,934 | |
Amounts in the dividend 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.
Amount for Fidelity Securities Lending Cash Central Fund 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.
Amounts included in the purchases and sales proceeds columns may include in-kind transactions, if applicable.
Investment Valuation
The following is a summary of the inputs used, as of December 31, 2022, 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: | ||||
Communication Services | 14,861,856 | 10,068,610 | 4,793,246 | - |
Consumer Discretionary | 76,536,904 | 76,536,904 | - | - |
Consumer Staples | 23,110,608 | 23,110,608 | - | - |
Energy | 61,565,677 | 61,565,677 | - | - |
Financials | 107,286,292 | 107,286,292 | - | - |
Health Care | 45,112,746 | 45,112,746 | - | - |
Industrials | 108,796,996 | 108,796,996 | - | - |
Information Technology | 35,495,686 | 35,495,686 | - | - |
Materials | 65,686,976 | 65,686,976 | - | - |
Real Estate | 51,315,348 | 51,315,348 | - | - |
Utilities | 55,530,448 | 55,530,448 | - | - |
| Money Market Funds | 15,558,934 | 15,558,934 | - | - |
| Total Investments in Securities: | 660,858,471 | 656,065,225 | 4,793,246 | - |
| Statement of Assets and Liabilities | ||||
| December 31, 2022 | ||||
| Assets | ||||
| Investment in securities, at value (including securities loaned of $13,485,326) - See accompanying schedule: | ||||
Unaffiliated issuers (cost $549,433,759) | $645,299,537 | |||
Fidelity Central Funds (cost $15,558,934) | 15,558,934 | |||
| Total Investment in Securities (cost $564,992,693) | $ | 660,858,471 | ||
| Foreign currency held at value (cost $22,207) | 22,207 | |||
| Receivable for fund shares sold | 345,598 | |||
| Dividends receivable | 653,924 | |||
| Distributions receivable from Fidelity Central Funds | 17,059 | |||
| Prepaid expenses | 782 | |||
Total assets | 661,898,041 | |||
| Liabilities | ||||
| Payable for investments purchased | $202,765 | |||
| Payable for fund shares redeemed | 423,581 | |||
| Accrued management fee | 288,095 | |||
| Distribution and service plan fees payable | 67,084 | |||
| Other affiliated payables | 66,567 | |||
| Other payables and accrued expenses | 53,013 | |||
| Collateral on securities loaned | 13,679,075 | |||
| Total Liabilities | 14,780,180 | |||
| Net Assets | $ | 647,117,861 | ||
| Net Assets consist of: | ||||
| Paid in capital | $ | 551,771,480 | ||
| Total accumulated earnings (loss) | 95,346,381 | |||
| Net Assets | $ | 647,117,861 | ||
| Net Asset Value and Maximum Offering Price | ||||
| Initial Class : | ||||
Net Asset Value , offering price and redemption price per share ($92,161,952 ÷ 6,411,047 shares) | $ | 14.38 | ||
| Service Class : | ||||
Net Asset Value , offering price and redemption price per share ($24,199,007 ÷ 1,689,784 shares) | $ | 14.32 | ||
| Service Class 2 : | ||||
Net Asset Value , offering price and redemption price per share ($309,683,191 ÷ 21,293,171 shares) | $ | 14.54 | ||
| Investor Class : | ||||
Net Asset Value , offering price and redemption price per share ($221,073,711 ÷ 15,528,218 shares) | $ | 14.24 | ||
| Statement of Operations | ||||
Year ended December 31, 2022 | ||||
| Investment Income | ||||
| Dividends | $ | 11,434,231 | ||
| Income from Fidelity Central Funds (including $88,528 from security lending) | 160,939 | |||
| Total Income | 11,595,170 | |||
| Expenses | ||||
| Management fee | $ | 3,686,938 | ||
| Transfer agent fees | 632,429 | |||
| Distribution and service plan fees | 797,879 | |||
| Accounting fees | 236,056 | |||
| Custodian fees and expenses | 19,104 | |||
| Independent trustees' fees and expenses | 2,414 | |||
| Audit | 60,538 | |||
| Legal | 3,039 | |||
| Interest | 3,307 | |||
| Miscellaneous | 3,280 | |||
| Total expenses before reductions | 5,444,984 | |||
| Expense reductions | (23,046) | |||
| Total expenses after reductions | 5,421,938 | |||
| Net Investment income (loss) | 6,173,232 | |||
| Realized and Unrealized Gain (Loss) | ||||
| Net realized gain (loss) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers | 26,242,689 | |||
| Foreign currency transactions | (6,323) | |||
| Total net realized gain (loss) | 26,236,366 | |||
| Change in net unrealized appreciation (depreciation) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers | (92,983,262) | |||
| Assets and liabilities in foreign currencies | 536 | |||
| Total change in net unrealized appreciation (depreciation) | (92,982,726) | |||
| Net gain (loss) | (66,746,360) | |||
| Net increase (decrease) in net assets resulting from operations | $ | (60,573,128) | ||
| Statement of Changes in Net Assets | ||||
Year ended December 31, 2022 | Year ended December 31, 2021 | |||
| Increase (Decrease) in Net Assets | ||||
| Operations | ||||
| Net investment income (loss) | $ | 6,173,232 | $ | 9,218,173 |
| Net realized gain (loss) | 26,236,366 | 80,396,366 | ||
| Change in net unrealized appreciation (depreciation) | (92,982,726) | 86,974,405 | ||
| Net increase (decrease) in net assets resulting from operations | (60,573,128) | 176,588,944 | ||
| Distributions to shareholders | (37,922,025) | (69,398,801) | ||
| Share transactions - net increase (decrease) | (4,512,076) | 150,373,547 | ||
| Total increase (decrease) in net assets | (103,007,229) | 257,563,690 | ||
| Net Assets | ||||
| Beginning of period | 750,125,090 | 492,561,400 | ||
| End of period | $ | 647,117,861 | $ | 750,125,090 |
Financial Highlights
| VIP Value Strategies Portfolio Initial Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 16.40 | $ | 13.55 | $ | 13.31 | $ | 11.11 | $ | 14.27 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .16 | .24 C | .14 | .20 D | .17 | |||||
| Net realized and unrealized gain (loss) | (1.29) | 4.26 | .88 | 3.39 | (2.58) | |||||
| Total from investment operations | (1.13) | 4.50 | 1.02 | 3.59 | (2.41) | |||||
| Distributions from net investment income | (.16) E | (.26) | (.15) | (.21) | (.13) | |||||
| Distributions from net realized gain | (.73) E | (1.39) | (.63) | (1.18) | (.62) | |||||
| Total distributions | (.89) | (1.65) | (.78) | (1.39) | (.75) | |||||
| Net asset value, end of period | $ | 14.38 | $ | 16.40 | $ | 13.55 | $ | 13.31 | $ | 11.11 |
Total Return F,G | (7.03)% | 33.60% | 8.26% | 34.53% | (17.32)% | |||||
Ratios to Average Net Assets B,H,I | ||||||||||
| Expenses before reductions | .64% | .64% | .66% | .66% | .67% | |||||
| Expenses net of fee waivers, if any | .63% | .63% | .66% | .66% | .67% | |||||
| Expenses net of all reductions | .63% | .63% | .65% | .66% | .66% | |||||
| Net investment income (loss) | 1.02% | 1.47% C | 1.32% | 1.64% D | 1.29% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 92,162 | $ | 125,050 | $ | 95,708 | $ | 83,357 | $ | 77,279 |
Portfolio turnover rate J | 59% | 62% | 85% | 68% | 68% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.06 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.09%.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.03 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.36%.
E The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Value Strategies Portfolio Service Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 16.35 | $ | 13.51 | $ | 13.27 | $ | 11.09 | $ | 14.23 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .14 | .22 C | .13 | .19 D | .16 | |||||
| Net realized and unrealized gain (loss) | (1.29) | 4.25 | .88 | 3.37 | (2.56) | |||||
| Total from investment operations | (1.15) | 4.47 | 1.01 | 3.56 | (2.40) | |||||
| Distributions from net investment income | (.15) E | (.24) | (.14) | (.20) | (.12) | |||||
| Distributions from net realized gain | (.73) E | (1.39) | (.63) | (1.18) | (.62) | |||||
| Total distributions | (.88) | (1.63) | (.77) | (1.38) | (.74) | |||||
| Net asset value, end of period | $ | 14.32 | $ | 16.35 | $ | 13.51 | $ | 13.27 | $ | 11.09 |
Total Return F,G | (7.19)% | 33.48% | 8.18% | 34.29% | (17.33)% | |||||
Ratios to Average Net Assets B,H,I | ||||||||||
| Expenses before reductions | .74% | .73% | .76% | .76% | .77% | |||||
| Expenses net of fee waivers, if any | .73% | .73% | .76% | .76% | .77% | |||||
| Expenses net of all reductions | .73% | .73% | .75% | .76% | .76% | |||||
| Net investment income (loss) | .92% | 1.37% C | 1.22% | 1.54% D | 1.19% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 24,199 | $ | 27,216 | $ | 19,115 | $ | 20,992 | $ | 16,586 |
Portfolio turnover rate J | 59% | 62% | 85% | 68% | 68% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.06 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .99%.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.03 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.26%.
E The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Value Strategies Portfolio Service Class 2 |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 16.59 | $ | 13.68 | $ | 13.43 | $ | 11.21 | $ | 14.38 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .12 | .20 C | .12 | .17 D | .14 | |||||
| Net realized and unrealized gain (loss) | (1.31) | 4.31 | .88 | 3.41 | (2.59) | |||||
| Total from investment operations | (1.19) | 4.51 | 1.00 | 3.58 | (2.45) | |||||
| Distributions from net investment income | (.13) E | (.21) | (.12) | (.18) | (.10) | |||||
| Distributions from net realized gain | (.73) E | (1.39) | (.63) | (1.18) | (.62) | |||||
| Total distributions | (.86) | (1.60) | (.75) | (1.36) | (.72) | |||||
| Net asset value, end of period | $ | 14.54 | $ | 16.59 | $ | 13.68 | $ | 13.43 | $ | 11.21 |
Total Return F,G | (7.35)% | 33.34% | 8.02% | 34.10% | (17.50)% | |||||
Ratios to Average Net Assets B,H,I | ||||||||||
| Expenses before reductions | .89% | .88% | .91% | .91% | .92% | |||||
| Expenses net of fee waivers, if any | .88% | .88% | .91% | .91% | .92% | |||||
| Expenses net of all reductions | .88% | .88% | .90% | .91% | .91% | |||||
| Net investment income (loss) | .77% | 1.22% C | 1.07% | 1.39% D | 1.04% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 309,683 | $ | 315,104 | $ | 228,031 | $ | 220,982 | $ | 160,274 |
Portfolio turnover rate J | 59% | 62% | 85% | 68% | 68% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.06 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .84%.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.03 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.11%.
E The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Value Strategies Portfolio Investor Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 16.25 | $ | 13.44 | $ | 13.20 | $ | 11.04 | $ | 14.18 |
| Income from Investment Operations | ||||||||||
�� Net investment income (loss) A,B | .14 | .23 C | .14 | .19 D | .16 | |||||
| Net realized and unrealized gain (loss) | (1.27) | 4.22 | .87 | 3.35 | (2.56) | |||||
| Total from investment operations | (1.13) | 4.45 | 1.01 | 3.54 | (2.40) | |||||
| Distributions from net investment income | (.15) E | (.24) | (.14) | (.20) | (.12) | |||||
| Distributions from net realized gain | (.73) E | (1.39) | (.63) | (1.18) | (.62) | |||||
| Total distributions | (.88) | (1.64) F | (.77) | (1.38) | (.74) | |||||
| Net asset value, end of period | $ | 14.24 | $ | 16.25 | $ | 13.44 | $ | 13.20 | $ | 11.04 |
Total Return G,H | (7.11)% | 33.48% | 8.26% | 34.27% | (17.37)% | |||||
Ratios to Average Net Assets B,I,J | ||||||||||
| Expenses before reductions | .71% | .71% | .74% | .74% | .75% | |||||
| Expenses net of fee waivers, if any | .71% | .71% | .74% | .74% | .75% | |||||
| Expenses net of all reductions | .71% | .71% | .73% | .74% | .74% | |||||
| Net investment income (loss) | .95% | 1.39% C | 1.24% | 1.56% D | 1.21% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 221,074 | $ | 282,755 | $ | 149,707 | $ | 104,581 | $ | 85,385 |
Portfolio turnover rate K | 59% | 62% | 85% | 68% | 68% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.06 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.02%.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.03 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.28%.
E The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
F Total distributions per share do not sum due to rounding.
G Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
H Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Fees and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
For the period ended December 31, 2022
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.
Funds may invest 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing 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 investing fund. These strategies are consistent with the investment objectives of the investing 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 investing fund.
| Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio A |
| Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | 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.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission 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, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission 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 - Investment 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 designated the Fund's investment adviser as the valuation designee responsible for the fair valuation function and performing fair value determinations as needed. The investment adviser has established a Fair Value Committee (the Committee) to carry out the day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process and the activities of the Committee. In accordance with these fair valuation policies and procedures, which have been approved by the Board, the Fund attempts to obtain prices from one or more third party pricing services 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 the policies and procedures. Factors used in determining fair value vary by investment type and may include market or investment specific events, transaction data, estimated cash flows, and market observations of comparable investments. The frequency that the fair valuation procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee manages the Fund's fair valuation practices and maintains the fair valuation policies and procedures. The Fund's investment adviser reports to the Board information regarding the fair valuation process and related material matters.
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 - unadjusted 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 service 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, and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. 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.
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, 2022, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain Funds 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of a 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 a fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred, as applicable. Certain expense reductions may also differ by class, if applicable. 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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, 2022, 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 and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences resulted in distribution reclassifications.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, 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 | $146,064,073 |
| Gross unrealized depreciation | (52,285,029) |
| Net unrealized appreciation (depreciation) | $93,779,044 |
| Tax Cost | $567,079,427 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed long-term capital gain | $1,565,878 |
| Net unrealized appreciation (depreciation) on securities and other investments | $93,780,502 |
The tax character of distributions paid was as follows:
| December 31, 2022 | December 31, 2021 | |
| Ordinary Income | $6,813,883 | $27,392,100 |
| Long-term Capital Gains | 31,108,142 | 42,006,701 |
| Total | $37,922,025 | $69,398,801 |
Restricted Securities (including Private Placements). Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities held at period end is included at the end of the Schedule of Investments, if applicable.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
| Purchases ($) | Sales ($) | |
| VIP Value Strategies Portfolio | 409,888,331 | 438,583,261 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (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 .23% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .53% 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 Company LLC (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 | $23,920 |
| Service Class 2 | 773,959 |
| $797,879 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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. For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Initial Class | $67,241 | .06 |
| Service Class | 14,932 | .06 |
| Service Class 2 | 193,466 | .06 |
| Investor Class | 356,790 | .14 |
| $632,429 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
| % of Average Net Assets | |
| VIP Value Strategies Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 as follows:
| Amount | |
| VIP Value Strategies Portfolio | $9,519 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
| VIP Value Strategies Portfolio | Borrower | $7,586,600 | 1.57% | $3,307 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
| Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
| VIP Value Strategies Portfolio | 49,077,738 | 55,409,758 | 6,343,199 |
6. Committed Line of Credit.
Certain Funds participate 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 participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are listed below. During the period, there were no borrowings on this line of credit.
| Amount | |
| VIP Value Strategies Portfolio | $1,232 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Affiliated security lending activity, if any, was as follows:
| Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
| VIP Value Strategies Portfolio | $9,554 | $1 | $- |
8. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $23,046.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Value Strategies Portfolio | ||
| Distributions to shareholders | ||
| Initial Class | $5,685,132 | $11,919,050 |
| Service Class | 1,349,204 | 2,530,343 |
| Service Class 2 | 17,261,213 | 28,337,558 |
| Investor Class | 13,626,476 | 26,611,850 |
Total | $37,922,025 | $69,398,801 |
10. Share Transactions.
Transactions for each class of shares were as follows and may contain in-kind transactions:
| Shares | Shares | Dollars | Dollars | |
| Year ended December 31, 2022 | Year ended December 31, 2021 | Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Value Strategies Portfolio | ||||
| Initial Class | ||||
| Shares sold | 1,947,608 | 2,695,923 | $30,529,762 | $43,770,907 |
| Reinvestment of distributions | 381,010 | 733,770 | 5,685,132 | 11,919,050 |
| Shares redeemed | (3,540,820) | (2,869,932) | (54,388,401) | (46,470,663) |
| Net increase (decrease) | (1,212,202) | 559,761 | $(18,173,507) | $9,219,294 |
| Service Class | ||||
| Shares sold | 1,240,779 | 454,526 | $19,740,105 | $7,507,997 |
| Reinvestment of distributions | 90,885 | 156,212 | 1,349,204 | 2,530,343 |
| Shares redeemed | (1,306,794) | (361,204) | (20,177,384) | (5,953,886) |
| Net increase (decrease) | 24,870 | 249,534 | $911,925 | $4,084,454 |
| Service Class 2 | ||||
| Shares sold | 5,294,423 | 3,862,756 | $83,174,293 | $63,259,710 |
| Reinvestment of distributions | 1,145,778 | 1,724,021 | 17,261,213 | 28,337,558 |
| Shares redeemed | (4,143,289) | (3,256,520) | (63,475,844) | (54,330,633) |
| Net increase (decrease) | 2,296,912 | 2,330,257 | $36,959,662 | $37,266,635 |
| Investor Class | ||||
| Shares sold | 3,558,568 | 9,653,520 | $56,415,018 | $156,305,016 |
| Reinvestment of distributions | 922,387 | 1,652,423 | 13,626,476 | 26,611,849 |
| Shares redeemed | (6,349,396) | (5,050,324) | (94,251,650) | (83,113,701) |
| Net increase (decrease) | (1,868,441) | 6,255,619 | $(24,210,156) | $99,803,164 |
11. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a 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 owners of record of more than 10% and certain otherwise unaffiliated shareholders were owners of record of more than 10% of the outstanding shares as follows:
| Fund | Affiliated % | Number of Unaffiliated Shareholders | Unaffiliated Shareholders % |
| VIP Value Strategies Portfolio | 40% | 1 | 36% |
12. Risk and Uncertainties.
Many factors affect a fund's performance. Developments that disrupt global economies and financial markets, such as pandemics, epidemics, outbreaks of infectious diseases, war, terrorism, and environmental disasters, may significantly affect a fund's investment performance. The effects of these developments to a fund will be impacted by the types of securities in which a fund invests, the financial condition, industry, economic sector, and geographic location of an issuer, and a fund's level of investment in the securities of that issuer.
To the Board of Trustees of Variable Insurance Products Fund III and the 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, 2022, 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, 2022, 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, 2022, 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.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 10, 2023
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 318 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. Robert A. Lawrence is an interested person and currently serves as Chair. The Trustees have determined that an interested Chair is appropriate and benefits shareholders because an interested Chair 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 Chair, 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 Chair 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. David M. Thomas serves as Lead Independent Trustee 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 other equity 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. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity ® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Chair of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Trustee and Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity ® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity ® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
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 served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity ® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity ® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University's Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity ® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity ® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean's Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity ® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity ® funds (2021).
David M. Thomas (1949)
Year of Election or Appointment: 2008
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity ® funds. 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). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company - America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity ® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Wiley also serves as Trustee of other Fidelity ® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 a Member of the Advisory Board of other Fidelity ® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (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 as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2022
Deputy Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present). Previously, Mr. Brown served as Assistant Treasurer of certain Fidelity ® funds (2019-2022).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity ® funds (2016-2020) and Assistant Treasurer of certain Fidelity ® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), FD Funds Management LLC (2021-present), and Fidelity Diversifying Solutions LLC (investment adviser firm, 2022-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity ® funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
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 FIMM, LLC (2021-present) and 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity ® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity ® funds (2019-2021).
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2022 to December 31, 2022). |
Actual Expenses
The first line of the accompanying table 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/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratio- A | Beginning Account Value July 1, 2022 | Ending Account Value December 31, 2022 | Expenses Paid During Period- C July 1, 2022 to December 31, 2022 | |||||||
| VIP Value Strategies Portfolio | ||||||||||
| Initial Class | .63% | |||||||||
| Actual | $ 1,000 | $ 1,059.40 | $ 3.27 | |||||||
Hypothetical- B | $ 1,000 | $ 1,022.03 | $ 3.21 | |||||||
| Service Class | .73% | |||||||||
| Actual | $ 1,000 | $ 1,058.60 | $ 3.79 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.53 | $ 3.72 | |||||||
| Service Class 2 | .88% | |||||||||
| Actual | $ 1,000 | $ 1,057.60 | $ 4.56 | |||||||
Hypothetical- B | $ 1,000 | $ 1,020.77 | $ 4.48 | |||||||
| Investor Class | .71% | |||||||||
| Actual | $ 1,000 | $ 1,059.10 | $ 3.68 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.63 | $ 3.62 | |||||||
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B 5% return per year before expenses
C Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
Distributions (Unaudited)
The dividend and capital gains distributions for the fund(s) are available on Fidelity.com or Institutional.Fidelity.com.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2022, $27,006,950, or, if subsequently determined to be different, the net capital gain of such year.
Initial Class designates 93%; Service Class designates 100%; Service Class 2 designates 100%; and Investor Class designates 100%; of the dividend distributed in December, during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
|
1.781994.120
VIPVS-ANN-0323
Fidelity® Variable Insurance Products:
Dynamic Capital Appreciation Portfolio
Annual Report
December 31, 2022
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity® Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2023 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-PORT 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.
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 | |||
Periods ended December 31, 2022 | Past 1 year | Past 5 years | Past 10 years |
| Initial Class | -20.87% | 10.27% | 12.45% |
| Service Class | -20.94% | 10.16% | 12.34% |
| Service Class 2 | -21.05% | 10.00% | 12.18% |
| Investor Class | -20.88% | 10.19% | 12.37% |
| $10,000 Over 10 Years |
Let's say hypothetically that $10,000 was invested in VIP Dynamic Capital Appreciation Portfolio - Initial Class, a class of the fund, on December 31, 2012. 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. |
 |
Market Recap:
U.S. equities returned -18.11% in 2022, according to the S&P 500 ® index, as a multitude of risk factors challenged the global economy. It was the index's lowest calendar-year return since 2008 and first retreat since 2018. High inflation prompted the Federal Reserve to aggressively tighten monetary policy, and market interest rates eclipsed their highest level in a decade, stoking recession fears and sending stocks into bear market territory. Since March, the Fed hiked its benchmark rate seven times, by 4.25 percentage points - the fastest-ever pace of monetary tightening - while also shrinking its massive portfolio. Against this backdrop, the S&P 500® posted its worst year-to-date result (-23.87%) in 20 years through September, a seasonally weak month that stayed true to form, with volatility spiking due to growing certainty the Fed would persist in its effort to cool inflation, even at the expense of economic growth. Three of the index's worst monthly returns ever were recorded in 2022, as it shed 8% to 9% in April, June and September. Gains of similar proportion were made in July and October, amid optimism on inflation and policy easing. November (+6%) began with a rate hike of 0.75% and ended on a high note when the Fed signaled its intent to slow its pace of rate rises. For the year, value stocks handily outpaced growth. This headwind was pronounced in the growthier communication services (-40%), consumer discretionary (-37%) and information technology (-28%) sectors. In sharp contrast, energy (+66%) shined.
Comments from Co-Managers Asher Anolic and Jason Weiner:
For the fiscal year ending December 31, 2022, the fund's share classes returned roughly -21%, trailing the -18.11% result of the benchmark S&P 500 ® index. The largest detractor from performance versus the benchmark was an overweighting in the communication services sector, primarily within the media & entertainment industry. An underweighting and security selection in energy also hampered the fund's relative result. Picks among health care stocks, especially pharmaceuticals, biotechnology & life sciences firms, hurt as well. Not owning Exxon Mobil, a benchmark component that gained roughly 87%, was the biggest individual relative detractor. Avoiding Chevron, a benchmark component that gained about 58%, also proved detrimental. Further holding back performance was our outsized stake in Microsoft, which returned roughly -28% and was the fund's largest holding at year-end. The fund's foreign holdings also detracted overall, in part due to a broadly strong U.S. dollar. In contrast, the top contributors to performance versus the benchmark were security selection and an underweighting in the consumer discretionary sector. Favorable investment choices among communication services companies and an overweighting in health care also bolstered the fund's relative performance. Not owning Tesla, a benchmark component that returned approximately -65%, was the biggest individual relative contributor. Also adding value was our outsized stake in Vertex Pharmaceuticals, which rose 32% in 2022 and was among the portfolio's biggest holdings. Another notable relative contributor was an overweighting in UnitedHealth Group (+7%), another of the portfolio's more sizable positions the past year. Notable changes in positioning include a higher allocation to the financials and industrials sectors.
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.
Top Holdings (% of Fund's net assets) | ||
| Microsoft Corp. | 7.8 | |
| UnitedHealth Group, Inc. | 4.3 | |
| JPMorgan Chase & Co. | 2.8 | |
| TJX Companies, Inc. | 2.3 | |
| Universal Music Group NV | 2.2 | |
| Bank of America Corp. | 2.2 | |
| The Coca-Cola Co. | 1.9 | |
| Warner Music Group Corp. Class A | 1.9 | |
| Apple, Inc. | 1.9 | |
| Vertex Pharmaceuticals, Inc. | 1.9 | |
| 29.2 | ||
| Market Sectors (% of Fund's net assets) | ||
| Information Technology | 21.8 | |
| Health Care | 18.0 | |
| Financials | 12.8 | |
| Industrials | 12.8 | |
| Consumer Discretionary | 10.1 | |
| Communication Services | 9.8 | |
| Consumer Staples | 5.1 | |
| Energy | 4.7 | |
| Materials | 2.9 | |
| Utilities | 0.4 | |
| Real Estate | 0.1 | |
Asset Allocation (% of Fund's net assets) |
 |
Foreign investments - 9.3% |
Showing Percentage of Net Assets
| Common Stocks - 98.1% | |||
| Shares | Value ($) | ||
| COMMUNICATION SERVICES - 9.8% | |||
| Entertainment - 4.5% | |||
| Liberty Media Corp. Liberty Formula One Series C (a) | 5,700 | 340,746 | |
| Netflix, Inc. (a) | 1,000 | 294,880 | |
| Universal Music Group NV | 165,269 | 3,996,649 | |
| Warner Music Group Corp. Class A | 99,475 | 3,483,615 | |
| 8,115,890 | |||
| Interactive Media & Services - 4.5% | |||
| Alphabet, Inc.: | |||
| Class A (a) | 29,180 | 2,574,551 | |
| Class C (a) | 30,860 | 2,738,208 | |
| Bumble, Inc. (a) | 16,700 | 351,535 | |
| Epic Games, Inc. (a)(b)(c) | 156 | 127,221 | |
| Meta Platforms, Inc. Class A (a) | 19,154 | 2,304,992 | |
| 8,096,507 | |||
| Media - 0.8% | |||
| Charter Communications, Inc. Class A (a) | 4,310 | 1,461,521 | |
| Innovid Corp. (a)(b) | 11,766 | 20,120 | |
| 1,481,641 | |||
TOTAL COMMUNICATION SERVICES | 17,694,038 | ||
| CONSUMER DISCRETIONARY - 10.1% | |||
| Auto Components - 0.0% | |||
| Mobileye Global, Inc. | 1,700 | 59,602 | |
| Hotels, Restaurants & Leisure - 1.3% | |||
| Airbnb, Inc. Class A (a) | 9,800 | 837,900 | |
| Chipotle Mexican Grill, Inc. (a) | 305 | 423,184 | |
| Flutter Entertainment PLC (a) | 8,174 | 1,115,673 | |
| 2,376,757 | |||
| Internet & Direct Marketing Retail - 3.3% | |||
| Amazon.com, Inc. (a) | 35,960 | 3,020,640 | |
| Uber Technologies, Inc. (a) | 113,000 | 2,794,490 | |
| 5,815,130 | |||
| Multiline Retail - 0.3% | |||
| Dollarama, Inc. | 10,100 | 590,708 | |
| Specialty Retail - 3.6% | |||
| Five Below, Inc. (a) | 8,100 | 1,432,647 | |
| TJX Companies, Inc. | 50,958 | 4,056,257 | |
| Victoria's Secret & Co. (a) | 24,874 | 889,992 | |
| 6,378,896 | |||
| Textiles, Apparel & Luxury Goods - 1.6% | |||
| LVMH Moet Hennessy Louis Vuitton SE | 700 | 512,176 | |
| LVMH Moet Hennessy Louis Vuitton SE | 1,800 | 1,309,848 | |
| Samsonite International SA (a)(d) | 391,545 | 1,028,082 | |
| 2,850,106 | |||
TOTAL CONSUMER DISCRETIONARY | 18,071,199 | ||
| CONSUMER STAPLES - 5.1% | |||
| Beverages - 4.8% | |||
| Boston Beer Co., Inc. Class A (a) | 2,200 | 724,944 | |
| Constellation Brands, Inc. Class A (sub. vtg.) | 5,500 | 1,274,625 | |
| Keurig Dr. Pepper, Inc. | 28,400 | 1,012,744 | |
| Monster Beverage Corp. (a) | 21,174 | 2,149,796 | |
| The Coca-Cola Co. | 55,100 | 3,504,911 | |
| 8,667,020 | |||
| Household Products - 0.3% | |||
| Energizer Holdings, Inc. | 15,100 | 506,605 | |
TOTAL CONSUMER STAPLES | 9,173,625 | ||
| ENERGY - 4.7% | |||
| Energy Equipment & Services - 1.5% | |||
| Baker Hughes Co. Class A | 57,600 | 1,700,928 | |
| Cactus, Inc. | 4,700 | 236,222 | |
| Championx Corp. | 18,500 | 536,315 | |
| Helmerich & Payne, Inc. | 4,800 | 237,936 | |
| 2,711,401 | |||
| Oil, Gas & Consumable Fuels - 3.2% | |||
| Canadian Natural Resources Ltd. | 28,300 | 1,571,499 | |
| Cheniere Energy, Inc. | 16,300 | 2,444,348 | |
| Denbury, Inc. (a) | 6,000 | 522,120 | |
| New Fortress Energy, Inc. | 11,300 | 479,346 | |
| Ovintiv, Inc. | 3,400 | 172,414 | |
| Range Resources Corp. | 23,500 | 587,970 | |
| 5,777,697 | |||
TOTAL ENERGY | 8,489,098 | ||
| FINANCIALS - 12.8% | |||
| Banks - 5.8% | |||
| Bank of America Corp. | 118,100 | 3,911,472 | |
| JPMorgan Chase & Co. | 37,300 | 5,001,930 | |
| M&T Bank Corp. | 9,500 | 1,378,070 | |
| Signature Bank | 1,900 | 218,918 | |
| 10,510,390 | |||
| Capital Markets - 2.9% | |||
| CME Group, Inc. | 19,636 | 3,301,990 | |
| Morgan Stanley | 22,810 | 1,939,306 | |
| 5,241,296 | |||
| Insurance - 4.0% | |||
| American Financial Group, Inc. | 8,900 | 1,221,792 | |
| Arthur J. Gallagher & Co. | 15,957 | 3,008,533 | |
| BRP Group, Inc. (a) | 16,600 | 417,324 | |
| Marsh & McLennan Companies, Inc. | 15,000 | 2,482,200 | |
| 7,129,849 | |||
| Thrifts & Mortgage Finance - 0.1% | |||
| Rocket Companies, Inc. (e) | 19,600 | 137,200 | |
TOTAL FINANCIALS | 23,018,735 | ||
| HEALTH CARE - 18.0% | |||
| Biotechnology - 6.1% | |||
| 2seventy bio, Inc. (a) | 2,300 | 21,551 | |
| Adamas Pharmaceuticals, Inc.: | |||
| rights (a)(c) | 47,000 | 12,690 | |
| rights (a)(c) | 47,000 | 4,230 | |
| Alnylam Pharmaceuticals, Inc. (a) | 4,579 | 1,088,199 | |
| Arcellx, Inc. | 1,700 | 52,666 | |
| Beam Therapeutics, Inc. (a)(e) | 2,100 | 82,131 | |
| Cytokinetics, Inc. (a) | 5,500 | 252,010 | |
| EQRx, Inc. (a) | 11,677 | 28,725 | |
| Erasca, Inc. (a) | 4,900 | 21,119 | |
| Evelo Biosciences, Inc. (a) | 12,700 | 20,447 | |
| Galapagos NV sponsored ADR (a) | 12,400 | 550,312 | |
| Gamida Cell Ltd. (a)(e) | 62,500 | 80,625 | |
| Genmab A/S (a) | 500 | 211,397 | |
| Gilead Sciences, Inc. | 13,000 | 1,116,050 | |
| Hookipa Pharma, Inc. (a) | 32,100 | 26,001 | |
| Immunocore Holdings PLC ADR (a) | 4,600 | 262,522 | |
| Legend Biotech Corp. ADR (a) | 3,700 | 184,704 | |
| Prelude Therapeutics, Inc. (a) | 800 | 4,832 | |
| Regeneron Pharmaceuticals, Inc. (a) | 3,179 | 2,293,617 | |
| Seagen, Inc. (a) | 7,800 | 1,002,378 | |
| Seres Therapeutics, Inc. (a) | 10,900 | 61,040 | |
| Synlogic, Inc. (a) | 34,200 | 25,992 | |
| Vertex Pharmaceuticals, Inc. (a) | 11,525 | 3,328,190 | |
| Vor Biopharma, Inc. (a) | 19,984 | 132,894 | |
| XOMA Corp. (a)(e) | 10,300 | 189,520 | |
| 11,053,842 | |||
| Health Care Equipment & Supplies - 1.2% | |||
| Boston Scientific Corp. (a) | 28,600 | 1,323,322 | |
| Insulet Corp. (a) | 400 | 117,756 | |
| Nevro Corp. (a) | 1,900 | 75,240 | |
| Penumbra, Inc. (a) | 2,600 | 578,396 | |
| 2,094,714 | |||
| Health Care Providers & Services - 5.9% | |||
| Guardant Health, Inc. (a) | 12,000 | 326,400 | |
| HealthEquity, Inc. (a) | 30,600 | 1,886,184 | |
| Option Care Health, Inc. (a) | 20,200 | 607,818 | |
| UnitedHealth Group, Inc. | 14,624 | 7,753,352 | |
| 10,573,754 | |||
| Health Care Technology - 0.3% | |||
| Certara, Inc. (a) | 17,900 | 287,653 | |
| Doximity, Inc. (a) | 3,400 | 114,104 | |
| Simulations Plus, Inc. | 2,500 | 91,425 | |
| 493,182 | |||
| Life Sciences Tools & Services - 3.6% | |||
| Bio-Techne Corp. | 6,800 | 563,584 | |
| Bruker Corp. | 14,600 | 997,910 | |
| Charles River Laboratories International, Inc. (a) | 1,100 | 239,690 | |
| Codexis, Inc. (a) | 12,700 | 59,182 | |
| Danaher Corp. | 7,000 | 1,857,940 | |
| Nanostring Technologies, Inc. (a) | 500 | 3,985 | |
| Thermo Fisher Scientific, Inc. | 5,000 | 2,753,450 | |
| 6,475,741 | |||
| Pharmaceuticals - 0.9% | |||
| Aclaris Therapeutics, Inc. (a) | 7,300 | 114,975 | |
| AstraZeneca PLC sponsored ADR | 20,300 | 1,376,340 | |
| Revance Therapeutics, Inc. (a) | 12,100 | 223,366 | |
| 1,714,681 | |||
TOTAL HEALTH CARE | 32,405,914 | ||
| INDUSTRIALS - 12.8% | |||
| Aerospace & Defense - 3.4% | |||
| Axon Enterprise, Inc. (a) | 2,000 | 331,860 | |
| Northrop Grumman Corp. | 4,000 | 2,182,440 | |
| Spirit AeroSystems Holdings, Inc. Class A | 31,600 | 935,360 | |
| The Boeing Co. (a) | 14,000 | 2,666,860 | |
| 6,116,520 | |||
| Electrical Equipment - 1.6% | |||
| AMETEK, Inc. | 5,600 | 782,432 | |
| Bloom Energy Corp. Class A (a)(e) | 3,900 | 74,568 | |
| Hubbell, Inc. Class B | 2,600 | 610,168 | |
| Rockwell Automation, Inc. | 5,600 | 1,442,392 | |
| 2,909,560 | |||
| Industrial Conglomerates - 0.9% | |||
| General Electric Co. | 18,000 | 1,508,220 | |
| Machinery - 3.5% | |||
| Chart Industries, Inc. (a) | 1,900 | 218,937 | |
| Ingersoll Rand, Inc. | 63,422 | 3,313,800 | |
| PACCAR, Inc. | 5,400 | 534,438 | |
| Parker Hannifin Corp. | 3,300 | 960,300 | |
| Westinghouse Air Brake Tech Co. | 12,500 | 1,247,625 | |
| 6,275,100 | |||
| Professional Services - 2.0% | |||
| ASGN, Inc. (a) | 4,400 | 358,512 | |
| KBR, Inc. | 55,785 | 2,945,448 | |
| Kforce, Inc. | 2,000 | 109,660 | |
| Upwork, Inc. (a) | 7,960 | 83,102 | |
| 3,496,722 | |||
| Road & Rail - 0.3% | |||
| Old Dominion Freight Lines, Inc. | 2,100 | 595,938 | |
| Trading Companies & Distributors - 1.1% | |||
| Ferguson PLC | 15,877 | 2,003,906 | |
TOTAL INDUSTRIALS | 22,905,966 | ||
| INFORMATION TECHNOLOGY - 21.7% | |||
| IT Services - 2.3% | |||
| Cloudflare, Inc. (a) | 6,200 | 280,302 | |
| MasterCard, Inc. Class A | 9,000 | 3,129,570 | |
| MongoDB, Inc. Class A (a) | 3,100 | 610,204 | |
| Snowflake, Inc. (a) | 800 | 114,832 | |
| 4,134,908 | |||
| Semiconductors & Semiconductor Equipment - 3.9% | |||
| Aixtron AG | 20,200 | 583,175 | |
| Allegro MicroSystems LLC (a) | 6,400 | 192,128 | |
| Analog Devices, Inc. | 8,800 | 1,443,464 | |
| ASML Holding NV | 1,505 | 822,332 | |
| Enphase Energy, Inc. (a) | 4,778 | 1,265,979 | |
| Monolithic Power Systems, Inc. | 400 | 141,444 | |
| NVIDIA Corp. | 4,787 | 699,572 | |
| NXP Semiconductors NV | 100 | 15,803 | |
| Qualcomm, Inc. | 7,539 | 828,838 | |
| SiTime Corp. (a) | 4,000 | 406,480 | |
| Universal Display Corp. | 6,439 | 695,670 | |
| 7,094,885 | |||
| Software - 13.6% | |||
| Adobe, Inc. (a) | 8,018 | 2,698,298 | |
| Confluent, Inc. (a) | 10,400 | 231,296 | |
| HashiCorp, Inc. (e) | 7,800 | 213,252 | |
| Intuit, Inc. | 3,700 | 1,440,114 | |
| Manhattan Associates, Inc. (a) | 6,100 | 740,540 | |
| Microsoft Corp. | 58,142 | 13,943,615 | |
| Oracle Corp. | 37,200 | 3,040,728 | |
| Palo Alto Networks, Inc. (a) | 4,183 | 583,696 | |
| Synopsys, Inc. (a) | 4,300 | 1,372,947 | |
| Volue A/S (a) | 48,500 | 139,359 | |
| 24,403,845 | |||
| Technology Hardware, Storage & Peripherals - 1.9% | |||
| Apple, Inc. | 26,260 | 3,411,962 | |
TOTAL INFORMATION TECHNOLOGY | 39,045,600 | ||
| MATERIALS - 2.6% | |||
| Chemicals - 2.2% | |||
| Albemarle Corp. | 3,500 | 759,010 | |
| Aspen Aerogels, Inc. (a) | 18,500 | 218,115 | |
| CF Industries Holdings, Inc. | 8,245 | 702,474 | |
| Sherwin-Williams Co. | 9,760 | 2,316,341 | |
| 3,995,940 | |||
| Metals & Mining - 0.4% | |||
| Lynas Rare Earths Ltd. (a) | 72,431 | 381,821 | |
| MP Materials Corp. (a)(e) | 13,500 | 327,780 | |
| 709,601 | |||
TOTAL MATERIALS | 4,705,541 | ||
| REAL ESTATE - 0.1% | |||
| Real Estate Management & Development - 0.1% | |||
| Doma Holdings, Inc. (a)(b) | 22,979 | 10,407 | |
| WeWork, Inc. (a)(e) | 103,400 | 147,862 | |
| 158,269 | |||
| UTILITIES - 0.4% | |||
| Independent Power and Renewable Electricity Producers - 0.4% | |||
| Brookfield Renewable Corp. | 19,500 | 537,030 | |
| Brookfield Renewable Partners LP | 4,000 | 101,360 | |
| 638,390 | |||
| TOTAL COMMON STOCKS (Cost $147,882,950) | 176,306,375 | ||
| Convertible Preferred Stocks - 0.4% | |||
| Shares | Value ($) | ||
| HEALTH CARE - 0.0% | |||
| Biotechnology - 0.0% | |||
| ElevateBio LLC Series C (a)(b)(c) | 5,300 | 19,398 | |
| INFORMATION TECHNOLOGY - 0.1% | |||
| Software - 0.1% | |||
| ASAPP, Inc. Series C (a)(b)(c) | 17,672 | 74,222 | |
| MATERIALS - 0.3% | |||
| Metals & Mining - 0.3% | |||
| Illuminated Holdings, Inc.: | |||
| Series C2 (a)(b)(c) | 3,438 | 162,858 | |
| Series C3 (a)(b)(c) | 4,298 | 203,596 | |
| Series C4 (a)(b)(c) | 1,252 | 59,307 | |
| Series C5 (a)(b)(c) | 2,617 | 123,967 | |
| 549,728 | |||
| TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $511,834) | 643,348 | ||
| Money Market Funds - 2.1% | |||
| Shares | Value ($) | ||
| Fidelity Cash Central Fund 4.37% (f) | 2,763,585 | 2,764,138 | |
| Fidelity Securities Lending Cash Central Fund 4.37% (f)(g) | 1,089,279 | 1,089,387 | |
| TOTAL MONEY MARKET FUNDS (Cost $3,853,525) | 3,853,525 | ||
| TOTAL INVESTMENT IN SECURITIES - 100.6% (Cost $152,248,309) | 180,803,248 |
NET OTHER ASSETS (LIABILITIES) - (0.6)% | (1,112,075) |
| NET ASSETS - 100.0% | 179,691,173 |
Legend
| (a) | Non-income producing |
| (b) | Restricted securities (including private placements) - 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 $801,096 or 0.4% of net assets. |
| (c) | Level 3 security |
| (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 $1,028,082 or 0.6% of net assets. |
| (e) | Security or a portion of the security is on loan at period end. |
| (f) | Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
| (g) | Investment made with cash collateral received from securities on loan. |
| Additional information on each restricted holding is as follows: | ||
| Security | Acquisition Date | Acquisition Cost ($) |
| ASAPP, Inc. Series C | 4/30/21 | 116,584 |
| Doma Holdings, Inc. | 3/02/21 | 229,790 |
| ElevateBio LLC Series C | 3/09/21 | 22,234 |
| Epic Games, Inc. | 3/29/21 | 138,060 |
| Illuminated Holdings, Inc. Series C2 | 7/07/20 | 85,950 |
| Illuminated Holdings, Inc. Series C3 | 7/07/20 | 128,940 |
| Illuminated Holdings, Inc. Series C4 | 1/08/21 | 45,072 |
| Illuminated Holdings, Inc. Series C5 | 6/16/21 | 113,054 |
| Innovid Corp. | 6/24/21 | 117,660 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
| Affiliate | Value, beginning of period ($) | Purchases ($) | Sales Proceeds ($) | Dividend Income ($) | Realized Gain (loss) ($) | Change in Unrealized appreciation (depreciation) ($) | Value, end of period ($) | % ownership, end of period |
| Fidelity Cash Central Fund 4.37% | 813,800 | 33,934,251 | 31,983,913 | 31,350 | - | - | 2,764,138 | 0.0% |
| Fidelity Securities Lending Cash Central Fund 4.37% | 374,512 | 20,027,150 | 19,312,275 | 19,437 | - | - | 1,089,387 | 0.0% |
| Total | 1,188,312 | 53,961,401 | 51,296,188 | 50,787 | - | - | 3,853,525 | |
Amounts in the dividend income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line item in the Statement of Operations, if applicable.
Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Amounts included in the purchases and sales proceeds columns may include in-kind transactions, if applicable.
Investment Valuation
The following is a summary of the inputs used, as of December 31, 2022, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total ($) | Level 1 ($) | Level 2 ($) | Level 3 ($) |
Investments in Securities: | ||||
| Equities: | ||||
Communication Services | 17,694,038 | 13,570,168 | 3,996,649 | 127,221 |
Consumer Discretionary | 18,071,199 | 15,733,269 | 2,337,930 | - |
Consumer Staples | 9,173,625 | 9,173,625 | - | - |
Energy | 8,489,098 | 8,489,098 | - | - |
Financials | 23,018,735 | 23,018,735 | - | - |
Health Care | 32,425,312 | 32,177,597 | 211,397 | 36,318 |
Industrials | 22,905,966 | 22,905,966 | - | - |
Information Technology | 39,119,822 | 39,045,600 | - | 74,222 |
Materials | 5,255,269 | 4,323,720 | 381,821 | 549,728 |
Real Estate | 158,269 | 158,269 | - | - |
Utilities | 638,390 | 638,390 | - | - |
| Money Market Funds | 3,853,525 | 3,853,525 | - | - |
| Total Investments in Securities: | 180,803,248 | 173,087,962 | 6,927,797 | 787,489 |
| Statement of Assets and Liabilities | ||||
| December 31, 2022 | ||||
| Assets | ||||
| Investment in securities, at value (including securities loaned of $1,080,907) - See accompanying schedule: | ||||
Unaffiliated issuers (cost $148,394,784) | $176,949,723 | |||
Fidelity Central Funds (cost $3,853,525) | 3,853,525 | |||
| Total Investment in Securities (cost $152,248,309) | $ | 180,803,248 | ||
| Cash | 6,432 | |||
| Foreign currency held at value (cost $3,712) | 3,472 | |||
| Receivable for investments sold | 175,273 | |||
| Receivable for fund shares sold | 10,162 | |||
| Dividends receivable | 144,942 | |||
| Distributions receivable from Fidelity Central Funds | 9,396 | |||
| Prepaid expenses | 223 | |||
Total assets | 181,153,148 | |||
| Liabilities | ||||
| Payable for investments purchased | $216,030 | |||
| Payable for fund shares redeemed | 8,460 | |||
| Accrued management fee | 80,818 | |||
| Distribution and service plan fees payable | 2,955 | |||
| Other affiliated payables | 24,485 | |||
| Other payables and accrued expenses | 40,027 | |||
| Collateral on securities loaned | 1,089,200 | |||
| Total Liabilities | 1,461,975 | |||
| Net Assets | $ | 179,691,173 | ||
| Net Assets consist of: | ||||
| Paid in capital | $ | 141,335,501 | ||
| Total accumulated earnings (loss) | 38,355,672 | |||
| Net Assets | $ | 179,691,173 | ||
| Net Asset Value and Maximum Offering Price | ||||
| Initial Class : | ||||
Net Asset Value , offering price and redemption price per share ($20,784,485 ÷ 1,514,355 shares) | $ | 13.72 | ||
| Service Class : | ||||
Net Asset Value , offering price and redemption price per share ($358,164 ÷ 26,543 shares) | $ | 13.49 | ||
| Service Class 2 : | ||||
Net Asset Value , offering price and redemption price per share ($13,739,485 ÷ 1,047,877 shares) | $ | 13.11 | ||
| Investor Class : | ||||
Net Asset Value , offering price and redemption price per share ($144,809,039 ÷ 10,585,929 shares) | $ | 13.68 | ||
| Statement of Operations | ||||
Year ended December 31, 2022 | ||||
| Investment Income | ||||
| Dividends | $ | 2,179,241 | ||
| Income from Fidelity Central Funds (including $19,437 from security lending) | 50,787 | |||
| Total Income | 2,230,028 | |||
| Expenses | ||||
| Management fee | $ | 1,054,333 | ||
| Transfer agent fees | 246,324 | |||
| Distribution and service plan fees | 38,739 | |||
| Accounting fees | 74,063 | |||
| Custodian fees and expenses | 20,211 | |||
| Independent trustees' fees and expenses | 706 | |||
| Audit | 55,360 | |||
| Legal | 4,517 | |||
| Miscellaneous | 916 | |||
| Total expenses before reductions | 1,495,169 | |||
| Expense reductions | (6,961) | |||
| Total expenses after reductions | 1,488,208 | |||
| Net Investment income (loss) | 741,820 | |||
| Realized and Unrealized Gain (Loss) | ||||
| Net realized gain (loss) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers | 9,660,339 | |||
| Foreign currency transactions | 1,804 | |||
| Total net realized gain (loss) | 9,662,143 | |||
| Change in net unrealized appreciation (depreciation) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers | (61,289,861) | |||
| Assets and liabilities in foreign currencies | (332) | |||
| Total change in net unrealized appreciation (depreciation) | (61,290,193) | |||
| Net gain (loss) | (51,628,050) | |||
| Net increase (decrease) in net assets resulting from operations | $ | (50,886,230) | ||
| Statement of Changes in Net Assets | ||||
Year ended December 31, 2022 | Year ended December 31, 2021 | |||
| Increase (Decrease) in Net Assets | ||||
| Operations | ||||
| Net investment income (loss) | $ | 741,820 | $ | 1,010,371 |
| Net realized gain (loss) | 9,662,143 | 31,847,565 | ||
| Change in net unrealized appreciation (depreciation) | (61,290,193) | 17,319,602 | ||
| Net increase (decrease) in net assets resulting from operations | (50,886,230) | 50,177,538 | ||
| Distributions to shareholders | (26,356,824) | (21,366,276) | ||
| Share transactions - net increase (decrease) | 3,303,432 | 19,313,218 | ||
| Total increase (decrease) in net assets | (73,939,622) | 48,124,480 | ||
| Net Assets | ||||
| Beginning of period | 253,630,795 | 205,506,315 | ||
| End of period | $ | 179,691,173 | $ | 253,630,795 |
Financial Highlights
| VIP Dynamic Capital Appreciation Portfolio Initial Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 19.62 | $ | 17.36 | $ | 13.20 | $ | 12.24 | $ | 14.43 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .07 | .09 C | .03 | .07 | .08 | |||||
| Net realized and unrealized gain (loss) | (3.87) | 3.96 | 4.35 | 3.21 | (.73) D | |||||
| Total from investment operations | (3.80) | 4.05 | 4.38 | 3.28 | (.65) | |||||
| Distributions from net investment income | (.05) | (.11) E | (.03) | (.08) | (.08) | |||||
| Distributions from net realized gain | (2.05) | (1.67) E | (.19) | (2.24) | (1.46) | |||||
| Total distributions | (2.10) | (1.79) F | (.22) | (2.32) | (1.54) | |||||
| Net asset value, end of period | $ | 13.72 | $ | 19.62 | $ | 17.36 | $ | 13.20 | $ | 12.24 |
Total Return G,H | (20.87)% | 24.63% | 33.61% | 30.08% | (4.89)% D | |||||
Ratios to Average Net Assets B,I,J | ||||||||||
| Expenses before reductions | .67% | .66% | .68% | .68% | .69% | |||||
| Expenses net of fee waivers, if any | .66% | .66% | .68% | .68% | .69% | |||||
| Expenses net of all reductions | .66% | .66% | .68% | .68% | .68% | |||||
| Net investment income (loss) | .45% | .51% C | .19% | .57% | .54% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 20,784 | $ | 30,029 | $ | 26,104 | $ | 22,638 | $ | 20,701 |
Portfolio turnover rate K | 55% | 61% | 62% | 66% | 155% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.06 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .18%.
D Amount includes a reimbursement from the investment adviser for an operational error which amounted to less than $.33 per share. Excluding this reimbursement, the total return would have been (7.25)%.
E The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
F Total distributions per share do not sum due to rounding.
G Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
H Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Fees and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Dynamic Capital Appreciation Portfolio Service Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 19.33 | $ | 17.13 | $ | 13.03 | $ | 12.11 | $ | 14.28 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .05 | .08 C | .01 | .06 | .06 | |||||
| Net realized and unrealized gain (loss) | (3.80) | 3.89 | 4.30 | 3.17 | (.71) D | |||||
| Total from investment operations | (3.75) | 3.97 | 4.31 | 3.23 | (.65) | |||||
| Distributions from net investment income | (.03) | (.09) E | (.02) | (.07) | (.06) | |||||
| Distributions from net realized gain | (2.05) | (1.67) E | (.19) | (2.24) | (1.46) | |||||
| Total distributions | (2.09) F | (1.77) F | (.21) | (2.31) | (1.52) | |||||
| Net asset value, end of period | $ | 13.49 | $ | 19.33 | $ | 17.13 | $ | 13.03 | $ | 12.11 |
Total Return G,H | (20.94)% | 24.47% | 33.48% | 29.96% | (4.97)% D | |||||
Ratios to Average Net Assets B,I,J | ||||||||||
| Expenses before reductions | .77% | .76% | .78% | .78% | .79% | |||||
| Expenses net of fee waivers, if any | .76% | .76% | .78% | .78% | .79% | |||||
| Expenses net of all reductions | .76% | .76% | .78% | .78% | .78% | |||||
| Net investment income (loss) | .35% | .42% C | .09% | .47% | .44% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 358 | $ | 445 | $ | 327 | $ | 287 | $ | 265 |
Portfolio turnover rate K | 55% | 61% | 62% | 66% | 155% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.06 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .08%.
D Amount includes a reimbursement from the investment adviser for an operational error which amounted to less than $.33 per share. Excluding this reimbursement, the total return would have been (7.33)%.
E The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
F Total distributions per share do not sum due to rounding.
G Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
H Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Fees and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Dynamic Capital Appreciation Portfolio Service Class 2 |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 18.85 | $ | 16.74 | $ | 12.74 | $ | 11.88 | $ | 14.05 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .03 | .05 C | (.01) | .04 | .04 | |||||
| Net realized and unrealized gain (loss) | (3.70) | 3.79 | 4.21 | 3.11 | (.71) D | |||||
| Total from investment operations | (3.67) | 3.84 | 4.20 | 3.15 | (.67) | |||||
| Distributions from net investment income | (.02) | (.05) E | (.01) | (.05) | (.05) | |||||
| Distributions from net realized gain | (2.05) | (1.67) E | (.19) | (2.24) | (1.46) | |||||
| Total distributions | (2.07) | (1.73) F | (.20) | (2.29) | (1.50) F | |||||
| Net asset value, end of period | $ | 13.11 | $ | 18.85 | $ | 16.74 | $ | 12.74 | $ | 11.88 |
Total Return G,H | (21.05)% | 24.27% | 33.34% | 29.82% | (5.17)% D | |||||
Ratios to Average Net Assets B,I,J | ||||||||||
| Expenses before reductions | .92% | .91% | .93% | .93% | .94% | |||||
| Expenses net of fee waivers, if any | .91% | .91% | .93% | .93% | .94% | |||||
| Expenses net of all reductions | .91% | .91% | .93% | .93% | .93% | |||||
| Net investment income (loss) | .20% | .26% C | (.06)% | .32% | .29% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 13,739 | $ | 19,579 | $ | 18,900 | $ | 15,870 | $ | 14,533 |
Portfolio turnover rate K | 55% | 61% | 62% | 66% | 155% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.06 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been (.07)%.
D Amount includes a reimbursement from the investment adviser for an operational error which amounted to less than $.32 per share. Excluding this reimbursement, the total return would have been (7.53)%.
E The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
F Total distributions per share do not sum due to rounding.
G Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
H Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Fees and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Dynamic Capital Appreciation Portfolio Investor Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 19.56 | $ | 17.32 | $ | 13.17 | $ | 12.21 | $ | 14.40 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .06 | .08 C | .02 | .06 | .06 | |||||
| Net realized and unrealized gain (loss) | (3.85) | 3.93 | 4.34 | 3.21 | (.72) D | |||||
| Total from investment operations | (3.79) | 4.01 | 4.36 | 3.27 | (.66) | |||||
| Distributions from net investment income | (.04) | (.09) E | (.02) | (.07) | (.07) | |||||
| Distributions from net realized gain | (2.05) | (1.67) E | (.19) | (2.24) | (1.46) | |||||
| Total distributions | (2.09) | (1.77) F | (.21) | (2.31) | (1.53) | |||||
| Net asset value, end of period | $ | 13.68 | $ | 19.56 | $ | 17.32 | $ | 13.17 | $ | 12.21 |
Total Return G,H | (20.88)% | 24.46% | 33.54% | 30.07% | (5.00)% D | |||||
Ratios to Average Net Assets B,I,J | ||||||||||
| Expenses before reductions | .74% | .73% | .76% | .76% | .77% | |||||
| Expenses net of fee waivers, if any | .74% | .73% | .76% | .76% | .77% | |||||
| Expenses net of all reductions | .74% | .73% | .75% | .76% | .76% | |||||
| Net investment income (loss) | .38% | .44% C | .12% | .50% | .46% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 144,809 | $ | 203,577 | $ | 160,175 | $ | 124,723 | $ | 108,561 |
Portfolio turnover rate K | 55% | 61% | 62% | 66% | 155% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.06 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .10%.
D Amount includes a reimbursement from the investment adviser for an operational error which amounted to less than $.33 per share. Excluding this reimbursement, the total return would have been (7.36)%.
E The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
F Total distributions per share do not sum due to rounding.
G Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
H Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Fees and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
For the period ended December 31, 2022
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.
Funds may invest 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing 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 investing fund. These strategies are consistent with the investment objectives of the investing 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 investing fund.
| Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio A |
| Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | 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.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission 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, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission 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 - Investment 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 designated the Fund's investment adviser as the valuation designee responsible for the fair valuation function and performing fair value determinations as needed. The investment adviser has established a Fair Value Committee (the Committee) to carry out the day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process and the activities of the Committee. In accordance with these fair valuation policies and procedures, which have been approved by the Board, the Fund attempts to obtain prices from one or more third party pricing services 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 the policies and procedures. Factors used in determining fair value vary by investment type and may include market or investment specific events, transaction data, estimated cash flows, and market observations of comparable investments. The frequency that the fair valuation procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee manages the Fund's fair valuation practices and maintains the fair valuation policies and procedures. The Fund's investment adviser reports to the Board information regarding the fair valuation process and related material matters.
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 - unadjusted 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 service 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, 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. 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.
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, 2022 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain Funds 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of a 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 a fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred, as applicable. Certain expense reductions may also differ by class, if applicable. 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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, 2022, 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 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 foreign currency transactions, passive foreign investment companies (PFIC), 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 | $39,877,562 |
| Gross unrealized depreciation | (11,451,857) |
| Net unrealized appreciation (depreciation) | $28,425,705 |
| Tax Cost | $152,377,543 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $268,377 |
| Undistributed long-term capital gain | $9,661,993 |
| Net unrealized appreciation (depreciation) on securities and other investments | $28,425,303 |
The tax character of distributions paid was as follows:
| December 31, 2022 | December 31, 2021 | |
| Ordinary Income | $471,570 | $7,433,857 |
| Long-term Capital Gains | 25,885,254 | 13,932,419 |
| Total | $26,356,824 | $21,366,276 |
Restricted Securities (including Private Placements). Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities held at period end is included at the end of the Schedule of Investments, if applicable.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
| Purchases ($) | Sales ($) | |
| VIP Dynamic Capital Appreciation Portfolio | 111,232,552 | 134,676,678 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (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 .23% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .53% 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 Company LLC (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 | $386 |
| Service Class 2 | 38,353 |
| $38,739 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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. For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Initial Class | $14,398 | .06 |
| Service Class | 241 | .06 |
| Service Class 2 | 9,569 | .06 |
| Investor Class | 222,116 | .14 |
| $246,324 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
| % of Average Net Assets | |
| VIP Dynamic Capital Appreciation Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 as follows:
| Amount | |
| VIP Dynamic Capital Appreciation Portfolio | $2,028 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
| Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
| VIP Dynamic Capital Appreciation Portfolio | 4,205,003 | 6,120,141 | 351,826 |
6. Committed Line of Credit.
Certain Funds participate 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 participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are listed below. During the period, there were no borrowings on this line of credit.
| Amount | |
| VIP Dynamic Capital Appreciation Portfolio | $366 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Affiliated security lending activity, if any, was as follows:
| Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
| VIP Dynamic Capital Appreciation Portfolio | $2,057 | $937 | $93,840 |
8. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $6,961.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Dynamic Capital Appreciation Portfolio | ||
| Distributions to shareholders | ||
| Initial Class | $3,143,134 | $2,664,797 |
| Service Class | 48,086 | 35,465 |
| Service Class 2 | 2,058,569 | 1,896,525 |
| Investor Class | 21,107,035 | 16,769,489 |
Total | $26,356,824 | $21,366,276 |
10. Share Transactions.
Transactions for each class of shares were as follows and may contain in-kind transactions:
| Shares | Shares | Dollars | Dollars | |
| Year ended December 31, 2022 | Year ended December 31, 2021 | Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Dynamic Capital Appreciation Portfolio | ||||
| Initial Class | ||||
| Shares sold | 71,549 | 121,009 | $1,052,691 | $2,187,314 |
| Reinvestment of distributions | 196,532 | 150,157 | 3,143,134 | 2,664,797 |
| Shares redeemed | (284,462) | (243,725) | (4,322,145) | (4,518,065) |
| Net increase (decrease) | (16,381) | 27,441 | $(126,320) | $334,046 |
| Service Class | ||||
| Shares sold | 28,979 | 2,415 | $398,871 | $41,895 |
| Reinvestment of distributions | 3,055 | 2,022 | 48,062 | 35,465 |
| Shares redeemed | (28,506) | (509) | (412,663) | (9,577) |
| Net increase (decrease) | 3,528 | 3,928 | $34,270 | $67,783 |
| Service Class 2 | ||||
| Shares sold | 127,017 | 61,917 | $1,818,111 | $1,062,336 |
| Reinvestment of distributions | 134,480 | 111,561 | 2,058,569 | 1,896,525 |
| Shares redeemed | (252,412) | (263,821) | (3,709,828) | (4,676,764) |
| Net increase (decrease) | 9,085 | (90,343) | $166,852 | $(1,717,903) |
| Investor Class | ||||
| Shares sold | 538,215 | 1,178,977 | $7,864,653 | $21,525,300 |
| Reinvestment of distributions | 1,323,379 | 946,320 | 21,107,034 | 16,769,489 |
| Shares redeemed | (1,682,766) | (967,121) | (25,743,057) | (17,665,497) |
| Net increase (decrease) | 178,828 | 1,158,176 | $3,228,630 | $20,629,292 |
11. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a 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 owners of record of more than 10% of the outstanding shares as follows:
| Fund | Affiliated % |
VIP Dynamic Capital Appreciation Portfolio | 92% |
12. Risk and Uncertainties.
Many factors affect a fund's performance. Developments that disrupt global economies and financial markets, such as pandemics, epidemics, outbreaks of infectious diseases, war, terrorism, and environmental disasters, may significantly affect a fund's investment performance. The effects of these developments to a fund will be impacted by the types of securities in which a fund invests, the financial condition, industry, economic sector, and geographic location of an issuer, and a fund's level of investment in the securities of that issuer.
To the Board of Trustees of Variable Insurance Products Fund III and the 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, 2022, 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, 2022, 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, 2022, 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.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 10, 2023
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 318 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. Robert A. Lawrence is an interested person and currently serves as Chair. The Trustees have determined that an interested Chair is appropriate and benefits shareholders because an interested Chair 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 Chair, 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 Chair 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. David M. Thomas serves as Lead Independent Trustee 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 other equity 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. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity ® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Chair of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Trustee and Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity ® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity ® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
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 served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity ® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity ® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University's Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity ® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity ® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean's Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity ® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity ® funds (2021).
David M. Thomas (1949)
Year of Election or Appointment: 2008
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity ® funds. 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). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company - America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity ® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Wiley also serves as Trustee of other Fidelity ® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 a Member of the Advisory Board of other Fidelity ® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (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 as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2022
Deputy Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present). Previously, Mr. Brown served as Assistant Treasurer of certain Fidelity ® funds (2019-2022).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity ® funds (2016-2020) and Assistant Treasurer of certain Fidelity ® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), FD Funds Management LLC (2021-present), and Fidelity Diversifying Solutions LLC (investment adviser firm, 2022-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity ® funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
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 FIMM, LLC (2021-present) and 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity ® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity ® funds (2019-2021).
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2022 to December 31, 2022). |
Actual Expenses
The first line of the accompanying table 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/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratio- A | Beginning Account Value July 1, 2022 | Ending Account Value December 31, 2022 | Expenses Paid During Period- C July 1, 2022 to December 31, 2022 | |||||||
| VIP Dynamic Capital Appreciation Portfolio | ||||||||||
| Initial Class | .66% | |||||||||
| Actual | $ 1,000 | $ 1,008.30 | $ 3.34 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.88 | $ 3.36 | |||||||
| Service Class | .76% | |||||||||
| Actual | $ 1,000 | $ 1,007.60 | $ 3.85 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.37 | $ 3.87 | |||||||
| Service Class 2 | .91% | |||||||||
| Actual | $ 1,000 | $ 1,007.20 | $ 4.60 | |||||||
Hypothetical- B | $ 1,000 | $ 1,020.62 | $ 4.63 | |||||||
| Investor Class | .74% | |||||||||
| Actual | $ 1,000 | $ 1,008.40 | $ 3.75 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.48 | $ 3.77 | |||||||
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B 5% return per year before expenses
C Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
Distributions (Unaudited)
The dividend and capital gains distributions for the fund(s) are available on Fidelity.com or Institutional.Fidelity.com.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2022, $9,680,873, or, if subsequently determined to be different, the net capital gain of such year.
Initial Class, Service Class, Service Class 2 and Investor Class designate 100% of the dividend distributed in November 2022 as qualifying for the dividends-received deduction for corporate shareholders.
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1.751799.122
VIPDCA-ANN-0323
Fidelity® Variable Insurance Products:
Mid Cap Portfolio
Annual Report
December 31, 2022
Contents
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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-PORT. Forms N-PORT are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-PORT 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.
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 | |||
Periods ended December 31, 2022 | Past 1 year | Past 5 years | Past 10 years |
| Initial Class | -14.74% | 5.95% | 9.96% |
| Service Class | -14.85% | 5.84% | 9.85% |
| Service Class 2 | -14.97% | 5.68% | 9.69% |
| Investor Class | -14.83% | 5.87% | 9.87% |
| $10,000 Over 10 Years |
Let's say hypothetically that $10,000 was invested in VIP Mid Cap Portfolio - Initial Class, a class of the fund, on December 31, 2012. 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. |
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Market Recap:
U.S. equities returned -18.11% in 2022, according to the S&P 500 ® index, as a multitude of risk factors challenged the global economy. It was the index's lowest calendar-year return since 2008 and first retreat since 2018. High inflation prompted the Federal Reserve to aggressively tighten monetary policy, and market interest rates eclipsed their highest level in a decade, stoking recession fears and sending stocks into bear market territory. Since March, the Fed hiked its benchmark rate seven times, by 4.25 percentage points - the fastest-ever pace of monetary tightening - while also shrinking its massive portfolio. Against this backdrop, the S&P 500® posted its worst year-to-date result (-23.87%) in 20 years through September, a seasonally weak month that stayed true to form, with volatility spiking due to growing certainty the Fed would persist in its effort to cool inflation, even at the expense of economic growth. Three of the index's worst monthly returns ever were recorded in 2022, as it shed 8% to 9% in April, June and September. Gains of similar proportion were made in July and October, amid optimism on inflation and policy easing. November (+6%) began with a rate hike of 0.75% and ended on a high note when the Fed signaled its intent to slow its pace of rate rises. For the year, value stocks handily outpaced growth. This headwind was pronounced in the growthier communication services (-40%), consumer discretionary (-37%) and information technology (-28%) sectors. In sharp contrast, energy (+66%) shined.
Comments from Co-Managers Thomas Allen and Daniel Sherwood:
For the year ending December 31, 2022, the fund's share classes returned about -15%, underperforming the -13.06% result of the benchmark S&P MidCap 400 Index. Versus the benchmark, security selection was the primary detractor, especially within the industrials sector. Weak picks among materials and consumer staples stocks also proved detrimental. A non-benchmark stake in Generac Holdings was the fund's largest individual relative detractor, due to its approximately -71% result. The decision to avoid Steel Dynamics, a benchmark component that gained 71% in 2022, along with an out-of-benchmark investment in Caesars Entertainment (-55%), further pressured relative performance. In contrast, the top contributors to performance versus the benchmark were investment choices and an overweighting in the market-leading energy sector. Also boosting the portfolio's relative return was security selection and an overweighting in utilities, along with favorable picks and smaller-than-benchmark exposure to real estate firms. Our top individual relative contributor was an out-of-benchmark stake in Hess (+95%), followed by a non-benchmark investment in Cheniere Energy (+51%). Outsized exposure to Antero Resources (+79%) also added value. Notable changes in positioning include a lower allocation to the consumer discretionary and real estate sectors.
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.
