UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-7205
Variable Insurance Products Fund III
(Exact name of registrant as specified in charter)
245 Summer St., Boston, MA 02210
(Address of principal executive offices) (Zip code)
Marc Bryant, Secretary
245 Summer St.
Boston, Massachusetts 02210
(Name and address of agent for service)
Registrant's telephone number, including area code:
617-563-7000
Date of fiscal year end: | December 31 |
Date of reporting period: | June 30, 2017 |
Item 1.
Reports to Stockholders
Fidelity® Variable Insurance Products: Value Strategies Portfolio Semi-Annual Report June 30, 2017 |
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. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.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.
Investment Summary (Unaudited)
Top Ten Stocks as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
American Tower Corp. | 3.2 | 2.7 |
Edison International | 2.9 | 3.2 |
Sempra Energy | 2.7 | 3.0 |
Synchrony Financial | 2.4 | 2.8 |
U.S. Bancorp | 2.3 | 2.8 |
Jazz Pharmaceuticals PLC | 2.1 | 1.7 |
Extra Space Storage, Inc. | 2.1 | 2.4 |
Equity Lifestyle Properties, Inc. | 1.9 | 1.1 |
FNF Group | 1.9 | 1.6 |
Discover Financial Services | 1.8 | 1.6 |
23.3 |
Top Five Market Sectors as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Financials | 17.4 | 18.7 |
Real Estate | 14.2 | 11.5 |
Consumer Discretionary | 12.0 | 12.6 |
Industrials | 11.0 | 10.1 |
Information Technology | 9.8 | 11.6 |
Asset Allocation (% of fund's net assets)
As of June 30, 2017 * | ||
Stocks | 99.4% | |
Bonds | 0.3% | |
Short-Term Investments and Net Other Assets (Liabilities) | 0.3% |
* Foreign investments - 16.6%
As of December 31, 2016 * | ||
Stocks | 99.5% | |
Bonds | 0.6% | |
Short-Term Investments and Net Other Assets (Liabilities)** | (0.1)% |
* Foreign investments - 15.9%
** Short-Term Investments and Net Other Assets (Liabilities) are not included in the pie chart
Investments June 30, 2017 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.4% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 12.0% | |||
Auto Components - 1.0% | |||
Delphi Automotive PLC | 50,831 | $4,455,337 | |
Diversified Consumer Services - 2.7% | |||
Houghton Mifflin Harcourt Co. (a) | 422,810 | 5,200,563 | |
Service Corp. International | 200,800 | 6,716,760 | |
11,917,323 | |||
Hotels, Restaurants & Leisure - 2.0% | |||
U.S. Foods Holding Corp. (a) | 158,100 | 4,303,482 | |
Wyndham Worldwide Corp. | 42,533 | 4,270,739 | |
8,574,221 | |||
Internet & Direct Marketing Retail - 0.9% | |||
Liberty Interactive Corp. QVC Group (Venture Group) Series A (a) | 75,600 | 3,953,124 | |
Leisure Products - 1.6% | |||
Mattel, Inc. | 193,400 | 4,163,902 | |
Vista Outdoor, Inc. (a) | 118,300 | 2,662,933 | |
6,826,835 | |||
Media - 3.0% | |||
Liberty Global PLC Class C (a) | 155,700 | 4,854,726 | |
Scripps Networks Interactive, Inc. Class A | 49,100 | 3,354,021 | |
Sinclair Broadcast Group, Inc. Class A | 147,000 | 4,836,300 | |
13,045,047 | |||
Specialty Retail - 0.8% | |||
Signet Jewelers Ltd. (b) | 57,400 | 3,629,976 | |
TOTAL CONSUMER DISCRETIONARY | 52,401,863 | ||
CONSUMER STAPLES - 2.4% | |||
Beverages - 1.2% | |||
Cott Corp. | 355,461 | 5,134,010 | |
Food Products - 1.2% | |||
Darling International, Inc. (a) | 334,763 | 5,269,170 | |
TOTAL CONSUMER STAPLES | 10,403,180 | ||
ENERGY - 7.3% | |||
Energy Equipment & Services - 1.2% | |||
Baker Hughes, Inc. | 91,200 | 4,971,312 | |
Oil, Gas & Consumable Fuels - 6.1% | |||
Boardwalk Pipeline Partners, LP | 289,323 | 5,210,707 | |
Cabot Oil & Gas Corp. | 114,500 | 2,871,660 | |
Cheniere Energy, Inc. (a) | 69,200 | 3,370,732 | |
EQT Corp. | 38,400 | 2,249,856 | |
GasLog Ltd. (b) | 216,078 | 3,295,190 | |
Lundin Petroleum AB | 174,900 | 3,365,258 | |
Teekay Corp. (b) | 455,992 | 3,041,467 | |
Valero Energy Corp. | 50,500 | 3,406,730 | |
26,811,600 | |||
TOTAL ENERGY | 31,782,912 | ||
FINANCIALS - 17.4% | |||
Banks - 5.9% | |||
CIT Group, Inc. | 68,400 | 3,331,080 | |
PNC Financial Services Group, Inc. | 37,100 | 4,632,677 | |
U.S. Bancorp | 194,316 | 10,088,887 | |
Wells Fargo & Co. | 137,930 | 7,642,701 | |
25,695,345 | |||
Capital Markets - 3.3% | |||
Apollo Global Management LLC Class A | 150,813 | 3,989,004 | |
Legg Mason, Inc. | 135,692 | 5,178,007 | |
The Blackstone Group LP | 160,300 | 5,346,005 | |
14,513,016 | |||
Consumer Finance - 4.9% | |||
Discover Financial Services | 129,500 | 8,053,605 | |
OneMain Holdings, Inc. (a) | 129,000 | 3,172,110 | |
Synchrony Financial | 347,000 | 10,347,540 | |
21,573,255 | |||
Insurance - 3.3% | |||
Chubb Ltd. | 39,600 | 5,757,048 | |
FNF Group | 187,900 | 8,423,557 | |
14,180,605 | |||
TOTAL FINANCIALS | 75,962,221 | ||
HEALTH CARE - 8.3% | |||
Biotechnology - 2.6% | |||
Amgen, Inc. | 31,500 | 5,425,245 | |
United Therapeutics Corp. (a) | 45,000 | 5,837,850 | |
11,263,095 | |||
Health Care Providers & Services - 2.6% | |||
Aetna, Inc. | 27,700 | 4,205,691 | |
Envision Healthcare Corp. (a) | 65,161 | 4,083,640 | |
Laboratory Corp. of America Holdings (a) | 18,900 | 2,913,246 | |
11,202,577 | |||
Pharmaceuticals - 3.1% | |||
Jazz Pharmaceuticals PLC (a) | 60,600 | 9,423,300 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 128,600 | 4,272,092 | |
13,695,392 | |||
TOTAL HEALTH CARE | 36,161,064 | ||
INDUSTRIALS - 11.0% | |||
Aerospace & Defense - 2.1% | |||
KLX, Inc. (a) | 105,700 | 5,285,000 | |
Rockwell Collins, Inc. | 38,300 | 4,024,564 | |
9,309,564 | |||
Airlines - 1.3% | |||
American Airlines Group, Inc. | 115,900 | 5,832,088 | |
Commercial Services & Supplies - 1.5% | |||
IWG PLC | 642,400 | 2,705,868 | |
KAR Auction Services, Inc. | 92,100 | 3,865,437 | |
6,571,305 | |||
Construction & Engineering - 1.3% | |||
AECOM (a) | 178,900 | 5,783,837 | |
Machinery - 2.3% | |||
Allison Transmission Holdings, Inc. | 180,900 | 6,785,559 | |
WABCO Holdings, Inc. (a) | 25,200 | 3,213,252 | |
9,998,811 | |||
Road & Rail - 0.8% | |||
Swift Transporation Co. (a) | 126,100 | 3,341,650 | |
Trading Companies & Distributors - 1.7% | |||
AerCap Holdings NV (a) | 156,600 | 7,270,938 | |
TOTAL INDUSTRIALS | 48,108,193 | ||
INFORMATION TECHNOLOGY - 9.8% | |||
Communications Equipment - 1.2% | |||
CommScope Holding Co., Inc. (a) | 139,000 | 5,286,170 | |
Electronic Equipment & Components - 1.6% | |||
Jabil, Inc. | 74,600 | 2,177,574 | |
TE Connectivity Ltd. | 63,700 | 5,011,916 | |
7,189,490 | |||
IT Services - 5.7% | |||
Amdocs Ltd. | 67,400 | 4,344,604 | |
Cognizant Technology Solutions Corp. Class A | 97,500 | 6,474,000 | |
DXC Technology Co. | 96,100 | 7,372,792 | |
First Data Corp. Class A (a) | 223,300 | 4,064,060 | |
Total System Services, Inc. | 42,700 | 2,487,275 | |
24,742,731 | |||
Semiconductors & Semiconductor Equipment - 1.3% | |||
Qualcomm, Inc. | 106,600 | 5,886,452 | |
TOTAL INFORMATION TECHNOLOGY | 43,104,843 | ||
MATERIALS - 9.6% | |||
Chemicals - 7.2% | |||
CF Industries Holdings, Inc. | 138,400 | 3,869,664 | |
E.I. du Pont de Nemours & Co. | 91,700 | 7,401,107 | |
Eastman Chemical Co. | 86,400 | 7,256,736 | |
LyondellBasell Industries NV Class A | 76,408 | 6,448,071 | |
Westlake Chemical Corp. | 96,700 | 6,402,507 | |
31,378,085 | |||
Construction Materials - 0.7% | |||
Eagle Materials, Inc. | 33,700 | 3,114,554 | |
Containers & Packaging - 1.7% | |||
Ball Corp. | 101,000 | 4,263,210 | |
Sealed Air Corp. | 70,900 | 3,173,484 | |
7,436,694 | |||
TOTAL MATERIALS | 41,929,333 | ||
REAL ESTATE - 14.2% | |||
Equity Real Estate Investment Trusts (REITs) - 12.9% | |||
American Tower Corp. | 106,000 | 14,025,919 | |
Douglas Emmett, Inc. | 208,100 | 7,951,501 | |
Equinix, Inc. | 16,200 | 6,952,392 | |
Equity Lifestyle Properties, Inc. | 97,800 | 8,444,052 | |
Extra Space Storage, Inc. | 116,100 | 9,055,800 | |
National Retail Properties, Inc. | 115,900 | 4,531,690 | |
Outfront Media, Inc. | 222,800 | 5,151,136 | |
56,112,490 | |||
Real Estate Management & Development - 1.3% | |||
CBRE Group, Inc. (a) | 159,600 | 5,809,440 | |
TOTAL REAL ESTATE | 61,921,930 | ||
UTILITIES - 7.4% | |||
Electric Utilities - 4.7% | |||
American Electric Power Co., Inc. | 114,800 | 7,975,156 | |
Edison International | 160,800 | 12,572,952 | |
20,548,108 | |||
Multi-Utilities - 2.7% | |||
Sempra Energy | 107,061 | 12,071,128 | |
TOTAL UTILITIES | 32,619,236 | ||
TOTAL COMMON STOCKS | |||
(Cost $371,717,382) | 434,394,775 | ||
Principal Amount | Value | ||
Convertible Bonds - 0.3% | |||
ENERGY - 0.3% | |||
Oil, Gas & Consumable Fuels - 0.3% | |||
Cobalt International Energy, Inc. 2.625% 12/1/19 (Cost $3,504,760) | 6,240,000 | 1,540,656 | |
Shares | Value | ||
Money Market Funds - 1.9% | |||
Fidelity Cash Central Fund, 1.10% (c) | 2,237,065 | 2,237,512 | |
Fidelity Securities Lending Cash Central Fund 1.09% (c)(d) | 5,925,543 | 5,926,135 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $8,163,643) | 8,163,647 | ||
TOTAL INVESTMENT PORTFOLIO - 101.6% | |||
(Cost $383,385,785) | 444,099,078 | ||
NET OTHER ASSETS (LIABILITIES) - (1.6)% | (7,121,945) | ||
NET ASSETS - 100% | $436,977,133 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
Fund | Income earned |
Fidelity Cash Central Fund | $13,738 |
Fidelity Securities Lending Cash Central Fund | 6,933 |
Total | $20,671 |
Investment Valuation
The following is a summary of the inputs used, as of June 30, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $52,401,863 | $52,401,863 | $-- | $-- |
Consumer Staples | 10,403,180 | 10,403,180 | -- | -- |
Energy | 31,782,912 | 31,782,912 | -- | -- |
Financials | 75,962,221 | 75,962,221 | -- | -- |
Health Care | 36,161,064 | 36,161,064 | -- | -- |
Industrials | 48,108,193 | 48,108,193 | -- | -- |
Information Technology | 43,104,843 | 43,104,843 | -- | -- |
Materials | 41,929,333 | 41,929,333 | -- | -- |
Real Estate | 61,921,930 | 61,921,930 | -- | -- |
Utilities | 32,619,236 | 32,619,236 | -- | -- |
Corporate Bonds | 1,540,656 | -- | 1,540,656 | -- |
Money Market Funds | 8,163,647 | 8,163,647 | -- | -- |
Total Investments in Securities: | $444,099,078 | $442,558,422 | $1,540,656 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 83.4% |
Netherlands | 3.2% |
Switzerland | 2.4% |
Ireland | 2.1% |
Bailiwick of Jersey | 1.6% |
Bermuda | 1.5% |
Canada | 1.2% |
United Kingdom | 1.1% |
Bailiwick of Guernsey | 1.0% |
Israel | 1.0% |
Others (Individually Less Than 1%) | 1.5% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
June 30, 2017 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $5,730,725) — See accompanying schedule: Unaffiliated issuers (cost $375,222,142) | $435,935,431 | |
Fidelity Central Funds (cost $8,163,643) | 8,163,647 | |
Total Investments (cost $383,385,785) | $444,099,078 | |
Foreign currency held at value (cost $720,852) | 720,852 | |
Receivable for investments sold | 6,052,599 | |
Receivable for fund shares sold | 227,261 | |
Dividends receivable | 495,650 | |
Interest receivable | 13,426 | |
Distributions receivable from Fidelity Central Funds | 4,725 | |
Other receivables | 7,863 | |
Total assets | 451,621,454 | |
Liabilities | ||
Payable for investments purchased | $5,587,221 | |
Payable for fund shares redeemed | 2,808,243 | |
Accrued management fee | 198,932 | |
Distribution and service plan fees payable | 44,100 | |
Other affiliated payables | 46,283 | |
Other payables and accrued expenses | 32,767 | |
Collateral on securities loaned | 5,926,775 | |
Total liabilities | 14,644,321 | |
Net Assets | $436,977,133 | |
Net Assets consist of: | ||
Paid in capital | $349,864,621 | |
Undistributed net investment income | 3,232,702 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 23,166,493 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 60,713,317 | |
Net Assets | $436,977,133 | |
Initial Class: | ||
Net Asset Value, offering price and redemption price per share ($94,205,479 ÷ 6,791,153 shares) | $13.87 | |
Service Class: | ||
Net Asset Value, offering price and redemption price per share ($22,563,429 ÷ 1,631,190 shares) | $13.83 | |
Service Class 2: | ||
Net Asset Value, offering price and redemption price per share ($202,749,078 ÷ 14,519,338 shares) | $13.96 | |
Investor Class: | ||
Net Asset Value, offering price and redemption price per share ($117,459,147 ÷ 8,522,333 shares) | $13.78 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Six months ended June 30, 2017 (Unaudited) | ||
Investment Income | ||
Dividends | $4,400,345 | |
Interest | 452,349 | |
Income from Fidelity Central Funds | 20,671 | |
Total income | 4,873,365 | |
Expenses | ||
Management fee | $1,178,801 | |
Transfer agent fees | 189,662 | |
Distribution and service plan fees | 258,874 | |
Accounting and security lending fees | 84,296 | |
Custodian fees and expenses | 37,026 | |
Independent trustees' fees and expenses | 855 | |
Audit | 35,475 | |
Legal | 2,014 | |
Interest | 995 | |
Miscellaneous | 1,709 | |
Total expenses before reductions | 1,789,707 | |
Expense reductions | (16,791) | 1,772,916 |
Net investment income (loss) | 3,100,449 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 23,152,042 | |
Fidelity Central Funds | (174) | |
Foreign currency transactions | (1,337) | |
Total net realized gain (loss) | 23,150,531 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 12,902,058 | |
Assets and liabilities in foreign currencies | 343 | |
Total change in net unrealized appreciation (depreciation) | 12,902,401 | |
Net gain (loss) | 36,052,932 | |
Net increase (decrease) in net assets resulting from operations | $39,153,381 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Six months ended June 30, 2017 (Unaudited) | Year ended December 31, 2016 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $3,100,449 | $6,019,672 |
Net realized gain (loss) | 23,150,531 | 111,861,521 |
Change in net unrealized appreciation (depreciation) | 12,902,401 | (80,134,657) |
Net increase (decrease) in net assets resulting from operations | 39,153,381 | 37,746,536 |
Distributions to shareholders from net investment income | (1,006,458) | (4,176,551) |
Distributions to shareholders from net realized gain | (84,193,612) | – |
Total distributions | (85,200,070) | (4,176,551) |
Share transactions - net increase (decrease) | 62,275,981 | (47,571,176) |
Total increase (decrease) in net assets | 16,229,292 | (14,001,191) |
Net Assets | ||
Beginning of period | 420,747,841 | 434,749,032 |
End of period | $436,977,133 | $420,747,841 |
Other Information | ||
Undistributed net investment income end of period | $3,232,702 | $1,138,711 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Value Strategies Portfolio Initial Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $15.77 | $14.54 | $15.19 | $14.37 | $11.11 | $8.78 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .11 | .23 | .18 | .15 | .12 | .07B |
Net realized and unrealized gain (loss) | 1.26 | 1.17 | (.64) | .83 | 3.26 | 2.32 |
Total from investment operations | 1.37 | 1.40 | (.46) | .98 | 3.38 | 2.39 |
Distributions from net investment income | (.04) | (.17) | (.18) | (.16) | (.12) | (.06) |
Distributions from net realized gain | (3.23) | – | (.01) | – | – | – |
Total distributions | (3.27) | (.17) | (.19) | (.16) | (.12) | (.06) |
Net asset value, end of period | $13.87 | $15.77 | $14.54 | $15.19 | $14.37 | $11.11 |
Total ReturnC,D,E | 9.60% | 9.62% | (2.99)% | 6.80% | 30.49% | 27.28% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .69%H | .67% | .67% | .68% | .68% | .70% |
Expenses net of fee waivers, if any | .69%H | .67% | .67% | .68% | .68% | .70% |
Expenses net of all reductions | .68%H | .67% | .67% | .68% | .68% | .68% |
Net investment income (loss) | 1.58%H | 1.56% | 1.19% | 1.02% | .94% | .72%B |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $94,205 | $93,648 | $98,919 | $107,742 | $115,594 | $93,738 |
Portfolio turnover rateI | 70%H | 108% | 25% | 9% | 28% | 27% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .26%.
C Total returns for periods of less than one year are not annualized.
D Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Value Strategies Portfolio Service Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $15.74 | $14.52 | $15.16 | $14.34 | $11.08 | $8.76 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .10 | .21 | .17 | .14 | .11 | .06B |
Net realized and unrealized gain (loss) | 1.26 | 1.17 | (.63) | .82 | 3.26 | 2.31 |
Total from investment operations | 1.36 | 1.38 | (.46) | .96 | 3.37 | 2.37 |
Distributions from net investment income | (.04) | (.16) | (.16) | (.14) | (.11) | (.05) |
Distributions from net realized gain | (3.23) | – | (.01) | – | – | – |
Total distributions | (3.27) | (.16) | (.18)C | (.14) | (.11) | (.05) |
Net asset value, end of period | $13.83 | $15.74 | $14.52 | $15.16 | $14.34 | $11.08 |
Total ReturnD,E,F | 9.53% | 9.48% | (3.05)% | 6.69% | 30.44% | 27.10% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .79%I | .77% | .77% | .77% | .78% | .79% |
Expenses net of fee waivers, if any | .79%I | .77% | .77% | .77% | .78% | .79% |
Expenses net of all reductions | .78%I | .77% | .77% | .77% | .78% | .78% |
Net investment income (loss) | 1.48%I | 1.46% | 1.09% | .93% | .84% | .62%B |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $22,563 | $21,949 | $22,970 | $29,109 | $33,460 | $27,293 |
Portfolio turnover rateJ | 70%I | 108% | 25% | 9% | 28% | 27% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .16%.
C Total distributions of $.18 per share is comprised of distributions from net investment income of $.163 and distributions from net realized gain of $.012 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Value Strategies Portfolio Service Class 2
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $15.86 | $14.64 | $15.28 | $14.46 | $11.18 | $8.83 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .09 | .19 | .15 | .12 | .09 | .05B |
Net realized and unrealized gain (loss) | 1.28 | 1.17 | (.64) | .82 | 3.28 | 2.34 |
Total from investment operations | 1.37 | 1.36 | (.49) | .94 | 3.37 | 2.39 |
Distributions from net investment income | (.04) | (.14) | (.14) | (.12) | (.09) | (.04) |
Distributions from net realized gain | (3.23) | – | (.01) | – | – | – |
Total distributions | (3.27) | (.14) | (.15) | (.12) | (.09) | (.04) |
Net asset value, end of period | $13.96 | $15.86 | $14.64 | $15.28 | $14.46 | $11.18 |
Total ReturnC,D,E | 9.49% | 9.27% | (3.19)% | 6.51% | 30.18% | 27.06% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .94%H | .92% | .92% | .92% | .93% | .94% |
Expenses net of fee waivers, if any | .94%H | .92% | .92% | .92% | .93% | .94% |
Expenses net of all reductions | .93%H | .92% | .92% | .92% | .93% | .93% |
Net investment income (loss) | 1.33%H | 1.31% | .94% | .78% | .69% | .47%B |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $202,749 | $187,876 | $186,853 | $220,494 | $215,780 | $155,316 |
Portfolio turnover rateI | 70%H | 108% | 25% | 9% | 28% | 27% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .01%.
C Total returns for periods of less than one year are not annualized.
D Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Value Strategies Portfolio Investor Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $15.69 | $14.47 | $15.12 | $14.31 | $11.06 | $8.74 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .10 | .22 | .17 | .14 | .11 | .06B |
Net realized and unrealized gain (loss) | 1.26 | 1.16 | (.64) | .82 | 3.25 | 2.32 |
Total from investment operations | 1.36 | 1.38 | (.47) | .96 | 3.36 | 2.38 |
Distributions from net investment income | (.04) | (.16) | (.17) | (.15) | (.11) | (.06) |
Distributions from net realized gain | (3.23) | – | (.01) | – | – | – |
Total distributions | (3.27) | (.16) | (.18) | (.15) | (.11) | (.06) |
Net asset value, end of period | $13.78 | $15.69 | $14.47 | $15.12 | $14.31 | $11.06 |
Total ReturnC,D,E | 9.56% | 9.53% | (3.07)% | 6.67% | 30.45% | 27.21% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .77%H | .75% | .75% | .76% | .76% | .78% |
Expenses net of fee waivers, if any | .77%H | .75% | .75% | .76% | .76% | .78% |
Expenses net of all reductions | .76%H | .75% | .75% | .75% | .76% | .76% |
Net investment income (loss) | 1.49%H | 1.48% | 1.11% | .94% | .86% | .64%B |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $117,459 | $117,276 | $126,007 | $110,755 | $115,468 | $77,935 |
Portfolio turnover rateI | 70%H | 108% | 25% | 9% | 28% | 27% |
A Calculated based on average shares outstanding during the period.
B Net Investment income per share reflects a large, non-recurring dividend which amounted to $.05 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .17%.
C Total returns for periods of less than one year are not annualized.
D Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended June 30, 2017
1. Organization.
VIP Value Strategies Portfolio (the Fund) is a fund of Variable Insurance Products Fund III (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. Corporate bonds are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of June 30, 2017 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), market discount, partnerships, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $68,225,466 |
Gross unrealized depreciation | (7,076,327) |
Net unrealized appreciation (depreciation) on securities | $61,149,139 |
Tax cost | $382,949,939 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $149,687,993 and $171,215,251, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annualized management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of 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 | $11,245 |
Service Class 2 | 247,629 |
$258,874 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class pays a fee for transfer agent services, typesetting and printing and mailing of shareholder reports, excluding mailing of proxy statements, equal to an annual rate of class-level average net assets The annual rate for Investor Class is .15% and the annual rate for all other classes is .07%. For the period, transfer agent fees for each class were as follows:
Initial Class | $31,448 |
Service Class | 7,422 |
Service Class 2 | 65,374 |
Investor Class | 85,418 |
$189,662 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $6,594 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable to affiliates" in the Fund's Statement of Assets and Liabilities. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $3,551,167 | .81% | $995 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $726 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $6,933. During the period, there were no securities loaned to FCM.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $14,844 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $1,947.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended June 30, 2017 | Year ended December 31, 2016 | |
From net investment income | ||
Initial Class | $243,848 | $1,028,891 |
Service Class | 55,127 | 219,057 |
Service Class 2 | 424,385 | 1,628,779 |
Investor Class | 283,098 | 1,299,824 |
Total | $1,006,458 | $4,176,551 |
From net realized gain | ||
Initial Class | $18,764,674 | $– |
Service Class | 4,454,263 | – |
Service Class 2 | 38,100,382 | – |
Investor Class | 22,874,293 | – |
Total | $84,193,612 | $– |
10. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Shares | Dollars | Dollars | |
Six months ended June 30, 2017 | Year ended December 31, 2016 | Six months ended June 30, 2017 | Year ended December 31, 2016 | |
Initial Class | ||||
Shares sold | 341,708 | 821,158 | $4,845,122 | $11,762,517 |
Reinvestment of distributions | 1,429,212 | 64,548 | 19,008,522 | 1,028,891 |
Shares redeemed | (918,445) | (1,749,152) | (13,039,813) | (25,984,549) |
Net increase (decrease) | 852,475 | (863,446) | $10,813,831 | $(13,193,141) |
Service Class | ||||
Shares sold | 36,017 | 80,499 | $501,746 | $1,151,667 |
Reinvestment of distributions | 339,818 | 13,768 | 4,509,390 | 219,057 |
Shares redeemed | (139,261) | (281,967) | (1,930,963) | (4,123,665) |
Net increase (decrease) | 236,574 | (187,700) | $3,080,173 | $(2,752,941) |
Service Class 2 | ||||
Shares sold | 696,990 | 1,130,913 | $9,908,599 | $16,766,591 |
Reinvestment of distributions | 2,874,983 | 101,545 | 38,524,767 | 1,628,779 |
Shares redeemed | (895,191) | (2,155,697) | (12,743,248) | (31,103,249) |
Net increase (decrease) | 2,676,782 | (923,239) | $35,690,118 | $(12,707,879) |
Investor Class | ||||
Shares sold | 396,614 | 1,395,785 | $5,545,553 | $20,122,693 |
Reinvestment of distributions | 1,751,694 | 81,956 | 23,157,391 | 1,299,824 |
Shares redeemed | (1,099,986) | (2,709,498) | (16,011,085) | (40,339,732) |
Net increase (decrease) | 1,048,322 | (1,231,757) | $12,691,859 | $(18,917,215) |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, the investment adviser or its affiliates were the owners of record of 32% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 33% of the total outstanding shares of the Fund.
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 to June 30, 2017).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annualized Expense Ratio-A | Beginning Account Value January 1, 2017 | Ending Account Value June 30, 2017 | Expenses Paid During Period-B January 1, 2017 to June 30, 2017 | |
Initial Class | .69% | |||
Actual | $1,000.00 | $1,096.00 | $3.59 | |
Hypothetical-C | $1,000.00 | $1,021.37 | $3.46 | |
Service Class | .79% | |||
Actual | $1,000.00 | $1,095.30 | $4.10 | |
Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 | |
Service Class 2 | .94% | |||
Actual | $1,000.00 | $1,094.90 | $4.88 | |
Hypothetical-C | $1,000.00 | $1,020.13 | $4.71 | |
Investor Class | .77% | |||
Actual | $1,000.00 | $1,095.60 | $4.00 | |
Hypothetical-C | $1,000.00 | $1,020.98 | $3.86 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
VIPVS-SANN-0817
1.774744.115
Fidelity® Variable Insurance Products: Growth & Income Portfolio Semi-Annual Report June 30, 2017 |
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. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.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.
Investment Summary (Unaudited)
Top Ten Stocks as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Bank of America Corp.(a) | 3.4 | 4.0 |
Microsoft Corp. | 3.4 | 3.3 |
JPMorgan Chase & Co.(a) | 3.4 | 4.2 |
Citigroup, Inc.(a) | 3.2 | 3.1 |
Apple, Inc.(a) | 2.8 | 3.1 |
General Electric Co.(a) | 2.4 | 2.7 |
State Street Corp.(a) | 2.0 | 1.6 |
Alphabet, Inc. Class A | 1.9 | 1.5 |
Comcast Corp. Class A | 1.9 | 1.8 |
Wells Fargo & Co. | 1.8 | 1.5 |
26.2 |
(a) Security or a portion of the security is pledged as collateral for call options written.
