N-CSR 1 filing1036.htm PRIMARY DOCUMENT

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   811-5511  


Variable Insurance Products Fund II

 (Exact name of registrant as specified in charter)


245 Summer St., Boston, Massachusetts  02210

 (Address of principal executive offices)       (Zip code)


Marc Bryant, Secretary

245 Summer St.

Boston, Massachusetts  02210

 (Name and address of agent for service)



Registrant's telephone number, including area code:

617-563-7000



Date of fiscal year end:

December 31


 

Date of reporting period:

December 31, 2015



Item 1.

Reports to Stockholders







Fidelity® Variable Insurance Products:

International Capital Appreciation Portfolio



Annual Report

December 31, 2015



Fidelity Investments


Contents

Performance

Management's Discussion of Fund Performance

Investment Summary

Investments

Financial Statements

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

Trustees and Officers

Shareholder Expense Example

Distributions

Board Approval of Investment Advisory Contracts and Management Fees


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

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.



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

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

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

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.



Performance: The Bottom Line

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

Average Annual Total Returns

For the periods ended December 31, 2015 Past 1 year Past 5 years Past 10 years 
Initial Class 3.22% 7.32% 4.32% 
Service Class 3.12% 7.23% 4.22% 
Service Class 2 2.96% 7.06% 4.07% 
Investor Class 3.08% 7.23% 4.22% 

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in VIP International Capital Appreciation Portfolio - Initial Class on December 31, 2005.

The chart shows how the value of your investment would have changed, and also shows how the MSCI ACWI (All Country World Index) ex USA Index performed over the same period.


Period Ending Values
$15,263VIP International Capital Appreciation Portfolio - Initial Class
$13,528MSCI ACWI (All Country World Index) ex USA Index

Management's Discussion of Fund Performance

Market Recap:  International equities suffered a moderate setback for the 12 months ending December 31, 2015, held back by a collapse in commodities prices that hurt resources-related sectors and geographies. The MSCI ACWI (All Country World Index) ex USA Index returned -5.54% for the period, affected also by concerns about global economic growth. Commodity producers remained under pressure for much of the past year, largely related to economic deceleration in China (-14%), the world’s second-largest economy and a leading consumer of raw materials. This effect was exacerbated by U.S. dollar strength relative to global currencies, which weighed on commodities priced in dollars and acutely impacted equity returns within regions most exposed to resources prices. The emerging-markets group, for example, returned about -16% this period. Canada, a significant energy producer, returned roughly -23%. Net energy consumer Japan (+10%) was the best-performing region by far. Only about a quarter of the nearly 50 index countries managed a gain this period: Denmark (+24%) and Ireland (+17%) – the EU’s fastest-growing economy – proved top performers; Greece (-61%) and Brazil (-41%), among the worst. As for the 10 economic sectors, health care (+6%) and consumer staples (+5%) proved the only gainers, whereas energy (-22%) and materials (-20%) declined the most.

Comments from Portfolio Manager Sammy Simnegar:  For the year, the fund’s share classes recorded low single-digit gains that considerably outpaced the benchmark MSCI ACWI (All Country World Index) ex USA Index. Stock selection in information technology, consumer discretionary and materials was especially beneficial to performance versus the benchmark. Geographically, stock picking in the U.K. and Germany, along with out-of-benchmark exposure to the U.S., meaningfully contributed. An out-of-benchmark stake in Sartorius, a Germany-based provider of lab equipment and technology for the biotechnology market, was our largest contributor. Also bolstering relative performance were OBIC, a Japan-based provider of software to small and mid-sized businesses; and not owning Netherlands-based oil producer Royal Dutch Shell, a poorly performing benchmark component. Conversely, a large underweighting in Japan dampened relative performance, as did our picks in Brazil. Among sectors, consumer staples and telecommunication services detracted. At the stock level, the biggest detractor was our overweighting in Brazil-based Kroton Educacional, the world’s largest for-profit operator of colleges. I liquidated this position in July to look for more-appealing possibilities. Two other Brazilian stocks – health insurer Qualicorp and property and casualty insurer BB Seguridade Participacoes – further weighed on performance, and were sold from the fund by period end.

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

Investment Summary (Unaudited)

Geographic Diversification (% of fund's net assets)

As of December 31, 2015 
   United States of America* 21.2% 
   United Kingdom 16.6% 
   Japan 7.6% 
   Germany 6.4% 
   France 4.6% 
   India 3.7% 
   Switzerland 3.4% 
   Australia 3.4% 
   Ireland 3.0% 
   Other 30.1% 


 * Includes Short-Term investments and Net Other Assets (Liabilities).


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

As of June 30, 2015 
   United States of America* 16.2% 
   United Kingdom 15.2% 
   Japan 9.3% 
   France 6.5% 
   Switzerland 5.0% 
   Germany 4.9% 
   India 4.9% 
   Ireland 3.2% 
   Australia 3.0% 
   Other 31.8% 


 * Includes Short-Term investments and Net Other Assets (Liabilities).


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

Asset Allocation as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Stocks 99.5 99.3 
Short-Term Investments and Net Other Assets (Liabilities) 0.5 0.7 

Top Ten Stocks as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Novartis AG sponsored ADR (Switzerland, Pharmaceuticals) 1.6 1.6 
Unilever PLC (United Kingdom, Personal Products) 1.2 0.0 
Novo Nordisk A/S Series B sponsored ADR (Denmark, Pharmaceuticals) 1.1 0.9 
Bayer AG (Germany, Pharmaceuticals) 1.0 1.0 
British American Tobacco PLC (United Kingdom) (United Kingdom, Tobacco) 1.0 0.0 
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR (Taiwan, Semiconductors & Semiconductor Equipment) 1.0 0.9 
Anheuser-Busch InBev SA NV (Belgium, Beverages) 1.0 0.9 
Tencent Holdings Ltd. (Cayman Islands, Internet Software & Services) 1.0 0.9 
AIA Group Ltd. (Hong Kong, Insurance) 0.9 0.8 
Naspers Ltd. Class N (South Africa, Media) 0.8 0.8 
 10.6  

Market Sectors as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Consumer Discretionary 19.2 20.0 
Industrials 16.6 19.7 
Consumer Staples 15.6 4.9 
Information Technology 15.4 15.6 
Health Care 15.3 17.1 
Financials 11.2 12.5 
Materials 6.2 8.8 
Telecommunication Services 0.0 0.7 

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

Investments December 31, 2015

Showing Percentage of Net Assets

Common Stocks - 99.1%   
 Shares Value 
Australia - 3.4%   
Amcor Ltd. 96,457 $937,103 
Carsales.com Ltd. 91,024 770,887 
CSL Ltd. 15,281 1,165,019 
Ramsay Health Care Ltd. 17,955 882,887 
realestate.com.au Ltd. 21,193 843,227 
Sydney Airport unit 174,634 803,722 
Transurban Group:   
unit 6,816 51,665 
unit 122,694 930,016 
TOTAL AUSTRALIA  6,384,526 
Bailiwick of Jersey - 2.5%   
Delphi Automotive PLC 9,000 771,570 
Experian PLC 54,900 972,012 
Regus PLC 159,400 782,978 
Shire PLC 18,130 1,243,852 
WPP PLC 44,900 1,032,780 
TOTAL BAILIWICK OF JERSEY  4,803,192 
Belgium - 1.5%   
Anheuser-Busch InBev SA NV 15,400 1,916,488 
Ontex Group NV 23,400 833,085 
TOTAL BELGIUM  2,749,573 
Canada - 2.6%   
Alimentation Couche-Tard, Inc. Class B (sub. vtg.) 21,500 946,423 
Canadian National Railway Co. 21,290 1,190,129 
Canadian Pacific Railway Ltd. (a) 7,800 996,238 
Constellation Software, Inc. 2,070 863,006 
Dollarama, Inc. 14,200 820,371 
TOTAL CANADA  4,816,167 
Cayman Islands - 2.1%   
Alibaba Group Holding Ltd. sponsored ADR (b) 14,430 1,172,726 
Sino Biopharmaceutical Ltd. 915,000 827,267 
Tencent Holdings Ltd. 97,350 1,906,112 
TOTAL CAYMAN ISLANDS  3,906,105 
Denmark - 1.5%   
Coloplast A/S Series B (a) 10,500 847,740 
Novo Nordisk A/S Series B sponsored ADR 35,400 2,056,032 
TOTAL DENMARK  2,903,772 
Finland - 0.5%   
Sampo Oyj (A Shares) 19,000 964,863 
France - 4.6%   
Amundi SA (b) 1,633 76,630 
Capgemini SA 9,700 902,350 
Christian Dior SA 5,331 908,126 
Dassault Systemes SA 10,700 857,814 
Essilor International SA 8,110 1,013,998 
Hermes International SCA 2,760 935,072 
L'Oreal SA 7,420 1,252,290 
Orpea 10,100 809,822 
Safran SA 14,690 1,011,661 
Sodexo SA 8,960 877,718 
TOTAL FRANCE  8,645,481 
Germany - 6.0%   
Bayer AG 15,810 1,974,517 
Continental AG 5,000 1,209,550 
CTS Eventim AG 20,661 819,197 
Fresenius Medical Care AG & Co. KGaA 11,200 941,187 
Fresenius SE & Co. KGaA 15,400 1,096,977 
Henkel AG & Co. KGaA 10,998 1,051,988 
ProSiebenSat.1 Media AG 16,860 850,609 
Scout24 Holding GmbH (b) 24,200 857,922 
Stroer Out-of-Home Media AG 13,400 841,331 
Symrise AG 12,800 847,340 
Wirecard AG (a) 15,900 794,762 
TOTAL GERMANY  11,285,380 
Hong Kong - 1.3%   
AIA Group Ltd. 267,000 1,595,347 
Techtronic Industries Co. Ltd. 201,500 815,721 
TOTAL HONG KONG  2,411,068 
India - 3.7%   
Adani Ports & Special Economic Zone (b) 208,171 817,858 
Amara Raja Batteries Ltd. (b) 56,257 729,769 
Asian Paints India Ltd. 62,828 836,341 
GlaxoSmithKline Consumer Healthcare Ltd. (b) 7,940 763,672 
HDFC Bank Ltd. 43,340 874,883 
Housing Development Finance Corp. Ltd. 61,343 1,165,849 
ITC Ltd. 175,593 867,616 
Tata Consultancy Services Ltd. 26,755 982,863 
TOTAL INDIA  7,038,851 
Indonesia - 0.9%   
PT Bank Central Asia Tbk 899,100 861,409 
PT Bank Rakyat Indonesia Tbk 1,088,800 893,579 
TOTAL INDONESIA  1,754,988 
Ireland - 3.0%   
Accenture PLC Class A 7,900 825,550 
Allegion PLC 11,500 758,080 
Kerry Group PLC Class A 10,530 873,252 
Kingspan Group PLC (Ireland) 28,500 752,938 
Medtronic PLC 10,170 782,276 
Paddy Power PLC (Ireland) 6,200 829,429 
Ryanair Holdings PLC sponsored ADR 10,020 866,329 
TOTAL IRELAND  5,687,854 
Isle of Man - 0.4%   
Playtech Ltd. 63,221 775,893 
Israel - 1.6%   
Check Point Software Technologies Ltd. (b) 9,500 773,110 
Frutarom Industries Ltd. 16,300 875,533 
Teva Pharmaceutical Industries Ltd. sponsored ADR 20,700 1,358,748 
TOTAL ISRAEL  3,007,391 
Italy - 0.9%   
Atlantia SpA 34,499 912,789 
Recordati SpA 30,130 786,117 
TOTAL ITALY  1,698,906 
Japan - 7.6%   
Astellas Pharma, Inc. 79,100 1,126,049 
Daito Trust Construction Co. Ltd. 7,900 912,533 
Dentsu, Inc. 15,500 848,039 
Fanuc Corp. 6,500 1,119,884 
Hoya Corp. 23,600 965,065 
Japan Tobacco, Inc. 34,500 1,266,625 
Kansai Paint Co. Ltd. 56,200 851,866 
Keyence Corp. 2,224 1,222,322 
Misumi Group, Inc. 56,500 780,471 
Nippon Paint Holdings Co. Ltd. 34,500 834,970 
OBIC Co. Ltd. 14,600 772,846 
Olympus Corp. 22,600 889,732 
SK Kaken Co. Ltd. 3,000 283,569 
Sundrug Co. Ltd. 12,900 829,428 
Suzuki Motor Corp. 29,700 902,399 
Tsuruha Holdings, Inc. 9,300 805,808 
TOTAL JAPAN  14,411,606 
Korea (South) - 0.4%   
AMOREPACIFIC Group, Inc. 6,346 790,982 
Luxembourg - 0.9%   
Eurofins Scientific SA 2,500 874,426 
Grand City Properties SA 36,957 854,245 
TOTAL LUXEMBOURG  1,728,671 
Mexico - 1.6%   
Grupo Aeroportuario del Pacifico SA de CV Series B 82,600 728,732 
Grupo Aeroportuario del Sureste SA de CV Series B 55,145 780,372 
Grupo Aeroportuario Norte S.A.B. de CV 155,735 755,520 
Megacable Holdings S.A.B. de CV unit 203,496 757,922 
TOTAL MEXICO  3,022,546 
Netherlands - 1.7%   
Altice NV Class A (b) 17,490 251,846 
Heineken Holding NV 14,200 1,095,661 
IMCD Group BV 21,012 777,867 
RELX NV 66,148 1,117,114 
TOTAL NETHERLANDS  3,242,488 
Philippines - 1.8%   
Ayala Corp. 51,110 821,396 
International Container Terminal Services, Inc. 549,560 820,844 
SM Investments Corp. 43,882 803,836 
SM Prime Holdings, Inc. 1,836,400 846,829 
TOTAL PHILIPPINES  3,292,905 
Russia - 0.5%   
Magnit OJSC (b) 5,777 888,550 
South Africa - 2.1%   
Discovery Ltd. 92,400 792,480 
Mr Price Group Ltd. 66,300 853,133 
Naspers Ltd. Class N 10,680 1,459,789 
Sanlam Ltd. 226,100 884,433 
TOTAL SOUTH AFRICA  3,989,835 
Spain - 1.5%   
Aena SA 8,070 924,366 
Amadeus IT Holding SA Class A 23,730 1,049,208 
Grifols SA ADR 25,900 839,160 
TOTAL SPAIN  2,812,734 
Sweden - 1.5%   
ASSA ABLOY AB (B Shares) 47,180 987,605 
Hexagon AB (B Shares) 24,400 902,625 
Svenska Cellulosa AB (SCA) (B Shares) 32,400 938,956 
TOTAL SWEDEN  2,829,186 
Switzerland - 3.4%   
Givaudan SA 520 943,780 
Kaba Holding AG (B Shares) (Reg.) 1,150 781,000 
Novartis AG sponsored ADR 34,240 2,946,009 
Partners Group Holding AG 2,260 812,773 
Sika AG 270 975,725 
TOTAL SWITZERLAND  6,459,287 
Taiwan - 1.0%   
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR 85,700 1,949,675 
Thailand - 0.4%   
Airports of Thailand PCL (For. Reg.) 85,300 815,184 
Turkey - 0.4%   
TAV Havalimanlari Holding A/S 133,000 829,540 
United Arab Emirates - 0.5%   
DP World Ltd. 46,509 944,133 
United Kingdom - 16.6%   
Aon PLC 8,530 786,551 
Associated British Foods PLC 20,300 1,000,136 
Auto Trader Group PLC 131,900 863,345 
Berkeley Group Holdings PLC 15,500 842,712 
British American Tobacco PLC (United Kingdom) 35,200 1,954,798 
Bunzl PLC 29,958 832,493 
Capita Group PLC 51,100 910,006 
Close Brothers Group PLC 38,504 758,916 
Compass Group PLC 61,182 1,060,175 
Dignity PLC 21,666 816,067 
Diploma PLC 74,289 833,423 
easyJet PLC 34,100 874,702 
EMIS Group PLC 46,300 776,747 
Essentra PLC 65,175 795,551 
Halma PLC 62,000 790,613 
Hikma Pharmaceuticals PLC 24,084 816,962 
Howden Joinery Group PLC 107,452 834,006 
Imperial Tobacco Group PLC 24,470 1,293,782 
InterContinental Hotel Group PLC 21,800 849,733 
Intertek Group PLC 20,600 843,334 
ITV PLC 235,754 961,319 
London Stock Exchange Group PLC 22,390 905,721 
Moneysupermarket.com Group PLC 148,916 805,682 
Persimmon PLC 32,000 956,225 
Provident Financial PLC 16,600 823,963 
Prudential PLC 61,633 1,388,560 
Reckitt Benckiser Group PLC 15,630 1,446,187 
Rightmove PLC 13,536 823,134 
St. James's Place Capital PLC 59,305 881,269 
The Restaurant Group PLC 83,073 839,506 
Unilever PLC 51,900 2,226,103 
Whitbread PLC 13,685 887,877 
TOTAL UNITED KINGDOM  31,479,598 
United States of America - 20.7%   
A.O. Smith Corp. 9,913 759,435 
Acuity Brands, Inc. 3,550 829,990 
Alphabet, Inc. Class C 993 753,568 
Altria Group, Inc. 13,700 797,477 
Amphenol Corp. Class A 13,760 718,685 
Apple, Inc. 7,120 749,451 
AutoZone, Inc. (b) 1,138 844,294 
Cerner Corp. (b) 13,220 795,447 
Cognizant Technology Solutions Corp. Class A (b) 12,630 758,053 
Colgate-Palmolive Co. 12,200 812,764 
Constellation Brands, Inc. Class A (sub. vtg.) 5,500 783,420 
CVS Health Corp. 8,100 791,937 
Danaher Corp. 8,100 752,328 
Domino's Pizza, Inc. 7,900 878,875 
Ecolab, Inc. 7,050 806,379 
Estee Lauder Companies, Inc. Class A 9,200 810,152 
Facebook, Inc. Class A (b) 7,700 805,882 
FactSet Research Systems, Inc. 5,000 812,850 
Fiserv, Inc. (b) 7,936 725,827 
FleetCor Technologies, Inc. (b) 5,830 833,282 
Gartner, Inc. Class A (b) 8,780 796,346 
Henry Schein, Inc. (b) 4,930 779,877 
Home Depot, Inc. 6,530 863,593 
International Flavors & Fragrances, Inc. 7,500 897,300 
L Brands, Inc. 7,890 756,020 
MasterCard, Inc. Class A 8,340 811,982 
McGraw Hill Financial, Inc. 8,311 819,298 
Mettler-Toledo International, Inc. (b) 2,590 878,347 
Molson Coors Brewing Co. Class B 8,300 779,536 
Moody's Corp. 8,020 804,727 
MSCI, Inc. Class A 11,700 843,921 
NIKE, Inc. Class B 12,660 791,250 
O'Reilly Automotive, Inc. (b) 3,160 800,807 
Papa John's International, Inc. 14,800 826,876 
PayPal Holdings, Inc. (b) 20,600 745,720 
Philip Morris International, Inc. 8,800 773,608 
PPG Industries, Inc. 7,910 781,666 
Priceline Group, Inc. (b) 702 895,015 
Reynolds American, Inc. 16,900 779,935 
ServiceMaster Global Holdings, Inc. (b) 20,500 804,420 
Sherwin-Williams Co. 3,310 859,276 
Snap-On, Inc. 4,700 805,721 
SS&C Technologies Holdings, Inc. 11,900 812,413 
Starbucks Corp. 11,800 708,354 
The Walt Disney Co. 7,590 797,557 
Thermo Fisher Scientific, Inc. 5,300 751,805 
TJX Companies, Inc. 11,100 787,101 
TransDigm Group, Inc. (b) 3,720 849,834 
Visa, Inc. Class A 10,000 775,500 
TOTAL UNITED STATES OF AMERICA  39,197,901 
TOTAL COMMON STOCKS   
(Cost $168,625,608)  187,518,831 
Nonconvertible Preferred Stocks - 0.4%   
Germany - 0.4%   
Sartorius AG (non-vtg.)   
(Cost $292,210) 3,035 791,790 
Money Market Funds - 1.6%   
Fidelity Securities Lending Cash Central Fund, 0.35% (c)(d)   
(Cost $3,115,478) 3,115,478 3,115,478 
TOTAL INVESTMENT PORTFOLIO - 101.1%   
(Cost $172,033,296)  191,426,099 
NET OTHER ASSETS (LIABILITIES) - (1.1)%  (2,162,796) 
NET ASSETS - 100%  $189,263,303 

Categorizations in the Schedule of Investments are based on country or territory of incorporation.

Legend

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

 (b) Non-income producing

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

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


Affiliated Central Funds

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

Fund Income earned 
Fidelity Cash Central Fund $3,615 
Fidelity Securities Lending Cash Central Fund 18,375 
Total $21,990 

Investment Valuation

The following is a summary of the inputs used, as of December 31, 2015, 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 $36,369,859 $23,984,176 $12,385,683 $-- 
Consumer Staples 29,370,659 14,512,008 14,858,651 -- 
Financials 21,183,025 7,513,846 13,669,179 -- 
Health Care 29,017,855 15,479,656 13,538,199 -- 
Industrials 31,716,804 21,362,161 10,354,643 -- 
Information Technology 29,126,020 20,915,681 8,210,339 -- 
Materials 11,526,399 5,015,705 6,510,694 -- 
Money Market Funds 3,115,478 3,115,478 -- -- 
Total Investments in Securities: $191,426,099 $111,898,711 $79,527,388 $-- 

The following is a summary of transfers between Level 1 and Level 2 for the period ended December 31, 2015. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:

Transfers Total 
Level 1 to Level 2 $6,479,222 
Level 2 to Level 1 $0 

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


Financial Statements

Statement of Assets and Liabilities

  December 31, 2015 
Assets   
Investment in securities, at value (including securities loaned of $2,951,912) — See accompanying schedule:
Unaffiliated issuers (cost $168,917,818) 		$188,310,621  
Fidelity Central Funds (cost $3,115,478) 3,115,478  
Total Investments (cost $172,033,296)  $191,426,099 
Foreign currency held at value (cost $26,436)  26,524 
Receivable for investments sold  3,650,161 
Receivable for fund shares sold  44,183 
Dividends receivable  248,801 
Distributions receivable from Fidelity Central Funds  2,882 
Prepaid expenses  377 
Other receivables  87,087 
Total assets  195,486,114 
Liabilities   
Payable to custodian bank $891,644  
Payable for investments purchased 1,946,143  
Payable for fund shares redeemed 28,901  
Accrued management fee 110,423  
Distribution and service plan fees payable 767  
Other affiliated payables 29,959  
Other payables and accrued expenses 99,496  
Collateral on securities loaned, at value 3,115,478  
Total liabilities  6,222,811 
Net Assets  $189,263,303 
Net Assets consist of:   
Paid in capital  $182,890,682 
Distributions in excess of net investment income  (2,478) 
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions  (12,944,217) 
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies  19,319,316 
Net Assets  $189,263,303 
Initial Class:   
Net Asset Value, offering price and redemption price per share ($20,154,111 ÷ 1,512,816 shares)  $13.32 
Service Class:   
Net Asset Value, offering price and redemption price per share ($222,141 ÷ 16,706 shares)  $13.30 
Service Class 2:   
Net Asset Value, offering price and redemption price per share ($3,629,306 ÷ 274,098 shares)  $13.24 
Investor Class:   
Net Asset Value, offering price and redemption price per share ($165,257,745 ÷ 12,496,571 shares)  $13.22 

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


Statement of Operations

  Year ended December 31, 2015 
Investment Income   
Dividends  $3,062,181 
Income from Fidelity Central Funds  21,990 
Income before foreign taxes withheld  3,084,171 
Less foreign taxes withheld  (195,902) 
Total income  2,888,269 
Expenses   
Management fee $1,225,498  
Transfer agent fees 238,614  
Distribution and service plan fees 11,328  
Accounting and security lending fees 91,108  
Custodian fees and expenses 221,246  
Independent trustees' compensation 729  
Audit 76,580  
Legal 736  
Miscellaneous 1,333  
Total expenses before reductions 1,867,172  
Expense reductions (40,174) 1,826,998 
Net investment income (loss)  1,061,271 
Realized and Unrealized Gain (Loss)   
Net realized gain (loss) on:   
Investment securities:   
Unaffiliated issuers (net of foreign taxes of $42,903) (1,691,338)  
Foreign currency transactions (20,103)  
Total net realized gain (loss)  (1,711,441) 
Change in net unrealized appreciation (depreciation) on:
Investment securities (net of decrease in deferred foreign taxes of $128,559) 		3,476,752  
Assets and liabilities in foreign currencies (47,180)  
Total change in net unrealized appreciation (depreciation)  3,429,572 
Net gain (loss)  1,718,131 
Net increase (decrease) in net assets resulting from operations  $2,779,402 

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


Statement of Changes in Net Assets

 Year ended December 31, 2015 Year ended December 31, 2014 
Increase (Decrease) in Net Assets   
Operations   
Net investment income (loss) $1,061,271 $879,757 
Net realized gain (loss) (1,711,441) 3,624,629 
Change in net unrealized appreciation (depreciation) 3,429,572 (1,334,157) 
Net increase (decrease) in net assets resulting from operations 2,779,402 3,170,229 
Distributions to shareholders from net investment income (1,222,199) (470,310) 
Return of capital (78,400) – 
Total distributions (1,300,599) (470,310) 
Share transactions - net increase (decrease) 52,866,176 22,251,301 
Redemption fees 7,314 17,455 
Total increase (decrease) in net assets 54,352,293 24,968,675 
Net Assets   
Beginning of period 134,911,010 109,942,335 
End of period (including distributions in excess of net investment income of $2,478 and undistributed net investment income of $218,991, respectively) $189,263,303 $134,911,010 

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


Financial Highlights — VIP International Capital Appreciation Portfolio Initial Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $13.01 $12.68 $10.50 $8.42 $9.74 
Income from Investment Operations      
Net investment income (loss)A .09 .10 .10 .10 .08 
Net realized and unrealized gain (loss) .33 .28 2.17 2.08 (1.30) 
Total from investment operations .42 .38 2.27 2.18 (1.22) 
Distributions from net investment income (.10) (.05) (.08) (.10) (.09) 
Distributions from net realized gain – – (.01) – (.01) 
Return of capital (.01) – – – – 
Total distributions (.11) (.05) (.09) (.10) (.10) 
Redemption fees added to paid in capitalA,B – – – – – 
Net asset value, end of period $13.32 $13.01 $12.68 $10.50 $8.42 
Total ReturnC,D 3.22% 3.01% 21.62% 25.91% (12.57)% 
Ratios to Average Net AssetsE,F      
Expenses before reductions .98% 1.10% 1.17% 1.25% 1.30% 
Expenses net of fee waivers, if any .98% 1.10% 1.10% 1.10% 1.10% 
Expenses net of all reductions .96% 1.09% 1.07% 1.05% 1.03% 
Net investment income (loss) .68% .78% .84% 1.07% .88% 
Supplemental Data      
Net assets, end of period (000 omitted) $20,154 $1,464 $2,404 $573 $511 
Portfolio turnover rateG 189% 183% 153% 137% 236% 

 A Calculated based on average shares outstanding during the period.

 B Amount represents less than $.005 per share.

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

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

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

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

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


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


Financial Highlights — VIP International Capital Appreciation Portfolio Service Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $12.99 $12.66 $10.49 $8.41 $9.72 
Income from Investment Operations      
Net investment income (loss)A .08 .09 .08 .09 .07 
Net realized and unrealized gain (loss) .32 .28 2.17 2.08 (1.29) 
Total from investment operations .40 .37 2.25 2.17 (1.22) 
Distributions from net investment income (.09) (.04) (.07) (.09) (.08) 
Distributions from net realized gain – – (.01) – (.01) 
Return of capital (.01) – – – – 
Total distributions (.09)B (.04) (.08) (.09) (.09) 
Redemption fees added to paid in capitalA,C – – – – – 
Net asset value, end of period $13.30 $12.99 $12.66 $10.49 $8.41 
Total ReturnD,E 3.12% 2.93% 21.44% 25.83% (12.60)% 
Ratios to Average Net AssetsF,G      
Expenses before reductions 1.09% 1.21% 1.28% 1.35% 1.42% 
Expenses net of fee waivers, if any 1.09% 1.20% 1.20% 1.20% 1.20% 
Expenses net of all reductions 1.07% 1.19% 1.17% 1.15% 1.14% 
Net investment income (loss) .58% .68% .73% .96% .78% 
Supplemental Data      
Net assets, end of period (000 omitted) $222 $114 $111 $94 $75 
Portfolio turnover rateH 189% 183% 153% 137% 236% 

 A Calculated based on average shares outstanding during the period.

 B Total distributions of $.09 per share is comprised of distributions from net investment income of $.088 and return of capital of $.006 per share.

 C Amount represents less than $.005 per share.

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

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

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

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

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


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


Financial Highlights — VIP International Capital Appreciation Portfolio Service Class 2

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $12.92 $12.61 $10.46 $8.40 $9.72 
Income from Investment Operations      
Net investment income (loss)A .06 .07 .07 .08 .06 
Net realized and unrealized gain (loss) .32 .27 2.16 2.07 (1.30) 
Total from investment operations .38 .34 2.23 2.15 (1.24) 
Distributions from net investment income (.06) (.03) (.07) (.09) (.07) 
Distributions from net realized gain – – (.01) – (.01) 
Return of capital –B – – – – 
Total distributions (.06) (.03) (.08) (.09) (.08) 
Redemption fees added to paid in capitalA,B – – – – – 
Net asset value, end of period $13.24 $12.92 $12.61 $10.46 $8.40 
Total ReturnC,D 2.96% 2.71% 21.33% 25.61% (12.74)% 
Ratios to Average Net AssetsE,F      
Expenses before reductions 1.23% 1.35% 1.46% 1.49% 1.58% 
Expenses net of fee waivers, if any 1.23% 1.35% 1.35% 1.35% 1.35% 
Expenses net of all reductions 1.21% 1.34% 1.32% 1.29% 1.28% 
Net investment income (loss) .43% .54% .59% .82% .63% 
Supplemental Data      
Net assets, end of period (000 omitted) $3,629 $2,360 $2,374 $1,476 $166 
Portfolio turnover rateG 189% 183% 153% 137% 236% 

 A Calculated based on average shares outstanding during the period.

 B Amount represents less than $.005 per share.

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

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

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

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

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


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


Financial Highlights — VIP International Capital Appreciation Portfolio Investor Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $12.92 $12.59 $10.43 $8.37 $9.69 
Income from Investment Operations      
Net investment income (loss)A .08 .09 .09 .09 .07 
Net realized and unrealized gain (loss) .32 .29 2.15 2.07 (1.29) 
Total from investment operations .40 .38 2.24 2.16 (1.22) 
Distributions from net investment income (.09) (.05) (.07) (.10) (.09) 
Distributions from net realized gain – – (.01) – (.01) 
Return of capital (.01) – – – – 
Total distributions (.10) (.05) (.08) (.10) (.10) 
Redemption fees added to paid in capitalA,B – – – – – 
Net asset value, end of period $13.22 $12.92 $12.59 $10.43 $8.37 
Total ReturnC,D 3.08% 2.99% 21.50% 25.81% (12.63)% 
Ratios to Average Net AssetsE,F      
Expenses before reductions 1.07% 1.19% 1.26% 1.34% 1.39% 
Expenses net of fee waivers, if any 1.06% 1.18% 1.18% 1.18% 1.18% 
Expenses net of all reductions 1.04% 1.17% 1.15% 1.13% 1.12% 
Net investment income (loss) .60% .71% .75% .99% .80% 
Supplemental Data      
Net assets, end of period (000 omitted) $165,258 $112,479 $87,029 $40,107 $25,262 
Portfolio turnover rateG 189% 183% 153% 137% 236% 

 A Calculated based on average shares outstanding during the period.