Top Holdings (% of Fund's net assets) | ||
| Deckers Outdoor Corp. | 1.9 | |
| Jabil, Inc. | 1.5 | |
| Churchill Downs, Inc. | 1.3 | |
| ITT, Inc. | 1.3 | |
| Five Below, Inc. | 1.3 | |
| Wintrust Financial Corp. | 1.3 | |
| OGE Energy Corp. | 1.2 | |
| KBR, Inc. | 1.1 | |
| Flex Ltd. | 1.1 | |
| Willscot Mobile Mini Holdings | 1.1 | |
| 13.1 | ||
| Market Sectors (% of Fund's net assets) | ||
| Industrials | 18.3 | |
| Financials | 14.6 | |
| Information Technology | 12.9 | |
| Consumer Discretionary | 12.7 | |
| Health Care | 9.0 | |
| Real Estate | 7.1 | |
| Materials | 6.9 | |
| Energy | 5.8 | |
| Utilities | 5.0 | |
| Consumer Staples | 4.5 | |
| Communication Services | 1.7 | |
Asset Allocation (% of Fund's net assets) |
 |
Foreign investments - 11.3% |
Geographic Diversification (% of Fund's net assets) |
 |
* Includes Short-Term investments and Net Other Assets (Liabilities). Percentages are based on country or territory of incorporation and are adjusted for the effect of derivatives, if applicable. |
Showing Percentage of Net Assets
| Common Stocks - 98.5% | |||
| Shares | Value ($) | ||
| COMMUNICATION SERVICES - 1.7% | |||
| Entertainment - 0.2% | |||
| Live Nation Entertainment, Inc. (a) | 184,494 | 12,866,612 | |
| Interactive Media & Services - 0.8% | |||
| Bumble, Inc. (a)(b) | 1,234,300 | 25,982,015 | |
| IAC, Inc. (a) | 530,975 | 23,575,290 | |
| 49,557,305 | |||
| Media - 0.7% | |||
| Interpublic Group of Companies, Inc. (b) | 1,448,842 | 48,260,927 | |
TOTAL COMMUNICATION SERVICES | 110,684,844 | ||
| CONSUMER DISCRETIONARY - 12.7% | |||
| Distributors - 0.1% | |||
| Pool Corp. | 32,400 | 9,795,492 | |
| Diversified Consumer Services - 0.2% | |||
| Grand Canyon Education, Inc. (a) | 149,400 | 15,785,604 | |
| Hotels, Restaurants & Leisure - 4.3% | |||
| ARAMARK Holdings Corp. (b) | 1,193,358 | 49,333,420 | |
| Bowlero Corp. Class A (a)(b) | 888,800 | 11,981,024 | |
| Caesars Entertainment, Inc. (a) | 621,706 | 25,862,970 | |
| Churchill Downs, Inc. | 405,052 | 85,640,144 | |
| Domino's Pizza, Inc. | 101,500 | 35,159,600 | |
| Jubilant Foodworks Ltd. | 750,700 | 4,627,476 | |
| Light & Wonder, Inc. Class A (a) | 428,100 | 25,086,660 | |
| Noodles & Co. (a)(c) | 3,054,960 | 16,771,730 | |
| Vail Resorts, Inc. | 83,647 | 19,937,262 | |
| Xponential Fitness, Inc. (a)(b) | 25,077 | 575,016 | |
| 274,975,302 | |||
| Household Durables - 1.4% | |||
| KB Home | 371,618 | 11,836,033 | |
| Lovesac (a)(b) | 196,653 | 4,328,333 | |
| NVR, Inc. (a) | 7,258 | 33,478,106 | |
| Taylor Morrison Home Corp. (a) | 1,306,712 | 39,658,709 | |
| 89,301,181 | |||
| Internet & Direct Marketing Retail - 0.1% | |||
| Revolve Group, Inc. (a)(b) | 352,181 | 7,839,549 | |
| Leisure Products - 0.4% | |||
| YETI Holdings, Inc. (a)(b) | 565,120 | 23,345,107 | |
| Specialty Retail - 3.6% | |||
| Academy Sports & Outdoors, Inc. (b) | 710,030 | 37,304,976 | |
| America's Car Mart, Inc. (a) | 101,049 | 7,301,801 | |
| Dick's Sporting Goods, Inc. (b) | 397,536 | 47,819,605 | |
| Five Below, Inc. (a)(b) | 470,646 | 83,243,158 | |
| Floor & Decor Holdings, Inc. Class A (a)(b) | 90,000 | 6,266,700 | |
| Williams-Sonoma, Inc. (b) | 413,923 | 47,568,031 | |
| 229,504,271 | |||
| Textiles, Apparel & Luxury Goods - 2.6% | |||
| Capri Holdings Ltd. (a) | 831,560 | 47,665,019 | |
| Deckers Outdoor Corp. (a) | 300,039 | 119,763,565 | |
| 167,428,584 | |||
TOTAL CONSUMER DISCRETIONARY | 817,975,090 | ||
| CONSUMER STAPLES - 4.5% | |||
| Beverages - 0.5% | |||
| Boston Beer Co., Inc. Class A (a) | 97,700 | 32,194,104 | |
| Food & Staples Retailing - 3.5% | |||
| BJ's Wholesale Club Holdings, Inc. (a) | 1,055,199 | 69,811,966 | |
| Performance Food Group Co. (a) | 837,100 | 48,878,269 | |
| Sprouts Farmers Market LLC (a) | 1,107,200 | 35,840,064 | |
| U.S. Foods Holding Corp. (a) | 1,585,540 | 53,940,071 | |
| United Natural Foods, Inc. (a) | 444,500 | 17,206,595 | |
| 225,676,965 | |||
| Food Products - 0.4% | |||
| Nomad Foods Ltd. (a) | 1,330,001 | 22,929,217 | |
| Personal Products - 0.1% | |||
| Olaplex Holdings, Inc. (a)(b) | 1,910,200 | 9,952,142 | |
TOTAL CONSUMER STAPLES | 290,752,428 | ||
| ENERGY - 5.8% | |||
| Energy Equipment & Services - 2.2% | |||
| Baker Hughes Co. Class A | 1,222,548 | 36,101,842 | |
| Championx Corp. | 703,600 | 20,397,364 | |
| Nextier Oilfield Solutions, Inc. (a) | 3,191,800 | 29,492,232 | |
| TechnipFMC PLC (a) | 4,396,100 | 53,588,459 | |
| 139,579,897 | |||
| Oil, Gas & Consumable Fuels - 3.6% | |||
| Antero Resources Corp. (a) | 1,097,725 | 34,018,498 | |
| Cheniere Energy, Inc. | 312,970 | 46,932,981 | |
| Hess Corp. | 356,188 | 50,514,582 | |
| Magnolia Oil & Gas Corp. Class A | 916,631 | 21,494,997 | |
| New Fortress Energy, Inc. (b) | 547,962 | 23,244,548 | |
| Ovintiv, Inc. | 348,900 | 17,692,719 | |
| Range Resources Corp. | 1,562,368 | 39,090,447 | |
| 232,988,772 | |||
TOTAL ENERGY | 372,568,669 | ||
| FINANCIALS - 14.6% | |||
| Banks - 5.9% | |||
| Bancorp, Inc., Delaware (a) | 1,831,222 | 51,970,080 | |
| Comerica, Inc. | 327,599 | 21,899,993 | |
| East West Bancorp, Inc. | 948,617 | 62,513,860 | |
| First Republic Bank | 254,627 | 31,036,485 | |
| Huntington Bancshares, Inc. | 3,143,610 | 44,324,901 | |
| M&T Bank Corp. | 224,194 | 32,521,582 | |
| Popular, Inc. | 447,427 | 29,673,359 | |
| Signature Bank | 205,530 | 23,681,167 | |
| Wintrust Financial Corp. | 969,441 | 81,937,153 | |
| 379,558,580 | |||
| Capital Markets - 2.3% | |||
| Ameriprise Financial, Inc. | 122,327 | 38,088,958 | |
| Northern Trust Corp. | 451,055 | 39,913,857 | |
| Raymond James Financial, Inc. | 405,697 | 43,348,724 | |
| TMX Group Ltd. | 270,900 | 27,114,009 | |
| 148,465,548 | |||
| Diversified Financial Services - 0.5% | |||
| Equitable Holdings, Inc. | 1,200,044 | 34,441,263 | |
| Insurance - 5.6% | |||
| American Financial Group, Inc. | 215,313 | 29,558,169 | |
| Arch Capital Group Ltd. (a) | 852,500 | 53,519,950 | |
| Assurant, Inc. | 208,627 | 26,090,893 | |
| Hartford Financial Services Group, Inc. | 684,622 | 51,914,886 | |
| Old Republic International Corp. | 1,726,310 | 41,690,387 | |
| Primerica, Inc. | 455,347 | 64,577,312 | |
| Reinsurance Group of America, Inc. | 462,178 | 65,670,872 | |
| Selective Insurance Group, Inc. | 307,600 | 27,256,436 | |
| 360,278,905 | |||
| Thrifts & Mortgage Finance - 0.3% | |||
| Essent Group Ltd. | 583,404 | 22,682,748 | |
TOTAL FINANCIALS | 945,427,044 | ||
| HEALTH CARE - 9.0% | |||
| Biotechnology - 1.8% | |||
| Argenx SE ADR (a) | 35,652 | 13,506,047 | |
| Blueprint Medicines Corp. (a) | 159,900 | 7,005,219 | |
| Exelixis, Inc. (a) | 1,542,860 | 24,747,474 | |
| Legend Biotech Corp. ADR (a) | 213,500 | 10,657,920 | |
| Neurocrine Biosciences, Inc. (a) | 171,102 | 20,436,423 | |
| United Therapeutics Corp. (a) | 147,100 | 40,907,039 | |
| 117,260,122 | |||
| Health Care Equipment & Supplies - 2.9% | |||
| Boston Scientific Corp. (a) | 728,243 | 33,695,804 | |
| Envista Holdings Corp. (a) | 977,766 | 32,921,381 | |
| Hologic, Inc. (a) | 285,772 | 21,378,603 | |
| Masimo Corp. (a) | 78,000 | 11,540,100 | |
| ResMed, Inc. | 83,585 | 17,396,546 | |
| The Cooper Companies, Inc. | 76,439 | 25,276,084 | |
| Zimmer Biomet Holdings, Inc. | 373,832 | 47,663,580 | |
| 189,872,098 | |||
| Health Care Providers & Services - 2.1% | |||
| agilon health, Inc. (a) | 551,400 | 8,899,596 | |
| Guardant Health, Inc. (a) | 111,700 | 3,038,240 | |
| Molina Healthcare, Inc. (a) | 192,368 | 63,523,761 | |
| Option Care Health, Inc. (a) | 1,937,020 | 58,284,932 | |
| 133,746,529 | |||
| Life Sciences Tools & Services - 0.9% | |||
| Bio-Rad Laboratories, Inc. Class A (a) | 55,800 | 23,463,342 | |
| ICON PLC (a) | 71,100 | 13,811,175 | |
| Thermo Fisher Scientific, Inc. | 32,661 | 17,986,086 | |
| 55,260,603 | |||
| Pharmaceuticals - 1.3% | |||
| Royalty Pharma PLC | 1,196,400 | 47,281,728 | |
| UCB SA | 468,200 | 36,867,146 | |
| 84,148,874 | |||
TOTAL HEALTH CARE | 580,288,226 | ||
| INDUSTRIALS - 18.3% | |||
| Aerospace & Defense - 1.5% | |||
| AerSale Corp. (a) | 852,300 | 13,824,306 | |
| Axon Enterprise, Inc. (a)(b) | 211,754 | 35,136,341 | |
| Howmet Aerospace, Inc. | 1,070,552 | 42,190,454 | |
| Spirit AeroSystems Holdings, Inc. Class A | 266,200 | 7,879,520 | |
| 99,030,621 | |||
| Air Freight & Logistics - 0.8% | |||
| Air Transport Services Group, Inc. (a) | 897,200 | 23,309,256 | |
| GXO Logistics, Inc. (a)(b) | 576,532 | 24,612,151 | |
| 47,921,407 | |||
| Building Products - 1.0% | |||
| Builders FirstSource, Inc. (a) | 982,771 | 63,762,182 | |
| Commercial Services & Supplies - 0.5% | |||
| Driven Brands Holdings, Inc. (a)(b) | 1,123,321 | 30,677,897 | |
| Construction & Engineering - 1.9% | |||
| Quanta Services, Inc. (b) | 368,469 | 52,506,833 | |
| Willscot Mobile Mini Holdings (a) | 1,558,619 | 70,402,820 | |
| 122,909,653 | |||
| Electrical Equipment - 3.2% | |||
| Acuity Brands, Inc. | 291,423 | 48,262,563 | |
| AMETEK, Inc. | 402,626 | 56,254,905 | |
| Generac Holdings, Inc. (a) | 180,490 | 18,168,123 | |
| Regal Rexnord Corp. | 473,264 | 56,782,215 | |
| Sunrun, Inc. (a)(b) | 1,210,446 | 29,074,913 | |
| 208,542,719 | |||
| Machinery - 4.2% | |||
| Crane Holdings Co. | 649,736 | 65,265,981 | |
| Fortive Corp. | 761,814 | 48,946,550 | |
| IDEX Corp. | 193,294 | 44,134,819 | |
| Ingersoll Rand, Inc. | 528,100 | 27,593,225 | |
| ITT, Inc. | 1,055,609 | 85,609,890 | |
| 271,550,465 | |||
| Marine - 0.3% | |||
| Clarkson PLC | 481,675 | 18,838,084 | |
| Professional Services - 3.0% | |||
| ASGN, Inc. (a) | 473,306 | 38,564,973 | |
| FTI Consulting, Inc. (a)(b) | 279,000 | 44,305,200 | |
| Jacobs Solutions, Inc. | 312,889 | 37,568,582 | |
| KBR, Inc. | 1,410,439 | 74,471,179 | |
| 194,909,934 | |||
| Road & Rail - 0.5% | |||
| J.B. Hunt Transport Services, Inc. | 180,400 | 31,454,544 | |
| Trading Companies & Distributors - 1.4% | |||
| NOW, Inc. (a) | 1,653,100 | 20,994,370 | |
| RS GROUP PLC | 3,163,315 | 34,246,514 | |
| Univar Solutions, Inc. (a) | 1,175,384 | 37,377,211 | |
| 92,618,095 | |||
TOTAL INDUSTRIALS | 1,182,215,601 | ||
| INFORMATION TECHNOLOGY - 12.9% | |||
| Communications Equipment - 0.9% | |||
| Digi International, Inc. (a) | 1,614,101 | 58,995,392 | |
| Electronic Equipment & Components - 3.3% | |||
| CDW Corp. | 181,176 | 32,354,410 | |
| Flex Ltd. (a) | 3,307,300 | 70,974,658 | |
| Jabil, Inc. (b) | 1,370,175 | 93,445,935 | |
| Trimble, Inc. (a) | 236,432 | 11,954,002 | |
| 208,729,005 | |||
| IT Services - 5.1% | |||
| Amadeus IT Holding SA Class A (a) | 795,200 | 41,253,205 | |
| Concentrix Corp. | 418,871 | 55,776,862 | |
| EPAM Systems, Inc. (a) | 77,822 | 25,505,382 | |
| Euronet Worldwide, Inc. (a) | 406,122 | 38,329,794 | |
| Genpact Ltd. | 1,280,358 | 59,306,183 | |
| GoDaddy, Inc. (a) | 450,454 | 33,702,968 | |
| Shift4 Payments, Inc. (a)(b) | 345,600 | 19,329,408 | |
| WNS Holdings Ltd. sponsored ADR (a) | 687,837 | 55,020,082 | |
| 328,223,884 | |||
| Semiconductors & Semiconductor Equipment - 2.3% | |||
| Marvell Technology, Inc. | 303,978 | 11,259,345 | |
| MKS Instruments, Inc. (b) | 370,271 | 31,373,062 | |
| onsemi (a) | 811,814 | 50,632,839 | |
| SolarEdge Technologies, Inc. (a) | 96,243 | 27,262,755 | |
| Teradyne, Inc. | 342,745 | 29,938,776 | |
| 150,466,777 | |||
| Software - 1.3% | |||
| Black Knight, Inc. (a) | 468,257 | 28,914,870 | |
| Dynatrace, Inc. (a) | 1,164,949 | 44,617,547 | |
| PowerSchool Holdings, Inc. (a) | 406,200 | 9,375,096 | |
| 82,907,513 | |||
TOTAL INFORMATION TECHNOLOGY | 829,322,571 | ||
| MATERIALS - 6.9% | |||
| Chemicals - 1.9% | |||
| Cabot Corp. | 251,100 | 16,783,524 | |
| Celanese Corp. Class A | 243,437 | 24,888,999 | |
| CF Industries Holdings, Inc. | 350,841 | 29,891,653 | |
| Element Solutions, Inc. | 2,726,105 | 49,587,850 | |
| 121,152,026 | |||
| Construction Materials - 0.7% | |||
| Martin Marietta Materials, Inc. | 141,537 | 47,835,260 | |
| Containers & Packaging - 0.9% | |||
| Avery Dennison Corp. | 241,783 | 43,762,723 | |
| Sealed Air Corp. | 342,200 | 17,068,936 | |
| 60,831,659 | |||
| Metals & Mining - 3.4% | |||
| Agnico Eagle Mines Ltd. (Canada) | 556,057 | 28,895,251 | |
| Commercial Metals Co. | 476,400 | 23,010,120 | |
| First Quantum Minerals Ltd. | 2,634,000 | 55,033,870 | |
| Lynas Rare Earths Ltd. (a) | 3,239,263 | 17,075,826 | |
| Reliance Steel & Aluminum Co. | 274,227 | 55,514,514 | |
| Wheaton Precious Metals Corp. | 961,700 | 37,573,065 | |
| 217,102,646 | |||
TOTAL MATERIALS | 446,921,591 | ||
| REAL ESTATE - 7.1% | |||
| Equity Real Estate Investment Trusts (REITs) - 6.6% | |||
| Alexandria Real Estate Equities, Inc. | 176,583 | 25,722,846 | |
| CubeSmart | 649,800 | 26,154,450 | |
| EastGroup Properties, Inc. | 372,700 | 55,181,962 | |
| Equity Lifestyle Properties, Inc. | 282,900 | 18,275,340 | |
| Highwoods Properties, Inc. (SBI) | 812,907 | 22,745,138 | |
| Invitation Homes, Inc. | 1,387,472 | 41,124,670 | |
| Lamar Advertising Co. Class A | 633,381 | 59,791,166 | |
| Mid-America Apartment Communities, Inc. | 164,005 | 25,747,145 | |
| National Retail Properties, Inc. | 537,811 | 24,610,231 | |
| Ryman Hospitality Properties, Inc. | 552,100 | 45,150,738 | |
| Sun Communities, Inc. | 133,600 | 19,104,800 | |
| Terreno Realty Corp. | 253,100 | 14,393,797 | |
| Ventas, Inc. | 1,078,237 | 48,574,577 | |
| 426,576,860 | |||
| Real Estate Management & Development - 0.5% | |||
| CBRE Group, Inc. (a) | 388,428 | 29,893,419 | |
TOTAL REAL ESTATE | 456,470,279 | ||
| UTILITIES - 5.0% | |||
| Electric Utilities - 2.6% | |||
| Constellation Energy Corp. | 549,300 | 47,355,153 | |
| OGE Energy Corp. (b) | 1,997,500 | 79,001,125 | |
| PG&E Corp. (a) | 2,521,000 | 40,991,460 | |
| 167,347,738 | |||
| Independent Power and Renewable Electricity Producers - 2.0% | |||
| Clearway Energy, Inc. Class C (b) | 1,141,954 | 36,394,074 | |
| NextEra Energy Partners LP | 671,023 | 47,032,002 | |
| The AES Corp. | 1,527,338 | 43,926,241 | |
| 127,352,317 | |||
| Multi-Utilities - 0.4% | |||
| NorthWestern Energy Corp. | 482,600 | 28,637,484 | |
TOTAL UTILITIES | 323,337,539 | ||
| TOTAL COMMON STOCKS (Cost $4,993,438,325) | 6,355,963,882 | ||
| Money Market Funds - 4.8% | |||
| Shares | Value ($) | ||
| Fidelity Cash Central Fund 4.37% (d) | 101,342,175 | 101,362,444 | |
| Fidelity Securities Lending Cash Central Fund 4.37% (d)(e) | 208,489,513 | 208,510,362 | |
| TOTAL MONEY MARKET FUNDS (Cost $309,872,806) | 309,872,806 | ||
| TOTAL INVESTMENT IN SECURITIES - 103.3% (Cost $5,303,311,131) | 6,665,836,688 |
NET OTHER ASSETS (LIABILITIES) - (3.3)% | (212,469,555) |
| NET ASSETS - 100.0% | 6,453,367,133 |
Legend
| (a) | Non-income producing |
| (b) | Security or a portion of the security is on loan at period end. |
| (c) | Affiliated company |
| (d) | Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
| (e) | Investment made with cash collateral received from securities on loan. |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
| Affiliate | Value, beginning of period ($) | Purchases ($) | Sales Proceeds ($) | Dividend Income ($) | Realized Gain (loss) ($) | Change in Unrealized appreciation (depreciation) ($) | Value, end of period ($) | % ownership, end of period |
| Fidelity Cash Central Fund 4.37% | 94,430,335 | 953,479,783 | 946,547,674 | 2,130,854 | - | - | 101,362,444 | 0.2% |
| Fidelity Securities Lending Cash Central Fund 4.37% | 279,718,537 | 1,721,257,748 | 1,792,465,923 | 311,918 | - | - | 208,510,362 | 0.7% |
| Total | 374,148,872 | 2,674,737,531 | 2,739,013,597 | 2,442,772 | - | - | 309,872,806 | |
Amounts in the dividend 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.
Amount for Fidelity Securities Lending Cash Central Fund 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.
Amounts included in the purchases and sales proceeds columns may include in-kind transactions, if applicable.
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 presented in the table below. Certain corporate actions, such as mergers, are excluded from the amounts in this table if applicable. A dash in the Value end of period ($) column means either the issuer is no longer held at period end, or the issuer is held at period end but is no longer an affiliate.
| Affiliate | Value, beginning of period ($) | Purchases ($) | Sales Proceeds ($) | Dividend Income ($) | Realized Gain (loss) ($) | Change in Unrealized appreciation (depreciation) ($) | Value, end of period ($) |
| Noodles & Co. | 26,543,818 | 736,831 | - | - | - | (10,508,919) | 16,771,730 |
| Total | 26,543,818 | 736,831 | - | - | - | (10,508,919) | 16,771,730 |
Amounts included in the purchases and sales proceeds columns may include in-kind transactions, if applicable.
Investment Valuation
The following is a summary of the inputs used, as of December 31, 2022, 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: | ||||
Communication Services | 110,684,844 | 110,684,844 | - | - |
Consumer Discretionary | 817,975,090 | 813,347,614 | 4,627,476 | - |
Consumer Staples | 290,752,428 | 290,752,428 | - | - |
Energy | 372,568,669 | 372,568,669 | - | - |
Financials | 945,427,044 | 945,427,044 | - | - |
Health Care | 580,288,226 | 580,288,226 | - | - |
Industrials | 1,182,215,601 | 1,182,215,601 | - | - |
Information Technology | 829,322,571 | 788,069,366 | 41,253,205 | - |
Materials | 446,921,591 | 429,845,765 | 17,075,826 | - |
Real Estate | 456,470,279 | 456,470,279 | - | - |
Utilities | 323,337,539 | 323,337,539 | - | - |
| Money Market Funds | 309,872,806 | 309,872,806 | - | - |
| Total Investments in Securities: | 6,665,836,688 | 6,602,880,181 | 62,956,507 | - |
| Statement of Assets and Liabilities | ||||
| December 31, 2022 | ||||
| Assets | ||||
| Investment in securities, at value (including securities loaned of $203,659,225) - See accompanying schedule: | ||||
Unaffiliated issuers (cost $4,971,750,048) | $6,339,192,152 | |||
Fidelity Central Funds (cost $309,872,806) | 309,872,806 | |||
Other affiliated issuers (cost $21,688,277) | 16,771,730 | |||
| Total Investment in Securities (cost $5,303,311,131) | $ | 6,665,836,688 | ||
| Foreign currency held at value (cost $46,509) | 46,089 | |||
| Receivable for fund shares sold | 834,820 | |||
| Dividends receivable | 5,170,346 | |||
| Distributions receivable from Fidelity Central Funds | 449,287 | |||
| Prepaid expenses | 7,434 | |||
| Other receivables | 121,042 | |||
Total assets | 6,672,465,706 | |||
| Liabilities | ||||
| Payable for investments purchased | $71,546 | |||
| Payable for fund shares redeemed | 6,199,408 | |||
| Accrued management fee | 2,883,032 | |||
| Distribution and service plan fees payable | 851,177 | |||
| Other affiliated payables | 470,312 | |||
| Other payables and accrued expenses | 128,305 | |||
| Collateral on securities loaned | 208,494,793 | |||
| Total Liabilities | 219,098,573 | |||
| Net Assets | $ | 6,453,367,133 | ||
| Net Assets consist of: | ||||
| Paid in capital | $ | 5,081,122,536 | ||
| Total accumulated earnings (loss) | 1,372,244,597 | |||
| Net Assets | $ | 6,453,367,133 | ||
| Net Asset Value and Maximum Offering Price | ||||
| Initial Class : | ||||
Net Asset Value , offering price and redemption price per share ($1,455,364,022 ÷ 44,482,926 shares) | $ | 32.72 | ||
| Service Class : | ||||
Net Asset Value , offering price and redemption price per share ($586,963,856 ÷ 18,197,651 shares) | $ | 32.25 | ||
| Service Class 2 : | ||||
Net Asset Value , offering price and redemption price per share ($3,776,819,481 ÷ 121,061,816 shares) | $ | 31.20 | ||
| Investor Class : | ||||
Net Asset Value , offering price and redemption price per share ($634,219,774 ÷ 19,562,473 shares) | $ | 32.42 | ||
| Statement of Operations | ||||
Year ended December 31, 2022 | ||||
| Investment Income | ||||
| Dividends | $ | 79,341,692 | ||
| Income from Fidelity Central Funds (including $311,918 from security lending) | 2,442,772 | |||
| Total Income | 81,784,464 | |||
| Expenses | ||||
| Management fee | $ | 35,899,464 | ||
| Transfer agent fees | 4,732,835 | |||
| Distribution and service plan fees | 10,722,265 | |||
| Accounting fees | 1,084,136 | |||
| Custodian fees and expenses | 62,294 | |||
| Independent trustees' fees and expenses | 23,866 | |||
| Audit | 68,621 | |||
| Legal | 10,262 | |||
| Miscellaneous | 32,507 | |||
| Total expenses before reductions | 52,636,250 | |||
| Expense reductions | (232,085) | |||
| Total expenses after reductions | 52,404,165 | |||
| Net Investment income (loss) | 29,380,299 | |||
| Realized and Unrealized Gain (Loss) | ||||
| Net realized gain (loss) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers | 318,626,890 | |||
| Foreign currency transactions | (256,754) | |||
| Total net realized gain (loss) | 318,370,136 | |||
| Change in net unrealized appreciation (depreciation) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers | (1,547,363,055) | |||
| Affiliated issuers | (10,508,919) | |||
| Assets and liabilities in foreign currencies | (19,427) | |||
| Total change in net unrealized appreciation (depreciation) | (1,557,891,401) | |||
| Net gain (loss) | (1,239,521,265) | |||
| Net increase (decrease) in net assets resulting from operations | $ | (1,210,140,966) | ||
| Statement of Changes in Net Assets | ||||
Year ended December 31, 2022 | Year ended December 31, 2021 | |||
| Increase (Decrease) in Net Assets | ||||
| Operations | ||||
| Net investment income (loss) | $ | 29,380,299 | $ | 28,538,173 |
| Net realized gain (loss) | 318,370,136 | 1,533,676,460 | ||
| Change in net unrealized appreciation (depreciation) | (1,557,891,401) | 279,604,374 | ||
| Net increase (decrease) in net assets resulting from operations | (1,210,140,966) | 1,841,819,007 | ||
| Distributions to shareholders | (483,587,759) | (1,305,048,342) | ||
| Share transactions - net increase (decrease) | (99,655,685) | 86,384,864 | ||
| Total increase (decrease) in net assets | (1,793,384,410) | 623,155,529 | ||
| Net Assets | ||||
| Beginning of period | 8,246,751,543 | 7,623,596,014 | ||
| End of period | $ | 6,453,367,133 | $ | 8,246,751,543 |
Financial Highlights
| VIP Mid Cap Portfolio Initial Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 41.17 | $ | 38.72 | $ | 32.95 | $ | 30.19 | $ | 38.94 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .21 | .23 | .15 | .27 | .23 | |||||
| Net realized and unrealized gain (loss) | (6.16) | 9.57 | 5.83 | 6.39 | (5.47) | |||||
| Total from investment operations | (5.95) | 9.80 | 5.98 | 6.66 | (5.24) | |||||
| Distributions from net investment income | (.17) C | (.28) | (.21) | (.28) | (.24) | |||||
| Distributions from net realized gain | (2.33) C | (7.07) | - | (3.63) | (3.27) | |||||
| Total distributions | (2.50) | (7.35) | (.21) | (3.90) D | (3.51) | |||||
| Net asset value, end of period | $ | 32.72 | $ | 41.17 | $ | 38.72 | $ | 32.95 | $ | 30.19 |
Total Return E,F | (14.74)% | 25.60% | 18.19% | 23.45% | (14.54)% | |||||
Ratios to Average Net Assets B,G,H | ||||||||||
| Expenses before reductions | .61% | .61% | .62% | .62% | .62% | |||||
| Expenses net of fee waivers, if any | .60% | .60% | .62% | .62% | .62% | |||||
| Expenses net of all reductions | .60% | .60% | .62% | .61% | .62% | |||||
| Net investment income (loss) | .60% | .52% | .48% | .88% | .62% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 1,455,364 | $ | 1,810,651 | $ | 1,579,450 | $ | 843,080 | $ | 1,141,305 |
Portfolio turnover rate I | 31% | 37% J | 44% | 34% | 47% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
J Portfolio turnover rate excludes securities received or delivered in-kind.
| VIP Mid Cap Portfolio Service Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 40.63 | $ | 38.28 | $ | 32.59 | $ | 29.90 | $ | 38.60 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .17 | .18 | .12 | .24 | .19 | |||||
| Net realized and unrealized gain (loss) | (6.09) | 9.47 | 5.74 | 6.33 | (5.42) | |||||
| Total from investment operations | (5.92) | 9.65 | 5.86 | 6.57 | (5.23) | |||||
| Distributions from net investment income | (.13) C | (.23) | (.17) | (.25) | (.20) | |||||
| Distributions from net realized gain | (2.33) C | (7.07) | - | (3.63) | (3.27) | |||||
| Total distributions | (2.46) | (7.30) | (.17) | (3.88) | (3.47) | |||||
| Net asset value, end of period | $ | 32.25 | $ | 40.63 | $ | 38.28 | $ | 32.59 | $ | 29.90 |
Total Return D,E | (14.85)% | 25.51% | 18.04% | 23.35% | (14.64)% | |||||
Ratios to Average Net Assets B,F,G | ||||||||||
| Expenses before reductions | .71% | .71% | .72% | .72% | .72% | |||||
| Expenses net of fee waivers, if any | .70% | .70% | .72% | .72% | .72% | |||||
| Expenses net of all reductions | .70% | .70% | .72% | .71% | .72% | |||||
| Net investment income (loss) | .50% | .42% | .38% | .78% | .52% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 586,964 | $ | 726,039 | $ | 642,654 | $ | 564,678 | $ | 504,156 |
Portfolio turnover rate H | 31% | 37% I | 44% | 34% | 47% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
I Portfolio turnover rate excludes securities received or delivered in-kind.
| VIP Mid Cap Portfolio Service Class 2 |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 39.39 | $ | 37.29 | $ | 31.75 | $ | 29.22 | $ | 37.79 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .12 | .11 | .07 | .19 | .13 | |||||
| Net realized and unrealized gain (loss) | (5.90) | 9.22 | 5.59 | 6.18 | (5.28) | |||||
| Total from investment operations | (5.78) | 9.33 | 5.66 | 6.37 | (5.15) | |||||
| Distributions from net investment income | (.08) C | (.16) | (.12) | (.21) | (.15) | |||||
| Distributions from net realized gain | (2.33) C | (7.07) | - | (3.63) | (3.27) | |||||
| Total distributions | (2.41) | (7.23) | (.12) | (3.84) | (3.42) | |||||
| Net asset value, end of period | $ | 31.20 | $ | 39.39 | $ | 37.29 | $ | 31.75 | $ | 29.22 |
Total Return D,E | (14.97)% | 25.31% | 17.87% | 23.17% | (14.77)% | |||||
Ratios to Average Net Assets B,F,G | ||||||||||
| Expenses before reductions | .86% | .86% | .87% | .87% | .87% | |||||
| Expenses net of fee waivers, if any | .85% | .85% | .87% | .87% | .87% | |||||
| Expenses net of all reductions | .85% | .85% | .87% | .86% | .87% | |||||
| Net investment income (loss) | .35% | .27% | .23% | .63% | .37% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 3,776,819 | $ | 4,970,428 | $ | 4,807,908 | $ | 5,282,468 | $ | 4,526,446 |
Portfolio turnover rate H | 31% | 37% I | 44% | 34% | 47% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
I Portfolio turnover rate excludes securities received or delivered in-kind.
| VIP Mid Cap Portfolio Investor Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 40.83 | $ | 38.44 | $ | 32.72 | $ | 30.01 | $ | 38.72 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .18 | .20 | .12 | .25 | .20 | |||||
| Net realized and unrealized gain (loss) | (6.12) | 9.51 | 5.78 | 6.34 | (5.43) | |||||
| Total from investment operations | (5.94) | 9.71 | 5.90 | 6.59 | (5.23) | |||||
| Distributions from net investment income | (.14) C | (.24) | (.18) | (.26) | (.21) | |||||
| Distributions from net realized gain | (2.33) C | (7.07) | - | (3.63) | (3.27) | |||||
| Total distributions | (2.47) | (7.32) D | (.18) | (3.88) D | (3.48) | |||||
| Net asset value, end of period | $ | 32.42 | $ | 40.83 | $ | 38.44 | $ | 32.72 | $ | 30.01 |
Total Return E,F | (14.83)% | 25.54% | 18.08% | 23.35% | (14.60)% | |||||
Ratios to Average Net Assets B,G,H | ||||||||||
| Expenses before reductions | .68% | .68% | .70% | .70% | .70% | |||||
| Expenses net of fee waivers, if any | .68% | .68% | .70% | .70% | .70% | |||||
| Expenses net of all reductions | .68% | .68% | .69% | .69% | .70% | |||||
| Net investment income (loss) | .52% | .44% | .41% | .80% | .54% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 634,220 | $ | 739,633 | $ | 593,584 | $ | 583,760 | $ | 530,794 |
Portfolio turnover rate I | 31% | 37% J | 44% | 34% | 47% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
J Portfolio turnover rate excludes securities received or delivered in-kind.
For the period ended December 31, 2022
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.
Funds may invest 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing 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 investing fund. These strategies are consistent with the investment objectives of the investing 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 investing fund.
| Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio A |
| Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | 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.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission 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, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission 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 - Investment 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 designated the Fund's investment adviser as the valuation designee responsible for the fair valuation function and performing fair value determinations as needed. The investment adviser has established a Fair Value Committee (the Committee) to carry out the day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process and the activities of the Committee. In accordance with these fair valuation policies and procedures, which have been approved by the Board, the Fund attempts to obtain prices from one or more third party pricing services 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 the policies and procedures. Factors used in determining fair value vary by investment type and may include market or investment specific events, transaction data, estimated cash flows, and market observations of comparable investments. The frequency that the fair valuation procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee manages the Fund's fair valuation practices and maintains the fair valuation policies and procedures. The Fund's investment adviser reports to the Board information regarding the fair valuation process and related material matters.
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 - unadjusted 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 service 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 ADRs, futures contracts, 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. 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.
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, 2022 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain Funds 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of a 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 a fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred, as applicable. Certain expense reductions may also differ by class, if applicable. 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
| VIP Mid Cap Portfolio | $63,225 |
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, 2022, 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 and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences resulted in distribution reclassifications.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships, 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 | $1,707,491,144 |
| Gross unrealized depreciation | (348,704,707) |
| Net unrealized appreciation (depreciation) | $1,358,786,437 |
| Tax Cost | $5,307,050,251 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed long-term capital gain | $15,875,428 |
| Net unrealized appreciation (depreciation) on securities and other investments | $1,358,719,671 |
The Fund intends to elect to defer to its next fiscal year $2,350,503 of ordinary losses recognized during the period November 1,2022 to December 31,2022.
The tax character of distributions paid was as follows:
| December 31, 2022 | December 31, 2021 | |
| Ordinary Income | $21,794,963 | $221,179,830 |
| Long-term Capital Gains | 461,792,796 | 1,083,868,512 |
| Total | $483,587,759 | $1,305,048,342 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
| Purchases ($) | Sales ($) | |
| VIP Mid Cap Portfolio | 2,128,557,177 | 2,684,264,677 |
Prior Fiscal Year Unaffiliated Redemptions In-Kind. Shares that were redeemed in-kind for investments, including accrued interest and cash, if any, are shown in the table below; along with realized gain or loss on investments delivered through in-kind redemptions. The amount of the in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. There was no gain or loss for federal income tax purposes.
| Shares | Total net realized gain or loss ($) | Total Proceeds ($) | Participating classes | |
| VIP Mid Cap Portfolio | 6,032,548 | 124,938,878 | 276,471,713 | Service Class 2 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (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 .23% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .53% 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 Company LLC (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 | $615,256 |
| Service Class 2 | 10,107,009 |
| $10,722,265 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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. For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Initial Class | $953,263 | .06 |
| Service Class | 384,048 | .06 |
| Service Class 2 | 2,522,681 | .06 |
| Investor Class | 872,843 | .14 |
| $4,732,835 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
| % of Average Net Assets | |
| VIP Mid Cap Portfolio | .02 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 as follows:
| Amount | |
| VIP Mid Cap Portfolio | $62,064 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
| Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
| VIP Mid Cap Portfolio | 142,148,639 | 219,275,590 | (11,809,861) |
6. Committed Line of Credit.
Certain Funds participate 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 participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are listed below. During the period, there were no borrowings on this line of credit.
| Amount | |
| VIP Mid Cap Portfolio | $12,361 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Affiliated security lending activity, if any, was as follows:
| Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
| VIP Mid Cap Portfolio | $32,026 | $1 | $- |
8. Expense Reductions.
Through arrangements with the Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expenses. During the period, custodian credits reduced the Fund's expenses by $576.
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $231,509.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Mid Cap Portfolio | ||
| Distributions to shareholders | ||
| Initial Class | $107,333,067 | $282,249,519 |
| Service Class | 43,228,209 | 113,643,288 |
| Service Class 2 | 287,207,276 | 793,950,040 |
| Investor Class | 45,819,207 | 115,205,495 |
Total | $483,587,759 | $1,305,048,342 |
10. Share Transactions.
Transactions for each class of shares were as follows and may contain in-kind transactions:
| Shares | Shares | Dollars | Dollars | |
| Year ended December 31, 2022 | Year ended December 31, 2021 | Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Mid Cap Portfolio | ||||
| Initial Class | ||||
| Shares sold | 1,959,807 | 1,506,397 | $68,533,102 | $66,737,492 |
| Reinvestment of distributions | 3,075,073 | 6,777,394 | 107,333,067 | 282,249,519 |
| Shares redeemed | (4,527,612) | (5,103,968) | (158,853,983) | (224,427,231) |
| Net increase (decrease) | 507,268 | 3,179,823 | $17,012,186 | $124,559,780 |
| Service Class | ||||
| Shares sold | 1,591,303 | 609,556 | $56,040,722 | $26,928,108 |
| Reinvestment of distributions | 1,255,402 | 2,765,282 | 43,228,209 | 113,643,288 |
| Shares redeemed | (2,517,964) | (2,293,170) | (87,089,991) | (100,931,802) |
| Net increase (decrease) | 328,741 | 1,081,668 | $12,178,940 | $39,639,594 |
| Service Class 2 | ||||
| Shares sold | 6,492,926 | 4,678,886 | $219,838,257 | $199,891,636 |
| Reinvestment of distributions | 8,605,525 | 19,921,529 | 287,207,276 | 793,950,039 |
| Shares redeemed | (20,223,486) | (27,356,107) | (684,617,429) | (1,181,194,025) |
| Net increase (decrease) | (5,125,035) | (2,755,692) | $(177,571,896) | $(187,352,350) |
| Investor Class | ||||
| Shares sold | 1,426,971 | 921,130 | $48,048,062 | $40,113,978 |
| Reinvestment of distributions | 1,325,820 | 2,789,747 | 45,819,207 | 115,205,495 |
| Shares redeemed | (1,305,948) | (1,036,797) | (45,142,184) | (45,781,633) |
| Net increase (decrease) | 1,446,843 | 2,674,080 | $48,725,085 | $109,537,840 |
11. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a 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 owners of record of more than 10% and certain otherwise unaffiliated shareholders were owners of record of more than 10% of the outstanding shares as follows:
| Fund | Affiliated % | Number of Unaffiliated Shareholders | Unaffiliated Shareholders % |
| VIP Mid Cap Portfolio | 14% | 1 | 13% |
12. Risk and Uncertainties.
Many factors affect a fund's performance. Developments that disrupt global economies and financial markets, such as pandemics, epidemics, outbreaks of infectious diseases, war, terrorism, and environmental disasters, may significantly affect a fund's investment performance. The effects of these developments to a fund will be impacted by the types of securities in which a fund invests, the financial condition, industry, economic sector, and geographic location of an issuer, and a fund's level of investment in the securities of that issuer.
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, 2022, the related statement of operations for the year ended December 31, 2022, the statement of changes in net assets for each of the two years in the period ended December 31, 2022, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2022 (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, 2022, 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, 2022 and the financial highlights for each of the five years in the period ended December 31, 2022 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, 2022 by correspondence with the custodian and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 10, 2023
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 318 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. Robert A. Lawrence is an interested person and currently serves as Chair. The Trustees have determined that an interested Chair is appropriate and benefits shareholders because an interested Chair 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 Chair, 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 Chair 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. David M. Thomas serves as Lead Independent Trustee 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 other equity 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. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity ® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Chair of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Trustee and Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity ® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity ® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
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 served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity ® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity ® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University's Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity ® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity ® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean's Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity ® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity ® funds (2021).
David M. Thomas (1949)
Year of Election or Appointment: 2008
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity ® funds. 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). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company - America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity ® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Wiley also serves as Trustee of other Fidelity ® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 a Member of the Advisory Board of other Fidelity ® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (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 as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2022
Deputy Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present). Previously, Mr. Brown served as Assistant Treasurer of certain Fidelity ® funds (2019-2022).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity ® funds (2016-2020) and Assistant Treasurer of certain Fidelity ® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), FD Funds Management LLC (2021-present), and Fidelity Diversifying Solutions LLC (investment adviser firm, 2022-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity ® funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
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 FIMM, LLC (2021-present) and 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity ® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity ® funds (2019-2021).
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2022 to December 31, 2022). |
Actual Expenses
The first line of the accompanying table 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/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratio- A | Beginning Account Value July 1, 2022 | Ending Account Value December 31, 2022 | Expenses Paid During Period- C July 1, 2022 to December 31, 2022 | |||||||
| VIP Mid Cap Portfolio | ||||||||||
| Initial Class | .61% | |||||||||
| Actual | $ 1,000 | $ 1,081.00 | $ 3.20 | |||||||
Hypothetical- B | $ 1,000 | $ 1,022.13 | $ 3.11 | |||||||
| Service Class | .70% | |||||||||
| Actual | $ 1,000 | $ 1,080.00 | $ 3.67 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.68 | $ 3.57 | |||||||
| Service Class 2 | .85% | |||||||||
| Actual | $ 1,000 | $ 1,079.40 | $ 4.46 | |||||||
Hypothetical- B | $ 1,000 | $ 1,020.92 | $ 4.33 | |||||||
| Investor Class | .68% | |||||||||
| Actual | $ 1,000 | $ 1,080.30 | $ 3.57 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.78 | $ 3.47 | |||||||
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B 5% return per year before expenses
C Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
Distributions (Unaudited)
The dividend and capital gains distributions for the fund(s) are available on Fidelity.com or Institutional.Fidelity.com.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2022, $299,087,700, or, if subsequently determined to be different, the net capital gain of such year.
Initial Class, Service Class, Service Class 2 and Investor Class designate 100% of the dividends distributed in December, during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
|
1.735273.123
VIPMID-ANN-0323
Fidelity® Variable Insurance Products:
Growth Opportunities Portfolio
Annual Report
December 31, 2022
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity® Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2023 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-PORT 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.
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 | |||
Periods ended December 31, 2022 | Past 1 year | Past 5 years | Past 10 years |
| Initial Class | -38.15% | 13.09% | 15.09% |
| Service Class | -38.21% | 12.97% | 14.98% |
| Service Class 2 | -38.32% | 12.80% | 14.81% |
| Investor Class | -38.20% | 13.00% | 15.00% |
| $10,000 Over 10 Years |
Let's say hypothetically that $10,000 was invested in VIP Growth Opportunities Portfolio - Initial Class, a class of the fund, on December 31, 2012. 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. |
 |
Market Recap:
U.S. equities returned -18.11% in 2022, according to the S&P 500 ® index, as a multitude of risk factors challenged the global economy. It was the index's lowest calendar-year return since 2008 and first retreat since 2018. High inflation prompted the Federal Reserve to aggressively tighten monetary policy, and market interest rates eclipsed their highest level in a decade, stoking recession fears and sending stocks into bear market territory. Since March, the Fed hiked its benchmark rate seven times, by 4.25 percentage points - the fastest-ever pace of monetary tightening - while also shrinking its massive portfolio. Against this backdrop, the S&P 500 ® posted its worst year-to-date result (-23.87%) in 20 years through September, a seasonally weak month that stayed true to form, with volatility spiking due to growing certainty the Fed would persist in its effort to cool inflation, even at the expense of economic growth. Three of the index's worst monthly returns ever were recorded in 2022, as it shed 8% to 9% in April, June and September. Gains of similar proportion were made in July and October, amid optimism on inflation and policy easing. November (+6%) began with a rate hike of 0.75% and ended on a high note when the Fed signaled its intent to slow its pace of rate rises. For the year, value stocks handily outpaced growth. This headwind was pronounced in the growthier communication services (-40%), consumer discretionary (-37%) and information technology (-28%) sectors. In sharp contrast, energy (+66%) shined.