Top Five Market Sectors as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Financials | 24.2 | 25.5 |
Information Technology | 16.7 | 16.8 |
Health Care | 14.2 | 12.2 |
Energy | 11.9 | 12.9 |
Industrials | 11.8 | 11.4 |
Asset Allocation (% of fund's net assets)
As of June 30, 2017*,** | ||
Stocks | 98.6% | |
Bonds | 0.1% | |
Short-Term Investments and Net Other Assets (Liabilities) | 1.3% |
* Foreign investments - 10.0%
** Written options - (0.1)%
As of December 31, 2016*,** | ||
Stocks | 98.7% | |
Bonds | 0.2% | |
Short-Term Investments and Net Other Assets (Liabilities) | 1.1% |
* Foreign investments - 9.8%
** Written options - (0.5)%
Investments June 30, 2017 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.2% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 6.6% | |||
Automobiles - 0.1% | |||
General Motors Co. | 39,000 | $1,362,270 | |
Hotels, Restaurants & Leisure - 0.2% | |||
Cedar Fair LP (depositary unit) | 6,000 | 432,600 | |
DineEquity, Inc. | 21,300 | 938,265 | |
Dunkin' Brands Group, Inc. | 10,300 | 567,736 | |
Marriott International, Inc. Class A | 2,700 | 270,837 | |
2,209,438 | |||
Leisure Products - 0.0% | |||
NJOY, Inc. (a)(b) | 95,072 | 1 | |
Media - 4.0% | |||
Comcast Corp. Class A | 632,362 | 24,611,529 | |
Omnicom Group, Inc. | 9,000 | 746,100 | |
Scripps Networks Interactive, Inc. Class A | 76,455 | 5,222,641 | |
The Walt Disney Co. | 80,200 | 8,521,250 | |
Time Warner, Inc. | 100,249 | 10,066,002 | |
Viacom, Inc. Class B (non-vtg.) | 101,500 | 3,407,355 | |
52,574,877 | |||
Multiline Retail - 0.7% | |||
Dollar General Corp. | 26,700 | 1,924,803 | |
Target Corp. | 132,877 | 6,948,138 | |
8,872,941 | |||
Specialty Retail - 1.5% | |||
L Brands, Inc. | 98,700 | 5,318,943 | |
Lowe's Companies, Inc. | 135,817 | 10,529,892 | |
TJX Companies, Inc. | 51,600 | 3,723,972 | |
19,572,807 | |||
Textiles, Apparel & Luxury Goods - 0.1% | |||
VF Corp. | 29,800 | 1,716,480 | |
TOTAL CONSUMER DISCRETIONARY | 86,308,814 | ||
CONSUMER STAPLES - 7.2% | |||
Beverages - 2.7% | |||
Coca-Cola European Partners PLC | 24,700 | 1,004,549 | |
Cott Corp. | 20,100 | 290,309 | |
Dr. Pepper Snapple Group, Inc. | 39,500 | 3,598,845 | |
Molson Coors Brewing Co. Class B | 96,500 | 8,331,810 | |
PepsiCo, Inc. | 28,043 | 3,238,686 | |
The Coca-Cola Co. | 429,753 | 19,274,422 | |
35,738,621 | |||
Food & Staples Retailing - 1.6% | |||
Costco Wholesale Corp. (c) | 5,200 | 831,636 | |
CVS Health Corp. | 116,264 | 9,354,601 | |
Kroger Co. | 238,800 | 5,568,816 | |
Wal-Mart Stores, Inc. | 59,000 | 4,465,120 | |
20,220,173 | |||
Food Products - 0.2% | |||
B&G Foods, Inc. Class A | 42,900 | 1,527,240 | |
Snyders-Lance, Inc. | 16,200 | 560,844 | |
2,088,084 | |||
Household Products - 1.6% | |||
Procter & Gamble Co. | 235,350 | 20,510,753 | |
Personal Products - 0.5% | |||
Coty, Inc. Class A | 141,600 | 2,656,416 | |
Edgewell Personal Care Co. (a) | 13,700 | 1,041,474 | |
Unilever NV (NY Reg.) | 62,500 | 3,454,375 | |
7,152,265 | |||
Tobacco - 0.6% | |||
Altria Group, Inc. | 108,300 | 8,065,101 | |
TOTAL CONSUMER STAPLES | 93,774,997 | ||
ENERGY - 11.9% | |||
Energy Equipment & Services - 0.8% | |||
Baker Hughes, Inc. | 60,300 | 3,286,953 | |
National Oilwell Varco, Inc. | 103,200 | 3,399,408 | |
Oceaneering International, Inc. | 124,525 | 2,844,151 | |
Schlumberger Ltd. | 14,547 | 957,774 | |
10,488,286 | |||
Oil, Gas & Consumable Fuels - 11.1% | |||
Amyris, Inc. | 82,980 | 263,876 | |
Anadarko Petroleum Corp. | 49,800 | 2,257,932 | |
Apache Corp. | 216,100 | 10,357,673 | |
Cabot Oil & Gas Corp. | 218,100 | 5,469,948 | |
Cenovus Energy, Inc. | 715,124 | 5,271,889 | |
Chevron Corp. | 214,318 | 22,359,797 | |
ConocoPhillips Co. | 492,500 | 21,650,300 | |
Golar LNG Ltd. | 109,900 | 2,445,275 | |
Imperial Oil Ltd. | 240,700 | 7,016,086 | |
Kinder Morgan, Inc. | 565,900 | 10,842,644 | |
Legacy Reserves LP (a) | 179,888 | 260,838 | |
Phillips 66 Co. | 12,500 | 1,033,625 | |
Plains All American Pipeline LP | 35,100 | 922,077 | |
PrairieSky Royalty Ltd. | 88,509 | 2,015,477 | |
Suncor Energy, Inc. | 726,060 | 21,214,076 | |
Teekay LNG Partners LP | 76,500 | 1,174,275 | |
The Williams Companies, Inc. | 683,690 | 20,702,133 | |
Williams Partners LP | 247,305 | 9,919,404 | |
145,177,325 | |||
TOTAL ENERGY | 155,665,611 | ||
FINANCIALS - 24.2% | |||
Banks - 16.2% | |||
Bank of America Corp. (c) | 1,833,932 | 44,491,188 | |
Citigroup, Inc. (c) | 628,318 | 42,021,908 | |
Comerica, Inc. (c) | 66,700 | 4,885,108 | |
JPMorgan Chase & Co. (c) | 481,832 | 44,039,445 | |
M&T Bank Corp. | 35,400 | 5,733,030 | |
PNC Financial Services Group, Inc. | 87,372 | 10,910,142 | |
Regions Financial Corp. (c) | 395,400 | 5,788,656 | |
SunTrust Banks, Inc. (c) | 292,764 | 16,605,574 | |
U.S. Bancorp | 256,598 | 13,322,568 | |
Wells Fargo & Co. | 418,069 | 23,165,203 | |
210,962,822 | |||
Capital Markets - 7.4% | |||
Apollo Global Management LLC Class A | 98,300 | 2,600,035 | |
CBOE Holdings, Inc. | 54,200 | 4,953,880 | |
Charles Schwab Corp. | 206,284 | 8,861,961 | |
Federated Investors, Inc. Class B (non-vtg.) | 9,600 | 271,200 | |
Goldman Sachs Group, Inc. | 20,800 | 4,615,520 | |
KKR & Co. LP | 390,793 | 7,268,750 | |
Morgan Stanley | 225,783 | 10,060,890 | |
Northern Trust Corp. (c) | 136,745 | 13,292,981 | |
Oaktree Capital Group LLC Class A | 43,900 | 2,045,740 | |
S&P Global, Inc. | 38,100 | 5,562,219 | |
State Street Corp. (c) | 296,979 | 26,647,926 | |
TD Ameritrade Holding Corp. | 10,100 | 434,199 | |
The Blackstone Group LP | 292,300 | 9,748,205 | |
96,363,506 | |||
Insurance - 0.4% | |||
Marsh & McLennan Companies, Inc. | 61,542 | 4,797,814 | |
Thrifts & Mortgage Finance - 0.2% | |||
MGIC Investment Corp. (a) | 46,400 | 519,680 | |
Radian Group, Inc. | 159,350 | 2,605,373 | |
3,125,053 | |||
TOTAL FINANCIALS | 315,249,195 | ||
HEALTH CARE - 13.9% | |||
Biotechnology - 3.1% | |||
Alexion Pharmaceuticals, Inc. (a) | 54,700 | 6,655,349 | |
Amgen, Inc. | 114,644 | 19,745,136 | |
Biogen, Inc. (a) | 12,400 | 3,364,864 | |
Gilead Sciences, Inc. | 76,500 | 5,414,670 | |
Intercept Pharmaceuticals, Inc. (a) | 12,858 | 1,556,718 | |
Shire PLC sponsored ADR | 17,500 | 2,892,225 | |
Vertex Pharmaceuticals, Inc. (a) | 4,000 | 515,480 | |
40,144,442 | |||
Health Care Equipment & Supplies - 2.0% | |||
Becton, Dickinson & Co. | 3,500 | 682,885 | |
Boston Scientific Corp. (a) | 101,100 | 2,802,492 | |
Fisher & Paykel Healthcare Corp. | 48,320 | 405,432 | |
Medtronic PLC | 154,285 | 13,692,794 | |
Meridian Bioscience, Inc. | 22,200 | 349,650 | |
ResMed, Inc. | 18,000 | 1,401,660 | |
Steris PLC | 21,800 | 1,776,700 | |
Zimmer Biomet Holdings, Inc. | 40,100 | 5,148,840 | |
26,260,453 | |||
Health Care Providers & Services - 2.9% | |||
Aetna, Inc. | 13,200 | 2,004,156 | |
Anthem, Inc. | 39,600 | 7,449,948 | |
Cardinal Health, Inc. | 13,200 | 1,028,544 | |
Cigna Corp. | 42,500 | 7,114,075 | |
Humana, Inc. | 20,600 | 4,956,772 | |
McKesson Corp. | 45,988 | 7,566,866 | |
Patterson Companies, Inc. | 73,143 | 3,434,064 | |
UnitedHealth Group, Inc. | 24,700 | 4,579,874 | |
38,134,299 | |||
Life Sciences Tools & Services - 0.2% | |||
Agilent Technologies, Inc. | 27,500 | 1,631,025 | |
Pharmaceuticals - 5.7% | |||
Allergan PLC | 9,000 | 2,187,810 | |
AstraZeneca PLC sponsored ADR | 81,500 | 2,778,335 | |
Bayer AG | 13,300 | 1,723,816 | |
Bristol-Myers Squibb Co. | 145,600 | 8,112,832 | |
GlaxoSmithKline PLC sponsored ADR | 504,594 | 21,758,093 | |
Innoviva, Inc. (a) | 43,800 | 560,640 | |
Johnson & Johnson | 173,259 | 22,920,433 | |
Novartis AG sponsored ADR | 6,325 | 527,948 | |
Sanofi SA | 43,456 | 4,163,953 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 293,403 | 9,746,848 | |
74,480,708 | |||
TOTAL HEALTH CARE | 180,650,927 | ||
INDUSTRIALS - 11.7% | |||
Aerospace & Defense - 2.5% | |||
General Dynamics Corp. | 17,700 | 3,506,370 | |
Meggitt PLC | 38,842 | 241,263 | |
Rolls-Royce Holdings PLC | 247,300 | 2,868,340 | |
The Boeing Co. (c) | 46,617 | 9,218,512 | |
United Technologies Corp. | 132,687 | 16,202,410 | |
32,036,895 | |||
Air Freight & Logistics - 1.6% | |||
C.H. Robinson Worldwide, Inc. | 76,000 | 5,219,680 | |
Expeditors International of Washington, Inc. | 56,900 | 3,213,712 | |
United Parcel Service, Inc. Class B | 113,372 | 12,537,809 | |
20,971,201 | |||
Commercial Services & Supplies - 0.1% | |||
KAR Auction Services, Inc. | 25,500 | 1,070,235 | |
Ritchie Brothers Auctioneers, Inc. | 19,100 | 548,786 | |
1,619,021 | |||
Construction & Engineering - 0.1% | |||
Fluor Corp. | 20,600 | 943,068 | |
Electrical Equipment - 0.7% | |||
Acuity Brands, Inc. | 10,800 | 2,195,424 | |
AMETEK, Inc. | 64,000 | 3,876,480 | |
Hubbell, Inc. Class B | 33,179 | 3,754,867 | |
9,826,771 | |||
Industrial Conglomerates - 2.4% | |||
General Electric Co. (c) | 1,143,850 | 30,895,389 | |
Machinery - 0.8% | |||
Burckhardt Compression Holding AG (d) | 2,070 | 593,649 | |
Donaldson Co., Inc. | 35,300 | 1,607,562 | |
Flowserve Corp. | 106,600 | 4,949,438 | |
IMI PLC | 12,600 | 196,110 | |
Wabtec Corp. | 33,700 | 3,083,550 | |
10,430,309 | |||
Professional Services - 0.3% | |||
Intertrust NV | 74,900 | 1,518,888 | |
Nielsen Holdings PLC | 77,000 | 2,976,820 | |
4,495,708 | |||
Road & Rail - 2.5% | |||
CSX Corp. (c) | 240,747 | 13,135,156 | |
J.B. Hunt Transport Services, Inc. | 103,682 | 9,474,461 | |
Norfolk Southern Corp. | 47,893 | 5,828,578 | |
Union Pacific Corp. | 36,800 | 4,007,888 | |
32,446,083 | |||
Trading Companies & Distributors - 0.7% | |||
Fastenal Co. | 59,100 | 2,572,623 | |
Howden Joinery Group PLC | 40,900 | 216,863 | |
W.W. Grainger, Inc. | 2,300 | 415,219 | |
Watsco, Inc. | 34,992 | 5,395,766 | |
8,600,471 | |||
TOTAL INDUSTRIALS | 152,264,916 | ||
INFORMATION TECHNOLOGY - 16.7% | |||
Communications Equipment - 1.5% | |||
Cisco Systems, Inc. (c) | 618,204 | 19,349,785 | |
Electronic Equipment & Components - 0.1% | |||
Avnet, Inc. | 20,800 | 808,704 | |
Philips Lighting NV | 22,800 | 841,646 | |
1,650,350 | |||
Internet Software & Services - 3.4% | |||
Alphabet, Inc.: | |||
Class A (a) | 26,818 | 24,932,158 | |
Class C (a) | 21,783 | 19,794,866 | |
44,727,024 | |||
IT Services - 3.6% | |||
Accenture PLC Class A | 25,800 | 3,190,944 | |
Amdocs Ltd. | 25,800 | 1,663,068 | |
Cognizant Technology Solutions Corp. Class A | 2,000 | 132,800 | |
MasterCard, Inc. Class A | 84,810 | 10,300,175 | |
Paychex, Inc. | 221,931 | 12,636,751 | |
Unisys Corp. (a) | 214,196 | 2,741,709 | |
Visa, Inc. Class A | 175,876 | 16,493,651 | |
47,159,098 | |||
Semiconductors & Semiconductor Equipment - 1.7% | |||
Qualcomm, Inc. | 387,461 | 21,395,596 | |
Software - 3.5% | |||
Microsoft Corp. | 645,113 | 44,467,639 | |
Oracle Corp. | 25,491 | 1,278,119 | |
45,745,758 | |||
Technology Hardware, Storage & Peripherals - 2.9% | |||
Apple, Inc. (c) | 249,458 | 35,926,941 | |
Western Digital Corp. (c) | 21,900 | 1,940,340 | |
37,867,281 | |||
TOTAL INFORMATION TECHNOLOGY | 217,894,892 | ||
MATERIALS - 3.0% | |||
Chemicals - 2.4% | |||
CF Industries Holdings, Inc. | 110,900 | 3,100,764 | |
E.I. du Pont de Nemours & Co. | 44,452 | 3,587,721 | |
LyondellBasell Industries NV Class A | 77,100 | 6,506,469 | |
Monsanto Co. | 77,919 | 9,222,493 | |
Potash Corp. of Saskatchewan, Inc. (d) | 334,100 | 5,448,963 | |
The Scotts Miracle-Gro Co. Class A | 2,100 | 187,866 | |
W.R. Grace & Co. | 47,800 | 3,442,078 | |
31,496,354 | |||
Containers & Packaging - 0.6% | |||
Ball Corp. | 84,800 | 3,579,408 | |
Graphic Packaging Holding Co. | 13,100 | 180,518 | |
WestRock Co. | 68,500 | 3,881,210 | |
7,641,136 | |||
Metals & Mining - 0.0% | |||
Reliance Steel & Aluminum Co. | 6,400 | 465,984 | |
TOTAL MATERIALS | 39,603,474 | ||
REAL ESTATE - 1.0% | |||
Equity Real Estate Investment Trusts (REITs) - 1.0% | |||
American Tower Corp. | 15,800 | 2,090,656 | |
CoreSite Realty Corp. | 7,100 | 735,063 | |
Crown Castle International Corp. | 57,300 | 5,740,314 | |
First Potomac Realty Trust | 8,800 | 97,768 | |
Omega Healthcare Investors, Inc. | 23,200 | 766,064 | |
Public Storage | 15,800 | 3,294,774 | |
Sabra Health Care REIT, Inc. | 37,400 | 901,340 | |
13,625,979 | |||
TELECOMMUNICATION SERVICES - 1.0% | |||
Diversified Telecommunication Services - 1.0% | |||
Verizon Communications, Inc. | 288,280 | 12,874,585 | |
UTILITIES - 1.0% | |||
Electric Utilities - 1.0% | |||
Exelon Corp. | 321,800 | 11,607,326 | |
PPL Corp. | 38,300 | 1,480,678 | |
13,088,004 | |||
TOTAL COMMON STOCKS | |||
(Cost $942,345,501) | 1,281,001,394 | ||
Preferred Stocks - 0.4% | |||
Convertible Preferred Stocks - 0.4% | |||
HEALTH CARE - 0.2% | |||
Health Care Equipment & Supplies - 0.2% | |||
Becton, Dickinson & Co. Series A 6.125% | 37,600 | 2,052,584 | |
INDUSTRIALS - 0.1% | |||
Commercial Services & Supplies - 0.1% | |||
Stericycle, Inc. 2.25% | 30,400 | 1,927,360 | |
UTILITIES - 0.1% | |||
Independent Power and Renewable Electricity Producers - 0.1% | |||
Dynegy, Inc. 7.00% | 11,300 | 693,368 | |
TOTAL CONVERTIBLE PREFERRED STOCKS | 4,673,312 | ||
Nonconvertible Preferred Stocks - 0.0% | |||
INDUSTRIALS - 0.0% | |||
Aerospace & Defense - 0.0% | |||
Rolls-Royce Holdings PLC (C Shares) | 43,011,370 | 56,020 | |
TOTAL PREFERRED STOCKS | |||
(Cost $5,175,358) | 4,729,332 | ||
Principal Amount(e) | Value | ||
Convertible Bonds - 0.1% | |||
HEALTH CARE - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Bayer Capital Corp. BV 5.625% 11/22/19(f) | |||
(Cost $1,175,020) | EUR 1,100,000 | 1,531,145 | |
Shares | Value | ||
Money Market Funds - 2.5% | |||
Fidelity Cash Central Fund, 1.10% (g) | 27,063,612 | 27,069,025 | |
Fidelity Securities Lending Cash Central Fund 1.09% (g)(h) | 5,710,552 | 5,711,123 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $32,779,023) | 32,780,148 | ||
TOTAL INVESTMENT PORTFOLIO - 101.2% | |||
(Cost $981,474,902) | 1,320,042,019 | ||
NET OTHER ASSETS (LIABILITIES) - (1.2)% | (15,443,378) | ||
NET ASSETS - 100% | $1,304,598,641 |
Written Options | ||||
Expiration Date/Exercise Price | Number of Contracts | Premium | Value | |
Call Options | ||||
Apple, Inc. | 7/21/17 - $155.00 | 137 | $14,564 | $(2,740) |
Apple, Inc. | 8/18/17 - $165.00 | 124 | 25,543 | (4,030) |
Bank of America Corp. | 7/21/17 - $26.00 | 1,792 | 50,175 | (13,440) |
Bank of America Corp. | 8/18/17 - $26.00 | 1,805 | 30,684 | (44,223) |
Cisco Systems, Inc. | 10/20/17 - $33.00 | 615 | 35,029 | (30,135) |
Citigroup, Inc. | 8/18/17 - $65.00 | 1,228 | 169,853 | (362,874) |
Comerica, Inc. | 7/21/17 - $72.50 | 651 | 168,626 | (155,263) |
Costco Wholesale Corp. | 10/20/17 - $178.00 | 52 | 23,763 | (6,370) |
CSX Corp. | 7/21/17 - $52.50 | 361 | 55,593 | (106,134) |
General Electric Co. | 9/15/17 - $31.00 | 1,713 | 40,255 | (6,852) |
JPMorgan Chase & Co. | 7/21/17 - $95.00 | 476 | 22,857 | (12,614) |
JPMorgan Chase & Co. | 8/18/17 - $90.00 | 480 | 45,609 | (138,240) |
Northern Trust Corp. | 10/20/17 - $105.00 | 134 | 16,281 | (18,760) |
Regions Financial Corp. | 8/18/17 - $16.00 | 352 | 4,928 | (5,632) |
State Street Corp. | 8/18/17 - $85.00 | 433 | 59,385 | (264,130) |
SunTrust Banks, Inc. | 7/21/17 - $65.00 | 250 | 35,999 | (1,250) |
The Boeing Co. | 7/21/17 - $185.00 | 111 | 54,611 | (151,793) |
Western Digital Corp. | 7/21/17 - $92.50 | 182 | 42,223 | (22,113) |
TOTAL WRITTEN OPTIONS | $895,978 | $(1,346,593) |
Currency Abbreviations
EUR – European Monetary Unit
Legend
(a) Non-income producing
(b) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $1 or 0.0% of net assets.
(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 $54,485,683.
(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) 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 $1,531,145 or 0.1% of net assets.
(g) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(h) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
Security | Acquisition Date | Acquisition Cost |
NJOY, Inc. | 2/14/14 | $164,892 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
Fund | Income earned |
Fidelity Cash Central Fund | $94,775 |
Fidelity Securities Lending Cash Central Fund | 16,215 |
Total | $110,990 |
Investment Valuation
The following is a summary of the inputs used, as of June 30, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $86,308,814 | $86,308,813 | $-- | $1 |
Consumer Staples | 93,774,997 | 93,774,997 | -- | -- |
Energy | 155,665,611 | 155,665,611 | -- | -- |
Financials | 315,249,195 | 315,249,195 | -- | -- |
Health Care | 182,703,511 | 174,763,158 | 7,940,353 | -- |
Industrials | 154,248,296 | 149,452,596 | 4,795,700 | -- |
Information Technology | 217,894,892 | 217,894,892 | -- | -- |
Materials | 39,603,474 | 39,603,474 | -- | -- |
Real Estate | 13,625,979 | 13,625,979 | -- | -- |
Telecommunication Services | 12,874,585 | 12,874,585 | -- | -- |
Utilities | 13,781,372 | 13,088,004 | 693,368 | -- |
Corporate Bonds | 1,531,145 | -- | 1,531,145 | -- |
Money Market Funds | 32,780,148 | 32,780,148 | -- | -- |
Total Investments in Securities: | $1,320,042,019 | $1,305,081,452 | $14,960,566 | $1 |
Derivative Instruments: | ||||
Liabilities | ||||
Written Options | $(1,346,593) | $(1,346,593) | $-- | $-- |
Total Liabilities | $(1,346,593) | $(1,346,593) | $-- | $-- |
Total Derivative Instruments: | $(1,346,593) | $(1,346,593) | $-- | $-- |
Value of Derivative Instruments
The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of June 30, 2017. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements.
Primary Risk Exposure / Derivative Type | Value | |
Asset | Liability | |
Equity Risk | ||
Written Options(a) | $0 | $(1,346,593) |
Total Equity Risk | 0 | (1,346,593) |
Total Value of Derivatives | $0 | $(1,346,593) |
(a) Gross value is presented in the Statement of Assets and Liabilities in the written options, at value line-item.
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 90.0% |
Canada | 3.0% |
United Kingdom | 2.5% |
Ireland | 1.5% |
Netherlands | 1.0% |
Others (Individually Less Than 1%) | 2.0% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
June 30, 2017 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $5,447,447) — See accompanying schedule: Unaffiliated issuers (cost $948,695,879) | $1,287,261,871 | |
Fidelity Central Funds (cost $32,779,023) | 32,780,148 | |
Total Investments (cost $981,474,902) | $1,320,042,019 | |
Cash | 23,204 | |
Foreign currency held at value (cost $17,314) | 17,318 | |
Receivable for investments sold | 521,235 | |
Receivable for fund shares sold | 765,558 | |
Dividends receivable | 1,434,162 | |
Interest receivable | 42,790 | |
Distributions receivable from Fidelity Central Funds | 21,649 | |
Other receivables | 6,496 | |
Total assets | 1,322,874,431 | |
Liabilities | ||
Payable for investments purchased | $4,619,033 | |
Payable for fund shares redeemed | 5,843,882 | |
Accrued management fee | 482,435 | |
Distribution and service plan fees payable | 104,282 | |
Written options, at value (premium received $895,978) | 1,346,593 | |
Other affiliated payables | 127,077 | |
Other payables and accrued expenses | 41,369 | |
Collateral on securities loaned | 5,711,119 | |
Total liabilities | 18,275,790 | |
Net Assets | $1,304,598,641 | |
Net Assets consist of: | ||
Paid in capital | $936,915,774 | |
Undistributed net investment income | 7,122,568 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 22,440,799 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 338,119,500 | |
Net Assets | $1,304,598,641 | |
Initial Class: | ||
Net Asset Value, offering price and redemption price per share ($417,674,196 ÷ 19,949,022 shares) | $20.94 | |
Service Class: | ||
Net Asset Value, offering price and redemption price per share ($120,684,713 ÷ 5,813,823 shares) | $20.76 | |
Service Class 2: | ||
Net Asset Value, offering price and redemption price per share ($460,852,378 ÷ 22,496,789 shares) | $20.49 | |
Investor Class: | ||
Net Asset Value, offering price and redemption price per share ($305,387,354 ÷ 14,646,611 shares) | $20.85 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Six months ended June 30, 2017 (Unaudited) | ||
Investment Income | ||
Dividends | $14,272,868 | |
Interest | 181,861 | |
Income from Fidelity Central Funds | 110,990 | |
Total income | 14,565,719 | |
Expenses | ||
Management fee | $2,790,151 | |
Transfer agent fees | 535,739 | |
Distribution and service plan fees | 574,334 | |
Accounting and security lending fees | 201,243 | |
Custodian fees and expenses | 32,281 | |
Independent trustees' fees and expenses | 2,422 | |
Audit | 37,198 | |
Legal | 3,055 | |
Miscellaneous | 5,127 | |
Total expenses before reductions | 4,181,550 | |
Expense reductions | (19,308) | 4,162,242 |
Net investment income (loss) | 10,403,477 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 28,051,689 | |
Fidelity Central Funds | (1,460) | |
Foreign currency transactions | (5,459) | |
Written options | 1,129,114 | |
Total net realized gain (loss) | 29,173,884 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 25,517,569 | |
Assets and liabilities in foreign currencies | 11,111 | |
Written options | 4,424,360 | |
Total change in net unrealized appreciation (depreciation) | 29,953,040 | |
Net gain (loss) | 59,126,924 | |
Net increase (decrease) in net assets resulting from operations | $69,530,401 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Six months ended June 30, 2017 (Unaudited) | Year ended December 31, 2016 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $10,403,477 | $18,088,807 |
Net realized gain (loss) | 29,173,884 | 20,057,226 |
Change in net unrealized appreciation (depreciation) | 29,953,040 | 113,422,450 |
Net increase (decrease) in net assets resulting from operations | 69,530,401 | 151,568,483 |
Distributions to shareholders from net investment income | (1,018,201) | (17,117,243) |
Distributions to shareholders from net realized gain | (21,921,857) | (60,942,871) |
Total distributions | (22,940,058) | (78,060,114) |
Share transactions - net increase (decrease) | 127,562,075 | 41,331,938 |
Total increase (decrease) in net assets | 174,152,418 | 114,840,307 |
Net Assets | ||
Beginning of period | 1,130,446,223 | 1,015,605,916 |
End of period | $1,304,598,641 | $1,130,446,223 |
Other Information | ||
Undistributed net investment income end of period | $7,122,568 | $– |
Distributions in excess of net investment income end of period | $– | $(2,262,708) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Growth & Income Portfolio Initial Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $20.15 | $18.88 | $20.78 | $19.14 | $14.59 | $12.59 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .18 | .35 | .40 | .38 | .33 | .32 |
Net realized and unrealized gain (loss) | 1.00 | 2.38 | (.86) | 1.63 | 4.55 | 2.01 |
Total from investment operations | 1.18 | 2.73 | (.46) | 2.01 | 4.88 | 2.33 |
Distributions from net investment income | (.02) | (.32) | (.42)B | (.36) | (.33) | (.33) |
Distributions from net realized gain | (.37) | (1.14) | (1.01)B | (.01) | – | (.01) |
Total distributions | (.39) | (1.46) | (1.44)C | (.37) | (.33) | (.33)D |
Net asset value, end of period | $20.94 | $20.15 | $18.88 | $20.78 | $19.14 | $14.59 |
Total ReturnE,F,G | 5.90% | 16.08% | (2.27)% | 10.47% | 33.56% | 18.56% |
Ratios to Average Net AssetsH,I | ||||||
Expenses before reductions | .56%J | .56% | .56% | .57% | .57% | .59% |
Expenses net of fee waivers, if any | .56%J | .56% | .56% | .57% | .57% | .59% |
Expenses net of all reductions | .55%J | .56% | .56% | .57% | .57% | .58% |
Net investment income (loss) | 1.77%J | 1.91% | 1.99% | 1.90% | 1.92% | 2.29% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $417,674 | $375,639 | $370,704 | $406,311 | $385,028 | $300,330 |
Portfolio turnover rateK | 32%J | 34% | 35% | 45% | 48% | 54% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total distributions of $1.44 per share is comprised of distributions from net investment income of $.422 and distributions from net realized gain of $1.013 per share.
D Total distributions of $.33 per share is comprised of distributions from net investment income of $.327 and distributions from net realized gain of $.007 per share.
E Total returns for periods of less than one year are not annualized.
F Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Annualized
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Growth & Income Portfolio Service Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $19.99 | $18.75 | $20.64 | $19.01 | $14.49 | $12.51 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .17 | .33 | .37 | .36 | .31 | .31 |
Net realized and unrealized gain (loss) | .98 | 2.35 | (.85) | 1.62 | 4.53 | 1.99 |
Total from investment operations | 1.15 | 2.68 | (.48) | 1.98 | 4.84 | 2.30 |
Distributions from net investment income | (.02) | (.31) | (.40)B | (.34) | (.32) | (.31) |
Distributions from net realized gain | (.37) | (1.14) | (1.01)B | (.01) | – | (.01) |
Total distributions | (.38)C | (1.44)D | (1.41) | (.35) | (.32) | (.32) |
Net asset value, end of period | $20.76 | $19.99 | $18.75 | $20.64 | $19.01 | $14.49 |
Total ReturnE,F,G | 5.83% | 15.94% | (2.35)% | 10.39% | 33.46% | 18.40% |
Ratios to Average Net AssetsH,I | ||||||
Expenses before reductions | .66%J | .66% | .66% | .66% | .67% | .68% |
Expenses net of fee waivers, if any | .66%J | .66% | .66% | .66% | .67% | .68% |
Expenses net of all reductions | .65%J | .66% | .66% | .66% | .67% | .67% |
Net investment income (loss) | 1.67%J | 1.81% | 1.89% | 1.80% | 1.82% | 2.19% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $120,685 | $119,952 | $116,035 | $135,893 | $139,248 | $118,185 |
Portfolio turnover rateK | 32%J | 34% | 35% | 45% | 48% | 54% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total distributions of $.38 per share is comprised of distributions from net investment income of $.017 and distributions from net realized gain of $.366 per share.
D Total distributions of $1.44 per share is comprised of distributions from net investment income of $.308 and distributions from net realized gain of $1.135 per share.
E Total returns for periods of less than one year are not annualized.
F Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Annualized
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Growth & Income Portfolio Service Class 2
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $19.74 | $18.54 | $20.43 | $18.82 | $14.35 | $12.39 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .15 | .30 | .34 | .32 | .28 | .28 |
Net realized and unrealized gain (loss) | .98 | 2.33 | (.85) | 1.61 | 4.48 | 1.98 |
Total from investment operations | 1.13 | 2.63 | (.51) | 1.93 | 4.76 | 2.26 |
Distributions from net investment income | (.01) | (.29) | (.37)B | (.31) | (.29) | (.29) |
Distributions from net realized gain | (.37) | (1.14) | (1.01)B | (.01) | – | (.01) |
Total distributions | (.38) | (1.43) | (1.38) | (.32) | (.29) | (.30) |
Net asset value, end of period | $20.49 | $19.74 | $18.54 | $20.43 | $18.82 | $14.35 |
Total ReturnC,D,E | 5.78% | 15.81% | (2.54)% | 10.23% | 33.25% | 18.25% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .81%H | .81% | .81% | .81% | .82% | .83% |
Expenses net of fee waivers, if any | .80%H | .81% | .81% | .81% | .82% | .83% |
Expenses net of all reductions | .80%H | .81% | .81% | .81% | .82% | .82% |
Net investment income (loss) | 1.52%H | 1.66% | 1.74% | 1.65% | 1.67% | 2.04% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $460,852 | $356,194 | $290,102 | $330,608 | $342,586 | $285,693 |
Portfolio turnover rateI | 32%H | 34% | 35% | 45% | 48% | 54% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total returns for periods of less than one year are not annualized.
D Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Growth & Income Portfolio Investor Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $20.07 | $18.82 | $20.71 | $19.09 | $14.55 | $12.56 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .17 | .33 | .38 | .36 | .32 | .31 |
Net realized and unrealized gain (loss) | .99 | 2.37 | (.85) | 1.62 | 4.54 | 2.01 |
Total from investment operations | 1.16 | 2.70 | (.47) | 1.98 | 4.86 | 2.32 |
Distributions from net investment income | (.02) | (.31) | (.40)B | (.35) | (.32) | (.32) |
Distributions from net realized gain | (.37) | (1.14) | (1.01)B | (.01) | – | (.01) |
Total distributions | (.38)C | (1.45) | (1.42)D | (.36) | (.32) | (.33) |
Net asset value, end of period | $20.85 | $20.07 | $18.82 | $20.71 | $19.09 | $14.55 |
Total ReturnE,F,G | 5.86% | 15.96% | (2.32)% | 10.33% | 33.52% | 18.46% |
Ratios to Average Net AssetsH,I | ||||||
Expenses before reductions | .64%J | .64% | .64% | .65% | .65% | .67% |
Expenses net of fee waivers, if any | .64%J | .64% | .64% | .65% | .65% | .67% |
Expenses net of all reductions | .63%J | .64% | .64% | .64% | .65% | .66% |
Net investment income (loss) | 1.69%J | 1.83% | 1.91% | 1.82% | 1.84% | 2.20% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $305,387 | $278,661 | $238,765 | $259,462 | $192,195 | $95,689 |
Portfolio turnover rateK | 32%J | 34% | 35% | 45% | 48% | 54% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total distributions of $.38 per share is comprised of distributions from net investment income of $.018 and distributions from net realized gain of $.366 per share.
D Total distributions of $1.42 per share is comprised of distributions from net investment income of $.404 and distributions from net realized gain of $1.013 per share.
E Total returns for periods of less than one year are not annualized.
F Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Annualized
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended June 30, 2017
1. Organization.
VIP Growth & Income Portfolio (the Fund) is a fund of Variable Insurance Products Fund III (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. Corporate bonds are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
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 June 30, 2017 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), market discount, equity-debt classifications, certain conversion ratio adjustments, partnerships, security level mergers and exchanges and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $387,133,118 |
Gross unrealized depreciation | (54,477,517) |
Net unrealized appreciation (depreciation) on securities | $332,655,601 |
Tax cost | $987,386,418 |
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund's investment objective allows the Fund to enter into various types of derivative contracts, including options. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified asset based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded options 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.
The Fund used exchange-traded written covered call options to manage its exposure to the market. When the Fund writes a covered call option, the Fund holds the underlying instrument which must be delivered to the holder upon the exercise of the option.
Upon entering into a written options contract, the Fund will receive a premium. Premiums received are reflected as a liability on the Statement of Assets and Liabilities. Options are valued daily and any unrealized appreciation (depreciation) is reflected on the Statement of Assets and Liabilities. When a written option is exercised, the premium is added to the proceeds from the sale of the underlying instrument in determining the gain or loss realized on that investment. When an option is closed the Fund will realize a gain or loss depending on whether the proceeds or amount paid for the closing sale transaction are greater or less than the premium received. When an option expires, gains and losses are realized to the extent of premiums received. The net realized gain (loss) on closed and expired written options and the change in net unrealized appreciation (depreciation) on written options are reflected separately on 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".
During the period, the Fund recognized net realized gain (loss) of $1,129,114 and a change in net unrealized appreciation (depreciation) of $4,424,360 related to its investment in written options. This amount is included in the Statement of Operations.
The following is a summary of the Fund's written options activity:
Number of Contracts | Amount of Premiums | |
Outstanding at beginning of period | 14,405 | $916,325 |
Options Opened | 28,751 | 2,277,237 |
Options Exercised | (15,060) | (1,109,783) |
Options Closed | (4,545) | (266,488) |
Options Expired | (12,655) | (921,313) |
Outstanding at end of period | 10,896 | $895,978 |
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $312,916,569 and $195,171,497, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .20% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annualized management fee rate was .45% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of 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 | $60,509 |
Service Class 2 | 513,825 |
$574,334 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class pays a fee for transfer agent services, typesetting and printing and mailing of shareholder reports, excluding mailing of proxy statements, equal to an annual rate of class-level average net assets. The annual rate for Investor Class is .15% and the annual rate for all other classes is .07%. For the period, transfer agent fees for each class were as follows:
Initial Class | $137,910 |
Service Class | 39,936 |
Service Class 2 | 135,650 |
Investor Class | 222,243 |
$535,739 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $3,902 for the period.
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
7. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $1,945 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $16,215, including $11 from securities loaned to FCM.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $14,187 for the period.In addition, 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, these credits reduced the Fund's custody expenses by $73.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $5,048.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended June 30, 2017 | Year ended December 31, 2016 | |
From net investment income | ||
Initial Class | $408,325 | $5,948,497 |
Service Class | 100,808 | 1,825,191 |
Service Class 2 | 246,544 | 5,114,614 |
Investor Class | 262,524 | 4,228,941 |
Total | $1,018,201 | $17,117,243 |
From net realized gain | ||
Initial Class | $7,472,349 | $22,208,671 |
Service Class | 2,170,345 | 6,932,182 |
Service Class 2 | 6,941,167 | 17,563,645 |
Investor Class | 5,337,996 | 14,238,373 |
Total | $21,921,857 | $60,942,871 |
11. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Shares | Dollars | Dollars | |
Six months ended June 30, 2017 | Year ended December 31, 2016 | Six months ended June 30, 2017 | Year ended December 31, 2016 | |
Initial Class | ||||
Shares sold | 2,817,960 | 1,795,563 | $57,623,558 | $33,082,383 |
Reinvestment of distributions | 388,402 | 1,674,735 | 7,880,674 | 28,157,168 |
Shares redeemed | (1,899,947) | (4,462,581) | (39,163,025) | (82,426,585) |
Net increase (decrease) | 1,306,415 | (992,283) | $26,341,207 | $(21,187,034) |
Service Class | ||||
Shares sold | 127,215 | 212,574 | $2,583,026 | $3,929,712 |
Reinvestment of distributions | 112,880 | 525,159 | 2,271,154 | 8,757,373 |
Shares redeemed | (427,656) | (926,473) | (8,719,382) | (16,914,248) |
Net increase (decrease) | (187,561) | (188,740) | $(3,865,202) | $(4,227,163) |
Service Class 2 | ||||
Shares sold | 5,631,559 | 5,989,891 | $113,461,282 | $111,049,985 |
Reinvestment of distributions | 361,737 | 1,371,267 | 7,187,711 | 22,678,259 |
Shares redeemed | (1,540,612) | (4,961,413) | (31,045,324) | (90,185,943) |
Net increase (decrease) | 4,452,684 | 2,399,745 | $89,603,669 | $43,542,301 |
Investor Class | ||||
Shares sold | 1,599,428 | 2,638,403 | $32,738,479 | $50,668,587 |
Reinvestment of distributions | 277,116 | 1,097,665 | 5,600,521 | 18,467,314 |
Shares redeemed | (1,111,899) | (2,540,649) | (22,856,599) | (45,932,067) |
Net increase (decrease) | 764,645 | 1,195,419 | $15,482,401 | $23,203,834 |
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, the investment adviser or its affiliates were the owners of record of 28% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 36% of the total outstanding shares of the Fund.
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 to June 30, 2017).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annualized Expense Ratio-A | Beginning Account Value January 1, 2017 | Ending Account Value June 30, 2017 | Expenses Paid During Period-B January 1, 2017 to June 30, 2017 | |
Initial Class | .56% | |||
Actual | $1,000.00 | $1,059.00 | $2.86 | |
Hypothetical-C | $1,000.00 | $1,022.02 | $2.81 | |
Service Class | .66% | |||
Actual | $1,000.00 | $1,058.30 | $3.37 | |
Hypothetical-C | $1,000.00 | $1,021.52 | $3.31 | |
Service Class 2 | .80% | |||
Actual | $1,000.00 | $1,057.80 | $4.08 | |
Hypothetical-C | $1,000.00 | $1,020.83 | $4.01 | |
Investor Class | .64% | |||
Actual | $1,000.00 | $1,058.60 | $3.27 | |
Hypothetical-C | $1,000.00 | $1,021.62 | $3.21 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
VIPGI-SANN-0817
1.705698.119
Fidelity® Variable Insurance Products: Dynamic Capital Appreciation Portfolio Semi-Annual Report June 30, 2017 |
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. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.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.
Investment Summary (Unaudited)
Top Ten Stocks as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Apple, Inc. | 4.0 | 3.0 |
Las Vegas Sands Corp. | 3.8 | 4.5 |
Adobe Systems, Inc. | 3.3 | 3.5 |
Amgen, Inc. | 3.0 | 2.6 |
CME Group, Inc. | 2.9 | 4.1 |
Alphabet, Inc. Class C | 2.8 | 0.9 |
Vertex Pharmaceuticals, Inc. | 2.5 | 1.9 |
Goldman Sachs Group, Inc. | 2.3 | 1.9 |
Altice NV Class A | 2.3 | 1.3 |
Charter Communications, Inc. Class A | 1.9 | 1.6 |
28.8 |
Top Five Market Sectors as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Information Technology | 24.5 | 17.5 |
Consumer Discretionary | 22.4 | 21.0 |
Financials | 13.7 | 16.7 |
Health Care | 13.6 | 16.5 |
Industrials | 8.2 | 14.2 |
Asset Allocation (% of fund's net assets)
As of June 30, 2017* | ||
Stocks | 94.3% | |
Short-Term Investments and Net Other Assets (Liabilities) | 5.7% |
* Foreign investments - 13.7%
As of December 31, 2016* | ||
Stocks | 98.6% | |
Short-Term Investments and Net Other Assets (Liabilities) | 1.4% |
* Foreign investments - 14.5%
Investments June 30, 2017 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 94.3% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 22.4% | |||
Diversified Consumer Services - 0.2% | |||
DeVry, Inc. | 9,320 | $353,694 | |
Hotels, Restaurants & Leisure - 7.7% | |||
Carnival Corp. | 4,200 | 275,394 | |
Dalata Hotel Group PLC (a) | 217,540 | 1,197,593 | |
Las Vegas Sands Corp. | 89,771 | 5,735,469 | |
Marriott International, Inc. Class A | 6,800 | 682,108 | |
McDonald's Corp. | 2,600 | 398,216 | |
Penn National Gaming, Inc. (a) | 7,800 | 166,920 | |
Royal Caribbean Cruises Ltd. | 2,100 | 229,383 | |
Whitbread PLC | 19,419 | 1,003,345 | |
Wyndham Worldwide Corp. | 19,043 | 1,912,108 | |
11,600,536 | |||
Household Durables - 0.3% | |||
Newell Brands, Inc. | 8,200 | 439,684 | |
Internet & Direct Marketing Retail - 1.2% | |||
Expedia, Inc. | 1,300 | 193,635 | |
Netflix, Inc. (a) | 2,300 | 343,643 | |
Priceline Group, Inc. (a) | 700 | 1,309,364 | |
1,846,642 | |||
Leisure Products - 0.2% | |||
Hasbro, Inc. | 2,100 | 234,171 | |
Media - 7.6% | |||
Altice NV Class A (a) | 152,461 | 3,517,493 | |
Charter Communications, Inc. Class A (a) | 8,500 | 2,863,225 | |
Interpublic Group of Companies, Inc. | 55,000 | 1,353,000 | |
ITV PLC | 456,332 | 1,078,150 | |
The Walt Disney Co. | 20,124 | 2,138,175 | |
Viacom, Inc. Class B (non-vtg.) | 15,000 | 503,550 | |
11,453,593 | |||
Multiline Retail - 2.7% | |||
B&M European Value Retail S.A. | 95,548 | 421,500 | |
Dollar General Corp. | 27,700 | 1,996,893 | |
JC Penney Corp., Inc. (a)(b) | 293,600 | 1,365,240 | |
Macy's, Inc. | 13,400 | 311,416 | |
4,095,049 | |||
Specialty Retail - 2.5% | |||
AutoZone, Inc. (a) | 2,000 | 1,140,920 | |
Home Depot, Inc. | 16,500 | 2,531,100 | |
3,672,020 | |||
TOTAL CONSUMER DISCRETIONARY | 33,695,389 | ||
CONSUMER STAPLES - 1.2% | |||
Food & Staples Retailing - 0.5% | |||
Costco Wholesale Corp. | 4,784 | 765,105 | |
Personal Products - 0.5% | |||
Unilever NV (Certificaten Van Aandelen) (Bearer) | 13,300 | 734,184 | |
Tobacco - 0.2% | |||
Imperial Tobacco Group PLC | 7,117 | 319,660 | |
TOTAL CONSUMER STAPLES | 1,818,949 | ||
ENERGY - 2.3% | |||
Energy Equipment & Services - 0.7% | |||
Ensco PLC Class A | 112,800 | 582,048 | |
Shelf Drilling Ltd. (a) | 31,800 | 251,391 | |
U.S. Silica Holdings, Inc. (b) | 6,500 | 230,685 | |
1,064,124 | |||
Oil, Gas & Consumable Fuels - 1.6% | |||
ConocoPhillips Co. | 15,000 | 659,400 | |
Marathon Oil Corp. | 100,300 | 1,188,555 | |
Southwestern Energy Co. (a) | 95,679 | 581,728 | |
2,429,683 | |||
TOTAL ENERGY | 3,493,807 | ||
FINANCIALS - 13.7% | |||
Banks - 3.1% | |||
Bank of America Corp. | 58,243 | 1,412,975 | |
PNC Financial Services Group, Inc. | 8,001 | 999,085 | |
Wells Fargo & Co. | 39,496 | 2,188,473 | |
4,600,533 | |||
Capital Markets - 10.2% | |||
CBOE Holdings, Inc. | 14,836 | 1,356,010 | |
CME Group, Inc. | 35,300 | 4,420,972 | |
Goldman Sachs Group, Inc. | 15,920 | 3,532,648 | |
Legg Mason, Inc. | 19,200 | 732,672 | |
MarketAxess Holdings, Inc. | 2,700 | 542,970 | |
Moody's Corp. | 2,300 | 279,864 | |
Morgan Stanley | 40,200 | 1,791,312 | |
MSCI, Inc. | 12,171 | 1,253,491 | |
S&P Global, Inc. | 10,000 | 1,459,900 | |
15,369,839 | |||
Consumer Finance - 0.2% | |||
Synchrony Financial | 10,300 | 307,146 | |
Insurance - 0.2% | |||
Willis Group Holdings PLC | 2,100 | 305,466 | |
TOTAL FINANCIALS | 20,582,984 | ||
HEALTH CARE - 13.6% | |||
Biotechnology - 8.1% | |||
Alexion Pharmaceuticals, Inc. (a) | 6,500 | 790,855 | |
Amgen, Inc. | 26,400 | 4,546,872 | |
Celgene Corp. (a) | 15,562 | 2,021,037 | |
Regeneron Pharmaceuticals, Inc. (a) | 2,100 | 1,031,394 | |
Vertex Pharmaceuticals, Inc. (a) | 29,200 | 3,763,004 | |
12,153,162 | |||
Health Care Equipment & Supplies - 2.5% | |||
Abiomed, Inc. (a) | 4,756 | 681,535 | |
Align Technology, Inc. (a) | 1,700 | 255,204 | |
Edwards Lifesciences Corp. (a) | 1,900 | 224,656 | |
Hologic, Inc. (a) | 30,498 | 1,383,999 | |
Inogen, Inc. (a) | 800 | 76,336 | |
Intuitive Surgical, Inc. (a) | 800 | 748,296 | |
Varian Medical Systems, Inc. (a) | 3,600 | 371,484 | |
3,741,510 | |||
Health Care Technology - 0.4% | |||
Cerner Corp. (a) | 10,331 | 686,702 | |
Life Sciences Tools & Services - 1.1% | |||
Agilent Technologies, Inc. | 9,300 | 551,583 | |
Bio-Rad Laboratories, Inc. Class A (a) | 1,300 | 294,203 | |
ICON PLC (a) | 4,200 | 410,718 | |
Mettler-Toledo International, Inc. (a) | 600 | 353,124 | |
1,609,628 | |||
Pharmaceuticals - 1.5% | |||
Jazz Pharmaceuticals PLC (a) | 7,400 | 1,150,700 | |
The Medicines Company (a)(b) | 30,000 | 1,140,300 | |
2,291,000 | |||
TOTAL HEALTH CARE | 20,482,002 | ||
INDUSTRIALS - 8.2% | |||
Aerospace & Defense - 0.6% | |||
Rockwell Collins, Inc. | 3,800 | 399,304 | |
United Technologies Corp. | 4,600 | 561,706 | |
961,010 | |||
Airlines - 1.2% | |||
Air Canada (a) | 84,400 | 1,131,147 | |
Ryanair Holdings PLC sponsored ADR (a) | 7,012 | 754,561 | |
1,885,708 | |||
Building Products - 0.8% | |||
A.O. Smith Corp. | 3,800 | 214,054 | |
Allegion PLC | 3,200 | 259,584 | |
Kingspan Group PLC (Ireland) | 23,682 | 812,940 | |
1,286,578 | |||
Commercial Services & Supplies - 0.2% | |||
Cintas Corp. | 1,900 | 239,476 | |
Electrical Equipment - 0.5% | |||
Rockwell Automation, Inc. | 4,400 | 712,624 | |
Machinery - 3.3% | |||
AGCO Corp. | 1,100 | 74,129 | |
Cummins, Inc. | 4,700 | 762,434 | |
Deere & Co. | 5,600 | 692,104 | |
Graco, Inc. | 3,200 | 349,696 | |
Illinois Tool Works, Inc. | 1,900 | 272,175 | |
Manitowoc Co., Inc. (a) | 60,596 | 364,182 | |
Nordson Corp. | 2,479 | 300,752 | |
PACCAR, Inc. | 3,700 | 244,348 | |
Parker Hannifin Corp. | 3,900 | 623,298 | |
Pentair PLC | 16,300 | 1,084,602 | |
Stanley Black & Decker, Inc. | 1,500 | 211,095 | |
4,978,815 | |||
Marine - 0.6% | |||
Irish Continental Group PLC unit | 166,000 | 963,152 | |
Professional Services - 0.3% | |||
IHS Markit Ltd. (a) | 8,900 | 391,956 | |
Road & Rail - 0.4% | |||
Norfolk Southern Corp. | 4,500 | 547,650 | |
Trading Companies & Distributors - 0.3% | |||
GATX Corp. (b) | 6,184 | 397,446 | |
TOTAL INDUSTRIALS | 12,364,415 | ||
INFORMATION TECHNOLOGY - 24.5% | |||
Electronic Equipment & Components - 0.9% | |||
Cognex Corp. | 4,200 | 356,580 | |
Coherent, Inc. (a) | 1,300 | 292,487 | |
IPG Photonics Corp. (a) | 932 | 135,233 | |
Zebra Technologies Corp. Class A (a) | 6,400 | 643,328 | |
1,427,628 | |||
Internet Software & Services - 4.8% | |||
Alphabet, Inc. Class C (a) | 4,600 | 4,180,158 | |
Facebook, Inc. Class A (a) | 18,211 | 2,749,497 | |
VeriSign, Inc. (a) | 2,700 | 250,992 | |
7,180,647 | |||
IT Services - 2.8% | |||
Fiserv, Inc. (a) | 2,600 | 318,084 | |
Gartner, Inc. (a) | 3,800 | 469,338 | |
Global Payments, Inc. | 7,512 | 678,484 | |
PayPal Holdings, Inc. (a) | 44,400 | 2,382,948 | |
Visa, Inc. Class A | 4,000 | 375,120 | |
4,223,974 | |||
Semiconductors & Semiconductor Equipment - 4.2% | |||
ASML Holding NV | 4,410 | 574,667 | |
Broadcom Ltd. | 1,800 | 419,490 | |
Cypress Semiconductor Corp. | 33,200 | 453,180 | |
KLA-Tencor Corp. | 12,758 | 1,167,485 | |
Qorvo, Inc. (a) | 6,200 | 392,584 | |
Qualcomm, Inc. | 18,832 | 1,039,903 | |
Skyworks Solutions, Inc. | 3,800 | 364,610 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 15,300 | 534,888 | |
Texas Instruments, Inc. | 17,500 | 1,346,275 | |
6,293,082 | |||
Software - 7.4% | |||
Adobe Systems, Inc. (a) | 34,700 | 4,907,968 | |
ANSYS, Inc. (a) | 3,600 | 438,048 | |
Autodesk, Inc. (a) | 4,200 | 423,444 | |
Electronic Arts, Inc. (a) | 22,485 | 2,377,114 | |
Microsoft Corp. | 36,200 | 2,495,266 | |
Take-Two Interactive Software, Inc. (a) | 6,100 | 447,618 | |
11,089,458 | |||
Technology Hardware, Storage & Peripherals - 4.4% | |||
Apple, Inc. | 41,519 | 5,979,569 | |
NetApp, Inc. | 17,600 | 704,880 | |
6,684,449 | |||
TOTAL INFORMATION TECHNOLOGY | 36,899,238 | ||
MATERIALS - 6.5% | |||
Chemicals - 3.6% | |||
Albemarle Corp. U.S. | 4,000 | 422,160 | |
E.I. du Pont de Nemours & Co. | 14,313 | 1,155,202 | |
FMC Corp. | 36,864 | 2,692,915 | |
Sherwin-Williams Co. | 1,900 | 666,824 | |
Sociedad Quimica y Minera de Chile SA (PN-B) sponsored ADR | 13,469 | 444,746 | |
5,381,847 | |||
Construction Materials - 0.4% | |||
Eagle Materials, Inc. | 7,179 | 663,483 | |
Containers & Packaging - 0.5% | |||
Aptargroup, Inc. | 4,798 | 416,754 | |
Ball Corp. | 7,400 | 312,354 | |
729,108 | |||
Metals& Mining - 2.0% | |||
Freeport-McMoRan, Inc. (a) | 89,596 | 1,076,048 | |
Glencore Xstrata PLC | 197,441 | 738,555 | |
Rio Tinto PLC | 26,900 | 1,139,264 | |
2,953,867 | |||
TOTAL MATERIALS | 9,728,305 | ||
REAL ESTATE - 0.3% | |||
Equity Real Estate Investment Trusts (REITs) - 0.3% | |||
Equinix, Inc. | 1,100 | 472,076 | |
TELECOMMUNICATION SERVICES - 1.6% | |||
Wireless Telecommunication Services - 1.6% | |||
T-Mobile U.S., Inc. (a) | 38,272 | 2,320,049 | |
TOTAL COMMON STOCKS | |||
(Cost $116,561,056) | 141,857,214 | ||
Money Market Funds - 7.2% | |||
Fidelity Cash Central Fund, 1.10% (c) | 7,796,109 | 7,797,669 | |
Fidelity Securities Lending Cash Central Fund 1.09% (c)(d) | 3,004,967 | 3,005,267 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $10,802,770) | 10,802,936 | ||
TOTAL INVESTMENT PORTFOLIO - 101.5% | |||
(Cost $127,363,826) | 152,660,150 | ||
NET OTHER ASSETS (LIABILITIES) - (1.5)% | (2,209,201) | ||
NET ASSETS - 100% | $150,450,949 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
Fund | Income earned |
Fidelity Cash Central Fund | $8,795 |
Fidelity Securities Lending Cash Central Fund | 21,515 |
Total | $30,310 |
Investment Valuation
The following is a summary of the inputs used, as of June 30, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $33,695,389 | $33,695,389 | $-- | $-- |
Consumer Staples | 1,818,949 | 1,084,765 | 734,184 | -- |
Energy | 3,493,807 | 3,242,416 | -- | 251,391 |
Financials | 20,582,984 | 20,582,984 | -- | -- |
Health Care | 20,482,002 | 20,482,002 | -- | -- |
Industrials | 12,364,415 | 12,364,415 | -- | -- |
Information Technology | 36,899,238 | 36,899,238 | -- | -- |
Materials | 9,728,305 | 8,589,041 | 1,139,264 | -- |
Real Estate | 472,076 | 472,076 | -- | -- |
Telecommunication Services | 2,320,049 | 2,320,049 | -- | -- |
Money Market Funds | 10,802,936 | 10,802,936 | -- | -- |
Total Investments in Securities: | $152,660,150 | $150,535,311 | $1,873,448 | $251,391 |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 86.3% |
Ireland | 4.4% |
Netherlands | 3.3% |
United Kingdom | 2.8% |
Others (Individually Less Than 1%) | 3.2% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
June 30, 2017 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $2,913,044) — See accompanying schedule: Unaffiliated issuers (cost $116,561,056) | $141,857,214 | |
Fidelity Central Funds (cost $10,802,770) | 10,802,936 | |
Total Investments (cost $127,363,826) | $152,660,150 | |
Cash | 239 | |
Foreign currency held at value (cost $24,381) | 24,381 | |
Receivable for investments sold | 2,079,559 | |
Receivable for fund shares sold | 1,881 | |
Dividends receivable | 55,588 | |
Distributions receivable from Fidelity Central Funds | 10,234 | |
Other receivables | 5,052 | |
Total assets | 154,837,084 | |
Liabilities | ||
Payable for investments purchased | $1,109,001 | |
Payable for fund shares redeemed | 143,514 | |
Accrued management fee | 69,493 | |
Distribution and service plan fees payable | 3,579 | |
Other affiliated payables | 20,999 | |
Other payables and accrued expenses | 35,049 | |
Collateral on securities loaned | 3,004,500 | |
Total liabilities | 4,386,135 | |
Net Assets | $150,450,949 | |
Net Assets consist of: | ||
Paid in capital | $115,626,159 | |
Undistributed net investment income | 570,999 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 8,957,865 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 25,295,926 | |
Net Assets | $150,450,949 | |
Initial Class: | ||
Net Asset Value, offering price and redemption price per share ($23,515,906 ÷ 1,799,829 shares) | $13.07 | |
Service Class: | ||
Net Asset Value, offering price and redemption price per share ($572,853 ÷ 44,295 shares) | $12.93 | |
Service Class 2: | ||
Net Asset Value, offering price and redemption price per share ($16,558,895 ÷ 1,301,568 shares) | $12.72 | |
Investor Class: | ||
Net Asset Value, offering price and redemption price per share ($109,803,295 ÷ 8,421,488 shares) | $13.04 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Six months ended June 30, 2017 (Unaudited) | ||
Investment Income | ||
Dividends | $1,186,464 | |
Income from Fidelity Central Funds | 30,310 | |
Total income | 1,216,774 | |
Expenses | ||
Management fee | $421,468 | |
Transfer agent fees | 96,567 | |
Distribution and service plan fees | 21,483 | |
Accounting and security lending fees | 30,343 | |
Custodian fees and expenses | 27,800 | |
Independent trustees' fees and expenses | 308 | |
Audit | 24,152 | |
Legal | 3,407 | |
Miscellaneous | 672 | |
Total expenses before reductions | 626,200 | |
Expense reductions | (8,538) | 617,662 |
Net investment income (loss) | 599,112 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 9,126,030 | |
Fidelity Central Funds | 329 | |
Foreign currency transactions | 152 | |
Total net realized gain (loss) | 9,126,511 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 4,485,114 | |
Assets and liabilities in foreign currencies | 67 | |
Total change in net unrealized appreciation (depreciation) | 4,485,181 | |
Net gain (loss) | 13,611,692 | |
Net increase (decrease) in net assets resulting from operations | $14,210,804 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Six months ended June 30, 2017 (Unaudited) | Year ended December 31, 2016 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $599,112 | $1,590,420 |
Net realized gain (loss) | 9,126,511 | 7,524,898 |
Change in net unrealized appreciation (depreciation) | 4,485,181 | (7,131,032) |
Net increase (decrease) in net assets resulting from operations | 14,210,804 | 1,984,286 |
Distributions to shareholders from net investment income | (462,874) | (1,308,115) |
Distributions to shareholders from net realized gain | (7,180,189) | (8,053,857) |
Total distributions | (7,643,063) | (9,361,972) |
Share transactions - net increase (decrease) | (11,615,413) | (60,590,752) |
Total increase (decrease) in net assets | (5,047,672) | (67,968,438) |
Net Assets | ||
Beginning of period | 155,498,621 | 223,467,059 |
End of period | $150,450,949 | $155,498,621 |
Other Information | ||
Undistributed net investment income end of period | $570,999 | $434,761 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Dynamic Capital Appreciation Portfolio Initial Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $12.53 | $12.85 | $13.56 | $12.76 | $10.02 | $8.22 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .06 | .12 | .13 | .06 | .05 | .07 |
Net realized and unrealized gain (loss) | 1.12 | .17 | .04 | 1.30 | 3.70 | 1.80 |
Total from investment operations | 1.18 | .29 | .17 | 1.36 | 3.75 | 1.87 |
Distributions from net investment income | (.04) | (.11) | (.12) | (.06) | (.04) | (.07) |
Distributions from net realized gain | (.60) | (.49) | (.77) | (.50) | (.97) | – |
Total distributions | (.64) | (.61)B | (.88)C | (.56) | (1.01) | (.07) |
Net asset value, end of period | $13.07 | $12.53 | $12.85 | $13.56 | $12.76 | $10.02 |
Total ReturnD,E,F | 9.68% | 2.88% | 1.30% | 10.92% | 38.53% | 22.72% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .72%I | .71% | .70% | .72% | .77% | .82% |
Expenses net of fee waivers, if any | .72%I | .71% | .70% | .72% | .77% | .82% |
Expenses net of all reductions | .71%I | .70% | .69% | .71% | .76% | .80% |
Net investment income (loss) | .86%I | .99% | .97% | .47% | .47% | .78% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $23,516 | $25,141 | $37,281 | $38,705 | $35,050 | $21,049 |
Portfolio turnover rateJ | 118%I | 123% | 129% | 122% | 136% | 168% |
A Calculated based on average shares outstanding during the period.
B Total distributions of $.61 per share is comprised of distributions from net investment income of $.111 and distributions from net realized gain of $.494 per share.