 B Amount represents less than $.005 per share.

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

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

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

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

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


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


Notes to Financial Statements

For the period ended December 31, 2015

1. Organization.

VIP International Capital Appreciation Portfolio (the Fund) is a fund of Variable Insurance Products Fund II (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 (formerly Investor Class R). The Fund offered Initial Class R shares, Service Class R shares and Service Class 2R shares during the period December 22, 2004 through April 30, 2015, and all outstanding shares were converted to Initial Class shares, Service Class shares and Service Class 2 shares, respectively, by April 30, 2015. All classes have equal rights and voting privileges, except for matters affecting a single class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.

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, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.

3. Significant Accounting Policies.

The 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 Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). 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) 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 December 31, 2015, including information on transfers between Levels 1 and 2 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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. As of December 31, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. The Fund is subject to a tax imposed on capital gains by certain countries in which it invests.

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, certain foreign taxes, passive foreign investment companies (PFIC), capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.

For the period ended December 31, 2015, the Fund's distributions exceeded the aggregate amount of taxable income resulting in a return of capital for tax purposes. This was due to reductions in taxable income available for distribution after certain distributions had been made.

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

Gross unrealized appreciation $22,384,637 
Gross unrealized depreciation (4,071,720) 
Net unrealized appreciation (depreciation) on securities $18,312,917 
Tax Cost $173,113,182 

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

Capital loss carryforward $(10,517,822) 
Net unrealized appreciation (depreciation) on securities and other investments $18,236,952 

Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.

Fiscal year of expiration  
2016 $(5,936,849) 
2017 (4,429,182) 
Total with expiration (10,366,031) 
No expiration  
Short-term (151,791) 
Total capital loss carryforward $(10,517,822) 

The Fund intends to elect to defer to its next fiscal year $1,346,509 of capital losses recognized during the period November 1, 2015 to December 31, 2015.

The tax character of distributions paid was as follows:

 December 31, 2015 December 31, 2014 
Ordinary Income $1,222,199 $ 470,310 
Return of capital 78,400 – 
Total $1,300,599 $ 470,310 

Trading (Redemption) Fees. Initial Class R shares, Service Class R shares, Service Class 2R shares and Investor Class shares held by investors less than 60 days may have been subject to a redemption fee equal to 1% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. These redemption fees were eliminated effective April 30, 2015.

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $379,153,830 and $325,490,082, 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 .45% 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 annual management fee rate was .70% 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' and Service Class R's average net assets and .25% of Service Class 2's and Service Class 2R's average net assets.

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

Service Class $191 
Service Class 2 10,991 
Service Class R(a) 39 
Service Class 2R(a) 107 
 $11,328 

 (a) For the period January 1, 2015 through April 30, 2015.


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 (with the exception of Investor Class) pays a fee for transfer agent services, typesetting, printing and mailing of shareholder reports, excluding mailing of proxy statements and out of pocket expenses, equal to an annual rate of .07% (.15% for Investor Class) of class-level average net assets. For the period, transfer agent fees for each class, including out of pocket expenses, were as follows:

Initial Class $9,497 
Service Class 131 
Service Class 2 2,902 
Initial Class R(a) 4,554 
Service Class R(a) 31 
Service Class 2R(a) 33 
Investor Class 221,466 
 $238,614 

 (a) For the period January 1, 2015 through April 30, 2015.


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 $1,687 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 $4,606.

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 $228 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. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers, 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 $18,375. 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 $37,208 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 $63.

In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $729 and a portion of class-level operating expenses as follows:

 Amount 
Investor Class $2,174 

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Years ended December 31, 2015(a) 2014 
From net investment income   
Initial Class $122,694 $5,966 
Service Class 1,312 351 
Service Class 2 14,211 4,856 
Initial Class R 28,245 73,565 
Service Class R 182 351 
Service Class 2R 198 202 
Investor Class 1,055,357 385,019 
Total $1,222,199 $470,310 
From return of capital   
Initial Class $7,870 $– 
Service Class 84 – 
Service Class 2 912 – 
Initial Class R 1,812 – 
Service Class R 12 – 
Service Class 2R 13 – 
Investor Class 67,697 – 
Total $78,400 $– 

 (a) All Initial Class R shares, Service Class R shares and Service Class 2R shares were converted by April 30, 2015.


10. Share Transactions.

Transactions for each class of shares were as follows:

 Shares Shares Dollars Dollars 
Years ended December 31, 2015(a) 2014 2015(a) 2014 
Initial Class     
Shares sold 1,695,089 73,822 $23,335,332 $945,161 
Reinvestment of distributions 9,999 467 130,565 5,966 
Shares redeemed (304,830) (151,274) (4,114,708) (1,947,806) 
Net increase (decrease) 1,400,258 (76,985) $19,351,189 $(996,679) 
Service Class     
Shares sold 8,788 – $120,747 $– 
Reinvestment of distributions 107 28 1,396 351 
Shares redeemed (977) (25) (13,281) (325) 
Net increase (decrease) 7,918 3 $108,862 $26 
Service Class 2     
Shares sold 537,471 228,423 $7,336,995 $2,943,522 
Reinvestment of distributions 1,157 382 15,123 4,856 
Shares redeemed (447,169) (234,462) (5,938,122) (2,946,637) 
Net increase (decrease) 91,459 (5,657) $1,413,996 $1,741 
Initial Class R     
Shares sold 153,466 336,042 $2,092,776 $4,320,757 
Reinvestment of distributions 2,235 5,755 30,057 73,565 
Shares redeemed (1,558,940) (341,258) (21,424,694) (4,356,999) 
Net increase (decrease) (1,403,239) 539 $(19,301,861) $37,323 
Service Class R     
Reinvestment of distributions 14 28 193 351 
Shares redeemed (8,802) (25) (120,941) (325) 
Net increase (decrease) (8,788) 3 $(120,748) $26 
Service Class 2R     
Reinvestment of distributions 16 16 211 202 
Shares redeemed (9,623) (13) (132,014) (173) 
Net increase (decrease) (9,607) 3 $(131,803) $29 
Investor Class     
Shares sold 4,411,916 2,582,554 $59,870,443 $33,136,772 
Reinvestment of distributions 86,263 30,327 1,123,054 385,019 
Shares redeemed (710,621) (813,789) (9,446,956) (10,312,956) 
Net increase (decrease) 3,787,558 1,799,092 $51,546,541 $23,208,835 

 (a) All Initial Class R shares, Service Class R shares and Service Class 2R shares were converted by April 30, 2015.


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 97% of the total outstanding shares of the Fund.

Report of Independent Registered Public Accounting Firm

To the Trustees of Variable Insurance Products Fund II and Shareholders of VIP International Capital Appreciation Portfolio:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of VIP International Capital Appreciation Portfolio (a fund of Variable Insurance Products Fund II) at December 31, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the VIP International Capital Appreciation Portfolio’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Boston, Massachusetts
February 18, 2016

Trustees and Officers

The Trustees, Members of the Advisory Board (if any), and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance.  Each of the Trustees oversees 170 funds. 

The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust.  Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the fund is referred to herein as an Independent Trustee.  Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs.  The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees.  Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years. 

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

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

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

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

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

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

Interested Trustees*:

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

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

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

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

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

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

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

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

Independent Trustees:

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

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

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

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

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

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

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is Chairman of the Board of Directors of Artis-Naples in Naples, Florida (2012-present), a member of the Council on Foreign Relations (1994-present), and a member of the Board of Governors, State University System of Florida (2013-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007).

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

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

Robert W. Selander (1950)

Year of Election or Appointment: 2011

Trustee

Mr. Selander also serves as Trustee of other Fidelity® funds. Mr. Selander serves as a Director of The Western Union Company (global money transfer, 2014-present) and a non-executive Chairman of Health Equity, Inc. (health savings custodian, 2015-present). Previously, Mr. Selander served as a Member of the Advisory Board of other Fidelity® funds (2011), and Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc.

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

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

William S. Stavropoulos (1939)

Year of Election or Appointment: 2001

Trustee

Vice Chairman of the Independent Trustees

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

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

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

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

Advisory Board Members and Officers:

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

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

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

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

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

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

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

Timothy M. Cohen (1969)

Vice President of certain Equity Funds

Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Chief Compliance Officer of FMR Investment Management (U.K.) Limited (investment adviser firm, 2013-present) and is an employee of Fidelity Investments. Previously, Mr. Cohen served as a Director of FMR Investment Management (U.K.) Limited (2013-2015).

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

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

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2008

Deputy Treasurer

Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005).

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

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

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

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

Scott C. Goebel (1968)

Year of Election or Appointment: 2015

Vice President

Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and FMR Investment Management (U.K.) Limited (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

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

John F. Papandrea (1972)

Year of Election or Appointment: 2016

Anti-Money Laundering (AML) Officer

Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).

Kenneth B. Robins (1969)

Year of Election or Appointment: 2008

President and Treasurer

Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.

Stacie M. Smith (1974)

Year of Election or Appointment: 2013

Deputy Treasurer

Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009).

Renee Stagnone (1975)

Year of Election or Appointment: 2013

Deputy Treasurer

Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present).

Linda J. Wondrack (1964)

Year of Election or Appointment: 2014

Chief Compliance Officer

Ms. Wondrack also serves as Chief Compliance Officer of other funds. Ms. Wondrack is Executive Vice President and head of the Ethics Office and Asset Management Compliance for Fidelity Investments (2012-present). Ms. Wondrack also serves as Chief Compliance Officer of Fidelity SelectCo, LLC (investment adviser firm, 2014-present); Chief Compliance Officer of Impresa Management LLC (2013-present); and Chief Compliance Officer of FMR Co., Inc. (investment adviser firm), Fidelity Investments Money Management, Inc. (investment adviser firm), FMR Investment Management (U.K.) Limited (investment adviser firm), Fidelity Management & Research (Hong Kong) (investment adviser firm), Fidelity Management & Research Company (investment adviser firm), FIAM LLC (investment adviser firm), and Strategic Advisers, Inc. (investment adviser firm), Ballyrock Investment Advisors LLC, and Northern Neck Investors LLC (2012-present). Previously, Ms. Wondrack served as Chief Compliance Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016); Senior Vice President and Chief Compliance Officer for Columbia Management Investment Advisers, LLC (2005-2012); Chief Compliance Officer for certain funds within the Columbia Family of Funds (2007-2012); and Senior Vice President of Compliance Risk Management at Bank of America (2005-2010).

Joseph F. Zambello (1957)

Year of Election or Appointment: 2011

Deputy Treasurer

Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009).

Shareholder Expense Example

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2015 to December 31, 2015).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 Annualized Expense Ratio-A Beginning
Account Value
July 1, 2015 		Ending
Account Value
December 31, 2015 		Expenses Paid
During Period-B
July 1, 2015
to December 31, 2015 
Initial Class .98%    
Actual  $1,000.00 $982.20 $4.90 
Hypothetical-C  $1,000.00 $1,020.27 $4.99 
Service Class 1.07%    
Actual  $1,000.00 $981.90 $5.35 
Hypothetical-C  $1,000.00 $1,019.81 $5.45 
Service Class 2 1.22%    
Actual  $1,000.00 $980.90 $6.09 
Hypothetical-C  $1,000.00 $1,019.06 $6.21 
Investor Class 1.05%    
Actual  $1,000.00 $981.90 $5.25 
Hypothetical-C  $1,000.00 $1,019.91 $5.35 

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

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

 C 5% return per year before expenses


Distributions (Unaudited)

A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:

 February 2015 December 2015 
Initial Class 1% 19% 
Service Class 1% 21% 
Service Class 2 1% 34% 
Initial Class R 1% –% 
Service Class R 1% –% 
Service Class 2R 1% –% 
Investor Class 1% 21% 

The percentage of dividends distributed during the fiscal year representing income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:

 Pay Date Income Taxes 
Initial Class 02 /13 /2015 $0.022 $0.0000 
Initial Class 12 /11 /2015 $0.099 $0.0139 
Service Class 02 /13 /2015 $0.022 $0.0000 
Service Class 12 /11 /2015 $0.086 $0.0139 
Service Class 2 02 /13 /2015 $0.022 $0.0000 
Service Class 2 12 /11 /2015 $0.054 $0.0139 
Initial Class R 02 /13 /2015 $0.022 $0.0000 
Service Class R 02 /13 /2015 $0.022 $0.0000 
Service Class 2R 02 /13 /2015 $0.022 $0.0000 
Investor Class 02 /13 /2015 $0.022 $0.0000 
Investor Class 12 /11/2015 $0.088 $0.0139 

Board Approval of Investment Advisory Contracts and Management Fees

VIP International Capital Appreciation Portfolio

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

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

At its July 2015 meeting, the Board unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; and (iv) the extent to which (if any) economies of scale exist and would be realized as the fund grows, and whether any economies of scale are appropriately shared with fund shareholders.

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

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

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

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

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

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

Investment in a Large Fund Family.  The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds and diversified international funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching active fixed-income exchange-traded funds; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and information security and to increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (x) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (xi) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xii) implementing changes to Fidelity's money market product line in response to recent money market regulatory reforms.

Investment Performance.  The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.

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

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

The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative calendar year total return information for the fund and an appropriate benchmark index and peer group for the most recentone-, three-, and five-year periods, as shown below. Returns are shown compared to the 25th percentile (top of box, 75% beaten) and 75th percentile (bottom of box, 25% beaten) of the peer universe. Returns of the benchmark index are "net MA," i.e., adjusted for tax withholding rates applicable to U.S.-based funds organized as Massachusetts business trusts.

VIP International Capital Appreciation Portfolio


The Board noted that, on April 30, 2015 (after the periods shown in the chart above), FMR converted assets in Initial Class R, Service Class R, and Service Class 2 R into the corresponding non-redemption fee class and eliminated the redemption fee and renamed "Investor Class R" to "Investor Class."

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

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

Management Fee.  The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure without taking into account performance adjustments, if any. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.

VIP International Capital Appreciation Portfolio


The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2014.

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

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

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

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

The Board noted that the total expense ratio of each class ranked above its competitive median for 2014. The Board considered that, in general, various factors can affect total expense ratios. The Board noted that the total expense ratio of Service Class 2 was above the competitive median primarily because of higher 12b-1 fees for Service Class 2 as compared to most competitor funds. The Board noted that the fund offers multiple classes, each of which has a different 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expense ratios of the classes vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.

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

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

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

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

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

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

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

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

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

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

Additional Information Requested by the Board.  In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) fund performance trends and Fidelity's long-term strategies for certain funds; (ii) the various share classes employed by Fidelity and the attributes of each class, together with similar information on the distribution and servicing payments made by Fidelity or the funds to third-party participants in the distribution channels; (iii) fund profitability, and fund performance in relation to fund profitability; (iv) the methodology with respect to evaluating competitive fund data and peer group classifications and fee comparisons; (v) annual fund profitability margins, with particular focus on certain funds with negative margins; (vi) the realization of fall-out benefits in certain Fidelity business units; (vii) economies of scale and the way in which they are shared with fund shareholders;(viii) Fidelity's group fee structures, including the group fee schedule of breakpoints;(ix) the impact of cost containment measures on the funds; and (x) the transfer agent fee structure.

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





Fidelity Investments

VIPCAP-ANN-0216
1.811843.111



Fidelity® Variable Insurance Products:

Disciplined Small Cap Portfolio



Annual Report

December 31, 2015



Fidelity Investments


Contents

Performance

Management's Discussion of Fund Performance

Investment Summary

Investments

Financial Statements

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

Trustees and Officers

Shareholder Expense Example

Distributions

Board Approval of Investment Advisory Contracts and Management Fees


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

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.



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

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

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

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.



Performance: The Bottom Line

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

Average Annual Total Returns

For the periods ended December 31, 2015 Past 1 year Past 5 years Past 10 years 
Initial Class (1.99)% 10.88% 6.85% 
Service Class (2.09)% 10.79% 6.75% 
Service Class 2 (2.18)% 10.57% 6.55% 
Investor Class (2.00)% 10.81% 6.76% 

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in VIP Disciplined Small Cap Portfolio - Initial Class on December 31, 2005.

The chart shows how the value of your investment would have changed, and also shows how the Russell 2000® Index performed over the same period.


Period Ending Values
$19,404VIP Disciplined Small Cap Portfolio - Initial Class
$19,314Russell 2000® Index

Management's Discussion of Fund Performance

Market Recap:  U.S. stocks gained modestly in 2015, rebounding from a steep decline in August and September over worries about China’s slowing economic growth. The S&P 500® index rose 1.38% for the period, its lowest calendar-year return since 2008. After the late-summer rout, stocks sharply reversed course in October, lifted by the Federal Reserve’s decision to put off raising near-term interest rates until mid-December. Investors also were encouraged by an interest-rate cut in China and economic stimulus in Europe. Overall, growth stocks fared much better than their value counterparts, as investors sought growth in a subpar economic environment. This helped lift the technology-heavy Nasdaq Composite Index® 6.96% for the year. Sector performance in the broader market was split, with five of 10 sectors in the S&P 500® gaining ground and five retreating. Consumer discretionary (+10%) led the way, benefiting from rising personal income and low inflation. Health care (+7%), consumer staples (+7%) and information technology (+6%) also outpaced the broad market amid strong fundamentals. Conversely, the energy sector (-21%) was by far the worst performer, stung by deflated commodity prices that also hit materials (-8%). The defensive, but rate-sensitive utilities sector (-5%) lost ground on the cusp of Fed tightening, while industrials (-3%) were dragged down with energy prices and a slower-growing China.

Comments from Maximilian Kaufmann, Senior Portfolio Manager of the Geode Capital Management, LLC, investment management team:  For the year, the fund’s share classes modestly declined but nevertheless significantly outpaced our benchmark, the Russell 2000® Index, which returned -4.41%. Relative to the index, the fund benefited from especially strong security selection in the energy sector. Our picks also proved very helpful in industrials, health care and consumer staples. In contrast, positioning in the financials sector modestly detracted. On an individual basis, Skechers USA, a maker and retailer of lifestyle- and performance-oriented footwear, was the top relative contributor. Skechers’ shares gained 68% for the fund between January and October 2015, when we ultimately sold our position, as our investment models found Skechers’ risk/reward trade-off less attractive than that of other opportunities in the marketplace. Other meaningful contributors included Omega Protein, a maker of fish oil supplements and other nutritional products; Thoratec, which develops treatments for heart-failure patients; and Extra Space Storage, a self-storage real estate investment trust not in the benchmark. Thoratec exited the portfolio in October 2015 after the company was acquired. On the negative side, Century Aluminum Company posed the biggest challenge; this aluminum producer saw its shares return -79% for the fund due to continued depressed prices for aluminum. As the period progressed, our models found the stock unattractive, and we decided to sell our position. Freight transporter Arcbest was another subpar pick, shedding more than half its value.

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

Investment Summary (Unaudited)

Top Ten Stocks as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Sovran Self Storage, Inc. 0.8 0.6 
Berry Plastics Group, Inc. 0.8 0.5 
Integrated Device Technology, Inc. 0.7 0.7 
Steris PLC 0.7 0.0 
Aspen Technology, Inc. 0.7 0.7 
PrivateBancorp, Inc. 0.7 0.6 
American Eagle Outfitters, Inc. 0.7 0.7 
SYNNEX Corp. 0.7 0.4 
Deluxe Corp. 0.7 0.7 
Molina Healthcare, Inc. 0.6 0.6 
 7.1  

Top Five Market Sectors as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Financials 23.3 22.3 
Health Care 18.0 17.6 
Information Technology 17.7 18.9 
Consumer Discretionary 12.8 13.0 
Industrials 10.9 11.5 

Asset Allocation (% of fund's net assets)

As of December 31, 2015 * 
   Stocks and Equity Futures 99.8% 
   Short-Term Investments and Net Other Assets (Liabilities) 0.2% 


 * Foreign investments - 3.6%


As of June 30, 2015* 
   Stocks and Equity Futures 99.9% 
   Short-Term Investments and Net Other Assets (Liabilities) 0.1% 