Comments from Portfolio Manager Kyle Weaver:
For the year ending December 31, 2022, the fund's share classes returned roughly -38%, trailing the -29.14% result of the benchmark, the Russell 1000® Growth Index. Versus the benchmark, security selection was the primary detractor, especially within the consumer discretionary sector. Weak stock picks in the information technology sector, primarily within the software & services industry, also hurt this period. Also hampering performance was an overweighting in communication services. The fund's biggest individual relative detractor was an outsized stake in Carvana, which returned -98% the past year. We pared our holdings in Carvana. Also holding back performance was our overweighting in Roku, which returned roughly -82%. We notably reduced our stake in Roku. Another notable relative detractor was an out-of-benchmark stake in Sea Limited (-76%), and we trimmed the position size. In contrast, the largest contributor to performance versus the benchmark was an overweighting in energy. Stock selection in communication services and an underweighting in consumer discretionary also helped the fund's relative performance. Our non-benchmark position in T-Mobile US was the fund's largest individual relative contributor, driven by a gain of roughly 21%. This was among the fund's biggest holdings. The fund's non-benchmark investment in Exxon Mobil, one of our largest holdings as of December 31, gained 43%. Exxon was a new position added the past 12 months. Another notable relative contributor was an outsized stake in Hess (+95%). This period we notably added to our stake. Notable changes in positioning include reduced exposure to the consumer discretionary sector and a higher allocation to industrials.
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.
Top Holdings (% of Fund's net assets) | ||
| Microsoft Corp. | 8.2 | |
| Alphabet, Inc. Class C | 4.7 | |
| T-Mobile U.S., Inc. | 4.1 | |
| Amazon.com, Inc. | 3.8 | |
| NVIDIA Corp. | 3.3 | |
| Apple, Inc. | 2.9 | |
| Antero Resources Corp. | 2.6 | |
| UnitedHealth Group, Inc. | 2.2 | |
| Uber Technologies, Inc. | 2.2 | |
| Advanced Micro Devices, Inc. | 1.9 | |
| 35.9 | ||
| Market Sectors (% of Fund's net assets) | ||
| Information Technology | 40.5 | |
| Communication Services | 15.5 | |
| Health Care | 13.1 | |
| Consumer Discretionary | 11.1 | |
| Energy | 10.0 | |
| Utilities | 2.8 | |
| Industrials | 2.5 | |
| Materials | 2.3 | |
| Financials | 1.8 | |
| Consumer Staples | 0.4 | |
| Real Estate | 0.0 | |
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Asset Allocation (% of Fund's net assets) |
 |
Foreign investments - 13.1% |
Geographic Diversification (% of Fund's net assets) |
 |
* Includes Short-Term investments and Net Other Assets (Liabilities). Percentages are based on country or territory of incorporation and are adjusted for the effect of derivatives, if applicable. |
Showing Percentage of Net Assets
| Common Stocks - 96.7% | |||
| Shares | Value ($) | ||
| COMMUNICATION SERVICES - 15.3% | |||
| Diversified Telecommunication Services - 0.0% | |||
| AT&T, Inc. | 23,100 | 425,271 | |
| Cellnex Telecom SA (a) | 6,600 | 218,930 | |
| Starry Group Holdings, Inc. Class A (b)(c) | 164,890 | 7,997 | |
| 652,198 | |||
| Entertainment - 1.3% | |||
| Netflix, Inc. (b) | 15,900 | 4,688,592 | |
| Roku, Inc. Class A (b) | 176,724 | 7,192,667 | |
| Sea Ltd. ADR (b) | 248,388 | 12,923,628 | |
| 24,804,887 | |||
| Interactive Media & Services - 8.9% | |||
| Alphabet, Inc.: | |||
| Class A (b) | 384,720 | 33,943,846 | |
| Class C (b) | 1,000,260 | 88,753,070 | |
| Epic Games, Inc. (b)(d)(e) | 8,216 | 6,700,312 | |
| Meta Platforms, Inc. Class A (b) | 214,579 | 25,822,437 | |
| Snap, Inc. Class A (b) | 270,200 | 2,418,290 | |
| Zoominfo Technologies, Inc. (b) | 386,100 | 11,625,471 | |
| 169,263,426 | |||
| Media - 1.0% | |||
| Charter Communications, Inc. Class A (b) | 5,900 | 2,000,690 | |
| Innovid Corp. (b)(d) | 141,062 | 241,216 | |
| Magnite, Inc. (b) | 625,650 | 6,625,634 | |
| TechTarget, Inc. (b) | 139,528 | 6,147,604 | |
| The Trade Desk, Inc. (b) | 106,050 | 4,754,222 | |
| 19,769,366 | |||
| Wireless Telecommunication Services - 4.1% | |||
| T-Mobile U.S., Inc. (b) | 551,988 | 77,278,320 | |
TOTAL COMMUNICATION SERVICES | 291,768,197 | ||
| CONSUMER DISCRETIONARY - 10.4% | |||
| Auto Components - 0.1% | |||
| Aptiv PLC (b) | 13,000 | 1,210,690 | |
| Mobileye Global, Inc. | 18,100 | 634,586 | |
| 1,845,276 | |||
| Automobiles - 1.5% | |||
| General Motors Co. | 11,500 | 386,860 | |
| Neutron Holdings, Inc. (b)(d)(e) | 106,587 | 2,281 | |
| Rad Power Bikes, Inc. (b)(d)(e) | 56,834 | 210,286 | |
| Rivian Automotive, Inc. (b) | 25,100 | 462,593 | |
| Tesla, Inc. (b) | 226,175 | 27,860,237 | |
| 28,922,257 | |||
| Diversified Consumer Services - 0.0% | |||
| Duolingo, Inc. (b) | 4,600 | 327,198 | |
| Hotels, Restaurants & Leisure - 0.0% | |||
| Domino's Pizza, Inc. | 600 | 207,840 | |
| Sonder Holdings, Inc. (b)(c) | 222,530 | 275,937 | |
| Sonder Holdings, Inc.: | |||
| rights (b)(e) | 2,658 | 824 | |
| rights (b)(e) | 2,658 | 691 | |
| rights (b)(e) | 2,657 | 558 | |
| rights (b)(e) | 2,657 | 478 | |
| rights (b)(e) | 2,657 | 399 | |
| rights (b)(e) | 2,657 | 345 | |
| 487,072 | |||
| Household Durables - 0.0% | |||
| Lennar Corp. Class A | 2,600 | 235,300 | |
| Internet & Direct Marketing Retail - 7.5% | |||
| Amazon.com, Inc. (b) | 860,360 | 72,270,240 | |
| Cazoo Group Ltd. Class A (b)(c) | 1,655,567 | 259,593 | |
| Doordash, Inc. (b)(c) | 151,100 | 7,376,702 | |
| FSN E-Commerce Ventures Private Ltd. | 2,174,220 | 4,055,410 | |
| Global-e Online Ltd. (b) | 310,233 | 6,403,209 | |
| Lyft, Inc. (b) | 837,816 | 9,232,732 | |
| Uber Technologies, Inc. (b)(c) | 1,686,493 | 41,706,972 | |
| Wayfair LLC Class A (b) | 70,874 | 2,331,046 | |
| 143,635,904 | |||
| Specialty Retail - 0.7% | |||
| Auto1 Group SE (a)(b)(c) | 1,339,700 | 11,185,839 | |
| Carvana Co. Class A (b)(c) | 208,000 | 985,920 | |
| 12,171,759 | |||
| Textiles, Apparel & Luxury Goods - 0.6% | |||
| Bombas LLC (b)(d)(e) | 745,906 | 2,528,621 | |
| Compagnie Financiere Richemont SA Series A | 1,490 | 193,193 | |
| lululemon athletica, Inc. (b) | 25,672 | 8,224,795 | |
| 10,946,609 | |||
TOTAL CONSUMER DISCRETIONARY | 198,571,375 | ||
| CONSUMER STAPLES - 0.2% | |||
| Beverages - 0.1% | |||
| Boston Beer Co., Inc. Class A (b) | 5,700 | 1,878,264 | |
| Food Products - 0.0% | |||
| Local Bounti Corp. (b)(c) | 505,373 | 702,468 | |
| Personal Products - 0.1% | |||
| Olaplex Holdings, Inc. (b) | 194,100 | 1,011,261 | |
| Tobacco - 0.0% | |||
| JUUL Labs, Inc. Class B (b)(d)(e) | 560 | 6,782 | |
| Philip Morris International, Inc. | 4,900 | 495,929 | |
| 502,711 | |||
TOTAL CONSUMER STAPLES | 4,094,704 | ||
| ENERGY - 10.0% | |||
| Oil, Gas & Consumable Fuels - 10.0% | |||
| Antero Resources Corp. (b) | 1,577,700 | 48,892,923 | |
| Canadian Natural Resources Ltd. | 405,100 | 22,495,915 | |
| Cenovus Energy, Inc. (Canada) | 905,800 | 17,574,126 | |
| Cheniere Energy, Inc. | 12,500 | 1,874,500 | |
| Exxon Mobil Corp. | 319,200 | 35,207,760 | |
| Hess Corp. | 206,700 | 29,314,194 | |
| Imperial Oil Ltd. | 58,400 | 2,844,520 | |
| Ovintiv, Inc. | 380,300 | 19,285,013 | |
| Range Resources Corp. | 37,800 | 945,756 | |
| Tourmaline Oil Corp. | 259,000 | 13,068,597 | |
| 191,503,304 | |||
| FINANCIALS - 1.7% | |||
| Banks - 1.6% | |||
| Starling Bank Ltd. Series D (b)(d)(e) | 1,101,900 | 4,169,604 | |
| Wells Fargo & Co. | 604,300 | 24,951,547 | |
| 29,121,151 | |||
| Capital Markets - 0.1% | |||
| LPL Financial | 10,800 | 2,334,636 | |
TOTAL FINANCIALS | 31,455,787 | ||
| HEALTH CARE - 13.0% | |||
| Biotechnology - 2.7% | |||
| ADC Therapeutics SA (b) | 37,288 | 143,186 | |
| Agios Pharmaceuticals, Inc. (b) | 88,200 | 2,476,656 | |
| Alnylam Pharmaceuticals, Inc. (b) | 27,751 | 6,595,025 | |
| ALX Oncology Holdings, Inc. (b) | 85,500 | 963,585 | |
| Arcutis Biotherapeutics, Inc. (b) | 40,700 | 602,360 | |
| Argenx SE ADR (b) | 18,031 | 6,830,684 | |
| Ascendis Pharma A/S sponsored ADR (b) | 16,125 | 1,969,346 | |
| Blueprint Medicines Corp. (b) | 11,900 | 521,339 | |
| Celldex Therapeutics, Inc. (b) | 107,200 | 4,777,904 | |
| Cytokinetics, Inc. (b) | 131,600 | 6,029,912 | |
| Erasca, Inc. (b) | 157,700 | 679,687 | |
| Exelixis, Inc. (b) | 156,600 | 2,511,864 | |
| Gilead Sciences, Inc. | 5,000 | 429,250 | |
| Icosavax, Inc. (b) | 195,900 | 1,555,446 | |
| Instil Bio, Inc. (b) | 200,100 | 126,063 | |
| Keros Therapeutics, Inc. (b) | 35,500 | 1,704,710 | |
| Moderna, Inc. (b) | 1,100 | 197,582 | |
| Monte Rosa Therapeutics, Inc. (b) | 54,800 | 417,028 | |
| Morphic Holding, Inc. (b) | 27,000 | 722,250 | |
| Natera, Inc. (b) | 4,200 | 168,714 | |
| Nuvalent, Inc. Class A (b) | 41,384 | 1,232,416 | |
| PTC Therapeutics, Inc. (b) | 9,000 | 343,530 | |
| Tenaya Therapeutics, Inc. (b) | 56,600 | 113,766 | |
| TG Therapeutics, Inc. (b)(c) | 89,800 | 1,062,334 | |
| Vaxcyte, Inc. (b) | 137,604 | 6,598,112 | |
| Verve Therapeutics, Inc. (b)(c) | 29,100 | 563,085 | |
| Zentalis Pharmaceuticals, Inc. (b) | 87,700 | 1,766,278 | |
| 51,102,112 | |||
| Health Care Equipment & Supplies - 2.4% | |||
| Blink Health LLC Series A1 (b)(d)(e) | 8,327 | 359,726 | |
| Boston Scientific Corp. (b) | 555,892 | 25,721,123 | |
| Insulet Corp. (b) | 15,600 | 4,592,484 | |
| Penumbra, Inc. (b) | 24,900 | 5,539,254 | |
| TransMedics Group, Inc. (b) | 166,441 | 10,272,739 | |
| 46,485,326 | |||
| Health Care Providers & Services - 6.9% | |||
| agilon health, Inc. (b)(c) | 773,500 | 12,484,290 | |
| Alignment Healthcare, Inc. (b) | 127,600 | 1,500,576 | |
| Centene Corp. (b) | 299,300 | 24,545,593 | |
| Guardant Health, Inc. (b) | 104,900 | 2,853,280 | |
| Humana, Inc. | 58,072 | 29,743,898 | |
| LifeStance Health Group, Inc. (b) | 549,081 | 2,712,460 | |
| Oak Street Health, Inc. (b) | 679,100 | 14,607,441 | |
| P3 Health Partners, Inc. (b)(d) | 285,914 | 526,082 | |
| The Oncology Institute, Inc. (b)(d) | 112,536 | 185,684 | |
| UnitedHealth Group, Inc. | 79,748 | 42,280,795 | |
| 131,440,099 | |||
| Life Sciences Tools & Services - 0.8% | |||
| Danaher Corp. | 31,600 | 8,387,272 | |
| Sartorius Stedim Biotech | 11,226 | 3,635,104 | |
| Thermo Fisher Scientific, Inc. | 7,100 | 3,909,899 | |
| 15,932,275 | |||
| Pharmaceuticals - 0.2% | |||
| Arvinas Holding Co. LLC (b) | 39,400 | 1,347,874 | |
| AstraZeneca PLC sponsored ADR | 3,500 | 237,300 | |
| Eli Lilly & Co. | 2,900 | 1,060,936 | |
| 2,646,110 | |||
TOTAL HEALTH CARE | 247,605,922 | ||
| INDUSTRIALS - 1.7% | |||
| Aerospace & Defense - 1.6% | |||
| Lockheed Martin Corp. | 20,200 | 9,827,098 | |
| Northrop Grumman Corp. | 15,200 | 8,293,272 | |
| Space Exploration Technologies Corp. Class A (b)(d)(e) | 13,000 | 1,001,000 | |
| The Boeing Co. (b) | 54,200 | 10,324,558 | |
| 29,445,928 | |||
| Air Freight & Logistics - 0.0% | |||
| Delhivery Private Ltd. | 151,900 | 608,216 | |
| FedEx Corp. | 800 | 138,560 | |
| 746,776 | |||
| Commercial Services & Supplies - 0.1% | |||
| ACV Auctions, Inc. Class A (b) | 193,900 | 1,591,919 | |
| Road & Rail - 0.0% | |||
| Bird Global, Inc.: | |||
| Stage 1 rights (b)(e) | 15,639 | 0 | |
| Stage 2 rights (b)(e) | 15,639 | 0 | |
| Stage 3 rights (b)(e) | 15,638 | 0 | |
| 0 | |||
TOTAL INDUSTRIALS | 31,784,623 | ||
| INFORMATION TECHNOLOGY - 39.5% | |||
| Electronic Equipment & Components - 1.5% | |||
| Flex Ltd. (b) | 737,452 | 15,825,720 | |
| Jabil, Inc. | 177,300 | 12,091,860 | |
| 27,917,580 | |||
| IT Services - 9.0% | |||
| Block, Inc. Class A (b) | 78,700 | 4,945,508 | |
| Cloudflare, Inc. (b) | 88,400 | 3,996,564 | |
| Cyxtera Technologies, Inc. Class A (b) | 143,648 | 275,804 | |
| Dlocal Ltd. (b)(c) | 702,265 | 10,934,266 | |
| EPAM Systems, Inc. (b) | 34,900 | 11,438,126 | |
| Euronet Worldwide, Inc. (b) | 5,200 | 490,776 | |
| Fiserv, Inc. (b) | 2,100 | 212,247 | |
| Flywire Corp. (b) | 122,127 | 2,988,448 | |
| Globant SA (b) | 10,700 | 1,799,312 | |
| GoDaddy, Inc. (b) | 260,406 | 19,483,577 | |
| Marqeta, Inc. Class A (b) | 832,860 | 5,088,775 | |
| MasterCard, Inc. Class A | 79,856 | 27,768,327 | |
| MongoDB, Inc. Class A (b) | 87,000 | 17,125,080 | |
| Nuvei Corp. (a)(b) | 432,526 | 10,992,038 | |
| Okta, Inc. (b) | 16,200 | 1,106,946 | |
| Payoneer Global, Inc. (b)(d) | 65,400 | 357,738 | |
| Repay Holdings Corp. (b) | 684,200 | 5,507,810 | |
| Shift4 Payments, Inc. (b)(c) | 166,000 | 9,284,380 | |
| Snowflake, Inc. (b) | 6,100 | 875,594 | |
| TaskUs, Inc. (b) | 302,495 | 5,112,166 | |
| Visa, Inc. Class A | 150,433 | 31,253,960 | |
| Wix.com Ltd. (b) | 2,500 | 192,075 | |
| 171,229,517 | |||
| Semiconductors & Semiconductor Equipment - 12.4% | |||
| Advanced Micro Devices, Inc. (b) | 546,900 | 35,422,713 | |
| Applied Materials, Inc. | 166,495 | 16,213,283 | |
| ASML Holding NV (Netherlands) | 500 | 272,626 | |
| BE Semiconductor Industries NV | 8,900 | 538,847 | |
| GlobalFoundries, Inc. (b) | 538,400 | 29,014,376 | |
| Lam Research Corp. | 28,244 | 11,870,953 | |
| Marvell Technology, Inc. | 473,370 | 17,533,625 | |
| Microchip Technology, Inc. | 15,000 | 1,053,750 | |
| NVIDIA Corp. | 433,852 | 63,403,131 | |
| NXP Semiconductors NV | 169,845 | 26,840,605 | |
| onsemi (b) | 497,039 | 31,000,322 | |
| Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 52,300 | 3,895,827 | |
| 237,060,058 | |||
| Software - 13.6% | |||
| Adobe, Inc. (b) | 3,500 | 1,177,855 | |
| Bill.Com Holdings, Inc. (b) | 69,600 | 7,583,616 | |
| Confluent, Inc. (b) | 80,300 | 1,785,872 | |
| Datadog, Inc. Class A (b) | 101,200 | 7,438,200 | |
| DoubleVerify Holdings, Inc. (b) | 280,456 | 6,158,814 | |
| Dynatrace, Inc. (b) | 529,700 | 20,287,510 | |
| Elastic NV (b) | 126,481 | 6,513,772 | |
| Five9, Inc. (b) | 84,800 | 5,754,528 | |
| HubSpot, Inc. (b) | 21,993 | 6,358,836 | |
| Intapp, Inc. (b) | 205,041 | 5,113,723 | |
| Intuit, Inc. | 27,590 | 10,738,580 | |
| Microsoft Corp. | 654,944 | 157,068,666 | |
| NICE Ltd. sponsored ADR (b) | 1,000 | 192,300 | |
| Oracle Corp. | 72,800 | 5,950,672 | |
| Pegasystems, Inc. | 6,000 | 205,440 | |
| Pine Labs Private Ltd. (b)(d)(e) | 2,299 | 1,213,734 | |
| Salesforce.com, Inc. (b) | 41,131 | 5,453,559 | |
| SentinelOne, Inc. (b) | 38,400 | 560,256 | |
| ServiceNow, Inc. (b) | 23,318 | 9,053,680 | |
| Stripe, Inc. Class B (b)(d)(e) | 10,400 | 233,168 | |
| Viant Technology, Inc. (b) | 169,415 | 681,048 | |
| Zscaler, Inc. (b) | 6,000 | 671,400 | |
| 260,195,229 | |||
| Technology Hardware, Storage & Peripherals - 3.0% | |||
| Apple, Inc. | 428,804 | 55,714,504 | |
| Pure Storage, Inc. Class A (b) | 40,200 | 1,075,752 | |
| 56,790,256 | |||
TOTAL INFORMATION TECHNOLOGY | 753,192,640 | ||
| MATERIALS - 2.1% | |||
| Chemicals - 0.9% | |||
| CF Industries Holdings, Inc. | 76,100 | 6,483,720 | |
| Nutrien Ltd. | 124,200 | 9,070,326 | |
| The Mosaic Co. | 41,300 | 1,811,831 | |
| 17,365,877 | |||
| Metals & Mining - 1.2% | |||
| Alcoa Corp. | 176,000 | 8,002,720 | |
| ArcelorMittal SA Class A unit GDR | 362,993 | 9,517,676 | |
| Freeport-McMoRan, Inc. | 131,800 | 5,008,400 | |
| MP Materials Corp. (b)(c) | 20,700 | 502,596 | |
| 23,031,392 | |||
TOTAL MATERIALS | 40,397,269 | ||
| REAL ESTATE - 0.0% | |||
| Real Estate Management & Development - 0.0% | |||
| WeWork, Inc. (b) | 403,700 | 577,291 | |
| UTILITIES - 2.8% | |||
| Electric Utilities - 1.9% | |||
| Constellation Energy Corp. | 94,733 | 8,166,932 | |
| ORSTED A/S (a) | 92,794 | 8,389,101 | |
| PG&E Corp. (b) | 1,199,100 | 19,497,366 | |
| 36,053,399 | |||
| Independent Power and Renewable Electricity Producers - 0.9% | |||
| NextEra Energy Partners LP | 234,800 | 16,457,132 | |
TOTAL UTILITIES | 52,510,531 | ||
| TOTAL COMMON STOCKS (Cost $1,518,650,414) | 1,843,461,643 | ||
| Preferred Stocks - 3.1% | |||
| Shares | Value ($) | ||
| Convertible Preferred Stocks - 2.3% | |||
| COMMUNICATION SERVICES - 0.2% | |||
| Interactive Media & Services - 0.2% | |||
| ByteDance Ltd. Series E1 (b)(d)(e) | 17,456 | 3,141,033 | |
| CONSUMER DISCRETIONARY - 0.3% | |||
| Automobiles - 0.0% | |||
| Rad Power Bikes, Inc.: | |||
| Series A(b)(d)(e) | 7,410 | 27,417 | |
| Series C(b)(d)(e) | 29,156 | 107,877 | |
| Series D(b)(d)(e) | 54,800 | 202,760 | |
| 338,054 | |||
| Internet & Direct Marketing Retail - 0.3% | |||
| Circle Internet Financial Ltd. Series F (d)(e) | 20,489 | 537,836 | |
| Instacart, Inc.: | |||
| Series H(b)(d)(e) | 39,942 | 1,709,518 | |
| Series I(b)(d)(e) | 13,388 | 573,006 | |
| Meesho Series F (b)(d)(e) | 32,200 | 2,509,346 | |
| 5,329,706 | |||
| Textiles, Apparel & Luxury Goods - 0.0% | |||
| CelLink Corp. Series D (d)(e) | 49,900 | 715,566 | |
TOTAL CONSUMER DISCRETIONARY | 6,383,326 | ||
| CONSUMER STAPLES - 0.2% | |||
| Food & Staples Retailing - 0.1% | |||
| GoBrands, Inc. Series G (b)(d)(e) | 10,300 | 1,490,822 | |
| Food Products - 0.0% | |||
| Bowery Farming, Inc. Series C1 (b)(d)(e) | 57,277 | 1,163,296 | |
| Tobacco - 0.1% | |||
| JUUL Labs, Inc.: | |||
| Series C(b)(d)(e) | 131,549 | 1,593,058 | |
| Series D(b)(d)(e) | 741 | 8,974 | |
| 1,602,032 | |||
TOTAL CONSUMER STAPLES | 4,256,150 | ||
| HEALTH CARE - 0.1% | |||
| Health Care Equipment & Supplies - 0.1% | |||
| Blink Health LLC Series C (b)(d)(e) | 40,445 | 1,747,224 | |
| Health Care Technology - 0.0% | |||
| Aledade, Inc. Series E1 (d)(e) | 19,932 | 957,334 | |
TOTAL HEALTH CARE | 2,704,558 | ||
| INDUSTRIALS - 0.8% | |||
| Aerospace & Defense - 0.6% | |||
| Relativity Space, Inc. Series E (b)(d)(e) | 149,903 | 2,783,699 | |
| Space Exploration Technologies Corp.: | |||
| Series I(b)(d)(e) | 3,941 | 3,034,570 | |
| Series N(b)(d)(e) | 8,100 | 6,237,000 | |
| 12,055,269 | |||
| Construction & Engineering - 0.2% | |||
| Beta Technologies, Inc. Series A (b)(d)(e) | 64,780 | 4,108,995 | |
TOTAL INDUSTRIALS | 16,164,264 | ||
| INFORMATION TECHNOLOGY - 0.5% | |||
| Electronic Equipment & Components - 0.0% | |||
| Enevate Corp. Series E (b)(d)(e) | 1,172,546 | 609,724 | |
| IT Services - 0.1% | |||
| Yanka Industries, Inc.: | |||
| Series E(b)(d)(e) | 53,172 | 558,838 | |
| Series F(b)(d)(e) | 55,568 | 584,020 | |
| 1,142,858 | |||
| Semiconductors & Semiconductor Equipment - 0.1% | |||
| GaN Systems, Inc.: | |||
| Series F1(b)(d)(e) | 44,969 | 221,247 | |
| Series F2(b)(d)(e) | 23,746 | 116,830 | |
| SiMa.ai: | |||
| Series B(b)(d)(e) | 171,100 | 1,071,086 | |
| Series B1(d)(e) | 24,426 | 179,043 | |
| Xsight Labs Ltd. Series D (b)(d)(e) | 74,300 | 524,558 | |
| 2,112,764 | |||
| Software - 0.3% | |||
| Convoy, Inc. Series D (b)(d)(e) | 197,216 | 1,871,580 | |
| Databricks, Inc. Series G (b)(d)(e) | 27,000 | 1,328,670 | |
| Mountain Digital, Inc. Series D (b)(d)(e) | 118,780 | 1,159,293 | |
| Stripe, Inc. Series H (b)(d)(e) | 4,500 | 100,890 | |
| Tenstorrent, Inc. Series C1 (b)(d)(e) | 4,700 | 244,917 | |
| 4,705,350 | |||
TOTAL INFORMATION TECHNOLOGY | 8,570,696 | ||
| MATERIALS - 0.2% | |||
| Metals & Mining - 0.2% | |||
| Diamond Foundry, Inc. Series C (b)(d)(e) | 99,028 | 3,071,849 | |
| TOTAL CONVERTIBLE PREFERRED STOCKS | 44,291,876 | ||
| Nonconvertible Preferred Stocks - 0.8% | |||
| CONSUMER DISCRETIONARY - 0.3% | |||
| Automobiles - 0.0% | |||
| Neutron Holdings, Inc. Series 1C (b)(d)(e) | 1,673,000 | 35,802 | |
| Waymo LLC Series A2 (b)(d)(e) | 7,496 | 346,765 | |
| 382,567 | |||
| Internet & Direct Marketing Retail - 0.3% | |||
| Circle Internet Financial Ltd. Series E (d)(e) | 214,805 | 5,638,631 | |
TOTAL CONSUMER DISCRETIONARY | 6,021,198 | ||
| FINANCIALS - 0.1% | |||
| Diversified Financial Services - 0.1% | |||
| Thriveworks TopCo LLC Series B (b)(d)(e)(f) | 105,185 | 1,741,864 | |
| INFORMATION TECHNOLOGY - 0.4% | |||
| IT Services - 0.1% | |||
| Gupshup, Inc. (b)(d)(e) | 70,900 | 1,258,475 | |
| Software - 0.3% | |||
| Pine Labs Private Ltd.: | |||
| Series 1(b)(d)(e) | 5,494 | 2,900,502 | |
| Series A(b)(d)(e) | 1,373 | 724,862 | |
| Series B(b)(d)(e) | 1,494 | 788,742 | |
| Series B2(b)(d)(e) | 1,208 | 637,752 | |
| Series C(b)(d)(e) | 2,247 | 1,186,281 | |
| Series C1(b)(d)(e) | 473 | 249,716 | |
| Series D(b)(d)(e) | 506 | 267,138 | |
| 6,754,993 | |||
TOTAL INFORMATION TECHNOLOGY | 8,013,468 | ||
| TOTAL NONCONVERTIBLE PREFERRED STOCKS | 15,776,530 | ||
| TOTAL PREFERRED STOCKS (Cost $60,279,189) | 60,068,406 | ||
| Convertible Bonds - 0.1% | |||
Principal Amount (g) | Value ($) | ||
| CONSUMER DISCRETIONARY - 0.1% | |||
| Automobiles - 0.1% | |||
| Neutron Holdings, Inc.: | |||
| 4% 10/27/25 (d)(e)(h) | 1,609,900 | 1,457,925 | |
| 4% 5/22/27 (d)(e) | 130,700 | 112,415 | |
| 4% 6/12/27 (d)(e) | 35,600 | 30,620 | |
| (Cost $1,776,200) | 1,600,960 | ||
| Preferred Securities - 0.1% | |||
Principal Amount (g) | Value ($) | ||
| INFORMATION TECHNOLOGY - 0.1% | |||
| Electronic Equipment & Components - 0.0% | |||
| Enevate Corp. 0% 1/29/23 (d)(e) | 499,219 | 476,754 | |
| Semiconductors & Semiconductor Equipment - 0.1% | |||
| GaN Systems, Inc. 0% (d)(e)(i) | 1,054,022 | 601,846 | |
| Software - 0.0% | |||
| Tenstorrent, Inc. 0% (d)(e)(i) | 260,000 | 227,760 | |
| TOTAL PREFERRED SECURITIES (Cost $1,813,241) | 1,306,360 | ||
| Money Market Funds - 1.3% | |||
| Shares | Value ($) | ||
| Fidelity Cash Central Fund 4.37% (j) | 3,546,891 | 3,547,601 | |
| Fidelity Securities Lending Cash Central Fund 4.37% (j)(k) | 22,296,544 | 22,298,774 | |
| TOTAL MONEY MARKET FUNDS (Cost $25,846,375) | 25,846,375 | ||
| TOTAL INVESTMENT IN SECURITIES - 101.3% (Cost $1,608,365,419) | 1,932,283,744 |
NET OTHER ASSETS (LIABILITIES) - (1.3)% | (25,665,953) |
| NET ASSETS - 100.0% | 1,906,617,791 |
Legend
| (a) | Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $30,785,908 or 1.6% of net assets. |
| (b) | Non-income producing |
| (c) | Security or a portion of the security is on loan at period end. |
| (d) | Restricted securities (including private placements) - 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 $80,711,960 or 4.2% of net assets. |
| (e) | Level 3 security |
| (f) | Investment is owned by a wholly-owned subsidiary (Subsidiary) that is treated as a corporation for U.S. tax purposes. |
| (g) | Amount is stated in United States dollars unless otherwise noted. |
| (h) | Security initially issued at one coupon which converts to a higher coupon at a specified date. The rate shown is the rate at period end. |
| (i) | Security is perpetual in nature with no stated maturity date. |
| (j) | Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
| (k) | Investment made with cash collateral received from securities on loan. |
| Additional information on each restricted holding is as follows: | ||
| Security | Acquisition Date | Acquisition Cost ($) |
| Aledade, Inc. Series E1 | 5/20/22 | 992,901 |
| Beta Technologies, Inc. Series A | 4/09/21 | 4,746,431 |
| Blink Health LLC Series A1 | 12/30/20 | 225,578 |
| Blink Health LLC Series C | 11/07/19 - 7/14/21 | 1,544,028 |
| Bombas LLC | 2/16/21 - 11/12/21 | 3,539,531 |
| Bowery Farming, Inc. Series C1 | 5/18/21 | 3,450,899 |
| ByteDance Ltd. Series E1 | 11/18/20 | 1,912,727 |
| CelLink Corp. Series D | 1/20/22 | 1,039,113 |
| Circle Internet Financial Ltd. Series E | 5/11/21 | 3,486,300 |
| Circle Internet Financial Ltd. Series F | 5/09/22 | 863,406 |
| Convoy, Inc. Series D | 10/30/19 | 2,670,305 |
| Databricks, Inc. Series G | 2/01/21 | 1,596,311 |
| Diamond Foundry, Inc. Series C | 3/15/21 | 2,376,672 |
| Enevate Corp. Series E | 1/29/21 | 1,299,984 |
| Enevate Corp. 0% 1/29/23 | 1/29/21 | 499,219 |
| Epic Games, Inc. | 7/13/20 - 3/29/21 | 6,646,200 |
| GaN Systems, Inc. Series F1 | 11/30/21 | 381,337 |
| GaN Systems, Inc. Series F2 | 11/30/21 | 201,366 |
| GaN Systems, Inc. 0% | 11/30/21 | 1,054,022 |
| GoBrands, Inc. Series G | 3/02/21 | 2,572,088 |
| Gupshup, Inc. | 6/08/21 | 1,621,143 |
| Innovid Corp. | 6/24/21 | 1,410,620 |
| Instacart, Inc. Series H | 11/13/20 | 2,396,520 |
| Instacart, Inc. Series I | 2/26/21 | 1,673,500 |
| JUUL Labs, Inc. Class B | 11/21/17 | 0 |
| JUUL Labs, Inc. Series C | 5/22/15 | 0 |
| JUUL Labs, Inc. Series D | 6/25/18 | 0 |
| Meesho Series F | 9/21/21 | 2,468,848 |
| Mountain Digital, Inc. Series D | 11/05/21 | 2,727,818 |
| Neutron Holdings, Inc. | 2/04/21 | 1,066 |
| Neutron Holdings, Inc. Series 1C | 7/03/18 | 305,891 |
| Neutron Holdings, Inc. 4% 10/27/25 | 10/29/21 | 1,609,900 |
| Neutron Holdings, Inc. 4% 5/22/27 | 6/04/20 | 130,700 |
| Neutron Holdings, Inc. 4% 6/12/27 | 6/12/20 | 35,600 |
| P3 Health Partners, Inc. | 5/25/21 | 2,859,140 |
| Payoneer Global, Inc. | 2/03/21 | 654,000 |
| Pine Labs Private Ltd. | 6/30/21 | 857,205 |
| Pine Labs Private Ltd. Series 1 | 6/30/21 | 2,048,493 |
| Pine Labs Private Ltd. Series A | 6/30/21 | 511,937 |
| Pine Labs Private Ltd. Series B | 6/30/21 | 557,053 |
| Pine Labs Private Ltd. Series B2 | 6/30/21 | 450,415 |
| Pine Labs Private Ltd. Series C | 6/30/21 | 837,816 |
| Pine Labs Private Ltd. Series C1 | 6/30/21 | 176,363 |
| Pine Labs Private Ltd. Series D | 6/30/21 | 188,667 |
| Rad Power Bikes, Inc. | 1/21/21 | 274,158 |
| Rad Power Bikes, Inc. Series A | 1/21/21 | 35,745 |
| Rad Power Bikes, Inc. Series C | 1/21/21 | 140,644 |
| Rad Power Bikes, Inc. Series D | 9/17/21 | 525,192 |
| Relativity Space, Inc. Series E | 5/27/21 | 3,423,050 |
| SiMa.ai Series B | 5/10/21 | 877,298 |
| SiMa.ai Series B1 | 4/25/22 - 10/17/22 | 173,203 |
| Space Exploration Technologies Corp. Class A | 2/16/21 | 545,987 |
| Space Exploration Technologies Corp. Series I | 4/05/18 | 666,029 |
| Space Exploration Technologies Corp. Series N | 8/04/20 | 2,187,000 |
| Starling Bank Ltd. Series D | 6/18/21 - 4/05/22 | 2,084,120 |
| Stripe, Inc. Class B | 5/18/21 | 417,335 |
| Stripe, Inc. Series H | 3/15/21 | 180,563 |
| Tenstorrent, Inc. Series C1 | 4/23/21 | 279,435 |
| Tenstorrent, Inc. 0% | 4/23/21 | 260,000 |
| The Oncology Institute, Inc. | 6/28/21 | 1,125,360 |
| Thriveworks TopCo LLC Series B | 7/23/21 - 2/25/22 | 3,019,147 |
| Waymo LLC Series A2 | 5/08/20 | 643,661 |
| Xsight Labs Ltd. Series D | 2/16/21 | 594,103 |
| Yanka Industries, Inc. Series E | 5/15/20 | 642,275 |
| Yanka Industries, Inc. Series F | 4/08/21 | 1,771,330 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
| Affiliate | Value, beginning of period ($) | Purchases ($) | Sales Proceeds ($) | Dividend Income ($) | Realized Gain (loss) ($) | Change in Unrealized appreciation (depreciation) ($) | Value, end of period ($) | % ownership, end of period |
| Fidelity Cash Central Fund 4.37% | 3,496,381 | 354,432,590 | 354,381,370 | 261,402 | - | - | 3,547,601 | 0.0% |
| Fidelity Securities Lending Cash Central Fund 4.37% | 124,803,443 | 887,024,439 | 989,529,108 | 517,647 | - | - | 22,298,774 | 0.1% |
| Total | 128,299,824 | 1,241,457,029 | 1,343,910,478 | 779,049 | - | - | 25,846,375 | |
Amounts in the dividend income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line item in the Statement of Operations, if applicable.
Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Amounts included in the purchases and sales proceeds columns may include in-kind transactions, if applicable.