C Total distributions of $.88 per share is comprised of distributions from net investment income of $.115 and distributions from net realized gain of $.767 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Dynamic Capital Appreciation Portfolio Service Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $12.41 | $12.74 | $13.45 | $12.66 | $9.95 | $8.17 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .05 | .11 | .12 | .05 | .04 | .07 |
Net realized and unrealized gain (loss) | 1.11 | .16 | .03 | 1.29 | 3.67 | 1.78 |
Total from investment operations | 1.16 | .27 | .15 | 1.34 | 3.71 | 1.85 |
Distributions from net investment income | (.04) | (.10) | (.10) | (.05) | (.03) | (.07) |
Distributions from net realized gain | (.60) | (.49) | (.77) | (.50) | (.97) | – |
Total distributions | (.64) | (.60)B | (.86)C | (.55) | (1.00) | (.07) |
Net asset value, end of period | $12.93 | $12.41 | $12.74 | $13.45 | $12.66 | $9.95 |
Total ReturnD,E,F | 9.58% | 2.76% | 1.16% | 10.88% | 38.39% | 22.61% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .82%I | .81% | .80% | .81% | .86% | .91% |
Expenses net of fee waivers, if any | .82%I | .81% | .80% | .81% | .86% | .91% |
Expenses net of all reductions | .81%I | .80% | .79% | .80% | .85% | .88% |
Net investment income (loss) | .76%I | .89% | .87% | .37% | .38% | .70% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $573 | $530 | $642 | $946 | $518 | $347 |
Portfolio turnover rateJ | 118%I | 123% | 129% | 122% | 136% | 168% |
A Calculated based on average shares outstanding during the period.
B Total distributions of $.60 per share is comprised of distributions from net investment income of $.103 and distributions from net realized gain of $.494 per share.
C Total distributions of $.86 per share is comprised of distributions from net investment income of $.096 and distributions from net realized gain of $.767 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Dynamic Capital Appreciation Portfolio Service Class 2
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $12.23 | $12.56 | $13.27 | $12.50 | $9.83 | $8.08 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .04 | .09 | .09 | .03 | .03 | .05 |
Net realized and unrealized gain (loss) | 1.09 | .16 | .05 | 1.27 | 3.62 | 1.75 |
Total from investment operations | 1.13 | .25 | .14 | 1.30 | 3.65 | 1.80 |
Distributions from net investment income | (.04) | (.09) | (.08) | (.03) | (.01) | (.05) |
Distributions from net realized gain | (.60) | (.49) | (.77) | (.50) | (.97) | – |
Total distributions | (.64) | (.58) | (.85) | (.53) | (.98) | (.05) |
Net asset value, end of period | $12.72 | $12.23 | $12.56 | $13.27 | $12.50 | $9.83 |
Total ReturnB,C,D | 9.44% | 2.66% | 1.02% | 10.66% | 38.25% | 22.25% |
Ratios to Average Net AssetsE,F | ||||||
Expenses before reductions | .97%G | .96% | .95% | .97% | 1.02% | 1.07% |
Expenses net of fee waivers, if any | .97%G | .96% | .95% | .97% | 1.01% | 1.07% |
Expenses net of all reductions | .96%G | .95% | .94% | .96% | 1.00% | 1.05% |
Net investment income (loss) | .61%G | .74% | .72% | .22% | .22% | .54% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $16,559 | $16,830 | $20,128 | $24,336 | $24,512 | $18,565 |
Portfolio turnover rateH | 118%G | 123% | 129% | 122% | 136% | 168% |
A Calculated based on average shares outstanding during the period.
B Total returns for periods of less than one year are not annualized.
C Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Annualized
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Dynamic Capital Appreciation Portfolio Investor Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $12.51 | $12.83 | $13.54 | $12.75 | $10.01 | $8.22 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .05 | .11 | .12 | .05 | .05 | .07 |
Net realized and unrealized gain (loss) | 1.12 | .17 | .04 | 1.29 | 3.69 | 1.78 |
Total from investment operations | 1.17 | .28 | .16 | 1.34 | 3.74 | 1.85 |
Distributions from net investment income | (.04) | (.10) | (.11) | (.05) | (.04) | (.06) |
Distributions from net realized gain | (.60) | (.49) | (.77) | (.50) | (.97) | – |
Total distributions | (.64) | (.60)B | (.87)C | (.55) | (1.00)D | (.06) |
Net asset value, end of period | $13.04 | $12.51 | $12.83 | $13.54 | $12.75 | $10.01 |
Total ReturnE,F,G | 9.59% | 2.81% | 1.22% | 10.79% | 38.52% | 22.52% |
Ratios to Average Net AssetsH,I | ||||||
Expenses before reductions | .80%J | .79% | .78% | .79% | .84% | .90% |
Expenses net of fee waivers, if any | .80%J | .79% | .78% | .79% | .84% | .90% |
Expenses net of all reductions | .79%J | .78% | .77% | .79% | .83% | .87% |
Net investment income (loss) | .78%J | .90% | .89% | .39% | .40% | .71% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $109,803 | $112,998 | $165,416 | $142,646 | $105,425 | $37,037 |
Portfolio turnover rateK | 118%J | 123% | 129% | 122% | 136% | 168% |
A Calculated based on average shares outstanding during the period.
B Total distributions of $.60 per share is comprised of distributions from net investment income of $.102 and distributions from net realized gain of $.494 per share.
C Total distributions of $.87 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $.767 per share.
D Total distributions of $1.00 per share is comprised of distributions from net investment income of $.037 and distributions from net realized gain of $.967 per share.
E Total returns for periods of less than one year are not annualized.
F Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Annualized
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended June 30, 2017
1. Organization.
VIP Dynamic Capital Appreciation Portfolio (the Fund) is a fund of Variable Insurance Products Fund III (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs)and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of June 30, 2017 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $28,646,688 |
Gross unrealized depreciation | (3,477,630) |
Net unrealized appreciation (depreciation) on securities | $25,169,058 |
Tax cost | $127,491,092 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $88,551,232 and $113,623,121, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annualized management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of 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 | $279 |
Service Class 2 | 21,204 |
$21,483 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class pays a fee for transfer agent services, typesetting and printing and mailing of shareholder reports, excluding mailing of proxy statements, equal to an annual rate of class-level average net assets. The annual rate for Investor Class is .15% and the annual rate for all other classes is .07%. For the period, transfer agent fees for each class were as follows:
Initial Class | $8,058 |
Service Class | 184 |
Service Class 2 | 5,598 |
Investor Class | 82,727 |
$96,567 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $1,968 for the period.
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $268 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $134,967. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $21,515, including $304 from securities loaned to FCM.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $7,823 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $715.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended June 30, 2017 | Year ended December 31, 2016 | |
From net investment income | ||
Initial Class | $77,660 | $227,944 |
Service Class | 1,653 | 4,366 |
Service Class 2 | 46,422 | 120,531 |
Investor Class | 337,139 | 955,274 |
Total | $462,874 | $1,308,115 |
From net realized gain | ||
Initial Class | $1,142,166 | $1,329,712 |
Service Class | 25,559 | 20,796 |
Service Class 2 | 799,777 | 764,648 |
Investor Class | 5,212,687 | 5,938,701 |
Total | $7,180,189 | $8,053,857 |
10. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Shares | Dollars | Dollars | |
Six months ended June 30, 2017 | Year ended December 31, 2016 | Six months ended June 30, 2017 | Year ended December 31, 2016 | |
Initial Class | ||||
Shares sold | 29,397 | 59,307 | $381,023 | $723,273 |
Reinvestment of distributions | 97,430 | 141,572 | 1,219,826 | 1,557,656 |
Shares redeemed | (333,105) | (1,095,052) | (4,291,644) | (13,190,380) |
Net increase (decrease) | (206,278) | (894,173) | $(2,690,795) | $(10,909,451) |
Service Class | ||||
Shares sold | 590 | 417 | $7,656 | $5,102 |
Reinvestment of distributions | 2,195 | 2,298 | 27,212 | 25,162 |
Shares redeemed | (1,218) | (10,325) | (15,353) | (128,470) |
Net increase (decrease) | 1,567 | (7,610) | $19,515 | $(98,206) |
Service Class 2 | ||||
Shares sold | 28,405 | 126,153 | $354,652 | $1,469,996 |
Reinvestment of distributions | 69,304 | 82,574 | 846,199 | 885,179 |
Shares redeemed | (172,483) | (434,340) | (2,168,757) | (5,103,920) |
Net increase (decrease) | (74,774) | (225,613) | $(967,906) | $(2,748,745) |
Investor Class | ||||
Shares sold | 207,623 | 340,788 | $2,658,213 | $4,141,529 |
Reinvestment of distributions | 443,986 | 628,496 | 5,549,826 | 6,893,975 |
Shares redeemed | (1,262,527) | (4,825,288) | (16,184,266) | (57,869,854) |
Net increase (decrease) | (610,918) | (3,856,004) | $(7,976,227) | $(46,834,350) |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, the investment adviser or its affiliates were the owners of record of 88% of the total outstanding shares of the Fund.
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 to June 30, 2017).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annualized Expense Ratio-A | Beginning Account Value January 1, 2017 | Ending Account Value June 30, 2017 | Expenses Paid During Period-B January 1, 2017 to June 30, 2017 | |
Initial Class | .72% | |||
Actual | $1,000.00 | $1,096.80 | $3.74 | |
Hypothetical-C | $1,000.00 | $1,021.22 | $3.61 | |
Service Class | .82% | |||
Actual | $1,000.00 | $1,095.80 | $4.26 | |
Hypothetical-C | $1,000.00 | $1,020.73 | $4.11 | |
Service Class 2 | .97% | |||
Actual | $1,000.00 | $1,094.40 | $5.04 | |
Hypothetical-C | $1,000.00 | $1,019.98 | $4.86 | |
Investor Class | .80% | |||
Actual | $1,000.00 | $1,095.90 | $4.16 | |
Hypothetical-C | $1,000.00 | $1,020.83 | $4.01 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
VIPDCA-SANN-0817
1.761772.116
Fidelity® Variable Insurance Products: Balanced Portfolio Semi-Annual Report June 30, 2017 |
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. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.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.
Investment Summary (Unaudited)
The information in the following tables is based on the combined investments of the Fund and its pro-rata share of the investments of Fidelity's Fixed-Income Central Funds.Top Five Stocks as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Apple, Inc. | 2.5 | 2.4 |
Autodesk, Inc. | 1.8 | 1.6 |
Alphabet, Inc. Class C | 1.6 | 1.8 |
Amazon.com, Inc. | 1.4 | 1.3 |
Citigroup, Inc. | 1.3 | 0.7 |
8.6 |
Top Five Bond Issuers as of June 30, 2017
(with maturities greater than one year) | % of fund's net assets | % of fund's net assets 6 months ago |
U.S. Treasury Obligations | 9.8 | 7.3 |
Fannie Mae | 3.6 | 3.4 |
Freddie Mac | 2.0 | 2.1 |
Ginnie Mae | 1.1 | 0.4 |
Petroleos Mexicanos | 0.6 | 0.7 |
17.1 |
Top Five Market Sectors as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Information Technology | 14.3 | 12.5 |
Financials | 14.0 | 15.5 |
Health Care | 10.2 | 9.6 |
Consumer Discretionary | 10.0 | 9.7 |
Industrials | 6.9 | 6.8 |
Asset Allocation (% of fund's net assets)
As of June 30, 2017* | ||
Stocks and Equity Futures | 66.5% | |
Bonds | 30.1% | |
Short-Term Investments and Net Other Assets (Liabilities) | 2.9% | |
Other Investments | 0.5% |
* Foreign investments - 9.6%
As of December 31, 2016* | ||
Stocks and Equity Futures | 65.6% | |
Bonds | 31.0% | |
Short-Term Investments and Net Other Assets (Liabilities) | 2.9% | |
Other Investments | 0.5% |
* Foreign investments - 10.0%
An unaudited holdings listing for the Fund, which presents direct holdings as well as the pro-rata share of any securities and other investments held indirectly through its investment in underlying non-money market Fidelity Central Funds, is available at fidelity.com and/or institutional.fidelity.com, as applicable.
Percentages in the above tables are adjusted for the effect of TBA Sale Commitments.
Percentages are adjusted for the effect of futures contracts and swaps, if applicable.
Investments June 30, 2017 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 65.4% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 8.8% | |||
Automobiles - 0.8% | |||
Tesla, Inc. (a) | 77,138 | $27,893,872 | |
Diversified Consumer Services - 0.3% | |||
ServiceMaster Global Holdings, Inc. (a) | 243,475 | 9,541,785 | |
Hotels, Restaurants & Leisure - 0.9% | |||
Hilton Grand Vacations, Inc. (a) | 43,620 | 1,572,937 | |
Las Vegas Sands Corp. | 64,395 | 4,114,197 | |
Marriott International, Inc. Class A | 74,691 | 7,492,254 | |
Park Hotels & Resorts, Inc. | 98,155 | 2,646,259 | |
Starbucks Corp. | 111,990 | 6,530,137 | |
U.S. Foods Holding Corp. (a) | 40,100 | 1,091,522 | |
Wyndham Worldwide Corp. | 114,777 | 11,524,759 | |
34,972,065 | |||
Household Durables - 0.0% | |||
PICO Holdings, Inc. (a) | 48,568 | 849,940 | |
Internet & Direct Marketing Retail - 1.7% | |||
Amazon.com, Inc. (a) | 54,010 | 52,281,680 | |
Netflix, Inc. (a) | 65,600 | 9,801,296 | |
62,082,976 | |||
Leisure Products - 0.3% | |||
Hasbro, Inc. | 54,600 | 6,088,446 | |
Mattel, Inc. | 249,400 | 5,369,582 | |
11,458,028 | |||
Media - 2.0% | |||
Charter Communications, Inc. Class A (a) | 60,164 | 20,266,243 | |
Comcast Corp. Class A | 344,990 | 13,427,011 | |
DISH Network Corp. Class A (a) | 14,700 | 922,572 | |
Interpublic Group of Companies, Inc. | 205,179 | 5,047,403 | |
Manchester United PLC | 107,600 | 1,748,500 | |
MDC Partners, Inc. Class A | 391,321 | 3,874,078 | |
The Walt Disney Co. | 260,100 | 27,635,625 | |
72,921,432 | |||
Multiline Retail - 0.3% | |||
Dollar Tree, Inc. (a) | 151,300 | 10,578,896 | |
Specialty Retail - 2.0% | |||
Home Depot, Inc. | 190,208 | 29,177,907 | |
L Brands, Inc. | 200,494 | 10,804,622 | |
Lowe's Companies, Inc. | 120,500 | 9,342,365 | |
O'Reilly Automotive, Inc. (a) | 27,300 | 5,971,602 | |
Ross Stores, Inc. | 109,543 | 6,323,917 | |
TJX Companies, Inc. | 147,740 | 10,662,396 | |
72,282,809 | |||
Textiles, Apparel & Luxury Goods - 0.5% | |||
NIKE, Inc. Class B | 347,530 | 20,504,270 | |
TOTAL CONSUMER DISCRETIONARY | 323,086,073 | ||
CONSUMER STAPLES - 6.0% | |||
Beverages - 1.4% | |||
Anheuser-Busch InBev SA NV | 49,500 | 5,467,202 | |
Coca-Cola European Partners PLC | 6,559 | 266,755 | |
Constellation Brands, Inc. Class A (sub. vtg.) | 48,900 | 9,473,397 | |
Molson Coors Brewing Co. Class B | 14,800 | 1,277,832 | |
Monster Beverage Corp. (a) | 155,526 | 7,726,532 | |
The Coca-Cola Co. | 615,786 | 27,618,002 | |
51,829,720 | |||
Food & Staples Retailing - 1.1% | |||
CVS Health Corp. | 259,880 | 20,909,945 | |
Kroger Co. | 523,369 | 12,204,965 | |
Rite Aid Corp. (a) | 692,610 | 2,043,200 | |
Walgreens Boots Alliance, Inc. | 62,420 | 4,888,110 | |
40,046,220 | |||
Food Products - 0.4% | |||
Blue Buffalo Pet Products, Inc. (a) | 50,500 | 1,151,905 | |
Bunge Ltd. | 60,678 | 4,526,579 | |
Mondelez International, Inc. | 50,100 | 2,163,819 | |
Post Holdings, Inc. (a) | 3,800 | 295,070 | |
The Hain Celestial Group, Inc. (a) | 73,485 | 2,852,688 | |
TreeHouse Foods, Inc. (a) | 54,100 | 4,419,429 | |
15,409,490 | |||
Household Products - 0.4% | |||
Colgate-Palmolive Co. | 215,244 | 15,956,038 | |
Kimberly-Clark Corp. | 5,100 | 658,461 | |
16,614,499 | |||
Personal Products - 0.6% | |||
Avon Products, Inc. (a) | 755,600 | 2,871,280 | |
Coty, Inc. Class A | 293,604 | 5,508,011 | |
Estee Lauder Companies, Inc. Class A | 120,192 | 11,536,028 | |
Unilever NV (Certificaten Van Aandelen) (Bearer) | 23,100 | 1,275,162 | |
21,190,481 | |||
Tobacco - 2.1% | |||
Altria Group, Inc. | 95,608 | 7,119,928 | |
British American Tobacco PLC sponsored ADR (b) | 315,194 | 21,603,397 | |
Philip Morris International, Inc. | 264,056 | 31,013,377 | |
Reynolds American, Inc. | 240,657 | 15,652,331 | |
75,389,033 | |||
TOTAL CONSUMER STAPLES | 220,479,443 | ||
ENERGY - 4.0% | |||
Energy Equipment & Services - 0.7% | |||
Baker Hughes, Inc. | 97,500 | 5,314,725 | |
Dril-Quip, Inc. (a) | 25,600 | 1,249,280 | |
Hess Midstream Partners LP | 54,900 | 1,118,313 | |
NCS Multistage Holdings, Inc. | 96,100 | 2,419,798 | |
Oceaneering International, Inc. | 47,700 | 1,089,468 | |
Schlumberger Ltd. | 213,100 | 14,030,504 | |
25,222,088 | |||
Oil, Gas & Consumable Fuels - 3.3% | |||
Amyris, Inc. | 9,766 | 31,056 | |
Anadarko Petroleum Corp. | 208,149 | 9,437,476 | |
Black Stone Minerals LP | 101,900 | 1,605,944 | |
Cabot Oil & Gas Corp. | 172,660 | 4,330,313 | |
Callon Petroleum Co. (a) | 231,700 | 2,458,337 | |
Centennial Resource Development, Inc.: | |||
Class A | 81,400 | 1,287,748 | |
Class A (c) | 72,000 | 1,139,040 | |
Chevron Corp. | 100,900 | 10,526,897 | |
Cimarex Energy Co. | 43,985 | 4,135,030 | |
ConocoPhillips Co. | 304,200 | 13,372,632 | |
Devon Energy Corp. | 209,300 | 6,691,321 | |
EOG Resources, Inc. | 82,600 | 7,476,952 | |
Extraction Oil & Gas, Inc. | 99,974 | 1,344,650 | |
Extraction Oil & Gas, Inc. (c) | 76,712 | 1,031,776 | |
Exxon Mobil Corp. | 206,000 | 16,630,380 | |
Newfield Exploration Co. (a) | 158,800 | 4,519,448 | |
Parsley Energy, Inc. Class A (a) | 161,200 | 4,473,300 | |
PDC Energy, Inc. (a) | 60,000 | 2,586,600 | |
Phillips 66 Co. | 96,926 | 8,014,811 | |
Pioneer Natural Resources Co. | 44,400 | 7,085,352 | |
PrairieSky Royalty Ltd. | 135,334 | 3,081,750 | |
Suncor Energy, Inc. | 294,480 | 8,604,139 | |
119,864,952 | |||
TOTAL ENERGY | 145,087,040 | ||
FINANCIALS - 9.6% | |||
Banks - 4.4% | |||
Allied Irish Banks PLC | 367,500 | 2,077,714 | |
Bank of America Corp. | 1,707,487 | 41,423,635 | |
Citigroup, Inc. | 716,754 | 47,936,508 | |
Huntington Bancshares, Inc. | 1,630,638 | 22,046,226 | |
JPMorgan Chase & Co. | 228,300 | 20,866,620 | |
PNC Financial Services Group, Inc. | 155,600 | 19,429,772 | |
SunTrust Banks, Inc. | 97,900 | 5,552,888 | |
Synovus Financial Corp. | 35,742 | 1,581,226 | |
160,914,589 | |||
Capital Markets - 2.0% | |||
Affiliated Managers Group, Inc. | 11,600 | 1,923,976 | |
BlackRock, Inc. Class A | 35,472 | 14,983,728 | |
CBOE Holdings, Inc. | 68,225 | 6,235,765 | |
E*TRADE Financial Corp. (a) | 269,600 | 10,252,888 | |
Goldman Sachs Group, Inc. | 49,400 | 10,961,860 | |
IntercontinentalExchange, Inc. | 102,400 | 6,750,208 | |
Legg Mason, Inc. | 26,400 | 1,007,424 | |
Northern Trust Corp. | 116,600 | 11,334,686 | |
State Street Corp. | 132,100 | 11,853,333 | |
75,303,868 | |||
Consumer Finance - 1.4% | |||
Capital One Financial Corp. | 395,231 | 32,653,985 | |
Imperial Holdings, Inc. warrants 4/11/19 (a) | 6,565 | 0 | |
OneMain Holdings, Inc. (a) | 225,100 | 5,535,209 | |
SLM Corp. (a) | 555,852 | 6,392,298 | |
Synchrony Financial | 247,300 | 7,374,486 | |
51,955,978 | |||
Diversified Financial Services - 0.4% | |||
Berkshire Hathaway, Inc.: | |||
Class A (a) | 17 | 4,329,900 | |
Class B (a) | 49,500 | 8,383,815 | |
KBC Ancora | 38,000 | 1,858,678 | |
Kimbell Royalty Partners LP | 54,300 | 913,869 | |
On Deck Capital, Inc. (a) | 65,000 | 302,900 | |
15,789,162 | |||
Insurance - 1.4% | |||
American International Group, Inc. | 10,508 | 656,960 | |
Chubb Ltd. | 85,230 | 12,390,737 | |
Hartford Financial Services Group, Inc. | 29,700 | 1,561,329 | |
Marsh & McLennan Companies, Inc. | 165,433 | 12,897,157 | |
MetLife, Inc. | 65,700 | 3,609,558 | |
The Travelers Companies, Inc. | 128,500 | 16,259,105 | |
Unum Group | 55,500 | 2,587,965 | |
WMI Holdings Corp. (a) | 57 | 71 | |
49,962,882 | |||
Thrifts & Mortgage Finance - 0.0% | |||
Washington Mutual, Inc. (a) | 101,600 | 1 | |
TOTAL FINANCIALS | 353,926,480 | ||
HEALTH CARE - 9.4% | |||
Biotechnology - 2.6% | |||
Alexion Pharmaceuticals, Inc. (a) | 55,850 | 6,795,270 | |
Amgen, Inc. | 198,609 | 34,206,428 | |
Biogen, Inc. (a) | 56,091 | 15,220,854 | |
BioMarin Pharmaceutical, Inc. (a) | 30,400 | 2,760,928 | |
Celgene Corp. (a) | 43,700 | 5,675,319 | |
Gilead Sciences, Inc. | 80,000 | 5,662,400 | |
Regeneron Pharmaceuticals, Inc. (a) | 19,200 | 9,429,888 | |
Shire PLC sponsored ADR | 43,100 | 7,123,137 | |
Vertex Pharmaceuticals, Inc. (a) | 74,600 | 9,613,702 | |
96,487,926 | |||
Health Care Equipment & Supplies - 2.2% | |||
Abbott Laboratories | 311,000 | 15,117,710 | |
Boston Scientific Corp. (a) | 688,980 | 19,098,526 | |
Intuitive Surgical, Inc. (a) | 16,100 | 15,059,457 | |
Medtronic PLC | 283,956 | 25,201,095 | |
ResMed, Inc. | 35,627 | 2,774,274 | |
Wright Medical Group NV (a) | 147,200 | 4,046,528 | |
81,297,590 | |||
Health Care Providers & Services - 2.0% | |||
Aetna, Inc. | 22,500 | 3,416,175 | |
Cardinal Health, Inc. | 42,600 | 3,319,392 | |
Henry Schein, Inc. (a) | 49,524 | 9,063,882 | |
Humana, Inc. | 47,900 | 11,525,698 | |
UnitedHealth Group, Inc. | 209,000 | 38,752,780 | |
Universal Health Services, Inc. Class B | 62,300 | 7,605,584 | |
73,683,511 | |||
Health Care Technology - 0.2% | |||
Cerner Corp. (a) | 97,900 | 6,507,413 | |
Life Sciences Tools & Services - 0.7% | |||
Agilent Technologies, Inc. | 171,700 | 10,183,527 | |
Bio-Rad Laboratories, Inc. Class A (a) | 17,200 | 3,892,532 | |
Thermo Fisher Scientific, Inc. | 62,317 | 10,872,447 | |
24,948,506 | |||
Pharmaceuticals - 1.7% | |||
Allergan PLC | 102,423 | 24,898,007 | |
Bristol-Myers Squibb Co. | 264,560 | 14,741,283 | |
GlaxoSmithKline PLC sponsored ADR | 220,300 | 9,499,336 | |
Jazz Pharmaceuticals PLC (a) | 39,600 | 6,157,800 | |
Merck & Co., Inc. | 116,600 | 7,472,894 | |
62,769,320 | |||
TOTAL HEALTH CARE | 345,694,266 | ||
INDUSTRIALS - 6.5% | |||
Aerospace & Defense - 1.0% | |||
Axon Enterprise, Inc. (a) | 90,900 | 2,285,226 | |
Lockheed Martin Corp. | 2,600 | 721,786 | |
Northrop Grumman Corp. | 46,900 | 12,039,699 | |
Raytheon Co. | 70,500 | 11,384,340 | |
United Technologies Corp. | 82,300 | 10,049,653 | |
36,480,704 | |||
Air Freight & Logistics - 0.2% | |||
United Parcel Service, Inc. Class B | 65,897 | 7,287,549 | |
Airlines - 0.7% | |||
American Airlines Group, Inc. | 374,700 | 18,854,904 | |
Southwest Airlines Co. | 126,600 | 7,866,924 | |
26,721,828 | |||
Building Products - 0.3% | |||
Allegion PLC | 142,516 | 11,560,898 | |
Commercial Services & Supplies - 0.0% | |||
Waste Management, Inc. | 29,700 | 2,178,495 | |
Construction & Engineering - 0.3% | |||
Fluor Corp. | 227,876 | 10,432,163 | |
Electrical Equipment - 1.3% | |||
AMETEK, Inc. | 269,409 | 16,318,103 | |
Fortive Corp. | 224,675 | 14,233,161 | |
Sensata Technologies Holding BV (a) | 175,600 | 7,501,632 | |
Sunrun, Inc. (a)(b) | 754,090 | 5,369,121 | |
Vivint Solar, Inc. (a)(b) | 502,852 | 2,941,684 | |
46,363,701 | |||
Industrial Conglomerates - 1.2% | |||
3M Co. | 1,200 | 249,828 | |
General Electric Co. | 1,289,644 | 34,833,284 | |
Honeywell International, Inc. | 57,000 | 7,597,530 | |
42,680,642 | |||
Machinery - 0.2% | |||
Caterpillar, Inc. | 43,765 | 4,702,987 | |
Deere & Co. | 8,500 | 1,050,515 | |
WABCO Holdings, Inc. (a) | 8,300 | 1,058,333 | |
6,811,835 | |||
Road & Rail - 0.9% | |||
CSX Corp. | 281,500 | 15,358,640 | |
Norfolk Southern Corp. | 52,300 | 6,364,910 | |
Union Pacific Corp. | 116,500 | 12,688,015 | |
34,411,565 | |||
Trading Companies & Distributors - 0.4% | |||
HD Supply Holdings, Inc. (a) | 448,800 | 13,746,744 | |
TOTAL INDUSTRIALS | 238,676,124 | ||
INFORMATION TECHNOLOGY - 14.2% | |||
Electronic Equipment & Components - 0.6% | |||
Jabil, Inc. | 765,618 | 22,348,389 | |
Internet Software & Services - 3.9% | |||
58.com, Inc. ADR (a) | 179,429 | 7,914,613 | |
Alibaba Group Holding Ltd. sponsored ADR (a) | 18,600 | 2,620,740 | |
Alphabet, Inc. Class C (a) | 66,149 | 60,111,581 | |
Altaba, Inc. (a) | 87,400 | 4,761,552 | |
Box, Inc. Class A (a) | 34,900 | 636,576 | |
Delivery Hero AG | 100 | 3,175 | |
Facebook, Inc. Class A (a) | 246,804 | 37,262,468 | |
Just Dial Ltd. (a) | 111,750 | 642,796 | |
MINDBODY, Inc. (a) | 126,761 | 3,447,899 | |
NetEase, Inc. ADR | 9,600 | 2,886,048 | |
New Relic, Inc. (a) | 229,868 | 9,886,623 | |
Shopify, Inc. Class A (a) | 26,100 | 2,266,240 | |
SPS Commerce, Inc. (a) | 26,700 | 1,702,392 | |
Twilio, Inc. Class A | 37,900 | 1,103,269 | |
Velti PLC (a)(c) | 284,296 | 398 | |
Yext, Inc. | 447,266 | 5,962,056 | |
141,208,426 | |||
IT Services - 0.6% | |||
Cognizant Technology Solutions Corp. Class A | 176,100 | 11,693,040 | |
FleetCor Technologies, Inc. (a) | 27,200 | 3,922,512 | |
PayPal Holdings, Inc. (a) | 106,400 | 5,710,488 | |
21,326,040 | |||
Semiconductors & Semiconductor Equipment - 2.5% | |||
Analog Devices, Inc. | 73,800 | 5,741,640 | |
Broadcom Ltd. | 19,100 | 4,451,255 | |
Cavium, Inc. (a) | 30,400 | 1,888,752 | |
GlobalWafers Co. Ltd. | 171,000 | 1,195,666 | |
Integrated Device Technology, Inc. (a) | 84,961 | 2,191,144 | |
Marvell Technology Group Ltd. | 141,500 | 2,337,580 | |
Mellanox Technologies Ltd. (a) | 18,100 | 783,730 | |
Micron Technology, Inc. (a) | 222,000 | 6,628,920 | |
NVIDIA Corp. | 28,600 | 4,134,416 | |
ON Semiconductor Corp. (a) | 507,305 | 7,122,562 | |
Qorvo, Inc. (a) | 337,900 | 21,395,828 | |
Qualcomm, Inc. | 354,708 | 19,586,976 | |
Semtech Corp. (a) | 97,900 | 3,499,925 | |
Silergy Corp. | 30,000 | 578,461 | |
Siltronic AG (a) | 85,831 | 7,271,024 | |
Skyworks Solutions, Inc. | 21,500 | 2,062,925 | |
90,870,804 | |||
Software - 3.7% | |||
Activision Blizzard, Inc. | 141,067 | 8,121,227 | |
Adobe Systems, Inc. (a) | 30,531 | 4,318,305 | |
Autodesk, Inc. (a) | 637,361 | 64,258,736 | |
Citrix Systems, Inc. (a) | 16,700 | 1,328,986 | |
HubSpot, Inc. (a) | 64,210 | 4,221,808 | |
Microsoft Corp. | 382,600 | 26,372,618 | |
Parametric Technology Corp. (a) | 157,500 | 8,681,400 | |
Salesforce.com, Inc. (a) | 157,300 | 13,622,180 | |
Zendesk, Inc. (a) | 225,972 | 6,277,502 | |
137,202,762 | |||
Technology Hardware, Storage & Peripherals - 2.9% | |||
Apple, Inc. | 633,812 | 91,281,603 | |
HP, Inc. | 681,200 | 11,907,376 | |
Western Digital Corp. | 39,600 | 3,508,560 | |
106,697,539 | |||
TOTAL INFORMATION TECHNOLOGY | 519,653,960 | ||
MATERIALS - 1.7% | |||
Chemicals - 1.2% | |||
E.I. du Pont de Nemours & Co. | 226,300 | 18,264,673 | |
LyondellBasell Industries NV Class A | 80,900 | 6,827,151 | |
Monsanto Co. | 28,900 | 3,420,604 | |
Platform Specialty Products Corp. (a) | 187,700 | 2,380,036 | |
Sherwin-Williams Co. | 17,900 | 6,282,184 | |
The Scotts Miracle-Gro Co. Class A | 12,900 | 1,154,034 | |
W.R. Grace & Co. | 57,925 | 4,171,179 | |
42,499,861 | |||
Construction Materials - 0.1% | |||
Eagle Materials, Inc. | 40,950 | 3,784,599 | |
Containers & Packaging - 0.3% | |||
Ball Corp. | 121,000 | 5,107,410 | |
WestRock Co. | 124,322 | 7,044,085 | |
12,151,495 | |||
Metals & Mining - 0.1% | |||
Freeport-McMoRan, Inc. (a) | 306,400 | 3,679,864 | |
TOTAL MATERIALS | 62,115,819 | ||
REAL ESTATE - 1.9% | |||
Equity Real Estate Investment Trusts (REITs) - 1.8% | |||
Altisource Residential Corp. Class B | 225,600 | 2,919,264 | |
American Homes 4 Rent Class A | 64,800 | 1,462,536 | |
American Tower Corp. | 117,200 | 15,507,904 | |
Boston Properties, Inc. | 40,500 | 4,982,310 | |
Colony NorthStar, Inc. | 362,083 | 5,101,749 | |
CoreSite Realty Corp. | 15,000 | 1,552,950 | |
Corporate Office Properties Trust (SBI) | 65,200 | 2,283,956 | |
Corrections Corp. of America | 26,400 | 728,112 | |
DDR Corp. | 72,900 | 661,203 | |
Equinix, Inc. | 12,700 | 5,450,332 | |
Extra Space Storage, Inc. | 42,673 | 3,328,494 | |
Gaming & Leisure Properties | 18,400 | 693,128 | |
Healthcare Trust of America, Inc. | 65,100 | 2,025,261 | |
Omega Healthcare Investors, Inc. | 13,100 | 432,562 | |
Outfront Media, Inc. | 114,320 | 2,643,078 | |
Prologis, Inc. | 109,500 | 6,421,080 | |
SBA Communications Corp. Class A (a) | 16,300 | 2,198,870 | |
Store Capital Corp. | 276,800 | 6,214,160 | |
Sun Communities, Inc. | 4,800 | 420,912 | |
VEREIT, Inc. | 363,800 | 2,961,332 | |
67,989,193 | |||
Real Estate Management & Development - 0.1% | |||
CBRE Group, Inc. (a) | 86,206 | 3,137,898 | |
TOTAL REAL ESTATE | 71,127,091 | ||
TELECOMMUNICATION SERVICES - 1.4% | |||
Diversified Telecommunication Services - 1.3% | |||
AT&T, Inc. | 664,571 | 25,074,264 | |
Level 3 Communications, Inc. (a) | 81,904 | 4,856,907 | |
Verizon Communications, Inc. | 376,072 | 16,795,376 | |
Zayo Group Holdings, Inc. (a) | 79,300 | 2,450,370 | |
49,176,917 | |||
Wireless Telecommunication Services - 0.1% | |||
T-Mobile U.S., Inc. (a) | 26,231 | 1,590,123 | |
TOTAL TELECOMMUNICATION SERVICES | 50,767,040 | ||
UTILITIES - 1.9% | |||
Electric Utilities - 1.2% | |||
Edison International | 25,758 | 2,014,018 | |
Exelon Corp. | 253,535 | 9,145,007 | |
FirstEnergy Corp. | 86,800 | 2,531,088 | |
Great Plains Energy, Inc. | 49,000 | 1,434,720 | |
NextEra Energy, Inc. | 118,551 | 16,612,552 | |
PG&E Corp. | 143,850 | 9,547,325 | |
PPL Corp. | 56,850 | 2,197,821 | |
43,482,531 | |||
Independent Power and Renewable Electricity Producers - 0.1% | |||
NRG Energy, Inc. | 109,800 | 1,890,756 | |
NRG Yield, Inc. Class C | 99,702 | 1,754,755 | |
3,645,511 | |||
Multi-Utilities - 0.6% | |||
CenterPoint Energy, Inc. | 30,000 | 821,400 | |
Dominion Resources, Inc. | 116,217 | 8,905,709 | |
Sempra Energy | 105,395 | 11,883,286 | |
21,610,395 | |||
Water Utilities - 0.0% | |||
AquaVenture Holdings Ltd. | 6,100 | 92,903 | |
TOTAL UTILITIES | 68,831,340 | ||
TOTAL COMMON STOCKS | |||
(Cost $1,916,390,964) | 2,399,444,676 | ||
Principal Amount | Value | ||
Convertible Bonds - 0.0% | |||
ENERGY - 0.0% | |||
Oil, Gas & Consumable Fuels - 0.0% | |||
Amyris, Inc. 9.5% 4/15/19 pay-in-kind | |||
(Cost $984,421) | 1,452,000 | 1,015,493 | |
U.S. Treasury Obligations - 0.1% | |||
U.S. Treasury Bills, yield at date of purchase 0.79% to 0.99% 7/13/17 to 9/14/17 (d) | |||
(Cost $1,817,864) | 1,820,000 | 1,818,018 | |
Shares | Value | ||
Fixed-Income Funds - 32.3% | |||
Fidelity High Income Central Fund 2 (e) | 794,724 | $90,217,039 | |
Fidelity VIP Investment Grade Central Fund (e) | 10,421,647 | 1,093,856,081 | |
TOTAL FIXED-INCOME FUNDS | |||
(Cost $1,160,714,516) | 1,184,073,120 | ||
Money Market Funds - 2.7% | |||
Fidelity Cash Central Fund, 1.10% (f) | 80,223,510 | 80,239,555 | |
Fidelity Securities Lending Cash Central Fund 1.09% (f)(g) | 18,592,181 | 18,594,040 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $98,823,340) | 98,833,595 | ||
TOTAL INVESTMENT PORTFOLIO - 100.5% | |||
(Cost $3,178,731,105) | 3,685,184,902 | ||
NET OTHER ASSETS (LIABILITIES) - (0.5)% | (16,932,484) | ||
NET ASSETS - 100% | $3,668,252,418 |
Futures Contracts | |||
Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation/(Depreciation) | |
Purchased | |||
Equity Index Contracts | |||
327 CME E-mini S&P 500 Index Contracts (United States) | Sept. 2017 | 39,581,715 | $(112,620) |
The face value of futures purchased as a percentage of Net Assets is 1.1%
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,171,214 or 0.1% of net assets.