 * Foreign investments - 2.1%


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

Investments December 31, 2015

Showing Percentage of Net Assets

Common Stocks - 97.8%   
 Shares Value 
CONSUMER DISCRETIONARY - 12.8%   
Auto Components - 2.8%   
American Axle & Manufacturing Holdings, Inc. (a) 66,890 $1,266,897 
Cooper Tire & Rubber Co. 36,646 1,387,051 
Cooper-Standard Holding, Inc. (a) 4,262 330,689 
Dana Holding Corp. 101,749 1,404,136 
Horizon Global Corp. (a) 3,891 40,350 
Metaldyne Performance Group, Inc. 10,747 197,100 
Superior Industries International, Inc. 357 6,576 
Tenneco, Inc. (a) 31,576 1,449,654 
Tower International, Inc. 6,442 184,048 
  6,266,501 
Diversified Consumer Services - 0.3%   
Apollo Education Group, Inc. Class A (non-vtg.) (a) 4,305 33,019 
Capella Education Co. 7,100 328,162 
Grand Canyon Education, Inc. (a) 2,470 99,096 
K12, Inc. (a) 26,635 234,388 
  694,665 
Hotels, Restaurants & Leisure - 2.1%   
BJ's Restaurants, Inc. (a) 7,003 304,420 
Bloomin' Brands, Inc. 44,860 757,685 
Cracker Barrel Old Country Store, Inc. 6,440 816,785 
Isle of Capri Casinos, Inc. (a) 82,753 1,152,749 
Jack in the Box, Inc. 6,932 531,754 
Marriott Vacations Worldwide Corp. 16,084 915,984 
Ruth's Hospitality Group, Inc. 18,402 292,960 
  4,772,337 
Household Durables - 1.0%   
Bassett Furniture Industries, Inc. 4,474 112,208 
CSS Industries, Inc. 345 9,791 
Flexsteel Industries, Inc. 18,990 838,978 
Hooker Furniture Corp. 202 5,098 
iRobot Corp. (a)(b) 2,763 97,810 
La-Z-Boy, Inc. 39,394 962,001 
M.D.C. Holdings, Inc. 4,163 106,281 
Zagg, Inc. (a) 15,193 166,211 
  2,298,378 
Internet & Catalog Retail - 0.0%   
Duluth Holdings, Inc. 1,235 18,019 
Leisure Products - 1.2%   
Brunswick Corp. 13,700 691,987 
Nautilus, Inc. (a) 56,026 936,755 
Smith & Wesson Holding Corp. (a) 43,867 964,197 
  2,592,939 
Media - 0.5%   
A.H. Belo Corp. Class A 4,925 24,625 
Gray Television, Inc. (a) 28,803 469,489 
Saga Communications, Inc. Class A 364 13,996 
The McClatchy Co. Class A (a) 21,891 26,488 
The New York Times Co. Class A 17,374 233,159 
Time, Inc. 26,550 416,039 
  1,183,796 
Multiline Retail - 0.2%   
Big Lots, Inc. 9,282 357,728 
Specialty Retail - 3.8%   
American Eagle Outfitters, Inc. (b) 98,075 1,520,163 
Big 5 Sporting Goods Corp. 55,336 552,807 
Caleres, Inc. 28,437 762,680 
Express, Inc. (a) 78,982 1,364,809 
Group 1 Automotive, Inc. 15,707 1,189,020 
Outerwall, Inc. (b) 21,540 787,072 
Rent-A-Center, Inc. 36,258 542,782 
Select Comfort Corp. (a) 47,037 1,007,062 
Shoe Carnival, Inc. 17,909 415,489 
Stein Mart, Inc. 5,293 35,622 
The Cato Corp. Class A (sub. vtg.) 9,864 363,192 
  8,540,698 
Textiles, Apparel & Luxury Goods - 0.9%   
Deckers Outdoor Corp. (a) 9,581 452,223 
Movado Group, Inc. 43,384 1,115,403 
Unifi, Inc. (a) 18,749 527,784 
  2,095,410 
TOTAL CONSUMER DISCRETIONARY  28,820,471 
CONSUMER STAPLES - 5.1%   
Beverages - 0.2%   
National Beverage Corp. (a) 6,755 306,947 
Food & Staples Retailing - 1.0%   
Casey's General Stores, Inc. 6,795 818,458 
Ingles Markets, Inc. Class A 22,098 974,080 
Performance Food Group Co. 1,333 30,846 
SpartanNash Co. 14,399 311,594 
Weis Markets, Inc. 1,466 64,944 
  2,199,922 
Food Products - 2.2%   
Cal-Maine Foods, Inc. (b) 16,866 781,570 
Dean Foods Co. 3,466 59,442 
Omega Protein Corp. (a) 53,752 1,193,294 
Post Holdings, Inc. (a) 20,974 1,294,096 
Sanderson Farms, Inc. (b) 18,014 1,396,445 
Seaboard Corp. (a) 51 147,632 
Seneca Foods Corp. Class A (a) 3,029 87,780 
  4,960,259 
Household Products - 0.3%   
Central Garden & Pet Co. Class A (non-vtg.) (a) 24,908 338,749 
WD-40 Co. 4,169 411,272 
  750,021 
Personal Products - 0.8%   
MediFast, Inc. 510 15,494 
Natural Health Trends Corp. (b) 18,110 607,228 
Nutraceutical International Corp. (a) 1,390 35,890 
USANA Health Sciences, Inc. (a)(b) 9,503 1,214,008 
  1,872,620 
Tobacco - 0.6%   
Universal Corp. 24,251 1,359,996 
TOTAL CONSUMER STAPLES  11,449,765 
ENERGY - 4.2%   
Energy Equipment & Services - 1.1%   
Archrock, Inc.(a) 3,690  27,749 
Atwood Oceanics, Inc. 26,987 276,077 
Dril-Quip, Inc. (a) 18,984 1,124,422 
Gulf Island Fabrication, Inc. 1,428 14,937 
Matrix Service Co. (a) 46,840 962,094 
Natural Gas Services Group, Inc. (a) 458 10,213 
  2,415,492 
Oil, Gas & Consumable Fuels - 3.1%   
Adams Resources & Energy, Inc. 244 9,370 
Alon U.S.A. Energy, Inc. 77,533 1,150,590 
DHT Holdings, Inc. 152,616 1,234,663 
Navios Maritime Acquisition Corp. (b) 10,523 31,674 
Nordic American Tanker Shipping Ltd. (b) 89,068 1,384,117 
Par Petroleum Corp. (a) 6,041 142,205 
Rex American Resources Corp. (a) 21,760 1,176,563 
Ship Finance International Ltd. (NY Shares) (b) 17,821 295,294 
Teekay Tankers Ltd. 20,346 139,980 
Western Refining, Inc. 40,630 1,447,241 
  7,011,697 
TOTAL ENERGY  9,427,189 
FINANCIALS - 23.3%   
Banks - 6.5%   
Arrow Financial Corp. 364 9,890 
Banc of California, Inc. 1,513 22,120 
BancFirst Corp. 4,113 241,104 
Banco Latinoamericano de Comercio Exterior SA Series E 5,752 149,149 
Bank of the Ozarks, Inc. 1,219 60,292 
Banner Corp. 5,337 244,755 
BB&T Corp. 30,569 1,155,814 
Centerstate Banks of Florida, Inc. 6,959 108,908 
Chemical Financial Corp. 15,763 540,198 
Community Trust Bancorp, Inc. 971 33,946 
Enterprise Financial Services Corp. 422 11,964 
Fidelity Southern Corp. 10,016 223,457 
First Bancorp, North Carolina 5,356 100,371 
First Bancorp, Puerto Rico (a) 76,104 247,338 
First Busey Corp. 5,829 120,252 
First Financial Corp., Indiana 744 25,274 
First Interstate Bancsystem, Inc. 16,962 493,085 
First Merchants Corp. 12,986 330,104 
First Midwest Bancorp, Inc., Delaware 14,384 265,097 
FNB Corp., Pennsylvania 6,851 91,392 
Franklin Financial Network, Inc. 296 9,288 
Fulton Financial Corp. 107,907 1,403,870 
German American Bancorp, Inc. 928 30,921 
Great Southern Bancorp, Inc. 5,412 244,947 
Great Western Bancorp, Inc. 23,841 691,866 
Guaranty Bancorp 7,474 123,620 
Hancock Holding Co. 10,657 268,237 
Heritage Commerce Corp. 3,011 36,012 
Hilltop Holdings, Inc. (a) 52,396 1,007,051 
IBERIABANK Corp. 5,576 307,070 
International Bancshares Corp. 7,889 202,747 
MainSource Financial Group, Inc. 1,598 36,562 
Merchants Bancshares, Inc. 7,404 233,152 
National Penn Bancshares, Inc. 385 4,747 
Opus Bank 19,183 709,196 
People's Utah Bancorp 310 5,335 
Preferred Bank, Los Angeles 903 29,817 
PrivateBancorp, Inc. 37,194 1,525,698 
Renasant Corp. 3,337 114,826 
ServisFirst Bancshares, Inc. 4,997 237,507 
Stonegate Bank 743 24,415 
Texas Capital Bancshares, Inc. (a) 933 46,109 
TowneBank 1,729 36,084 
Trico Bancshares 290 7,958 
Umpqua Holdings Corp. 66,880 1,063,392 
United Community Bank, Inc. 1,365 26,604 
Univest Corp. of Pennsylvania 2,702 56,364 
Washington Trust Bancorp, Inc. 3,304 130,574 
WesBanco, Inc. 3,689 110,744 
Wilshire Bancorp, Inc. 10,086 116,493 
Wintrust Financial Corp. 27,353 1,327,168 
  14,642,884 
Capital Markets - 2.0%   
Diamond Hill Investment Group, Inc. 1,157 218,673 
Financial Engines, Inc. (b) 41,248 1,388,820 
INTL FCStone, Inc. (a) 32,735 1,095,313 
Investment Technology Group, Inc. 6,183 105,235 
Janus Capital Group, Inc. 4,757 67,026 
KCG Holdings, Inc. Class A (a) 13,488 166,037 
Manning & Napier, Inc. Class A 5,792 49,174 
Oppenheimer Holdings, Inc. Class A (non-vtg.) 8,315 144,515 
Piper Jaffray Companies (a) 29,278 1,182,831 
Vector Capital Corp. rights (a) 5,673 0 
  4,417,624 
Consumer Finance - 1.0%   
Enova International, Inc. (a) 44,340 293,087 
Nelnet, Inc. Class A 37,595 1,262,064 
Regional Management Corp. (a) 8,930 138,147 
World Acceptance Corp. (a)(b) 12,601 467,497 
  2,160,795 
Diversified Financial Services - 0.2%   
Gain Capital Holdings, Inc. 22,022 178,598 
Marlin Business Services Corp. 13,853 222,479 
  401,077 
Insurance - 4.1%   
AMBAC Financial Group, Inc. (a) 2,291 32,280 
Amerisafe, Inc. 12,724 647,652 
EMC Insurance Group 1,696 42,909 
Employers Holdings, Inc. 13,450 367,185 
Federated National Holding Co. 39,131 1,156,712 
HCI Group, Inc. (b) 22,496 783,986 
Heritage Insurance Holdings, Inc. 55,195 1,204,355 
Horace Mann Educators Corp. 27,835 923,565 
Infinity Property & Casualty Corp. 1,695 139,380 
James River Group Holdings Ltd. 4,958 166,291 
National General Holdings Corp. 1,880 41,097 
Navigators Group, Inc. (a) 3,622 310,731 
Primerica, Inc. 1,481 69,948 
Selective Insurance Group, Inc. 40,790 1,369,728 
Stewart Information Services Corp. 956 35,687 
Symetra Financial Corp. 2,138 67,924 
United Insurance Holdings Corp. 38,199 653,203 
Universal Insurance Holdings, Inc. (b) 52,794 1,223,765 
  9,236,398 
Real Estate Investment Trusts - 7.4%   
American Capital Mortgage Investment Corp. 4,944 69,018 
Anworth Mortgage Asset Corp. 61,289 266,607 
Apollo Commercial Real Estate Finance, Inc. 33,684 580,375 
Apollo Residential Mortgage, Inc. 20,287 242,430 
Ashford Hospitality Trust, Inc. 147,485 930,630 
Capstead Mortgage Corp. 103,249 902,396 
Coresite Realty Corp. 22,482 1,275,179 
Easterly Government Properties, Inc. 1,162 19,963 
Extra Space Storage, Inc. 13,480 1,189,071 
First Industrial Realty Trust, Inc. 14,444 319,646 
Gyrodyne LLC 190 4,813 
iStar Financial, Inc. (a) 9,014 105,734 
LTC Properties, Inc. 1,007 43,442 
MFA Financial, Inc. 166,763 1,100,636 
Monogram Residential Trust, Inc. 18,040 176,070 
New Residential Investment Corp. 105,061 1,277,542 
PS Business Parks, Inc. 8,410 735,286 
RLJ Lodging Trust 63,901 1,382,179 
Ryman Hospitality Properties, Inc. 26,985 1,393,505 
Sovran Self Storage, Inc. 15,806 1,696,140 
Sunstone Hotel Investors, Inc. 89,323 1,115,644 
The GEO Group, Inc. 44,679 1,291,670 
Xenia Hotels & Resorts, Inc. 25,861 396,449 
  16,514,425 
Real Estate Management & Development - 0.2%   
Altisource Portfolio Solutions SA (a) 1,671 46,471 
Marcus & Millichap, Inc. (a) 16,079 468,542 
RE/MAX Holdings, Inc. 1,511 56,360 
  571,373 
Thrifts & Mortgage Finance - 1.9%   
Anchor BanCorp Wisconsin, Inc. (a) 478 20,803 
Brookline Bancorp, Inc., Delaware 3,729 42,884 
Dime Community Bancshares, Inc. 18,402 321,851 
Essent Group Ltd. (a) 18,780 411,094 
EverBank Financial Corp. 11,100 177,378 
Farmer Mac Class C (non-vtg.) 1,161 36,653 
First Defiance Financial Corp. 3,757 141,939 
Flagstar Bancorp, Inc. (a) 9,942 229,760 
Hingham Institution for Savings 280 33,544 
Lendingtree, Inc. (a) 3,800 339,264 
Northwest Bancshares, Inc. 76,726 1,027,361 
Provident Financial Services, Inc. 3,046 61,377 
Walker & Dunlop, Inc. (a) 14,260 410,831 
Waterstone Financial, Inc. 9,216 129,946 
WSFS Financial Corp. 26,757 865,857 
  4,250,542 
TOTAL FINANCIALS  52,195,118 
HEALTH CARE - 18.0%   
Biotechnology - 4.9%   
ACADIA Pharmaceuticals, Inc. (a) 7,234 257,892 
Acceleron Pharma, Inc. (a) 554 27,013 
Achillion Pharmaceuticals, Inc. (a) 4,461 48,134 
Acorda Therapeutics, Inc. (a) 8,651 370,090 
Akebia Therapeutics, Inc. (a) 4,449 57,481 
Alexion Pharmaceuticals, Inc. (a) 1,112 212,114 
AMAG Pharmaceuticals, Inc. (a) 8,585 259,181 
Amicus Therapeutics, Inc. (a) 3,475 33,708 
Anacor Pharmaceuticals, Inc. (a) 4,347 491,081 
Applied Genetic Technologies Corp. (a) 6,300 128,520 
ARIAD Pharmaceuticals, Inc. (a) 4,181 26,131 
Array BioPharma, Inc. (a) 47,328 199,724 
Atara Biotherapeutics, Inc. (a) 6,867 181,357 
Axovant Sciences Ltd. (a) 1,004 18,102 
Biospecifics Technologies Corp. (a) 909 39,060 
Celldex Therapeutics, Inc. (a) 5,923 92,873 
Cepheid, Inc. (a) 12,875 470,324 
Clovis Oncology, Inc. (a)(b) 425 14,875 
Concert Pharmaceuticals, Inc. (a) 7,539 143,015 
Cytokinetics, Inc. (a) 20,641 215,905 
CytomX Therapeutics, Inc. (a) 2,304 48,084 
Dyax Corp. (a) 11,819 444,631 
Dynavax Technologies Corp. (a) 197 4,760 
Eagle Pharmaceuticals, Inc. (a)(b) 2,897 256,877 
Edge Therapeutics, Inc. (a) 1,465 18,313 
Emergent BioSolutions, Inc. (a) 7,283 291,393 
Enanta Pharmaceuticals, Inc. (a)(b) 5,507 181,841 
Exact Sciences Corp. (a) 1,080 9,968 
Exelixis, Inc. (a)(b) 9,754 55,013 
FibroGen, Inc. (a) 10,147 309,179 
Five Prime Therapeutics, Inc. (a) 6,020 249,830 
Genomic Health, Inc. (a) 1,492 52,518 
Halozyme Therapeutics, Inc. (a) 7,333 127,081 
Heron Therapeutics, Inc. (a) 1,387 37,033 
ImmunoGen, Inc. (a) 3,094 41,986 
Insmed, Inc. (a) 2,108 38,260 
Ironwood Pharmaceuticals, Inc. Class A (a) 7,126 82,590 
Kite Pharma, Inc. (a)(b) 1,992 122,747 
Lexicon Pharmaceuticals, Inc. (a) 2,068 27,525 
Ligand Pharmaceuticals, Inc. Class B (a) 3,489 378,277 
Macrogenics, Inc. (a) 450 13,937 
Merrimack Pharmaceuticals, Inc. (a)(b) 1,465 11,574 
MiMedx Group, Inc. (a)(b) 29,160 273,229 
Mirati Therapeutics, Inc. (a) 2,670 84,372 
Momenta Pharmaceuticals, Inc. (a) 449 6,663 
Myriad Genetics, Inc. (a)(b) 11,647 502,685 
Neurocrine Biosciences, Inc. (a) 9,164 518,407 
NewLink Genetics Corp. (a) 6,108 222,270 
Novavax, Inc. (a) 22,066 185,134 
Ophthotech Corp. (a) 4,860 381,656 
PDL BioPharma, Inc. 52,404 185,510 
Pfenex, Inc. (a) 6,630 82,079 
Portola Pharmaceuticals, Inc. (a) 7,525 387,161 
Progenics Pharmaceuticals, Inc. (a) 21,436 131,403 
Prothena Corp. PLC (a) 2,509 170,888 
PTC Therapeutics, Inc. (a) 1,070 34,668 
Radius Health, Inc. (a) 187 11,508 
Repligen Corp. (a) 8,925 252,488 
Retrophin, Inc. (a) 10,506 202,661 
Rigel Pharmaceuticals, Inc. (a) 19,737 59,803 
Sage Therapeutics, Inc. (a) 1,010 58,883 
Sarepta Therapeutics, Inc. (a) 2,920 112,654 
TESARO, Inc. (a) 910 47,611 
Tobira Therapeutics, Inc. (a) 3,439 34,562 
Trevena, Inc. (a) 15,107 158,624 
Ultragenyx Pharmaceutical, Inc. (a) 4,051 454,441 
Vanda Pharmaceuticals, Inc. (a)(b) 17,499 162,916 
Voyager Therapeutics, Inc. (a) 1,797 39,354 
ZIOPHARM Oncology, Inc. (a)(b) 28,063 233,204 
  11,084,831 
Health Care Equipment & Supplies - 4.8%   
Abiomed, Inc. (a) 5,478 494,554 
Angiodynamics, Inc. (a) 393 4,771 
Atrion Corp. 46 17,535 
Cantel Medical Corp. 21,870 1,359,002 
Cryolife, Inc. 3,305 35,628 
Exactech, Inc. (a) 6,264 113,692 
Globus Medical, Inc. (a) 1,112 30,936 
Greatbatch, Inc. (a) 23,673 1,242,833 
ICU Medical, Inc. (a) 1,613 181,914 
Inogen, Inc. (a) 11,467 459,712 
LivaNova PLC (a)(b) 24,038 1,427,136 
Masimo Corp. (a) 33,410 1,386,849 
Meridian Bioscience, Inc. 14,103 289,394 
Merit Medical Systems, Inc. (a) 35,798 665,485 
Natus Medical, Inc. (a) 19,113 918,380 
NuVasive, Inc. (a) 6,056 327,690 
Steris PLC 20,976 1,580,332 
SurModics, Inc. (a) 14,283 289,516 
Symmetry Surgical, Inc. (a) 3,786 34,831 
  10,860,190 
Health Care Providers & Services - 5.7%   
Air Methods Corp. (a) 1,100 46,123 
Alliance Healthcare Services, Inc. (a) 24,462 224,561 
AmSurg Corp. (a) 641 48,716 
Centene Corp. (a) 18,288 1,203,533 
Chemed Corp. 9,580 1,435,084 
Corvel Corp. (a) 8,024 352,414 
HealthSouth Corp. 33,044 1,150,262 
Magellan Health Services, Inc. (a) 22,521 1,388,645 
Molina Healthcare, Inc. (a)(b) 24,226 1,456,709 
National Healthcare Corp. 5,036 310,721 
Owens & Minor, Inc. 14,052 505,591 
PharMerica Corp. (a) 16,482 576,870 
Select Medical Holdings Corp. 59,414 707,621 
Surgical Care Affiliates, Inc. (a) 23,285 926,976 
Team Health Holdings, Inc. (a) 12,596 552,838 
The Ensign Group, Inc. 246 5,567 
Triple-S Management Corp. (a) 20,225 483,580 
Wellcare Health Plans, Inc. (a) 17,191 1,344,508 
  12,720,319 
Health Care Technology - 1.0%   
HMS Holdings Corp. (a) 19,257 237,631 
MedAssets, Inc. (a) 70 2,166 
Omnicell, Inc. (a) 25,245 784,615 
Quality Systems, Inc. 77,602 1,250,944 
  2,275,356 
Life Sciences Tools & Services - 0.7%   
Affymetrix, Inc. (a) 2,525 25,477 
Cambrex Corp. (a) 6,381 300,481 
INC Research Holdings, Inc. Class A (a) 4,597 223,000 
Luminex Corp. (a) 10,697 228,809 
PAREXEL International Corp. (a) 8,830 601,500 
PRA Health Sciences, Inc. (a) 2,011 91,038 
  1,470,305 
Pharmaceuticals - 0.9%   
Catalent, Inc. (a) 6,518 163,146 
Cempra, Inc. (a) 27 841 
DepoMed, Inc. (a) 1,889 34,248 
Impax Laboratories, Inc. (a) 6,795 290,554 
Intra-Cellular Therapies, Inc. (a) 169 9,091 
Lannett Co., Inc. (a)(b) 6,198 248,664 
Nektar Therapeutics (a) 10,705 180,379 
Pacira Pharmaceuticals, Inc. (a)(b) 3,345 256,863 
Prestige Brands Holdings, Inc. (a) 8,966 461,570 
Relypsa, Inc. (a)(b) 207 5,866 
Sucampo Pharmaceuticals, Inc. Class A (a) 10,126 175,079 
The Medicines Company (a) 5,610 209,477 
TherapeuticsMD, Inc. (a) 4,146 42,994 
Theravance, Inc. 223 2,350 
  2,081,122 
TOTAL HEALTH CARE  40,492,123 
INDUSTRIALS - 10.9%   
Aerospace & Defense - 2.1%   
Astronics Corp. (a) 29,148 1,186,615 
Astronics Corp. Class B 3,493 141,990 
Curtiss-Wright Corp. 20,381 1,396,099 
Esterline Technologies Corp. (a) 433 35,073 
Moog, Inc. Class A (a) 22,771 1,379,923 
Teledyne Technologies, Inc. (a) 7,797 691,594 
  4,831,294 
Air Freight & Logistics - 0.5%   
Atlas Air Worldwide Holdings, Inc. (a) 25,304 1,046,067 
Airlines - 1.2%   
Hawaiian Holdings, Inc. (a) 37,633 1,329,574 
JetBlue Airways Corp. (a) 47,908 1,085,116 
SkyWest, Inc. 12,562 238,929 
  2,653,619 
Building Products - 0.4%   
American Woodmark Corp. (a) 8,004 640,160 
Universal Forest Products, Inc. 3,748 256,251 
  896,411 
Commercial Services & Supplies - 2.0%   
ACCO Brands Corp. (a) 20,957 149,423 
ARC Document Solutions, Inc. (a) 10,669 47,157 
Deluxe Corp. 26,768 1,459,927 
Ennis, Inc. 7,765 149,476 
G&K Services, Inc. Class A 3,115 195,934 
Herman Miller, Inc. 18,154 521,020 
Kimball International, Inc. Class B 58,254 569,142 
Steelcase, Inc. Class A 12,045 179,471 
UniFirst Corp. 9,871 1,028,558 
West Corp. 5,411 116,715 
  4,416,823 
Construction & Engineering - 0.5%   
Argan, Inc. 32,720 1,060,128 
EMCOR Group, Inc. 861 41,362 
  1,101,490 
Electrical Equipment - 0.0%   
Allied Motion Technologies, Inc. 1,905 49,873 
EnerSys 1,173 65,606 
  115,479 
Machinery - 1.4%   
Alamo Group, Inc. 4,205 219,081 
Federal Signal Corp. 14,691 232,852 
FreightCar America, Inc. 4,680 90,932 
Global Brass & Copper Holdings, Inc. 8,569 182,520 
Greenbrier Companies, Inc. 1,144 37,317 
Hurco Companies, Inc. 6,118 162,494 
Hyster-Yale Materials Handling Class A 10,566 554,187 
Kadant, Inc. 9,771 396,800 
Wabash National Corp. (a)(b) 110,739 1,310,042 
  3,186,225 
Marine - 0.6%   
Matson, Inc. 30,262 1,290,069 
Professional Services - 1.9%   
CRA International, Inc. (a) 1,008 18,799 
Heidrick & Struggles International, Inc. 486 13,229 
Insperity, Inc. 27,749 1,336,114 
Korn/Ferry International 39,680 1,316,582 
Resources Connection, Inc. 40,452 660,986 
RPX Corp. (a) 75,572 831,292 
  4,177,002 
Road & Rail - 0.3%   
ArcBest Corp. 31,021 663,539 
TOTAL INDUSTRIALS  24,378,018 
INFORMATION TECHNOLOGY - 17.7%   
Communications Equipment - 1.6%   
Bel Fuse, Inc. Class B (non-vtg.) 1,553 26,851 
Black Box Corp. 14,921 142,197 
Communications Systems, Inc. 3,028 23,528 
Comtech Telecommunications Corp. 8,778 176,350 
Digi International, Inc. (a) 6,944 79,023 
InterDigital, Inc. 13,538 663,904 
NETGEAR, Inc. (a) 16,897 708,153 
Plantronics, Inc. 8,021 380,356 
Polycom, Inc. (a) 105,927 1,333,621 
ShoreTel, Inc. (a) 8,891 78,685 
  3,612,668 
Electronic Equipment & Components - 4.9%   
Anixter International, Inc. (a) 2,663 160,819 
Benchmark Electronics, Inc. (a) 62,369 1,289,167 
Coherent, Inc. (a) 12,186 793,430 
CTS Corp. 381 6,721 
ePlus, Inc. (a) 4,412 411,463 
Insight Enterprises, Inc. (a) 3,049 76,591 
KEMET Corp. (a) 3,952 9,366 
Kimball Electronics, Inc. (a) 46,478 510,793 
Mercury Systems, Inc. (a) 4,582 84,126 
Methode Electronics, Inc. Class A 38,994 1,241,179 
Multi-Fineline Electronix, Inc. (a) 20,570 425,388 
Newport Corp. (a) 19,301 306,307 
PC Connection, Inc. 3,132 70,908 
Plexus Corp. (a) 7,726 269,792 
Rofin-Sinar Technologies, Inc. (a) 4,458 119,385 
Sanmina Corp. (a) 63,814 1,313,292 
ScanSource, Inc. (a) 27,606 889,465 
SYNNEX Corp. 16,328 1,468,377 
Tech Data Corp. (a) 21,613 1,434,671 
  10,881,240 
Internet Software & Services - 0.7%   
DHI Group, Inc. (a) 3,893 35,699 
EarthLink Holdings Corp. 19,626 145,821 
Global Sources Ltd. (a) 23,186 180,851 
RetailMeNot, Inc. (a) 72,889 723,059 
United Online, Inc. (a) 41,040 483,862 
  1,569,292 
IT Services - 3.9%   
CACI International, Inc. Class A (a) 782 72,554 
Cardtronics, Inc. (a) 17,731 596,648 
Computer Task Group, Inc. 6,796 44,990 
Convergys Corp. 21,306 530,306 
CSG Systems International, Inc. 37,814 1,360,548 
ExlService Holdings, Inc. (a) 6,194 278,296 
Hackett Group, Inc. 3,377 54,268 
Heartland Payment Systems, Inc. 2,187 207,371 
Higher One Holdings, Inc. (a) 26,651 86,349 
Jack Henry & Associates, Inc. 14,414 1,125,157 
Maximus, Inc. 24,429 1,374,131 
NCI, Inc. Class A 7,284 99,427 
Neustar, Inc. Class A (a)(b) 54,885 1,315,593 
Science Applications International Corp. 3,243 148,465 
Sykes Enterprises, Inc. (a) 26,691 821,549 
Syntel, Inc. (a) 13,582 614,586 
  8,730,238 
Semiconductors & Semiconductor Equipment - 3.9%   
Cabot Microelectronics Corp. (a) 28,304 1,239,149 
Cirrus Logic, Inc. (a)(b) 44,550 1,315,562 
Fairchild Semiconductor International, Inc. (a) 3,160 65,444 
Integrated Device Technology, Inc. (a) 62,470 1,646,085 
IXYS Corp. 24,782 312,997 
Microsemi Corp. (a) 21,270 693,189 
MKS Instruments, Inc. 25,201 907,236 
NeoPhotonics Corp. (a) 39,326 427,080 
PDF Solutions, Inc. (a) 554 6,005 
Photronics, Inc. (a) 49,181 612,303 
PMC-Sierra, Inc. (a) 2,921 33,942 
Rambus, Inc. (a) 1,962 22,740 
Rudolph Technologies, Inc. (a) 2,589 36,816 
Sigma Designs, Inc. (a) 4,641 29,331 
Synaptics, Inc. (a) 1,926 154,735 
Tessera Technologies, Inc. 42,424 1,273,144 
  8,775,758 
Software - 1.8%   
Aspen Technology, Inc. (a) 40,782 1,539,928 
AVG Technologies NV (a) 6,748 135,297 
Fleetmatics Group PLC (a)(b) 1,390 70,598 
MicroStrategy, Inc. Class A (a) 3,826 685,964 
Monotype Imaging Holdings, Inc. 12,029 284,366 
Pegasystems, Inc. 10,701 294,278 
Progress Software Corp. (a) 26,898 645,552 
QAD, Inc. Class B 1,676 30,905 
Qualys, Inc. (a) 10,000 330,900 
Zix Corp. (a) 3,871 19,665 
  4,037,453 
Technology Hardware, Storage & Peripherals - 0.9%   
QLogic Corp. (a) 103,906 1,267,653 
Super Micro Computer, Inc. (a)(b) 32,557 797,972 
  2,065,625 
TOTAL INFORMATION TECHNOLOGY  39,672,274 
MATERIALS - 2.7%   
Chemicals - 0.9%   
Chemtura Corp. (a) 8,966 244,503 
FutureFuel Corp. 59,266 800,091 
Innophos Holdings, Inc. 3,549 102,850 
Innospec, Inc. 2,619 142,238 
Kraton Performance Polymers, Inc. (a) 6,622 109,991 
Minerals Technologies, Inc. 13,749 630,529 
Stepan Co. 583 28,969 
  2,059,171 
Construction Materials - 0.0%   
United States Lime & Minerals, Inc. 907 49,849 
Containers & Packaging - 1.1%   
AEP Industries, Inc. (a) 7,978 615,503 
Berry Plastics Group, Inc. (a) 46,676 1,688,738 
  2,304,241 
Metals & Mining - 0.1%   
Commercial Metals Co. 15,688 214,769 
SunCoke Energy, Inc. 6,866 23,825 
Worthington Industries, Inc. 783 23,600 
  262,194 
Paper & Forest Products - 0.6%   
P.H. Glatfelter Co. 2,225 41,029 
Schweitzer-Mauduit International, Inc. 32,457 1,362,869 
  1,403,898 
TOTAL MATERIALS  6,079,353 
TELECOMMUNICATION SERVICES - 1.3%   
Diversified Telecommunication Services - 1.2%   
Atlantic Tele-Network, Inc. 8,792 687,798 
IDT Corp. Class B 31,656 369,109 
Inteliquent, Inc. 64,127 1,139,537 
Vonage Holdings Corp. (a) 84,282 483,779 
  2,680,223 
Wireless Telecommunication Services - 0.1%   
Shenandoah Telecommunications Co. 3,358 144,562 
Spok Holdings, Inc. 3,934 72,071 
  216,633 
TOTAL TELECOMMUNICATION SERVICES  2,896,856 
UTILITIES - 1.8%   
Electric Utilities - 0.4%   
Allete, Inc. 5,452 277,125 
Cleco Corp. 2,968 154,959 
Empire District Electric Co. 528 14,821 
IDACORP, Inc. 5,655 384,540 
Portland General Electric Co. 2,357 85,724 
  917,169 
Gas Utilities - 0.6%   
Laclede Group, Inc. 478 28,398 
New Jersey Resources Corp. 11,168 368,097 
ONE Gas, Inc. 13,818 693,249 
Piedmont Natural Gas Co., Inc. 6,116 348,734 
  1,438,478 
Multi-Utilities - 0.2%   
Avangrid, Inc. (a) 9,760 374,784 
Water Utilities - 0.6%   
American States Water Co. 32,477 1,362,410 
Artesian Resources Corp. Class A 265 7,341 
Middlesex Water Co. 1,931 51,249 
  1,421,000 
TOTAL UTILITIES  4,151,431 
TOTAL COMMON STOCKS   
(Cost $206,594,348)  219,562,598 
 Principal Amount Value 
U.S. Treasury Obligations - 0.5%   
U.S. Treasury Bills, yield at date of purchase 0.37% 5/26/16 (c)   
(Cost $998,510) 1,000,000 998,456 
 Shares Value 
Money Market Funds - 10.8%   
Fidelity Cash Central Fund, 0.33% (d) 4,033,560 $4,033,560 
Fidelity Securities Lending Cash Central Fund, 0.35% (d)(e) 20,254,836 20,254,836 
TOTAL MONEY MARKET FUNDS   
(Cost $24,288,396)  24,288,396 
TOTAL INVESTMENT PORTFOLIO - 109.1%   
(Cost $231,881,254)  244,849,450 
NET OTHER ASSETS (LIABILITIES) - (9.1)%  (20,443,670) 
NET ASSETS - 100%  $224,405,780 

Futures Contracts    
 Expiration Date Underlying Face Amount at Value Unrealized Appreciation/(Depreciation) 
Purchased    
Equity Index Contracts    
40 ICE Russell 2000 Index Contracts (United States) March 2016 4,526,000 $67,951 

The face value of futures purchased as a percentage of Net Assets is 2%

Legend

 (a) Non-income producing

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

 (c) 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 $236,634.

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

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


Affiliated Central Funds

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

Fund Income earned 
Fidelity Cash Central Fund $10,196 
Fidelity Securities Lending Cash Central Fund 232,647 
Total $242,843 

Investment Valuation

The following is a summary of the inputs used, as of December 31, 2015, 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 $28,820,471 $28,820,471 $-- $-- 
Consumer Staples 11,449,765 11,449,765 -- -- 
Energy 9,427,189 9,427,189 -- -- 
Financials 52,195,118 52,195,118 -- -- 
Health Care 40,492,123 40,492,123 -- -- 
Industrials 24,378,018 24,378,018 -- -- 
Information Technology 39,672,274 39,672,274 -- -- 
Materials 6,079,353 6,079,353 -- -- 
Telecommunication Services 2,896,856 2,896,856 -- -- 
Utilities 4,151,431 4,151,431 -- -- 
U.S. Government and Government Agency Obligations 998,456 -- 998,456 -- 
Money Market Funds 24,288,396 24,288,396 -- -- 
Total Investments in Securities: $244,849,450 $243,850,994 $998,456 $-- 
Derivative Instruments:     
Assets     
Futures Contracts $67,951 $67,951 $-- $-- 
Total Assets $67,951 $67,951 $-- $-- 
Total Derivative Instruments: $67,951 $67,951 $-- $-- 

Value of Derivative Instruments

The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of December 31, 2015. 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) $67,951 $0 
Total Value of Derivatives $67,951 $0 

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


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


Financial Statements

Statement of Assets and Liabilities

  December 31, 2015 
Assets   
Investment in securities, at value (including securities loaned of $19,339,445) — See accompanying schedule:
Unaffiliated issuers (cost $207,592,858) 		$220,561,054  
Fidelity Central Funds (cost $24,288,396) 24,288,396  
Total Investments (cost $231,881,254)  $244,849,450 
Receivable for investments sold  2,028,904 
Receivable for fund shares sold  150,153 
Dividends receivable  450,991 
Distributions receivable from Fidelity Central Funds  43,736 
Prepaid expenses  491 
Total assets  247,523,725 
Liabilities   
Payable to custodian bank $325,920  
Payable for investments purchased 2,273,727  
Payable for fund shares redeemed 3,424  
Accrued management fee 132,625  
Distribution and service plan fees payable 693  
Payable for daily variation margin for derivative instruments 46,000  
Other affiliated payables 33,155  
Other payables and accrued expenses 47,565  
Collateral on securities loaned, at value 20,254,836  
Total liabilities  23,117,945 
Net Assets  $224,405,780 
Net Assets consist of:   
Paid in capital  $196,991,822 
Undistributed net investment income  59,596 
Accumulated undistributed net realized gain (loss) on investments  14,318,215 
Net unrealized appreciation (depreciation) on investments  13,036,147 
Net Assets  $224,405,780 
Initial Class:   
Net Asset Value, offering price and redemption price per share ($30,227,218 ÷ 2,081,783 shares)  $14.52 
Service Class:   
Net Asset Value, offering price and redemption price per share ($311,427 ÷ 21,388 shares)  $14.56 
Service Class 2:   
Net Asset Value, offering price and redemption price per share ($3,198,149 ÷ 219,416 shares)  $14.58 
Investor Class:   
Net Asset Value, offering price and redemption price per share ($190,668,986 ÷ 13,172,103 shares)  $14.48 

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


Statement of Operations

  Year ended December 31, 2015 
Investment Income   
Dividends  $3,262,844 
Interest  375 
Income from Fidelity Central Funds (including $232,647 from security lending)  242,843 
Total income  3,506,062 
Expenses   
Management fee $1,602,372  
Transfer agent fees 309,825  
Distribution and service plan fees 8,383  
Accounting and security lending fees 90,467  
Custodian fees and expenses 35,894  
Independent trustees' compensation 971  
Audit 52,879  
Legal 1,695  
Miscellaneous 1,450  
Total expenses before reductions 2,103,936  
Expense reductions (4,706) 2,099,230 
Net investment income (loss)  1,406,832 
Realized and Unrealized Gain (Loss)   
Net realized gain (loss) on:   
Investment securities:   
Unaffiliated issuers 15,722,493  
Futures contracts (25,780)  
Total net realized gain (loss)  15,696,713 
Change in net unrealized appreciation (depreciation) on:
Investment securities 		(23,280,016)  
Futures contracts (113,637)  
Total change in net unrealized appreciation (depreciation)  (23,393,653) 
Net gain (loss)  (7,696,940) 
Net increase (decrease) in net assets resulting from operations  $(6,290,108) 

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


Statement of Changes in Net Assets

 Year ended December 31, 2015 Year ended December 31, 2014 
Increase (Decrease) in Net Assets   
Operations   
Net investment income (loss) $1,406,832 $761,959 
Net realized gain (loss) 15,696,713 11,535,251 
Change in net unrealized appreciation (depreciation) (23,393,653) (3,059,641) 
Net increase (decrease) in net assets resulting from operations (6,290,108) 9,237,569 
Distributions to shareholders from net investment income (1,246,217) (734,026) 
Distributions to shareholders from net realized gain (457,407) (15,669,756) 
Total distributions (1,703,624) (16,403,782) 
Share transactions - net increase (decrease) 21,754,368 (17,288,259) 
Total increase (decrease) in net assets 13,760,636 (24,454,472) 
Net Assets   
Beginning of period 210,645,144 235,099,616 
End of period (including undistributed net investment income of $59,596 and $0, respectively) $224,405,780 $210,645,144 

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


Financial Highlights — VIP Disciplined Small Cap Portfolio Initial Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $14.94 $15.40 $12.03 $10.94 $11.15 
Income from Investment Operations      
Net investment income (loss)A .10 .06 .09 .22 .05 
Net realized and unrealized gain (loss) (.40) .69 4.44 1.83 (.20) 
Total from investment operations (.30) .75 4.53 2.05 (.15) 
Distributions from net investment income (.09) (.07) (.07) (.25) (.06) 
Distributions from net realized gain (.03) (1.14) (1.09) (.71) – 
Total distributions (.12) (1.21) (1.16) (.96) (.06) 
Net asset value, end of period $14.52 $14.94 $15.40 $12.03 $10.94 
Total ReturnB,C (1.99)% 5.28% 38.35% 19.00% (1.36)% 
Ratios to Average Net AssetsD,E      
Expenses before reductions .85% .85% .86% .91% .91% 
Expenses net of fee waivers, if any .84% .85% .86% .91% .91% 
Expenses net of all reductions .84% .85% .86% .91% .91% 
Net investment income (loss) .68% .41% .66% 1.80% .47% 
Supplemental Data      
Net assets, end of period (000 omitted) $30,227 $33,658 $45,699 $20,183 $19,809 
Portfolio turnover rateF 96% 100% 108% 99% 90% 

 A Calculated based on average shares outstanding during the period.