Investment Valuation
The following is a summary of the inputs used, as of December 31, 2022, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total ($) | Level 1 ($) | Level 2 ($) | Level 3 ($) |
Investments in Securities: | ||||
| Equities: | ||||
Communication Services | 294,909,230 | 284,848,955 | 218,930 | 9,841,345 |
Consumer Discretionary | 210,975,899 | 191,578,289 | 4,248,603 | 15,149,007 |
Consumer Staples | 8,350,854 | 4,087,922 | - | 4,262,932 |
Energy | 191,503,304 | 191,503,304 | - | - |
Financials | 33,197,651 | 27,286,183 | - | 5,911,468 |
Health Care | 250,310,480 | 247,246,196 | - | 3,064,284 |
Industrials | 47,948,887 | 30,175,407 | 608,216 | 17,165,264 |
Information Technology | 769,776,804 | 751,473,112 | 272,626 | 18,031,066 |
Materials | 43,469,118 | 40,397,269 | - | 3,071,849 |
Real Estate | 577,291 | 577,291 | - | - |
Utilities | 52,510,531 | 44,121,430 | 8,389,101 | - |
| Corporate Bonds | 1,600,960 | - | - | 1,600,960 |
| Preferred Securities | 1,306,360 | - | - | 1,306,360 |
| Money Market Funds | 25,846,375 | 25,846,375 | - | - |
| Total Investments in Securities: | 1,932,283,744 | 1,839,141,733 | 13,737,476 | 79,404,535 |
| Net Unrealized Depreciation on Unfunded Commitments | (174,892) | - | - | (174,892) |
| Total | (174,892) | - | - | (174,892) |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
| Investments in Securities: | |||
| Information Technology | |||
| Beginning Balance | $ | 35,813,938 | |
| Net Realized Gain (Loss) on Investment Securities | - | ||
| Net Unrealized Gain (Loss) on Investment Securities | (17,956,074) | ||
| Cost of Purchases | 173,202 | ||
| Proceeds of Sales | - | ||
| Amortization/Accretion | - | ||
| Transfers into Level 3 | - | ||
| Transfers out of Level 3 | - | ||
| Ending Balance | $ | 18,031,066 | |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at December 31, 2022 | $ | (17,956,074) | |
| Industrials | |||
| Beginning Balance | $ | 19,804,962 | |
| Net Realized Gain (Loss) on Investment Securities | - | ||
| Net Unrealized Gain (Loss) on Investment Securities | (1,912,582) | ||
| Cost of Purchases | - | ||
| Proceeds of Sales | - | ||
| Amortization/Accretion | - | ||
| Transfers into Level 3 | - | ||
| Transfers out of Level 3 | (727,116) | ||
| Ending Balance | $ | 17,165,264 | |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at December 31, 2022 | $ | (1,912,582) | |
| Other Investments in Securities | |||
| Beginning Balance | $ | 40,714,229 | |
| Net Realized Gain (Loss) on Investment Securities | - | ||
| Net Unrealized Gain (Loss) on Investment Securities | (5,786,253) | ||
| Cost of Purchases | 3,539,108 | ||
| Proceeds of Sales | - | ||
| Amortization/Accretion | - | ||
| Transfers into Level 3 | 5,741,121 | ||
| Transfers out of Level 3 | - | ||
| Ending Balance | $ | 44,208,205 | |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at December 31, 2022 | $ | (5,786,253) | |
| 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. Cost of purchases and proceeds of sales may include securities received and/or delivered through in-kind transactions. Transfers into Level 3 were attributable to a lack of observable market data resulting from decreases in market activity, decreases in liquidity, security restructurings or corporate actions. Transfers out of Level 3 were attributable to observable market data becoming available for those securities. 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. | |||
| Statement of Assets and Liabilities | ||||
| December 31, 2022 | ||||
| Assets | ||||
| Investment in securities, at value (including securities loaned of $19,833,692) - See accompanying schedule: | $ | |||
Unaffiliated issuers (cost $1,582,519,044) | 1,906,437,369 | |||
Fidelity Central Funds (cost $25,846,375) | 25,846,375 | |||
| Total Investment in Securities (cost $1,608,365,419) | $ | 1,932,283,744 | ||
| Foreign currency held at value (cost $100,356) | 100,356 | |||
| Receivable for investments sold | 368,901 | |||
| Receivable for fund shares sold | 558,619 | |||
| Dividends receivable | 690,643 | |||
| Interest receivable | 60,971 | |||
| Distributions receivable from Fidelity Central Funds | 54,573 | |||
| Prepaid expenses | 2,413 | |||
| Other receivables | 1,412 | |||
Total assets | 1,934,121,632 | |||
| Liabilities | ||||
| Payable for investments purchased | $1,831,497 | |||
| Unrealized depreciation on unfunded commitments | 174,892 | |||
| Payable for fund shares redeemed | 1,439,635 | |||
| Accrued management fee | 866,985 | |||
| Distribution and service plan fees payable | 194,144 | |||
| Other affiliated payables | 193,093 | |||
| Other payables and accrued expenses | 512,038 | |||
| Collateral on securities loaned | 22,291,557 | |||
| Total Liabilities | 27,503,841 | |||
| Net Assets | $ | 1,906,617,791 | ||
| Net Assets consist of: | ||||
| Paid in capital | $ | 1,847,794,745 | ||
| Total accumulated earnings (loss) | 58,823,046 | |||
| Net Assets | $ | 1,906,617,791 | ||
| Net Asset Value and Maximum Offering Price | ||||
| Initial Class : | ||||
Net Asset Value , offering price and redemption price per share ($256,756,771 ÷ 6,257,883 shares) | $ | 41.03 | ||
| Service Class : | ||||
Net Asset Value , offering price and redemption price per share ($94,432,827 ÷ 2,310,608 shares) | $ | 40.87 | ||
| Service Class 2 : | ||||
Net Asset Value , offering price and redemption price per share ($868,128,598 ÷ 21,749,447 shares) | $ | 39.91 | ||
| Investor Class : | ||||
Net Asset Value , offering price and redemption price per share ($687,299,595 ÷ 16,936,599 shares) | $ | 40.58 | ||
| Statement of Operations | ||||
Year ended December 31, 2022 | ||||
| Investment Income | ||||
| Dividends | $ | 12,269,561 | ||
| Interest | 50,641 | |||
| Income from Fidelity Central Funds (including $517,647 from security lending) | 779,049 | |||
| Total Income | 13,099,251 | |||
| Expenses | ||||
| Management fee | $ | 12,040,512 | ||
| Transfer agent fees | 2,081,583 | |||
| Distribution and service plan fees | 2,564,290 | |||
| Accounting fees | 643,907 | |||
| Custodian fees and expenses | 53,840 | |||
| Independent trustees' fees and expenses | 8,287 | |||
| Audit | 69,179 | |||
| Legal | 8,006 | |||
| Interest | 5,460 | |||
| Miscellaneous | 12,016 | |||
| Total expenses before reductions | 17,487,080 | |||
| Expense reductions | (84,441) | |||
| Total expenses after reductions | 17,402,639 | |||
| Net Investment income (loss) | (4,303,388) | |||
| Realized and Unrealized Gain (Loss) | ||||
| Net realized gain (loss) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers(net of foreign taxes of $1,826,094) | (223,052,763) | |||
| Foreign currency transactions | (159,065) | |||
| Total net realized gain (loss) | (223,211,828) | |||
| Change in net unrealized appreciation (depreciation) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers (net of decrease in deferred foreign taxes of $2,308,078) | (993,988,452) | |||
| Unfunded commitments | (77,609) | |||
| Assets and liabilities in foreign currencies | 2,173 | |||
| Total change in net unrealized appreciation (depreciation) | (994,063,888) | |||
| Net gain (loss) | (1,217,275,716) | |||
| Net increase (decrease) in net assets resulting from operations | $ | (1,221,579,104) | ||
| Statement of Changes in Net Assets | ||||
Year ended December 31, 2022 | Year ended December 31, 2021 | |||
| Increase (Decrease) in Net Assets | ||||
| Operations | ||||
| Net investment income (loss) | $ | (4,303,388) | $ | (14,311,071) |
| Net realized gain (loss) | (223,211,828) | 518,790,946 | ||
| Change in net unrealized appreciation (depreciation) | (994,063,888) | (157,766,100) | ||
| Net increase (decrease) in net assets resulting from operations | (1,221,579,104) | 346,713,775 | ||
| Distributions to shareholders | (455,527,380) | (290,996,278) | ||
| Share transactions - net increase (decrease) | 287,378,244 | 275,469,006 | ||
| Total increase (decrease) in net assets | (1,389,728,240) | 331,186,503 | ||
| Net Assets | ||||
| Beginning of period | 3,296,346,031 | 2,965,159,528 | ||
| End of period | $ | 1,906,617,791 | $ | 3,296,346,031 |
Financial Highlights
| VIP Growth Opportunities Portfolio Initial Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 79.25 | $ | 77.54 | $ | 48.86 | $ | 38.01 | $ | 36.08 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | (.02) | (.24) | (.06) | .09 C | .03 | |||||
| Net realized and unrealized gain (loss) | (27.11) | 9.38 | 32.11 | 14.54 | 4.19 | |||||
| Total from investment operations | (27.13) | 9.14 | 32.05 | 14.63 | 4.22 | |||||
| Distributions from net investment income | - | - | (.01) | (.07) | (.05) | |||||
| Distributions from net realized gain | (11.09) | (7.43) | (3.36) | (3.71) | (2.24) | |||||
| Total distributions | (11.09) | (7.43) | (3.37) | (3.78) | (2.29) | |||||
| Net asset value, end of period | $ | 41.03 | $ | 79.25 | $ | 77.54 | $ | 48.86 | $ | 38.01 |
Total Return D,E | (38.15)% | 11.94% | 68.66% | 40.84% | 12.46% | |||||
Ratios to Average Net Assets B,F,G | ||||||||||
| Expenses before reductions | .62% | .62% | .64% | .64% | .65% | |||||
| Expenses net of fee waivers, if any | .62% | .62% | .64% | .64% | .65% | |||||
| Expenses net of all reductions | .62% | .62% | .63% | .64% | .65% | |||||
| Net investment income (loss) | (.05)% | (.30)% | (.10)% | .20% C | .09% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 256,757 | $ | 471,980 | $ | 470,897 | $ | 284,621 | $ | 187,106 |
Portfolio turnover rate H | 68% | 82% | 65% | 49% | 39% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.07 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .03%.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Growth Opportunities Portfolio Service Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 79.06 | $ | 77.37 | $ | 48.77 | $ | 37.95 | $ | 36.02 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | (.07) | (.32) | (.12) | .04 C | - D | |||||
| Net realized and unrealized gain (loss) | (27.03) | 9.35 | 32.04 | 14.52 | 4.17 | |||||
| Total from investment operations | (27.10) | 9.03 | 31.92 | 14.56 | 4.17 | |||||
| Distributions from net investment income | - | - | - D | (.02) | (.04) | |||||
| Distributions from net realized gain | (11.09) | (7.34) | (3.31) | (3.71) | (2.20) | |||||
| Total distributions | (11.09) | (7.34) | (3.32) E | (3.74) E | (2.24) | |||||
| Net asset value, end of period | $ | 40.87 | $ | 79.06 | $ | 77.37 | $ | 48.77 | $ | 37.95 |
Total Return F,G | (38.21)% | 11.83% | 68.49% | 40.70% | 12.35% | |||||
Ratios to Average Net Assets B,H,I | ||||||||||
| Expenses before reductions | .72% | .72% | .74% | .74% | .75% | |||||
| Expenses net of fee waivers, if any | .72% | .72% | .74% | .74% | .75% | |||||
| Expenses net of all reductions | .72% | .72% | .73% | .74% | .75% | |||||
| Net investment income (loss) | (.15)% | (.40)% | (.20)% | .10% C | (.01)% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 94,433 | $ | 157,797 | $ | 163,452 | $ | 111,145 | $ | 94,561 |
Portfolio turnover rate J | 68% | 82% | 65% | 49% | 39% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.07 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been (.07)%.
D Amount represents less than $.005 per share.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Growth Opportunities Portfolio Service Class 2 |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 77.62 | $ | 76.08 | $ | 48.05 | $ | 37.46 | $ | 35.60 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | (.14) | (.44) | (.20) | (.02) C | (.06) | |||||
| Net realized and unrealized gain (loss) | (26.48) | 9.22 | 31.50 | 14.31 | 4.13 | |||||
| Total from investment operations | (26.62) | 8.78 | 31.30 | 14.29 | 4.07 | |||||
| Distributions from net investment income | - | - | - | - | (.03) | |||||
| Distributions from net realized gain | (11.09) | (7.24) | (3.27) | (3.70) | (2.17) | |||||
| Total distributions | (11.09) | (7.24) | (3.27) | (3.70) | (2.21) D | |||||
| Net asset value, end of period | $ | 39.91 | $ | 77.62 | $ | 76.08 | $ | 48.05 | $ | 37.46 |
Total Return E,F | (38.32)% | 11.68% | 68.21% | 40.49% | 12.18% | |||||
Ratios to Average Net Assets B,G,H | ||||||||||
| Expenses before reductions | .87% | .87% | .88% | .89% | .90% | |||||
| Expenses net of fee waivers, if any | .87% | .87% | .88% | .89% | .90% | |||||
| Expenses net of all reductions | .87% | .87% | .88% | .89% | .90% | |||||
| Net investment income (loss) | (.30)% | (.55)% | (.35)% | (.05)% C | (.16)% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 868,129 | $ | 1,304,134 | $ | 1,079,778 | $ | 505,917 | $ | 273,228 |
Portfolio turnover rate I | 68% | 82% | 65% | 49% | 39% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.07 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been (.22)%.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Growth Opportunities Portfolio Investor Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 78.58 | $ | 76.94 | $ | 48.52 | $ | 37.78 | $ | 35.88 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | (.06) | (.30) | (.10) | .05 C | - D | |||||
| Net realized and unrealized gain (loss) | (26.85) | 9.31 | 31.86 | 14.44 | 4.16 | |||||
| Total from investment operations | (26.91) | 9.01 | 31.76 | 14.49 | 4.16 | |||||
| Distributions from net investment income | - | - | (.01) | (.04) | (.04) | |||||
| Distributions from net realized gain | (11.09) | (7.37) | (3.33) | (3.71) | (2.22) | |||||
| Total distributions | (11.09) | (7.37) | (3.34) | (3.75) | (2.26) | |||||
| Net asset value, end of period | $ | 40.58 | $ | 78.58 | $ | 76.94 | $ | 48.52 | $ | 37.78 |
Total Return E,F | (38.20)% | 11.87% | 68.52% | 40.71% | 12.37% | |||||
Ratios to Average Net Assets B,G,H | ||||||||||
| Expenses before reductions | .70% | .70% | .71% | .72% | .73% | |||||
| Expenses net of fee waivers, if any | .70% | .70% | .71% | .72% | .73% | |||||
| Expenses net of all reductions | .70% | .70% | .71% | .72% | .73% | |||||
| Net investment income (loss) | (.12)% | (.38)% | (.18)% | .12% C | .01% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 687,300 | $ | 1,362,435 | $ | 1,251,032 | $ | 647,493 | $ | 347,473 |
Portfolio turnover rate I | 68% | 82% | 65% | 49% | 39% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.07 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been (.05)%.
D Amount represents less than $.005 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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
For the period ended December 31, 2022
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.
Funds may invest 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing 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 investing fund. These strategies are consistent with the investment objectives of the investing 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 investing fund.
| Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio A |
| Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | 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.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission 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, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission 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 - Investment 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 designated the Fund's investment adviser as the valuation designee responsible for the fair valuation function and performing fair value determinations as needed. The investment adviser has established a Fair Value Committee (the Committee) to carry out the day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process and the activities of the Committee. In accordance with these fair valuation policies and procedures, which have been approved by the Board, the Fund attempts to obtain prices from one or more third party pricing services 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 the policies and procedures. Factors used in determining fair value vary by investment type and may include market or investment specific events, transaction data, estimated cash flows, and market observations of comparable investments. The frequency that the fair valuation procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee manages the Fund's fair valuation practices and maintains the fair valuation policies and procedures. The Fund's investment adviser reports to the Board information regarding the fair valuation process and related material matters.
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 - unadjusted 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 service 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, 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. 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. Securities, including private placements or other restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market approach, the income approach and cost approach, and are categorized as Level 3 in the hierarchy. The market approach considers factors including the price of recent investments in the same or a similar security or financial metrics of comparable securities. The income approach considers factors including expected future cash flows, security specific risks and corresponding discount rates. The cost approach considers factors including the value of the security's underlying assets and liabilities.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing services or from brokers who make markets in such securities. Corporate bonds and preferred securities are valued by pricing services 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 services. 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.
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 | $76,497,215 | Market comparable | Enterprise value/EBITDA multiple (EV/EBITDA) | 15.0 | Increase |
| Enterprise value/Revenue multiple (EV/R) | 2.1 - 25.0/ 8.0 | Increase | |||
| Enterprise value/Net income multiple (EV/NI) | 15.5 | Increase | |||
| Enterprise value/Gross profit multiple (EV/GP) | 7.3 | Increase | |||
| Probability rate | 25.0% - 75.0% / 50.0% | Increase | |||
| Recovery value | Recovery value | $0.00 | Increase | ||
| Market approach | Transaction price | $1.11 - $85.87 / $19.51 | Increase | ||
| Discount rate | 15.0% - 50.0% / 25.9% | Decrease | |||
| Probability rate | 25.0% - 75.0% / 51.7% | Increase | |||
| Premium rate | 5.0% | Increase | |||
| Discounted cash flow | Weighted average cost of capital (WACC) | 30.0% | Decrease | ||
| Exit multiple | 2.0 | Increase | |||
| Black scholes | Discount rate | 3.8% - 4.2% / 3.9% | Increase | ||
| Probability rate | 50.0% | Increase | |||
| Volatility | 50.0% - 100.0% / 74.6% | Increase | |||
| Term | 2.0 - 5.0 / 4.0 | Increase | |||
| Corporate Bonds | $1,600,960 | Market comparable | Enterprise value/Revenue multiple (EV/R) | 2.9 | Increase |
| Discount rate | 29.2% | Decrease | |||
| Probability rate | 10.0% - 50.0% / 33.3% | Increase | |||
| Black scholes | Volatility | 75.0% | Increase | ||
| Term | 1.0 | Increase | |||
| Preferred Securities | $1,306,360 | Market comparable | Enterprise value/Revenue multiple (EV/R) | 4.3 | Increase |
| Probability rate | 10.0% - 90.0% / 50.0% | Increase | |||
| Market approach | Transaction price | $1.11 - $100.0 / $33.08 | Increase | ||
| Discount rate | 15.0% | Decrease | |||
| Probability rate | 25.0% - 75.0% / 51.7% | Increase | |||
| Black scholes | Discount rate | 4.0% - 4.2% / 4.1% | Increase | ||
| Volatility | 70.0% - 100.0% / 90.3% | Increase | |||
| Term | 2.0 - 3.0 / 2.7 | Increase |
A Represents the directional change in the fair value of the Level 3 investments that could have resulted from an increase in the corresponding input as of period end. A decrease to the unobservable input would have had the opposite effect. Significant changes in these inputs may have resulted in a significantly higher or lower fair value measurement at period end.
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, 2022, as well as a roll forward of Level 3 investments, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain Funds 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of a 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 a fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred, as applicable. Certain expense reductions may also differ by class, if applicable. 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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, 2022, 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. The Fund is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income 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 foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), net operating losses, capital loss carryforwards 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 | $603,121,888 |
| Gross unrealized depreciation | (298,976,126) |
| Net unrealized appreciation (depreciation) | $304,145,762 |
| Tax Cost | $1,627,963,090 |
The tax-based components of distributable earnings as of period end were as follows:
| Capital loss carryforward | $(244,873,386) |
| Net unrealized appreciation (depreciation) on securities and other investments | $304,146,318 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
Short-term | $(244,873,386) |
The Fund intends to elect to defer to its next fiscal year $1,139 of ordinary losses recognized during the period January 1, 2022 to December 31, 2022.
The tax character of distributions paid was as follows:
| December 31, 2022 | December 31, 2021 | |
| Ordinary Income | $ - | $ 100,584,367 |
| Long-term Capital Gains | 455,527,380 | 190,411,911 |
| Total | $455,527,380 | $290,996,278 |
Restricted Securities (including Private Placements). Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities held at period end is included at the end of the Schedule of Investments, if applicable.
Commitments. A commitment is an agreement to acquire an investment at a future date (subject to conditions) in connection with a potential public or non-public offering. Commitments outstanding at period end are presented in the table below. Unrealized appreciation (depreciation) on any commitments outstanding at period end is separately presented in the Statements of Assets and Liabilities as Unrealized appreciation (depreciation) on unfunded commitments, and any change in unrealized appreciation (depreciation) on unfunded commitments during the period is separately presented in the Statement of Operations, as applicable based on contractual conditions of each commitment.
| Investment to be Acquired | Commitment Amount | Unrealized Appreciation (Depreciation) | |
| VIP Growth Opportunities Portfolio | Stripe, Inc. | $174,892 | $(174,892) |
Special Purpose Acquisition Companies. Funds may invest in stock, warrants, and other securities of special purpose acquisition companies (SPACs) or similar special purpose entities. A SPAC is a publicly traded company that raises investment capital via an initial public offering (IPO) for the purpose of acquiring the equity securities of one or more existing companies via merger, business combination, acquisition or other similar transactions within a designated time frame.
Private Investment in Public Equity. Funds may acquire equity securities of an issuer through a private investment in a public equity (PIPE) transaction, including through commitments to purchase securities on a when-issued basis. A PIPE typically involves the purchase of securities directly from a publicly traded company in a private placement transaction. Securities purchased through PIPE transactions will be restricted from trading and considered illiquid until a resale registration statement for the shares is filed and declared effective.
At the current and/or prior period end, the Fund had commitments to purchase when-issued securities through PIPE transactions with SPACs. The commitments are contingent upon the SPACs acquiring the securities of target companies. Unrealized appreciation (depreciation) on any commitments outstanding at period end is separately presented in the Statements of Assets and Liabilities as Unrealized appreciation (depreciation) on unfunded commitments, and any change in unrealized appreciation (depreciation) on unfunded commitments during the period is separately presented in the Statement of Operations, as applicable.
Consolidated Subsidiary. The Funds included in the table below hold certain investments through a wholly-owned subsidiary ("Subsidiary"), which may be subject to federal and state taxes upon disposition.
As of period end, investments in Subsidiaries were as follows:
| $ Amount | % of Net Assets | |
| VIP Growth Opportunities Portfolio | 1,741,864 | .09 |
The financial statements have been consolidated to include the Subsidiary accounts where applicable. Accordingly, all inter-company transactions and balances have been eliminated.
At period end, any estimated tax liability for these investments is presented as "Deferred taxes" in the Statement of Assets and Liabilities and included in "Change in net unrealized appreciation (depreciation) on investment securities" in the Statement of Operations. The tax liability incurred may differ materially depending on conditions when these investments are disposed. Any cash held by a Subsidiary is restricted as to its use and is presented as "Restricted cash" in the Statement of Assets and Liabilities, if applicable.
New Accounting Pronouncement. In June 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions . The amendments in this ASU clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. They also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. They also require additional disclosures for equity securities subject to contractual sale restrictions. ASU 2022-03 will be effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. Management is currently evaluating the potential impact of ASU 2022-03 to the financial statements.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
| Purchases ($) | Sales ($) | |
| VIP Growth Opportunities Portfolio | 1,580,445,377 | 1,754,628,175 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (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 .23% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .53% 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 Company LLC (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 | $ 112,036 |
| Service Class 2 | 2,452,254 |
| $2,564,290 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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. For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Initial Class | $ 198,973 | .06 |
| Service Class | 69,821 | .06 |
| Service Class 2 | 611,667 | .06 |
| Investor Class | 1,201,122 | .14 |
| $2,081,583 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
| % of Average Net Assets | |
| VIP Growth Opportunities Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 as follows:
| Amount | |
| VIP Growth Opportunities Portfolio | $ 40,052 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
| VIP Growth Opportunities Portfolio | Borrower | $ 9,180,135 | .38% | $ 5,362 |
Interfund Trades. Funds 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. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
| Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
| VIP Growth Opportunities Portfolio | 153,726,611 | 117,827,042 | (6,776,149) |
Other. During the period, the investment adviser reimbursed the Fund for certain losses as follows:
| Amount ($) | |
| VIP Growth Opportunities Portfolio | 3,164 |
6. Committed Line of Credit.
Certain Funds participate 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 participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are listed below. During the period, there were no borrowings on this line of credit.
| Amount | |
| VIP Growth Opportunities Portfolio | $ 4,466 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Affiliated security lending activity, if any, was as follows:
| Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
| VIP Growth Opportunities Portfolio | $55,410 | $18,974 | $226,572 |
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable" in the Statement of Assets and Liabilities, if applicable. Activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| VIP Growth Opportunities Portfolio | $ 6,094,000 | .58% | $ 98 |
9. Expense Reductions.
Through arrangements with the Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expenses. During the period, custodian credits reduced the Fund's expenses by $625.
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $83,816.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Growth Opportunities Portfolio | ||
| Distributions to shareholders | ||
| Initial Class | $ 64,630,110 | $44,683,955 |
| Service Class | 21,878,935 | 15,002,730 |
| Service Class 2 | 187,539,568 | 106,914,640 |
| Investor Class | 181,478,767 | 124,394,953 |
Total | $455,527,380 | $290,996,278 |
11. Share Transactions.
Transactions for each class of shares were as follows and may contain in-kind transactions:
| Shares | Shares | Dollars | Dollars | |
| Year ended December 31, 2022 | Year ended December 31, 2021 | Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Growth Opportunities Portfolio | ||||
| Initial Class | ||||
| Shares sold | 445,956 | 798,604 | $ 22,595,346 | $ 64,046,280 |
| Reinvestment of distributions | 1,134,459 | 562,222 | 64,630,110 | 44,683,955 |
| Shares redeemed | (1,277,771) | (1,478,756) | (65,793,680) | (117,097,350) |
| Net increase (decrease) | 302,644 | (117,930) | $21,431,776 | $(8,367,115) |
| Service Class | ||||
| Shares sold | 227,137 | 131,744 | $ 10,515,341 | $ 10,555,172 |
| Reinvestment of distributions | 385,193 | 189,152 | 21,878,935 | 15,002,730 |
| Shares redeemed | (297,546) | (437,810) | (14,796,343) | (34,733,936) |
| Net increase (decrease) | 314,784 | (116,914) | $17,597,933 | $(9,176,034) |
| Service Class 2 | ||||
| Shares sold | 5,179,254 | 5,059,471 | $ 250,307,062 | $ 395,555,746 |
| Reinvestment of distributions | 3,376,658 | 1,373,358 | 187,539,568 | 106,914,640 |
| Shares redeemed | (3,608,653) | (3,822,447) | (176,762,361) | (303,873,474) |
| Net increase (decrease) | 4,947,259 | 2,610,382 | $261,084,269 | $198,596,912 |
| Investor Class | ||||
| Shares sold | 455,013 | 2,450,283 | $ 22,738,381 | $ 197,530,478 |
| Reinvestment of distributions | 3,218,850 | 1,578,749 | 181,478,767 | 124,394,953 |
| Shares redeemed | (4,075,292) | (2,950,707) | (216,952,882) | (227,510,188) |
| Net increase (decrease) | (401,429) | 1,078,325 | $(12,735,734) | $94,415,243 |
12. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a 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 owners of record of more than 10% and certain otherwise unaffiliated shareholders were owners of record of more than 10% of the outstanding shares as follows:
| Fund | Affiliated % | Number ofUnaffiliated Shareholders | Unaffiliated Shareholders % |
| VIP Growth Opportunities Portfolio | 43% | 1 | 40% |
13. Risk and Uncertainties.
Many factors affect a fund's performance. Developments that disrupt global economies and financial markets, such as pandemics, epidemics, outbreaks of infectious diseases, war, terrorism, and environmental disasters, may significantly affect a fund's investment performance. The effects of these developments to a fund will be impacted by the types of securities in which a fund invests, the financial condition, industry, economic sector, and geographic location of an issuer, and a fund's level of investment in the securities of that issuer.
To the Board of Trustees of Variable Insurance Products Fund III and the 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, 2022, 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, 2022, 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, 2022, 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.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 14, 2023
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 318 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. Robert A. Lawrence is an interested person and currently serves as Chair. The Trustees have determined that an interested Chair is appropriate and benefits shareholders because an interested Chair 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 Chair, 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 Chair 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. David M. Thomas serves as Lead Independent Trustee 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 other equity 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. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity ® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Chair of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Trustee and Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity ® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity ® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
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 served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity ® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity ® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University's Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity ® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity ® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean's Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity ® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity ® funds (2021).
David M. Thomas (1949)
Year of Election or Appointment: 2008
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity ® funds. 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). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company - America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity ® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Wiley also serves as Trustee of other Fidelity ® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 a Member of the Advisory Board of other Fidelity ® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (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 as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2022
Deputy Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present). Previously, Mr. Brown served as Assistant Treasurer of certain Fidelity ® funds (2019-2022).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity ® funds (2016-2020) and Assistant Treasurer of certain Fidelity ® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), FD Funds Management LLC (2021-present), and Fidelity Diversifying Solutions LLC (investment adviser firm, 2022-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity ® funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
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 FIMM, LLC (2021-present) and 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity ® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity ® funds (2019-2021).
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2022 to December 31, 2022). |
Actual Expenses
The first line of the accompanying table 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/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratio- A | Beginning Account Value July 1, 2022 | Ending Account Value December 31, 2022 | Expenses Paid During Period- C July 1, 2022 to December 31, 2022 | |||||||
| VIP Growth Opportunities Portfolio | ||||||||||
| Initial Class | .62% | |||||||||
| Actual | $ 1,000 | $ 971.10 | $ 3.08 | |||||||
Hypothetical- B | $ 1,000 | $ 1,022.08 | $ 3.16 | |||||||
| Service Class | .72% | |||||||||
| Actual | $ 1,000 | $ 970.80 | $ 3.58 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.58 | $ 3.67 | |||||||
| Service Class 2 | .87% | |||||||||
| Actual | $ 1,000 | $ 969.90 | $ 4.32 | |||||||
Hypothetical- B | $ 1,000 | $ 1,020.82 | $ 4.43 | |||||||
| Investor Class | .69% | |||||||||
| Actual | $ 1,000 | $ 970.80 | $ 3.43 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.73 | $ 3.52 | |||||||
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B 5% return per year before expenses
C Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
Distributions (Unaudited)
The dividend and capital gains distributions for the fund(s) are available on Fidelity.com or Institutional.Fidelity.com.
|
1.540209.125
VIPGRO-ANN-0323
Fidelity® Variable Insurance Products:
Balanced Portfolio
Annual Report
December 31, 2022
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity® Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2023 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-PORT 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.
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 | |||
Periods ended December 31, 2022 | Past 1 year | Past 5 years | Past 10 years |
| Initial Class | -17.94% | 7.21% | 8.91% |
| Service Class | -18.02% | 7.11% | 8.79% |
| Service Class 2 | -18.19% | 6.93% | 8.63% |
| Investor Class | -18.03% | 7.13% | 8.82% |
| $10,000 Over 10 Years |
Let's say hypothetically that $10,000 was invested in VIP Balanced Portfolio - Initial Class, a class of the fund, on December 31, 2012. 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. |
 |
Market Recap:
U.S. equities returned -18.11% in 2022, according to the S&P 500® index, as a multitude of risk factors challenged the global economy. It was the index's lowest calendar-year return since 2008 and first retreat since 2018. High inflation prompted the Federal Reserve to aggressively tighten monetary policy, and market interest rates eclipsed their highest level in a decade, stoking recession fears and sending stocks into bear market territory. Since March, the Fed hiked its benchmark rate seven times, by 4.25 percentage points - the fastest-ever pace of monetary tightening - while also shrinking its massive portfolio. Against this backdrop, the S&P 500® posted its worst year-to-date result (-23.87%) in 20 years through September, a seasonally weak month that stayed true to form, with volatility spiking due to growing certainty the Fed would persist in its effort to cool inflation, even at the expense of economic growth. Three of the index's worst monthly returns ever were recorded in 2022, as it shed 8% to 9% in April, June and September. Gains of similar proportion were made in July and October, amid optimism on inflation and policy easing. November (+6%) began with a rate hike of 0.75% and ended on a high note when the Fed signaled its intent to slow its pace of rate rises. For the year, value stocks handily outpaced growth. Turning to fixed income, U.S. taxable investment-grade bonds returned -13.01% for the 12 months, hampered by higher interest rates. Meanwhile, U.S. corporate high-yield bonds returned -11.21% and U.S. Treasury Inflation-Protected Securities had a return of -11.85%.
Comments from Co-Portfolio Manager Christopher Lee:
For the year, the fund's share classes returned about -18%, trailing the -15.79% return of the Fidelity Balanced 60/40 Composite Index SM . Versus the Composite index, security selection in the equity subportfolio detracted most. The fund's stock investments returned -19.77% the past 12 months, versus -18.11% for the S&P 500®. Stock picks particularly hurt in the software & services segment of the information technology sector. At the stock level, avoiding strong-performing benchmark component Chevron (+58%) in the energy sector notably held back the fund's performance. Conversely, positioning in the industrials sector aided relative performance. Exxon Mobil (+87%) was the portfolio's top relative contributor among individual holdings. The investment-grade bond central fund returned -12.70%, outpacing the -13.01% result of the Bloomberg U.S. Aggregate Bond Index. Our decision to limit the portfolio's duration, particularly in the period's first half, added value versus the benchmark amid sharply rising interest rates the past 12 months. Significantly underweighting mortgage-backed securities also contributed on a relative basis. On the other hand, positioning among investment-grade corporate bonds modestly crimped the fund's results. Specifically, the fund had more exposure to BBB-rated bonds, which underperformed their higher-quality counterparts as credit spreads widened. Elsewhere, overweighting commercial mortgage-backed securities and asset-backed securities, two segments that lagged the benchmark, also hindered the relative result.
Notes to shareholders:
After more than 17 years with Fidelity, Brian Lempel retired from Fidelity on January 18, 2022, at which time Matt Drukker, Pri Bakshi and Ali Khan were appointed co-managers of the fund. Pri and Ali assumed responsibility for the information technology sleeve, while Matt took the reins on the communication services sleeve. On April 1, 2022, Ashley Fernandes assumed co-management responsibilities for the fund's materials sleeve, joining Jody Simes. Additionally, on July 27, 2022, Chad Colman assumed portfolio management responsibilities for the fund's industrials sleeve, succeeding John Mirshekari. On August 1, 2022, Chris Lee assumed co-management responsibilities for the fund. After nearly four decades with Fidelity, Robert Stansky retired from Fidelity on December 31, 2022. On January 1, 2023, Chris Lee assumed Stansky's portfolio management responsibilities. On January 1, 2023, Jody Simes retired from the firm and came off the fund and the fund's materials sleeve.
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.
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 Holdings (% of Fund's net assets) | ||
| Microsoft Corp. | 4.3 | |
| Apple, Inc. | 3.5 | |
| Amazon.com, Inc. | 1.7 | |
| UnitedHealth Group, Inc. | 1.4 | |
| Exxon Mobil Corp. | 1.3 | |
| Alphabet, Inc. Class A | 1.2 | |
| Eli Lilly & Co. | 1.1 | |
| Visa, Inc. Class A | 1.0 | |
| Bank of America Corp. | 1.0 | |
| NVIDIA Corp. | 0.9 | |
| 17.4 | ||
| Top Bond Issuers (% of Fund's net assets) | ||
(with maturities greater than one year) | ||
| U.S. Treasury Obligations | 13.9 | |
| Uniform Mortgage Backed Securities | 2.0 | |
| Freddie Mac | 1.7 | |
| Fannie Mae | 1.7 | |
| Ginnie Mae | 1.4 | |
| JPMorgan Chase & Co. | 0.6 | |
| Bank of America Corp. | 0.5 | |
| Morgan Stanley | 0.5 | |
| Petroleos Mexicanos | 0.4 | |
| Goldman Sachs Group, Inc. | 0.3 | |
| 23.0 | ||
| Market Sectors (% of Fund's net assets) | ||
| Information Technology | 16.1 | |
| Financials | 12.5 | |
| Health Care | 10.4 | |
| Consumer Discretionary | 6.4 | |
| Communication Services | 5.9 | |
| Industrials | 5.7 | |
| Consumer Staples | 5.4 | |
| Energy | 4.7 | |
| Real Estate | 2.5 | |
| Utilities | 2.5 | |
| Materials | 1.8 | |
Quality Diversification (% of Fund's net assets) |
 |
| We have used ratings from Moody's Investors Service, Inc. Where Moody's® ratings are not available, we have used S&P® ratings. All ratings are as of the date indicated and do not reflect subsequent changes. |
Asset Allocation (% of Fund's net assets) |
 |
Short-Term Investments and Net Other Assets (Liabilities) - (1.7)%* |
Foreign investments - 9.2% |
Futures - 0.6% |
*Short-Term Investments and Net Other Assets (Liabilities) are not available in the pie chart. |
Percentages in the above tables are adjusted for the effect of TBA Sale Commitments.
Percentages in the above tables are adjusted for the effect of futures contracts and swaps, if applicable.
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 Fidelity Central Funds, other than the Money Market Central Funds, is available at fidelity.com and/or institutional.fidelity.com, as applicable.