(d) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At period end, the value of securities pledged amounted to $1,520,096.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. A complete unaudited schedule of portfolio holdings for each Fidelity Central Fund is filed with the SEC for the first and third quarters of each fiscal year on Form N-Q and is available upon request or at the SEC's website at www.sec.gov. An unaudited holdings listing for the Fund, which presents direct holdings as well as the pro-rata share of securities and other investments held indirectly through its investment in underlying non-money market Fidelity Central Funds, is available at fidelity.com and/or institutional.fidelity.com, as applicable. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(f) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(g) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
Security | Acquisition Date | Acquisition Cost |
Centennial Resource Development, Inc. Class A | 12/28/16 | $1,046,880 |
Extraction Oil & Gas, Inc. | 12/12/16 | $1,399,994 |
Velti PLC | 4/19/13 | $426,444 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
Fund | Income earned |
Fidelity Cash Central Fund | $437,821 |
Fidelity High Income Central Fund 2 | 2,818,595 |
Fidelity Securities Lending Cash Central Fund | 243,125 |
Fidelity VIP Investment Grade Central Fund | 14,758,063 |
Total | $18,257,604 |
Additional information regarding the Fund's fiscal year to date purchases and sales, including the ownership percentage, of the non Money Market Central Funds is as follows:
Fund | Value, beginning of period | Purchases | Sales Proceeds | Value, end of period | % ownership, end of period |
Fidelity High Income Central Fund 2 | $85,572,854 | $2,818,709 | $-- | $90,217,039 | 10.2% |
Fidelity VIP Investment Grade Central Fund | 958,344,998 | 127,678,329 | -- | 1,093,856,081 | 20.6% |
Total | $1,043,917,852 | $130,497,038 | $-- | $1,184,073,120 |
Investment Valuation
The following is a summary of the inputs used, as of June 30, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $323,086,073 | $323,086,073 | $-- | $-- |
Consumer Staples | 220,479,443 | 213,737,079 | 6,742,364 | -- |
Energy | 145,087,040 | 145,087,040 | -- | -- |
Financials | 353,926,480 | 353,926,479 | -- | 1 |
Health Care | 345,694,266 | 345,694,266 | -- | -- |
Industrials | 238,676,124 | 238,676,124 | -- | -- |
Information Technology | 519,653,960 | 519,653,960 | -- | -- |
Materials | 62,115,819 | 62,115,819 | -- | -- |
Real Estate | 71,127,091 | 71,127,091 | -- | -- |
Telecommunication Services | 50,767,040 | 50,767,040 | -- | -- |
Utilities | 68,831,340 | 68,831,340 | -- | -- |
Corporate Bonds | 1,015,493 | -- | 1,015,493 | -- |
U.S. Government and Government Agency Obligations | 1,818,018 | -- | 1,818,018 | -- |
Fixed-Income Funds | 1,184,073,120 | 1,184,073,120 | -- | -- |
Money Market Funds | 98,833,595 | 98,833,595 | -- | -- |
Total Investments in Securities: | $3,685,184,902 | $3,675,609,026 | $9,575,875 | $1 |
Derivative Instruments: | ||||
Liabilities | ||||
Futures Contracts | $(112,620) | $(112,620) | $-- | $-- |
Total Liabilities | $(112,620) | $(112,620) | $-- | $-- |
Total Derivative Instruments: | $(112,620) | $(112,620) | $-- | $-- |
Value of Derivative Instruments
The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of June 30, 2017. For additional information on derivative instruments, please refer to the Derivative Instruments section in the accompanying Notes to Financial Statements.
Primary Risk Exposure / Derivative Type | Value | |
Asset | Liability | |
Equity Risk | ||
Futures Contracts(a) | $0 | $(112,620) |
Total Equity Risk | 0 | (112,620) |
Total Value of Derivatives | $0 | $(112,620) |
(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 for derivative instruments, and the net cumulative appreciation (depreciation) is included in net unrealized appreciation (depreciation).
Other Information
The information in the following table is based on the combined investments of the Fund and its pro-rata share of the investments of Fidelity’s Fixed-Income Central Funds. The composition of credit quality ratings as a percentage of Total Net Assets is as follows (Unaudited):
U.S. Government and U.S. Government Agency Obligations | 16.7% |
AAA,AA,A | 2.0% |
BBB | 7.2% |
BB | 2.7% |
B | 1.7% |
CCC,CC,C | 0.3% |
Not Rated | 0.0% |
Equities | 65.4% |
Short-Term Investments and Net Other Assets | 4.0% |
100.0% |
We have used ratings from Moody's Investors Service, Inc. Where Moody's® ratings are not available, we have used S&P® ratings. All ratings are as of the date indicated and do not reflect subsequent changes. Percentages are adjusted for the effect of futures contracts, if applicable.
Percentages shown as 0.0% may reflect amounts less than 0.05%.
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
June 30, 2017 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $18,194,137) — See accompanying schedule: Unaffiliated issuers (cost $1,919,193,249) | $2,402,278,187 | |
Fidelity Central Funds (cost $1,259,537,856) | 1,282,906,715 | |
Total Investments (cost $3,178,731,105) | $3,685,184,902 | |
Receivable for investments sold | 17,140,795 | |
Receivable for fund shares sold | 1,080,218 | |
Dividends receivable | 2,715,762 | |
Interest receivable | 29,121 | |
Distributions receivable from Fidelity Central Funds | 141,324 | |
Receivable for daily variation margin for derivative instruments | 14,715 | |
Other receivables | 32,845 | |
Total assets | 3,706,339,682 | |
Liabilities | ||
Payable to custodian bank | $395,078 | |
Payable for investments purchased | 16,837,556 | |
Payable for fund shares redeemed | 326,139 | |
Accrued management fee | 1,208,431 | |
Distribution and service plan fees payable | 177,445 | |
Other affiliated payables | 488,257 | |
Other payables and accrued expenses | 59,758 | |
Collateral on securities loaned | 18,594,600 | |
Total liabilities | 38,087,264 | |
Net Assets | $3,668,252,418 | |
Net Assets consist of: | ||
Paid in capital | $3,070,338,168 | |
Undistributed net investment income | 20,759,220 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 70,814,761 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 506,340,269 | |
Net Assets | $3,668,252,418 | |
Initial Class: | ||
Net Asset Value, offering price and redemption price per share ($222,991,338 ÷ 12,466,794 shares) | $17.89 | |
Service Class: | ||
Net Asset Value, offering price and redemption price per share ($5,319,697 ÷ 299,055 shares) | $17.79 | |
Service Class 2: | ||
Net Asset Value, offering price and redemption price per share ($855,929,943 ÷ 48,976,638 shares) | $17.48 | |
Investor Class: | ||
Net Asset Value, offering price and redemption price per share ($2,584,011,440 ÷ 145,600,847 shares) | $17.75 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Six months ended June 30, 2017 (Unaudited) | ||
Investment Income | ||
Dividends | $13,124,091 | |
Interest | 198,334 | |
Income from Fidelity Central Funds | 18,257,604 | |
Total income | 31,580,029 | |
Expenses | ||
Management fee | $6,919,398 | |
Transfer agent fees | 2,165,100 | |
Distribution and service plan fees | 976,011 | |
Accounting and security lending fees | 645,911 | |
Custodian fees and expenses | 57,513 | |
Independent trustees' fees and expenses | 6,789 | |
Audit | 47,114 | |
Legal | 6,983 | |
Miscellaneous | 15,420 | |
Total expenses before reductions | 10,840,239 | |
Expense reductions | (83,036) | 10,757,203 |
Net investment income (loss) | 20,822,826 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 83,133,763 | |
Fidelity Central Funds | (580) | |
Foreign currency transactions | 4,645 | |
Futures contracts | 3,779,967 | |
Capital gain distributions from Fidelity Central Funds | 4,846,735 | |
Total net realized gain (loss) | 91,764,530 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 164,156,259 | |
Assets and liabilities in foreign currencies | 11,547 | |
Futures contracts | 278,737 | |
Total change in net unrealized appreciation (depreciation) | 164,446,543 | |
Net gain (loss) | 256,211,073 | |
Net increase (decrease) in net assets resulting from operations | $277,033,899 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Six months ended June 30, 2017 (Unaudited) | Year ended December 31, 2016 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $20,822,826 | $47,471,078 |
Net realized gain (loss) | 91,764,530 | 49,611,242 |
Change in net unrealized appreciation (depreciation) | 164,446,543 | 115,374,812 |
Net increase (decrease) in net assets resulting from operations | 277,033,899 | 212,457,132 |
Distributions to shareholders from net investment income | (7,755,464) | (40,091,074) |
Distributions to shareholders from net realized gain | (49,400,215) | (73,621,115) |
Total distributions | (57,155,679) | (113,712,189) |
Share transactions - net increase (decrease) | 196,276,771 | 155,546,730 |
Total increase (decrease) in net assets | 416,154,991 | 254,291,673 |
Net Assets | ||
Beginning of period | 3,252,097,427 | 2,997,805,754 |
End of period | $3,668,252,418 | $3,252,097,427 |
Other Information | ||
Undistributed net investment income end of period | $20,759,220 | $7,691,858 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Balanced Portfolio Initial Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $16.77 | $16.27 | $16.93 | $17.76 | $15.76 | $14.63 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .11 | .27 | .26 | .27 | .26 | .26 |
Net realized and unrealized gain (loss) | 1.30 | .85 | (.16) | 1.37 | 2.76 | 1.91 |
Total from investment operations | 1.41 | 1.12 | .10 | 1.64 | 3.02 | 2.17 |
Distributions from net investment income | (.04) | (.22) | (.26) | (.25) | (.27) | (.26)B |
Distributions from net realized gain | (.25) | (.40) | (.50) | (2.22) | (.76) | (.78)B |
Total distributions | (.29) | (.62) | (.76) | (2.47) | (1.02)C | (1.04) |
Net asset value, end of period | $17.89 | $16.77 | $16.27 | $16.93 | $17.76 | $15.76 |
Total ReturnD,E,F | 8.50% | 7.26% | .59% | 10.26% | 19.66% | 15.07% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .51%I | .51% | .51% | .51% | .53% | .54% |
Expenses net of fee waivers, if any | .50%I | .51% | .51% | .51% | .52% | .54% |
Expenses net of all reductions | .50%I | .51% | .51% | .51% | .52% | .53% |
Net investment income (loss) | 1.30%I | 1.66% | 1.54% | 1.63% | 1.54% | 1.69% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $222,991 | $209,201 | $212,589 | $220,897 | $207,796 | $178,915 |
Portfolio turnover rateJ | 39%I | 43% | 54% | 56% | 95% | 48% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total distributions of $1.02 per share is comprised of distributions from net investment income of $.268 and distributions from net realized gain of $.755 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. Based on their most recent shareholder report date, the expenses of any underlying non-money market Fidelity Central Funds were less than .005%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Balanced Portfolio Service Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $16.69 | $16.20 | $16.86 | $17.70 | $15.71 | $14.58 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .10 | .25 | .24 | .25 | .24 | .24 |
Net realized and unrealized gain (loss) | 1.29 | .85 | (.15) | 1.36 | 2.75 | 1.91 |
Total from investment operations | 1.39 | 1.10 | .09 | 1.61 | 2.99 | 2.15 |
Distributions from net investment income | (.04) | (.21) | (.25) | (.23) | (.24) | (.23)B |
Distributions from net realized gain | (.25) | (.40) | (.50) | (2.22) | (.76) | (.78)B |
Total distributions | (.29) | (.61) | (.75) | (2.45) | (1.00) | (1.02)C |
Net asset value, end of period | $17.79 | $16.69 | $16.20 | $16.86 | $17.70 | $15.71 |
Total ReturnD,E,F | 8.40% | 7.16% | .51% | 10.09% | 19.50% | 14.95% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .61%I | .61% | .62% | .65% | .66% | .67% |
Expenses net of fee waivers, if any | .60%I | .61% | .61% | .65% | .66% | .67% |
Expenses net of all reductions | .60%I | .61% | .61% | .65% | .66% | .67% |
Net investment income (loss) | 1.20%I | 1.56% | 1.43% | 1.50% | 1.41% | 1.55% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $5,320 | $4,865 | $4,619 | $3,267 | $3,474 | $3,548 |
Portfolio turnover rateJ | 39%I | 43% | 54% | 56% | 95% | 48% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total distributions of $1.02 per share is comprised of distributions from net investment income of $.232 and distributions from net realized gain of $.784 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. Based on their most recent shareholder report date, the expenses of any underlying non-money market Fidelity Central Funds were less than .005%.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Balanced Portfolio Service Class 2
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $16.41 | $15.95 | $16.61 | $17.47 | $15.53 | $14.43 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .09 | .22 | .21 | .23 | .21 | .22 |
Net realized and unrealized gain (loss) | 1.27 | .83 | (.15) | 1.34 | 2.71 | 1.89 |
Total from investment operations | 1.36 | 1.05 | .06 | 1.57 | 2.92 | 2.11 |
Distributions from net investment income | (.04) | (.19) | (.22) | (.22) | (.23) | (.22)B |
Distributions from net realized gain | (.25) | (.40) | (.50) | (2.22) | (.76) | (.78)B |
Total distributions | (.29) | (.59) | (.72) | (2.43)C | (.98)D | (1.01)E |
Net asset value, end of period | $17.48 | $16.41 | $15.95 | $16.61 | $17.47 | $15.53 |
Total ReturnF,G,H | 8.34% | 6.98% | .36% | 10.02% | 19.28% | 14.82% |
Ratios to Average Net AssetsI,J | ||||||
Expenses before reductions | .75%K | .76% | .76% | .76% | .78% | .78% |
Expenses net of fee waivers, if any | .75%K | .76% | .76% | .76% | .77% | .78% |
Expenses net of all reductions | .75%K | .76% | .76% | .76% | .77% | .78% |
Net investment income (loss) | 1.05%K | 1.41% | 1.29% | 1.38% | 1.29% | 1.44% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $855,930 | $687,973 | $555,924 | $521,880 | $436,060 | $353,711 |
Portfolio turnover rateL | 39%K | 43% | 54% | 56% | 95% | 48% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total distributions of $2.43 per share is comprised of distributions from net investment income of $.216 and distributions from net realized gain of $2.217 per share.
D Total distributions of $.98 per share is comprised of distributions from net investment income of $.227 and distributions from net realized gain of $.755 per share.
E Total distributions of $1.01 per share is comprised of distributions from net investment income of $.221 and distributions from net realized gain of $.784 per share.
F Total returns for periods of less than one year are not annualized.
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 Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. Based on their most recent shareholder report date, the expenses of any underlying non-money market Fidelity Central Funds were less than .005%.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K Annualized
L Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Balanced Portfolio Investor Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $16.65 | $16.16 | $16.82 | $17.66 | $15.68 | $14.56 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .11 | .25 | .24 | .26 | .25 | .25 |
Net realized and unrealized gain (loss) | 1.28 | .85 | (.15) | 1.36 | 2.74 | 1.90 |
Total from investment operations | 1.39 | 1.10 | .09 | 1.62 | 2.99 | 2.15 |
Distributions from net investment income | (.04) | (.21) | (.25) | (.24) | (.26) | (.24)B |
Distributions from net realized gain | (.25) | (.40) | (.50) | (2.22) | (.76) | (.78)B |
Total distributions | (.29) | (.61) | (.75) | (2.46) | (1.01)C | (1.03)D |
Net asset value, end of period | $17.75 | $16.65 | $16.16 | $16.82 | $17.66 | $15.68 |
Total ReturnE,F,G | 8.43% | 7.18% | .52% | 10.18% | 19.54% | 14.99% |
Ratios to Average Net AssetsH,I | ||||||
Expenses before reductions | .59%J | .59% | .59% | .59% | .61% | .62% |
Expenses net of fee waivers, if any | .59%J | .59% | .59% | .59% | .60% | .62% |
Expenses net of all reductions | .58%J | .59% | .59% | .59% | .60% | .61% |
Net investment income (loss) | 1.22%J | 1.58% | 1.46% | 1.55% | 1.46% | 1.61% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $2,584,011 | $2,350,058 | $2,224,674 | $2,052,258 | $1,783,149 | $1,417,431 |
Portfolio turnover rateK | 39%J | 43% | 54% | 56% | 95% | 48% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total distributions of $1.01 per share is comprised of distributions from net investment income of $.255 and distributions from net realized gain of $.755 per share.
D Total distributions of $1.03 per share is comprised of distributions from net investment income of $.244 and distributions from net realized gain of $.784 per share.
E Total returns for periods of less than one year are not annualized.
F Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds. Based on their most recent shareholder report date, the expenses of any underlying non-money market Fidelity Central Funds were less than .005%.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Annualized
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended June 30, 2017
1. Organization.
VIP Balanced Portfolio (the Fund) is a fund of Variable Insurance Products Fund III (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the Fund. These strategies are consistent with the investment objectives of the Fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the Fund. The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%. The following summarizes the Fund's investment in each non-money market Fidelity Central Fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity High Income Central Fund 2 | FMR Co., Inc. (FMRC) | Seeks a high level of income and may also seek capital appreciation by investing primarily in debt securities, preferred stocks, and convertible securities, with an emphasis on lower-quality debt securities. | Delayed Delivery & When issued Securities Foreign Securities Loans & Direct Debt Instruments Restricted Securities | Less than.005% |
Fidelity VIP Investment Grade Central Fund | FIMM | 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 Swaps | Less than.005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
An unaudited holdings listing for each Fund, which presents direct holdings as well as the pro-rata share of any securities and other investments held indirectly through each Fund's investment in underlying non-money market Fidelity Central Funds, is available at fidelity.com and/or institutional.fidelity.com, as applicable. A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. Corporate bonds and U.S. government and government agency obligations are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded and are categorized as Level 1 in the hierarchy. Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of June 30, 2017 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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. Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivables when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectability of interest is reasonably assured.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to short-term gain distributions from the Underlying Funds, futures contracts, foreign currency transactions, passive foreign investment companies (PFIC), market discount, partnerships (including allocations from the Fidelity Central Funds), deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $557,710,140 |
Gross unrealized depreciation | (67,031,650) |
Net unrealized appreciation (depreciation) on securities | $490,678,490 |
Tax cost | $3,194,506,412 |
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
New Accounting Pronouncement. In March 2017, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU), ASU 2017-08, which amends the amortization period for certain callable debt securities that are held at a premium. The amendment requires the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount. The ASU is effective for annual periods beginning after December 15, 2018. Management is currently evaluating the potential impact of these changes to the financial statements.
4. Derivative Instruments.
Risk Exposures and the Use of Derivative Instruments. The Fund's investment objective allows the Fund to enter into various types of derivative contracts, including futures contracts. Derivatives are investments whose value is primarily derived from underlying assets, indices or reference rates and may be transacted on an exchange or over-the-counter (OTC). Derivatives may involve a future commitment to buy or sell a specified asset based on specified terms, to exchange future cash flows at periodic intervals based on a notional principal amount, or for one party to make one or more payments upon the occurrence of specified events in exchange for periodic payments from the other party.
The Fund used derivatives to increase returns and to manage exposure to certain risks as defined below. The success of any strategy involving derivatives depends on analysis of numerous economic factors, and if the strategies for investment do not work as intended, the Fund may not achieve its objectives.
The Fund's use of derivatives increased or decreased its exposure to the following risk:
Equity Risk | Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment. |
The Fund is also exposed to additional risks from investing in derivatives, such as liquidity risk and counterparty credit risk. Liquidity risk is the risk that the Fund will be unable to close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that the counterparty will not be able to fulfill its obligation to the Fund. Counterparty credit risk related to exchange-traded futures contracts 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. The Fund used futures contracts to manage its exposure to the stock market.
Upon entering into a futures contract, a fund is required to deposit either cash or securities (initial margin) with a clearing broker in an amount equal to a certain percentage of the face value of the contract. Futures contracts are marked-to-market daily and subsequent daily payments (variation margin) are made or received by a fund depending on the daily fluctuations in the value of the futures contracts and are recorded as unrealized appreciation or (depreciation). This receivable and/or payable, if any, is included in daily variation margin for derivative instruments in the Statement of Assets and Liabilities. Realized gain or (loss) is recorded upon the expiration or closing of a futures contract.
Any open futures contracts at period end are presented in the Schedule of Investments under the caption "Futures Contracts". The underlying face amount at value reflects each contract's exposure to the underlying instrument or index at period end and is representative of volume of activity during the period. Securities deposited to meet initial margin requirements are identified in the Schedule of Investments.
During the period the Fund recognized net realized gain (loss) of $3,779,967 and a change in net unrealized appreciation (depreciation) of $278,737 related to its investment in futures contracts. These amounts are included in the Statement of Operations.
5. Purchases and Sales of Investments.
Purchases and sales of securities (including the Fixed-Income Central Funds), other than short-term securities, aggregated $878,804,303 and $666,603,289, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .15% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annualized management fee rate was .40% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's average net assets.
For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services, were as follows:
Service Class | $2,610 |
Service Class 2 | 973,401 |
$976,011 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class pays a fee for transfer agent services, typesetting and printing and mailing of shareholder reports, excluding mailing of proxy statements, equal to an annual rate of class-level average net assets . The annual rate for Investor Class is .15% and the annual rate for all other classes is .07%. For the period, transfer agent fees for each class were as follows:
Initial Class | $72,374 |
Service Class | 1,723 |
Service Class 2 | 256,978 |
Investor Class | 1,834,025 |
$2,165,100 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $20,423 for the period.
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
7. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $5,589 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $243,125, including $147 from securities loaned to FCM.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $68,471 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $14,565.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended June 30, 2017 | Year ended December 31, 2016 | |
From net investment income | ||
Initial Class | $524,109 | $2,731,972 |
Service Class | 11,396 | 60,138 |
Service Class 2 | 1,559,131 | 7,938,842 |
Investor Class | 5,660,828 | 29,360,122 |
Total | $7,755,464 | $40,091,074 |
From net realized gain | ||
Initial Class | $3,119,694 | $5,088,372 |
Service Class | 73,052 | 105,659 |
Service Class 2 | 10,827,296 | 13,741,804 |
Investor Class | 35,380,173 | 54,685,280 |
Total | $49,400,215 | $73,621,115 |
11. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Shares | Dollars | Dollars | |
Six months ended June 30, 2017 | Year ended December 31, 2016 | Six months ended June 30, 2017 | Year ended December 31, 2016 | |
Initial Class | ||||
Shares sold | 426,162 | 1,190,454 | $7,418,753 | $19,542,488 |
Reinvestment of distributions | 213,213 | 508,731 | 3,643,803 | 7,820,344 |
Shares redeemed | (644,746) | (2,291,938) | (11,260,376) | (37,399,408) |
Net increase (decrease) | (5,371) | (592,753) | $(197,820) | $(10,036,576) |
Service Class | ||||
Shares sold | 51,531 | 72,296 | $891,353 | $1,167,509 |
Reinvestment of distributions | 4,965 | 10,818 | 84,448 | 165,797 |
Shares redeemed | (48,976) | (76,747) | (848,368) | (1,218,697) |
Net increase (decrease) | 7,520 | 6,367 | $127,433 | $114,609 |
Service Class 2 | ||||
Shares sold | 8,431,902 | 10,983,630 | $143,904,937 | $177,679,347 |
Reinvestment of distributions | 740,815 | 1,437,467 | 12,386,427 | 21,680,646 |
Shares redeemed | (2,121,510) | (5,359,696) | (36,192,526) | (85,052,676) |
Net increase (decrease) | 7,051,207 | 7,061,401 | $120,098,838 | $114,307,317 |
Investor Class | ||||
Shares sold | 4,489,816 | 6,410,977 | $77,645,513 | $103,317,005 |
Reinvestment of distributions | 2,418,444 | 5,507,570 | 41,041,001 | 84,045,402 |
Shares redeemed | (2,456,663) | (8,445,108) | (42,438,194) | (136,201,027) |
Net increase (decrease) | 4,451,597 | 3,473,439 | $76,248,320 | $51,161,380 |
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, the investment adviser or its affiliates were the owners of record of 75% of the total outstanding shares of the Fund and one otherwise unaffiliated shareholder was the owner of record of 10% of the total outstanding shares of the Fund.