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

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

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

 E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

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


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


Financial Highlights — VIP Disciplined Small Cap Portfolio Service Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $14.98 $15.44 $12.06 $10.96 $11.16 
Income from Investment Operations      
Net investment income (loss)A .09 .05 .08 .21 .04 
Net realized and unrealized gain (loss) (.40) .68 4.44 1.84 (.20) 
Total from investment operations (.31) .73 4.52 2.05 (.16) 
Distributions from net investment income (.08) (.05) (.05) (.24) (.04) 
Distributions from net realized gain (.03) (1.14) (1.09) (.71) – 
Total distributions (.11) (1.19) (1.14) (.95) (.04) 
Net asset value, end of period $14.56 $14.98 $15.44 $12.06 $10.96 
Total ReturnB,C (2.09)% 5.19% 38.19% 18.97% (1.41)% 
Ratios to Average Net AssetsD,E      
Expenses before reductions .95% .95% .95% .99% 1.01% 
Expenses net of fee waivers, if any .94% .95% .95% .99% 1.01% 
Expenses net of all reductions .94% .95% .95% .99% 1.01% 
Net investment income (loss) .58% .32% .57% 1.72% .38% 
Supplemental Data      
Net assets, end of period (000 omitted) $311 $320 $329 $279 $235 
Portfolio turnover rateF 96% 100% 108% 99% 90% 

 A Calculated based on average shares outstanding during the period.

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

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

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

 E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

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


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


Financial Highlights — VIP Disciplined Small Cap Portfolio Service Class 2

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $14.99 $15.45 $12.07 $10.96 $11.15 
Income from Investment Operations      
Net investment income (loss)A .07 .02 .05 .18 .02 
Net realized and unrealized gain (loss) (.40) .68 4.45 1.83 (.20) 
Total from investment operations (.33) .70 4.50 2.01 (.18) 
Distributions from net investment income (.05) (.02) (.03) (.19) (.01) 
Distributions from net realized gain (.03) (1.14) (1.09) (.71) – 
Total distributions (.08) (1.16) (1.12) (.90) (.01) 
Net asset value, end of period $14.58 $14.99 $15.45 $12.07 $10.96 
Total ReturnB,C (2.18)% 4.93% 37.96% 18.58% (1.58)% 
Ratios to Average Net AssetsD,E      
Expenses before reductions 1.10% 1.14% 1.15% 1.23% 1.26% 
Expenses net of fee waivers, if any 1.10% 1.14% 1.15% 1.23% 1.25% 
Expenses net of all reductions 1.10% 1.14% 1.15% 1.23% 1.25% 
Net investment income (loss) .43% .12% .37% 1.48% .14% 
Supplemental Data      
Net assets, end of period (000 omitted) $3,198 $3,097 $4,115 $1,624 $1,656 
Portfolio turnover rateF 96% 100% 108% 99% 90% 

 A Calculated based on average shares outstanding during the period.

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

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

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

 E Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

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


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


Financial Highlights — VIP Disciplined Small Cap Portfolio Investor Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $14.89 $15.36 $12.01 $10.92 $11.12 
Income from Investment Operations      
Net investment income (loss)A .09 .05 .08 .21 .04 
Net realized and unrealized gain (loss) (.39) .68 4.42 1.83 (.19) 
Total from investment operations (.30) .73 4.50 2.04 (.15) 
Distributions from net investment income (.08) (.05) (.06) (.24) (.05) 
Distributions from net realized gain (.03) (1.14) (1.09) (.71) – 
Total distributions (.11) (1.20)B (1.15) (.95) (.05) 
Net asset value, end of period $14.48 $14.89 $15.36 $12.01 $10.92 
Total ReturnC,D (2.00)% 5.15% 38.18% 18.96% (1.35)% 
Ratios to Average Net AssetsE,F      
Expenses before reductions .93% .93% .94% .98% .99% 
Expenses net of fee waivers, if any .92% .93% .93% .98% .98% 
Expenses net of all reductions .92% .93% .93% .98% .98% 
Net investment income (loss) .60% .34% .58% 1.73% .40% 
Supplemental Data      
Net assets, end of period (000 omitted) $190,669 $173,570 $184,956 $65,042 $54,198 
Portfolio turnover rateG 96% 100% 108% 99% 90% 

 A Calculated based on average shares outstanding during the period.

 B Total distributions of $1.20 per share is comprised of distributions from net investment income of $.054 and distributions from net realized gain of $1.141 per share.

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

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

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

 F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

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


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


Notes to Financial Statements

For the period ended December 31, 2015

1. Organization.

VIP Disciplined Small Cap Portfolio (the Fund) is a fund of Variable Insurance Products Fund II (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, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.

3. Significant Accounting Policies.

The 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 Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). 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. U.S. government and government agency obligations are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.

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

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of December 31, 2015 is included at the end of the Fund's Schedule of Investments.

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

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

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of December 31, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction.

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, passive foreign investment companies (PFIC), market discount and losses deferred due to wash sales.

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

Gross unrealized appreciation $29,392,433 
Gross unrealized depreciation (18,462,972) 
Net unrealized appreciation (depreciation) on securities $10,929,461 
Tax Cost $233,919,989 

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

Undistributed ordinary income $59,499 
Undistributed long-term capital gain $16,424,996 
Net unrealized appreciation (depreciation) on securities and other investments $10,929,461 

The tax character of distributions paid was as follows:

 December 31, 2015 December 31, 2014 
Ordinary Income $1,323,059 $ 2,689,619 
Long-term Capital Gains 380,565 13,714,163 
Total $1,703,624 $ 16,403,782 

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 $(25,780) and a change in net unrealized appreciation (depreciation) of $(113,637) 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, other than short-term securities, aggregated $236,861,961 and $214,065,356, 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 .45% 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 annual management fee rate was .70% of the Fund's average net assets.

Sub-Adviser. Geode Capital Management, LLC (Geode), serves as sub-adviser for the Fund. Geode provides discretionary investment advisory services to the Fund and is paid by the investment adviser for providing these services.

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 $329 
Service Class 2 8,054 
 $8,383 

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 (with the exception of Investor Class) pays a fee for transfer agent services, typesetting, printing and mailing of shareholder reports, excluding mailing of proxy statements and out of pocket expenses, equal to an annual rate of 07%(.15% for Investor Class) of class-level average net assets. For the period, transfer agent fees for each class, including out of pocket expenses, were as follows:

Initial Class $21,980 
Service Class 222 
Service Class 2 2,405 
Investor Class 285,218 
 $309,825 

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.

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 $319 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. 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. 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.

9. Expense Reductions.

During the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $961 and a portion of class-level operating expenses as follows:

 Amount 
Investor Class $3,745 

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Years ended December 31, 2015 2014 
From net investment income   
Initial Class $189,220 $138,865 
Service Class 1,604 1,130 
Service Class 2 11,209 3,132 
Investor Class 1,044,184 590,899 
Total $1,246,217 $734,026 
From net realized gain   
Initial Class $69,227 $2,630,986 
Service Class 684 24,318 
Service Class 2 6,519 239,244 
Investor Class 380,977 12,775,208 
Total $457,407 $15,669,756 

11. Share Transactions.

Transactions for each class of shares were as follows:

 Shares Shares Dollars Dollars 
Years ended December 31, 2015 2014 2015 2014 
Initial Class     
Shares sold 414,891 345,327 $6,416,859 $5,224,865 
Reinvestment of distributions 17,720 193,300 258,447 2,769,851 
Shares redeemed (603,842) (1,253,092) (9,221,976) (18,660,460) 
Net increase (decrease) (171,231) (714,465) $(2,546,670) $(10,665,744) 
Service Class     
Reinvestment of distributions 156 1,771 2,288 25,448 
Shares redeemed (157) (1,695) (2,288) (25,448) 
Net increase (decrease) (1) 76 $– $– 
Service Class 2     
Shares sold 114,892 63,989 $1,792,406 $972,445 
Reinvestment of distributions 1,207 16,850 17,728 242,376 
Shares redeemed (103,229) (140,691) (1,603,734) (2,074,222) 
Net increase (decrease) 12,870 (59,852) $206,400 $(859,401) 
Investor Class     
Shares sold 2,814,636 1,936,337 $43,782,381 $29,244,341 
Reinvestment of distributions 98,023 935,591 1,425,161 13,366,107 
Shares redeemed (1,394,487) (3,261,463) (21,112,904) (48,373,562) 
Net increase (decrease) 1,518,172 (389,535) $24,094,638 $(5,763,114) 

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 99% of the total outstanding shares of the Fund.

Report of Independent Registered Public Accounting Firm

To the Trustees of Variable Insurance Products Fund II and Shareholders of VIP Disciplined Small Cap Portfolio:

We have audited the accompanying statement of assets and liabilities of VIP Disciplined Small Cap Portfolio (the Fund), a fund of Variable Insurance Products Fund II, including the schedule of investments, as of December 31, 2015, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2015, by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of VIP Disciplined Small Cap Portfolio as of December 31, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 16, 2016

Trustees and Officers

The Trustees, Members of the Advisory Board (if any), and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance.  Each of the Trustees oversees 170 funds. 

The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust.  Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the fund is referred to herein as an Independent Trustee.  Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs.  The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees.  Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years. 

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

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

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

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

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

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

Interested Trustees*:

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

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

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

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

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

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

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

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

Independent Trustees:

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

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

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

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

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

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

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is Chairman of the Board of Directors of Artis-Naples in Naples, Florida (2012-present), a member of the Council on Foreign Relations (1994-present), and a member of the Board of Governors, State University System of Florida (2013-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007).

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

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

Robert W. Selander (1950)

Year of Election or Appointment: 2011

Trustee

Mr. Selander also serves as Trustee of other Fidelity® funds. Mr. Selander serves as a Director of The Western Union Company (global money transfer, 2014-present) and a non-executive Chairman of Health Equity, Inc. (health savings custodian, 2015-present). Previously, Mr. Selander served as a Member of the Advisory Board of other Fidelity® funds (2011), and Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc.

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

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

William S. Stavropoulos (1939)

Year of Election or Appointment: 2001

Trustee

Vice Chairman of the Independent Trustees

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

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

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

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

Advisory Board Members and Officers:

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

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

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

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

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

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

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

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

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

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2008

Deputy Treasurer

Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005).

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

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

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

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

Scott C. Goebel (1968)

Year of Election or Appointment: 2015

Vice President

Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and FMR Investment Management (U.K.) Limited (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

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

John F. Papandrea (1972)

Year of Election or Appointment: 2016

Anti-Money Laundering (AML) Officer

Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).

Kenneth B. Robins (1969)

Year of Election or Appointment: 2008

President and Treasurer

Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.

Stacie M. Smith (1974)

Year of Election or Appointment: 2013

Deputy Treasurer

Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009).

Renee Stagnone (1975)

Year of Election or Appointment: 2013

Deputy Treasurer

Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present).

Linda J. Wondrack (1964)

Year of Election or Appointment: 2014

Chief Compliance Officer

Ms. Wondrack also serves as Chief Compliance Officer of other funds. Ms. Wondrack is Executive Vice President and head of the Ethics Office and Asset Management Compliance for Fidelity Investments (2012-present). Ms. Wondrack also serves as Chief Compliance Officer of Fidelity SelectCo, LLC (investment adviser firm, 2014-present); Chief Compliance Officer of Impresa Management LLC (2013-present); and Chief Compliance Officer of FMR Co., Inc. (investment adviser firm), Fidelity Investments Money Management, Inc. (investment adviser firm), FMR Investment Management (U.K.) Limited (investment adviser firm), Fidelity Management & Research (Hong Kong) (investment adviser firm), Fidelity Management & Research Company (investment adviser firm), FIAM LLC (investment adviser firm), and Strategic Advisers, Inc. (investment adviser firm), Ballyrock Investment Advisors LLC, and Northern Neck Investors LLC (2012-present). Previously, Ms. Wondrack served as Chief Compliance Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016); Senior Vice President and Chief Compliance Officer for Columbia Management Investment Advisers, LLC (2005-2012); Chief Compliance Officer for certain funds within the Columbia Family of Funds (2007-2012); and Senior Vice President of Compliance Risk Management at Bank of America (2005-2010).

Joseph F. Zambello (1957)

Year of Election or Appointment: 2011

Deputy Treasurer

Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009).

Shareholder Expense Example

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2015 to December 31, 2015).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 Annualized Expense Ratio-A Beginning
Account Value
July 1, 2015 		Ending
Account Value
December 31, 2015 		Expenses Paid
During Period-B
July 1, 2015
to December 31, 2015 
Initial Class .84%    
Actual  $1,000.00 $923.90 $4.07 
Hypothetical-C  $1,000.00 $1,020.97 $4.28 
Service Class .95%    
Actual  $1,000.00 $923.70 $4.61 
Hypothetical-C  $1,000.00 $1,020.42 $4.84 
Service Class 2 1.10%    
Actual  $1,000.00 $923.50 $5.33 
Hypothetical-C  $1,000.00 $1,019.66 $5.60 
Investor Class .93%    
Actual  $1,000.00 $924.20 $4.51 
Hypothetical-C  $1,000.00 $1,020.52 $4.74 

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

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

 C 5% return per year before expenses


Distributions (Unaudited)

The Board of Trustees of VIP Disciplined Small Cap Portfolio voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:

 Pay Date Record Date Dividends Capital Gains 
Initial Class 02/08/16 02/05/16 $0.004 $1.062 
     
Service Class 02/08/16 02/05/16 $0.004 $1.062 
     
Service Class 2 02/08/16 02/05/16 $0.004 $1.062 
     
Investor Class 02/08/16 02/05/16 $0.004 $1.062 
     

The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31 2015, $16,445,999, or, if subsequently determined to be different, the net capital gain of such year.

Initial Class, Service Class, Service Class 2, and Investor Class designate 100% of the dividend distributed in December, during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.

Board Approval of Investment Advisory Contracts and Management Fees

VIP Disciplined Small Cap Portfolio

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

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

At its July 2015 meeting, the Board unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; and (iv) the extent to which (if any) economies of scale exist and would be realized as the fund grows, and whether any economies of scale are appropriately shared with fund shareholders.

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

Nature, Extent, and Quality of Services Provided.  The Board considered staffing as it relates to the fund, including the backgrounds of investment personnel of Fidelity and Geode, and also considered the fund's investment objective, strategies, and related investment philosophy. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups and with representatives of Geode. The Board considered the portfolio managers' investments, if any, in the funds that they manage.

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

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

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

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

Investment in a Large Fund Family.  The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds and diversified international funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching active fixed-income exchange-traded funds; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and information security and to increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (x) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (xi) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xii) implementing changes to Fidelity's money market product line in response to recent money market regulatory reforms.

Investment Performance.  The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.

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

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

The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative calendar year total return information for the fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods, as shown below. A peer group is not shown below because the fund does not generally utilize a peer group for performance comparison purposes.

VIP Disciplined Small Cap Portfolio


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

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

Management Fee.  The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure without taking into account performance adjustments, if any. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.

VIP Disciplined Small Cap Portfolio


The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2014.

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

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

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

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

The Board noted that the total expense ratio of each of Initial Class, Investor Class, and Service Class ranked below its competitive median for 2014 and the total expense ratio of Service Class 2 ranked above its competitive median for 2014. The Board considered that, in general, various factors can affect total expense ratios. The Board noted that the total expense ratio of Service Class 2 was above the competitive median primarily because of higher 12b-1 fees for Service Class 2 as compared to most competitor funds. The Board noted that the fund offers multiple classes, each of which has a different 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expense ratios of the classes vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.

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

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

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

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

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

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

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

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

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

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

Additional Information Requested by the Board.  In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) fund performance trends and Fidelity's long-term strategies for certain funds; (ii) the various share classes employed by Fidelity and the attributes of each class, together with similar information on the distribution and servicing payments made by Fidelity or the funds to third-party participants in the distribution channels; (iii) fund profitability, and fund performance in relation to fund profitability; (iv) the methodology with respect to evaluating competitive fund data and peer group classifications and fee comparisons; (v) annual fund profitability margins, with particular focus on certain funds with negative margins; (vi) the realization of fall-out benefits in certain Fidelity business units; (vii) economies of scale and the way in which they are shared with fund shareholders;(viii) Fidelity's group fee structures, including the group fee schedule of breakpoints;(ix) the impact of cost containment measures on the funds; and (x) the transfer agent fee structure.

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





Fidelity Investments

VDSC-ANN-0216
1.820582.110



Fidelity® Variable Insurance Products:

Contrafund® Portfolio



Annual Report

December 31, 2015



Fidelity Investments


Contents

Performance

Management's Discussion of Fund Performance

Investment Summary

Investments

Financial Statements

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

Trustees and Officers

Shareholder Expense Example

Distributions

Board Approval of Investment Advisory Contracts and Management Fees


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

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.



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

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

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

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.



Performance: The Bottom Line

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

Average Annual Total Returns

For the periods ended December 31, 2015 Past 1 year Past 5 years Past 10 years 
Initial Class 0.64% 10.91% 7.26% 
Service Class 0.56% 10.80% 7.16% 
Service Class 2 0.39% 10.63% 7.00% 
Investor Class 0.56% 10.82% 7.17% 

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in VIP Contrafund℠ Portfolio - Initial Class on December 31, 2005.

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


Period Ending Values
$20,163VIP Contrafund℠ Portfolio - Initial Class
$20,242S&P 500® Index

Management's Discussion of Fund Performance

Market Recap:  U.S. stocks gained modestly in 2015, rebounding from a steep decline in August and September over worries about China’s slowing economic growth. The S&P 500® index rose 1.38% for the period, its lowest calendar-year return since 2008. After the late-summer rout, stocks sharply reversed course in October, lifted by the U.S. Federal Reserve’s decision to put off raising near-term interest rates until mid-December. Investors also were encouraged by an interest-rate cut in China and economic stimulus in Europe. Overall, growth stocks fared much better than their value counterparts, as investors sought growth in a subpar economic environment. This helped lift the technology-heavy Nasdaq Composite Index® 6.96% for the year. Sector performance in the broader market was split, with five of 10 sectors in the S&P 500® gaining ground and five retreating. Consumer discretionary (+10%) led the way, benefiting from rising personal income and low inflation. Health care (+7%), consumer staples (+7%) and information technology (+6%) also outpaced the broad market amid strong fundamentals. Conversely, energy (-21%) was by far the worst performer, stung by deflated commodity prices that also hit materials (-8%). The defensive, but rate-sensitive utilities sector (-5%) lost ground on the cusp of Fed tightening, while industrials (-3%) were dragged down with energy prices and a slower-growing China.

Comments from Co-Portfolio Manager Robert Stansky:  For the year, the fund’s share classes posted small gains while trailing the benchmark S&P 500® index. Stock selection in the consumer discretionary sector was the biggest drag on relative performance. One stock responsible for a lot of the negative impact here was strong-performing online retailer Amazon.com, the fund’s biggest relative detractor and a stock we didn’t own for much of the period because of concerns about its valuation. Given Amazon’s improving profitability and its recent success in cloud computing, Co-Manager Peter Dixon built an overweighted position here in November. Also detracting was chipmaker Marvell Technology Group, an out-of-benchmark position. Not owning industrial conglomerate General Electric also detracted, as did a sizable underweighting in PC software provider Microsoft. Both were strong-performing index names. Conversely, the fund got a boost from stock picking in industrials. Shares of Roper Technologies, the fund’s top relative contributor and fourth-largest holding at the end of 2015, rose about 22% for the year. The maker of pumps and other equipment used in the energy and industrials sectors, as well as medical software and scientific imaging products, posted strong third-quarter earnings. Other noteworthy contributors were coffee-bar operator Starbucks and managed-care provider CIGNA.

Note to shareholders: On November 2, 2015, Peter Dixon was named Co-Manager of the fund to manage its consumer discretionary sleeve, succeeding Peter Saperstone.

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

Investment Summary (Unaudited)

Top Ten Stocks as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Alphabet, Inc. Class C 3.0 1.8 
Apple, Inc. 2.5 4.2 
Danaher Corp. 2.4 1.9 
Roper Technologies, Inc. 2.2 1.6 
AMETEK, Inc. 2.2 1.7 
JPMorgan Chase & Co. 1.7 1.9 
Capital One Financial Corp. 1.6 1.8 
Amazon.com, Inc. 1.6 0.0 
Facebook, Inc. Class A 1.4 0.9 
The Coca-Cola Co. 1.4 1.2 
 20.0  

Market Sectors as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Information Technology 19.8 18.3 
Financials 15.8 16.3 
Health Care 15.2 15.3 
Consumer Discretionary 13.7 14.6 
Consumer Staples 9.8 9.0 
Industrials 8.9 9.8 
Energy 6.5 7.6 
Materials 3.7 3.8 
Utilities 2.9 2.7 
Telecommunication Services 2.2 1.8 

Asset Allocation (% of fund's net assets)

As of December 31, 2015 * 
   Stocks and Equity Futures 98.8% 
   Short-Term Investments and Net Other Assets (Liabilities) 1.2% 


 * Foreign investments - 12.0%


As of June 30, 2015 * 
   Stocks and Equity Futures 99.5% 
   Short-Term Investments and Net Other Assets (Liabilities) 0.5% 


 * Foreign investments - 11.5%


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

Investments December 31, 2015

Showing Percentage of Net Assets

Common Stocks - 98.4%   
 Shares Value 
CONSUMER DISCRETIONARY - 13.7%   
Auto Components - 0.6%   
Delphi Automotive PLC 1,216,400 $104,281,972 
Automobiles - 0.3%   
Tesla Motors, Inc. (a) 239,100 57,386,391 
Diversified Consumer Services - 0.3%   
2U, Inc. (a) 785,400 21,975,492 
H&R Block, Inc. 1,260,100 41,973,931 
  63,949,423 
Hotels, Restaurants & Leisure - 1.6%   
Fiesta Restaurant Group, Inc. (a) 602,500 20,244,000 
Hilton Worldwide Holdings, Inc. 5,497,700 117,650,780 
Las Vegas Sands Corp. 1,010,900 44,317,856 
Starbucks Corp. 1,989,400 119,423,682 
Tuniu Corp. Class A sponsored ADR (a) 309,109 4,939,562 
  306,575,880 
Household Durables - 0.2%   
Lennar Corp. Class A 384,414 18,801,689 
PulteGroup, Inc. 1,590,640 28,345,205 
  47,146,894 
Internet & Catalog Retail - 1.6%   
Amazon.com, Inc. (a) 433,700 293,133,493 
Media - 3.5%   
Charter Communications, Inc. Class A (a)(b) 738,200 135,164,420 
Comcast Corp. Class A 238,300 13,447,269 
ITV PLC 37,801,500 154,140,803 
Legend Pictures LLC (a)(c)(d) 2,062 3,777,378 
Manchester United PLC (b) 1,352,629 24,090,322 
MDC Partners, Inc. Class A 2,088,521 45,362,676 
The Madison Square Garden Co. (a) 201,306 32,571,311 
The Walt Disney Co. 2,213,700 232,615,596 
Weinstein Co. Holdings LLC Class A-1 unit (a)(c)(d) 11,499 3,438,201 
  644,607,976 
Multiline Retail - 0.4%   
B&M European Value Retail S.A. 15,805,466 66,336,290 
Specialty Retail - 3.4%   
AutoZone, Inc. (a) 112,445 83,424,070 
Home Depot, Inc. 1,517,494 200,688,582 
L Brands, Inc. 1,682,371 161,204,789 
Ross Stores, Inc. 1,652,450 88,918,335 
TJX Companies, Inc. 1,383,939 98,135,114 
  632,370,890 
Textiles, Apparel & Luxury Goods - 1.8%   
NIKE, Inc. Class B 3,038,802 189,925,125 
VF Corp. 2,248,800 139,987,800 
  329,912,925 
TOTAL CONSUMER DISCRETIONARY  2,545,702,134 
CONSUMER STAPLES - 9.8%   
Beverages - 2.1%   
Anheuser-Busch InBev SA NV 36,571 4,551,161 
Constellation Brands, Inc. Class A (sub. vtg.) 495,200 70,536,288 
Monster Beverage Corp. 395,033 58,844,116 
The Coca-Cola Co. 6,127,306 263,229,066 
  397,160,631 
Food & Staples Retailing - 2.1%   
CVS Health Corp. 2,021,364 197,628,758 
Kroger Co. 2,748,764 114,980,798 
Sprouts Farmers Market LLC (a) 724,000 19,251,160 
Wal-Mart Stores, Inc. 394,276 24,169,119 
Whole Foods Market, Inc. 1,286,806 43,108,001 
  399,137,836 
Food Products - 1.1%   
Blue Buffalo Pet Products, Inc. (a)(b) 289,900 5,424,029 
Keurig Green Mountain, Inc. 762,133 68,576,727 
Mead Johnson Nutrition Co. Class A 1,025,989 81,001,832 
The Hershey Co. 440,490 39,322,542 
  194,325,130 
Household Products - 1.4%   
Colgate-Palmolive Co. 2,416,900 161,013,878 
Procter & Gamble Co. 1,241,184 98,562,421 
  259,576,299 
Personal Products - 0.4%   
Estee Lauder Companies, Inc. Class A 675,928 59,522,220 
Nu Skin Enterprises, Inc. Class A 472,937 17,919,583 
  77,441,803 
Tobacco - 2.7%   
Altria Group, Inc. 3,877,554 225,712,418 
British American Tobacco PLC sponsored ADR 1,854,279 204,805,116 
Philip Morris International, Inc. 729,400 64,121,554 
Reynolds American, Inc. 73,436 3,389,071 
  498,028,159 
TOTAL CONSUMER STAPLES  1,825,669,858 
ENERGY - 6.4%   
Energy Equipment & Services - 1.5%   
Baker Hughes, Inc. 1,036,200 47,820,630 
Dril-Quip, Inc. (a) 276,749 16,391,843 
Halliburton Co. 717,982 24,440,107 
Independence Contract Drilling, Inc. (a) 1,081,939 5,463,792 
Oceaneering International, Inc. 479,162 17,978,158 
Schlumberger Ltd. 2,274,000 158,611,500 
  270,706,030 
Oil, Gas & Consumable Fuels - 4.9%   
Anadarko Petroleum Corp. 1,824,121 88,615,798 
Apache Corp. 1,003,600 44,630,092 
Black Stone Minerals LP 1,195,000 17,243,850 
Cabot Oil & Gas Corp. 1,718,635 30,402,653 
Chevron Corp. 1,345,900 121,077,164 
Cimarex Energy Co. 249,300 22,282,434 
Encana Corp. 4,618,200 23,463,139 
EOG Resources, Inc. 803,574 56,885,003 
Exxon Mobil Corp. 1,619,002 126,201,206 
Kinder Morgan, Inc. 269,700 4,023,924 
Memorial Resource Development Corp. (a) 1,499,500 24,216,925 
Noble Energy, Inc. 2,471,800 81,396,374 
Parsley Energy, Inc. Class A (a) 1,629,457 30,063,482 
Phillips 66 Co. 999,439 81,754,110 
Pioneer Natural Resources Co. 406,600 50,979,508 
PrairieSky Royalty Ltd. (b) 1,444,612 22,884,943 
SM Energy Co. (b) 1,240,600 24,390,196 
Suncor Energy, Inc. 2,386,195 61,599,252 
  912,110,053 
TOTAL ENERGY  1,182,816,083 
FINANCIALS - 15.8%   
Banks - 6.6%   
Bank of America Corp. 14,439,214 243,011,972 
Citigroup, Inc. 4,177,450 216,183,038 
Comerica, Inc. 1,157,500 48,418,225 
Huntington Bancshares, Inc. 3,415,181 37,771,902 
JPMorgan Chase & Co. 4,821,006 318,331,026 
M&T Bank Corp. 496,500 60,165,870 
Regions Financial Corp. 3,286,900 31,554,240 
Synovus Financial Corp. 950,023 30,761,745 
U.S. Bancorp 3,805,544 162,382,562 
Wells Fargo & Co. 983,200 53,446,752 
Zions Bancorporation 1,008,500 27,532,050 
  1,229,559,382 
Capital Markets - 1.8%   
Bank of New York Mellon Corp. 990,400 40,824,288 
BlackRock, Inc. Class A 191,113 65,077,799 
E*TRADE Financial Corp. (a) 1,456,278 43,164,080 
Goldman Sachs Group, Inc. 581,100 104,731,653 
Invesco Ltd. 735,357 24,619,752 
Northern Trust Corp. 483,364 34,845,711 
Oaktree Capital Group LLC Class A 331,134 15,801,714 
  329,064,997 
Consumer Finance - 2.1%   
Capital One Financial Corp. 4,084,248 294,801,021 
Navient Corp. 3,176,876 36,375,230 
OneMain Holdings, Inc. (a) 495,098 20,566,371 
SLM Corp. (a) 5,632,376 36,723,092 
  388,465,714 
Diversified Financial Services - 1.0%   
Berkshire Hathaway, Inc.:   
Class A (a) 47 9,296,600 
Class B (a) 768,800 101,512,352 
IntercontinentalExchange, Inc. 249,109 63,836,672 
KBC Ancora 450,178 19,038,422 
  193,684,046 
Insurance - 1.9%   
Direct Line Insurance Group PLC 5,376,391 32,297,943 
Fairfax Financial Holdings Ltd. (sub. vtg.) 21,700 10,302,050 
Marsh & McLennan Companies, Inc. 1,226,970 68,035,487 
MetLife, Inc. 938,487 45,244,458 
The Chubb Corp. 1,404,300 186,266,352 
Unum Group 635,100 21,142,479 
  363,288,769 
Real Estate Investment Trusts - 2.1%   
Altisource Residential Corp. Class B 2,101,682 26,081,874 
American Tower Corp. 242,100 23,471,595 
Boston Properties, Inc. 326,000 41,578,040 
Crown Castle International Corp. 156,600 13,538,070 
Digital Realty Trust, Inc. 508,200 38,430,084 
Duke Realty LP 1,550,100 32,583,102 
Extra Space Storage, Inc. 255,400 22,528,834 
FelCor Lodging Trust, Inc. 1,352,900 9,876,170 
Outfront Media, Inc. 587,014 12,814,516 
Store Capital Corp. 1,879,000 43,592,800 
Sun Communities, Inc. 801,969 54,958,936 
Ventas, Inc. 796,000 44,918,280 
VEREIT, Inc. 2,582,800 20,455,776 
  384,828,077 
Real Estate Management & Development - 0.3%   
CBRE Group, Inc. (a) 1,402,389 48,494,612 
TOTAL FINANCIALS  2,937,385,597 
HEALTH CARE - 15.2%   
Biotechnology - 4.8%   
AbbVie, Inc. 2,025,421 119,985,940 
Alexion Pharmaceuticals, Inc. (a) 542,432 103,468,904 
Amgen, Inc. 1,298,520 210,788,752 
Baxalta, Inc. 1,882,425 73,471,048 
Biogen, Inc. (a) 118,931 36,434,512 
BioMarin Pharmaceutical, Inc. (a) 246,893 25,864,511 
Celgene Corp. (a) 1,135,700 136,011,432 
Gilead Sciences, Inc. 1,701,961 172,221,434 
Vertex Pharmaceuticals, Inc. (a) 34,100 4,290,803 
  882,537,336 
Health Care Equipment & Supplies - 3.3%   
Abbott Laboratories 2,216,400 99,538,524 
Boston Scientific Corp. (a) 7,962,549 146,829,404 
Edwards Lifesciences Corp. (a) 855,484 67,566,126 
Medtronic PLC 3,264,390 251,096,879 
The Cooper Companies, Inc. 186,020 24,963,884 
Wright Medical Group NV (a) 1,204,200 29,117,556 
  619,112,373 
Health Care Providers & Services - 2.9%   
Brookdale Senior Living, Inc. (a) 409,233 7,554,441 
Cigna Corp. 879,126 128,642,508 
HCA Holdings, Inc. (a) 669,114 45,252,180 
Henry Schein, Inc. (a) 473,641 74,925,270 
McKesson Corp. 539,100 106,326,693 
UnitedHealth Group, Inc. 1,465,100 172,354,364 
  535,055,456 
Life Sciences Tools & Services - 0.8%   
Agilent Technologies, Inc. 1,361,700 56,932,677 
Thermo Fisher Scientific, Inc. 670,613 95,126,454 
  152,059,131 
Pharmaceuticals - 3.4%   
Allergan PLC (a) 754,352 235,735,000 
Bristol-Myers Squibb Co. 3,318,705 228,293,717 
Endo Health Solutions, Inc. (a) 810,100 49,594,322 
Horizon Pharma PLC (a) 1,448,700 31,393,329 
Teva Pharmaceutical Industries Ltd. sponsored ADR 1,345,700 88,331,748 
  633,348,116 
TOTAL HEALTH CARE  2,822,112,412 
INDUSTRIALS - 8.9%   
Electrical Equipment - 2.3%   
AMETEK, Inc. 7,459,547 399,757,124 
SolarCity Corp. (a) 385,500 19,668,210 
  419,425,334 
Industrial Conglomerates - 4.6%   
Danaher Corp. 4,774,221 443,429,646 
Roper Technologies, Inc. 2,174,340 412,667,989 
  856,097,635 
Machinery - 1.2%   
WABCO Holdings, Inc. (a) 965,979 98,781,013 
Wabtec Corp. 1,732,535 123,217,889 
  221,998,902 
Professional Services - 0.3%   
Verisk Analytics, Inc. (a) 629,032 48,359,980 
WageWorks, Inc. (a) 59,257 2,688,490 
  51,048,470 
Road & Rail - 0.5%   
eHi Car Service Co. Ltd. sponsored ADR (a) 40 504 
J.B. Hunt Transport Services, Inc. 1,354,583 99,372,209 
  99,372,713 
Trading Companies & Distributors - 0.0%   
AerCap Holdings NV (a) 181,400 7,829,224 
TOTAL INDUSTRIALS  1,655,772,278 
INFORMATION TECHNOLOGY - 19.8%   
Communications Equipment - 0.6%   
CommScope Holding Co., Inc. (a) 250,600 6,488,034 
Qualcomm Technologies, Inc. 2,038,629 101,900,871 
  108,388,905 
Electronic Equipment & Components - 0.2%   
Fitbit, Inc. 593,900 17,573,501 
Samsung SDI Co. Ltd. 224,010 21,485,525 
  39,059,026 
Internet Software & Services - 7.0%   
58.com, Inc. ADR (a) 387,455 25,556,532 
Alibaba Group Holding Ltd. sponsored ADR (a) 2,708,400 220,111,668 
Alphabet, Inc.:   
Class A (a) 27,000 21,006,270 
Class C 729,136 553,326,721 
Box, Inc. Class A (b) 1,467,400 20,484,904 
Cvent, Inc. (a) 1,779,131 62,109,463 
Facebook, Inc. Class A (a) 2,540,776 265,917,616 
Just Dial Ltd. 1,155,420 14,642,806 
New Relic, Inc. 635,992 23,169,189 
Opower, Inc. (a)(b)(e) 2,860,761 30,209,636 
Shopify, Inc. Class A 11,600 299,280 
Tencent Holdings Ltd. 1,395,700 27,327,787 
Yahoo!, Inc. (a) 1,224,100 40,713,566 
  1,304,875,438 
IT Services - 1.3%   
Alliance Data Systems Corp. (a) 88,100 24,365,817 
Blackhawk Network Holdings, Inc. (a) 1,203,680 53,214,693 
Fidelity National Information Services, Inc. 534,900 32,414,940 
Global Payments, Inc. 280,300 18,082,153 
Sabre Corp. 1,144,544 32,012,896 
The Western Union Co. 205,900 3,687,669 
Travelport Worldwide Ltd. 6,053,205 78,086,345 
Worldline SA (a)(f) 361,963 9,389,582 
  251,254,095 
Semiconductors & Semiconductor Equipment - 3.0%   
Broadcom Corp. Class A 575,800 33,292,756 
Intersil Corp. Class A 1,380,029 17,609,170 
Marvell Technology Group Ltd. 9,461,328 83,448,913 
Maxim Integrated Products, Inc. 818,700 31,110,600 
Micron Technology, Inc. (a) 2,609,900 36,956,184 
NVIDIA Corp. 1,002,102 33,029,282 
NXP Semiconductors NV (a) 1,001,500 84,376,375 
Qorvo, Inc. (a) 4,304,395 219,093,706 
Semtech Corp. (a) 762,400 14,424,608 
  553,341,594 
Software - 3.8%   
Activision Blizzard, Inc. 673,171 26,058,449 
Adobe Systems, Inc. (a) 354,729 33,323,242 
Autodesk, Inc. (a) 2,263,100 137,890,683 
Electronic Arts, Inc. (a) 1,851,600 127,241,952 
Fleetmatics Group PLC (a) 304,689 15,475,154 
HubSpot, Inc. (a) 73,785 4,154,833 
Imperva, Inc. (a) 141,720 8,972,293 
Microsoft Corp. 2,852,613 158,262,969 
Mobileye NV (a) 100,800 4,261,824 
Salesforce.com, Inc. (a) 1,791,157 140,426,709 
Varonis Systems, Inc. (a)(b) 762,445 14,333,966 
Zendesk, Inc. (a) 1,210,300 32,000,332 
  702,402,406 
Technology Hardware, Storage & Peripherals - 3.9%   
Apple, Inc. 4,462,892 469,764,012 
EMC Corp. 2,798,100 71,855,208 
HP, Inc. 7,749,400 91,752,896 
SanDisk Corp. 807,500 61,361,925 
Western Digital Corp. 681,900 40,948,095 
  735,682,136 
TOTAL INFORMATION TECHNOLOGY  3,695,003,600 
MATERIALS - 3.7%   
Chemicals - 3.2%   
E.I. du Pont de Nemours & Co. 1,347,400 89,736,840 
Eastman Chemical Co. 769,441 51,944,962 
Ecolab, Inc. 2,162,194 247,311,750 
LyondellBasell Industries NV Class A 378,624 32,902,426 
Monsanto Co. 688,176 67,799,100 
PPG Industries, Inc. 526,800 52,058,376 
The Dow Chemical Co. 630,900 32,478,732 
W.R. Grace & Co. (a) 305,522 30,426,936 
  604,659,122 
Construction Materials - 0.1%   
Eagle Materials, Inc. 396,359 23,951,974 
Containers & Packaging - 0.4%   
Graphic Packaging Holding Co. 1,571,733 20,165,334 
WestRock Co. 1,080,540 49,294,235 
  69,459,569 
TOTAL MATERIALS  698,070,665 
TELECOMMUNICATION SERVICES - 2.2%   
Diversified Telecommunication Services - 2.2%   
AT&T, Inc. 6,207,568 213,602,415 
CenturyLink, Inc. 486,632 12,243,661 
Cogent Communications Group, Inc. 401,339 13,922,450 
Frontier Communications Corp. 546,500 2,552,155 
inContact, Inc. (a) 1,547,317 14,761,404 
Level 3 Communications, Inc. (a) 726,886 39,513,523 
Verizon Communications, Inc. 2,325,568 107,487,753 
  404,083,361 
Wireless Telecommunication Services - 0.0%   
T-Mobile U.S., Inc. (a) 55,400 2,167,248 
Telephone & Data Systems, Inc. 256,603 6,643,452 
  8,810,700 
TOTAL TELECOMMUNICATION SERVICES  412,894,061 
UTILITIES - 2.9%   
Electric Utilities - 1.7%   
Edison International 696,226 41,223,541 
Exelon Corp. 3,101,292 86,122,879 
FirstEnergy Corp. 166,600 5,286,218 
NextEra Energy, Inc. 1,044,300 108,492,327 
PPL Corp. 1,893,772 64,634,438 
  305,759,403 
Independent Power and Renewable Electricity Producers - 0.1%   
NRG Energy, Inc. 1,526,352 17,965,163 
NRG Yield, Inc. Class C (b) 532,400 7,858,224 
  25,823,387 
Multi-Utilities - 1.1%   
Dominion Resources, Inc. 1,070,431 72,403,953 
DTE Energy Co. 67,536 5,415,712 
NiSource, Inc. 820,877 16,015,310 
PG&E Corp. 994,834 52,915,220 
Sempra Energy 697,550 65,576,676 
  212,326,871 
TOTAL UTILITIES  543,909,661 
TOTAL COMMON STOCKS   
(Cost $15,239,181,638)  18,319,336,349 
Convertible Preferred Stocks - 0.1%   
ENERGY - 0.1%   
Oil, Gas & Consumable Fuels - 0.1%   
Southwestern Energy Co. Series B 6.25% 429,700 7,970,935 
INFORMATION TECHNOLOGY - 0.0%   
Software - 0.0%   
MongoDB, Inc. Series F, 8.00% (a)(d) 299,866 2,416,920 
TOTAL CONVERTIBLE PREFERRED STOCKS   
(Cost $26,432,798)  10,387,855 
 Principal Amount Value 
U.S. Treasury Obligations - 0.0%   
U.S. Treasury Bills, yield at date of purchase 0.1% to 0.27% 1/28/16 to 3/10/16 (g)   
(Cost $5,739,522) 5,740,000 5,739,488 
 Shares Value 
Money Market Funds - 2.4%   
Fidelity Cash Central Fund, 0.33% (h) 330,668,416 $330,668,416 
Fidelity Securities Lending Cash Central Fund, 0.35% (h)(i) 115,366,217 115,366,217 
TOTAL MONEY MARKET FUNDS   
(Cost $446,034,633)  446,034,633 
TOTAL INVESTMENT PORTFOLIO - 100.9%   
(Cost $15,717,388,591)  18,781,498,325 
NET OTHER ASSETS (LIABILITIES) - (0.9)%  (158,621,516) 
NET ASSETS - 100%  $18,622,876,809 