Showing Percentage of Net Assets
| Common Stocks - 62.8% | |||
| Shares | Value ($) | ||
| COMMUNICATION SERVICES - 4.9% | |||
| Diversified Telecommunication Services - 0.1% | |||
| AT&T, Inc. | 22,400 | 412,384 | |
| Liberty Global PLC Class C (a) | 246,763 | 4,794,605 | |
| 5,206,989 | |||
| Entertainment - 1.1% | |||
| Activision Blizzard, Inc. | 188,575 | 14,435,416 | |
| Cinemark Holdings, Inc. (a)(b) | 124,782 | 1,080,612 | |
| Netflix, Inc. (a) | 89,858 | 26,497,327 | |
| Sea Ltd. ADR (a) | 76,900 | 4,001,107 | |
| Take-Two Interactive Software, Inc. (a) | 43,218 | 4,500,290 | |
| The Walt Disney Co. (a) | 120,732 | 10,489,196 | |
| Warner Bros Discovery, Inc. (a) | 8,928 | 84,637 | |
| 61,088,585 | |||
| Interactive Media & Services - 3.0% | |||
| Alphabet, Inc.: | |||
| Class A (a) | 778,760 | 68,709,995 | |
| Class C (a) | 541,440 | 48,041,971 | |
| Epic Games, Inc. (a)(c)(d) | 1,812 | 1,477,722 | |
| Meta Platforms, Inc. Class A (a) | 419,542 | 50,487,684 | |
| Snap, Inc. Class A (a) | 686,449 | 6,143,719 | |
| Tongdao Liepin Group (a) | 745,554 | 870,537 | |
| 175,731,628 | |||
| Media - 0.5% | |||
| Altice U.S.A., Inc. Class A (a) | 168,745 | 776,227 | |
| Charter Communications, Inc. Class A (a) | 17,900 | 6,069,890 | |
| Comcast Corp. Class A | 401,109 | 14,026,782 | |
| Liberty Broadband Corp.: | |||
| Class A (a) | 62,000 | 4,702,700 | |
| Class C (a) | 55,200 | 4,210,104 | |
| 29,785,703 | |||
| Wireless Telecommunication Services - 0.2% | |||
| T-Mobile U.S., Inc. (a) | 98,951 | 13,853,140 | |
TOTAL COMMUNICATION SERVICES | 285,666,045 | ||
| CONSUMER DISCRETIONARY - 6.2% | |||
| Auto Components - 0.1% | |||
| Adient PLC (a) | 108,000 | 3,746,520 | |
| Automobiles - 0.6% | |||
| Ferrari NV | 20,100 | 4,305,822 | |
| Tesla, Inc. (a) | 265,700 | 32,728,926 | |
| 37,034,748 | |||
| Hotels, Restaurants & Leisure - 1.1% | |||
| ARAMARK Holdings Corp. | 22,800 | 942,552 | |
| Booking Holdings, Inc. (a) | 8,500 | 17,129,880 | |
| Caesars Entertainment, Inc. (a) | 97,100 | 4,039,360 | |
| Churchill Downs, Inc. | 38,100 | 8,055,483 | |
| Domino's Pizza, Inc. | 15,200 | 5,265,280 | |
| Marriott International, Inc. Class A | 98,800 | 14,710,332 | |
| McDonald's Corp. | 40,700 | 10,725,671 | |
| Sweetgreen, Inc. Class A (a) | 11,200 | 95,984 | |
| 60,964,542 | |||
| Household Durables - 0.1% | |||
| D.R. Horton, Inc. | 28,900 | 2,576,146 | |
| Lennar Corp. Class A | 19,800 | 1,791,900 | |
| Mohawk Industries, Inc. (a) | 30,500 | 3,117,710 | |
| 7,485,756 | |||
| Internet & Direct Marketing Retail - 2.0% | |||
| Amazon.com, Inc. (a) | 1,180,500 | 99,162,000 | |
| Cazoo Group Ltd. (a)(c) | 56,400 | 8,844 | |
| Deliveroo PLC Class A (a)(e) | 71,200 | 73,768 | |
| eBay, Inc. | 229,700 | 9,525,659 | |
| Uber Technologies, Inc. (a) | 277,447 | 6,861,264 | |
| 115,631,535 | |||
| Multiline Retail - 0.4% | |||
| Dollar General Corp. | 78,500 | 19,330,625 | |
| Nordstrom, Inc. | 158,405 | 2,556,657 | |
| Ollie's Bargain Outlet Holdings, Inc. (a) | 18,300 | 857,172 | |
| Target Corp. | 20,600 | 3,070,224 | |
| 25,814,678 | |||
| Specialty Retail - 1.5% | |||
| Burlington Stores, Inc. (a) | 15,400 | 3,122,504 | |
| Industria de Diseno Textil SA | 190,300 | 5,054,568 | |
| Lowe's Companies, Inc. | 150,700 | 30,025,468 | |
| The Home Depot, Inc. | 64,108 | 20,249,153 | |
| TJX Companies, Inc. | 337,480 | 26,863,408 | |
| 85,315,101 | |||
| Textiles, Apparel & Luxury Goods - 0.4% | |||
| Capri Holdings Ltd. (a) | 46,400 | 2,659,648 | |
| LVMH Moet Hennessy Louis Vuitton SE | 4,000 | 2,910,773 | |
| NIKE, Inc. Class B | 83,030 | 9,715,340 | |
| PVH Corp. | 50,400 | 3,557,736 | |
| Tapestry, Inc. | 169,900 | 6,469,792 | |
| 25,313,289 | |||
TOTAL CONSUMER DISCRETIONARY | 361,306,169 | ||
| CONSUMER STAPLES - 4.6% | |||
| Beverages - 1.7% | |||
| Boston Beer Co., Inc. Class A (a) | 5,700 | 1,878,264 | |
| Celsius Holdings, Inc. (a) | 16,400 | 1,706,256 | |
| Constellation Brands, Inc. Class A (sub. vtg.) | 57,400 | 13,302,450 | |
| Duckhorn Portfolio, Inc. (a) | 54,500 | 903,065 | |
| Keurig Dr. Pepper, Inc. | 33,617 | 1,198,782 | |
| Monster Beverage Corp. (a) | 115,326 | 11,709,049 | |
| PepsiCo, Inc. | 165,500 | 29,899,230 | |
| Pernod Ricard SA | 14,300 | 2,812,741 | |
| The Coca-Cola Co. | 554,400 | 35,265,384 | |
| 98,675,221 | |||
| Food & Staples Retailing - 1.3% | |||
| Albertsons Companies, Inc. | 113,400 | 2,351,916 | |
| Alimentation Couche-Tard, Inc. Class A (multi-vtg.) | 83,800 | 3,682,496 | |
| Cake Box Holdings PLC | 53,343 | 74,162 | |
| Costco Wholesale Corp. | 55,200 | 25,198,800 | |
| Sysco Corp. | 73,900 | 5,649,655 | |
| U.S. Foods Holding Corp. (a) | 240,600 | 8,185,212 | |
| Walmart, Inc. | 201,800 | 28,613,222 | |
| 73,755,463 | |||
| Food Products - 0.6% | |||
| Bunge Ltd. | 16,800 | 1,676,136 | |
| Freshpet, Inc. (a) | 55,500 | 2,928,735 | |
| Hotel Chocolat Group Ltd. (a)(b) | 30,400 | 57,149 | |
| Lamb Weston Holdings, Inc. | 33,500 | 2,993,560 | |
| Local Bounti Corp. (a) | 99,065 | 137,700 | |
| McCormick & Co., Inc. (non-vtg.) | 62,100 | 5,147,469 | |
| Mondelez International, Inc. | 228,200 | 15,209,530 | |
| Sovos Brands, Inc. (a) | 77,300 | 1,110,801 | |
| The Hershey Co. | 30,200 | 6,993,414 | |
| TreeHouse Foods, Inc. (a) | 37,000 | 1,827,060 | |
| 38,081,554 | |||
| Household Products - 0.9% | |||
| Procter & Gamble Co. | 347,600 | 52,682,256 | |
| Personal Products - 0.1% | |||
| Estee Lauder Companies, Inc. Class A | 33,100 | 8,212,441 | |
| Olaplex Holdings, Inc. (a) | 161,100 | 839,331 | |
| The Honest Co., Inc. (a) | 29,100 | 87,591 | |
| 9,139,363 | |||
TOTAL CONSUMER STAPLES | 272,333,857 | ||
| ENERGY - 3.4% | |||
| Energy Equipment & Services - 0.4% | |||
| Expro Group Holdings NV (a) | 255,100 | 4,624,963 | |
| Schlumberger Ltd. | 278,800 | 14,904,648 | |
| Weatherford International PLC (a) | 91,500 | 4,659,180 | |
| 24,188,791 | |||
| Oil, Gas & Consumable Fuels - 3.0% | |||
| Canadian Natural Resources Ltd. | 247,200 | 13,727,451 | |
| Eco Atlantic Oil & Gas Ltd. (a) | 868,000 | 192,319 | |
| Exxon Mobil Corp. | 683,100 | 75,345,930 | |
| Hess Corp. | 166,200 | 23,570,484 | |
| Imperial Oil Ltd. | 279,300 | 13,604,014 | |
| Kosmos Energy Ltd. (a) | 913,900 | 5,812,404 | |
| MEG Energy Corp. (a) | 1,051,300 | 14,635,897 | |
| Phillips 66 Co. | 103,726 | 10,795,802 | |
| Tourmaline Oil Corp. | 106,400 | 5,368,721 | |
| Valero Energy Corp. | 81,900 | 10,389,834 | |
| 173,442,856 | |||
TOTAL ENERGY | 197,631,647 | ||
| FINANCIALS - 7.2% | |||
| Banks - 3.5% | |||
| AIB Group PLC | 310,200 | 1,200,706 | |
| Bank of America Corp. | 1,825,353 | 60,455,691 | |
| BankUnited, Inc. | 23,375 | 794,049 | |
| BNP Paribas SA | 64,479 | 3,671,382 | |
| Citizens Financial Group, Inc. | 113,956 | 4,486,448 | |
| Comerica, Inc. | 83,101 | 5,555,302 | |
| DNB Bank ASA | 50,200 | 991,456 | |
| Eurobank Ergasias Services and Holdings SA (a) | 3,235,061 | 3,653,434 | |
| JPMorgan Chase & Co. | 199,480 | 26,750,268 | |
| KBC Group NV | 49,600 | 3,193,512 | |
| M&T Bank Corp. | 46,340 | 6,722,080 | |
| NatWest Group PLC | 456,586 | 1,456,158 | |
| Piraeus Financial Holdings SA (a) | 814,768 | 1,254,178 | |
| PNC Financial Services Group, Inc. | 34,264 | 5,411,656 | |
| Signature Bank | 29,136 | 3,357,050 | |
| Societe Generale Series A | 159,100 | 3,990,811 | |
| Starling Bank Ltd. Series D (a)(c)(d) | 756,521 | 2,862,686 | |
| Sumitomo Mitsui Financial Group, Inc. | 88,000 | 3,540,455 | |
| U.S. Bancorp | 280,262 | 12,222,226 | |
| UniCredit SpA | 324,856 | 4,609,565 | |
| Wells Fargo & Co. | 1,169,923 | 48,306,121 | |
| 204,485,234 | |||
| Capital Markets - 1.1% | |||
| Bank of New York Mellon Corp. | 377,592 | 17,187,988 | |
| BlackRock, Inc. Class A | 16,472 | 11,672,553 | |
| Cboe Global Markets, Inc. | 17,931 | 2,249,803 | |
| Goldman Sachs Group, Inc. | 15,056 | 5,169,929 | |
| Intercontinental Exchange, Inc. | 80,626 | 8,271,421 | |
| State Street Corp. | 208,648 | 16,184,825 | |
| StepStone Group, Inc. Class A | 92,961 | 2,340,758 | |
| Virtu Financial, Inc. Class A | 154,473 | 3,152,794 | |
| 66,230,071 | |||
| Consumer Finance - 0.4% | |||
| American Express Co. | 62,193 | 9,189,016 | |
| Capital One Financial Corp. | 75,442 | 7,013,088 | |
| OneMain Holdings, Inc. | 113,388 | 3,776,954 | |
| Shriram Transport Finance Co. Ltd. | 93,993 | 1,560,034 | |
| 21,539,092 | |||
| Diversified Financial Services - 0.4% | |||
| Ant International Co. Ltd. Class C (a)(c)(d) | 915,084 | 1,564,794 | |
| Apollo Global Management, Inc. | 71,800 | 4,580,122 | |
| Berkshire Hathaway, Inc.: | |||
| Class A (a) | 13 | 6,093,242 | |
| Class B (a) | 34,606 | 10,689,793 | |
| Jumo World Ltd. (a)(d) | 176 | 187,963 | |
| Sunrisemezz Ltd. (a) | 120,882 | 14,661 | |
| 23,130,575 | |||
| Insurance - 1.8% | |||
| Arthur J. Gallagher & Co. | 46,722 | 8,808,966 | |
| Assurant, Inc. | 12,137 | 1,517,853 | |
| Chubb Ltd. | 26,400 | 5,823,840 | |
| Direct Line Insurance Group PLC | 206,200 | 551,669 | |
| Globe Life, Inc. | 60,210 | 7,258,316 | |
| Hartford Financial Services Group, Inc. | 171,267 | 12,987,177 | |
| Marsh & McLennan Companies, Inc. | 91,167 | 15,086,315 | |
| Prudential PLC | 64,803 | 883,608 | |
| The Travelers Companies, Inc. | 265,213 | 49,724,785 | |
| 102,642,529 | |||
| Thrifts & Mortgage Finance - 0.0% | |||
| UWM Holdings Corp. Class A (b) | 116,656 | 386,131 | |
TOTAL FINANCIALS | 418,413,632 | ||
| HEALTH CARE - 10.0% | |||
| Biotechnology - 1.9% | |||
| Amgen, Inc. | 40,851 | 10,729,107 | |
| BeiGene Ltd. ADR (a) | 23,000 | 5,058,620 | |
| Gilead Sciences, Inc. | 430,500 | 36,958,425 | |
| Legend Biotech Corp. ADR (a) | 132,308 | 6,604,815 | |
| Regeneron Pharmaceuticals, Inc. (a) | 28,751 | 20,743,559 | |
| Vertex Pharmaceuticals, Inc. (a) | 114,863 | 33,170,137 | |
| 113,264,663 | |||
| Health Care Equipment & Supplies - 1.8% | |||
| Abbott Laboratories | 202,744 | 22,259,264 | |
| Boston Scientific Corp. (a) | 911,835 | 42,190,605 | |
| Intuitive Surgical, Inc. (a) | 40,800 | 10,826,280 | |
| Masimo Corp. (a) | 40,400 | 5,977,180 | |
| ResMed, Inc. | 61,150 | 12,727,150 | |
| Stryker Corp. | 40,700 | 9,950,743 | |
| 103,931,222 | |||
| Health Care Providers & Services - 2.9% | |||
| agilon health, Inc. (a) | 382,444 | 6,172,646 | |
| AmerisourceBergen Corp. | 187,489 | 31,068,802 | |
| Humana, Inc. | 40,197 | 20,588,501 | |
| Option Care Health, Inc. (a) | 488,653 | 14,703,569 | |
| Surgery Partners, Inc. (a) | 477,570 | 13,305,100 | |
| UnitedHealth Group, Inc. | 158,407 | 83,984,223 | |
| 169,822,841 | |||
| Life Sciences Tools & Services - 1.0% | |||
| IQVIA Holdings, Inc. (a) | 50,500 | 10,346,945 | |
| Thermo Fisher Scientific, Inc. | 84,299 | 46,422,616 | |
| 56,769,561 | |||
| Pharmaceuticals - 2.4% | |||
| AstraZeneca PLC sponsored ADR | 348,547 | 23,631,487 | |
| Bristol-Myers Squibb Co. | 147,512 | 10,613,488 | |
| Eli Lilly & Co. | 169,777 | 62,111,218 | |
| Merck & Co., Inc. | 75,900 | 8,421,105 | |
| Roche Holding AG (participation certificate) | 33,758 | 10,608,031 | |
| Royalty Pharma PLC | 599,667 | 23,698,840 | |
| 139,084,169 | |||
TOTAL HEALTH CARE | 582,872,456 | ||
| INDUSTRIALS - 5.5% | |||
| Aerospace & Defense - 1.2% | |||
| Howmet Aerospace, Inc. | 166,100 | 6,546,001 | |
| Lockheed Martin Corp. | 50,470 | 24,553,150 | |
| Northrop Grumman Corp. | 19,370 | 10,568,466 | |
| Raytheon Technologies Corp. | 66,077 | 6,668,491 | |
| Space Exploration Technologies Corp. Class A (a)(c)(d) | 17,000 | 1,309,000 | |
| The Boeing Co. (a) | 110,117 | 20,976,187 | |
| 70,621,295 | |||
| Air Freight & Logistics - 0.1% | |||
| United Parcel Service, Inc. Class B | 31,323 | 5,445,190 | |
| Airlines - 0.1% | |||
| Delta Air Lines, Inc. (a) | 183,700 | 6,036,382 | |
| Building Products - 0.4% | |||
| Trane Technologies PLC | 136,894 | 23,010,512 | |
| Electrical Equipment - 0.7% | |||
| AMETEK, Inc. | 166,953 | 23,326,673 | |
| Emerson Electric Co. | 170,400 | 16,368,624 | |
| 39,695,297 | |||
| Industrial Conglomerates - 0.6% | |||
| General Electric Co. | 245,689 | 20,586,281 | |
| Honeywell International, Inc. | 63,816 | 13,675,769 | |
| 34,262,050 | |||
| Machinery - 1.7% | |||
| Caterpillar, Inc. | 66,025 | 15,816,949 | |
| Deere & Co. | 17,900 | 7,674,804 | |
| Dover Corp. | 138,500 | 18,754,285 | |
| Fortive Corp. | 369,740 | 23,755,795 | |
| Ingersoll Rand, Inc. | 246,600 | 12,884,850 | |
| Parker Hannifin Corp. | 61,001 | 17,751,291 | |
| 96,637,974 | |||
| Professional Services - 0.0% | |||
| Dun & Bradstreet Holdings, Inc. | 86,929 | 1,065,750 | |
| Road & Rail - 0.7% | |||
| CSX Corp. | 653,462 | 20,244,253 | |
| Norfolk Southern Corp. | 48,929 | 12,057,084 | |
| Old Dominion Freight Lines, Inc. | 41,000 | 11,634,980 | |
| 43,936,317 | |||
TOTAL INDUSTRIALS | 320,710,767 | ||
| INFORMATION TECHNOLOGY - 15.6% | |||
| Electronic Equipment & Components - 0.2% | |||
| Amphenol Corp. Class A | 161,800 | 12,319,452 | |
| IT Services - 2.4% | |||
| Accenture PLC Class A | 25,800 | 6,884,472 | |
| Affirm Holdings, Inc. (a)(b) | 62,900 | 608,243 | |
| Block, Inc. Class A (a) | 160,400 | 10,079,536 | |
| Capgemini SA | 44,600 | 7,456,058 | |
| Cognizant Technology Solutions Corp. Class A | 160,200 | 9,161,838 | |
| Dlocal Ltd. (a) | 237,900 | 3,704,103 | |
| EPAM Systems, Inc. (a) | 21,400 | 7,013,636 | |
| Fiserv, Inc. (a) | 8,967 | 906,295 | |
| MasterCard, Inc. Class A | 30,600 | 10,640,538 | |
| MongoDB, Inc. Class A (a) | 38,000 | 7,479,920 | |
| Snowflake, Inc. (a) | 25,800 | 3,703,332 | |
| Twilio, Inc. Class A (a) | 51,900 | 2,541,024 | |
| Visa, Inc. Class A | 292,732 | 60,818,000 | |
| Wix.com Ltd. (a) | 54,200 | 4,164,186 | |
| Worldline SA (a)(e) | 92,415 | 3,619,199 | |
| 138,780,380 | |||
| Semiconductors & Semiconductor Equipment - 3.0% | |||
| Advanced Micro Devices, Inc. (a) | 65,000 | 4,210,050 | |
| ASML Holding NV (Netherlands) | 13,800 | 7,524,479 | |
| Lam Research Corp. | 37,700 | 15,845,310 | |
| Marvell Technology, Inc. | 188,572 | 6,984,707 | |
| MediaTek, Inc. | 213,000 | 4,307,265 | |
| Microchip Technology, Inc. | 202,600 | 14,232,650 | |
| Micron Technology, Inc. | 360,400 | 18,012,792 | |
| NVIDIA Corp. | 383,100 | 55,986,234 | |
| NXP Semiconductors NV | 72,012 | 11,380,056 | |
| Renesas Electronics Corp. (a) | 1,105,600 | 9,771,585 | |
| Silergy Corp. | 143,000 | 2,020,159 | |
| SolarEdge Technologies, Inc. (a) | 33,700 | 9,546,199 | |
| Taiwan Semiconductor Manufacturing Co. Ltd. | 1,102,000 | 16,007,200 | |
| 175,828,686 | |||
| Software - 6.5% | |||
| Adobe, Inc. (a) | 95,100 | 32,004,003 | |
| Autodesk, Inc. (a) | 68,200 | 12,744,534 | |
| Black Knight, Inc. (a) | 18,665 | 1,152,564 | |
| CCC Intelligent Solutions Holdings, Inc. (a)(c) | 36,613 | 318,533 | |
| Coupa Software, Inc. (a) | 53,100 | 4,203,927 | |
| Cvent Holding Corp. (a)(c) | 117,171 | 632,723 | |
| Elastic NV (a) | 43,900 | 2,260,850 | |
| Five9, Inc. (a) | 58,900 | 3,996,954 | |
| HubSpot, Inc. (a) | 29,500 | 8,529,335 | |
| Intuit, Inc. | 55,900 | 21,757,398 | |
| Microsoft Corp. | 1,042,100 | 249,916,424 | |
| Salesforce.com, Inc. (a) | 185,300 | 24,568,927 | |
| Stripe, Inc. Class B (a)(c)(d) | 19,953 | 447,346 | |
| Synopsys, Inc. (a) | 33,300 | 10,632,357 | |
| Workday, Inc. Class A (a) | 44,200 | 7,395,986 | |
| 380,561,861 | |||
| Technology Hardware, Storage & Peripherals - 3.5% | |||
| Apple, Inc. | 1,585,464 | 205,999,338 | |
TOTAL INFORMATION TECHNOLOGY | 913,489,717 | ||
| MATERIALS - 1.8% | |||
| Chemicals - 1.2% | |||
| Air Products & Chemicals, Inc. | 35,203 | 10,851,677 | |
| Cabot Corp. | 19,100 | 1,276,644 | |
| Celanese Corp. Class A | 25,200 | 2,576,448 | |
| CF Industries Holdings, Inc. | 15,480 | 1,318,896 | |
| Chemtrade Logistics Income Fund | 159,600 | 1,057,321 | |
| Corteva, Inc. | 115,400 | 6,783,212 | |
| DuPont de Nemours, Inc. | 62,550 | 4,292,807 | |
| Ecolab, Inc. | 19,746 | 2,874,228 | |
| Linde PLC | 68,070 | 22,203,073 | |
| LyondellBasell Industries NV Class A | 43,000 | 3,570,290 | |
| Olin Corp. | 40,830 | 2,161,540 | |
| Sherwin-Williams Co. | 7,371 | 1,749,359 | |
| The Chemours Co. LLC | 48,200 | 1,475,884 | |
| Tronox Holdings PLC | 157,400 | 2,157,954 | |
| Valvoline, Inc. | 153,000 | 4,995,450 | |
| Westlake Corp. | 10,300 | 1,056,162 | |
| 70,400,945 | |||
| Construction Materials - 0.1% | |||
| Martin Marietta Materials, Inc. | 7,984 | 2,698,352 | |
| Vulcan Materials Co. | 17,020 | 2,980,372 | |
| 5,678,724 | |||
| Containers & Packaging - 0.1% | |||
| Aptargroup, Inc. | 15,300 | 1,682,694 | |
| Crown Holdings, Inc. | 8,420 | 692,208 | |
| Greif, Inc. Class A | 24,500 | 1,642,970 | |
| Sealed Air Corp. | 43,800 | 2,184,744 | |
| 6,202,616 | |||
| Metals & Mining - 0.4% | |||
| Alcoa Corp. | 30,230 | 1,374,558 | |
| First Quantum Minerals Ltd. | 267,000 | 5,578,604 | |
| Freeport-McMoRan, Inc. | 244,051 | 9,273,938 | |
| Glencore PLC | 338,700 | 2,258,671 | |
| Reliance Steel & Aluminum Co. | 17,218 | 3,485,612 | |
| 21,971,383 | |||
TOTAL MATERIALS | 104,253,668 | ||
| REAL ESTATE - 1.6% | |||
| Equity Real Estate Investment Trusts (REITs) - 1.5% | |||
| Alexandria Real Estate Equities, Inc. | 2,800 | 407,876 | |
| American Tower Corp. | 57,800 | 12,245,508 | |
| Corporate Office Properties Trust (SBI) | 88,700 | 2,300,878 | |
| Crown Castle International Corp. | 67,200 | 9,115,008 | |
| CubeSmart | 30,500 | 1,227,625 | |
| Elme Communities (SBI) | 59,458 | 1,058,352 | |
| Equinix, Inc. | 16,700 | 10,939,001 | |
| Equity Lifestyle Properties, Inc. | 96,100 | 6,208,060 | |
| Essex Property Trust, Inc. | 18,600 | 3,941,712 | |
| Host Hotels & Resorts, Inc. | 367,800 | 5,903,190 | |
| Invitation Homes, Inc. | 184,500 | 5,468,580 | |
| Kilroy Realty Corp. | 7,900 | 305,493 | |
| Life Storage, Inc. | 5,100 | 502,350 | |
| Mid-America Apartment Communities, Inc. | 27,800 | 4,364,322 | |
| Prologis (REIT), Inc. | 111,100 | 12,524,303 | |
| Simon Property Group, Inc. | 16,400 | 1,926,672 | |
| Ventas, Inc. | 98,700 | 4,446,435 | |
| Welltower, Inc. | 91,700 | 6,010,935 | |
| 88,896,300 | |||
| Real Estate Management & Development - 0.1% | |||
| Cushman & Wakefield PLC (a) | 427,100 | 5,321,666 | |
| WeWork, Inc. (a) | 274,800 | 392,964 | |
| 5,714,630 | |||
TOTAL REAL ESTATE | 94,610,930 | ||
| UTILITIES - 2.0% | |||
| Electric Utilities - 1.4% | |||
| Constellation Energy Corp. | 106,378 | 9,170,847 | |
| Edison International | 79,500 | 5,057,790 | |
| Exelon Corp. | 194,035 | 8,388,133 | |
| FirstEnergy Corp. | 202,000 | 8,471,880 | |
| NextEra Energy, Inc. | 271,104 | 22,664,294 | |
| PG&E Corp. (a) | 659,219 | 10,718,901 | |
| PPL Corp. | 187,300 | 5,472,906 | |
| Southern Co. | 211,800 | 15,124,638 | |
| 85,069,389 | |||
| Independent Power and Renewable Electricity Producers - 0.1% | |||
| The AES Corp. | 200,700 | 5,772,132 | |
| Multi-Utilities - 0.5% | |||
| Dominion Energy, Inc. | 131,278 | 8,049,967 | |
| NiSource, Inc. | 143,500 | 3,934,770 | |
| Public Service Enterprise Group, Inc. | 64,200 | 3,933,534 | |
| Sempra Energy | 70,598 | 10,910,215 | |
| 26,828,486 | |||
TOTAL UTILITIES | 117,670,007 | ||
| TOTAL COMMON STOCKS (Cost $2,892,058,899) | 3,668,958,895 | ||
| Preferred Stocks - 0.3% | |||
| Shares | Value ($) | ||
| Convertible Preferred Stocks - 0.2% | |||
| COMMUNICATION SERVICES - 0.1% | |||
| Interactive Media & Services - 0.1% | |||
| ByteDance Ltd. Series E1 (a)(c)(d) | 21,701 | 3,904,878 | |
| CONSUMER DISCRETIONARY - 0.0% | |||
| Internet & Direct Marketing Retail - 0.0% | |||
| Circle Internet Financial Ltd. Series F (c)(d) | 36,875 | 967,969 | |
| INDUSTRIALS - 0.0% | |||
| Aerospace & Defense - 0.0% | |||
| ABL Space Systems: | |||
| Series B(a)(c)(d) | 17,763 | 703,592 | |
| Series B2(a)(c)(d) | 8,188 | 320,233 | |
| 1,023,825 | |||
| Construction & Engineering - 0.0% | |||
| Beta Technologies, Inc. Series A (a)(c)(d) | 7,264 | 460,756 | |
TOTAL INDUSTRIALS | 1,484,581 | ||
| INFORMATION TECHNOLOGY - 0.1% | |||
| Communications Equipment - 0.0% | |||
| Astranis Space Technologies Corp. Series C (a)(c)(d) | 60,816 | 690,262 | |
| Semiconductors & Semiconductor Equipment - 0.0% | |||
| Astera Labs, Inc. Series C (a)(c)(d) | 155,858 | 1,477,534 | |
| GaN Systems, Inc.: | |||
| Series F1(a)(c)(d) | 14,731 | 72,477 | |
| Series F2(a)(c)(d) | 7,778 | 38,268 | |
| Xsight Labs Ltd. Series D (a)(c)(d) | 65,770 | 464,336 | |
| 2,052,615 | |||
| Software - 0.1% | |||
| Algolia, Inc. Series D (a)(c)(d) | 28,064 | 439,763 | |
| Bolt Technology OU Series E (c)(d) | 6,283 | 766,723 | |
| Databricks, Inc.: | |||
| Series G(a)(c)(d) | 4,461 | 219,526 | |
| Series H(a)(c)(d) | 18,642 | 917,373 | |
| Skyryse, Inc. Series B (a)(c)(d) | 50,000 | 1,009,500 | |
| Stripe, Inc. Series H (a)(c)(d) | 6,600 | 147,972 | |
| 3,500,857 | |||
TOTAL INFORMATION TECHNOLOGY | 6,243,734 | ||
| TOTAL CONVERTIBLE PREFERRED STOCKS | 12,601,162 | ||
| Nonconvertible Preferred Stocks - 0.1% | |||
| CONSUMER DISCRETIONARY - 0.0% | |||
| Internet & Direct Marketing Retail - 0.0% | |||
| Circle Internet Financial Ltd. Series E (c)(d) | 68,071 | 1,786,864 | |
| INFORMATION TECHNOLOGY - 0.1% | |||
| IT Services - 0.1% | |||
| Checkr, Inc. Series E (a)(d) | 87,327 | 1,286,327 | |
| Gupshup, Inc. (a)(c)(d) | 59,838 | 1,062,125 | |
| 2,348,452 | |||
| TOTAL NONCONVERTIBLE PREFERRED STOCKS | 4,135,316 | ||
| TOTAL PREFERRED STOCKS (Cost $18,025,002) | 16,736,478 | ||
| U.S. Treasury Obligations - 0.1% | |||
Principal Amount (f) | Value ($) | ||
U.S. Treasury Bills, yield at date of purchase 3.56% to 4.31% 1/12/23 to 3/2/23 (g) (Cost $3,240,900) | 3,250,000 | 3,241,856 | |
| Preferred Securities - 0.0% | |||
Principal Amount (f) | Value ($) | ||
| INFORMATION TECHNOLOGY - 0.0% | |||
| Semiconductors & Semiconductor Equipment - 0.0% | |||
GaN Systems, Inc. 0% (c)(d)(h) (Cost $345,272) | 345,272 | 197,150 | |
| Fixed-Income Funds - 35.6% | |||
| Shares | Value ($) | ||
Fidelity VIP Investment Grade Central Fund (i) (Cost $2,387,730,403) | 22,702,602 | 2,082,963,744 | |
| Money Market Funds - 1.2% | |||
| Shares | Value ($) | ||
| Fidelity Cash Central Fund 4.37% (j) | 68,237,201 | 68,250,848 | |
| Fidelity Securities Lending Cash Central Fund 4.37% (j)(k) | 2,108,625 | 2,108,836 | |
| TOTAL MONEY MARKET FUNDS (Cost $70,359,176) | 70,359,684 | ||
| TOTAL INVESTMENT IN SECURITIES - 100.0% (Cost $5,371,759,652) | 5,842,457,807 |
NET OTHER ASSETS (LIABILITIES) - 0.0% | (17,898) |
| NET ASSETS - 100.0% | 5,842,439,909 |
| Futures Contracts | |||||
Number of contracts | Expiration Date | Notional Amount ($) | Value ($) | Unrealized Appreciation/ (Depreciation) ($) | |
| Purchased | |||||
| Equity Index Contracts | |||||
| CME Micro E-mini S&P 500 Index Contracts (United States) | 184 | Mar 2023 | 35,521,200 | (992,519) | (992,519) |
| The notional amount of futures purchased as a percentage of Net Assets is 0.6% | |||||
Legend
| (a) | Non-income producing |
| (b) | Security or a portion of the security is on loan at period end. |
| (c) | Restricted securities (including private placements) - 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 $24,268,949 or 0.4% of net assets. |
| (d) | Level 3 security |
| (e) | Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $3,692,967 or 0.1% of net assets. |
| (f) | Amount is stated in United States dollars unless otherwise noted. |
| (g) | 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 $2,062,880. |
| (h) | Security is perpetual in nature with no stated maturity date. |
| (i) | Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. A complete unaudited schedule of portfolio holdings for each Fidelity Central Fund is filed with the SEC for the first and third quarters of each fiscal year on Form N-PORT and is available upon request or at the SEC's website at www.sec.gov. An unaudited holdings listing for the Fund, which presents direct holdings as well as the pro-rata share of securities and other investments held indirectly through its investment in underlying non-money market Fidelity Central Funds, is available at fidelity.com and/or institutional.fidelity.com, as applicable. In addition, each Fidelity Central Fund's financial statements,which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
| (j) | Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
| (k) | Investment made with cash collateral received from securities on loan. |
| Additional information on each restricted holding is as follows: | ||
| Security | Acquisition Date | Acquisition Cost ($) |
| ABL Space Systems Series B | 3/24/21 | 799,967 |
| ABL Space Systems Series B2 | 10/22/21 | 556,752 |
| Algolia, Inc. Series D | 7/23/21 | 820,733 |
| Ant International Co. Ltd. Class C | 5/16/18 | 3,487,731 |
| Astera Labs, Inc. Series C | 8/24/21 | 523,963 |
| Astranis Space Technologies Corp. Series C | 3/19/21 | 1,333,143 |
| Beta Technologies, Inc. Series A | 4/09/21 | 532,233 |
| Bolt Technology OU Series E | 1/03/22 | 1,632,302 |
| ByteDance Ltd. Series E1 | 11/18/20 | 2,377,869 |
| Cazoo Group Ltd. | 3/28/21 | 564,000 |
| CCC Intelligent Solutions Holdings, Inc. | 2/02/21 | 366,130 |
| Circle Internet Financial Ltd. Series E | 5/11/21 | 1,104,800 |
| Circle Internet Financial Ltd. Series F | 5/09/22 | 1,553,913 |
| Cvent Holding Corp. | 7/23/21 | 1,171,710 |
| Databricks, Inc. Series G | 2/01/21 | 263,746 |
| Databricks, Inc. Series H | 8/31/21 | 1,369,891 |
| Epic Games, Inc. | 3/29/21 | 1,603,620 |
| GaN Systems, Inc. Series F1 | 11/30/21 | 124,919 |
| GaN Systems, Inc. Series F2 | 11/30/21 | 65,957 |
| GaN Systems, Inc. 0% | 11/30/21 | 345,272 |
| Gupshup, Inc. | 6/08/21 | 1,368,208 |
| Skyryse, Inc. Series B | 10/21/21 | 1,233,999 |
| Space Exploration Technologies Corp. Class A | 2/16/21 | 713,983 |
| Starling Bank Ltd. Series D | 6/18/21 | 1,352,573 |
| Stripe, Inc. Class B | 5/18/21 | 800,682 |
| Stripe, Inc. Series H | 3/15/21 | 264,825 |
| Xsight Labs Ltd. Series D | 2/16/21 | 525,897 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
| Affiliate | Value, beginning of period ($) | Purchases ($) | Sales Proceeds ($) | Dividend Income ($) | Realized Gain (loss) ($) | Change in Unrealized appreciation (depreciation) ($) | Value, end of period ($) | % ownership, end of period |
| Fidelity Cash Central Fund 4.37% | 115,602,840 | 1,248,559,466 | 1,295,911,458 | 1,208,222 | - | - | 68,250,848 | 0.2% |
| Fidelity Securities Lending Cash Central Fund 4.37% | 5,110,773 | 119,933,612 | 122,935,549 | 93,544 | - | - | 2,108,836 | 0.0% |
| Fidelity VIP Investment Grade Central Fund | 2,046,910,415 | 378,673,733 | - | 74,456,990 | - | (342,620,404) | 2,082,963,744 | 84.7% |
| Total | 2,167,624,028 | 1,747,166,811 | 1,418,847,007 | 75,758,756 | - | (342,620,404) | 2,153,323,428 | |
Amounts in the dividend income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line item in the Statement of Operations, if applicable.
Amount for Fidelity Securities Lending Cash Central Fund represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities.
Amounts included in the purchases and sales proceeds columns may include in-kind transactions, if applicable.
Investment Valuation
The following is a summary of the inputs used, as of December 31, 2022, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total ($) | Level 1 ($) | Level 2 ($) | Level 3 ($) |
Investments in Securities: | ||||
| Equities: | ||||
Communication Services | 289,570,923 | 283,317,786 | 870,537 | 5,382,600 |
Consumer Discretionary | 364,061,002 | 353,340,828 | 7,965,341 | 2,754,833 |
Consumer Staples | 272,333,857 | 272,333,857 | - | - |
Energy | 197,631,647 | 197,631,647 | - | - |
Financials | 418,413,632 | 389,901,208 | 23,896,981 | 4,615,443 |
Health Care | 582,872,456 | 572,264,425 | 10,608,031 | - |
Industrials | 322,195,348 | 319,401,767 | - | 2,793,581 |
Information Technology | 922,081,903 | 862,336,426 | 50,705,945 | 9,039,532 |
Materials | 104,253,668 | 101,994,997 | 2,258,671 | - |
Real Estate | 94,610,930 | 94,610,930 | - | - |
Utilities | 117,670,007 | 117,670,007 | - | - |
| U.S. Government and Government Agency Obligations | 3,241,856 | - | 3,241,856 | - |
| Preferred Securities | 197,150 | - | - | 197,150 |
| Fixed-Income Funds | 2,082,963,744 | 2,082,963,744 | - | - |
| Money Market Funds | 70,359,684 | 70,359,684 | - | - |
| Total Investments in Securities: | 5,842,457,807 | 5,718,127,306 | 99,547,362 | 24,783,139 |
Derivative Instruments: | ||||
| Liabilities | ||||
Futures Contracts | (992,519) | (992,519) | - | - |
| Total Liabilities | (992,519) | (992,519) | - | - |
| Total Derivative Instruments: | (992,519) | (992,519) | - | - |
| Net Unrealized Depreciation on Unfunded Commitments | (117,891) | - | - | (117,891) |
| Total | (117,891) | - | - | (117,891) |
Value of Derivative Instruments
The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of December 31, 2022. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements.