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 to June 30, 2017).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annualized Expense Ratio-A | Beginning Account Value January 1, 2017 | Ending Account Value June 30, 2017 | Expenses Paid During Period-B January 1, 2017 to June 30, 2017 | |
Initial Class | .50% | |||
Actual | $1,000.00 | $1,085.00 | $2.58 | |
Hypothetical-C | $1,000.00 | $1,022.32 | $2.51 | |
Service Class | .60% | |||
Actual | $1,000.00 | $1,084.00 | $3.10 | |
Hypothetical-C | $1,000.00 | $1,021.82 | $3.01 | |
Service Class 2 | .75% | |||
Actual | $1,000.00 | $1,083.40 | $3.87 | |
Hypothetical-C | $1,000.00 | $1,021.08 | $3.76 | |
Investor Class | .59% | |||
Actual | $1,000.00 | $1,084.30 | $3.05 | |
Hypothetical-C | $1,000.00 | $1,021.87 | $2.96 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). In addition to the expenses noted above, the Fund also indirectly bears its proportional share of the expenses of the underlying Fidelity Central Funds. Annualized expenses of the underlying non-money market Fidelity Central Funds as of their most recent fiscal half year were less than .005%.
C 5% return per year before expenses
VIPBAL-SANN-0817
1.705697.119
Fidelity® Variable Insurance Products: Mid Cap Portfolio Semi-Annual Report June 30, 2017 |
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. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.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.
Investment Summary (Unaudited)
Top Ten Stocks as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Electronic Arts, Inc. | 1.4 | 1.2 |
Essent Group Ltd. | 1.3 | 1.1 |
Boston Scientific Corp. | 1.1 | 1.0 |
Reinsurance Group of America, Inc. | 1.1 | 1.2 |
Jazz Pharmaceuticals PLC | 1.0 | 0.8 |
Activision Blizzard, Inc. | 0.9 | 0.6 |
Steris PLC | 0.9 | 0.7 |
Total System Services, Inc. | 0.9 | 0.9 |
Global Payments, Inc. | 0.9 | 0.9 |
Calpine Corp. | 0.9 | 0.1 |
10.4 |
Top Five Market Sectors as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Information Technology | 21.8 | 22.8 |
Financials | 19.1 | 20.0 |
Health Care | 16.1 | 14.1 |
Industrials | 13.8 | 14.4 |
Consumer Discretionary | 12.3 | 13.7 |
Asset Allocation (% of fund's net assets)
As of June 30, 2017* | ||
Stocks | 99.9% | |
Short-Term Investments and Net Other Assets (Liabilities) | 0.1% |
* Foreign investments - 13.7%
As of December 31, 2016* | ||
Stocks | 99.6% | |
Short-Term Investments and Net Other Assets (Liabilities) | 0.4% |
* Foreign investments - 12.1%
Investments June 30, 2017 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 12.3% | |||
Auto Components - 0.8% | |||
Delphi Automotive PLC | 175,261 | $15,361,627 | |
Gentex Corp. | 1,982,492 | 37,607,873 | |
Tenneco, Inc. | 53,376 | 3,086,734 | |
Visteon Corp. (a) | 117,622 | 12,004,501 | |
68,060,735 | |||
Distributors - 0.2% | |||
LKQ Corp. (a) | 462,500 | 15,239,375 | |
Diversified Consumer Services - 0.8% | |||
Advtech Ltd. | 1,591,978 | 2,172,124 | |
Houghton Mifflin Harcourt Co. (a) | 2,830,000 | 34,809,000 | |
New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 396,596 | 27,956,052 | |
64,937,176 | |||
Hotels, Restaurants & Leisure - 3.0% | |||
Bojangles', Inc. (a) | 357,800 | 5,814,250 | |
Buffalo Wild Wings, Inc. (a) | 85,900 | 10,883,530 | |
Darden Restaurants, Inc. | 195,000 | 17,635,800 | |
DineEquity, Inc. (b) | 1,241,800 | 54,701,290 | |
ILG, Inc. | 348,000 | 9,566,520 | |
Jubilant Foodworks Ltd. | 75,070 | 1,099,447 | |
Las Vegas Sands Corp. | 557,288 | 35,605,130 | |
Texas Roadhouse, Inc. Class A | 406,100 | 20,690,795 | |
The Restaurant Group PLC | 166,500 | 710,210 | |
Wyndham Worldwide Corp. | 619,100 | 62,163,831 | |
Yum China Holdings, Inc. | 748,200 | 29,501,526 | |
248,372,329 | |||
Household Durables - 2.6% | |||
D.R. Horton, Inc. | 203,000 | 7,017,710 | |
Ethan Allen Interiors, Inc. | 2,300 | 74,290 | |
iRobot Corp. (a)(c) | 309,880 | 26,073,303 | |
Lennar Corp. Class A | 904,900 | 48,249,268 | |
Maisons du Monde SA | 18,250 | 710,059 | |
Mohawk Industries, Inc. (a) | 34,200 | 8,265,798 | |
NVR, Inc. (a) | 9,424 | 22,717,589 | |
PulteGroup, Inc. | 2,646,500 | 64,918,645 | |
SodaStream International Ltd. (a) | 8,918 | 477,291 | |
Toll Brothers, Inc. | 998,800 | 39,462,588 | |
217,966,541 | |||
Internet & Direct Marketing Retail - 0.0% | |||
Liberty Interactive Corp. QVC Group QVC Group Series A (a) | 101,800 | 2,498,172 | |
Leisure Products - 0.8% | |||
Polaris Industries, Inc. (c) | 633,647 | 58,441,263 | |
Vista Outdoor, Inc. (a) | 545,255 | 12,273,690 | |
70,714,953 | |||
Media - 1.3% | |||
Interpublic Group of Companies, Inc. | 1,962,385 | 48,274,671 | |
Lions Gate Entertainment Corp.: | |||
Class A (c) | 470,550 | 13,278,921 | |
Class B (a) | 470,550 | 12,366,054 | |
Naspers Ltd. Class N | 73,200 | 14,415,483 | |
News Corp. Class A | 759,000 | 10,398,300 | |
Omnicom Group, Inc. | 149,800 | 12,418,420 | |
111,151,849 | |||
Multiline Retail - 0.4% | |||
Dollar Tree, Inc. (a) | 428,200 | 29,939,744 | |
Specialty Retail - 0.9% | |||
AutoZone, Inc. (a) | 25,132 | 14,336,801 | |
Foot Locker, Inc. | 597,887 | 29,463,871 | |
GNC Holdings, Inc. | 2,400 | 20,232 | |
Murphy U.S.A., Inc. (a) | 56,462 | 4,184,399 | |
Party City Holdco, Inc. (a)(c) | 438,400 | 6,860,960 | |
Williams-Sonoma, Inc. (c) | 425,100 | 20,617,350 | |
75,483,613 | |||
Textiles, Apparel & Luxury Goods - 1.5% | |||
Deckers Outdoor Corp. (a) | 131,225 | 8,957,419 | |
G-III Apparel Group Ltd. (a) | 1,629,044 | 40,644,648 | |
Michael Kors Holdings Ltd. (a) | 444,800 | 16,124,000 | |
Page Industries Ltd. | 19,804 | 5,129,288 | |
PVH Corp. | 438,500 | 50,208,250 | |
Ralph Lauren Corp. | 92,900 | 6,856,020 | |
VF Corp. | 39,976 | 2,302,618 | |
130,222,243 | |||
TOTAL CONSUMER DISCRETIONARY | 1,034,586,730 | ||
CONSUMER STAPLES - 1.2% | |||
Beverages - 0.4% | |||
C&C Group PLC | 2,577,924 | 9,477,946 | |
Dr. Pepper Snapple Group, Inc. | 231,425 | 21,085,132 | |
30,563,078 | |||
Food & Staples Retailing - 0.3% | |||
CVS Health Corp. | 262,947 | 21,156,716 | |
Kroger Co. | 33,600 | 783,552 | |
United Natural Foods, Inc. (a) | 118,528 | 4,349,978 | |
26,290,246 | |||
Food Products - 0.5% | |||
Amplify Snack Brands, Inc. (a)(c) | 102,200 | 985,208 | |
Britannia Industries Ltd. | 15,000 | 856,558 | |
Hostess Brands, Inc. Class A (a) | 1,227,000 | 19,754,700 | |
Ingredion, Inc. | 41,205 | 4,912,048 | |
The J.M. Smucker Co. | 51,900 | 6,141,327 | |
TreeHouse Foods, Inc. (a) | 56,300 | 4,599,147 | |
Tyson Foods, Inc. Class A | 94,000 | 5,887,220 | |
43,136,208 | |||
TOTAL CONSUMER STAPLES | 99,989,532 | ||
ENERGY - 3.9% | |||
Energy Equipment & Services - 1.7% | |||
Baker Hughes, Inc. | 422,381 | 23,023,988 | |
Dril-Quip, Inc. (a) | 515,900 | 25,175,920 | |
Ensco PLC Class A | 4,453,300 | 22,979,028 | |
Frank's International NV (c) | 1,386,400 | 11,493,256 | |
Halliburton Co. | 588,600 | 25,139,106 | |
National Oilwell Varco, Inc. | 585,000 | 19,269,900 | |
Noble Corp. | 642,700 | 2,326,574 | |
Oceaneering International, Inc. | 569,700 | 13,011,948 | |
Superior Energy Services, Inc. (a) | 219,100 | 2,285,213 | |
144,704,933 | |||
Oil, Gas & Consumable Fuels - 2.2% | |||
Anadarko Petroleum Corp. | 110,800 | 5,023,672 | |
Apache Corp. | 503,796 | 24,146,942 | |
Arch Coal, Inc. (c) | 107,500 | 7,342,250 | |
Cabot Oil & Gas Corp. | 264,100 | 6,623,628 | |
Cimarex Energy Co. | 261,552 | 24,588,504 | |
Newfield Exploration Co. (a) | 444,600 | 12,653,316 | |
PDC Energy, Inc. (a) | 152,500 | 6,574,275 | |
Southwestern Energy Co. (a) | 2,887,100 | 17,553,568 | |
Suncor Energy, Inc. | 1,395,100 | 40,762,137 | |
Teekay LNG Partners LP | 371,886 | 5,708,450 | |
Tesoro Corp. | 88,609 | 8,293,802 | |
World Fuel Services Corp. | 523,100 | 20,113,195 | |
179,383,739 | |||
TOTAL ENERGY | 324,088,672 | ||
FINANCIALS - 19.0% | |||
Banks - 8.2% | |||
BankUnited, Inc. | 559,761 | 18,869,543 | |
Boston Private Financial Holdings, Inc. | 1,464,849 | 22,485,432 | |
CIT Group, Inc. | 1,490,100 | 72,567,870 | |
Comerica, Inc. | 654,229 | 47,915,732 | |
Commerce Bancshares, Inc. | 741,671 | 42,149,163 | |
CVB Financial Corp. | 1,149,100 | 25,774,313 | |
First Citizen Bancshares, Inc. | 48,500 | 18,075,950 | |
First Commonwealth Financial Corp. | 1,080,700 | 13,703,276 | |
First Republic Bank | 443,000 | 44,344,300 | |
FNB Corp., Pennsylvania | 412,100 | 5,835,336 | |
Hilltop Holdings, Inc. | 80,200 | 2,102,042 | |
Huntington Bancshares, Inc. | 4,962,016 | 67,086,456 | |
Investors Bancorp, Inc. | 1,314,000 | 17,555,040 | |
KeyCorp | 139,700 | 2,617,978 | |
Lakeland Financial Corp. | 878,419 | 40,301,864 | |
M&T Bank Corp. | 309,000 | 50,042,550 | |
Old National Bancorp, Indiana | 50,500 | 871,125 | |
Prosperity Bancshares, Inc. | 466,200 | 29,948,688 | |
Regions Financial Corp. | 2,228,500 | 32,625,240 | |
SunTrust Banks, Inc. | 906,265 | 51,403,351 | |
TCF Financial Corp. | 1,737,925 | 27,702,525 | |
UMB Financial Corp. | 593,800 | 44,451,868 | |
Valley National Bancorp | 877,200 | 10,359,732 | |
688,789,374 | |||
Capital Markets - 3.4% | |||
Affiliated Managers Group, Inc. | 339,100 | 56,243,126 | |
Ameriprise Financial, Inc. | 98,713 | 12,565,178 | |
CBOE Holdings, Inc. | 111,100 | 10,154,540 | |
CRISIL Ltd. | 78,365 | 2,357,499 | |
Diamond Hill Investment Group, Inc. | 4,100 | 817,540 | |
E*TRADE Financial Corp. (a) | 26,400 | 1,003,992 | |
Federated Investors, Inc. Class B (non-vtg.) | 31,800 | 898,350 | |
Greenhill & Co., Inc. | 2,700 | 54,270 | |
Invesco Ltd. | 469,100 | 16,507,629 | |
Lazard Ltd. Class A | 307,745 | 14,257,826 | |
Legg Mason, Inc. | 412,700 | 15,748,632 | |
Moody's Corp. | 155,500 | 18,921,240 | |
Raymond James Financial, Inc. | 428,595 | 34,381,891 | |
S&P Global, Inc. | 495,230 | 72,298,628 | |
Stifel Financial Corp. (a) | 586,800 | 26,981,064 | |
283,191,405 | |||
Consumer Finance - 1.4% | |||
Capital One Financial Corp. | 435,900 | 36,014,058 | |
Discover Financial Services | 209,100 | 13,003,929 | |
Kruk SA | 82,900 | 6,890,343 | |
OneMain Holdings, Inc. (a) | 419,500 | 10,315,505 | |
SLM Corp. (a) | 1,064,846 | 12,245,729 | |
Synchrony Financial | 1,177,000 | 35,098,140 | |
113,567,704 | |||
Diversified Financial Services - 0.0% | |||
Valvoline, Inc. | 187,910 | 4,457,225 | |
Insurance - 4.3% | |||
AFLAC, Inc. | 865,100 | 67,200,968 | |
Bajaj Finserv Ltd. | 54,608 | 3,480,563 | |
Chubb Ltd. | 152,839 | 22,219,734 | |
Direct Line Insurance Group PLC | 620,900 | 2,874,089 | |
First American Financial Corp. | 989,100 | 44,202,879 | |
Hiscox Ltd. | 1,668,151 | 27,527,897 | |
Hyundai Fire & Marine Insurance Co. Ltd. | 82,114 | 2,821,578 | |
Marsh & McLennan Companies, Inc. | 38,084 | 2,969,029 | |
Primerica, Inc. | 390,720 | 29,597,040 | |
Principal Financial Group, Inc. | 1,009,500 | 64,678,665 | |
Progressive Corp. | 109,800 | 4,841,082 | |
Reinsurance Group of America, Inc. | 712,776 | 91,513,311 | |
363,926,835 | |||
Mortgage Real Estate Investment Trusts - 0.3% | |||
Ladder Capital Corp. Class A | 1,595,312 | 21,393,134 | |
Thrifts & Mortgage Finance - 1.4% | |||
Beneficial Bancorp, Inc. | 119,462 | 1,791,930 | |
Essent Group Ltd. (a) | 2,855,100 | 106,038,414 | |
Housing Development Finance Corp. Ltd. | 536,431 | 13,406,209 | |
121,236,553 | |||
TOTAL FINANCIALS | 1,596,562,230 | ||
HEALTH CARE - 16.1% | |||
Biotechnology - 2.5% | |||
Alexion Pharmaceuticals, Inc. (a) | 415,800 | 50,590,386 | |
AMAG Pharmaceuticals, Inc. (a)(c) | 746,400 | 13,733,760 | |
Amgen, Inc. | 250,700 | 43,178,061 | |
BioMarin Pharmaceutical, Inc. (a) | 173,200 | 15,730,024 | |
Regeneron Pharmaceuticals, Inc. (a) | 29,600 | 14,537,744 | |
REGENXBIO, Inc. (a) | 437,300 | 8,636,675 | |
Seattle Genetics, Inc. (a) | 38,854 | 2,010,306 | |
United Therapeutics Corp. (a) | 473,000 | 61,362,290 | |
209,779,246 | |||
Health Care Equipment & Supplies - 5.9% | |||
Becton, Dickinson & Co. | 160,100 | 31,237,111 | |
Boston Scientific Corp. (a) | 3,443,303 | 95,448,359 | |
Dentsply Sirona, Inc. | 649,700 | 42,126,548 | |
Hill-Rom Holdings, Inc. | 298,311 | 23,748,539 | |
Hologic, Inc. (a) | 776,424 | 35,234,121 | |
LivaNova PLC (a) | 178,293 | 10,913,315 | |
Medtronic PLC | 472,300 | 41,916,625 | |
Olympus Corp. | 481,600 | 17,645,058 | |
ResMed, Inc. | 227,348 | 17,703,589 | |
Steris PLC | 931,200 | 75,892,800 | |
The Cooper Companies, Inc. | 138,983 | 33,275,310 | |
Zimmer Biomet Holdings, Inc. | 551,400 | 70,799,760 | |
495,941,135 | |||
Health Care Providers & Services - 4.0% | |||
AmerisourceBergen Corp. | 55,300 | 5,227,509 | |
Cardinal Health, Inc. | 765,647 | 59,659,214 | |
Centene Corp. (a) | 1,738 | 138,831 | |
Cigna Corp. | 127,700 | 21,375,703 | |
DaVita HealthCare Partners, Inc. (a) | 595,200 | 38,545,152 | |
Envision Healthcare Corp. (a) | 291,000 | 18,236,970 | |
HCA Holdings, Inc. (a) | 240,435 | 20,965,932 | |
Laboratory Corp. of America Holdings (a) | 379,100 | 58,434,474 | |
McKesson Corp. | 341,250 | 56,149,275 | |
Premier, Inc. (a) | 323,800 | 11,656,800 | |
Quest Diagnostics, Inc. | 18,000 | 2,000,880 | |
Ryman Healthcare Group Ltd. | 145,175 | 881,925 | |
Spire Healthcare Group PLC | 2,542,173 | 10,734,435 | |
UnitedHealth Group, Inc. | 26,619 | 4,935,695 | |
Universal Health Services, Inc. Class B | 256,100 | 31,264,688 | |
340,207,483 | |||
Life Sciences Tools & Services - 1.5% | |||
Agilent Technologies, Inc. | 712,606 | 42,264,662 | |
Bruker Corp. | 869,800 | 25,085,032 | |
Cambrex Corp. (a) | 2,300 | 137,425 | |
Charles River Laboratories International, Inc. (a) | 9,900 | 1,001,385 | |
Thermo Fisher Scientific, Inc. | 336,363 | 58,685,253 | |
127,173,757 | |||
Pharmaceuticals - 2.2% | |||
Catalent, Inc. (a) | 692,100 | 24,292,710 | |
Endo International PLC (a) | 824,500 | 9,209,665 | |
Jazz Pharmaceuticals PLC (a) | 542,571 | 84,369,791 | |
Perrigo Co. PLC | 174,900 | 13,208,448 | |
Teva Pharmaceutical Industries Ltd. sponsored ADR | 1,497,956 | 49,762,098 | |
Theravance Biopharma, Inc. (a) | 10,605 | 422,503 | |
181,265,215 | |||
TOTAL HEALTH CARE | 1,354,366,836 | ||
INDUSTRIALS - 13.8% | |||
Aerospace & Defense - 2.0% | |||
Curtiss-Wright Corp. | 12,448 | 1,142,477 | |
Elbit Systems Ltd. | 93,509 | 11,571,739 | |
Esterline Technologies Corp. (a) | 42,448 | 4,024,070 | |
Hexcel Corp. | 88,700 | 4,682,473 | |
Huntington Ingalls Industries, Inc. | 305,800 | 56,927,728 | |
Rockwell Collins, Inc. | 378,483 | 39,770,994 | |
Textron, Inc. | 1,103,881 | 51,992,795 | |
170,112,276 | |||
Air Freight & Logistics - 1.1% | |||
C.H. Robinson Worldwide, Inc. | 296,500 | 20,363,620 | |
FedEx Corp. | 331,011 | 71,938,621 | |
92,302,241 | |||
Airlines - 1.2% | |||
Allegiant Travel Co. | 334,400 | 45,344,640 | |
Copa Holdings SA Class A | 71,600 | 8,377,200 | |
Spirit Airlines, Inc. (a) | 878,413 | 45,370,031 | |
99,091,871 | |||
Building Products - 0.7% | |||
A.O. Smith Corp. | 388,300 | 21,872,939 | |
Johnson Controls International PLC | 56,176 | 2,435,791 | |
Lennox International, Inc. | 187,657 | 34,461,331 | |
58,770,061 | |||
Commercial Services & Supplies - 1.2% | |||
Copart, Inc. (a) | 111,700 | 3,550,943 | |
Deluxe Corp. | 242,498 | 16,785,712 | |
Herman Miller, Inc. | 132,800 | 4,037,120 | |
HNI Corp. | 16,108 | 642,226 | |
KAR Auction Services, Inc. | 208,582 | 8,754,187 | |
Knoll, Inc. | 2,006,706 | 40,234,455 | |
Multi-Color Corp. | 34,600 | 2,823,360 | |
Stericycle, Inc. (a) | 349,600 | 26,681,472 | |
103,509,475 | |||
Construction & Engineering - 1.9% | |||
EMCOR Group, Inc. | 682,607 | 44,628,846 | |
Fluor Corp. | 327,800 | 15,006,684 | |
Jacobs Engineering Group, Inc. | 627,355 | 34,121,838 | |
KBR, Inc. | 3,056,200 | 46,515,364 | |
Quanta Services, Inc. (a) | 172,571 | 5,681,037 | |
Valmont Industries, Inc. | 84,281 | 12,608,438 | |
158,562,207 | |||
Electrical Equipment - 0.4% | |||
AMETEK, Inc. | 200,800 | 12,162,456 | |
Regal Beloit Corp. | 289,513 | 23,609,785 | |
35,772,241 | |||
Industrial Conglomerates - 0.1% | |||
Carlisle Companies, Inc. | 54,700 | 5,218,380 | |
Machinery - 3.4% | |||
Colfax Corp. (a) | 799,300 | 31,468,441 | |
Cummins, Inc. | 13,875 | 2,250,803 | |
Flowserve Corp. | 521,800 | 24,227,174 | |
IDEX Corp. | 17,500 | 1,977,675 | |
Ingersoll-Rand PLC | 743,345 | 67,934,300 | |
KION Group AG | 79,400 | 6,068,755 | |
Mueller Industries, Inc. | 193,604 | 5,895,242 | |
Pentair PLC | 74,800 | 4,977,192 | |
Proto Labs, Inc. (a) | 9,022 | 606,730 | |
Rexnord Corp. (a) | 2,873,034 | 66,798,041 | |
Stanley Black & Decker, Inc. | 45,400 | 6,389,142 | |
Wabtec Corp. (c) | 560,860 | 51,318,690 | |
Xylem, Inc. | 323,300 | 17,920,519 | |
287,832,704 | |||
Professional Services - 0.5% | |||
Dun & Bradstreet Corp. | 381,505 | 41,259,766 | |
Road & Rail - 0.5% | |||
CSX Corp. | 196,600 | 10,726,496 | |
J.B. Hunt Transport Services, Inc. | 50,400 | 4,605,552 | |
Old Dominion Freight Lines, Inc. | 149,000 | 14,190,760 | |
Saia, Inc. (a) | 87,391 | 4,483,158 | |
Swift Transporation Co. (a) | 115,578 | 3,062,817 | |
37,068,783 | |||
Trading Companies & Distributors - 0.8% | |||
Air Lease Corp. Class A | 878,894 | 32,835,480 | |
HD Supply Holdings, Inc. (a) | 322,500 | 9,878,175 | |
Misumi Group, Inc. | 746,800 | 17,037,464 | |
WESCO International, Inc. (a) | 107,000 | 6,131,100 | |
65,882,219 | |||
TOTAL INDUSTRIALS | 1,155,382,224 | ||
INFORMATION TECHNOLOGY - 21.8% | |||
Communications Equipment - 1.3% | |||
CommScope Holding Co., Inc. (a) | 1,057,890 | 40,231,557 | |
F5 Networks, Inc. (a) | 384,654 | 48,874,137 | |
Harris Corp. | 199,700 | 21,783,276 | |
NETGEAR, Inc. (a) | 40,576 | 1,748,826 | |
112,637,796 | |||
Electronic Equipment & Components - 4.0% | |||
Amphenol Corp. Class A | 52,000 | 3,838,640 | |
Avnet, Inc. | 950,230 | 36,944,942 | |
Belden, Inc. | 916,900 | 69,161,767 | |
CDW Corp. | 982,701 | 61,448,294 | |
IPG Photonics Corp. (a) | 112,809 | 16,368,586 | |
Jabil, Inc. | 1,096,141 | 31,996,356 | |
Keysight Technologies, Inc. (a) | 799,853 | 31,138,277 | |
Methode Electronics, Inc. Class A | 229,700 | 9,463,640 | |
National Instruments Corp. | 29,200 | 1,174,424 | |
TE Connectivity Ltd. | 375,466 | 29,541,665 | |
Trimble, Inc. (a) | 1,186,600 | 42,326,022 | |
333,402,613 | |||
Internet Software & Services - 1.7% | |||
Akamai Technologies, Inc. (a) | 1,349,700 | 67,228,557 | |
Alphabet, Inc. Class C (a) | 61,102 | 55,525,220 | |
Tencent Holdings Ltd. | 528,800 | 18,970,679 | |
141,724,456 | |||
IT Services - 8.3% | |||
Alliance Data Systems Corp. | 73,590 | 18,889,817 | |
Blackhawk Network Holdings, Inc. (a) | 1,252,894 | 54,626,178 | |
Broadridge Financial Solutions, Inc. | 60,303 | 4,556,495 | |
Cognizant Technology Solutions Corp. Class A | 182,593 | 12,124,175 | |
Conduent, Inc. (a) | 297,309 | 4,739,105 | |
CSRA, Inc. | 550,800 | 17,487,900 | |
EPAM Systems, Inc. (a) | 322,800 | 27,144,252 | |
Euronet Worldwide, Inc. (a) | 791,377 | 69,142,608 | |
EVERTEC, Inc. | 665,893 | 11,519,949 | |
ExlService Holdings, Inc. (a) | 566,500 | 31,486,070 | |
Fidelity National Information Services, Inc. | 449,877 | 38,419,496 | |
FleetCor Technologies, Inc. (a) | 449,840 | 64,871,426 | |
Gartner, Inc. (a) | 45,086 | 5,568,572 | |
Genpact Ltd. | 2,627,388 | 73,120,208 | |
Global Payments, Inc. | 814,176 | 73,536,376 | |
Maximus, Inc. | 373,600 | 23,398,568 | |
PayPal Holdings, Inc. (a) | 229,700 | 12,327,999 | |
The Western Union Co. | 1,082,148 | 20,614,919 | |
Total System Services, Inc. | 1,285,510 | 74,880,958 | |
Vantiv, Inc. (a) | 492,900 | 31,220,286 | |
Visa, Inc. Class A | 307,100 | 28,799,838 | |
698,475,195 | |||
Semiconductors & Semiconductor Equipment - 2.9% | |||
Analog Devices, Inc. | 58,400 | 4,543,520 | |
Applied Materials, Inc. | 554,800 | 22,918,788 | |
ASML Holding NV (Netherlands) | 25,200 | 3,284,890 | |
Cirrus Logic, Inc. (a) | 500 | 31,360 | |
Cree, Inc. (a) | 625,200 | 15,411,180 | |
KLA-Tencor Corp. | 15,625 | 1,429,844 | |
Maxim Integrated Products, Inc. | 775,000 | 34,797,500 | |
Microchip Technology, Inc. | 31,704 | 2,446,915 | |
NVIDIA Corp. | 375,933 | 54,344,874 | |
Qualcomm, Inc. | 442,400 | 24,429,328 | |
Semtech Corp. (a) | 1,019,551 | 36,448,948 | |
Skyworks Solutions, Inc. | 292,700 | 28,084,565 | |
Synaptics, Inc. (a)(c) | 206,200 | 10,662,602 | |
Teradyne, Inc. | 185,900 | 5,582,577 | |
244,416,891 | |||
Software - 3.5% | |||
Activision Blizzard, Inc. | 1,349,900 | 77,713,743 | |
Electronic Arts, Inc. (a) | 1,116,290 | 118,014,172 | |
Fair Isaac Corp. | 279,200 | 38,923,272 | |
Intuit, Inc. | 177,697 | 23,599,939 | |
Parametric Technology Corp. (a) | 119,141 | 6,567,052 | |
Synopsys, Inc. (a) | 373,949 | 27,272,101 | |
292,090,279 | |||
Technology Hardware, Storage & Peripherals - 0.1% | |||
Xerox Corp. | 235,437 | 6,764,105 | |
TOTAL INFORMATION TECHNOLOGY | 1,829,511,335 | ||
MATERIALS - 7.2% | |||
Chemicals - 4.9% | |||
Albemarle Corp. U.S. | 574,656 | 60,649,194 | |
Ashland Global Holdings, Inc. | 94,626 | 6,236,800 | |
CF Industries Holdings, Inc. | 989,900 | 27,677,604 | |
Eastman Chemical Co. | 779,400 | 65,461,806 | |
Ferro Corp. (a) | 36,109 | 660,434 | |
H.B. Fuller Co. | 540,975 | 27,649,232 | |
Innospec, Inc. | 121,109 | 7,938,695 | |
LyondellBasell Industries NV Class A | 722,700 | 60,988,653 | |
PolyOne Corp. | 775,060 | 30,025,824 | |
PPG Industries, Inc. | 177,400 | 19,506,904 | |
Praxair, Inc. | 30,500 | 4,042,775 | |
The Chemours Co. LLC | 842,900 | 31,962,768 | |
The Mosaic Co. | 2,735,600 | 62,453,748 | |
W.R. Grace & Co. | 67,300 | 4,846,273 | |
410,100,710 | |||
Containers & Packaging - 1.6% | |||
Aptargroup, Inc. | 182,530 | 15,854,556 | |
Graphic Packaging Holding Co. | 2,568,200 | 35,389,796 | |
Packaging Corp. of America | 183,200 | 20,406,648 | |
WestRock Co. | 1,035,400 | 58,665,764 | |
130,316,764 | |||
Metals & Mining - 0.5% | |||
B2Gold Corp. (a) | 7,860,000 | 22,122,918 | |
Continental Gold, Inc. (a) | 245,200 | 722,289 | |
Guyana Goldfields, Inc. (a) | 727,900 | 3,412,733 | |
New Gold, Inc. (a) | 2,039,120 | 6,478,389 | |
Randgold Resources Ltd. sponsored ADR (c) | 97,032 | 8,583,451 | |
Tahoe Resources, Inc. | 367,400 | 3,167,437 | |
44,487,217 | |||
Paper & Forest Products - 0.2% | |||
Boise Cascade Co. (a) | 504,364 | 15,332,666 | |
TOTAL MATERIALS | 600,237,357 | ||
REAL ESTATE - 2.9% | |||
Equity Real Estate Investment Trusts (REITs) - 1.4% | |||
Extra Space Storage, Inc. | 314,900 | 24,562,200 | |
Gaming & Leisure Properties | 304,000 | 11,451,680 | |
Hibernia (REIT) PLC | 12,613,610 | 19,809,123 | |
Highwoods Properties, Inc. (SBI) | 11,995 | 608,266 | |
Monogram Residential Trust, Inc. | 79,300 | 770,003 | |
Outfront Media, Inc. | 356,500 | 8,242,280 | |
Safestore Holdings PLC | 3,247,546 | 17,824,235 | |
Store Capital Corp. | 674,391 | 15,140,078 | |
Urban Edge Properties | 28,500 | 676,305 | |
Ventas, Inc. | 14,100 | 979,668 | |
VEREIT, Inc. | 1,818,050 | 14,798,927 | |
114,862,765 | |||
Real Estate Management & Development - 1.5% | |||
BUWOG-Gemeinnuetzige Wohnung | 733,431 | 21,072,047 | |
CBRE Group, Inc. (a) | 1,263,923 | 46,006,797 | |
Goldcrest Co. Ltd. | 88,700 | 1,958,931 | |
Hysan Development Co. Ltd. | 894,000 | 4,265,349 | |
Jones Lang LaSalle, Inc. | 283,715 | 35,464,375 | |
Olav Thon Eiendomsselskap A/S | 428,500 | 8,622,608 | |
Sino Land Ltd. | 3,061,113 | 5,018,572 | |
Tai Cheung Holdings Ltd. | 1,653,000 | 1,757,283 | |
Wing Tai Holdings Ltd. | 4,421,600 | 6,391,127 | |
130,557,089 | |||
TOTAL REAL ESTATE | 245,419,854 | ||
UTILITIES - 1.6% | |||
Electric Utilities - 0.2% | |||
Exelon Corp. | 356,700 | 12,866,169 | |
Independent Power and Renewable Electricity Producers - 1.4% | |||
Calpine Corp. (a) | 5,416,534 | 73,285,705 | |
Dynegy, Inc. (a) | 290,500 | 2,402,435 | |
The AES Corp. | 3,960,600 | 44,002,266 | |
119,690,406 | |||
TOTAL UTILITIES | 132,556,575 | ||
TOTAL COMMON STOCKS | |||
(Cost $6,696,287,453) | 8,372,701,345 | ||
Nonconvertible Preferred Stocks - 0.1% | |||
FINANCIALS - 0.1% | |||
Capital Markets - 0.1% | |||
GMAC Capital Trust I Series 2, 8.125% | |||
(Cost $8,358,700) | 405,466 | 10,623,209 | |
Money Market Funds - 1.7% | |||
Fidelity Securities Lending Cash Central Fund 1.09% (d)(e) | |||
(Cost $138,605,745) | 138,596,784 | 138,610,643 | |
TOTAL INVESTMENT PORTFOLIO - 101.6% | |||
(Cost $6,843,251,898) | 8,521,935,197 | ||
NET OTHER ASSETS (LIABILITIES) - (1.6)% | (134,354,432) | ||
NET ASSETS - 100% | $8,387,580,765 |
Legend
(a) Non-income producing
(b) Affiliated company
(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 are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
Fund | Income earned |
Fidelity Cash Central Fund | $45,213 |
Fidelity Securities Lending Cash Central Fund | 431,374 |
Total | $476,587 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
DineEquity, Inc. | $50,188,600 | $32,998,794 | $1,820,864 | $2,033,314 | $54,701,290 |
Total | $50,188,600 | $32,998,794 | $1,820,864 | $2,033,314 | $54,701,290 |
Investment Valuation
The following is a summary of the inputs used, as of June 30, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $1,034,586,730 | $1,020,171,247 | $14,415,483 | $-- |
Consumer Staples | 99,989,532 | 99,989,532 | -- | -- |
Energy | 324,088,672 | 324,088,672 | -- | -- |
Financials | 1,607,185,439 | 1,607,185,439 | -- | -- |
Health Care | 1,354,366,836 | 1,336,721,778 | 17,645,058 | -- |
Industrials | 1,155,382,224 | 1,155,382,224 | -- | -- |
Information Technology | 1,829,511,335 | 1,807,255,766 | 22,255,569 | -- |
Materials | 600,237,357 | 600,237,357 | -- | -- |
Real Estate | 245,419,854 | 245,419,854 | -- | -- |
Utilities | 132,556,575 | 132,556,575 | -- | -- |
Money Market Funds | 138,610,643 | 138,610,643 | -- | -- |
Total Investments in Securities: | $8,521,935,197 | $8,467,619,087 | $54,316,110 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 86.3% |
Ireland | 2.9% |
Bermuda | 2.9% |
United Kingdom | 1.6% |
Canada | 1.2% |
Others (Individually Less Than 1%) | 5.1% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
June 30, 2017 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $135,954,513) — See accompanying schedule: Unaffiliated issuers (cost $6,611,697,854) | $8,328,623,264 | |
Fidelity Central Funds (cost $138,605,745) | 138,610,643 | |
Other affiliated issuers (cost $92,948,299) | 54,701,290 | |
Total Investments (cost $6,843,251,898) | $8,521,935,197 | |
Cash | 15,382 | |
Foreign currency held at value (cost $46,448) | 47,545 | |
Receivable for investments sold | 39,276,054 | |
Receivable for fund shares sold | 1,192,150 | |
Dividends receivable | 7,399,410 | |
Distributions receivable from Fidelity Central Funds | 68,022 | |
Other receivables | 156,651 | |
Total assets | 8,570,090,411 | |
Liabilities | ||
Payable for investments purchased | $24,967,397 | |
Payable for fund shares redeemed | 5,704,185 | |
Accrued management fee | 3,835,274 | |
Distribution and service plan fees payable | 1,256,269 | |