Futures Contracts    
 Expiration Date Underlying Face Amount at Value Unrealized Appreciation/(Depreciation) 
Purchased    
Equity Index Contracts    
568 CME E-mini S&P 500 Index Contracts (United States) March 2016 57,805,360 $973,787 

The face value of futures purchased as a percentage of Net Assets is 0.3%

Legend

 (a) Non-income producing

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

 (c) Investment is owned by an entity that is treated as a corporation for U.S. tax purposes and is wholly-owned by the Fund.

 (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 $9,632,499 or 0.1% of net assets.

 (e) Affiliated company

 (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 $9,389,582 or 0.1% of net assets.

 (g) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At period end, the value of securities pledged amounted to $3,714,664.

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

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


Additional information on each restricted holding is as follows:

Security Acquisition Date Acquisition Cost 
Legend Pictures LLC 9/23/10 $1,546,500 
MongoDB, Inc. Series F, 8.00% 10/2/13 $5,014,998 
Weinstein Co. Holdings LLC Class A-1 unit 10/19/05 $11,499,000 

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 $596,492 
Fidelity Securities Lending Cash Central Fund 1,523,547 
Total $2,120,039 

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 
Jumei International Holding Ltd. sponsored ADR $-- $47,470,775 $39,084,426 $-- $-- 
Opower, Inc. 27,573,841 11,231,435 -- -- 30,209,636 
Total $27,573,841 $58,702,210 $39,084,426 $-- $30,209,636 

Investment Valuation

The following is a summary of the inputs used, as of December 31, 2015, 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 $2,545,702,134 $2,538,486,555 $-- $7,215,579 
Consumer Staples 1,825,669,858 1,821,118,697 4,551,161 -- 
Energy 1,190,787,018 1,190,787,018 -- -- 
Financials 2,937,385,597 2,937,385,597 -- -- 
Health Care 2,822,112,412 2,822,112,412 -- -- 
Industrials 1,655,772,278 1,655,772,278 -- -- 
Information Technology 3,697,420,520 3,631,547,482 63,456,118 2,416,920 
Materials 698,070,665 698,070,665 -- -- 
Telecommunication Services 412,894,061 412,894,061 -- -- 
Utilities 543,909,661 543,909,661 -- -- 
U.S. Government and Government Agency Obligations 5,739,488 -- 5,739,488 -- 
Money Market Funds 446,034,633 446,034,633 -- -- 
Total Investments in Securities: $18,781,498,325 $18,698,119,059 $73,746,767 $9,632,499 
Derivative Instruments:     
Assets     
Futures Contracts $973,787 $973,787 $-- $-- 
Total Assets $973,787 $973,787 $-- $-- 
Total Derivative Instruments: $973,787 $973,787 $-- $-- 

Value of Derivative Instruments

The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of December 31, 2015. 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) $973,787 $0 
Total Equity Risk $973,787 $0 
Total Value of Derivatives $973,787 $0 

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


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 88.0% 
Ireland 3.1% 
United Kingdom 2.5% 
Cayman Islands 1.6% 
Others (Individually Less Than 1%) 4.8% 
 100.0% 

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


Financial Statements

Statement of Assets and Liabilities

  December 31, 2015 
Assets   
Investment in securities, at value (including securities loaned of $112,814,119) — See accompanying schedule:
Unaffiliated issuers (cost $15,224,727,118) 		$18,305,254,056  
Fidelity Central Funds (cost $446,034,633) 446,034,633  
Other affiliated issuers (cost $46,626,840) 30,209,636  
Total Investments (cost $15,717,388,591)  $18,781,498,325 
Receivable for investments sold  11,796,095 
Receivable for fund shares sold  2,371,862 
Dividends receivable  23,371,256 
Distributions receivable from Fidelity Central Funds  349,575 
Prepaid expenses  40,104 
Other receivables  1,006,912 
Total assets  18,820,434,129 
Liabilities   
Payable for investments purchased $45,629,131  
Payable for fund shares redeemed 23,267,985  
Accrued management fee 8,599,218  
Distribution and service plan fees payable 1,892,942  
Payable for daily variation margin for derivative instruments 642,622  
Other affiliated payables 1,260,397  
Other payables and accrued expenses 898,808  
Collateral on securities loaned, at value 115,366,217  
Total liabilities  197,557,320 
Net Assets  $18,622,876,809 
Net Assets consist of:   
Paid in capital  $14,224,031,817 
Distributions in excess of net investment income  (780,806) 
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions  1,334,668,790 
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies  3,064,957,008 
Net Assets  $18,622,876,809 
Initial Class:   
Net Asset Value, offering price and redemption price per share ($7,436,130,270 ÷ 219,262,221 shares)  $33.91 
Service Class:   
Net Asset Value, offering price and redemption price per share ($1,546,863,855 ÷ 45,781,036 shares)  $33.79 
Service Class 2:   
Net Asset Value, offering price and redemption price per share ($8,363,075,583 ÷ 251,484,786 shares)  $33.25 
Investor Class:   
Net Asset Value, offering price and redemption price per share ($1,276,807,101 ÷ 37,815,086 shares)  $33.76 

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


Statement of Operations

  Year ended December 31, 2015 
Investment Income   
Dividends  $315,035,042 
Interest  2,371 
Income from Fidelity Central Funds  2,120,039 
Total income  317,157,452 
Expenses   
Management fee $106,872,546  
Transfer agent fees 13,883,996  
Distribution and service plan fees 23,441,424  
Accounting and security lending fees 1,706,048  
Custodian fees and expenses 379,623  
Independent trustees' compensation 84,348  
Appreciation in deferred trustee compensation account 32  
Audit 96,943  
Legal 70,881  
Miscellaneous 131,775  
Total expenses before reductions 146,667,616  
Expense reductions (1,098,180) 145,569,436 
Net investment income (loss)  171,588,016 
Realized and Unrealized Gain (Loss)   
Net realized gain (loss) on:   
Investment securities:   
Unaffiliated issuers 1,530,712,419  
Other affiliated issuers (8,386,349)  
Foreign currency transactions (316,439)  
Futures contracts 2,138,003  
Total net realized gain (loss)  1,524,147,634 
Change in net unrealized appreciation (depreciation) on:
Investment securities 		(1,581,220,096)  
Assets and liabilities in foreign currencies (25,202)  
Futures contracts (215,223)  
Total change in net unrealized appreciation (depreciation)  (1,581,460,521) 
Net gain (loss)  (57,312,887) 
Net increase (decrease) in net assets resulting from operations  $114,275,129 

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


Statement of Changes in Net Assets

 Year ended December 31, 2015 Year ended December 31, 2014 
Increase (Decrease) in Net Assets   
Operations   
Net investment income (loss) $171,588,016 $169,153,778 
Net realized gain (loss) 1,524,147,634 2,187,512,453 
Change in net unrealized appreciation (depreciation) (1,581,460,521) (227,810,831) 
Net increase (decrease) in net assets resulting from operations 114,275,129 2,128,855,400 
Distributions to shareholders from net investment income (176,945,760) (161,948,221) 
Distributions to shareholders from net realized gain (1,751,090,544) (388,082,984) 
Total distributions (1,928,036,304) (550,031,205) 
Share transactions - net increase (decrease) 730,822,309 (730,491,919) 
Redemption fees – 13 
Total increase (decrease) in net assets (1,082,938,866) 848,332,289 
Net Assets   
Beginning of period 19,705,815,675 18,857,483,386 
End of period (including distributions in excess of net investment income of $780,806 and undistributed net investment income of $1,449,774, respectively) $18,622,876,809 $19,705,815,675 

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


Financial Highlights — VIP Contrafund Portfolio Initial Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $37.36 $34.35 $26.44 $23.02 $23.88 
Income from Investment Operations      
Net investment income (loss)A .35 .36 .32 .32 .25 
Net realized and unrealized gain (loss) (.14) 3.76 7.94 3.46 (.86) 
Total from investment operations .21 4.12 8.26 3.78 (.61) 
Distributions from net investment income (.37) (.36) (.34) (.34)B (.25) 
Distributions from net realized gain (3.30) (.75) (.01) (.01)B – 
Total distributions (3.66)C (1.11) (.35) (.36)D (.25) 
Redemption fees added to paid in capitalA – –E –E –E –E 
Net asset value, end of period $33.91 $37.36 $34.35 $26.44 $23.02 
Total ReturnF,G .64% 11.94% 31.29% 16.42% (2.53)% 
Ratios to Average Net AssetsH,I      
Expenses before reductions .63% .63% .64% .64% .65% 
Expenses net of fee waivers, if any .63% .63% .63% .64% .64% 
Expenses net of all reductions .62% .63% .62% .63% .63% 
Net investment income (loss) 1.01% 1.01% 1.05% 1.27% 1.03% 
Supplemental Data      
Net assets, end of period (000 omitted) $7,436,130 $8,005,930 $7,654,305 $6,440,357 $6,113,440 
Portfolio turnover rateJ 80% 74% 86% 87% 135% 

 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 $3.66 per share is comprised of distributions from net investment income of $.369 and distributions from net realized gain of $3.295 per share.

 D Total distributions of $.36 per share is comprised of distributions from net investment income of $.342 and distributions from net realized gain of $.013 per share.

 E Amount represents less than $.005 per share.

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

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

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

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

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


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


Financial Highlights — VIP Contrafund Portfolio Service Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $37.23 $34.24 $26.36 $22.95 $23.81 
Income from Investment Operations      
Net investment income (loss)A .32 .33 .29 .30 .22 
Net realized and unrealized gain (loss) (.13) 3.73 7.91 3.44 (.85) 
Total from investment operations .19 4.06 8.20 3.74 (.63) 
Distributions from net investment income (.33) (.32) (.31) (.32)B (.23) 
Distributions from net realized gain (3.30) (.75) (.01) (.01)B – 
Total distributions (3.63) (1.07) (.32) (.33) (.23) 
Redemption fees added to paid in capitalA – –C –C –C –C 
Net asset value, end of period $33.79 $37.23 $34.24 $26.36 $22.95 
Total ReturnD,E .56% 11.82% 31.14% 16.31% (2.64)% 
Ratios to Average Net AssetsF,G      
Expenses before reductions .73% .73% .74% .74% .75% 
Expenses net of fee waivers, if any .73% .73% .73% .74% .74% 
Expenses net of all reductions .72% .73% .72% .73% .73% 
Net investment income (loss) .91% .91% .95% 1.16% .93% 
Supplemental Data      
Net assets, end of period (000 omitted) $1,546,864 $1,714,615 $1,688,448 $1,374,781 $1,277,101 
Portfolio turnover rateH 80% 74% 86% 87% 135% 

 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 Amount represents less than $.005 per share.

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

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

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

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

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


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


Financial Highlights — VIP Contrafund Portfolio Service Class 2

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $36.70 $33.77 $26.00 $22.64 $23.49 
Income from Investment Operations      
Net investment income (loss)A .26 .27 .24 .26 .18 
Net realized and unrealized gain (loss) (.14) 3.68 7.80 3.39 (.84) 
Total from investment operations .12 3.95 8.04 3.65 (.66) 
Distributions from net investment income (.28) (.27) (.26) (.28)B (.19) 
Distributions from net realized gain (3.30) (.75) (.01) (.01)B – 
Total distributions (3.57)C (1.02) (.27) (.29) (.19) 
Redemption fees added to paid in capitalA – –D –D –D –D 
Net asset value, end of period $33.25 $36.70 $33.77 $26.00 $22.64 
Total ReturnE,F .39% 11.65% 30.95% 16.14% (2.78)% 
Ratios to Average Net AssetsG,H      
Expenses before reductions .88% .88% .89% .89% .90% 
Expenses net of fee waivers, if any .88% .88% .88% .89% .89% 
Expenses net of all reductions .87% .88% .87% .88% .88% 
Net investment income (loss) .76% .76% .80% 1.02% .78% 
Supplemental Data      
Net assets, end of period (000 omitted) $8,363,076 $8,764,266 $8,472,780 $7,740,640 $6,980,191 
Portfolio turnover rateI 80% 74% 86% 87% 135% 

 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 $3.57 per share is comprised of distributions from net investment income of $.279 and distributions from net realized gain of $3.295 per share.

 D Amount represents less than $.005 per share.

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

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

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

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

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


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


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


Financial Highlights — VIP Contrafund Portfolio Investor Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $37.21 $34.22 $26.35 $22.94 $23.80 
Income from Investment Operations      
Net investment income (loss)A .32 .33 .29 .30 .23 
Net realized and unrealized gain (loss) (.13) 3.74 7.91 3.45 (.86) 
Total from investment operations .19 4.07 8.20 3.75 (.63) 
Distributions from net investment income (.34) (.33) (.32) (.32)B (.23) 
Distributions from net realized gain (3.30) (.75) (.01) (.01)B – 
Total distributions (3.64) (1.08) (.33) (.34)C (.23) 
Redemption fees added to paid in capitalA – –D –D –D –D 
Net asset value, end of period $33.76 $37.21 $34.22 $26.35 $22.94 
Total ReturnE,F .56% 11.85% 31.15% 16.34% (2.62)% 
Ratios to Average Net AssetsG,H      
Expenses before reductions .71% .71% .72% .73% .73% 
Expenses net of fee waivers, if any .71% .71% .71% .73% .73% 
Expenses net of all reductions .70% .71% .71% .71% .71% 
Net investment income (loss) .93% .93% .97% 1.18% .94% 
Supplemental Data      
Net assets, end of period (000 omitted) $1,276,807 $1,210,592 $1,031,358 $698,845 $577,021 
Portfolio turnover rateI 80% 74% 86% 87% 135% 

 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 $.34 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $.013 per share.

 D Amount represents less than $.005 per share.

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

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

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

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

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


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


Notes to Financial Statements

For the period ended December 31, 2015

1. Organization.

VIP Contrafund Portfolio (the Fund) is a fund of Variable Insurance Products Fund II (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. The Fund offered Service Class 2R shares during the period April 24, 2002 through April 30, 2015, and all outstanding shares were converted to Service Class 2 shares by April 30, 2015. 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, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.

3. Significant Accounting Policies.

The 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 Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). 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. U.S. government and government agency obligations are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.

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

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of December 31, 2015, 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Subsequent to ex-dividend date the Fund determines the components of these distributions, based upon receipt of tax filings or other correspondence relating to the underlying investment. 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.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of December 31, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.

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

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

Book-tax differences are primarily due to future contracts, foreign currency transactions, short-term gain distributions from the underlying funds, passive foreign investment companies (PFIC), market discount, partnerships, deferred trustees compensation 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 $3,885,918,269 
Gross unrealized depreciation (878,064,417) 
Net unrealized appreciation (depreciation) on securities $3,007,853,852 
Tax Cost $15,773,644,473 

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

Undistributed long-term capital gain $1,451,089,124 
Net unrealized appreciation (depreciation) on securities and other investments $3,007,727,338 

The Fund intends to elect to defer to its next fiscal year $59,189,705 of capital losses recognized during the period November 1, 2015 to December 31, 2015.

The tax character of distributions paid was as follows:

 December 31, 2015 December 31, 2014 
Ordinary Income $332,205,069 $ 550,031,205 
Long-term Capital Gains 1,595,831,235 – 
Total $1,928,036,304 $ 550,031,205 

Trading (Redemption) Fees. Service Class 2R shares held by investors less than 60 days may have been subject to a redemption fee equal to 1% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. These redemption fees were eliminated effective April 30, 2015.

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 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 $2,138,003 and a change in net unrealized appreciation (depreciation) of $(215,223) 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, other than short-term securities, aggregated $15,215,723,815 and $16,217,211,883, 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 .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 annual 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 and Service Class 2R's average net assets.

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

Service Class $1,650,945 
Service Class 2 21,781,847 
Service Class 2R(a) 8,632 
 $23,441,424 

 (a) For the period January 1, 2015 through April 30, 2015.


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 (with the exception of Investor Class) pays a fee for transfer agent services, typesetting, printing and mailing of shareholder reports, excluding mailing of proxy statements and out of pocket expenses, equal to an annual rate of .07% (.15% for Investor Class) of class-level average net assets. For the period, transfer agent fees for each class, including out of pocket expenses, were as follows:

Initial Class $5,191,806 
Service Class 1,090,201 
Service Class 2 5,751,481 
Service Class 2R(a) 2,276 
Investor Class 1,848,232 
 $13,883,996 

 (a) For the period January 1, 2015 through April 30, 2015.


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 $244,252 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 $7,531.

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 $28,208 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.

8. Security Lending.

The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. For equity securities, a lending agent is used and may loan securities to certain qualified borrowers, including Fidelity Capital Markets (FCM), a broker-dealer affiliated with the Fund. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. The value of securities loaned to FCM at period end was $2,824,800. 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 $1,523,547, including $69,724 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 $993,689 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 $79,633 and a portion of class-level operating expenses as follows:

 Amount 
Investor Class $24,858 

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Years ended December 31, 2015(a) 2014 
From net investment income   
Initial Class $79,941,331 $74,463,277 
Service Class 14,932,185 14,364,873 
Service Class 2 69,447,147 62,622,769 
Service Class 2R 856 73,371 
Investor Class 12,624,241 10,423,931 
Total $176,945,760 $161,948,221 
From net realized gain   
Initial Class $703,131,983 $156,226,874 
Service Class 150,460,594 33,622,782 
Service Class 2 788,053,180 174,366,001 
Service Class 2R 864,532 208,163 
Investor Class 108,580,255 23,659,164 
Total $1,751,090,544 $388,082,984 

 (a) All Service Class 2R shares were converted by April 30, 2015.


11. Share Transactions.

Transactions for each class of shares were as follows:

 Shares Shares Dollars Dollars 
Years ended December 31, 2015(a) 2014 2015(a) 2014 
Initial Class     
Shares sold 8,952,835 10,169,551 $315,514,465 $365,094,273 
Reinvestment of distributions 22,901,483 6,099,687 783,073,314 230,690,151 
Shares redeemed (26,888,922) (24,801,841) (943,774,825) (891,153,398) 
Net increase (decrease) 4,965,396 (8,532,603) $154,812,954 $(295,368,974) 
Service Class     
Shares sold 1,554,871 1,837,138 $54,599,900 $66,530,853 
Reinvestment of distributions 4,853,587 1,273,220 165,392,779 47,987,655 
Shares redeemed (6,683,290) (6,372,556) (233,768,207) (228,362,389) 
Net increase (decrease) (274,832) (3,262,198) $(13,775,528) $(113,843,881) 
Service Class 2     
Shares sold 21,717,333 19,214,314 $748,436,481 $682,228,630 
Reinvestment of distributions 25,563,476 6,379,240 857,500,327 236,988,770 
Shares redeemed (34,618,040) (37,694,574) (1,186,593,252) (1,326,668,678) 
Net increase (decrease) 12,662,769 (12,101,020) $419,343,556 $(407,451,278) 
Service Class 2R     
Shares sold 11,068 17,673 $389,193 $616,867 
Reinvestment of distributions 25,733 7,591 865,388 281,534 
Shares redeemed (321,045) (55,287) (11,097,459) (1,946,621) 
Net increase (decrease) (284,244) (30,023) $(9,842,878) $(1,048,220) 
Investor Class     
Shares sold 3,099,314 2,779,701 $107,242,291 $99,365,365 
Reinvestment of distributions 3,561,108 904,781 121,204,496 34,083,095 
Shares redeemed (1,379,023) (1,288,330) (48,162,582) (46,228,026) 
Net increase (decrease) 5,281,399 2,396,152 $180,284,205 $87,220,434 

 (a) All Service Class 2R shares were converted by April 30, 2015.


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 12% 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.

Report of Independent Registered Public Accounting Firm

To the Trustees of Variable Insurance Products Fund II and Shareholders of VIP Contrafund Portfolio:

We have audited the accompanying statement of assets and liabilities of VIP Contrafund Portfolio (the Fund), a fund of Variable Insurance Products Fund II, including the schedule of investments, as of December 31, 2015, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2015, by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of VIP Contrafund Portfolio as of December 31, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 16, 2016

Trustees and Officers

The Trustees, Members of the Advisory Board (if any), and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance.  Each of the Trustees oversees 170 funds. 

The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust.  Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the fund is referred to herein as an Independent Trustee.  Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs.  The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees.  Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years. 

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

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

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

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

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

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

Interested Trustees*:

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

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

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

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

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

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

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

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

Independent Trustees:

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

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

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

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

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

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

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is Chairman of the Board of Directors of Artis-Naples in Naples, Florida (2012-present), a member of the Council on Foreign Relations (1994-present), and a member of the Board of Governors, State University System of Florida (2013-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007).

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

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

Robert W. Selander (1950)

Year of Election or Appointment: 2011

Trustee

Mr. Selander also serves as Trustee of other Fidelity® funds. Mr. Selander serves as a Director of The Western Union Company (global money transfer, 2014-present) and a non-executive Chairman of Health Equity, Inc. (health savings custodian, 2015-present). Previously, Mr. Selander served as a Member of the Advisory Board of other Fidelity® funds (2011), and Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc.

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

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

William S. Stavropoulos (1939)

Year of Election or Appointment: 2001

Trustee

Vice Chairman of the Independent Trustees

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

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

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

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

Advisory Board Members and Officers:

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

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

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

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

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

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

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

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

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

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2008

Deputy Treasurer

Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005).

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

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

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

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

Scott C. Goebel (1968)

Year of Election or Appointment: 2015

Vice President

Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and FMR Investment Management (U.K.) Limited (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

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

John F. Papandrea (1972)

Year of Election or Appointment: 2016

Anti-Money Laundering (AML) Officer

Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).