Primary Risk Exposure / Derivative Type | Value | |
| Asset ($) | Liability ($) | |
| Equity Risk | ||
Futures Contracts (a) | 0 | (992,519) |
| Total Equity Risk | 0 | (992,519) |
| Total Value of Derivatives | 0 | (992,519) |
(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 Total accumulated earnings (loss).
| Statement of Assets and Liabilities | ||||
| December 31, 2022 | ||||
| Assets | ||||
| Investment in securities, at value (including securities loaned of $2,023,858) - See accompanying schedule: | $ | |||
Unaffiliated issuers (cost $2,913,670,073) | 3,689,134,379 | |||
Fidelity Central Funds (cost $2,458,089,579) | 2,153,323,428 | |||
| Total Investment in Securities (cost $5,371,759,652) | $ | 5,842,457,807 | ||
| Cash | 207,296 | |||
| Foreign currency held at value (cost $16,910) | 16,918 | |||
| Receivable for investments sold | 4,169,584 | |||
| Receivable for fund shares sold | 172,195 | |||
| Dividends receivable | 3,789,029 | |||
| Distributions receivable from Fidelity Central Funds | 284,139 | |||
| Prepaid expenses | 7,173 | |||
| Other receivables | 17,484 | |||
Total assets | 5,851,121,625 | |||
| Liabilities | ||||
| Payable for investments purchased | $1,669,689 | |||
| Unrealized depreciation on unfunded commitments | 117,891 | |||
| Payable for fund shares redeemed | 1,558,469 | |||
| Accrued management fee | 1,875,484 | |||
| Transfer agent fee payable | 535,222 | |||
| Distribution and service plan fees payable | 450,148 | |||
| Payable for daily variation margin on futures contracts | 98,900 | |||
| Other affiliated payables | 111,333 | |||
| Other payables and accrued expenses | 155,744 | |||
| Collateral on securities loaned | 2,108,836 | |||
| Total Liabilities | 8,681,716 | |||
| Net Assets | $ | 5,842,439,909 | ||
| Net Assets consist of: | ||||
| Paid in capital | $ | 5,133,275,389 | ||
| Total accumulated earnings (loss) | 709,164,520 | |||
| Net Assets | $ | 5,842,439,909 | ||
| Net Asset Value and Maximum Offering Price | ||||
| Initial Class : | ||||
Net Asset Value , offering price and redemption price per share ($266,447,096 ÷ 13,750,433 shares) | $ | 19.38 | ||
| Service Class : | ||||
Net Asset Value , offering price and redemption price per share ($35,778,243 ÷ 1,863,633 shares) | $ | 19.20 | ||
| Service Class 2 : | ||||
Net Asset Value , offering price and redemption price per share ($2,104,753,206 ÷ 112,293,793 shares) | $ | 18.74 | ||
| Investor Class : | ||||
Net Asset Value , offering price and redemption price per share ($3,435,461,364 ÷ 179,225,596 shares) | $ | 19.17 | ||
| Statement of Operations | ||||
Year ended December 31, 2022 | ||||
| Investment Income | ||||
| Dividends | $ | 56,725,038 | ||
| Interest | 38,114 | |||
| Income from Fidelity Central Funds (including $93,544 from security lending) | 56,977,720 | |||
| Total Income | 113,740,872 | |||
| Expenses | ||||
| Management fee | $ | 24,015,181 | ||
| Transfer agent fees | 6,841,364 | |||
| Distribution and service plan fees | 5,660,006 | |||
| Accounting fees | 1,382,230 | |||
| Custodian fees and expenses | 131,260 | |||
| Independent trustees' fees and expenses | 22,199 | |||
| Audit | 80,233 | |||
| Legal | 27,184 | |||
| Interest | 4,398 | |||
| Miscellaneous | 29,050 | |||
| Total expenses before reductions | 38,193,105 | |||
| Expense reductions | (216,091) | |||
| Total expenses after reductions | 37,977,014 | |||
| Net Investment income (loss) | 75,763,858 | |||
| Realized and Unrealized Gain (Loss) | ||||
| Net realized gain (loss) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers (net of foreign taxes of $320,652) | 215,977,692 | |||
| Foreign currency transactions | (99,873) | |||
| Futures contracts | (3,761,488) | |||
| Capital gain distributions from Fidelity Central Funds | 18,781,036 | |||
| Total net realized gain (loss) | 230,897,367 | |||
| Change in net unrealized appreciation (depreciation) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers (net of decrease in deferred foreign taxes of $235,169) | (1,298,595,692) | |||
| Fidelity Central Funds | (342,620,404) | |||
| Unfunded commitments | (113,452) | |||
| Assets and liabilities in foreign currencies | (31,633) | |||
| Futures contracts | (1,756,669) | |||
| Total change in net unrealized appreciation (depreciation) | (1,643,117,850) | |||
| Net gain (loss) | (1,412,220,483) | |||
| Net increase (decrease) in net assets resulting from operations | $ | (1,336,456,625) | ||
| Statement of Changes in Net Assets | ||||
Year ended December 31, 2022 | Year ended December 31, 2021 | |||
| Increase (Decrease) in Net Assets | ||||
| Operations | ||||
| Net investment income (loss) | $ | 75,763,858 | $ | 59,520,454 |
| Net realized gain (loss) | 230,897,367 | 563,915,748 | ||
| Change in net unrealized appreciation (depreciation) | (1,643,117,850) | 486,540,958 | ||
| Net increase (decrease) in net assets resulting from operations | (1,336,456,625) | 1,109,977,160 | ||
| Distributions to shareholders | (460,415,308) | (545,425,671) | ||
| Share transactions - net increase (decrease) | 225,085,361 | 866,336,017 | ||
| Total increase (decrease) in net assets | (1,571,786,572) | 1,430,887,506 | ||
| Net Assets | ||||
| Beginning of period | 7,414,226,481 | 5,983,338,975 | ||
| End of period | $ | 5,842,439,909 | $ | 7,414,226,481 |
Financial Highlights
| VIP Balanced Portfolio Initial Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 25.29 | $ | 23.29 | $ | 19.55 | $ | 16.78 | $ | 18.76 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .28 | .25 | .29 | .33 | .30 | |||||
| Net realized and unrealized gain (loss) | (4.62) | 3.79 | 4.02 | 3.62 | (1.07) | |||||
| Total from investment operations | (4.34) | 4.04 | 4.31 | 3.95 | (.77) | |||||
| Distributions from net investment income | (.27) | (.23) | (.30) | (.32) | (.27) | |||||
| Distributions from net realized gain | (1.30) | (1.81) | (.28) | (.86) | (.94) | |||||
| Total distributions | (1.57) | (2.04) | (.57) C | (1.18) | (1.21) | |||||
| Net asset value, end of period | $ | 19.38 | $ | 25.29 | $ | 23.29 | $ | 19.55 | $ | 16.78 |
Total Return D,E | (17.94)% | 18.26% | 22.39% | 24.51% | (4.22)% | |||||
Ratios to Average Net Assets B,F,G | ||||||||||
| Expenses before reductions | .47% | .46% | .48% | .49% | .49% | |||||
| Expenses net of fee waivers, if any | .46% | .46% | .48% | .49% | .49% | |||||
| Expenses net of all reductions | .46% | .46% | .47% | .48% | .49% | |||||
| Net investment income (loss) | 1.32% | 1.01% | 1.45% | 1.81% | 1.64% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 266,447 | $ | 332,976 | $ | 271,384 | $ | 240,746 | $ | 206,293 |
Portfolio turnover rate H | 37% | 33% | 62% | 41% | 55% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Balanced Portfolio Service Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 25.07 | $ | 23.11 | $ | 19.40 | $ | 16.67 | $ | 18.65 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .25 | .22 | .27 | .31 | .28 | |||||
| Net realized and unrealized gain (loss) | (4.57) | 3.76 | 4.00 | 3.58 | (1.05) | |||||
| Total from investment operations | (4.32) | 3.98 | 4.27 | 3.89 | (.77) | |||||
| Distributions from net investment income | (.25) | (.21) | (.28) | (.30) | (.27) | |||||
| Distributions from net realized gain | (1.30) | (1.81) | (.28) | (.86) | (.94) | |||||
| Total distributions | (1.55) | (2.02) | (.56) | (1.16) | (1.21) | |||||
| Net asset value, end of period | $ | 19.20 | $ | 25.07 | $ | 23.11 | $ | 19.40 | $ | 16.67 |
Total Return C,D | (18.02)% | 18.13% | 22.32% | 24.30% | (4.27)% | |||||
Ratios to Average Net Assets B,E,F | ||||||||||
| Expenses before reductions | .57% | .56% | .58% | .59% | .59% | |||||
| Expenses net of fee waivers, if any | .56% | .56% | .58% | .59% | .59% | |||||
| Expenses net of all reductions | .56% | .56% | .57% | .58% | .59% | |||||
| Net investment income (loss) | 1.22% | .91% | 1.35% | 1.71% | 1.53% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 35,778 | $ | 41,039 | $ | 30,072 | $ | 19,258 | $ | 16,616 |
Portfolio turnover rate G | 37% | 33% | 62% | 41% | 55% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
G Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Balanced Portfolio Service Class 2 |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 24.52 | $ | 22.64 | $ | 19.02 | $ | 16.37 | $ | 18.33 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .22 | .18 | .24 | .28 | .25 | |||||
| Net realized and unrealized gain (loss) | (4.48) | 3.68 | 3.91 | 3.51 | (1.04) | |||||
| Total from investment operations | (4.26) | 3.86 | 4.15 | 3.79 | (.79) | |||||
| Distributions from net investment income | (.22) | (.18) | (.25) | (.28) | (.23) | |||||
| Distributions from net realized gain | (1.30) | (1.81) | (.28) | (.86) | (.94) | |||||
| Total distributions | (1.52) | (1.98) C | (.53) | (1.14) | (1.17) | |||||
| Net asset value, end of period | $ | 18.74 | $ | 24.52 | $ | 22.64 | $ | 19.02 | $ | 16.37 |
Total Return D,E | (18.19)% | 17.99% | 22.13% | 24.11% | (4.44)% | |||||
Ratios to Average Net Assets B,F,G | ||||||||||
| Expenses before reductions | .72% | .71% | .73% | .74% | .74% | |||||
| Expenses net of fee waivers, if any | .71% | .71% | .73% | .74% | .74% | |||||
| Expenses net of all reductions | .71% | .71% | .72% | .73% | .74% | |||||
| Net investment income (loss) | 1.07% | .76% | 1.20% | 1.56% | 1.39% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 2,104,753 | $ | 2,562,199 | $ | 1,985,175 | $ | 1,492,773 | $ | 1,045,617 |
Portfolio turnover rate H | 37% | 33% | 62% | 41% | 55% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Balanced Portfolio Investor Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 25.04 | $ | 23.08 | $ | 19.37 | $ | 16.64 | $ | 18.61 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .26 | .22 | .27 | .31 | .28 | |||||
| Net realized and unrealized gain (loss) | (4.58) | 3.76 | 4.00 | 3.59 | (1.05) | |||||
| Total from investment operations | (4.32) | 3.98 | 4.27 | 3.90 | (.77) | |||||
| Distributions from net investment income | (.25) | (.21) | (.28) | (.31) | (.26) | |||||
| Distributions from net realized gain | (1.30) | (1.81) | (.28) | (.86) | (.94) | |||||
| Total distributions | (1.55) | (2.02) | (.56) | (1.17) | (1.20) | |||||
| Net asset value, end of period | $ | 19.17 | $ | 25.04 | $ | 23.08 | $ | 19.37 | $ | 16.64 |
Total Return C,D | (18.03)% | 18.17% | 22.35% | 24.38% | (4.28)% | |||||
Ratios to Average Net Assets B,E,F | ||||||||||
| Expenses before reductions | .54% | .54% | .56% | .57% | .57% | |||||
| Expenses net of fee waivers, if any | .54% | .54% | .55% | .57% | .57% | |||||
| Expenses net of all reductions | .54% | .54% | .55% | .56% | .57% | |||||
| Net investment income (loss) | 1.25% | .93% | 1.37% | 1.73% | 1.56% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 3,435,461 | $ | 4,478,013 | $ | 3,696,708 | $ | 3,152,822 | $ | 2,599,494 |
Portfolio turnover rate G | 37% | 33% | 62% | 41% | 55% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
G Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
For the period ended December 31, 2022
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.
Funds may invest 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing 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 investing fund. These strategies are consistent with the investment objectives of the investing 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 investing fund.
| Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio A |
| Fidelity VIP Investment Grade Central Fund | Fidelity Management & Research Company LLC (FMR) | Seeks a high level of current income by normally investing in investment-grade debt securities and repurchase agreements. | Delayed Delivery & When Issued Securities Restricted Securities | Less than .005% |
| Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | 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 investing 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. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission 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, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission 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 - Investment 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 designated the Fund's investment adviser as the valuation designee responsible for the fair valuation function and performing fair value determinations as needed. The investment adviser has established a Fair Value Committee (the Committee) to carry out the day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process and the activities of the Committee. In accordance with these fair valuation policies and procedures, which have been approved by the Board, the Fund attempts to obtain prices from one or more third party pricing services 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 the policies and procedures. Factors used in determining fair value vary by investment type and may include market or investment specific events, transaction data, estimated cash flows, and market observations of comparable investments. The frequency that the fair valuation procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee manages the Fund's fair valuation practices and maintains the fair valuation policies and procedures. The Fund's investment adviser reports to the Board information regarding the fair valuation process and related material matters.
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 - unadjusted 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 service 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, 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. 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.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing services or from brokers who make markets in such securities. Preferred securities and U.S. government and government agency obligations are valued by pricing services 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 services. 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, 2022 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain Funds 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of a 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 a fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred, as applicable. Certain expense reductions may also differ by class, if applicable. 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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, 2022, 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. The Fund is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income 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 futures contracts, foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), 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 | $1,126,635,169 |
| Gross unrealized depreciation | (660,799,576) |
| Net unrealized appreciation (depreciation) | $465,835,593 |
| Tax Cost | $5,376,504,323 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $18,519,366 |
| Undistributed long-term capital gain | $228,478,263 |
| Net unrealized appreciation (depreciation) on securities and other investments | $465,833,338 |
The tax character of distributions paid was as follows:
| December 31, 2022 | December 31, 2021 | |
| Ordinary Income | $88,795,820 | $ 304,745,651 |
| Long-term Capital Gains | 371,619,488 | 240,680,020 |
| Total | $460,415,308 | $545,425,671 |
Restricted Securities (including Private Placements). Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities held at period end is included at the end of the Schedule of Investments, if applicable.
Commitments. A commitment is an agreement to acquire an investment at a future date (subject to conditions) in connection with a potential public or non-public offering. Commitments outstanding at period end are presented in the table below. Unrealized appreciation (depreciation) on any commitments outstanding at period end is separately presented in the Statements of Assets and Liabilities as Unrealized appreciation (depreciation) on unfunded commitments, and any change in unrealized appreciation (depreciation) on unfunded commitments during the period is separately presented in the Statement of Operations, as applicable based on contractual conditions of each commitment.
| Investment to be Acquired | Commitment Amount | Unrealized Appreciation (Depreciation) | |
| VIP Balanced Portfolio | Stripe, Inc. | $117,891 | $(117,891) |
Special Purpose Acquisition Companies. Funds may invest in stock, warrants, and other securities of special purpose acquisition companies (SPACs) or similar special purpose entities. A SPAC is a publicly traded company that raises investment capital via an initial public offering (IPO) for the purpose of acquiring the equity securities of one or more existing companies via merger, business combination, acquisition or other similar transactions within a designated time frame.
Private Investment in Public Equity. Funds may acquire equity securities of an issuer through a private investment in a public equity (PIPE) transaction, including through commitments to purchase securities on a when-issued basis. A PIPE typically involves the purchase of securities directly from a publicly traded company in a private placement transaction. Securities purchased through PIPE transactions will be restricted from trading and considered illiquid until a resale registration statement for the shares is filed and declared effective.
At the current and/or prior period end, the Fund had commitments to purchase when-issued securities through PIPE transactions with SPACs. The commitments are contingent upon the SPACs acquiring the securities of target companies. Unrealized appreciation (depreciation) on any commitments outstanding at period end is separately presented in the Statements of Assets and Liabilities as Unrealized appreciation (depreciation) on unfunded commitments, and any change in unrealized appreciation (depreciation) on unfunded commitments during the period is separately presented in the Statement of Operations, as applicable.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund's investment objectives allow for various types of derivative instruments, 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.
Derivatives were used 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 objectives may not be achieved.
Derivatives were used to increase or decrease exposure to the following risk(s):
| 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. |
Funds are also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that a 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 a fund. Counterparty credit risk related to exchange-traded contracts may be mitigated by the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, 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. Futures contracts were used to manage 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 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 unless an average notional amount is presented. Any securities deposited to meet initial margin requirements are identified in the Schedule of Investments. Any 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, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
| Purchases ($) | Sales ($) | |
| VIP Balanced Portfolio | 2,367,950,044 | 2,450,103,234 |
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (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 .23% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .38% 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 Company LLC (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 | $ 37,083 |
| Service Class 2 | 5,622,923 |
| $5,660,006 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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. For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Initial Class | $182,092 | .06 |
| Service Class | 23,160 | .06 |
| Service Class 2 | 1,404,224 | .06 |
| Investor Class | 5,231,888 | .14 |
| $6,841,364 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
| % of Average Net Assets | |
| VIP Balanced Portfolio | .02 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 as follows:
| Amount | |
| VIP Balanced Portfolio | $45,040 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
| VIP Balanced Portfolio | Borrower | $38,946,000 | 4.07% | $4,398 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
| Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
| VIP Balanced Portfolio | 236,478,761 | 210,750,608 | 12,213,931 |
7. Committed Line of Credit.
Certain Funds participate 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 participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are listed below. During the period, there were no borrowings on this line of credit.
| Amount | |
| VIP Balanced Portfolio | $11,381 |
8. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Affiliated security lending activity, if any, was as follows:
| Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
| VIP Balanced Portfolio | $10,021 | $919 | $47,995 |
9. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $216,091.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Balanced Portfolio | ||
| Distributions to shareholders | ||
| Initial Class | $20,604,790 | $24,483,104 |
| Service Class | 2,493,974 | 2,857,510 |
| Service Class 2 | 160,737,445 | 183,989,796 |
| Investor Class | 276,579,099 | 334,095,261 |
Total | $460,415,308 | $545,425,671 |
11. Share Transactions.
Transactions for each class of shares were as follows and may contain in-kind transactions:
| Shares | Shares | Dollars | Dollars | |
| Year ended December 31, 2022 | Year ended December 31, 2021 | Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Balanced Portfolio | ||||
| Initial Class | ||||
| Shares sold | 1,835,940 | 2,346,915 | $39,365,194 | $57,940,332 |
| Reinvestment of distributions | 922,872 | 1,048,715 | 20,604,790 | 24,483,104 |
| Shares redeemed | (2,172,887) | (1,881,652) | (45,541,686) | (45,214,085) |
| Net increase (decrease) | 585,925 | 1,513,978 | $14,428,298 | $37,209,351 |
| Service Class | ||||
| Shares sold | 502,131 | 409,426 | $10,709,871 | $9,827,105 |
| Reinvestment of distributions | 112,708 | 123,283 | 2,493,974 | 2,857,510 |
| Shares redeemed | (387,864) | (197,194) | (8,164,125) | (4,753,055) |
| Net increase (decrease) | 226,975 | 335,515 | $5,039,720 | $7,931,560 |
| Service Class 2 | ||||
| Shares sold | 14,124,040 | 16,662,627 | $289,431,617 | $390,743,401 |
| Reinvestment of distributions | 7,416,339 | 8,124,891 | 160,737,445 | 183,989,796 |
| Shares redeemed | (13,745,239) | (7,956,788) | (277,401,627) | (187,262,084) |
| Net increase (decrease) | 7,795,140 | 16,830,730 | $172,767,435 | $387,471,113 |
| Investor Class | ||||
| Shares sold | 2,608,451 | 8,471,131 | $55,900,558 | $201,898,989 |
| Reinvestment of distributions | 12,498,473 | 14,458,679 | 276,579,099 | 334,095,261 |
| Shares redeemed | (14,736,457) | (4,254,847) | (299,629,749) | (102,270,257) |
| Net increase (decrease) | 370,467 | 18,674,963 | $32,849,908 | $433,723,993 |
12. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a 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 owners of record of more than 10% and certain otherwise unaffiliated shareholders were owners of record of more than 10% of the outstanding shares as follows
| Fund | Affiliated % | Number of Unaffiliated Shareholders | Unaffiliated Shareholders % |
| VIP Balanced Portfolio | 61% | 1 | 19% |
13. Risk and Uncertainties.
Many factors affect a fund's performance. Developments that disrupt global economies and financial markets, such as pandemics, epidemics, outbreaks of infectious diseases, war, terrorism, and environmental disasters, may significantly affect a fund's investment performance. The effects of these developments to a fund will be impacted by the types of securities in which a fund invests, the financial condition, industry, economic sector, and geographic location of an issuer, and a fund's level of investment in the securities of that issuer.
To the Board of Trustees of Variable Insurance Products Fund III and the 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, 2022, 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, 2022, 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, 2022, 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.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 14, 2023
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 318 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. Robert A. Lawrence is an interested person and currently serves as Chair. The Trustees have determined that an interested Chair is appropriate and benefits shareholders because an interested Chair 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 Chair, 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 Chair 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. David M. Thomas serves as Lead Independent Trustee 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 other equity 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. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity ® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Chair of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Trustee and Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity ® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity ® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
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 served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity ® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity ® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University's Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity ® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity ® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean's Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity ® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity ® funds (2021).
David M. Thomas (1949)
Year of Election or Appointment: 2008
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity ® funds. 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). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company - America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity ® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Wiley also serves as Trustee of other Fidelity ® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 a Member of the Advisory Board of other Fidelity ® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (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 as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2022
Deputy Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present). Previously, Mr. Brown served as Assistant Treasurer of certain Fidelity ® funds (2019-2022).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity ® funds (2016-2020) and Assistant Treasurer of certain Fidelity ® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), FD Funds Management LLC (2021-present), and Fidelity Diversifying Solutions LLC (investment adviser firm, 2022-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity ® funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
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 FIMM, LLC (2021-present) and 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity ® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity ® funds (2019-2021).
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2022 to December 31, 2022). |
Actual Expenses
The first line of the accompanying table 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/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratio- A | Beginning Account Value July 1, 2022 | Ending Account Value December 31, 2022 | Expenses Paid During Period- C July 1, 2022 to December 31, 2022 | |||||||
| VIP Balanced Portfolio | ||||||||||
| Initial Class | .46% | |||||||||
| Actual | $ 1,000 | $ 999.50 | $ 2.32 | |||||||
Hypothetical- B | $ 1,000 | $ 1,022.89 | $ 2.35 | |||||||
| Service Class | .56% | |||||||||
| Actual | $ 1,000 | $ 999.20 | $ 2.82 | |||||||
Hypothetical- B | $ 1,000 | $ 1,022.38 | $ 2.85 | |||||||
| Service Class 2 | .71% | |||||||||
| Actual | $ 1,000 | $ 998.40 | $ 3.58 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.63 | $ 3.62 | |||||||
| Investor Class | .54% | |||||||||
| Actual | $ 1,000 | $ 999.30 | $ 2.72 | |||||||
Hypothetical- B | $ 1,000 | $ 1,022.48 | $ 2.75 | |||||||
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B 5% return per year before expenses
C Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
Distributions (Unaudited)
The dividend and capital gains distributions for the fund(s) are available on Fidelity.com or Institutional.Fidelity.com.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2022, $228,572,964, or, if subsequently determined to be different, the net capital gain of such year.
A total of 11.42% 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 1%, and 70%; Service Class designates 1%, and 76%; Service Class 2 designates 1%, and 88%; and Investor Class designates 1%, and 75%; of the dividends distributed in February and December, respectively during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
|
1.540208.125
VIPBAL-ANN-0323
Fidelity® Variable Insurance Products:
Growth & Income Portfolio
Annual Report
December 31, 2022
Contents
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Fidelity® Variable Insurance Products are separate account options which are purchased through a variable insurance contract.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2023 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT. Forms N-PORT are available on the SEC's web site at http://www.sec.gov. A fund's Forms N-PORT 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.
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 | |||
Periods ended December 31, 2022 | Past 1 year | Past 5 years | Past 10 years |
| Initial Class | -4.95% | 8.85% | 11.58% |
| Service Class | -5.02% | 8.74% | 11.47% |
| Service Class 2 | -5.17% | 8.58% | 11.30% |
| Investor Class | -5.01% | 8.77% | 11.49% |
| $10,000 Over 10 Years |
Let's say hypothetically that $10,000 was invested in VIP Growth & Income Portfolio - Initial Class, a class of the fund, on December 31, 2012. 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. |
 |
Market Recap:
U.S. equities returned -18.11% in 2022, according to the S&P 500 ® index, as a multitude of risk factors challenged the global economy. It was the index's lowest calendar-year return since 2008 and first retreat since 2018. High inflation prompted the Federal Reserve to aggressively tighten monetary policy, and market interest rates eclipsed their highest level in a decade, stoking recession fears and sending stocks into bear market territory. Since March, the Fed hiked its benchmark rate seven times, by 4.25 percentage points - the fastest-ever pace of monetary tightening - while also shrinking its massive portfolio. Against this backdrop, the S&P 500 ® posted its worst year-to-date result (-23.87%) in 20 years through September, a seasonally weak month that stayed true to form, with volatility spiking due to growing certainty the Fed would persist in its effort to cool inflation, even at the expense of economic growth. Three of the index's worst monthly returns ever were recorded in 2022, as it shed 8% to 9% in April, June and September. Gains of similar proportion were made in July and October, amid optimism on inflation and policy easing. November (+6%) began with a rate hike of 0.75% and ended on a high note when the Fed signaled its intent to slow its pace of rate rises. For the year, value stocks handily outpaced growth. This headwind was pronounced in the growthier communication services (-40%), consumer discretionary (-37%) and information technology (-28%) sectors. In sharp contrast, energy (+66%) shined.
Comments from Portfolio Manager Matt Fruhan:
For the year, the fund's share classes returned roughly -5%, outperforming the -18.11% result of the benchmark S&P 500 ® index. The top contributors to performance versus the benchmark were an overweighting and security selection in energy. An underweighting and stock picking in consumer discretionary also helped. Also helping were stock picks in the health care sector, primarily driven by the health care equipment & services industry. The fund's largest individual relative contributor was an overweighting in Exxon Mobil, which gained approximately 87% the past year. It was the fund's largest holding. Our second-largest relative contributor this period was avoiding Amazon.com, a benchmark component that returned about -50%. Another notable relative contributor was an outsized stake in Hess (+93%), which was one of the fund's biggest holdings this period. In contrast, the largest detractor from performance versus the benchmark was stock selection in the industrials sector, primarily within the capital goods industry. An underweighting in utilities and stock selection in financials also hurt relative performance. Not owning Chevron, a benchmark component that gained about 58%, was the largest individual relative detractor. Our second-largest relative detractor this period was avoiding Merck, a benchmark component that gained roughly 49%. Avoiding Berkshire Hathaway, a benchmark component that gained approximately 3%, also hurt relative performance. Notable changes in positioning include increased exposure to the energy sector and a lower allocation to consumer staples.
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.
Top Holdings (% of Fund's net assets) | ||
| Exxon Mobil Corp.* | 8.2 | |
| Microsoft Corp. | 5.7 | |
| Wells Fargo & Co. | 5.0 | |
| General Electric Co. | 4.9 | |
| Bank of America Corp. | 2.8 | |
| Apple, Inc. | 2.8 | |
| Bristol-Myers Squibb Co. | 1.9 | |
| Comcast Corp. Class A | 1.8 | |
| Visa, Inc. Class A | 1.8 | |
| Hess Corp. | 1.8 | |
| 36.7 | ||
* Security or a portion of the security is pledged as collateral for call options written.