Notes payable to affiliates | 7,464,000 | |
Other affiliated payables | 607,678 | |
Other payables and accrued expenses | 71,183 | |
Collateral on securities loaned | 138,603,660 | |
Total liabilities | 182,509,646 | |
Net Assets | $8,387,580,765 | |
Net Assets consist of: | ||
Paid in capital | $6,333,640,096 | |
Undistributed net investment income | 20,412,214 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 354,874,343 | |
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,678,654,112 | |
Net Assets | $8,387,580,765 | |
Initial Class: | ||
Net Asset Value, offering price and redemption price per share ($1,396,500,851 ÷ 39,299,935 shares) | $35.53 | |
Service Class: | ||
Net Asset Value, offering price and redemption price per share ($590,957,328 ÷ 16,781,073 shares) | $35.22 | |
Service Class 2: | ||
Net Asset Value, offering price and redemption price per share ($5,789,460,329 ÷ 167,969,698 shares) | $34.47 | |
Investor Class: | ||
Net Asset Value, offering price and redemption price per share ($610,662,257 ÷ 17,284,241 shares) | $35.33 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Six months ended June 30, 2017 (Unaudited) | ||
Investment Income | ||
Dividends (including $2,033,314 earned from other affiliated issuers) | $54,597,213 | |
Interest | 21,833 | |
Income from Fidelity Central Funds | 476,587 | |
Total income | 55,095,633 | |
Expenses | ||
Management fee | $22,914,478 | |
Transfer agent fees | 3,012,111 | |
Distribution and service plan fees | 7,531,053 | |
Accounting and security lending fees | 619,697 | |
Custodian fees and expenses | 86,950 | |
Independent trustees' fees and expenses | 16,617 | |
Audit | 30,984 | |
Legal | 6,994 | |
Interest | 9,038 | |
Miscellaneous | 39,321 | |
Total expenses before reductions | 34,267,243 | |
Expense reductions | (197,436) | 34,069,807 |
Net investment income (loss) | 21,025,826 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 372,793,457 | |
Fidelity Central Funds | 2,109 | |
Other affiliated issuers | (1,108,391) | |
Foreign currency transactions | 1,953 | |
Total net realized gain (loss) | 371,689,128 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 318,692,900 | |
Assets and liabilities in foreign currencies | 12,914 | |
Total change in net unrealized appreciation (depreciation) | 318,705,814 | |
Net gain (loss) | 690,394,942 | |
Net increase (decrease) in net assets resulting from operations | $711,420,768 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Six months ended June 30, 2017 (Unaudited) | Year ended December 31, 2016 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $21,025,826 | $39,459,390 |
Net realized gain (loss) | 371,689,128 | 347,715,513 |
Change in net unrealized appreciation (depreciation) | 318,705,814 | 522,347,999 |
Net increase (decrease) in net assets resulting from operations | 711,420,768 | 909,522,902 |
Distributions to shareholders from net investment income | (10,760,748) | (28,421,672) |
Distributions to shareholders from net realized gain | (336,414,651) | (494,682,420) |
Total distributions | (347,175,399) | (523,104,092) |
Share transactions - net increase (decrease) | (211,052,571) | (215,304,797) |
Total increase (decrease) in net assets | 153,192,798 | 171,114,013 |
Net Assets | ||
Beginning of period | 8,234,387,967 | 8,063,273,954 |
End of period | $8,387,580,765 | $8,234,387,967 |
Other Information | ||
Undistributed net investment income end of period | $20,412,214 | $10,147,136 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Mid Cap Portfolio Initial Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $33.98 | $32.65 | $37.68 | $36.39 | $30.55 | $29.08 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .12 | .21 | .17 | .13 | .18 | .29 |
Net realized and unrealized gain (loss) | 2.86 | 3.27 | (.59) | 2.11 | 10.57 | 3.99 |
Total from investment operations | 2.98 | 3.48 | (.42) | 2.24 | 10.75 | 4.28 |
Distributions from net investment income | (.05) | (.16) | (.16)B | (.10) | (.19) | (.20)B |
Distributions from net realized gain | (1.38) | (1.99) | (4.45)B | (.85) | (4.72) | (2.61)B |
Total distributions | (1.43) | (2.15) | (4.61) | (.95) | (4.91) | (2.81) |
Net asset value, end of period | $35.53 | $33.98 | $32.65 | $37.68 | $36.39 | $30.55 |
Total ReturnC,D,E | 8.92% | 12.23% | (1.39)% | 6.29% | 36.23% | 14.83% |
Ratios to Average Net AssetsF,G | ||||||
Expenses before reductions | .63%H | .63% | .63% | .64% | .64% | .65% |
Expenses net of fee waivers, if any | .63%H | .63% | .63% | .64% | .64% | .65% |
Expenses net of all reductions | .63%H | .63% | .63% | .63% | .63% | .63% |
Net investment income (loss) | .69%H | .68% | .49% | .35% | .52% | .90% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $1,396,501 | $1,360,134 | $1,382,527 | $1,476,171 | $1,489,788 | $1,217,359 |
Portfolio turnover rateI | 32%H | 30% | 26%J | 142% | 132% | 187% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total returns for periods of less than one year are not annualized.
D Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Annualized
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J The portfolio turnover rate does not include the assets acquired in the merger.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Mid Cap Portfolio Service Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $33.70 | $32.41 | $37.44 | $36.16 | $30.39 | $28.93 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .10 | .18 | .13 | .09 | .15 | .25 |
Net realized and unrealized gain (loss) | 2.84 | 3.23 | (.59) | 2.10 | 10.49 | 3.98 |
Total from investment operations | 2.94 | 3.41 | (.46) | 2.19 | 10.64 | 4.23 |
Distributions from net investment income | (.05) | (.14) | (.13)B | (.06) | (.15) | (.16)B |
Distributions from net realized gain | (1.38) | (1.99) | (4.45)B | (.85) | (4.72) | (2.61)B |
Total distributions | (1.42)C | (2.12)D | (4.57)E | (.91) | (4.87) | (2.77) |
Net asset value, end of period | $35.22 | $33.70 | $32.41 | $37.44 | $36.16 | $30.39 |
Total ReturnF,G,H | 8.90% | 12.11% | (1.50)% | 6.20% | 36.06% | 14.75% |
Ratios to Average Net AssetsI,J | ||||||
Expenses before reductions | .73%K | .73% | .73% | .74% | .74% | .75% |
Expenses net of fee waivers, if any | .73%K | .73% | .73% | .74% | .74% | .75% |
Expenses net of all reductions | .73%K | .73% | .73% | .73% | .73% | .73% |
Net investment income (loss) | .59%K | .58% | .39% | .25% | .42% | .80% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $590,957 | $566,378 | $566,349 | $622,227 | $638,612 | $525,875 |
Portfolio turnover rateL | 32%K | 30% | 26%M | 142% | 132% | 187% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total distributions of $1.42 per share is comprised of distributions from net investment income of $.047 and distributions from net realized gain of $1.377 per share.
D Total distributions of $2.12 per share is comprised of distributions from net investment income of $.137 and distributions from net realized gain of $1.987 per share.
E Total distributions of $4.57 per share is comprised of distributions from net investment income of $.128 and distributions from net realized gain of $4.445 per share.
F Total returns for periods of less than one year are not annualized.
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 Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K Annualized
L Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
M The portfolio turnover rate does not include the assets acquired in the merger.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Mid Cap Portfolio Service Class 2
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $33.03 | $31.83 | $36.84 | $35.60 | $29.98 | $28.58 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .07 | .13 | .08 | .04 | .09 | .20 |
Net realized and unrealized gain (loss) | 2.79 | 3.16 | (.57) | 2.06 | 10.35 | 3.93 |
Total from investment operations | 2.86 | 3.29 | (.49) | 2.10 | 10.44 | 4.13 |
Distributions from net investment income | (.04) | (.10) | (.08)B | (.01) | (.10) | (.12)B |
Distributions from net realized gain | (1.38) | (1.99) | (4.45)B | (.85) | (4.72) | (2.61)B |
Total distributions | (1.42) | (2.09) | (4.52)C | (.86) | (4.82) | (2.73) |
Net asset value, end of period | $34.47 | $33.03 | $31.83 | $36.84 | $35.60 | $29.98 |
Total ReturnD,E,F | 8.82% | 11.92% | (1.63)% | 6.03% | 35.87% | 14.56% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .88%I | .88% | .88% | .88% | .89% | .90% |
Expenses net of fee waivers, if any | .88%I | .88% | .88% | .88% | .89% | .90% |
Expenses net of all reductions | .88%I | .88% | .88% | .88% | .88% | .88% |
Net investment income (loss) | .44%I | .43% | .24% | .10% | .27% | .65% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $5,789,460 | $5,746,266 | $5,591,030 | $6,431,011 | $6,574,623 | $5,335,565 |
Portfolio turnover rateJ | 32%I | 30% | 26%K | 142% | 132% | 187% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total distributions of $4.52 per share is comprised of distributions from net investment income of $.075 and distributions from net realized gain of $4.446 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K The portfolio turnover rate does not include the assets acquired in the merger.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Mid Cap Portfolio Investor Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $33.80 | $32.50 | $37.53 | $36.25 | $30.46 | $29.00 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .10 | .19 | .14 | .10 | .15 | .26 |
Net realized and unrealized gain (loss) | 2.86 | 3.24 | (.59) | 2.10 | 10.52 | 3.98 |
Total from investment operations | 2.96 | 3.43 | (.45) | 2.20 | 10.67 | 4.24 |
Distributions from net investment income | (.05) | (.14) | (.14)B | (.07) | (.16) | (.17)B |
Distributions from net realized gain | (1.38) | (1.99) | (4.45)B | (.85) | (4.72) | (2.61)B |
Total distributions | (1.43) | (2.13) | (4.58)C | (.92) | (4.88) | (2.78) |
Net asset value, end of period | $35.33 | $33.80 | $32.50 | $37.53 | $36.25 | $30.46 |
Total ReturnD,E,F | 8.90% | 12.13% | (1.47)% | 6.20% | 36.08% | 14.74% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .71%I | .71% | .71% | .72% | .73% | .74% |
Expenses net of fee waivers, if any | .71%I | .71% | .71% | .72% | .72% | .74% |
Expenses net of all reductions | .71%I | .71% | .71% | .71% | .71% | .72% |
Net investment income (loss) | .60%I | .60% | .41% | .27% | .44% | .82% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $610,662 | $561,609 | $523,368 | $503,509 | $470,265 | $312,004 |
Portfolio turnover rateJ | 32%I | 30% | 26%K | 142% | 132% | 187% |
A Calculated based on average shares outstanding during the period.
B The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
C Total distributions of $4.58 per share is comprised of distributions from net investment income of $.137 and distributions from net realized gain of $4.446 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K The portfolio turnover rate does not include the assets acquired in the merger.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended June 30, 2017
1. Organization.
VIP Mid Cap Portfolio (the Fund) is a fund of Variable Insurance Products Fund III (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events.The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds ,including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of June 30, 2017 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. 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.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships, equity-debt classifications and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $2,092,112,887 |
Gross unrealized depreciation | (430,768,581) |
Net unrealized appreciation (depreciation) on securities | $1,661,344,306 |
Tax cost | $6,860,590,891 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,338,448,245 and $1,808,655,181, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annualized management fee rate was .55% of the Fund's average net assets.
.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of 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 | $291,329 |
Service Class 2 | 7,239,724 |
$7,531,053 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class pays a fee for transfer agent services, typesetting and printing and mailing of shareholder reports, excluding mailing of proxy statements, equal to an annual rate of class-level average net assets. The annual rate for Investor Class is .15% and the annual rate for all other classes is .07%. For the period, transfer agent fees for each class were as follows:
Initial Class | $472,655 |
Service Class | 192,277 |
Service Class 2 | 1,911,287 |
Investor Class | 435,892 |
$3,012,111 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $48,328 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable to affiliates" in the Fund's Statement of Assets and Liabilities. The Fund's activity in this program during the period for which loans were outstanding was as follows:
Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
Borrower | $11,150,500 | 1.22% | $9,038 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $14,137 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $6,922,507. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $431,374, including $35,468 from securities loaned to FCM.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $159,803 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $37,633.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended June 30, 2017 | Year ended December 31, 2016 | |
From net investment income | ||
Initial Class | $1,975,843 | $6,509,193 |
Service Class | 779,633 | 2,306,610 |
Service Class 2 | 7,199,986 | 17,226,607 |
Investor Class | 805,286 | 2,379,262 |
Total | $10,760,748 | $28,421,672 |
From net realized gain | ||
Initial Class | $54,414,726 | $83,439,215 |
Service Class | 22,841,590 | 33,992,166 |
Service Class 2 | 236,056,679 | 345,471,270 |
Investor Class | 23,101,656 | 31,779,769 |
Total | $336,414,651 | $494,682,420 |
10. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Shares | Dollars | Dollars | |
Six months ended June 30, 2017 | Year ended December 31, 2016 | Six months ended June 30, 2017 | Year ended December 31, 2016 | |
Initial Class | ||||
Shares sold | 3,066,122 | 5,842,420 | $105,247,912 | $184,976,667 |
Reinvestment of distributions | 1,648,365 | 3,268,042 | 56,390,569 | 89,948,408 |
Shares redeemed | (5,442,839) | (11,423,991) | (190,366,286) | (368,303,468) |
Net increase (decrease) | (728,352) | (2,313,529) | $(28,727,805) | $(93,378,393) |
Service Class | ||||
Shares sold | 501,512 | 1,242,725 | $17,259,656 | $38,448,209 |
Reinvestment of distributions | 696,586 | 1,331,661 | 23,621,223 | 36,298,776 |
Shares redeemed | (1,223,352) | (3,242,354) | (42,094,182) | (100,590,205) |
Net increase (decrease) | (25,254) | (667,968) | $(1,213,303) | $(25,843,220) |
Service Class 2 | ||||
Shares sold | 3,886,945 | 16,603,885 | $130,757,683 | $504,881,832 |
Reinvestment of distributions | 7,324,802 | 13,620,413 | 243,256,665 | 362,697,877 |
Shares redeemed | (17,201,938) | (31,941,188) | (578,101,148) | (975,475,144) |
Net increase (decrease) | (5,990,191) | (1,716,890) | $(204,086,800) | $(107,895,435) |
Investor Class | ||||
Shares sold | 581,168 | 958,357 | $20,104,390 | $30,135,517 |
Reinvestment of distributions | 702,732 | 1,247,783 | 23,906,942 | 34,159,031 |
Shares redeemed | (613,504) | (1,694,440) | (21,035,995) | (52,482,297) |
Net increase (decrease) | 670,396 | 511,700 | $22,975,337 | $11,812,251 |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, the investment adviser or its affiliates were the owners of record of 11% of the total outstanding shares of the Fund.
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 to June 30, 2017).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annualized Expense Ratio-A | Beginning Account Value January 1, 2017 | Ending Account Value June 30, 2017 | Expenses Paid During Period-B January 1, 2017 to June 30, 2017 | |
Initial Class | .63% | |||
Actual | $1,000.00 | $1,089.20 | $3.26 | |
Hypothetical-C | $1,000.00 | $1,021.67 | $3.16 | |
Service Class | .73% | |||
Actual | $1,000.00 | $1,089.00 | $3.78 | |
Hypothetical-C | $1,000.00 | $1,021.17 | $3.66 | |
Service Class 2 | .88% | |||
Actual | $1,000.00 | $1,088.20 | $4.56 | |
Hypothetical-C | $1,000.00 | $1,020.43 | $4.41 | |
Investor Class | .71% | |||
Actual | $1,000.00 | $1,089.00 | $3.68 | |
Hypothetical-C | $1,000.00 | $1,021.27 | $3.56 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
VIPMID-SANN-0817
1.723369.118
Fidelity® Variable Insurance Products: Growth Opportunities Portfolio Semi-Annual Report June 30, 2017 |
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. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.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.
Investment Summary (Unaudited)
Top Ten Stocks as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Apple, Inc. | 6.0 | 6.1 |
Alphabet, Inc. Class C | 3.9 | 3.6 |
Amazon.com, Inc. | 3.5 | 3.3 |
American Tower Corp. | 3.1 | 3.4 |
Facebook, Inc. Class A | 2.9 | 2.3 |
LyondellBasell Industries NV Class A | 2.6 | 1.7 |
Microsoft Corp. | 2.5 | 2.8 |
Tesla, Inc. | 2.3 | 2.9 |
Alphabet, Inc. Class A | 2.2 | 2.2 |
Amgen, Inc. | 2.1 | 1.5 |
31.1 |
Top Five Market Sectors as of June 30, 2017
% of fund's net assets | % of fund's net assets 6 months ago | |
Information Technology | 41.8 | 38.8 |
Health Care | 16.9 | 17.8 |
Consumer Discretionary | 14.2 | 15.4 |
Consumer Staples | 6.4 | 7.4 |
Materials | 5.1 | 4.6 |
Asset Allocation (% of fund's net assets)
As of June 30, 2017* | ||
Stocks | 98.9% | |
Short-Term Investments and Net Other Assets (Liabilities) | 1.1% |
* Foreign investments - 11.6%
As of December 31, 2016* | ||
Stocks | 99.6% | |
Short-Term Investments and Net Other Assets (Liabilities) | 0.4% |
* Foreign investments - 12.0%
Investments June 30, 2017 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 97.8% | |||
Shares | Value | ||
CONSUMER DISCRETIONARY - 14.2% | |||
Automobiles - 2.3% | |||
Tesla, Inc. (a)(b) | 41,197 | $14,897,247 | |
Hotels, Restaurants & Leisure - 1.5% | |||
Chipotle Mexican Grill, Inc. (a) | 2,000 | 832,200 | |
Marriott International, Inc. Class A | 200 | 20,062 | |
Penn National Gaming, Inc. (a) | 32,300 | 691,220 | |
Starbucks Corp. | 44,564 | 2,598,527 | |
U.S. Foods Holding Corp. (a) | 188,065 | 5,119,129 | |
9,261,138 | |||
Household Durables - 0.5% | |||
Newell Brands, Inc. | 54,900 | 2,943,738 | |
Internet & Direct Marketing Retail - 5.6% | |||
Amazon.com, Inc. (a) | 22,973 | 22,237,864 | |
Blue Apron Holdings, Inc.: | |||
Class B | 83,090 | 698,455 | |
Class B | 20,771 | 174,601 | |
Groupon, Inc. (a)(b) | 455,600 | 1,749,504 | |
Netflix, Inc. (a) | 11,400 | 1,703,274 | |
Priceline Group, Inc. (a) | 1,450 | 2,712,254 | |
Vipshop Holdings Ltd. ADR (a) | 379,300 | 4,001,615 | |
Wayfair LLC Class A (a) | 31,100 | 2,390,968 | |
35,668,535 | |||
Media - 3.2% | |||
Charter Communications, Inc. Class A (a) | 33,063 | 11,137,272 | |
Comcast Corp. Class A | 104,378 | 4,062,392 | |
Liberty SiriusXM Liberty Media Class A (a)(b) | 51,800 | 1,814,554 | |
Lions Gate Entertainment Corp.: | |||
Class A (b) | 29,500 | 832,490 | |
Class B (a) | 29,300 | 770,004 | |
The Walt Disney Co. | 14,400 | 1,530,000 | |
20,146,712 | |||
Multiline Retail - 0.1% | |||
Dollar Tree, Inc. (a) | 8,200 | 573,344 | |
Specialty Retail - 0.8% | |||
Home Depot, Inc. | 18,710 | 2,870,114 | |
TJX Companies, Inc. | 27,900 | 2,013,543 | |
4,883,657 | |||
Textiles, Apparel & Luxury Goods - 0.2% | |||
lululemon athletica, Inc. (a) | 24,372 | 1,454,277 | |
TOTAL CONSUMER DISCRETIONARY | 89,828,648 | ||
CONSUMER STAPLES - 6.3% | |||
Beverages - 1.7% | |||
Constellation Brands, Inc. Class A (sub. vtg.) | 11,700 | 2,266,641 | |
Molson Coors Brewing Co. Class B | 38,700 | 3,341,358 | |
Monster Beverage Corp. (a) | 67,695 | 3,363,088 | |
The Coca-Cola Co. | 33,369 | 1,496,600 | |
10,467,687 | |||
Food & Staples Retailing - 1.7% | |||
Costco Wholesale Corp. | 10,600 | 1,695,258 | |
CVS Health Corp. | 20,000 | 1,609,200 | |
Performance Food Group Co. (a) | 272,008 | 7,453,019 | |
10,757,477 | |||
Personal Products - 0.6% | |||
Coty, Inc. Class A | 146,500 | 2,748,340 | |
Unilever NV (Certificaten Van Aandelen) (Bearer) | 24,400 | 1,346,924 | |
4,095,264 | |||
Tobacco - 2.3% | |||
British American Tobacco PLC: | |||
(United Kingdom) | 129,100 | 8,797,252 | |
sponsored ADR (b) | 24,000 | 1,644,960 | |
Imperial Tobacco Group PLC | 32,330 | 1,452,102 | |
Philip Morris International, Inc. | 20,100 | 2,360,745 | |
14,255,059 | |||
TOTAL CONSUMER STAPLES | 39,575,487 | ||
ENERGY - 1.2% | |||
Oil, Gas & Consumable Fuels - 1.2% | |||
Anadarko Petroleum Corp. | 10,200 | 462,468 | |
Cabot Oil & Gas Corp. | 104,482 | 2,620,409 | |
Devon Energy Corp. | 14,300 | 457,171 | |
PDC Energy, Inc. (a) | 20,000 | 862,200 | |
Petronet LNG Ltd. | 9,454 | 63,210 | |
Teekay LNG Partners LP | 49,100 | 753,685 | |
The Williams Companies, Inc. | 30,700 | 929,596 | |
Williams Partners LP | 40,300 | 1,616,433 | |
7,765,172 | |||
FINANCIALS - 4.1% | |||
Banks - 0.5% | |||
HDFC Bank Ltd. sponsored ADR | 34,400 | 2,991,768 | |
Capital Markets - 2.8% | |||
BlackRock, Inc. Class A | 800 | 337,928 | |
CBOE Holdings, Inc. | 129,700 | 11,854,580 | |
MSCI, Inc. | 3,000 | 308,970 | |
S&P Global, Inc. | 2,300 | 335,777 | |
TD Ameritrade Holding Corp. | 115,200 | 4,952,448 | |
17,789,703 | |||
Consumer Finance - 0.8% | |||
Synchrony Financial | 168,900 | 5,036,598 | |
TOTAL FINANCIALS | 25,818,069 | ||
HEALTH CARE - 16.9% | |||
Biotechnology - 9.3% | |||
ACADIA Pharmaceuticals, Inc. (a) | 16,818 | 469,054 | |
Acorda Therapeutics, Inc. (a) | 14,500 | 285,650 | |
Agios Pharmaceuticals, Inc. (a) | 16,000 | 823,200 | |
Alexion Pharmaceuticals, Inc. (a) | 105,752 | 12,866,846 | |
Alkermes PLC (a) | 20,700 | 1,199,979 | |
Alnylam Pharmaceuticals, Inc. (a) | 39,703 | 3,166,711 | |
Amgen, Inc. | 76,559 | 13,185,757 | |
Amicus Therapeutics, Inc. (a)(b) | 164,200 | 1,653,494 | |
aTyr Pharma, Inc. (a)(c) | 22,036 | 76,024 | |
BioMarin Pharmaceutical, Inc. (a) | 26,800 | 2,433,976 | |
bluebird bio, Inc. (a) | 19,830 | 2,083,142 | |
Coherus BioSciences, Inc. (a) | 21,800 | 312,830 | |
Five Prime Therapeutics, Inc. (a) | 13,600 | 409,496 | |
Genocea Biosciences, Inc. (a)(b) | 16,693 | 87,137 | |
Insmed, Inc. (a) | 81,342 | 1,395,829 | |
Intercept Pharmaceuticals, Inc. (a) | 2,500 | 302,675 | |
Ionis Pharmaceuticals, Inc. (a) | 80,906 | 4,115,688 | |
Merrimack Pharmaceuticals, Inc. (b) | 89,800 | 111,352 | |
Neurocrine Biosciences, Inc. (a) | 41,788 | 1,922,248 | |
Opko Health, Inc. (a) | 1 | 7 | |
Prothena Corp. PLC (a) | 25,802 | 1,396,404 | |
Regeneron Pharmaceuticals, Inc. (a) | 10,600 | 5,206,084 | |
Regulus Therapeutics, Inc. (a)(b) | 54,400 | 53,617 | |
Rigel Pharmaceuticals, Inc. (a) | 111,406 | 304,138 | |
Sage Therapeutics, Inc. (a) | 6,300 | 501,732 | |
Spark Therapeutics, Inc. (a) | 2,500 | 149,350 | |
TESARO, Inc. (a)(b) | 8,000 | 1,118,880 | |
Vertex Pharmaceuticals, Inc. (a) | 20,900 | 2,693,383 | |
Xencor, Inc. (a) | 15,300 | 322,983 | |
58,647,666 | |||
Health Care Equipment & Supplies - 2.3% | |||
Boston Scientific Corp. (a) | 266,600 | 7,390,152 | |
Danaher Corp. | 17,900 | 1,510,581 | |
Insulet Corp. (a) | 23,800 | 1,221,178 | |
Intuitive Surgical, Inc. (a) | 700 | 654,759 | |
Medtronic PLC | 36,900 | 3,274,875 | |
14,051,545 | |||
Health Care Providers & Services - 2.7% | |||
Aetna, Inc. | 4,300 | 652,869 | |
Anthem, Inc. | 40,500 | 7,619,265 | |
Cigna Corp. | 10,100 | 1,690,639 | |
Humana, Inc. | 9,000 | 2,165,580 | |
UnitedHealth Group, Inc. | 27,300 | 5,061,966 | |
17,190,319 | |||
Health Care Technology - 0.4% | |||
athenahealth, Inc. (a) | 17,756 | 2,495,606 | |
Castlight Health, Inc. Class B (a) | 17,500 | 72,625 | |
2,568,231 | |||
Pharmaceuticals - 2.2% | |||
Allergan PLC | 37,563 | 9,131,190 | |
Bristol-Myers Squibb Co. | 49,900 | 2,780,428 | |
Innoviva, Inc. (a) | 52,400 | 670,720 | |
Theravance Biopharma, Inc. (a)(b) | 35,000 | 1,394,400 | |
13,976,738 | |||
TOTAL HEALTH CARE | 106,434,499 | ||
INDUSTRIALS - 2.9% | |||
Air Freight & Logistics - 0.2% | |||
FedEx Corp. | 6,100 | 1,325,713 | |
Airlines - 0.9% | |||
JetBlue Airways Corp. (a) | 15,300 | 349,299 | |
Spirit Airlines, Inc. (a) | 98,200 | 5,072,030 | |
5,421,329 | |||
Electrical Equipment - 0.4% | |||
Fortive Corp. | 7,150 | 452,953 | |
Sunrun, Inc. (a)(b) | 262,100 | 1,866,152 | |
2,319,105 | |||
Machinery - 0.6% | |||
Allison Transmission Holdings, Inc. | 40,600 | 1,522,906 | |
Caterpillar, Inc. | 21,000 | 2,256,660 | |
Middleby Corp. (a) | 1,000 | 121,510 | |
3,901,076 | |||
Professional Services - 0.5% | |||
Equifax, Inc. | 15,500 | 2,130,010 | |
TransUnion Holding Co., Inc. (a) | 29,500 | 1,277,645 | |
3,407,655 | |||
Road & Rail - 0.1% | |||
J.B. Hunt Transport Services, Inc. | 6,510 | 594,884 | |
Trading Companies & Distributors - 0.2% | |||
Bunzl PLC | 34,000 | 1,013,202 | |
MSC Industrial Direct Co., Inc. Class A | 3,800 | 326,648 | |
1,339,850 | |||
TOTAL INDUSTRIALS | 18,309,612 | ||
INFORMATION TECHNOLOGY - 41.0% | |||
Communications Equipment - 0.6% | |||
Carvana Co. Class A (b) | 190,967 | 3,909,094 | |
Internet Software & Services - 11.2% | |||
Akamai Technologies, Inc. (a) | 12,900 | 642,549 | |
Alibaba Group Holding Ltd. sponsored ADR (a) | 2,200 | 309,980 | |
Alphabet, Inc.: | |||
Class A (a) | 14,802 | 13,761,123 | |
Class C (a) | 27,163 | 24,683,833 | |
Apptio, Inc. Class A | 5,800 | 100,630 | |
Cloudera, Inc. (b) | 2,500 | 40,050 | |
Cloudera, Inc. | 6,366 | 91,785 | |
Criteo SA sponsored ADR (a) | 3,200 | 156,960 | |
Endurance International Group Holdings, Inc. (a) | 363,370 | 3,034,140 | |
Facebook, Inc. Class A (a) | 120,910 | 18,254,992 | |
GoDaddy, Inc. (a) | 108,120 | 4,586,450 | |
Nutanix, Inc. Class A (a)(b) | 71,200 | 1,434,680 | |
The Trade Desk, Inc. | 10,500 | 526,155 | |
Wix.com Ltd. (a) | 48,807 | 3,396,967 | |
71,020,294 | |||
IT Services - 11.8% | |||
Accenture PLC Class A | 3,000 | 371,040 | |
Alliance Data Systems Corp. | 39,200 | 10,062,248 | |
Capgemini SA | 28,600 | 2,955,574 | |
Cognizant Technology Solutions Corp. Class A | 119,064 | 7,905,850 | |
EPAM Systems, Inc. (a) | 73,400 | 6,172,206 | |
Euronet Worldwide, Inc. (a) | 43,800 | 3,826,806 | |
FleetCor Technologies, Inc. (a) | 27,500 | 3,965,775 | |
Global Payments, Inc. | 73,500 | 6,638,520 | |
Luxoft Holding, Inc. (a) | 94,300 | 5,738,155 | |
MasterCard, Inc. Class A | 52,400 | 6,363,980 | |
PayPal Holdings, Inc. (a) | 75,800 | 4,068,186 | |
Paysafe Group PLC (a) | 544,300 | 3,622,599 | |
Presidio, Inc. | 246,900 | 3,533,139 | |
Visa, Inc. Class A | 96,900 | 9,087,282 | |
74,311,360 | |||