Melissa M. Reilly (1971)

Year of Election or Appointment: 2014

Vice President of certain Equity Funds

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

Kenneth B. Robins (1969)

Year of Election or Appointment: 2008

President and Treasurer

Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.

Stacie M. Smith (1974)

Year of Election or Appointment: 2013

Deputy Treasurer

Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009).

Renee Stagnone (1975)

Year of Election or Appointment: 2013

Deputy Treasurer

Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present).

Linda J. Wondrack (1964)

Year of Election or Appointment: 2014

Chief Compliance Officer

Ms. Wondrack also serves as Chief Compliance Officer of other funds. Ms. Wondrack is Executive Vice President and head of the Ethics Office and Asset Management Compliance for Fidelity Investments (2012-present). Ms. Wondrack also serves as Chief Compliance Officer of Fidelity SelectCo, LLC (investment adviser firm, 2014-present); Chief Compliance Officer of Impresa Management LLC (2013-present); and Chief Compliance Officer of FMR Co., Inc. (investment adviser firm), Fidelity Investments Money Management, Inc. (investment adviser firm), FMR Investment Management (U.K.) Limited (investment adviser firm), Fidelity Management & Research (Hong Kong) (investment adviser firm), Fidelity Management & Research Company (investment adviser firm), FIAM LLC (investment adviser firm), and Strategic Advisers, Inc. (investment adviser firm), Ballyrock Investment Advisors LLC, and Northern Neck Investors LLC (2012-present). Previously, Ms. Wondrack served as Chief Compliance Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016); Senior Vice President and Chief Compliance Officer for Columbia Management Investment Advisers, LLC (2005-2012); Chief Compliance Officer for certain funds within the Columbia Family of Funds (2007-2012); and Senior Vice President of Compliance Risk Management at Bank of America (2005-2010).

Joseph F. Zambello (1957)

Year of Election or Appointment: 2011

Deputy Treasurer

Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009).

Shareholder Expense Example

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2015 to December 31, 2015).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 Annualized Expense Ratio-A Beginning
Account Value
July 1, 2015 		Ending
Account Value
December 31, 2015 		Expenses Paid
During Period-B
July 1, 2015
to December 31, 2015 
Initial Class .63%    
Actual  $1,000.00 $974.20 $3.13 
Hypothetical-C  $1,000.00 $1,022.03 $3.21 
Service Class .73%    
Actual  $1,000.00 $973.90 $3.63 
Hypothetical-C  $1,000.00 $1,021.53 $3.72 
Service Class 2 .88%    
Actual  $1,000.00 $972.90 $4.38 
Hypothetical-C  $1,000.00 $1,020.77 $4.48 
Investor Class .71%    
Actual  $1,000.00 $973.60 $3.53 
Hypothetical-C  $1,000.00 $1,021.63 $3.62 

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

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

 C 5% return per year before expenses


Distributions (Unaudited)

The Board of Trustees of VIP Contrafund Portfolio voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:

 Pay Date Record Date Dividends Capital Gains 
Initial Class  02/05/2016 02/05/2016 $0.00 $2.648 
Service Class  02/05/2016 02/05/2016 $0.00 $2.648 
Service Class 2  02/05/2016 02/05/2016 $0.00 $2.648 
Investor Class  02/05/2016 02/05/2016 $0.00 $2.648 

The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2015 $1,452,533,002, or, if subsequently determined to be different, the net capital gain of such year.

A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:

 February 2015 December 2015 
Initial Class  20%  70% 
Service Class  21%  74% 
Service Class 2  22%  81% 
Investor Class  20%  73% 
Service Class 2R  22%  0% 

Board Approval of Investment Advisory Contracts and Management Fees

VIP Contrafund Portfolio

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

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

At its July 2015 meeting, the Board unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; and (iv) the extent to which (if any) economies of scale exist and would be realized as the fund grows, and whether any economies of scale are appropriately shared with fund shareholders.

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

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

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

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

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

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

Investment in a Large Fund Family.  The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds and diversified international funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching active fixed-income exchange-traded funds; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and information security and to increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (x) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (xi) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xii) implementing changes to Fidelity's money market product line in response to recent money market regulatory reforms.

Investment Performance.  The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history. The Board noted that there were portfolio management changes for the fund in April 2013 and June 2013.

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

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

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

VIP Contrafund Portfolio


The Board noted that, on April 30, 2015 (after the periods shown in the chart above), FMR converted assets in Service Class 2 R into Service Class 2.

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

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

Management Fee.  The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure without taking into account performance adjustments, if any. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.

VIP Contrafund Portfolio


The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2014.

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

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

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

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

The Board noted that the total expense ratio of each class ranked below its competitive median for 2014.

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

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

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

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

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

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

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

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

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

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

Additional Information Requested by the Board.  In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) fund performance trends and Fidelity's long-term strategies for certain funds; (ii) the various share classes employed by Fidelity and the attributes of each class, together with similar information on the distribution and servicing payments made by Fidelity or the funds to third-party participants in the distribution channels; (iii) fund profitability, and fund performance in relation to fund profitability; (iv) the methodology with respect to evaluating competitive fund data and peer group classifications and fee comparisons; (v) annual fund profitability margins, with particular focus on certain funds with negative margins; (vi) the realization of fall-out benefits in certain Fidelity business units; (vii) economies of scale and the way in which they are shared with fund shareholders;(viii) Fidelity's group fee structures, including the group fee schedule of breakpoints;(ix) the impact of cost containment measures on the funds; and (x) the transfer agent fee structure.

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





Fidelity Investments

VIPCON-ANN-0216
1.540131.118



Fidelity® Variable Insurance Products:

Emerging Markets Portfolio



Annual Report

December 31, 2015



Fidelity Investments


Contents

Performance

Management's Discussion of Fund Performance

Investment Summary

Investments

Financial Statements

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

Trustees and Officers

Shareholder Expense Example

Distributions

Board Approval of Investment Advisory Contracts and Management Fees


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

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.



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

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

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

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.



Performance: The Bottom Line

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

Average Annual Total Returns

For the periods ended December 31, 2015 Past 1 year Past 5 years Life of FundA 
Initial Class (9.97)% (3.06)% (1.63)% 
Service Class (10.15)% (3.16)% (1.73)% 
Service Class 2 (10.31)% (3.32)% (1.89)% 
Investor Class (10.08)% (3.13)% (1.71)% 

 A From January 23, 2008


$10,000 Over Life of Fund

Let's say hypothetically that $10,000 was invested in VIP Emerging Markets Portfolio - Initial Class on January 23, 2008, when the fund started.

The chart shows how the value of your investment would have changed, and also shows how the MSCI Emerging Markets Index performed over the same period.


Period Ending Values
$8,774VIP Emerging Markets Portfolio - Initial Class
$9,373MSCI Emerging Markets Index

Management's Discussion of Fund Performance

Market Recap:  International equities suffered a moderate setback for the 12 months ending December 31, 2015, held back by a collapse in commodities prices that hurt resources-related sectors and geographies. The MSCI ACWI (All Country World Index) ex USA Index returned -5.54% for the period, affected also by concerns about global economic growth. Commodity producers remained under pressure for much of the past year, largely related to economic deceleration in China (-14%), the world’s second-largest economy and a leading consumer of raw materials. This effect was exacerbated by U.S. dollar strength relative to global currencies, which weighed on commodities priced in dollars and acutely impacted equity returns within regions most exposed to resources prices. The emerging-markets group, for example, returned about -16% this period. Canada, a significant energy producer, returned roughly -23%. Net energy consumer Japan (+10%) was the best-performing region by far. Only about a quarter of the nearly 50 index countries managed a gain this period: Denmark (+24%) and Ireland (+17%) – the EU’s fastest-growing economy – proved top performers; Greece (-61%) and Brazil (-41%), among the worst. As for the 10 economic sectors, health care (+6%) and consumer staples (+5%) proved the only gainers, whereas energy (-22%) and materials (-20%) declined the most.

Comments from Portfolio Manager Sammy Simnegar:  For the year, the fund’s share classes mostly recorded low double-digit declines that considerably outperformed the -14.60% return of the benchmark MSCI Emerging Markets Index. Positioning in information technology, health care, industrials and financials meaningfully contributed to performance versus the benchmark. Geographically, stock selection in China and Mexico, along with out-of-benchmark exposure to the U.S., stood out as positives. Two out-of-benchmark positions established during the period were key contributors. China Biologic Products, which manufactures plasma-based biopharmaceutical products for sale to hospitals and other health care facilities in China, was the fund’s top relative contributor. China-based pharmaceutical firm Jiangsu Hengrui Medicine also helped. Elsewhere, avoiding weak-performing, Brazil-based index components Banco Bradesco, one of the country's largest banks; metals miner Vale; and oil producer Petroleo Brasileiro, also known as Petrobras, bolstered relative performance. Conversely, consumer discretionary and consumer staples detracted. Among countries, Russia and South Korea weighed on performance. Also, a sizable overweighting in Brazil-based health insurer Qualicorp dampened our results, as did overweighting Brazil's for-profit educator Kroton Educacional and not owning wireless carrier China Mobile, an index name that roughly broke even.

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

Investment Summary (Unaudited)

Geographic Diversification (% of fund's net assets)

As of December 31, 2015 
   India 13.3% 
   United States of America* 9.5% 
   Cayman Islands 8.6% 
   Mexico 7.2% 
   China 7.0% 
   Taiwan 6.8% 
   South Africa 6.4% 
   Korea (South) 5.8% 
   Brazil 5.4% 
   Other 30.0% 


 * Includes Short-Term investments and Net Other Assets (Liabilities).


As of June 30, 2015 
   India 12.9% 
   China 10.5% 
   South Africa 8.6% 
   Brazil 7.9% 
   Mexico 7.5% 
   United States of America* 7.5% 
   Cayman Islands 6.7% 
   Taiwan 5.9% 
   Korea (South) 5.3% 
   Other 27.2% 


 * Includes Short-Term investments and Net Other Assets (Liabilities).


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

Asset Allocation as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Stocks 99.0 97.4 
Short-Term Investments and Net Other Assets (Liabilities) 1.0 2.6 

Top Ten Stocks as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Taiwan Semiconductor Manufacturing Co. Ltd. (Taiwan, Semiconductors & Semiconductor Equipment) 3.6 3.0 
Tencent Holdings Ltd. (Cayman Islands, Internet Software & Services) 3.4 2.9 
Naspers Ltd. Class N (South Africa, Media) 2.1 2.0 
Alibaba Group Holding Ltd. sponsored ADR (Cayman Islands, Internet Software & Services) 1.8 0.5 
Ping An Insurance (Group) Co. of China Ltd. (H Shares) (China, Insurance) 1.4 0.0 
Housing Development Finance Corp. Ltd. (India, Thrifts & Mortgage Finance) 1.3 1.3 
Tata Consultancy Services Ltd. (India, IT Services) 1.0 0.9 
Ambev SA sponsored ADR (Brazil, Beverages) 1.0 1.1 
Fomento Economico Mexicano S.A.B. de CV unit (Mexico, Beverages) 0.9 0.8 
NAVER Corp. (Korea (South), Internet Software & Services) 0.9 0.8 
 17.4  

Market Sectors as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Information Technology 19.9 21.2 
Financials 18.5 24.6 
Consumer Discretionary 16.2 15.3 
Consumer Staples 13.2 6.3 
Industrials 11.5 14.2 
Health Care 9.8 7.9 
Materials 4.2 2.6 
Utilities 3.1 1.9 
Telecommunication Services 1.5 2.8 
Energy 1.1 0.6 

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

Investments December 31, 2015

Showing Percentage of Net Assets

Common Stocks - 98.0%   
 Shares Value 
Australia - 0.9%   
Amcor Ltd. 83,814 $814,273 
Sydney Airport unit 209,472 964,057 
TOTAL AUSTRALIA  1,778,330 
Bailiwick of Jersey - 0.2%   
Integrated Diagnostics Holdings PLC (a) 74,846 370,113 
Belgium - 0.4%   
Anheuser-Busch InBev SA NV 6,600 821,352 
Bermuda - 2.0%   
China Gas Holdings Ltd. 688,000 988,573 
China Resource Gas Group Ltd. 348,000 1,037,146 
Credicorp Ltd. (United States) 12,076 1,175,236 
PAX Global Technology Ltd. 801,000 821,801 
TOTAL BERMUDA  4,022,756 
Brazil - 4.4%   
BB Seguridade Participacoes SA 170,200 1,046,690 
Cetip SA - Mercados Organizado 106,400 1,008,531 
Cielo SA 142,232 1,207,601 
Kroton Educacional SA 452,600 1,090,244 
Qualicorp SA 317,500 1,133,972 
Smiles SA 128,500 1,130,313 
Ultrapar Participacoes SA 74,700 1,141,388 
Weg SA 262,780 993,001 
TOTAL BRAZIL  8,751,740 
British Virgin Islands - 0.6%   
Mail.Ru Group Ltd. GDR (Reg. S) (a) 49,100 1,107,205 
Cayman Islands - 8.6%   
Alibaba Group Holding Ltd. sponsored ADR (a) 42,500 3,453,975 
ENN Energy Holdings Ltd. 200,000 1,060,923 
Fu Shou Yuan International Group Ltd. 1,254,000 972,531 
Hengan International Group Co. Ltd. 127,500 1,196,987 
Shenzhou International Group Holdings Ltd. 207,000 1,186,272 
Sino Biopharmaceutical Ltd. 1,377,000 1,244,969 
TAL Education Group ADR (a)(b) 22,200 1,031,634 
Tencent Holdings Ltd. 345,200 6,759,011 
TOTAL CAYMAN ISLANDS  16,906,302 
China - 7.0%   
Beijing Capital International Airport Co. Ltd. (H Shares) 992,000 1,065,461 
China Pacific Insurance (Group) Co. Ltd. (H Shares) 418,000 1,710,612 
Fuyao Glass Industries Group Co. Ltd. (a) 400,400 961,651 
Inner Mongoli Yili Industries Co. Ltd. 330,400 833,281 
Jiangsu Hengrui Medicine Co. Ltd. 129,844 979,084 
Kweichow Moutai Co. Ltd. 32,172 1,077,529 
PICC Property & Casualty Co. Ltd. (H Shares) 609,297 1,202,458 
Ping An Insurance (Group) Co. of China Ltd. (H Shares) 484,500 2,671,875 
Shanghai International Airport Co. Ltd. 214,300 970,430 
Weifu High-Technology Co. Ltd. (B Shares) 106,076 272,505 
Zhengzhou Yutong Bus Co. Ltd. 285,850 985,561 
Zhuzhou CSR Times Electric Co. Ltd. (H Shares) 173,000 997,615 
TOTAL CHINA  13,728,062 
Denmark - 0.5%   
Novo Nordisk A/S Series B sponsored ADR 17,100 993,168 
France - 1.3%   
Hermes International SCA 2,400 813,106 
LVMH Moet Hennessy - Louis Vuitton SA 5,028 789,749 
Safran SA 12,600 867,729 
TOTAL FRANCE  2,470,584 
Germany - 0.9%   
Bayer AG 6,600 824,277 
Wirecard AG (b) 19,100 954,714 
TOTAL GERMANY  1,778,991 
Hong Kong - 2.2%   
AIA Group Ltd. 164,000 979,914 
CSPC Pharmaceutical Group Ltd. 1,084,000 1,105,147 
Guangdong Investment Ltd. 784,000 1,107,187 
Techtronic Industries Co. Ltd. 257,000 1,040,399 
TOTAL HONG KONG  4,232,647 
India - 13.3%   
Adani Ports & Special Economic Zone (a) 310,789 1,221,021 
Amara Raja Batteries Ltd. (a) 65,365 847,918 
Asian Paints India Ltd. 83,420 1,110,454 
Axis Bank Ltd. (a) 124,555 839,518 
Bharti Infratel Ltd. 180,410 1,163,105 
Colgate-Palmolive (India) 60,943 893,492 
GlaxoSmithKline Consumer Healthcare Ltd. (a) 8,922 858,121 
HCL Technologies Ltd. 106,374 1,370,858 
HDFC Bank Ltd. 52,223 1,054,200 
Hindustan Unilever Ltd. 111,572 1,452,942 
Housing Development Finance Corp. Ltd. 139,494 2,651,140 
IndusInd Bank Ltd. 62,984 918,585 
ITC Ltd. 316,922 1,565,932 
LIC Housing Finance Ltd. (a) 146,234 1,124,976 
Lupin Ltd. 43,805 1,211,072 
Maruti Suzuki India Ltd. (a) 17,435 1,213,274 
Power Grid Corp. of India Ltd. 440,739 937,200 
Sun Pharmaceutical Industries Ltd. 137,475 1,699,306 
Tata Consultancy Services Ltd. 55,408 2,035,450 
Titan Co. Ltd. (a) 171,947 898,275 
Zee Entertainment Enterprises Ltd. 181,461 1,195,280 
TOTAL INDIA  26,262,119 
Indonesia - 4.6%   
PT ACE Hardware Indonesia Tbk 17,356,900 1,032,321 
PT Bank Central Asia Tbk 1,675,000 1,604,783 
PT Bank Rakyat Indonesia Tbk 1,916,640 1,572,987 
PT Kalbe Farma Tbk 10,300,600 980,044 
PT Matahari Department Store Tbk 855,600 1,083,133 
PT Media Nusantara Citra Tbk 6,867,700 914,333 
PT Surya Citra Media Tbk 4,392,400 979,439 
PT Tower Bersama Infrastructure Tbk (a) 1,891,600 800,180 
TOTAL INDONESIA  8,967,220 
Isle of Man - 0.5%   
Playtech Ltd. 80,604 989,230 
Israel - 0.9%   
Check Point Software Technologies Ltd. (a) 10,800 878,904 
Teva Pharmaceutical Industries Ltd. sponsored ADR 14,400 945,216 
TOTAL ISRAEL  1,824,120 
Kenya - 0.5%   
Safaricom Ltd. 6,261,400 997,662 
Korea (South) - 5.8%   
AMOREPACIFIC Corp. 4,655 1,629,799 
AMOREPACIFIC Group, Inc. 4,916 612,743 
BGFretail Co. Ltd. 6,400 924,401 
Coway Co. Ltd. 14,463 1,027,420 
KEPCO Plant Service & Engineering Co. Ltd. 12,458 940,197 
KT&G Corp. 15,676 1,389,838 
LG Chemical Ltd. 5,974 1,645,518 
LG Household & Health Care Ltd. 1,629 1,443,189 
NAVER Corp. 3,155 1,755,295 
TOTAL KOREA (SOUTH)  11,368,400 
Luxembourg - 0.5%   
Eurofins Scientific SA 2,830 989,850 
Mexico - 7.2%   
Banregio Grupo Financiero S.A.B. de CV 178,277 913,806 
Fomento Economico Mexicano S.A.B. de CV unit 188,500 1,767,806 
Gruma S.A.B. de CV Series B 70,500 988,910 
Grupo Aeroportuario del Pacifico SA de CV Series B 114,000 1,005,756 
Grupo Aeroportuario del Sureste SA de CV Series B 71,675 1,014,292 
Grupo Aeroportuario Norte S.A.B. de CV 221,700 1,075,537 
Grupo Financiero Banorte S.A.B. de CV Series O 315,300 1,737,814 
Grupo GICSA SA de CV (a) 909,390 853,221 
Infraestructura Energetica Nova S.A.B. de CV 191,180 802,458 
Kimberly-Clark de Mexico SA de CV Series A 431,700 1,011,212 
Megacable Holdings S.A.B. de CV unit 251,764 937,697 
Promotora y Operadora de Infraestructura S.A.B. de CV 89,500 1,052,791 
Tenedora Nemak SA de CV 724,400 981,447 
TOTAL MEXICO  14,142,747 
Netherlands - 0.4%   
Hanhzhou Hikvision Digital Technology Co. Ltd. ELS (BNP Paribas Arbitrage Warrant Program) warrants 10/21/16 (a)(c) 137,500 723,823 
Philippines - 4.5%   
Ayala Corp. 72,750 1,169,176 
Ayala Land, Inc. 1,543,500 1,131,382 
GT Capital Holdings, Inc. 39,940 1,122,042 
International Container Terminal Services, Inc. 639,830 955,675 
Jollibee Food Corp. 217,380 1,011,916 
Robinsons Land Corp. (d) 142,200 83,354 
SM Investments Corp. 61,235 1,121,710 
SM Prime Holdings, Inc. 2,747,300 1,266,877 
Universal Robina Corp. 243,170 962,216 
TOTAL PHILIPPINES  8,824,348 
Russia - 0.7%   
Magnit OJSC (a) 9,453 1,453,949 
South Africa - 6.4%   
Aspen Pharmacare Holdings Ltd. 67,384 1,345,299 
Bidvest Group Ltd. 56,625 1,201,877 
Discovery Ltd. 129,264 1,108,649 
FirstRand Ltd. 486,200 1,328,763 
Imperial Holdings Ltd. 44 341 
Mr Price Group Ltd. 76,013 978,117 
Naspers Ltd. Class N 30,868 4,219,172 
Sanlam Ltd. 343,600 1,344,056 
Woolworths Holdings Ltd. 176,200 1,139,885 
TOTAL SOUTH AFRICA  12,666,159 
Spain - 0.5%   
Amadeus IT Holding SA Class A 22,700 1,003,667 
Switzerland - 0.4%   
Sika AG 240 867,311 
Taiwan - 6.8%   
Advantech Co. Ltd. 146,000 932,994 
Catcher Technology Co. Ltd. 135,000 1,123,057 
ECLAT Textile Co. Ltd. 76,000 1,042,144 
Giant Manufacturing Co. Ltd. 129,000 853,348 
Largan Precision Co. Ltd. 20,000 1,365,627 
Merida Industry Co. Ltd. 164,050 877,981 
Taiwan Semiconductor Manufacturing Co. Ltd. 1,651,000 7,107,882 
TOTAL TAIWAN  13,303,033 
Thailand - 1.6%   
Airports of Thailand PCL (For. Reg.) 133,900 1,279,638 
Bangkok Dusit Medical Services PCL (For. Reg.) 1,662,200 1,026,703 
Thai Beverage PCL 1,863,700 904,754 
TOTAL THAILAND  3,211,095 
Turkey - 1.9%   
Koc Holding A/S 242,000 906,348 
TAV Havalimanlari Holding A/S 147,000 916,860 
Tofas Turk Otomobil Fabrikasi A/S 136,557 887,311 
Tupras Turkiye Petrol Rafinelleri A/S (a) 41,000 978,467 
TOTAL TURKEY  3,688,986 
United Arab Emirates - 1.2%   
DP World Ltd. 62,464 1,268,019 
First Gulf Bank PJSC 317,176 1,092,370 
TOTAL UNITED ARAB EMIRATES  2,360,389 
United Kingdom - 2.8%   
British American Tobacco PLC (United Kingdom) 15,700 871,884 
Hikma Pharmaceuticals PLC 31,999 1,085,449 
InterContinental Hotel Group PLC 22,700 884,813 
NMC Health PLC 75,500 935,494 
Prudential PLC 39,790 896,448 
Unilever PLC 20,300 870,711 
TOTAL UNITED KINGDOM  5,544,799 
United States of America - 8.5%   
A.O. Smith Corp. 12,700 972,947 
Alphabet, Inc. Class C 1,304 989,580 
Apple, Inc. 8,500 894,710 
China Biologic Products, Inc. (a) 8,100 1,153,926 
Cognizant Technology Solutions Corp. Class A (a) 13,600 816,272 
Ecolab, Inc. 7,800 892,164 
Facebook, Inc. Class A (a) 7,400 774,484 
International Flavors & Fragrances, Inc. 7,900 945,156 
MasterCard, Inc. Class A 9,300 905,448 
McGraw Hill Financial, Inc. 10,200 1,005,516 
MercadoLibre, Inc. (b) 8,000 914,720 
Mettler-Toledo International, Inc. (a) 3,000 1,017,390 
Moody's Corp. 9,800 983,332 
NIKE, Inc. Class B 13,200 825,000 
Philip Morris International, Inc. 9,100 799,981 
PPG Industries, Inc. 9,400 928,908 
Sherwin-Williams Co. 3,800 986,480 
Visa, Inc. Class A 12,400 961,620 
TOTAL UNITED STATES OF AMERICA  16,767,634 
TOTAL COMMON STOCKS   
(Cost $185,665,637)  192,917,791 
Nonconvertible Preferred Stocks - 1.0%   
Brazil - 1.0%   
Ambev SA sponsored ADR   
(Cost $3,032,273) 438,290 1,954,773 
Money Market Funds - 2.6%   
Fidelity Cash Central Fund, 0.33% (e) 2,211,445 2,211,445 
Fidelity Securities Lending Cash Central Fund, 0.35% (e)(f) 2,994,712 2,994,712 
TOTAL MONEY MARKET FUNDS   
(Cost $5,206,157)  5,206,157 
TOTAL INVESTMENT PORTFOLIO - 101.6%   
(Cost $193,904,067)  200,078,721 
NET OTHER ASSETS (LIABILITIES) - (1.6)%  (3,211,754) 
NET ASSETS - 100%  $196,866,967 

Categorizations in the Schedule of Investments are based on country or territory of incorporation.

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 $723,823 or 0.4% of net assets.

 (d) A portion of the security sold on a delayed delivery basis.

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

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


Affiliated Central Funds

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

Fund Income earned 
Fidelity Cash Central Fund $4,565 
Fidelity Securities Lending Cash Central Fund 17,942 
Total $22,507 

Investment Valuation

The following is a summary of the inputs used, as of December 31, 2015, 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 $32,271,051 $7,696,752 $24,574,299 $-- 
Consumer Staples 26,285,802 7,976,631 18,309,171 -- 
Energy 2,119,855 2,119,855 -- -- 
Financials 36,322,134 9,816,516 26,505,618 -- 
Health Care 19,040,479 8,624,578 10,415,901 -- 
Industrials 22,624,440 9,166,932 13,457,508 -- 
Information Technology 39,124,105 14,897,416 24,226,689 -- 
Materials 8,190,264 3,752,708 4,437,556 -- 
Telecommunication Services 2,960,947 997,662 1,963,285 -- 
Utilities 5,933,487 802,458 5,131,029 -- 
Money Market Funds 5,206,157 5,206,157 -- -- 
Total Investments in Securities: $200,078,721 $71,057,665 $129,021,056 $-- 

The following is a summary of transfers between Level 1 and Level 2 for the period ended December 31, 2015. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:

Transfers Total 
Level 1 to Level 2 $12,081,559 
Level 2 to Level 1 $0 

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


Financial Statements

Statement of Assets and Liabilities

  December 31, 2015 
Assets   
Investment in securities, at value (including securities loaned of $2,899,717) — See accompanying schedule:
Unaffiliated issuers (cost $188,697,910) 		$194,872,564  
Fidelity Central Funds (cost $5,206,157) 5,206,157  
Total Investments (cost $193,904,067)  $200,078,721 
Foreign currency held at value (cost $152,027)  152,032 
Receivable for investments sold   
Regular delivery  830,074 
Delayed delivery  16,450 
Receivable for fund shares sold  28,646 
Dividends receivable  217,539 
Distributions receivable from Fidelity Central Funds  1,883 
Prepaid expenses  399 
Other receivables  17,283 
Total assets  201,343,027 
Liabilities   
Payable for investments purchased $1,134,601  
Payable for fund shares redeemed 87,475  
Accrued management fee 131,492  
Distribution and service plan fees payable 1,680  
Other affiliated payables 24,608  
Other payables and accrued expenses 101,492  
Collateral on securities loaned, at value 2,994,712  
Total liabilities  4,476,060 
Net Assets  $196,866,967 
Net Assets consist of:   
Paid in capital  $210,253,350 
Distributions in excess of net investment income  (5,659) 
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions  (19,485,517) 
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies  6,104,793 
Net Assets  $196,866,967 
Initial Class:   
Net Asset Value, offering price and redemption price per share ($112,674,879 ÷ 13,845,110 shares)  $8.14 
Service Class:   
Net Asset Value, offering price and redemption price per share ($71,718 ÷ 8,780 shares)  $8.17 
Service Class 2:   
Net Asset Value, offering price and redemption price per share ($8,075,535 ÷ 990,510 shares)  $8.15 
Investor Class:   
Net Asset Value, offering price and redemption price per share ($76,044,835 ÷ 9,380,694 shares)  $8.11 

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


Statement of Operations

  Year ended December 31, 2015 
Investment Income   
Dividends  $3,662,711 
Interest  105 
Income from Fidelity Central Funds  22,507 
Income before foreign taxes withheld  3,685,323 
Less foreign taxes withheld  (336,618) 
Total income  3,348,705 
Expenses   
Management fee $1,536,856  
Transfer agent fees 190,602  
Distribution and service plan fees 20,972  
Accounting and security lending fees 100,028  
Custodian fees and expenses 211,495  
Independent trustees' compensation 813  
Audit 78,267  
Legal 577  
Miscellaneous 1,416  
Total expenses before reductions 2,141,026  
Expense reductions (33,255) 2,107,771 
Net investment income (loss)  1,240,934 
Realized and Unrealized Gain (Loss)   
Net realized gain (loss) on:   
Investment securities:   
Unaffiliated issuers (net of foreign taxes of $88,604) (14,390,320)  
Foreign currency transactions (96,765)  
Total net realized gain (loss)  (14,487,085) 
Change in net unrealized appreciation (depreciation) on:
Investment securities (net of decrease in deferred foreign taxes of $151,598) 		(8,877,583)  
Assets and liabilities in foreign currencies (2,767)  
Total change in net unrealized appreciation (depreciation)  (8,880,350) 
Net gain (loss)  (23,367,435) 
Net increase (decrease) in net assets resulting from operations  $(22,126,501) 

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


Statement of Changes in Net Assets

 Year ended December 31, 2015 Year ended December 31, 2014 
Increase (Decrease) in Net Assets   
Operations   
Net investment income (loss) $1,240,934 $869,812 
Net realized gain (loss) (14,487,085) (834,452) 
Change in net unrealized appreciation (depreciation) (8,880,350) (744,889) 
Net increase (decrease) in net assets resulting from operations (22,126,501) (709,529) 
Distributions to shareholders from net investment income (1,140,865) (588,241) 
Share transactions - net increase (decrease) 43,094,685 46,288,234 
Redemption fees 1,289 6,129 
Total increase (decrease) in net assets 19,828,608 44,996,593 
Net Assets   
Beginning of period 177,038,359 132,041,766 
End of period (including distributions in excess of net investment income of $5,659 and undistributed net investment income of $77,307, respectively) $196,866,967 $177,038,359 

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


Financial Highlights — VIP Emerging Markets Portfolio Initial Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $9.10 $9.01 $8.75 $7.74 $9.91 
Income from Investment Operations      
Net investment income (loss)A .06 .06 .07 .11 .13 
Net realized and unrealized gain (loss) (.97) .06 .27 1.00 (2.22) 
Total from investment operations (.91) .12 .34 1.11 (2.09) 
Distributions from net investment income (.05) (.03) (.07) (.08) (.09) 
Distributions from net realized gain – – (.01) (.01) – 
Tax return of capital – – – (.01) – 
Total distributions (.05) (.03) (.08) (.10) (.09) 
Redemption fees added to paid in capitalA –B –B –B –B .01 
Net asset value, end of period $8.14 $9.10 $9.01 $8.75 $7.74 
Total ReturnC,D (9.97)% 1.38% 3.85% 14.37% (21.01)% 
Ratios to Average Net AssetsE,F      
Expenses before reductions 1.07% 1.10% 1.14% 1.38% 1.31% 
Expenses net of fee waivers, if any 1.07% 1.10% 1.10% 1.10% 1.10% 
Expenses net of all reductions 1.05% 1.10% 1.07% 1.05% 1.02% 
Net investment income (loss) .69% .62% .84% 1.36% 1.46% 
Supplemental Data      
Net assets, end of period (000 omitted) $112,675 $91,224 $60,924 $44,979 $29,478 
Portfolio turnover rateG 106% 96% 110% 198% 151% 

 A Calculated based on average shares outstanding during the period.