| Market Sectors (% of Fund's net assets) | ||
| Information Technology | 17.7 | |
| Industrials | 16.6 | |
| Financials | 15.5 | |
| Energy | 13.5 | |
| Health Care | 13.3 | |
| Consumer Staples | 5.3 | |
| Communication Services | 4.9 | |
| Materials | 2.7 | |
| Consumer Discretionary | 2.7 | |
| Utilities | 1.7 | |
| Real Estate | 1.2 | |
Asset Allocation (% of Fund's net assets) |
 |
Foreign investments - 13.8% |
Geographic Diversification (% of Fund's net assets) |
 |
* Includes Short-Term investments and Net Other Assets (Liabilities). Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable. |
Showing Percentage of Net Assets
| Common Stocks - 94.8% | |||
| Shares | Value ($) | ||
| COMMUNICATION SERVICES - 4.8% | |||
| Diversified Telecommunication Services - 0.8% | |||
| Cellnex Telecom SA (a) | 174,800 | 5,798,335 | |
| Elisa Corp. (A Shares) | 29,400 | 1,556,567 | |
| Verizon Communications, Inc. | 185,480 | 7,307,912 | |
| 14,662,814 | |||
| Entertainment - 1.5% | |||
| Activision Blizzard, Inc. | 33,600 | 2,572,080 | |
| Nintendo Co. Ltd. ADR | 259,100 | 2,699,822 | |
| The Walt Disney Co. (b) | 114,700 | 9,965,136 | |
| Universal Music Group NV | 442,600 | 10,703,259 | |
| Warner Music Group Corp. Class A | 104,300 | 3,652,586 | |
| 29,592,883 | |||
| Media - 2.5% | |||
| Comcast Corp. Class A | 1,014,662 | 35,482,730 | |
| Interpublic Group of Companies, Inc. | 404,600 | 13,477,226 | |
| 48,959,956 | |||
TOTAL COMMUNICATION SERVICES | 93,215,653 | ||
| CONSUMER DISCRETIONARY - 2.7% | |||
| Auto Components - 0.4% | |||
| BorgWarner, Inc. (c) | 170,280 | 6,853,770 | |
| Hotels, Restaurants & Leisure - 0.7% | |||
| Churchill Downs, Inc. | 27,800 | 5,877,754 | |
| Marriott International, Inc. Class A | 28,800 | 4,288,032 | |
| Starbucks Corp. | 36,200 | 3,591,040 | |
| 13,756,826 | |||
| Household Durables - 0.2% | |||
| Sony Group Corp. sponsored ADR | 31,400 | 2,395,192 | |
| Whirlpool Corp. | 8,100 | 1,145,826 | |
| 3,541,018 | |||
| Multiline Retail - 0.2% | |||
| Target Corp. | 25,700 | 3,830,328 | |
| Specialty Retail - 1.0% | |||
| Lowe's Companies, Inc. | 89,617 | 17,855,291 | |
| TJX Companies, Inc. | 6,200 | 493,520 | |
| Williams-Sonoma, Inc. | 2,900 | 333,268 | |
| 18,682,079 | |||
| Textiles, Apparel & Luxury Goods - 0.2% | |||
| NIKE, Inc. Class B | 22,100 | 2,585,921 | |
| Puma AG | 34,702 | 2,106,221 | |
| Tapestry, Inc. | 900 | 34,272 | |
| 4,726,414 | |||
TOTAL CONSUMER DISCRETIONARY | 51,390,435 | ||
| CONSUMER STAPLES - 5.3% | |||
| Beverages - 2.4% | |||
| Diageo PLC sponsored ADR (d) | 54,500 | 9,711,355 | |
| Keurig Dr. Pepper, Inc. | 246,200 | 8,779,492 | |
| Pernod Ricard SA | 16,000 | 3,147,123 | |
| Remy Cointreau SA | 9,428 | 1,590,531 | |
| The Coca-Cola Co. | 352,453 | 22,419,535 | |
| 45,648,036 | |||
| Food & Staples Retailing - 1.2% | |||
| Alimentation Couche-Tard, Inc. Class A (multi-vtg.) | 11,500 | 505,355 | |
| Sysco Corp. | 180,200 | 13,776,290 | |
| Walmart, Inc. | 65,400 | 9,273,066 | |
| 23,554,711 | |||
| Food Products - 0.2% | |||
| Lamb Weston Holdings, Inc. | 50,100 | 4,476,936 | |
| Household Products - 0.2% | |||
| Colgate-Palmolive Co. | 16,100 | 1,268,519 | |
| Kimberly-Clark Corp. | 3,200 | 434,400 | |
| Spectrum Brands Holdings, Inc. | 35,700 | 2,174,844 | |
| 3,877,763 | |||
| Personal Products - 0.3% | |||
| Estee Lauder Companies, Inc. Class A | 4,100 | 1,017,251 | |
| Haleon PLC ADR (b) | 631,294 | 5,050,352 | |
| 6,067,603 | |||
| Tobacco - 1.0% | |||
| Altria Group, Inc. | 428,285 | 19,576,907 | |
TOTAL CONSUMER STAPLES | 103,201,956 | ||
| ENERGY - 13.5% | |||
| Energy Equipment & Services - 0.0% | |||
| Baker Hughes Co. Class A | 15,100 | 445,903 | |
| Oil, Gas & Consumable Fuels - 13.5% | |||
| Canadian Natural Resources Ltd. (d) | 130,700 | 7,258,001 | |
| Cenovus Energy, Inc. (Canada) | 1,345,904 | 26,112,923 | |
| Energy Transfer LP | 81,800 | 970,966 | |
| Enterprise Products Partners LP | 48,600 | 1,172,232 | |
| Exxon Mobil Corp. (c) | 1,438,600 | 158,677,574 | |
| Hess Corp. | 247,700 | 35,128,814 | |
| Imperial Oil Ltd. | 226,100 | 11,012,773 | |
| Kosmos Energy Ltd. (b) | 1,021,328 | 6,495,646 | |
| Phillips 66 Co. | 23,700 | 2,466,696 | |
| Tourmaline Oil Corp. | 224,700 | 11,337,891 | |
| 260,633,516 | |||
TOTAL ENERGY | 261,079,419 | ||
| FINANCIALS - 15.5% | |||
| Banks - 11.5% | |||
| Bank of America Corp. | 1,620,912 | 53,684,605 | |
| Comerica, Inc. | 9,100 | 608,335 | |
| JPMorgan Chase & Co. | 147,832 | 19,824,271 | |
| M&T Bank Corp. | 29,900 | 4,337,294 | |
| PNC Financial Services Group, Inc. | 127,372 | 20,117,134 | |
| Truist Financial Corp. | 352,304 | 15,159,641 | |
| U.S. Bancorp | 267,798 | 11,678,671 | |
| Wells Fargo & Co. | 2,359,279 | 97,414,630 | |
| 222,824,581 | |||
| Capital Markets - 2.5% | |||
| Ashmore Group PLC | 314,500 | 910,234 | |
| Brookfield Asset Management Ltd. Class A | 18,973 | 543,956 | |
| Brookfield Corp. Class A | 81,145 | 2,552,822 | |
| CME Group, Inc. | 1,100 | 184,976 | |
| Intercontinental Exchange, Inc. | 3,200 | 328,288 | |
| KKR & Co. LP | 134,493 | 6,243,165 | |
| Morgan Stanley | 82,283 | 6,995,701 | |
| Northern Trust Corp. | 207,545 | 18,365,657 | |
| Raymond James Financial, Inc. | 96,550 | 10,316,368 | |
| S&P Global, Inc. | 300 | 100,482 | |
| State Street Corp. | 28,179 | 2,185,845 | |
| 48,727,494 | |||
| Consumer Finance - 0.2% | |||
| Discover Financial Services | 32,200 | 3,150,126 | |
| Insurance - 1.0% | |||
| American Financial Group, Inc. | 10,500 | 1,441,440 | |
| Brookfield Asset Management Reinsurance Partners Ltd. | 548 | 17,147 | |
| Chubb Ltd. | 28,400 | 6,265,040 | |
| Marsh & McLennan Companies, Inc. | 40,542 | 6,708,890 | |
| Old Republic International Corp. | 55,000 | 1,328,250 | |
| The Travelers Companies, Inc. | 18,600 | 3,487,314 | |
| 19,248,081 | |||
| Thrifts & Mortgage Finance - 0.3% | |||
| Essent Group Ltd. | 61,500 | 2,391,120 | |
| Radian Group, Inc. | 170,450 | 3,250,482 | |
| 5,641,602 | |||
TOTAL FINANCIALS | 299,591,884 | ||
| HEALTH CARE - 13.1% | |||
| Health Care Equipment & Supplies - 1.4% | |||
| Abbott Laboratories | 8,300 | 911,257 | |
| Becton, Dickinson & Co. | 25,576 | 6,503,977 | |
| Boston Scientific Corp. (b) | 319,400 | 14,778,638 | |
| GN Store Nord A/S | 12,500 | 287,453 | |
| Koninklijke Philips Electronics NV (depositary receipt) (NY Reg.) (d) | 234,927 | 3,521,556 | |
| Sonova Holding AG | 6,040 | 1,432,512 | |
| 27,435,393 | |||
| Health Care Providers & Services - 6.3% | |||
| Cardinal Health, Inc. | 163,500 | 12,568,245 | |
| Cigna Corp. | 88,390 | 29,287,143 | |
| CVS Health Corp. (c) | 192,964 | 17,982,315 | |
| Humana, Inc. | 9,300 | 4,763,367 | |
| McKesson Corp. (c) | 67,688 | 25,391,123 | |
| UnitedHealth Group, Inc. | 59,900 | 31,757,782 | |
| 121,749,975 | |||
| Life Sciences Tools & Services - 0.4% | |||
| Danaher Corp. | 30,900 | 8,201,478 | |
| Pharmaceuticals - 5.0% | |||
| Bayer AG | 22,633 | 1,164,923 | |
| Bristol-Myers Squibb Co. | 499,100 | 35,910,245 | |
| Eli Lilly & Co. | 21,000 | 7,682,640 | |
| GSK PLC sponsored ADR | 404,235 | 14,204,818 | |
| Johnson & Johnson | 154,459 | 27,285,182 | |
| Perrigo Co. PLC | 34,600 | 1,179,514 | |
| Sanofi SA sponsored ADR | 51,200 | 2,479,616 | |
| UCB SA | 62,300 | 4,905,645 | |
| Viatris, Inc. | 22,500 | 250,425 | |
| Zoetis, Inc. Class A | 3,500 | 512,925 | |
| 95,575,933 | |||
TOTAL HEALTH CARE | 252,962,779 | ||
| INDUSTRIALS - 16.6% | |||
| Aerospace & Defense - 3.4% | |||
| Airbus Group NV | 91,000 | 10,820,128 | |
| General Dynamics Corp. | 34,700 | 8,609,417 | |
| Huntington Ingalls Industries, Inc. | 25,800 | 5,951,544 | |
| MTU Aero Engines AG | 13,000 | 2,813,785 | |
| Raytheon Technologies Corp. | 46,587 | 4,701,560 | |
| Safran SA | 31,700 | 3,970,552 | |
| The Boeing Co. (b) | 154,810 | 29,489,757 | |
| 66,356,743 | |||
| Air Freight & Logistics - 1.8% | |||
| DSV A/S | 12,300 | 1,941,462 | |
| Expeditors International of Washington, Inc. | 2,095 | 217,712 | |
| FedEx Corp. | 29,300 | 5,074,760 | |
| United Parcel Service, Inc. Class B | 161,572 | 28,087,676 | |
| 35,321,610 | |||
| Airlines - 0.0% | |||
| Copa Holdings SA Class A (b) | 7,200 | 598,824 | |
| Building Products - 0.5% | |||
| A.O. Smith Corp. | 41,900 | 2,398,356 | |
| Johnson Controls International PLC | 111,600 | 7,142,400 | |
| 9,540,756 | |||
| Commercial Services & Supplies - 0.6% | |||
| GFL Environmental, Inc. | 302,900 | 8,845,396 | |
| Healthcare Services Group, Inc. (d) | 166,300 | 1,995,600 | |
| Ritchie Bros. Auctioneers, Inc. | 4,000 | 231,049 | |
| 11,072,045 | |||
| Electrical Equipment - 1.3% | |||
| Acuity Brands, Inc. | 35,500 | 5,879,155 | |
| Hubbell, Inc. Class B | 33,179 | 7,786,448 | |
| Regal Rexnord Corp. | 30,600 | 3,671,388 | |
| Rockwell Automation, Inc. | 5,100 | 1,313,607 | |
| Vertiv Holdings Co. | 392,200 | 5,357,452 | |
| 24,008,050 | |||
| Industrial Conglomerates - 5.1% | |||
| 3M Co. | 25,400 | 3,045,968 | |
| General Electric Co. | 1,132,731 | 94,911,530 | |
| 97,957,498 | |||
| Machinery - 1.9% | |||
| Allison Transmission Holdings, Inc. | 74,000 | 3,078,400 | |
| Caterpillar, Inc. | 9,800 | 2,347,688 | |
| Cummins, Inc. | 14,000 | 3,392,060 | |
| Donaldson Co., Inc. | 155,200 | 9,136,624 | |
| Epiroc AB (A Shares) | 8,400 | 152,957 | |
| Flowserve Corp. | 85,300 | 2,617,004 | |
| Fortive Corp. | 67,400 | 4,330,450 | |
| Kardex AG | 1,700 | 279,457 | |
| Nordson Corp. | 24,500 | 5,824,140 | |
| Otis Worldwide Corp. | 22,643 | 1,773,173 | |
| Stanley Black & Decker, Inc. (d) | 13,100 | 984,072 | |
| Westinghouse Air Brake Tech Co. | 32,121 | 3,205,997 | |
| 37,122,022 | |||
| Professional Services - 0.5% | |||
| Equifax, Inc. | 21,300 | 4,139,868 | |
| RELX PLC (London Stock Exchange) | 220,320 | 6,091,415 | |
| Robert Half International, Inc. | 2,600 | 191,958 | |
| 10,423,241 | |||
| Road & Rail - 0.5% | |||
| Knight-Swift Transportation Holdings, Inc. Class A (c) | 185,138 | 9,703,083 | |
| Trading Companies & Distributors - 0.9% | |||
| Brenntag SE | 19,000 | 1,211,723 | |
| Fastenal Co. | 32,300 | 1,528,436 | |
| MSC Industrial Direct Co., Inc. Class A | 4,400 | 359,480 | |
| Watsco, Inc. (d) | 50,992 | 12,717,405 | |
| WESCO International, Inc. (b) | 7,000 | 876,400 | |
| 16,693,444 | |||
| Transportation Infrastructure - 0.1% | |||
| Aena SME SA (a)(b) | 12,500 | 1,566,980 | |
TOTAL INDUSTRIALS | 320,364,296 | ||
| INFORMATION TECHNOLOGY - 17.7% | |||
| Electronic Equipment & Components - 0.2% | |||
| CDW Corp. | 25,300 | 4,518,074 | |
| IT Services - 4.2% | |||
| Amadeus IT Holding SA Class A (b) | 142,700 | 7,402,958 | |
| DXC Technology Co. (b) | 29,500 | 781,750 | |
| Edenred SA | 156,600 | 8,529,140 | |
| Fidelity National Information Services, Inc. | 120,000 | 8,142,000 | |
| Genpact Ltd. | 131,700 | 6,100,344 | |
| Global Payments, Inc. | 31,100 | 3,088,852 | |
| IBM Corp. | 49,700 | 7,002,233 | |
| MasterCard, Inc. Class A | 13,300 | 4,624,809 | |
| Unisys Corp. (b) | 210,696 | 1,076,657 | |
| Visa, Inc. Class A | 170,576 | 35,438,870 | |
| 82,187,613 | |||
| Semiconductors & Semiconductor Equipment - 3.1% | |||
| Analog Devices, Inc. | 38,100 | 6,249,543 | |
| Applied Materials, Inc. | 40,100 | 3,904,938 | |
| Intel Corp. | 128,200 | 3,388,326 | |
| Lam Research Corp. | 10,000 | 4,203,000 | |
| Marvell Technology, Inc. | 180,900 | 6,700,536 | |
| Microchip Technology, Inc. | 5,900 | 414,475 | |
| NVIDIA Corp. | 29,200 | 4,267,288 | |
| NXP Semiconductors NV | 52,000 | 8,217,560 | |
| Qualcomm, Inc. | 167,561 | 18,421,656 | |
| Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 22,700 | 1,690,923 | |
| Teradyne, Inc. | 19,800 | 1,729,530 | |
| 59,187,775 | |||
| Software - 7.3% | |||
| Intuit, Inc. | 28,800 | 11,209,536 | |
| Microsoft Corp. | 464,318 | 111,352,743 | |
| Open Text Corp. | 42,600 | 1,262,269 | |
| SAP SE sponsored ADR (d) | 144,800 | 14,941,912 | |
| Temenos Group AG | 31,440 | 1,725,264 | |
| 140,491,724 | |||
| Technology Hardware, Storage & Peripherals - 2.9% | |||
| Apple, Inc. | 412,832 | 53,639,262 | |
| FUJIFILM Holdings Corp. | 16,300 | 815,024 | |
| Samsung Electronics Co. Ltd. | 41,980 | 1,843,780 | |
| 56,298,066 | |||
TOTAL INFORMATION TECHNOLOGY | 342,683,252 | ||
| MATERIALS - 2.7% | |||
| Chemicals - 0.7% | |||
| DuPont de Nemours, Inc. | 162,000 | 11,118,060 | |
| PPG Industries, Inc. | 14,400 | 1,810,656 | |
| 12,928,716 | |||
| Metals & Mining - 2.0% | |||
| First Quantum Minerals Ltd. | 454,900 | 9,504,521 | |
| Freeport-McMoRan, Inc. | 495,600 | 18,832,800 | |
| Glencore PLC | 1,591,800 | 10,615,153 | |
| 38,952,474 | |||
| Paper & Forest Products - 0.0% | |||
| Louisiana-Pacific Corp. | 7,100 | 420,320 | |
TOTAL MATERIALS | 52,301,510 | ||
| REAL ESTATE - 1.2% | |||
| Equity Real Estate Investment Trusts (REITs) - 1.2% | |||
| American Tower Corp. | 42,900 | 9,088,794 | |
| Crown Castle International Corp. | 16,900 | 2,292,316 | |
| Equinix, Inc. | 200 | 131,006 | |
| Public Storage | 700 | 196,133 | |
| Simon Property Group, Inc. | 101,800 | 11,959,464 | |
| 23,667,713 | |||
| UTILITIES - 1.7% | |||
| Electric Utilities - 1.5% | |||
| Constellation Energy Corp. | 12,333 | 1,063,228 | |
| Duke Energy Corp. | 30,000 | 3,089,700 | |
| Entergy Corp. | 32,900 | 3,701,250 | |
| Exelon Corp. | 37,000 | 1,599,510 | |
| NextEra Energy, Inc. | 7,800 | 652,080 | |
| PG&E Corp. (b) | 274,400 | 4,461,744 | |
| Southern Co. | 202,100 | 14,431,961 | |
| 28,999,473 | |||
| Multi-Utilities - 0.2% | |||
| Sempra Energy | 17,900 | 2,766,266 | |
TOTAL UTILITIES | 31,765,739 | ||
| TOTAL COMMON STOCKS (Cost $1,222,230,232) | 1,832,224,636 | ||
| Convertible Preferred Stocks - 0.2% | |||
| Shares | Value ($) | ||
| HEALTH CARE - 0.2% | |||
| Health Care Equipment & Supplies - 0.2% | |||
| Becton, Dickinson & Co. 6.50% | 40,000 | 2,004,000 | |
| Boston Scientific Corp. Series A, 5.50% | 23,900 | 2,744,974 | |
| TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $4,390,000) | 4,748,974 | ||
| Convertible Bonds - 0.1% | |||
Principal Amount (e) | Value ($) | ||
| COMMUNICATION SERVICES - 0.1% | |||
| Interactive Media & Services - 0.1% | |||
Snap, Inc. 0.125% 3/1/28 (a) (Cost $1,575,412) | 2,241,000 | 1,495,868 | |
| Money Market Funds - 6.1% | |||
| Shares | Value ($) | ||
| Fidelity Cash Central Fund 4.37% (f) | 88,146,970 | 88,164,599 | |
| Fidelity Securities Lending Cash Central Fund 4.37% (f)(g) | 29,335,202 | 29,338,136 | |
| TOTAL MONEY MARKET FUNDS (Cost $117,502,735) | 117,502,735 | ||
| TOTAL INVESTMENT IN SECURITIES - 101.2% (Cost $1,345,698,379) | 1,955,972,213 |
NET OTHER ASSETS (LIABILITIES) - (1.2)% | (22,717,934) |
| NET ASSETS - 100.0% | 1,933,254,279 |
| Written Options | ||||||
| Counterparty | Number of Contracts | Notional Amount ($) | Exercise Price ($) | Expiration Date | Value ($) | |
| Call Options | ||||||
| BorgWarner, Inc. | Chicago Board Options Exchange | 167 | 672,175 | 45.00 | 01/20/23 | (1,253) |
| CVS Health Corp. | Chicago Board Options Exchange | 94 | 875,986 | 105.00 | 01/20/23 | (611) |
| Exxon Mobil Corp. | Chicago Board Options Exchange | 728 | 8,029,840 | 110.00 | 01/20/23 | (238,420) |
| Exxon Mobil Corp. | Chicago Board Options Exchange | 1,424 | 15,706,720 | 115.00 | 03/17/23 | (585,088) |
| Knight-Swift Transportation Holdings, Inc. | Chicago Board Options Exchange | 169 | 885,729 | 60.00 | 01/20/23 | (1,690) |
| McKesson Corp. | Chicago Board Options Exchange | 18 | 675,216 | 380.00 | 01/20/23 | (12,870) |
| TOTAL WRITTEN OPTIONS | (839,932) | |||||
Legend
| (a) | Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $8,861,183 or 0.5% of net assets. |
| (b) | Non-income producing |
| (c) | 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 $26,845,666. |
| (d) | Security or a portion of the security is on loan at period end. |
| (e) | Amount is stated in United States dollars unless otherwise noted. |
| (f) | Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request. |
| (g) | Investment made with cash collateral received from securities on loan. |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
| Affiliate | Value, beginning of period ($) | Purchases ($) | Sales Proceeds ($) | Dividend Income ($) | Realized Gain (loss) ($) | Change in Unrealized appreciation (depreciation) ($) | Value, end of period ($) | % ownership, end of period |
| Fidelity Cash Central Fund 4.37% | 17,754,902 | 274,338,992 | 203,929,295 | 1,295,257 | - | - | 88,164,599 | 0.2% |
| Fidelity Securities Lending Cash Central Fund 4.37% | 312,435 | 264,926,027 | 235,900,326 | 28,209 | - | - | 29,338,136 | 0.1% |
| Total | 18,067,337 | 539,265,019 | 439,829,621 | 1,323,466 | - | - | 117,502,735 | |
Amounts in the dividend 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.
Amount for Fidelity Securities Lending Cash Central Fund 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.
Amounts included in the purchases and sales proceeds columns may include in-kind transactions, if applicable.
Investment Valuation
The following is a summary of the inputs used, as of December 31, 2022, 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: | ||||
Communication Services | 93,215,653 | 76,714,059 | 16,501,594 | - |
Consumer Discretionary | 51,390,435 | 51,390,435 | - | - |
Consumer Staples | 103,201,956 | 103,201,956 | - | - |
Energy | 261,079,419 | 261,079,419 | - | - |
Financials | 299,591,884 | 299,591,884 | - | - |
Health Care | 257,711,753 | 251,797,856 | 5,913,897 | - |
Industrials | 320,364,296 | 296,550,541 | 23,813,755 | - |
Information Technology | 342,683,252 | 334,465,270 | 8,217,982 | - |
Materials | 52,301,510 | 41,686,357 | 10,615,153 | - |
Real Estate | 23,667,713 | 23,667,713 | - | - |
Utilities | 31,765,739 | 31,765,739 | - | - |
| Corporate Bonds | 1,495,868 | - | 1,495,868 | - |
| Money Market Funds | 117,502,735 | 117,502,735 | - | - |
| Total Investments in Securities: | 1,955,972,213 | 1,889,413,964 | 66,558,249 | - |
Derivative Instruments: | ||||
| Liabilities | ||||
Written Options | (839,932) | (839,932) | - | - |
| Total Liabilities | (839,932) | (839,932) | - | - |
| Total Derivative Instruments: | (839,932) | (839,932) | - | - |
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, 2022. 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 | ||
Written Options (a) | 0 | (839,932) |
| Total Equity Risk | 0 | (839,932) |
| Total Value of Derivatives | 0 | (839,932) |
(a)Gross value is presented in the Statement of Assets and Liabilities in the written options, at value line-item.
| Statement of Assets and Liabilities | ||||
| December 31, 2022 | ||||
| Assets | ||||
| Investment in securities, at value (including securities loaned of $28,396,001) - See accompanying schedule: | ||||
Unaffiliated issuers (cost $1,228,195,644) | $1,838,469,478 | |||
Fidelity Central Funds (cost $117,502,735) | 117,502,735 | |||
| Total Investment in Securities (cost $1,345,698,379) | $ | 1,955,972,213 | ||
| Cash | 8,965 | |||
| Foreign currency held at value (cost $124,083) | 124,083 | |||
| Receivable for investments sold | 776,739 | |||
| Receivable for fund shares sold | 6,540,766 | |||
| Dividends receivable | 1,967,681 | |||
| Interest receivable | 975 | |||
| Distributions receivable from Fidelity Central Funds | 320,441 | |||
| Prepaid expenses | 2,155 | |||
| Other receivables | 1,202 | |||
Total assets | 1,965,715,220 | |||
| Liabilities | ||||
| Payable for investments purchased | $643,864 | |||
| Payable for fund shares redeemed | 489,525 | |||
| Accrued management fee | 690,693 | |||
| Distribution and service plan fees payable | 234,469 | |||
| Written options, at value (premium received $938,238) | 839,932 | |||
| Other affiliated payables | 169,192 | |||
| Other payables and accrued expenses | 55,640 | |||
| Collateral on securities loaned | 29,337,626 | |||
| Total Liabilities | 32,460,941 | |||
| Net Assets | $ | 1,933,254,279 | ||
| Net Assets consist of: | ||||
| Paid in capital | $ | 1,320,212,860 | ||
| Total accumulated earnings (loss) | 613,041,419 | |||
| Net Assets | $ | 1,933,254,279 | ||
| Net Asset Value and Maximum Offering Price | ||||
| Initial Class : | ||||
Net Asset Value , offering price and redemption price per share ($367,028,025 ÷ 15,278,764 shares) | $ | 24.02 | ||
| Service Class : | ||||
Net Asset Value , offering price and redemption price per share ($116,688,058 ÷ 4,916,374 shares) | $ | 23.73 | ||
| Service Class 2 : | ||||
Net Asset Value , offering price and redemption price per share ($1,071,533,151 ÷ 46,071,655 shares) | $ | 23.26 | ||
| Investor Class : | ||||
Net Asset Value , offering price and redemption price per share ($378,005,045 ÷ 15,826,051 shares) | $ | 23.88 | ||
| Statement of Operations | ||||
Year ended December 31, 2022 | ||||
| Investment Income | ||||
| Dividends | $ | 41,318,101 | ||
| Interest | 158,635 | |||
| Income from Fidelity Central Funds (including $28,209 from security lending) | 1,323,466 | |||
| Total Income | 42,800,202 | |||
| Expenses | ||||
| Management fee | $ | 8,299,395 | ||
| Transfer agent fees | 1,494,103 | |||
| Distribution and service plan fees | 2,781,219 | |||
| Accounting fees | 553,628 | |||
| Custodian fees and expenses | 36,554 | |||
| Independent trustees' fees and expenses | 6,678 | |||
| Audit | 68,541 | |||
| Legal | 5,105 | |||
| Interest | 405 | |||
| Miscellaneous | 8,548 | |||
| Total expenses before reductions | 13,254,176 | |||
| Expense reductions | (63,663) | |||
| Total expenses after reductions | 13,190,513 | |||
| Net Investment income (loss) | 29,609,689 | |||
| Realized and Unrealized Gain (Loss) | ||||
| Net realized gain (loss) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers | 43,059,979 | |||
| Foreign currency transactions | 368,895 | |||
| Written options | 1,648,049 | |||
| Total net realized gain (loss) | 45,076,923 | |||
| Change in net unrealized appreciation (depreciation) on: | ||||
| Investment Securities: | ||||
| Unaffiliated issuers | (181,299,018) | |||
| Assets and liabilities in foreign currencies | (21,900) | |||
| Written options | (27,863) | |||
| Total change in net unrealized appreciation (depreciation) | (181,348,781) | |||
| Net gain (loss) | (136,271,858) | |||
| Net increase (decrease) in net assets resulting from operations | $ | (106,662,169) | ||
| Statement of Changes in Net Assets | ||||
Year ended December 31, 2022 | Year ended December 31, 2021 | |||
| Increase (Decrease) in Net Assets | ||||
| Operations | ||||
| Net investment income (loss) | $ | 29,609,689 | $ | 39,049,478 |
| Net realized gain (loss) | 45,076,923 | 46,453,948 | ||
| Change in net unrealized appreciation (depreciation) | (181,348,781) | 338,858,569 | ||
| Net increase (decrease) in net assets resulting from operations | (106,662,169) | 424,361,995 | ||
| Distributions to shareholders | (70,058,469) | (133,000,432) | ||
| Share transactions - net increase (decrease) | 28,157,702 | 105,627,226 | ||
| Total increase (decrease) in net assets | (148,562,936) | 396,988,789 | ||
| Net Assets | ||||
| Beginning of period | 2,081,817,215 | 1,684,828,426 | ||
| End of period | $ | 1,933,254,279 | $ | 2,081,817,215 |
Financial Highlights
| VIP Growth & Income Portfolio Initial Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 26.22 | $ | 22.36 | $ | 22.17 | $ | 19.38 | $ | 22.71 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .42 | .55 C | .42 | .46 | .46 | |||||
| Net realized and unrealized gain (loss) | (1.70) | 5.07 | 1.23 | 4.91 | (2.42) | |||||
| Total from investment operations | (1.28) | 5.62 | 1.65 | 5.37 | (1.96) | |||||
| Distributions from net investment income | (.42) | (.62) | (.42) | (.77) D | (.08) | |||||
| Distributions from net realized gain | (.50) | (1.14) | (1.03) | (1.81) D | (1.29) | |||||
| Total distributions | (.92) | (1.76) | (1.46) E | (2.58) | (1.37) | |||||
| Net asset value, end of period | $ | 24.02 | $ | 26.22 | $ | 22.36 | $ | 22.17 | $ | 19.38 |
Total Return F,G | (4.95)% | 25.95% | 7.85% | 30.05% | (8.98)% | |||||
Ratios to Average Net Assets B,H,I | ||||||||||
| Expenses before reductions | .52% | .52% | .54% | .54% | .55% | |||||
| Expenses net of fee waivers, if any | .52% | .52% | .54% | .54% | .54% | |||||
| Expenses net of all reductions | .52% | .52% | .53% | .54% | .54% | |||||
| Net investment income (loss) | 1.68% | 2.18% C | 2.18% | 2.27% | 2.08% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 367,028 | $ | 439,309 | $ | 377,942 | $ | 358,103 | $ | 361,868 |
Portfolio turnover rate J | 10% | 15% | 26% | 34% | 41% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.16 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.55%.
D The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Growth & Income Portfolio Service Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 25.91 | $ | 22.12 | $ | 21.95 | $ | 19.21 | $ | 22.52 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .39 | .52 C | .40 | .44 | .43 | |||||
| Net realized and unrealized gain (loss) | (1.67) | 5.00 | 1.21 | 4.87 | (2.39) | |||||
| Total from investment operations | (1.28) | 5.52 | 1.61 | 5.31 | (1.96) | |||||
| Distributions from net investment income | (.40) | (.59) | (.40) | (.75) D | (.06) | |||||
| Distributions from net realized gain | (.50) | (1.14) | (1.03) | (1.81) D | (1.29) | |||||
| Total distributions | (.90) | (1.73) | (1.44) E | (2.57) E | (1.35) | |||||
| Net asset value, end of period | $ | 23.73 | $ | 25.91 | $ | 22.12 | $ | 21.95 | $ | 19.21 |
Total Return F,G | (5.02)% | 25.76% | 7.74% | 29.94% | (9.07)% | |||||
Ratios to Average Net Assets B,H,I | ||||||||||
| Expenses before reductions | .62% | .62% | .64% | .64% | .65% | |||||
| Expenses net of fee waivers, if any | .62% | .62% | .64% | .64% | .64% | |||||
| Expenses net of all reductions | .62% | .62% | .63% | .64% | .64% | |||||
| Net investment income (loss) | 1.58% | 2.08% C | 2.08% | 2.17% | 1.98% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 116,688 | $ | 128,601 | $ | 115,376 | $ | 118,198 | $ | 101,089 |
Portfolio turnover rate J | 10% | 15% | 26% | 34% | 41% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.16 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.45%.
D The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Growth & Income Portfolio Service Class 2 |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 25.42 | $ | 21.72 | $ | 21.58 | $ | 18.94 | $ | 22.22 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .34 | .48 C | .37 | .40 | .39 | |||||
| Net realized and unrealized gain (loss) | (1.64) | 4.92 | 1.18 | 4.78 | (2.35) | |||||
| Total from investment operations | (1.30) | 5.40 | 1.55 | 5.18 | (1.96) | |||||
| Distributions from net investment income | (.36) | (.55) | (.38) | (.73) D | (.04) | |||||
| Distributions from net realized gain | (.50) | (1.14) | (1.03) | (1.81) D | (1.28) | |||||
| Total distributions | (.86) | (1.70) E | (1.41) | (2.54) | (1.32) | |||||
| Net asset value, end of period | $ | 23.26 | $ | 25.42 | $ | 21.72 | $ | 21.58 | $ | 18.94 |
Total Return F,G | (5.17)% | 25.64% | 7.59% | 29.68% | (9.19)% | |||||
Ratios to Average Net Assets B,H,I | ||||||||||
| Expenses before reductions | .77% | .77% | .79% | .79% | .80% | |||||
| Expenses net of fee waivers, if any | .77% | .77% | .79% | .79% | .79% | |||||
| Expenses net of all reductions | .77% | .77% | .78% | .79% | .79% | |||||
| Net investment income (loss) | 1.43% | 1.94% C | 1.93% | 2.02% | 1.83% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 1,071,533 | $ | 1,137,635 | $ | 908,013 | $ | 790,495 | $ | 527,879 |
Portfolio turnover rate J | 10% | 15% | 26% | 34% | 41% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.16 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.30%.
D The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
| VIP Growth & Income Portfolio Investor Class |
| Years ended December 31, | 2022 | 2021 | 2020 | 2019 | 2018 | |||||
Selected Per-Share Data | ||||||||||
| Net asset value, beginning of period | $ | 26.07 | $ | 22.25 | $ | 22.07 | $ | 19.30 | $ | 22.62 |
| Income from Investment Operations | ||||||||||
Net investment income (loss) A,B | .40 | .53 C | .41 | .44 | .44 | |||||
| Net realized and unrealized gain (loss) | (1.68) | 5.03 | 1.21 | 4.90 | (2.41) | |||||
| Total from investment operations | (1.28) | 5.56 | 1.62 | 5.34 | (1.97) | |||||
| Distributions from net investment income | (.40) | (.60) | (.41) | (.75) D | (.06) | |||||
| Distributions from net realized gain | (.50) | (1.14) | (1.03) | (1.81) D | (1.29) | |||||
| Total distributions | (.91) E | (1.74) | (1.44) | (2.57) E | (1.35) | |||||
| Net asset value, end of period | $ | 23.88 | $ | 26.07 | $ | 22.25 | $ | 22.07 | $ | 19.30 |
Total Return F,G | (5.01)% | 25.80% | 7.76% | 29.97% | (9.05)% | |||||
Ratios to Average Net Assets B,H,I | ||||||||||
| Expenses before reductions | .60% | .60% | .61% | .62% | .62% | |||||
| Expenses net of fee waivers, if any | .60% | .60% | .61% | .62% | .62% | |||||
| Expenses net of all reductions | .60% | .60% | .61% | .62% | .62% | |||||
| Net investment income (loss) | 1.60% | 2.11% C | 2.10% | 2.19% | 2.01% | |||||
| Supplemental Data | ||||||||||
| Net assets, end of period (000 omitted) | $ | 378,005 | $ | 376,272 | $ | 283,497 | $ | 291,704 | $ | 258,292 |
Portfolio turnover rate J | 10% | 15% | 26% | 34% | 41% |
A Calculated based on average shares outstanding during the period.
B Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
C Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.16 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.48%.
D The amount shown reflects reclassifications related to book to tax differences that were made in the year shown.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
For the period ended December 31, 2022
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.
Funds may invest 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing 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 investing fund. These strategies are consistent with the investment objectives of the investing 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 investing fund.
| Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio A |
| Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | 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.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission 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, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission 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 - Investment 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 designated the Fund's investment adviser as the valuation designee responsible for the fair valuation function and performing fair value determinations as needed. The investment adviser has established a Fair Value Committee (the Committee) to carry out the day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process and the activities of the Committee. In accordance with these fair valuation policies and procedures, which have been approved by the Board, the Fund attempts to obtain prices from one or more third party pricing services 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 the policies and procedures. Factors used in determining fair value vary by investment type and may include market or investment specific events, transaction data, estimated cash flows, and market observations of comparable investments. The frequency that the fair valuation procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee manages the Fund's fair valuation practices and maintains the fair valuation policies and procedures. The Fund's investment adviser reports to the Board information regarding the fair valuation process and related material matters.
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 - unadjusted 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 service 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, 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. 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.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing services or from brokers who make markets in such securities. Corporate bonds are valued by pricing services 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 services. 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 the last sale price or, in the absence of a sale, the last offering price 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, 2022 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain Funds 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of a 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 a fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred, as applicable. Certain expense reductions may also differ by class, if applicable. 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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, 2022, 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 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 foreign currency transactions, 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 | $682,608,714 |
| Gross unrealized depreciation | (76,661,375) |
| Net unrealized appreciation (depreciation) | $605,947,339 |
| Tax Cost | $1,349,184,942 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $2,499,822 |
| Undistributed long-term capital gain | $4,613,185 |
| Net unrealized appreciation (depreciation) on securities and other investments | $605,928,413 |
The tax character of distributions paid was as follows:
| December 31, 2022 | December 31, 2021 | |
| Ordinary Income | $32,663,492 | $54,554,307 |
| Long-term Capital Gains | 37,394,977 | 78,446,125 |
| Total | $70,058,469 | $133,000,432 |
Restricted Securities (including Private Placements). Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities held at period end is included at the end of the Schedule of Investments, if applicable.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund's investment objectives allow for various types of derivative instruments, 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.
Derivatives were used 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 objectives may not be achieved.
Derivatives were used to increase or decrease exposure to the following risk(s):
| 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. |
Funds are also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that a 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 a fund. Counterparty credit risk related to exchange-traded contracts may be mitigated by the protection provided by the exchange on which they trade.
Investing in derivatives may involve greater risks than investing in the underlying assets directly and, to varying degrees, 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.
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.
Exchange-traded written covered call options were used to manage exposure to the market. When a fund writes a covered call option, a 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, a 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, a gain or loss is realized 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 unless an average contracts amount is presented.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, U.S. government securities and in-kind transactions, as applicable, are noted in the table below.
| Purchases ($) | Sales ($) | |
| VIP Growth & Income Portfolio | 184,354,180 | 277,002,989 |
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (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 .23% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .43% 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 Company LLC (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 | $120,059 |
| Service Class 2 | 2,661,160 |
| $2,781,219 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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. For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Initial Class | $244,431 | .06 |
| Service Class | 74,986 | .06 |
| Service Class 2 | 664,911 | .06 |
| Investor Class | 509,775 | .14 |
| $1,494,103 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
| % of Average Net Assets | |
| VIP Growth & Income Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 as follows:
| Amount | |
| VIP Growth & Income Portfolio | $3,380 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
| VIP Growth & Income Portfolio | Borrower | $23,152,000 | .32% | $405 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
| Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
| VIP Growth & Income Portfolio | 18,141,235 | 22,771,038 | 4,058,508 |
7. Committed Line of Credit.
Certain Funds participate 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 participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are listed below. During the period, there were no borrowings on this line of credit.
| Amount | |
| VIP Growth & Income Portfolio | $3,359 |
8. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Affiliated security lending activity, if any, was as follows:
| Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
| VIP Growth & Income Portfolio | $2,980 | $- | $- |
9. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $63,663.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Growth & Income Portfolio | ||
| Distributions to shareholders | ||
| Initial Class | $13,621,746 | $29,180,191 |
| Service Class | 4,287,387 | 8,583,827 |
| Service Class 2 | 38,453,504 | 71,702,293 |
| Investor Class | 13,695,832 | 23,534,121 |
Total | $70,058,469 | $133,000,432 |
11. Share Transactions.
Transactions for each class of shares were as follows and may contain in-kind transactions:
| Shares | Shares | Dollars | Dollars | |
| Year ended December 31, 2022 | Year ended December 31, 2021 | Year ended December 31, 2022 | Year ended December 31, 2021 | |
| VIP Growth & Income Portfolio | ||||
| Initial Class | ||||
| Shares sold | 4,205,341 | 2,834,414 | $105,061,293 | $71,355,013 |
| Reinvestment of distributions | 553,666 | 1,199,113 | 13,621,746 | 29,180,191 |
| Shares redeemed | (6,237,929) | (4,175,421) | (155,225,066) | (104,656,469) |
| Net increase (decrease) | (1,478,922) | (141,894) | $(36,542,027) | $(4,121,265) |
| Service Class | ||||
| Shares sold | 225,906 | 137,042 | $5,617,209 | $3,481,587 |
| Reinvestment of distributions | 176,389 | 357,380 | 4,287,387 | 8,583,827 |
| Shares redeemed | (448,513) | (747,533) | (11,012,554) | (19,043,010) |
| Net increase (decrease) | (46,218) | (253,111) | $(1,107,958) | $(6,977,596) |
| Service Class 2 | ||||
| Shares sold | 4,830,627 | 5,519,392 | $115,599,799 | $134,744,364 |
| Reinvestment of distributions | 1,614,154 | 3,031,330 | 38,453,504 | 71,702,293 |
| Shares redeemed | (5,135,070) | (5,585,958) | (125,404,991) | (132,439,834) |
| Net increase (decrease) | 1,309,711 | 2,964,764 | $28,648,312 | $74,006,823 |
| Investor Class | ||||
| Shares sold | 3,874,646 | 2,644,483 | $97,699,069 | $66,781,336 |
| Reinvestment of distributions | 559,919 | 968,694 | 13,695,832 | 23,534,121 |
| Shares redeemed | (3,039,935) | (1,922,897) | (74,235,526) | (47,596,193) |
| Net increase (decrease) | 1,394,630 | 1,690,280 | $37,159,375 | $42,719,264 |
12. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a 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 owners of record of more than 10% and certain otherwise unaffiliated shareholders were owners of record of more than 10% of the outstanding shares as follows:
| Fund | Affiliated % | Number of Unaffiliated Shareholders | Unaffiliated Shareholders % |
| VIP Growth & Income Portfolio | 24% | 2 | 54% |
13. Risk and Uncertainties.
Many factors affect a fund's performance. Developments that disrupt global economies and financial markets, such as pandemics, epidemics, outbreaks of infectious diseases, war, terrorism, and environmental disasters, may significantly affect a fund's investment performance. The effects of these developments to a fund will be impacted by the types of securities in which a fund invests, the financial condition, industry, economic sector, and geographic location of an issuer, and a fund's level of investment in the securities of that issuer.
To the Board of Trustees of Variable Insurance Products Fund III and the 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, 2022, 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, 2022, 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, 2022, 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.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 10, 2023
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 318 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. Robert A. Lawrence is an interested person and currently serves as Chair. The Trustees have determined that an interested Chair is appropriate and benefits shareholders because an interested Chair 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 Chair, 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 Chair 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. David M. Thomas serves as Lead Independent Trustee 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 other equity 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. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity ® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Chair of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Trustee and Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity ® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity ® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
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 served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity ® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006) and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity ® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University's Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity ® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity ® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean's Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity ® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity ® funds (2021).
David M. Thomas (1949)
Year of Election or Appointment: 2008
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity ® funds. 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). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity ® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company - America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity ® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Wiley also serves as Trustee of other Fidelity ® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity ® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. 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 a Member of the Advisory Board of other Fidelity ® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (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 as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2022
Deputy Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present). Previously, Mr. Brown served as Assistant Treasurer of certain Fidelity ® funds (2019-2022).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity ® funds (2016-2020) and Assistant Treasurer of certain Fidelity ® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), FD Funds Management LLC (2021-present), and Fidelity Diversifying Solutions LLC (investment adviser firm, 2022-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity ® funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
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 FIMM, LLC (2021-present) and 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity ® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity ® funds (2019-2021).
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2022 to December 31, 2022). |
Actual Expenses
The first line of the accompanying table 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/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the annualized expense ratio used to calculate the expense estimate in the table below. 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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Annualized Expense Ratio- A | Beginning Account Value July 1, 2022 | Ending Account Value December 31, 2022 | Expenses Paid During Period- C July 1, 2022 to December 31, 2022 | |||||||
| VIP Growth & Income Portfolio | ||||||||||
| Initial Class | .52% | |||||||||
| Actual | $ 1,000 | $ 1,080.10 | $ 2.73 | |||||||
Hypothetical- B | $ 1,000 | $ 1,022.58 | $ 2.65 | |||||||
| Service Class | .62% | |||||||||
| Actual | $ 1,000 | $ 1,079.10 | $ 3.25 | |||||||
Hypothetical- B | $ 1,000 | $ 1,022.08 | $ 3.16 | |||||||
| Service Class 2 | .77% | |||||||||
| Actual | $ 1,000 | $ 1,078.80 | $ 4.03 | |||||||
Hypothetical- B | $ 1,000 | $ 1,021.32 | $ 3.92 | |||||||
| Investor Class | .60% | |||||||||
| Actual | $ 1,000 | $ 1,079.40 | $ 3.14 | |||||||
Hypothetical- B | $ 1,000 | $ 1,022.18 | $ 3.06 | |||||||
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B 5% return per year before expenses
C Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
Distributions (Unaudited)
The dividend and capital gains distributions for the fund(s) are available on Fidelity.com or Institutional.Fidelity.com.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31 st , 2022, $38,059,654, or, if subsequently determined to be different, the net capital gain of such year.
Initial Class, Service Class, Service Class 2, and Investor Class designate 100% of the dividends distributed during the fiscal year as qualifying for the dividends-received deduction for corporate shareholders.
|
1.540026.125
VIPGI-ANN-0323
Item 2.
Code of Ethics
As of the end of the period, December 31, 2022, 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 Donald F. Donahue is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Donahue 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, 2022 FeesA
Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | |
VIP Balanced Portfolio | $52,000 | $- | $9,800 | $1,200 |
VIP Dynamic Capital Appreciation Portfolio | $34,600 | $- | $8,800 | $900 |
VIP Growth & Income Portfolio | $43,600 | $- | $8,800 | $1,100 |
VIP Growth Opportunities Portfolio | $46,000 | $- | $7,100 | $1,100 |
VIP Value Strategies Portfolio | $40,600 | $- | $10,500 | $1,000 |
December 31, 2021 FeesA
Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | |
VIP Balanced Portfolio | $50,600 | $- | $10,400 | $1,200 |
VIP Dynamic Capital Appreciation Portfolio | $33,600 | $- | $9,000 | $900 |
VIP Growth & Income Portfolio | $42,500 | $- | $8,800 | $1,100 |
VIP Growth Opportunities Portfolio | $44,800 | $- | $7,400 | $1,100 |
VIP Value Strategies Portfolio | $39,500 | $- | $10,700 | $1,000 |
A Amounts may reflect rounding.
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, 2022 FeesA
Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | |
VIP Mid Cap Portfolio | $43,200 | $3,600 | $10,600 | $1,200 |
December 31, 2021 FeesA
Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | |
VIP Mid Cap Portfolio | $39,600 | $3,900 | $7,100 | $1,200 |
A Amounts may reflect rounding.
The following table(s) present(s) fees billed by Deloitte Entities and PwC that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Fund(s) and that are rendered on behalf of Fidelity Management & Research Company LLC ("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 Fund(s) (“Fund Service Providers”):
Services Billed by Deloitte Entities
December 31, 2022A | December 31, 2021A | |
Audit-Related Fees | $- | $- |
Tax Fees | $- | $- |
All Other Fees | $- | $- |
A Amounts may reflect rounding.
Services Billed by PwC
December 31, 2022A | December 31, 2021A | |
Audit-Related Fees | $7,914,600 | $8,522,600 |
Tax Fees | $1,000 | $354,200 |
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 Deloitte Entities and PwC for services rendered to the Fund(s), 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 Fund(s) are as follows:
Billed By | December 31, 2022A | December 31, 2021A |
Deloitte Entities | $507,900 | $573,200 |
PwC | $12,898,400 | $14,131,700 |
A Amounts may reflect rounding.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by Deloitte Entities and PwC to Fund Service Providers to be compatible with maintaining the independence of Deloitte Entities and PwC in its(their) audit of the Fund(s), taking into account representations from Deloitte Entities and PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the Fund(s) and its(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(s) 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 periodically.
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 Fund’s(s’) last two fiscal years relating to services provided to (i) the Fund(s) or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Fund(s).
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
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.
Disclosure of Securities Lending Activities for Closed-End Management
Investment Companies
Not applicable.
Item 13.
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) | |
(a) | (3) | Not applicable. |
(b) |
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 21, 2023 |
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 21, 2023 |
By: | /s/John J. Burke III |
John J. Burke III | |
Chief Financial Officer | |
Date: | February 21, 2023 |