Semiconductors & Semiconductor Equipment - 2.3% | |||
Advanced Micro Devices, Inc. (a) | 28,000 | 349,440 | |
Micron Technology, Inc. (a) | 101,400 | 3,027,804 | |
NVIDIA Corp. | 29,200 | 4,221,152 | |
Qualcomm, Inc. | 64,100 | 3,539,602 | |
SolarEdge Technologies, Inc. (a)(b) | 169,935 | 3,398,700 | |
14,536,698 | |||
Software - 9.1% | |||
Activision Blizzard, Inc. | 102,200 | 5,883,654 | |
Adobe Systems, Inc. (a) | 50,500 | 7,142,720 | |
Autodesk, Inc. (a) | 61,400 | 6,190,348 | |
Electronic Arts, Inc. (a) | 31,900 | 3,372,468 | |
Microsoft Corp. | 226,249 | 15,595,344 | |
Red Hat, Inc. (a) | 8,700 | 833,025 | |
Salesforce.com, Inc. (a) | 142,177 | 12,312,528 | |
SS&C Technologies Holdings, Inc. | 86,300 | 3,314,783 | |
Workday, Inc. Class A (a) | 27,600 | 2,677,200 | |
57,322,070 | |||
Technology Hardware, Storage & Peripherals - 6.0% | |||
Apple, Inc. | 264,543 | 38,099,478 | |
TOTAL INFORMATION TECHNOLOGY | 259,198,994 | ||
MATERIALS - 5.1% | |||
Chemicals - 3.9% | |||
E.I. du Pont de Nemours & Co. | 52,500 | 4,237,275 | |
LyondellBasell Industries NV Class A | 195,000 | 16,456,050 | |
Monsanto Co. | 24,700 | 2,923,492 | |
The Chemours Co. LLC | 22,200 | 841,824 | |
24,458,641 | |||
Containers & Packaging - 1.2% | |||
Ball Corp. | 187,500 | 7,914,375 | |
TOTAL MATERIALS | 32,373,016 | ||
REAL ESTATE - 4.6% | |||
Equity Real Estate Investment Trusts (REITs) - 4.6% | |||
American Tower Corp. | 146,700 | 19,411,344 | |
Extra Space Storage, Inc. | 78,000 | 6,084,000 | |
Prologis, Inc. | 5,600 | 328,384 | |
SBA Communications Corp. Class A (a) | 22,900 | 3,089,210 | |
28,912,938 | |||
TELECOMMUNICATION SERVICES - 1.5% | |||
Diversified Telecommunication Services - 0.1% | |||
Altice U.S.A., Inc. Class A | 23,442 | 757,177 | |
Wireless Telecommunication Services - 1.4% | |||
T-Mobile U.S., Inc. (a) | 145,500 | 8,820,210 | |
TOTAL TELECOMMUNICATION SERVICES | 9,577,387 | ||
TOTAL COMMON STOCKS | |||
(Cost $390,716,687) | 617,793,822 | ||
Preferred Stocks - 1.1% | |||
Convertible Preferred Stocks - 1.1% | |||
CONSUMER STAPLES - 0.1% | |||
Tobacco - 0.1% | |||
PAX Labs, Inc. Series C (a)(d) | 215,881 | 669,231 | |
FINANCIALS - 0.1% | |||
Insurance - 0.1% | |||
Clover Health Series D (d) | 65,670 | 615,840 | |
INFORMATION TECHNOLOGY - 0.8% | |||
Internet Software & Services - 0.5% | |||
Uber Technologies, Inc. Series D, 8.00% (a)(d) | 66,008 | 3,219,357 | |
Software - 0.3% | |||
Cloudflare, Inc. Series D 8.00% (a)(d) | 5,997 | 40,960 | |
MongoDB, Inc. Series F, 8.00% (a)(d) | 82,814 | 1,384,992 | |
1,425,952 | |||
TOTAL INFORMATION TECHNOLOGY | 4,645,309 | ||
REAL ESTATE - 0.1% | |||
Real Estate Management & Development - 0.1% | |||
Redfin Corp. Series G (a)(d) | 152,148 | 684,666 | |
TOTAL CONVERTIBLE PREFERRED STOCKS | 6,615,046 | ||
Nonconvertible Preferred Stocks - 0.0% | |||
CONSUMER STAPLES - 0.0% | |||
Tobacco - 0.0% | |||
PAX Labs, Inc. Series A (d) | 215,881 | 161,911 | |
TOTAL PREFERRED STOCKS | |||
(Cost $4,394,432) | 6,776,957 | ||
Money Market Funds - 6.1% | |||
Fidelity Cash Central Fund, 1.10% (e) | 10,358,941 | 10,361,013 | |
Fidelity Securities Lending Cash Central Fund 1.09% (e)(f) | 28,092,525 | 28,095,334 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $38,455,648) | 38,456,347 | ||
TOTAL INVESTMENT PORTFOLIO - 105.0% | |||
(Cost $433,566,767) | 663,027,126 | ||
NET OTHER ASSETS (LIABILITIES) - (5.0)% | (31,286,944) | ||
NET ASSETS - 100% | $631,740,182 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $76,024 or 0.0% of net assets.
(d) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $6,776,957 or 1.1% of net assets.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements are available on the SEC's website or upon request.
(f) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
Security | Acquisition Date | Acquisition Cost |
Cloudflare, Inc. Series D 8.00% | 11/5/14 | $36,735 |
Clover Health Series D | 6/7/17 | $615,840 |
MongoDB, Inc. Series F, 8.00% | 10/2/13 | $1,384,992 |
PAX Labs, Inc. Series A | 5/22/15 | $159,752 |
PAX Labs, Inc. Series C | 5/22/15 | $671,390 |
Redfin Corp. Series G | 12/16/14 | $501,738 |
Uber Technologies, Inc. Series D, 8.00% | 6/6/14 | $1,023,986 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
Fund | Income earned |
Fidelity Cash Central Fund | $31,960 |
Fidelity Securities Lending Cash Central Fund | 207,695 |
Total | $239,655 |
Investment Valuation
The following is a summary of the inputs used, as of June 30, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Valuation Inputs at Reporting Date: | ||||
Description | Total | Level 1 | Level 2 | Level 3 |
Investments in Securities: | ||||
Equities: | ||||
Consumer Discretionary | $89,828,648 | $88,955,592 | $873,056 | $-- |
Consumer Staples | 40,406,629 | 29,431,311 | 10,144,176 | 831,142 |
Energy | 7,765,172 | 7,765,172 | -- | -- |
Financials | 26,433,909 | 25,818,069 | -- | 615,840 |
Health Care | 106,434,499 | 106,434,499 | -- | -- |
Industrials | 18,309,612 | 18,309,612 | -- | -- |
Information Technology | 263,844,303 | 259,107,209 | 91,785 | 4,645,309 |
Materials | 32,373,016 | 32,373,016 | -- | -- |
Real Estate | 29,597,604 | 28,912,938 | 684,666 | -- |
Telecommunication Services | 9,577,387 | 9,577,387 | -- | -- |
Money Market Funds | 38,456,347 | 38,456,347 | -- | -- |
Total Investments in Securities: | $663,027,126 | $645,141,152 | $11,793,683 | $6,092,291 |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
United States of America | 88.4% |
Netherlands | 2.8% |
Ireland | 2.5% |
United Kingdom | 2.1% |
Others (Individually Less Than 1%) | 4.2% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
June 30, 2017 (Unaudited) | ||
Assets | ||
Investment in securities, at value (including securities loaned of $27,424,574) — See accompanying schedule: Unaffiliated issuers (cost $395,111,119) | $624,570,779 | |
Fidelity Central Funds (cost $38,455,648) | 38,456,347 | |
Total Investments (cost $433,566,767) | $663,027,126 | |
Foreign currency held at value (cost $10,241) | 10,241 | |
Receivable for investments sold | 1,327,187 | |
Receivable for fund shares sold | 131,269 | |
Dividends receivable | 182,089 | |
Distributions receivable from Fidelity Central Funds | 85,157 | |
Other receivables | 5,710 | |
Total assets | 664,768,779 | |
Liabilities | ||
Payable for investments purchased | $3,507,788 | |
Payable for fund shares redeemed | 990,583 | |
Accrued management fee | 288,518 | |
Distribution and service plan fees payable | 41,539 | |
Other affiliated payables | 69,173 | |
Other payables and accrued expenses | 35,803 | |
Collateral on securities loaned | 28,095,193 | |
Total liabilities | 33,028,597 | |
Net Assets | $631,740,182 | |
Net Assets consist of: | ||
Paid in capital | $376,407,648 | |
Undistributed net investment income | 811,671 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 25,060,504 | |
Net unrealized appreciation (depreciation) on investments | 229,460,359 | |
Net Assets | $631,740,182 | |
Initial Class: | ||
Net Asset Value, offering price and redemption price per share ($155,363,892 ÷ 4,746,071 shares) | $32.74 | |
Service Class: | ||
Net Asset Value, offering price and redemption price per share ($100,632,290 ÷ 3,080,434 shares) | $32.67 | |
Service Class 2: | ||
Net Asset Value, offering price and redemption price per share ($158,907,187 ÷ 4,920,730 shares) | $32.29 | |
Investor Class: | ||
Net Asset Value, offering price and redemption price per share ($216,836,813 ÷ 6,661,784 shares) | $32.55 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Six months ended June 30, 2017 (Unaudited) | ||
Investment Income | ||
Dividends | $2,838,793 | |
Income from Fidelity Central Funds (including $207,695 from security lending) | 239,655 | |
Total income | 3,078,448 | |
Expenses | ||
Management fee | $1,580,404 | |
Transfer agent fees | 270,304 | |
Distribution and service plan fees | 223,676 | |
Accounting and security lending fees | 110,625 | |
Custodian fees and expenses | 16,744 | |
Independent trustees' fees and expenses | 1,112 | |
Audit | 35,067 | |
Legal | 5,710 | |
Miscellaneous | 2,865 | |
Total expenses before reductions | 2,246,507 | |
Expense reductions | (15,085) | 2,231,422 |
Net investment income (loss) | 847,026 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 27,982,790 | |
Fidelity Central Funds | (559) | |
Foreign currency transactions | 12,852 | |
Total net realized gain (loss) | 27,995,083 | |
Change in net unrealized appreciation (depreciation) on: Investment securities | 73,984,642 | |
Assets and liabilities in foreign currencies | 243 | |
Total change in net unrealized appreciation (depreciation) | 73,984,885 | |
Net gain (loss) | 101,979,968 | |
Net increase (decrease) in net assets resulting from operations | $102,826,994 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Six months ended June 30, 2017 (Unaudited) | Year ended December 31, 2016 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $847,026 | $1,550,111 |
Net realized gain (loss) | 27,995,083 | 64,520,465 |
Change in net unrealized appreciation (depreciation) | 73,984,885 | (70,613,183) |
Net increase (decrease) in net assets resulting from operations | 102,826,994 | (4,542,607) |
Distributions to shareholders from net investment income | (383,242) | (1,170,788) |
Distributions to shareholders from net realized gain | (66,134,324) | (13,837,937) |
Total distributions | (66,517,566) | (15,008,725) |
Share transactions - net increase (decrease) | 76,664,155 | (199,072,390) |
Total increase (decrease) in net assets | 112,973,583 | (218,623,722) |
Net Assets | ||
Beginning of period | 518,766,599 | 737,390,321 |
End of period | $631,740,182 | $518,766,599 |
Other Information | ||
Undistributed net investment income end of period | $811,671 | $347,887 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Growth Opportunities Portfolio Initial Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $31.06 | $31.75 | $33.51 | $29.96 | $21.80 | $18.30 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .06 | .11 | .10 | .07 | .08 | .08 |
Net realized and unrealized gain (loss) | 5.65 | (.10) | 1.70 | 3.58 | 8.18 | 3.51 |
Total from investment operations | 5.71 | .01 | 1.80 | 3.65 | 8.26 | 3.59 |
Distributions from net investment income | (.03) | (.10) | (.06) | (.07) | (.08) | (.09) |
Distributions from net realized gain | (4.00) | (.60) | (3.49) | (.03) | (.01) | – |
Total distributions | (4.03) | (.70) | (3.56)B | (.10) | (.10)C | (.09) |
Net asset value, end of period | $32.74 | $31.06 | $31.75 | $33.51 | $29.96 | $21.80 |
Total ReturnD,E,F | 19.93% | .37% | 5.61% | 12.20% | 37.90% | 19.61% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .67%I | .68% | .67% | .68% | .68% | .69% |
Expenses net of fee waivers, if any | .67%I | .68% | .67% | .68% | .68% | .69% |
Expenses net of all reductions | .66%I | .68% | .66% | .68% | .68% | .69% |
Net investment income (loss) | .40%I | .36% | .30% | .21% | .31% | .40% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $155,364 | $133,393 | $176,056 | $158,791 | $163,798 | $121,947 |
Portfolio turnover rateJ | 57%I | 65% | 63%K | 11% | 25% | 36% |
A Calculated based on average shares outstanding during the period.
B Total distributions of $3.56 per share is comprised of distributions from net investment income of $.064 and distributions from net realized gain of $3.492 per share.
C Total distributions of $.10 per share is comprised of distributions from net investment income of $.082 and distributions from net realized gain of $.014 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K The portfolio turnover rate does not include the assets acquired in the merger.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Growth Opportunities Portfolio Service Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $31.01 | $31.70 | $33.46 | $29.91 | $21.76 | $18.27 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .05 | .08 | .07 | .04 | .05 | .06 |
Net realized and unrealized gain (loss) | 5.64 | (.09) | 1.68 | 3.58 | 8.17 | 3.50 |
Total from investment operations | 5.69 | (.01) | 1.75 | 3.62 | 8.22 | 3.56 |
Distributions from net investment income | (.02) | (.07) | (.02) | (.04) | (.05) | (.07) |
Distributions from net realized gain | (4.00) | (.60) | (3.49) | (.03) | (.01) | – |
Total distributions | (4.03)B | (.68)C | (3.51) | (.07) | (.07)D | (.07) |
Net asset value, end of period | $32.67 | $31.01 | $31.70 | $33.46 | $29.91 | $21.76 |
Total ReturnE,F,G | 19.88% | .28% | 5.48% | 12.10% | 37.78% | 19.46% |
Ratios to Average Net AssetsH,I | ||||||
Expenses before reductions | .77%J | .78% | .77% | .77% | .78% | .79% |
Expenses net of fee waivers, if any | .77%J | .78% | .77% | .77% | .78% | .79% |
Expenses net of all reductions | .76%J | .78% | .76% | .77% | .78% | .79% |
Net investment income (loss) | .30%J | .26% | .20% | .11% | .21% | .30% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $100,632 | $92,664 | $113,812 | $141,833 | $160,835 | $143,321 |
Portfolio turnover rateK | 57%J | 65% | 63%L | 11% | 25% | 36% |
A Calculated based on average shares outstanding during the period.
B Total distributions of $4.03 per share is comprised of distributions from net investment income of $.023 and distributions from net realized gain of $4.002 per share.
C Total distributions of $.68 per share is comprised of distributions from net investment income of $.073 and distributions from net realized gain of $.602 per share.
D Total distributions of $.07 per share is comprised of distributions from net investment income of $.052 and distributions from net realized gain of $.014 per share.
E Total returns for periods of less than one year are not annualized.
F Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Annualized
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L The portfolio turnover rate does not include the assets acquired in the merger.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Growth Opportunities Portfolio Service Class 2
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $30.71 | $31.40 | $33.20 | $29.68 | $21.60 | $18.13 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .02 | .03 | .02 | (.01) | .01 | .03 |
Net realized and unrealized gain (loss) | 5.58 | (.10) | 1.67 | 3.56 | 8.10 | 3.47 |
Total from investment operations | 5.60 | (.07) | 1.69 | 3.55 | 8.11 | 3.50 |
Distributions from net investment income | (.02) | (.02) | –B | –B | (.01) | (.03) |
Distributions from net realized gain | (4.00) | (.60) | (3.49) | (.02) | (.01) | – |
Total distributions | (4.02) | (.62) | (3.49) | (.03)C | (.03)D | (.03) |
Net asset value, end of period | $32.29 | $30.71 | $31.40 | $33.20 | $29.68 | $21.60 |
Total ReturnE,F,G | 19.78% | .10% | 5.34% | 11.95% | 37.54% | 19.32% |
Ratios to Average Net AssetsH,I | ||||||
Expenses before reductions | .92%J | .93% | .92% | .93% | .94% | .94% |
Expenses net of fee waivers, if any | .92%J | .93% | .92% | .93% | .93% | .94% |
Expenses net of all reductions | .91%J | .93% | .91% | .93% | .93% | .94% |
Net investment income (loss) | .15%J | .11% | .05% | (.04)% | .06% | .15% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $158,907 | $117,623 | $177,404 | $83,545 | $81,360 | $72,525 |
Portfolio turnover rateK | 57%J | 65% | 63%L | 11% | 25% | 36% |
A Calculated based on average shares outstanding during the period.
B Amount represents less than $.005 per share.
C Total distributions of $.03 per share is comprised of distributions from net investment income of $.002 and distributions from net realized gain of $.023 per share.
D Total distributions of $.03 per share is comprised of distributions from net investment income of $.012 and distributions from net realized gain of $.014 per share.
E Total returns for periods of less than one year are not annualized.
F Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Annualized
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L The portfolio turnover rate does not include the assets acquired in the merger.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — VIP Growth Opportunities Portfolio Investor Class
Six months ended (Unaudited) June 30, | Years ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
Selected Per–Share Data | ||||||
Net asset value, beginning of period | $30.91 | $31.60 | $33.37 | $29.84 | $21.72 | $18.23 |
Income from Investment Operations | ||||||
Net investment income (loss)A | .05 | .08 | .07 | .04 | .06 | .07 |
Net realized and unrealized gain (loss) | 5.62 | (.09) | 1.70 | 3.57 | 8.14 | 3.49 |
Total from investment operations | 5.67 | (.01) | 1.77 | 3.61 | 8.20 | 3.56 |
Distributions from net investment income | (.02) | (.07) | (.05) | (.05) | (.07) | (.07) |
Distributions from net realized gain | (4.00) | (.60) | (3.49) | (.03) | (.01) | – |
Total distributions | (4.03)B | (.68)C | (3.54) | (.08) | (.08) | (.07) |
Net asset value, end of period | $32.55 | $30.91 | $31.60 | $33.37 | $29.84 | $21.72 |
Total ReturnD,E,F | 19.88% | .28% | 5.54% | 12.09% | 37.77% | 19.54% |
Ratios to Average Net AssetsG,H | ||||||
Expenses before reductions | .75%I | .76% | .75% | .76% | .77% | .78% |
Expenses net of fee waivers, if any | .75%I | .76% | .75% | .76% | .76% | .78% |
Expenses net of all reductions | .75%I | .76% | .74% | .76% | .76% | .77% |
Net investment income (loss) | .32%I | .28% | .22% | .13% | .23% | .31% |
Supplemental Data | ||||||
Net assets, end of period (000 omitted) | $216,837 | $175,086 | $270,119 | $136,782 | $122,334 | $77,969 |
Portfolio turnover rateJ | 57%I | 65% | 63%K | 11% | 25% | 36% |
A Calculated based on average shares outstanding during the period.
B Total distributions of $4.03 per share is comprised of distributions from net investment income of $.024 and distributions from net realized gain of $4.002 per share.
C Total distributions of $.68 per share is comprised of distributions from net investment income of $.073 and distributions from net realized gain of $.602 per share.
D Total returns for periods of less than one year are not annualized.
E Total returns do not reflect charges attributable to your insurance company's separate account. Inclusion of these charges would reduce the total returns shown.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Annualized
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K The portfolio turnover rate does not include the assets acquired in the merger.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements (Unaudited)
For the period ended June 30, 2017
1. Organization.
VIP Growth Opportunities Portfolio (the Fund) is a fund of Variable Insurance Products Fund III (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. Shares of the Fund may only be purchased by insurance companies for the purpose of funding variable annuity or variable life insurance contracts. The Fund offers the following classes of shares: Initial Class shares, Service Class shares, Service Class 2 shares and Investor Class shares. All classes have equal rights and voting privileges, except for matters affecting a single class.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds are available on the SEC website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services – Investments Companies. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of June 30, 2017, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. 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.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
Gross unrealized appreciation | $239,009,158 |
Gross unrealized depreciation | (10,434,376) |
Net unrealized appreciation (depreciation) on securities | $228,574,782 |
Tax cost | $434,452,344 |
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $168,071,860 and $162,160,751, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by the investment adviser, including any mutual funds previously advised by the investment adviser that are currently advised by Fidelity SelectCo, LLC, an affiliate of the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annualized management fee rate was .54% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate 12b-1 Plans for each Service Class of shares. Each Service Class pays Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, a service fee. For the period, the service fee is based on an annual rate of .10% of Service Class' average net assets and .25% of Service Class 2's average net assets.
For the period, total fees, all of which were re-allowed to insurance companies for the distribution of shares and providing shareholder support services, were as follows:
Service Class | $49,355 |
Service Class 2 | 174,321 |
$223,676 |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing, and shareholder servicing agent. FIIOC receives an asset-based fee with respect to each class. Each class pays a fee for transfer agent services, typesetting and printing and mailing of shareholder reports, excluding mailing of proxy statements, equal to an annual rate of class-level average net assets. The annual rate for Investor Class is .15% and the annual rate for all other classes is .07%. For the period, transfer agent fees for each class were as follows:
Initial Class | $48,149 |
Service Class | 32,574 |
Service Class 2 | 46,021 |
Investor Class | 143,560 |
$270,304 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $4,355 for the period.
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Other. During the period, the investment adviser reimbursed the Fund for certain losses in the amount of $4,770.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $915 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. At period end, there were no security loans outstanding with FCM. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds and includes $37,452 from securities loaned to FCM.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $12,723 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $2,362.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Six months ended June 30, 2017 | Year ended December 31, 2016 | |
From net investment income | ||
Initial Class | $117,640 | $441,232 |
Service Class | 67,410 | 222,177 |
Service Class 2 | 66,155 | 71,358 |
Investor Class | 132,037 | 436,021 |
Total | $383,242 | $1,170,788 |
From net realized gain | ||
Initial Class | $16,814,109 | $3,227,176 |
Service Class | 11,729,342 | 2,124,607 |
Service Class 2 | 15,573,656 | 3,498,766 |
Investor Class | 22,017,217 | 4,987,388 |
Total | $66,134,324 | $13,837,937 |
10. Share Transactions.
Transactions for each class of shares were as follows:
Shares | Shares | Dollars | Dollars | |
Six months ended June 30, 2017 | Year ended December 31, 2016 | Six months ended June 30, 2017 | Year ended December 31, 2016 | |
Initial Class | ||||
Shares sold | 280,142 | 280,329 | $8,638,268 | $8,217,274 |
Reinvestment of distributions | 578,863 | 135,711 | 16,931,749 | 3,668,408 |
Shares redeemed | (408,094) | (1,666,374) | (12,747,565) | (50,097,985) |
Net increase (decrease) | 450,911 | (1,250,334) | $12,822,452 | $(38,212,303) |
Service Class | ||||
Shares sold | 55,639 | 68,666 | $1,744,495 | $2,044,301 |
Reinvestment of distributions | 403,998 | 87,295 | 11,796,752 | 2,346,784 |
Shares redeemed | (367,409) | (757,522) | (11,526,020) | (22,707,390) |
Net increase (decrease) | 92,228 | (601,561) | $2,015,227 | $(18,316,305) |
Service Class 2 | ||||
Shares sold | 1,059,501 | 1,537,082 | $32,708,590 | $44,979,886 |
Reinvestment of distributions | 541,545 | 135,723 | 15,639,811 | 3,570,124 |
Shares redeemed | (510,099) | (3,493,410) | (15,773,029) | (104,002,667) |
Net increase (decrease) | 1,090,947 | (1,820,605) | $32,575,372 | $(55,452,657) |
Investor Class | ||||
Shares sold | 589,949 | 180,117 | $18,320,104 | $5,259,727 |
Reinvestment of distributions | 761,404 | 202,876 | 22,149,254 | 5,423,409 |
Shares redeemed | (354,110) | (3,267,048) | (11,218,254) | (97,774,261) |
Net increase (decrease) | 997,243 | (2,884,055) | $29,251,104 | $(87,091,125) |
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, the investment adviser or its affiliates were the owners of record of 49% of the total outstanding shares of the Fund and two otherwise unaffiliated shareholders were the owners of record of 25% of the total outstanding shares of the Fund.
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2017 to June 30, 2017).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The estimate of expenses does not include any fees or other expenses of any variable annuity or variable life insurance product. If they were, the estimate of expenses you paid during the period would be higher, and your ending account value would be lower. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
Annualized Expense Ratio-A | Beginning Account Value January 1, 2017 | Ending Account Value June 30, 2017 | Expenses Paid During Period-B January 1, 2017 to June 30, 2017 | |
Initial Class | .67% | |||
Actual | $1,000.00 | $1,199.30 | $3.65 | |
Hypothetical-C | $1,000.00 | $1,021.47 | $3.36 | |
Service Class | .77% | |||
Actual | $1,000.00 | $1,198.80 | $4.20 | |
Hypothetical-C | $1,000.00 | $1,020.98 | $3.86 | |
Service Class 2 | .92% | |||
Actual | $1,000.00 | $1,197.80 | $5.01 | |
Hypothetical-C | $1,000.00 | $1,020.23 | $4.61 | |
Investor Class | .75% | |||
Actual | $1,000.00 | $1,198.80 | $4.09 | |
Hypothetical-C | $1,000.00 | $1,021.08 | $3.76 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
VIPGRO-SANN-0817
1.705699.119
Item 2.
Code of Ethics
Not applicable.
Item 3.
Audit Committee Financial Expert
Not applicable.
Item 4.
Principal Accountant Fees and Services
Not applicable.
Item 5.
Audit Committee of Listed Registrants
Not applicable.
Item 6.
Investments
(a)
Not applicable.
(b)
Not applicable
Item 7.
Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8.
Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9.
Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10.
Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the Variable Insurance Products Fund III’s Board of Trustees.
Item 11.
Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the Variable Insurance Products Fund III’s (the “Trust”) disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the Trust’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting.
Item 12.
Exhibits
(a) | (1) | Not applicable. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) | Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Variable Insurance Products Fund III
By: | /s/Stacie M. Smith |
Stacie M. Smith | |
President and Treasurer | |
Date: | August 23, 2017 |
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: | August 23, 2017 |
By: | /s/Howard J. Galligan III |
Howard J. Galligan III | |
Chief Financial Officer | |
Date: | August 23, 2017 |