 B Amount represents less than $.005 per share.

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

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

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

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

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


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


Financial Highlights — VIP Emerging Markets Portfolio Service Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $9.14 $9.04 $8.77 $7.76 $9.94 
Income from Investment Operations      
Net investment income (loss)A .05 .05 .07 .10 .12 
Net realized and unrealized gain (loss) (.98) .07 .27 1.00 (2.23) 
Total from investment operations (.93) .12 .34 1.10 (2.11) 
Distributions from net investment income (.04) (.02) (.06) (.07) (.08) 
Distributions from net realized gain – – (.01) (.01) – 
Tax return of capital – – – (.01) – 
Total distributions (.04) (.02) (.07) (.09) (.08) 
Redemption fees added to paid in capitalA –B –B –B –B .01 
Net asset value, end of period $8.17 $9.14 $9.04 $8.77 $7.76 
Total ReturnC,D (10.15)% 1.36% 3.84% 14.22% (21.15)% 
Ratios to Average Net AssetsE,F      
Expenses before reductions 1.17% 1.20% 1.23% 1.47% 1.40% 
Expenses net of fee waivers, if any 1.17% 1.20% 1.20% 1.20% 1.20% 
Expenses net of all reductions 1.16% 1.19% 1.18% 1.15% 1.12% 
Net investment income (loss) .58% .52% .74% 1.26% 1.35% 
Supplemental Data      
Net assets, end of period (000 omitted) $72 $84 $84 $83 $72 
Portfolio turnover rateG 106% 96% 110% 198% 151% 

 A Calculated based on average shares outstanding during the period.

 B Amount represents less than $.005 per share.

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

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

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

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

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


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


Financial Highlights — VIP Emerging Markets Portfolio Service Class 2

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $9.12 $9.03 $8.77 $7.76 $9.95 
Income from Investment Operations      
Net investment income (loss)A .04 .03 .05 .09 .11 
Net realized and unrealized gain (loss) (.98) .07 .27 1.00 (2.24) 
Total from investment operations (.94) .10 .32 1.09 (2.13) 
Distributions from net investment income (.03) (.01) (.06) (.06) (.07) 
Distributions from net realized gain – – (.01) (.01) – 
Tax return of capital – – – (.01) – 
Total distributions (.03) (.01) (.06)B (.08) (.07) 
Redemption fees added to paid in capitalA –C –C –C –C .01 
Net asset value, end of period $8.15 $9.12 $9.03 $8.77 $7.76 
Total ReturnD,E (10.31)% 1.13% 3.70% 14.10% (21.30)% 
Ratios to Average Net AssetsF,G      
Expenses before reductions 1.32% 1.35% 1.38% 1.63% 1.54% 
Expenses net of fee waivers, if any 1.32% 1.35% 1.35% 1.35% 1.35% 
Expenses net of all reductions 1.30% 1.34% 1.32% 1.30% 1.27% 
Net investment income (loss) .44% .37% .59% 1.11% 1.21% 
Supplemental Data      
Net assets, end of period (000 omitted) $8,076 $7,681 $6,517 $4,042 $2,249 
Portfolio turnover rateH 106% 96% 110% 198% 151% 

 A Calculated based on average shares outstanding during the period.

 B Total distributions of $.06 per share is comprised of distributions from net investment income of $.055 and distributions from net realized gain of $.008 per share.

 C Amount represents less than $.005 per share.

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

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

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

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

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


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


Financial Highlights — VIP Emerging Markets Portfolio Investor Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $9.07 $8.98 $8.71 $7.72 $9.89 
Income from Investment Operations      
Net investment income (loss)A .05 .05 .07 .11 .13 
Net realized and unrealized gain (loss) (.96) .07 .27 .98 (2.22) 
Total from investment operations (.91) .12 .34 1.09 (2.09) 
Distributions from net investment income (.05) (.03) (.06) (.08) (.09) 
Distributions from net realized gain – – (.01) (.01) – 
Tax return of capital – – – (.01) – 
Total distributions (.05) (.03) (.07) (.10) (.09) 
Redemption fees added to paid in capitalA –B –B –B –B .01 
Net asset value, end of period $8.11 $9.07 $8.98 $8.71 $7.72 
Total ReturnC,D (10.08)% 1.30% 3.90% 14.14% (21.05)% 
Ratios to Average Net AssetsE,F      
Expenses before reductions 1.15% 1.18% 1.22% 1.46% 1.38% 
Expenses net of fee waivers, if any 1.15% 1.18% 1.18% 1.18% 1.18% 
Expenses net of all reductions 1.13% 1.18% 1.15% 1.13% 1.10% 
Net investment income (loss) .61% .54% .76% 1.28% 1.37% 
Supplemental Data      
Net assets, end of period (000 omitted) $76,045 $69,854 $54,761 $46,967 $41,924 
Portfolio turnover rateG 106% 96% 110% 198% 151% 

 A Calculated based on average shares outstanding during the period.

 B Amount represents less than $.005 per share.

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

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

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

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

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


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


Notes to Financial Statements

For the period ended December 31, 2015

1. Organization.

VIP Emerging Markets Portfolio (the Fund) is a fund of Variable Insurance Products Fund II (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 (formerly Investor Class R). The Fund offered Initial Class R shares and Service Class 2R shares during the period January 23, 2008 through April 30, 2015 and all outstanding shares were converted to Initial Class shares and Service Class 2 shares, respectively, by April 30, 2015. All classes have equal rights and voting privileges, except for matters affecting a single class. The Fund's investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.

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, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.

3. Significant Accounting Policies.

The 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 Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). 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 December 31, 2015, including information on transfers between Levels 1 and 2, 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. 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. As of December 31, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. The Fund is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.

Distributions are declared and recorded on the ex-dividend date. Income 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, certain foreign taxes, passive foreign investment companies (PFIC), 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 $20,241,805 
Gross unrealized depreciation (15,634,665) 
Net unrealized appreciation (depreciation) on securities $4,607,140 
Tax Cost $195,471,581 

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

Capital loss carryforward $(17,918,004) 
Net unrealized appreciation (depreciation) on securities and other investments $4,613,197 

Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.

Fiscal year of expiration  
2016 $(319,345) 
2017 (2,824,257) 
Total with expiration (3,143,602) 
No expiration  
Short-term (14,774,402) 
Total capital loss carryforward $(17,918,004) 

The Fund intends to elect to defer to its next fiscal year $14,869 of ordinary losses recognized during the period November 1, 2015 to December 31, 2015.

The tax character of distributions paid was as follows:

 December 31, 2015 December 31, 2014 
Ordinary Income $1,140,865 $ 588,241 

Trading (Redemption) Fees. Initial Class R shares, Service Class 2R shares and Investor Class shares held by investors less than 60 days may have been subject to a redemption fee equal to 1% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. These redemption fees were eliminated effective April 30, 2015.

Delayed Delivery Transactions and When-Issued Securities. During the period, the Fund transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. With respect to purchase commitments, the Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.

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

4. Purchases and Sales of Investments.

Purchases and sales of securities, other than short-term securities, aggregated $241,296,708 and $199,905,472, 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 .55% 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 annual management fee rate was .80% 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 and Service Class 2R's average net assets.

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

Service Class $82 
Service Class 2 20,818 
Service Class 2R(a) 72 
 $20,972 

 (a) For the period January 1, 2015 through April 30, 2015.


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 (with the exception of Investor Class) pays a fee for transfer agent services, typesetting, printing and mailing of shareholder reports, excluding mailing of proxy statements and out of pocket expenses, equal to an annual rate of .07% (.15% for Investor Class) of class-level average net assets. For the period, transfer agent fees for each class, including out of pocket expenses, were as follows:

Initial Class $71,282 
Service Class 59 
Service Class 2 5,497 
Initial Class R(a) 2,096 
Service Class 2R(a) 24 
Investor Class 111,644 
 $190,602 

 (a) For the period January 1, 2015 through April 30, 2015.


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 $652 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. 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 $17,942, including $2,638 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 $31,039 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 $809 and a portion of class-level operating expenses as follows:

 Amount 
Investor Class $1,407 

9. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Years ended December 31, 2015(a) 2014 
From net investment income   
Initial Class $696,891 $341,474 
Service Class 388 213 
Service Class 2 28,692 10,085 
Initial Class R 5,261 28,590 
Service Class 2R 46 92 
Investor Class 409,587 207,787 
Total $1,140,865 $588,241 

 (a) All Initial Class R shares and Service Class 2R shares were converted by April 30, 2015.


10. Share Transactions.


Transactions for each class of shares were as follows:

 Shares Shares Dollars Dollars 
Years ended December 31, 2015(a) 2014 2015(a) 2014 
Initial Class     
Shares sold 5,729,633 4,095,352 $51,690,395 $39,011,232 
Reinvestment of distributions 87,669 37,566 696,891 341,474 
Shares redeemed (1,992,232) (872,491) (17,370,312) (7,949,387) 
Net increase (decrease) 3,825,070 3,260,427 $35,016,974 $31,403,319 
Service Class     
Reinvestment of distributions 48 23 388 213 
Shares redeemed (508) (23) (4,152) (213) 
Net increase (decrease) (460) – $(3,764) $– 
Service Class 2     
Shares sold 279,784 250,229 $2,530,256 $2,291,880 
Reinvestment of distributions 3,543 1,108 28,692 10,085 
Shares redeemed (135,264) (130,883) (1,183,465) (1,193,726) 
Net increase (decrease) 148,063 120,454 $1,375,483 $1,108,239 
Initial Class R     
Shares sold 78,977 312,659 $740,424 $2,933,308 
Reinvestment of distributions 561 3,145 5,261 28,590 
Shares redeemed (969,941) (498,186) (9,226,801) (4,543,005) 
Net increase (decrease) (890,403) (182,382) $(8,481,116) $(1,581,107) 
Service Class 2R     
Reinvestment of distributions 5 10 46 92 
Shares redeemed (9,200) (10) (88,041) (92) 
Net increase (decrease) (9,195) – $(87,995) $– 
Investor Class     
Shares sold 2,995,722 2,821,894 $26,839,858 $26,472,473 
Reinvestment of distributions 51,501 22,960 409,587 207,787 
Shares redeemed (1,369,723) (1,241,415) (11,974,342) (11,322,477) 
Net increase (decrease) 1,677,500 1,603,439 $15,275,103 $15,357,783 

 (a) All Initial Class R shares and Service Class 2R shares were converted by April 30, 2015.


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 17% of the total outstanding shares of the Fund. In addition, VIP Freedom 2020 Portfolio and VIP Freedom 2030 Portfolio were the owners of record of approximately 24% and 10%, respectively, of the total outstanding shares of the Fund. Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 78% of the total outstanding shares of the Fund.

Report of Independent Registered Public Accounting Firm

To the Trustees of Variable Insurance Products Fund II and Shareholders of VIP Emerging Markets Portfolio:

We have audited the accompanying statement of assets and liabilities of VIP Emerging Markets Portfolio (the Fund), a fund of Variable Insurance Products Fund II, including the schedule of investments, as of December 31, 2015, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2015, by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of VIP Emerging Markets Portfolio as of December 31, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 18, 2016

Trustees and Officers

The Trustees, Members of the Advisory Board (if any), and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance.  Each of the Trustees oversees 170 funds. 

The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust.  Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the fund is referred to herein as an Independent Trustee.  Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs.  The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees.  Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years. 

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

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

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

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

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

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

Interested Trustees*:

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

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

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

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

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

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

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

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

Independent Trustees:

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

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

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

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

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

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

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is Chairman of the Board of Directors of Artis-Naples in Naples, Florida (2012-present), a member of the Council on Foreign Relations (1994-present), and a member of the Board of Governors, State University System of Florida (2013-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007).

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

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

Robert W. Selander (1950)

Year of Election or Appointment: 2011

Trustee

Mr. Selander also serves as Trustee of other Fidelity® funds. Mr. Selander serves as a Director of The Western Union Company (global money transfer, 2014-present) and a non-executive Chairman of Health Equity, Inc. (health savings custodian, 2015-present). Previously, Mr. Selander served as a Member of the Advisory Board of other Fidelity® funds (2011), and Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc.

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

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

William S. Stavropoulos (1939)

Year of Election or Appointment: 2001

Trustee

Vice Chairman of the Independent Trustees

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

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

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

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

Advisory Board Members and Officers:

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

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

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

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

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

Timothy M. Cohen (1969)

Year of Election or Appointment: 2014

Vice President of certain Equity Funds

Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Chief Compliance Officer of FMR Investment Management (U.K.) Limited (investment adviser firm, 2013-present) and is an employee of Fidelity Investments. Previously, Mr. Cohen served as a Director of FMR Investment Management (U.K.) Limited (2013-2015).

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

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

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

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

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2008

Deputy Treasurer

Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005).

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

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

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

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

Scott C. Goebel (1968)

Year of Election or Appointment: 2015

Vice President

Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and FMR Investment Management (U.K.) Limited (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

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

Kenneth B. Robins (1969)

Year of Election or Appointment: 2008

President and Treasurer

Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.

Stacie M. Smith (1974)

Year of Election or Appointment: 2013

Deputy Treasurer

Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009).

Renee Stagnone (1975)

Year of Election or Appointment: 2013

Deputy Treasurer

Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present).

Linda J. Wondrack (1964)

Year of Election or Appointment: 2014

Chief Compliance Officer

Ms. Wondrack also serves as Chief Compliance Officer of other funds. Ms. Wondrack is Executive Vice President and head of the Ethics Office and Asset Management Compliance for Fidelity Investments (2012-present). Ms. Wondrack also serves as Chief Compliance Officer of Fidelity SelectCo, LLC (investment adviser firm, 2014-present); Chief Compliance Officer of Impresa Management LLC (2013-present); and Chief Compliance Officer of FMR Co., Inc. (investment adviser firm), Fidelity Investments Money Management, Inc. (investment adviser firm), FMR Investment Management (U.K.) Limited (investment adviser firm), Fidelity Management & Research (Hong Kong) (investment adviser firm), Fidelity Management & Research Company (investment adviser firm), FIAM LLC (investment adviser firm), and Strategic Advisers, Inc. (investment adviser firm), Ballyrock Investment Advisors LLC, and Northern Neck Investors LLC (2012-present). Previously, Ms. Wondrack served as Chief Compliance Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016); Senior Vice President and Chief Compliance Officer for Columbia Management Investment Advisers, LLC (2005-2012); Chief Compliance Officer for certain funds within the Columbia Family of Funds (2007-2012); and Senior Vice President of Compliance Risk Management at Bank of America (2005-2010).

Joseph F. Zambello (1957)

Year of Election or Appointment: 2011

Deputy Treasurer

Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009).

Shareholder Expense Example

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2015 to December 31, 2015).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 Annualized Expense Ratio-A Beginning
Account Value
July 1, 2015 		Ending
Account Value
December 31, 2015 		Expenses Paid
During Period-B
July 1, 2015
to December 31, 2015 
Initial Class 1.05%    
Actual  $1,000.00 $891.90 $5.01 
Hypothetical-C  $1,000.00 $1,019.91 $5.35 
Service Class 1.14%    
Actual  $1,000.00 $891.10 $5.43 
Hypothetical-C  $1,000.00 $1,019.46 $5.80 
Service Class 2 1.30%    
Actual  $1,000.00 $889.50 $6.19 
Hypothetical-C  $1,000.00 $1,018.65 $6.61 
Investor Class 1.13%    
Actual  $1,000.00 $891.70 $5.39 
Hypothetical-C  $1,000.00 $1,019.51 $5.75 

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

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

 C 5% return per year before expenses


Distributions (Unaudited)

A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:

 February 2015 December 2015 
Initial Class 3% 8% 
Service Class 3% 9% 
Service Class 2 3% 12% 
Investor Class 3% 9% 
Initial Class R 3% 0% 
Service Class 2R 3% 0% 

The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:

 Pay Date Income Taxes 
Initial Class 02/13/2015 $0.006 $0.000 
 12/11/2015 $0.062 $0.0163 
Service Class 02/13/2015 $0.006 $0.000 
 12/11/2015 $0.052 $0.0163 
Service Class 2 02/13/2015 $0.006 $0.000 
 12/11/2015 $0.040 $0.0163 
Investor Class 02/13/2015 $0.006 $0.000 
 12/11/2015 $0.055 $0.0163 
Initial Class R 02/13/2015 $0.006 $0.000 
Service Class 2R 02/13/2015 $0.005 $0.000 

Board Approval of Investment Advisory Contracts and Management Fees

VIP Emerging Markets Portfolio

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

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

At its July 2015 meeting, the Board unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; and (iv) the extent to which (if any) economies of scale exist and would be realized as the fund grows, and whether any economies of scale are appropriately shared with fund shareholders.

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

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

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

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

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

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

Investment in a Large Fund Family.  The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds and diversified international funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching active fixed-income exchange-traded funds; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and information security and to increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (x) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (xi) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xii) implementing changes to Fidelity's money market product line in response to recent money market regulatory reforms.

Investment Performance.  The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history. The Board noted that there was a portfolio management change for the fund in October 2012.

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

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

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

VIP Emerging Markets Portfolio


The Board noted that, on April 30, 2015 (after the periods shown in the chart above), FMR converted assets in Initial Class R and Service Class 2 R into the corresponding non-redemption fee class and eliminated the redemption fee and renamed "Investor Class R" to "Investor Class."

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

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

Management Fee.  The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure without taking into account performance adjustments, if any. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.

VIP Emerging Markets Portfolio


The Board noted that the fund's management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2014.

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

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

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

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

The Board noted that the total expense ratio of each class ranked above its competitive median for 2014. The Board considered that, in general, various factors can affect total expense ratios. The Board noted that the total expense ratio of Service Class 2 was above the competitive median primarily because of higher 12b-1 fees for Service Class 2 as compared to most competitor funds. The Board noted that the fund offers multiple classes, each of which has a different 12b-1 fee structure, and that the multiple structures are intended to offer a range of pricing options for the intermediary market. The Board also noted that the total expense ratios of the classes vary primarily by the level of their 12b-1 fees, although differences in transfer agent fees may also cause expenses to vary from class to class.

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

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

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

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

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

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

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

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

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

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

Additional Information Requested by the Board.  In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) fund performance trends and Fidelity's long-term strategies for certain funds; (ii) the various share classes employed by Fidelity and the attributes of each class, together with similar information on the distribution and servicing payments made by Fidelity or the funds to third-party participants in the distribution channels; (iii) fund profitability, and fund performance in relation to fund profitability; (iv) the methodology with respect to evaluating competitive fund data and peer group classifications and fee comparisons; (v) annual fund profitability margins, with particular focus on certain funds with negative margins; (vi) the realization of fall-out benefits in certain Fidelity business units; (vii) economies of scale and the way in which they are shared with fund shareholders;(viii) Fidelity's group fee structures, including the group fee schedule of breakpoints;(ix) the impact of cost containment measures on the funds; and (x) the transfer agent fee structure.

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





Fidelity Investments

VIPEM-ANN-0216
1.858135.107



Fidelity® Variable Insurance Products:

Index 500 Portfolio



Annual Report

December 31, 2015



Fidelity Investments


Contents

Performance

Management's Discussion of Fund Performance

Investment Summary

Investments

Financial Statements

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm

Trustees and Officers

Shareholder Expense Example

Distributions

Board Approval of Investment Advisory Contracts and Management Fees


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

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

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

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

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

All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2016 FMR LLC. All rights reserved.



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

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

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

NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE

Neither the Fund nor Fidelity Distributors Corporation is a bank.



Performance: The Bottom Line

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

Average Annual Total Returns

For the periods ended December 31, 2015 Past 1 year Past 5 years Past 10 years 
Initial Class 1.33% 12.48% 7.26% 
Service Class 1.24% 12.36% 7.15% 
Service Class 2 1.08% 12.20% 6.99% 

$10,000 Over 10 Years

Let's say hypothetically that $10,000 was invested in VIP Index 500 Portfolio - Initial Class on December 31, 2005.

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


Period Ending Values
$20,153VIP Index 500 Portfolio - Initial Class
$20,242S&P 500® Index

Management's Discussion of Fund Performance

Market Recap:  U.S. stocks gained modestly in 2015, rebounding from a steep decline in August and September over worries about China’s slowing economic growth. The S&P 500® index rose 1.38% for the period, its lowest calendar-year return since 2008. After the late-summer rout, stocks sharply reversed course in October, lifted by the Federal Reserve’s decision to put off raising near-term interest rates until mid-December. Investors also were encouraged by an interest-rate cut in China and economic stimulus in Europe. Overall, growth stocks fared much better than their value counterparts, as investors sought growth in a subpar economic environment. This helped lift the technology-heavy Nasdaq Composite Index® 6.96% for the year. Sector performance in the broader market was split, with five of 10 sectors in the S&P 500® gaining ground and five retreating. Consumer discretionary (+10%) led the way, benefiting from rising personal income and low inflation. Health care (+7%), consumer staples (+7%) and information technology (+6%) also outpaced the broad market amid strong fundamentals. Conversely, the energy sector (-21%) was by far the worst performer, stung by deflated commodity prices that also hit materials (-8%). The defensive, but rate-sensitive utilities sector (-5%) lost ground on the cusp of Fed tightening, while industrials (-3%) were dragged down with energy prices and a slower-growing China.

Comments from Patrick Waddell, Senior Portfolio Manager of the Geode Capital Management, LLC, investment management team:  For the year, the fund’s share classes produced a gain in the low single digits, a result that was roughly in line with the benchmark S&P 500®. In the consumer discretionary sector, the strongest-performing category in the index this period, online retail giant Amazon.com made a particularly large performance contribution. Amazon’s shares more than doubled, due in part to stronger-than-expected financial results. Also in consumer discretionary, home products superstore retailer Home Depot and coffee retailer Starbucks added value, gaining about 28% and 48%, respectively. Several technology stocks also lifted results, most notably software manufacturer Microsoft; social networking company Facebook; and Alphabet, the parent company of Internet search leader Google. On the negative side, various energy companies detracted, an unsurprising development in light of the plummeting price of oil. In this sector, integrated energy producers such as Exxon Mobil (-13%), Chevron (-16%) and ConocoPhillips (-29%) hampered results, as did energy transportation company Kinder Morgan (-63%). Another detractor was QUALCOMM, whose proprietary technology is found in most of the world’s smartphones. Concerns about the company’s ability to collect royalty payments in China was partly behind the stock’s roughly -31% return for the year.

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

Investment Summary (Unaudited)

Top Ten Stocks as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Apple, Inc. 3.2 3.9 
Microsoft Corp. 2.4 1.9 
Exxon Mobil Corp. 1.8 1.9 
General Electric Co. 1.6 1.5 
Johnson & Johnson 1.6 1.5 
Amazon.com, Inc. 1.4 0.9 
Wells Fargo & Co. 1.4 1.4 
Berkshire Hathaway, Inc. Class B 1.4 1.4 
JPMorgan Chase & Co. 1.3 1.4 
Facebook, Inc. Class A 1.3 1.0 
 17.4  

Market Sectors as of December 31, 2015

 % of fund's net assets % of fund's net assets 6 months ago 
Information Technology 20.4 19.5 
Financials 16.3 16.4 
Health Care 15.0 15.3 
Consumer Discretionary 12.7 12.7 
Consumer Staples 10.0 9.3 
Industrials 9.9 10.0 
Energy 6.4 7.8 
Utilities 3.0 2.8 
Materials 2.7 3.2 
Telecommunication Services 2.4 2.2 

Asset Allocation (% of fund's net assets)

To match the S&P 500® Index, VIP Index 500 Portfolio seeks 100% investment exposure to stocks at all times.

Investments December 31, 2015

Showing Percentage of Net Assets

Common Stocks - 98.8%   
 Shares Value 
CONSUMER DISCRETIONARY - 12.7%   
Auto Components - 0.4%   
BorgWarner, Inc. (a) 58,674 $2,536,477 
Delphi Automotive PLC 73,319 6,285,638 
Johnson Controls, Inc. 169,542 6,695,214 
The Goodyear Tire & Rubber Co. 70,392 2,299,707 
  17,817,036 
Automobiles - 0.6%   
Ford Motor Co. 1,020,325 14,376,379 
General Motors Co. 370,699 12,607,473 
Harley-Davidson, Inc. (a) 50,223 2,279,622 
  29,263,474 
Distributors - 0.1%   
Genuine Parts Co. 39,473 3,390,336 
Diversified Consumer Services - 0.0%   
H&R Block, Inc. (a) 61,741 2,056,593 
Hotels, Restaurants & Leisure - 1.8%   
Carnival Corp. unit 120,490 6,564,295 
Chipotle Mexican Grill, Inc. (a)(b) 8,165 3,917,975 
Darden Restaurants, Inc. 30,188 1,921,164 
Marriott International, Inc. Class A (a) 50,481 3,384,246 
McDonald's Corp. 240,366 28,396,839 
Royal Caribbean Cruises Ltd. (a) 44,919 4,546,252 
Starbucks Corp. 388,678 23,332,340 
Starwood Hotels & Resorts Worldwide, Inc. 44,160 3,059,405 
Wyndham Worldwide Corp. 30,393 2,208,051 
Wynn Resorts Ltd. (a) 21,270 1,471,671 
Yum! Brands, Inc. 112,887 8,246,395 
  87,048,633 
Household Durables - 0.4%   
D.R. Horton, Inc. 85,902 2,751,441 
Garmin Ltd. (a) 30,893 1,148,293 
Harman International Industries, Inc. 18,608 1,753,060 
Leggett & Platt, Inc. 35,599 1,495,870 
Lennar Corp. Class A (a) 46,872 2,292,510 
Mohawk Industries, Inc. (b) 16,644 3,152,207 
Newell Rubbermaid, Inc. (a) 69,921 3,082,118 
PulteGroup, Inc. 83,174 1,482,161 
Whirlpool Corp. 20,470 3,006,429 
  20,164,089 
Internet & Catalog Retail - 2.2%   
Amazon.com, Inc. (b) 100,620 68,008,052 
Expedia, Inc. 30,809 3,829,559 
Netflix, Inc. (b) 111,878 12,796,606 
Priceline Group, Inc. (b) 13,031 16,613,873 
TripAdvisor, Inc. (a)(b) 29,577 2,521,439 
  103,769,529 
Leisure Products - 0.1%   
Hasbro, Inc. 29,361 1,977,757 
Mattel, Inc. (a) 88,833 2,413,593 
  4,391,350 
Media - 3.0%   
Cablevision Systems Corp. - NY Group Class A 58,260 1,858,494 
CBS Corp. Class B 113,531 5,350,716 
Comcast Corp. Class A 639,202 36,070,169 
Discovery Communications, Inc.:   
Class A (a)(b) 39,161 1,044,815 
Class C (non-vtg.) (b) 67,502 1,702,400 
Interpublic Group of Companies, Inc. 106,370 2,476,294 
News Corp.:   
Class A 99,663 1,331,498 
Class B 28,422 396,771 
Omnicom Group, Inc. 63,415 4,797,979 
Scripps Networks Interactive, Inc. Class A (a) 24,767 1,367,386 
Tegna, Inc. 58,033 1,481,002 
The Walt Disney Co. 398,133 41,835,816 
Time Warner Cable, Inc. 74,132 13,758,158 
Time Warner, Inc. 209,280 13,534,138 
Twenty-First Century Fox, Inc.:   
Class A 306,515 8,324,947 
Class B 112,831 3,072,388 
Viacom, Inc. Class B (non-vtg.) 90,878 3,740,538 
  142,143,509 
Multiline Retail - 0.6%   
Dollar General Corp. 76,158 5,473,475 
Dollar Tree, Inc. (b) 61,463 4,746,173 
Kohl's Corp. (a) 49,689 2,366,687 
Macy's, Inc. 82,292 2,878,574 
Nordstrom, Inc. (a) 35,616 1,774,033 
Target Corp. 161,264 11,709,379 
  28,948,321 
Specialty Retail - 2.6%   
Advance Auto Parts, Inc. 19,171 2,885,427 
AutoNation, Inc. (b) 19,982 1,192,126 
AutoZone, Inc. (a)(b) 7,980 5,920,442 
Bed Bath & Beyond, Inc. (b) 43,687 2,107,898 
Best Buy Co., Inc. (a) 78,051 2,376,653 
CarMax, Inc. (a)(b) 53,044 2,862,785 
GameStop Corp. Class A (a) 27,614 774,297 
Gap, Inc. 59,966 1,481,160 
Home Depot, Inc. 331,894 43,892,982 
L Brands, Inc. 66,674 6,388,703 
Lowe's Companies, Inc. 239,548 18,215,230 
O'Reilly Automotive, Inc. (a)(b) 25,821 6,543,558 
Ross Stores, Inc. 106,019 5,704,882 
Signet Jewelers Ltd. 20,818 2,574,978 
Staples, Inc. 168,480 1,595,506 
Tiffany & Co., Inc. 29,188 2,226,753 
TJX Companies, Inc. 175,263 12,427,899 
Tractor Supply Co. 35,164 3,006,522 
Urban Outfitters, Inc. (a)(b) 22,726 517,017 
  122,694,818 
Textiles, Apparel & Luxury Goods - 0.9%   
Coach, Inc. (a) 72,645 2,377,671 
Fossil Group, Inc. (a)(b) 10,839 396,274 
Hanesbrands, Inc. 102,567 3,018,547 
Michael Kors Holdings Ltd. (b) 48,178 1,930,011 
NIKE, Inc. Class B 353,253 22,078,313 
PVH Corp. 21,607 1,591,356 
Ralph Lauren Corp. 15,395 1,716,235 
Under Armour, Inc. Class A (sub. vtg.) (a)(b) 47,148 3,800,600 
VF Corp. 89,276 5,557,431 
  42,466,438 
TOTAL CONSUMER DISCRETIONARY  604,154,126 
CONSUMER STAPLES - 10.0%   
Beverages - 2.3%   
Brown-Forman Corp. Class B (non-vtg.) (a) 26,604 2,641,245 
Coca-Cola Enterprises, Inc. 54,656 2,691,261 
Constellation Brands, Inc. Class A (sub. vtg.) 45,325 6,456,093 
Dr. Pepper Snapple Group, Inc. 49,447 4,608,460 
Molson Coors Brewing Co. Class B 41,247 3,873,918 
Monster Beverage Corp. 39,270 5,849,659 
PepsiCo, Inc. 381,361 38,105,591 
The Coca-Cola Co. 1,024,593 44,016,515 
  108,242,742 
Food & Staples Retailing - 2.4%   
Costco Wholesale Corp. 114,500 18,491,750 
CVS Health Corp. 289,863 28,339,906 
Kroger Co. 254,817 10,658,995 
Sysco Corp. 137,429 5,634,589 
Wal-Mart Stores, Inc. 410,699 25,175,849 
Walgreens Boots Alliance, Inc. 228,011 19,416,277 
Whole Foods Market, Inc. 89,334 2,992,689 
  110,710,055 
Food Products - 1.7%   
Archer Daniels Midland Co. 156,208 5,729,709 
Campbell Soup Co. 47,013 2,470,533 
ConAgra Foods, Inc. 113,323 4,777,698 
General Mills, Inc. 156,457 9,021,311 
Hormel Foods Corp. 35,314 2,792,631 
Kellogg Co. 66,794 4,827,202 
Keurig Green Mountain, Inc. 30,408 2,736,112 
McCormick & Co., Inc. (non-vtg.) 30,441 2,604,532 
Mead Johnson Nutrition Co. Class A 51,604 4,074,136 
Mondelez International, Inc. 415,998 18,653,350 
The Hershey Co. 37,612 3,357,623 
The J.M. Smucker Co. 31,327 3,863,872 
The Kraft Heinz Co. 155,646 11,324,803 
Tyson Foods, Inc. Class A 77,390 4,127,209 
  80,360,721 
Household Products - 1.9%   
Church & Dwight Co., Inc. 34,246 2,906,800 
Clorox Co. 33,792 4,285,839 
Colgate-Palmolive Co. 234,788 15,641,577 
Kimberly-Clark Corp. 95,021 12,096,173 
Procter & Gamble Co. 712,165 56,553,023 
  91,483,412 
Personal Products - 0.1%   
Estee Lauder Companies, Inc. Class A (a) 58,264 5,130,728 
Tobacco - 1.6%   
Altria Group, Inc. 513,248 29,876,166 
Philip Morris International, Inc. 405,560 35,652,780 
Reynolds American, Inc. (a) 216,976 10,013,442 
  75,542,388 
TOTAL CONSUMER STAPLES  471,470,046 
ENERGY - 6.4%   
Energy Equipment & Services - 1.0%   
Baker Hughes, Inc. 114,153 5,268,161 
Cameron International Corp. (b) 50,027 3,161,706 
Diamond Offshore Drilling, Inc. (a) 16,892 356,421 
Ensco PLC Class A (a) 61,649 948,778 
FMC Technologies, Inc. (b) 59,704 1,732,013 
Halliburton Co. 224,022 7,625,709 
Helmerich & Payne, Inc. (a) 28,213 1,510,806 
National Oilwell Varco, Inc. 98,355 3,293,909 
Schlumberger Ltd. 330,117 23,025,661 
Transocean Ltd. (United States) (a) 89,500 1,108,010 
  48,031,174 
Oil, Gas & Consumable Fuels - 5.4%   
Anadarko Petroleum Corp. 133,017 6,461,966 
Apache Corp. 98,953 4,400,440 
Cabot Oil & Gas Corp. 108,340 1,916,535 
Chesapeake Energy Corp. (a) 135,471 609,620 
Chevron Corp. 492,662 44,319,874 
Cimarex Energy Co. 24,753 2,212,423 
Columbia Pipeline Group, Inc. 101,858 2,037,160 
ConocoPhillips Co. 323,192 15,089,834 
CONSOL Energy, Inc. (a) 59,957 473,660 
Devon Energy Corp. 101,131 3,236,192 
EOG Resources, Inc. 143,897 10,186,469 
EQT Corp. 39,930 2,081,551 
Exxon Mobil Corp. 1,089,735 84,944,843 
Hess Corp. 62,908 3,049,780 
Kinder Morgan, Inc. 478,998 7,146,650 
Marathon Oil Corp. 177,284 2,232,006 
Marathon Petroleum Corp. 139,498 7,231,576 
Murphy Oil Corp. (a) 42,366 951,117 
Newfield Exploration Co. (b) 42,315 1,377,776 
Noble Energy, Inc. 111,413 3,668,830 
Occidental Petroleum Corp. 199,923 13,516,794 
ONEOK, Inc. (a) 54,781 1,350,899 
Phillips 66 Co. 124,279 10,166,022 
Pioneer Natural Resources Co. 39,103 4,902,734 
Range Resources Corp. (a) 44,336 1,091,109 
Southwestern Energy Co. (a)(b) 100,630 715,479 
Spectra Energy Corp. (a) 175,755 4,207,575 
Tesoro Corp. 31,515 3,320,736 
The Williams Companies, Inc. 178,602 4,590,071 
Valero Energy Corp. 126,043 8,912,501 
  256,402,222 
TOTAL ENERGY  304,433,396 
FINANCIALS - 16.3%   
Banks - 6.0%   
Bank of America Corp. 2,725,680 45,873,194 
BB&T Corp. 204,219 7,721,520 
Citigroup, Inc. 779,811 40,355,219 
Comerica, Inc. 46,293 1,936,436 
Fifth Third Bancorp 207,932 4,179,433 
Huntington Bancshares, Inc. 208,547 2,306,530 
JPMorgan Chase & Co. 963,612 63,627,300 
KeyCorp 218,585 2,883,136 
M&T Bank Corp. (a) 41,880 5,075,018 
Peoples United Financial, Inc. (a) 81,206 1,311,477 
PNC Financial Services Group, Inc. 132,929 12,669,463 
Regions Financial Corp. 341,729 3,280,598 
SunTrust Banks, Inc. 133,401 5,714,899 
U.S. Bancorp 430,410 18,365,595 
Wells Fargo & Co. 1,216,739 66,141,932 
Zions Bancorporation (a) 53,472 1,459,786 
  282,901,536 
Capital Markets - 2.1%   
Affiliated Managers Group, Inc. (b) 14,145 2,259,805 
Ameriprise Financial, Inc. 45,577 4,850,304 
Bank of New York Mellon Corp. 286,103 11,793,166 
BlackRock, Inc. Class A 33,055 11,255,889 
Charles Schwab Corp. 313,611 10,327,210 
E*TRADE Financial Corp. (b) 76,674 2,272,617 
Franklin Resources, Inc. 99,194 3,652,323 
Goldman Sachs Group, Inc. 103,840 18,715,083 
Invesco Ltd. 110,954 3,714,740 
Legg Mason, Inc. 28,199 1,106,247 
Morgan Stanley 395,340 12,575,765 
Northern Trust Corp. 56,895 4,101,561 
State Street Corp. 105,620 7,008,943 
T. Rowe Price Group, Inc. 65,729 4,698,966 
  98,332,619 
Consumer Finance - 0.8%   
American Express Co. 219,000 15,231,450 
Capital One Financial Corp. 139,273 10,052,725 
Discover Financial Services 111,903 6,000,239 
Navient Corp. 94,840 1,085,918 
Synchrony Financial (b) 218,270 6,637,591 
  39,007,923 
Diversified Financial Services - 2.0%   
Berkshire Hathaway, Inc. Class B (b) 490,410 64,753,736 
CME Group, Inc. 88,540 8,021,724 
IntercontinentalExchange, Inc. 31,083 7,965,330 
Leucadia National Corp. 87,260 1,517,451 
McGraw Hill Financial, Inc. 70,757 6,975,225 
Moody's Corp. (a) 45,024 4,517,708 
The NASDAQ OMX Group, Inc. 30,095 1,750,626 
  95,501,800 
Insurance - 2.7%   
ACE Ltd. 84,861 9,916,008 
AFLAC, Inc. 111,708 6,691,309 
Allstate Corp. 101,385 6,294,995 
American International Group, Inc. 323,814 20,066,754 
Aon PLC 71,703 6,611,734 
Assurant, Inc. 17,234 1,388,026 
Cincinnati Financial Corp. 38,603 2,284,140 
Hartford Financial Services Group, Inc. 107,224 4,659,955 
Lincoln National Corp. 64,780 3,255,843 
Loews Corp. 73,278 2,813,875 
Marsh & McLennan Companies, Inc. 136,553 7,571,864 
MetLife, Inc. 290,990 14,028,628 
Principal Financial Group, Inc. 71,263 3,205,410 
Progressive Corp. 153,005 4,865,559 
Prudential Financial, Inc. 117,536 9,568,606 
The Chubb Corp. 59,437 7,883,724 
The Travelers Companies, Inc. (a) 79,636 8,987,719 
Torchmark Corp. 30,024 1,716,172 
Unum Group 63,727 2,121,472 
XL Group PLC Class A 77,946 3,053,924 
  126,985,717 
Real Estate Investment Trusts - 2.7%   
American Tower Corp. 110,878 10,749,622 
Apartment Investment & Management Co. Class A 40,946 1,639,068 
AvalonBay Communities, Inc. 35,830 6,597,378 
Boston Properties, Inc. 40,202 5,127,363 
Crown Castle International Corp. 87,372 7,553,309 
Equinix, Inc. (a) 16,222 4,905,533 
Equity Residential (SBI) 95,353 7,779,851 
Essex Property Trust, Inc. 17,286 4,138,441 
General Growth Properties, Inc. 152,423 4,147,430 
HCP, Inc. 121,733 4,655,070 
Host Hotels & Resorts, Inc. 196,748 3,018,114 
Iron Mountain, Inc. 50,296 1,358,495 
Kimco Realty Corp. 108,190 2,862,707 
Plum Creek Timber Co., Inc. 45,462 2,169,447 
Prologis, Inc. 137,247 5,890,641 
Public Storage 38,528 9,543,386 
Realty Income Corp. 65,337 3,373,349 
Simon Property Group, Inc. 80,994 15,748,473 
SL Green Realty Corp. 26,099 2,948,665 
The Macerich Co. 35,228 2,842,547 
Ventas, Inc. 87,165 4,918,721 
Vornado Realty Trust 46,392 4,637,344 
Welltower, Inc. 92,635 6,301,959 
Weyerhaeuser Co. 133,619 4,005,898 
  126,912,811 
Real Estate Management & Development - 0.0%   
CBRE Group, Inc. (b) 76,104 2,631,676 
TOTAL FINANCIALS  772,274,082 
HEALTH CARE - 15.0%   
Biotechnology - 3.7%   
AbbVie, Inc. 427,928 25,350,455 
Alexion Pharmaceuticals, Inc. (b) 58,983 11,251,007 
Amgen, Inc. 197,461 32,053,844 
Baxalta, Inc. 142,087 5,545,656 
Biogen, Inc. (b) 58,350 17,875,523 
Celgene Corp. (b) 205,659 24,629,722 
Gilead Sciences, Inc. 377,258 38,174,737 
Regeneron Pharmaceuticals, Inc. (b) 20,323 11,032,747 
Vertex Pharmaceuticals, Inc. (b) 64,321 8,093,511 
  174,007,202 
Health Care Equipment & Supplies - 2.1%   
Abbott Laboratories 390,488 17,536,816 
Baxter International, Inc. 143,192 5,462,775 
Becton, Dickinson & Co. 55,165 8,500,375 
Boston Scientific Corp. (b) 352,133 6,493,333 
C.R. Bard, Inc. 19,341 3,663,959 
DENTSPLY International, Inc. 36,612 2,227,840 
Edwards Lifesciences Corp. (b) 56,467 4,459,764 
Intuitive Surgical, Inc. (b) 9,780 5,341,445 
Medtronic PLC 368,090 28,313,483 
St. Jude Medical, Inc. 73,992 4,570,486 
Stryker Corp. 82,678 7,684,093 
Varian Medical Systems, Inc. (a)(b) 25,362 2,049,250 
Zimmer Biomet Holdings, Inc. 44,808 4,596,853 
  100,900,472 
Health Care Providers & Services - 2.7%   
Aetna, Inc. 91,279 9,869,085 
AmerisourceBergen Corp. 51,137 5,303,418 
Anthem, Inc. 68,341 9,529,469 
Cardinal Health, Inc. 86,116 7,687,575 
Cigna Corp. 67,432 9,867,325 
DaVita HealthCare Partners, Inc. (b) 43,634 3,041,726 
Express Scripts Holding Co. (b) 177,029 15,474,105 
HCA Holdings, Inc. (a)(b) 82,171 5,557,225 
Henry Schein, Inc. (b) 21,714 3,434,938 
Humana, Inc. 38,801 6,926,367 
Laboratory Corp. of America Holdings (b) 26,491 3,275,347 
McKesson Corp. 60,237 11,880,544 
Patterson Companies, Inc. 21,863 988,426 
Quest Diagnostics, Inc. 37,524 2,669,457 
Tenet Healthcare Corp. (a)(b) 26,091 790,557 
UnitedHealth Group, Inc. 249,495 29,350,592 
Universal Health Services, Inc. Class B 23,867 2,851,868 
  128,498,024 
Health Care Technology - 0.1%   
Cerner Corp. (a)(b) 79,702 4,795,669 
Life Sciences Tools & Services - 0.7%   
Agilent Technologies, Inc. 86,751 3,627,059 
Illumina, Inc. (a)(b) 38,323 7,355,908 
PerkinElmer, Inc. 29,301 1,569,655 
Thermo Fisher Scientific, Inc. 104,472 14,819,353 
Waters Corp. (b) 21,378 2,877,051 
  30,249,026 
Pharmaceuticals - 5.7%   
Allergan PLC (b) 103,171 32,240,938 
Bristol-Myers Squibb Co. 436,708 30,041,143 
Eli Lilly & Co. 255,485 21,527,166 
Endo Health Solutions, Inc. (b) 54,491 3,335,939 
Johnson & Johnson 724,305 74,400,610 
Mallinckrodt PLC (b) 30,351 2,265,095 
Merck & Co., Inc. 731,267 38,625,523 
Mylan N.V. (a) 108,129 5,846,535 
Perrigo Co. PLC 38,324 5,545,483 
Pfizer, Inc. 1,615,909 52,161,543 
Zoetis, Inc. Class A 119,914 5,746,279 
  271,736,254 
TOTAL HEALTH CARE  710,186,647 
INDUSTRIALS - 9.9%   
Aerospace & Defense - 2.7%   
General Dynamics Corp. 77,788 10,684,960 
Honeywell International, Inc. 201,745 20,894,730 
L-3 Communications Holdings, Inc. 20,519 2,452,226 
Lockheed Martin Corp. 69,179 15,022,220 
Northrop Grumman Corp. 47,743 9,014,356 
Precision Castparts Corp. 36,017 8,356,304 
Raytheon Co. 78,818 9,815,206 
Rockwell Collins, Inc. 34,408 3,175,858 
Textron, Inc. 71,638 3,009,512 
The Boeing Co. 164,859 23,836,963 
United Technologies Corp. 215,941 20,745,452 
  127,007,787 
Air Freight & Logistics - 0.7%   
C.H. Robinson Worldwide, Inc. (a) 37,596 2,331,704 
Expeditors International of Washington, Inc. 48,798 2,200,790 
FedEx Corp. 68,745 10,242,318 
United Parcel Service, Inc. Class B 182,231 17,536,089 
  32,310,901 
Airlines - 0.6%   
American Airlines Group, Inc. 165,000 6,987,750 
Delta Air Lines, Inc. 205,876 10,435,854 
Southwest Airlines Co. 170,244 7,330,707 
United Continental Holdings, Inc. (b) 97,591 5,591,964 
  30,346,275 
Building Products - 0.1%   
Allegion PLC 25,108 1,655,119 
Masco Corp. 88,081 2,492,692 
  4,147,811 
Commercial Services & Supplies - 0.4%   
ADT Corp. (a) 43,175 1,423,912 
Cintas Corp. 22,891 2,084,226 
Pitney Bowes, Inc. 51,580 1,065,127 
Republic Services, Inc. 62,717 2,758,921 
Stericycle, Inc. (b) 22,246 2,682,868 
Tyco International Ltd. 110,662 3,529,011 
Waste Management, Inc. 108,698 5,801,212 
  19,345,277 
Construction & Engineering - 0.1%   
Fluor Corp. 37,068 1,750,351 
Jacobs Engineering Group, Inc. (a)(b) 32,081 1,345,798 
Quanta Services, Inc. (b) 41,820 846,855 
  3,943,004 
Electrical Equipment - 0.4%   
AMETEK, Inc. 62,270 3,337,049 
Eaton Corp. PLC 121,147 6,304,490 
Emerson Electric Co. 171,343 8,195,336 
Rockwell Automation, Inc. (a) 34,558 3,545,996 
  21,382,871 
Industrial Conglomerates - 2.5%   
3M Co. 161,176 24,279,553 
Danaher Corp. 156,068 14,495,596 
General Electric Co. 2,470,557 76,957,851 
Roper Technologies, Inc. 26,388 5,008,179 
  120,741,179 
Machinery - 1.2%   
Caterpillar, Inc. 152,412 10,357,920 
Cummins, Inc. 42,997 3,784,166 
Deere & Co. 81,608 6,224,242 
Dover Corp. (a) 40,565 2,487,040 
Flowserve Corp. 34,256 1,441,492 
Illinois Tool Works, Inc. 85,637 7,936,837 
Ingersoll-Rand PLC 68,335 3,778,242 
PACCAR, Inc. 92,524 4,385,638 
Parker Hannifin Corp. 35,595 3,452,003 
Pentair PLC (a) 47,184 2,337,024 
Snap-On, Inc. 15,201 2,605,907 
Stanley Black & Decker, Inc. 39,194 4,183,176 
Xylem, Inc. 46,953 1,713,785 
  54,687,472 
Professional Services - 0.3%   
Dun & Bradstreet Corp. 9,458 982,970 
Equifax, Inc. 31,014 3,454,029 
Nielsen Holdings PLC (a) 95,300 4,440,980 
Robert Half International, Inc. 34,732 1,637,266 
Verisk Analytics, Inc. (a)(b) 40,803 3,136,935 
  13,652,180 
Road & Rail - 0.7%   
CSX Corp. 255,211 6,622,725 
J.B. Hunt Transport Services, Inc. 23,700 1,738,632 
Kansas City Southern 28,568 2,133,173 
Norfolk Southern Corp. 78,158 6,611,385 
Ryder System, Inc. 13,984 794,711 
Union Pacific Corp. 223,584 17,484,269 
  35,384,895 
Trading Companies & Distributors - 0.2%   
Fastenal Co. (a) 75,833 3,095,503 
United Rentals, Inc. (b) 24,299 1,762,649 
W.W. Grainger, Inc. (a) 15,121 3,063,363 
  7,921,515 
TOTAL INDUSTRIALS  470,871,167 
INFORMATION TECHNOLOGY - 20.4%   
Communications Equipment - 1.4%   
Cisco Systems, Inc. 1,328,769 36,082,722 
F5 Networks, Inc. (b) 18,423 1,786,294 
Harris Corp. 32,568 2,830,159 
Juniper Networks, Inc. 92,925 2,564,730 
Motorola Solutions, Inc. (a) 42,059 2,878,939 
Qualcomm Technologies, Inc. 393,465 19,667,348 
  65,810,192 
Electronic Equipment & Components - 0.4%   
Amphenol Corp. Class A 80,693 4,214,595 
Corning, Inc. 309,670 5,660,768 
FLIR Systems, Inc. 36,159 1,014,983 
TE Connectivity Ltd. 101,124 6,533,622 
  17,423,968 
Internet Software & Services - 4.2%   
Akamai Technologies, Inc. (b) 46,579 2,451,453 
Alphabet, Inc.:   
Class A (b) 76,262 59,332,599 
Class C 77,781 59,026,445 
eBay, Inc. (b) 289,153 7,945,924 
Facebook, Inc. Class A (b) 594,338 62,203,415 
VeriSign, Inc. (a)(b) 25,687 2,244,016 
Yahoo!, Inc. (b) 227,428 7,564,255 
  200,768,107 
IT Services - 3.6%   
Accenture PLC Class A 163,556 17,091,602 
Alliance Data Systems Corp. (b) 16,004 4,426,226 
Automatic Data Processing, Inc. 120,729 10,228,161 
Cognizant Technology Solutions Corp. Class A (b) 159,174 9,553,623 
CSRA, Inc. 36,086 1,082,580 
Fidelity National Information Services, Inc. 72,624 4,401,014 
Fiserv, Inc. (b) 59,825 5,471,595 
IBM Corp. 233,630 32,152,161 
MasterCard, Inc. Class A 259,208 25,236,491 
Paychex, Inc. 83,996 4,442,548 
PayPal Holdings, Inc. (b) 291,020 10,534,924 
Teradata Corp. (a)(b) 34,815 919,812 
The Western Union Co. (a) 132,266 2,368,884 
Total System Services, Inc. 44,310 2,206,638 
Visa, Inc. Class A (a) 509,522 39,513,431 
Xerox Corp. 249,114 2,648,082 
  172,277,772 
Semiconductors & Semiconductor Equipment - 2.4%   
Analog Devices, Inc. 81,690 4,519,091 
Applied Materials, Inc. 300,812 5,616,160 
Avago Technologies Ltd. (a) 68,636 9,962,515 
Broadcom Corp. Class A 146,855 8,491,156 
First Solar, Inc. (b) 19,814 1,307,526 
Intel Corp. 1,235,300 42,556,085 
KLA-Tencor Corp. 40,822 2,831,006 
Lam Research Corp. (a) 41,463 3,292,991 
Linear Technology Corp. 62,603 2,658,749 
Microchip Technology, Inc. (a) 53,174 2,474,718 
Micron Technology, Inc. (b) 284,218 4,024,527 
NVIDIA Corp. (a) 133,793 4,409,817 
Qorvo, Inc. (b) 36,999 1,883,249 
Skyworks Solutions, Inc. 50,038 3,844,420 
Texas Instruments, Inc. 265,545 14,554,521 
Xilinx, Inc. 67,244 3,158,451 
  115,584,982 
Software - 4.3%   
Activision Blizzard, Inc. 132,068 5,112,352 
Adobe Systems, Inc. (b) 130,571 12,265,840 
Autodesk, Inc. (b) 59,212 3,607,787 
CA Technologies, Inc. 81,522 2,328,268 
Citrix Systems, Inc. (b) 40,267 3,046,199 
Electronic Arts, Inc. (b) 81,360 5,591,059 
Intuit, Inc. 69,109 6,669,019 
Microsoft Corp. 2,091,000 116,008,680 
Oracle Corp. 838,073 30,614,807 
Red Hat, Inc. (b) 47,853 3,962,707 
Salesforce.com, Inc. (b) 163,387 12,809,541 
Symantec Corp. 176,832 3,713,472 
  205,729,731 
Technology Hardware, Storage & Peripherals - 4.1%   
Apple, Inc. 1,459,458 153,622,545 
EMC Corp. 507,530 13,033,370 
Hewlett Packard Enterprise Co. 470,722 7,154,974 
HP, Inc. 472,866 5,598,733 
NetApp, Inc. 76,527 2,030,261 
SanDisk Corp. 52,535 3,992,135 
Seagate Technology LLC (a) 78,278 2,869,671 
Western Digital Corp. 60,656 3,642,393 
  191,944,082 
TOTAL INFORMATION TECHNOLOGY  969,538,834 
MATERIALS - 2.7%   
Chemicals - 2.1%   
Air Products & Chemicals, Inc. 50,752 6,603,343 
Airgas, Inc. 16,976 2,348,120 
CF Industries Holdings, Inc. 61,012 2,489,900 
E.I. du Pont de Nemours & Co. 229,417 15,279,172 
Eastman Chemical Co. 38,900 2,626,139 
Ecolab, Inc. 69,572 7,957,645 
FMC Corp. 34,977 1,368,650 
International Flavors & Fragrances, Inc. 21,006 2,513,158 
LyondellBasell Industries NV Class A 94,120 8,179,028 
Monsanto Co. 115,135 11,343,100 
PPG Industries, Inc. 70,486 6,965,427 
Praxair, Inc. 74,563 7,635,251 
Sherwin-Williams Co. 20,715 5,377,614 
The Dow Chemical Co. 294,365 15,153,910 
The Mosaic Co. 87,809 2,422,650 
  98,263,107 
Construction Materials - 0.1%   
Martin Marietta Materials, Inc. 17,313 2,364,610 
Vulcan Materials Co. 34,899 3,314,358 
  5,678,968 
Containers & Packaging - 0.2%   
Avery Dennison Corp. 23,847 1,494,253 
Ball Corp. (a) 35,685 2,595,370 
Owens-Illinois, Inc. (b) 42,102 733,417 
Sealed Air Corp. 51,679 2,304,883 
WestRock Co. 67,305 3,070,454 
  10,198,377 
Metals & Mining - 0.2%   
Alcoa, Inc. (a) 342,952 3,384,936 
Freeport-McMoRan, Inc. (a) 302,571 2,048,406 
Newmont Mining Corp. 138,507 2,491,741 
Nucor Corp. 83,665 3,371,700 
  11,296,783 
Paper & Forest Products - 0.1%   
International Paper Co. 108,521 4,091,242 
TOTAL MATERIALS  129,528,477 
TELECOMMUNICATION SERVICES - 2.4%   
Diversified Telecommunication Services - 2.4%   
AT&T, Inc. 1,610,413 55,414,311 
CenturyLink, Inc. 143,712 3,615,794 
Frontier Communications Corp. (a) 305,801 1,428,091 
Level 3 Communications, Inc. (b) 75,540 4,106,354 
Verizon Communications, Inc. 1,065,112 49,229,477 
  113,794,027 
UTILITIES - 3.0%   
Electric Utilities - 1.7%   
American Electric Power Co., Inc. 128,480 7,486,530 
Duke Energy Corp. 180,185 12,863,407 
Edison International 85,287 5,049,843 
Entergy Corp. 46,708 3,192,959 
Eversource Energy 83,028 4,240,240 
Exelon Corp. 240,713 6,684,600 
FirstEnergy Corp. 110,738 3,513,717 
NextEra Energy, Inc. 120,554 12,524,355 
Pepco Holdings, Inc. 66,389 1,726,778 
Pinnacle West Capital Corp. 29,016 1,870,952 
PPL Corp. 175,854 6,001,897 
Southern Co. 237,933 11,132,885 
Xcel Energy, Inc. 132,847 4,770,536 
  81,058,699 
Gas Utilities - 0.0%   
AGL Resources, Inc. 31,476 2,008,484 
Independent Power and Renewable Electricity Producers - 0.1%   
NRG Energy, Inc. 82,241 967,977 
The AES Corp. 176,137 1,685,631 
  2,653,608 
Multi-Utilities - 1.2%   
Ameren Corp. 63,513 2,745,667 
CenterPoint Energy, Inc. (a) 112,628 2,067,850 
CMS Energy Corp. 72,531 2,616,918 
Consolidated Edison, Inc. 76,750 4,932,723 
Dominion Resources, Inc. (a) 155,842 10,541,153 
DTE Energy Co. 46,981 3,767,406 
NiSource, Inc. 83,419 1,627,505 
PG&E Corp. 128,387 6,828,905 
Public Service Enterprise Group, Inc. 132,445 5,124,297 
SCANA Corp. (a) 37,412 2,263,052 
Sempra Energy 61,725 5,802,767 
TECO Energy, Inc. 61,576 1,641,000 
WEC Energy Group, Inc. (a) 82,637 4,240,104 
  54,199,347 
TOTAL UTILITIES  139,920,138 
TOTAL COMMON STOCKS   
(Cost $2,467,070,489)  4,686,170,940 
 Principal Amount Value 
U.S. Treasury Obligations - 0.1%   
U.S. Treasury Bills, yield at date of purchase 0.18% to 0.3% 3/31/16 to 5/26/16 (c)   
(Cost $3,497,255) 3,500,000 3,496,840 
 Shares Value 
Money Market Funds - 6.3%   
Fidelity Cash Central Fund, 0.33% (d) 64,407,948 $64,407,948 
Fidelity Securities Lending Cash Central Fund, 0.35% (d)(e) 234,937,835 234,937,835 
TOTAL MONEY MARKET FUNDS   
(Cost $299,345,783)  299,345,783 
TOTAL INVESTMENT PORTFOLIO - 105.2%   
(Cost $2,769,913,527)  4,989,013,563 
NET OTHER ASSETS (LIABILITIES) - (5.2)%  (245,371,942) 
NET ASSETS - 100%  $4,743,641,621 

Futures Contracts    
 Expiration Date Underlying Face Amount at Value Unrealized Appreciation/(Depreciation) 
Purchased    
Equity Index Contracts    
123 CME E-mini S&P 500 Index Contracts (United States) March 2016 12,517,710 $32,026 
82 CME S&P 500 Index Contracts (United States) March 2016 41,725,700 (29,119) 
TOTAL FUTURES CONTRACTS   $2,907 

The face value of futures purchased as a percentage of Net Assets is 1.1%


Legend

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

 (b) Non-income producing

 (c) Security or a portion of the security was pledged to cover margin requirements for futures contracts. At period end, the value of securities pledged amounted to $2,421,723.

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

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




Affiliated Central Funds

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

Fund Income earned 
Fidelity Cash Central Fund $90,061 
Fidelity Securities Lending Cash Central Fund 371,854 
Total $461,915 



Investment Valuation

The following is a summary of the inputs used, as of December 31, 2015, 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 $604,154,126 $604,154,126 $-- $-- 
Consumer Staples 471,470,046 471,470,046 -- -- 
Energy 304,433,396 304,433,396 -- -- 
Financials 772,274,082 772,274,082 -- -- 
Health Care 710,186,647 710,186,647 -- -- 
Industrials 470,871,167 470,871,167 -- -- 
Information Technology 969,538,834 969,538,834 -- -- 
Materials 129,528,477 129,528,477 -- -- 
Telecommunication Services 113,794,027 113,794,027 -- -- 
Utilities 139,920,138 139,920,138 -- -- 
U.S. Government and Government Agency Obligations 3,496,840 -- 3,496,840 -- 
Money Market Funds 299,345,783 299,345,783 -- -- 
Total Investments in Securities: $4,989,013,563 $4,985,516,723 $3,496,840 $-- 
Derivative Instruments:     
Assets     
Futures Contracts $32,026 $32,026 $-- $-- 
Total Assets $32,026 $32,026 $-- $-- 
Liabilities     
Futures Contracts $(29,119) $(29,119) $-- $-- 
Total Liabilities $(29,119) $(29,119) $-- $-- 
Total Derivative Instruments: $2,907 $2,907 $-- $-- 





Value of Derivative Instruments

The following table is a summary of the Fund's value of derivative instruments by primary risk exposure as of December 31, 2015. 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) $32,026 $(29,119) 
Total Value of Derivatives $32,026 $(29,119) 

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


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


Financial Statements

Statement of Assets and Liabilities

  December 31, 2015 
Assets   
Investment in securities, at value (including securities loaned of $227,920,784) — See accompanying schedule:
Unaffiliated issuers (cost $2,470,567,744) 		$4,689,667,780  
Fidelity Central Funds (cost $299,345,783) 299,345,783  
Total Investments (cost $2,769,913,527)  $4,989,013,563 
Cash  604 
Receivable for fund shares sold  11,560,165 
Dividends receivable  6,297,845 
Distributions receivable from Fidelity Central Funds  54,213 
Other receivables  39,994 
Total assets  5,006,966,384 
Liabilities   
Payable for investments purchased $20,817,145  
Payable for fund shares redeemed 6,519,852  
Accrued management fee 178,572  
Distribution and service plan fees payable 135,060  
Payable for daily variation margin for derivative instruments 477,993  
Other affiliated payables 218,314  
Other payables and accrued expenses 39,992  
Collateral on securities loaned, at value 234,937,835  
Total liabilities  263,324,763 
Net Assets  $4,743,641,621 
Net Assets consist of:   
Paid in capital  $2,531,050,338 
Undistributed net investment income  151,183 
Accumulated undistributed net realized gain (loss) on investments  (6,662,843) 
Net unrealized appreciation (depreciation) on investments  2,219,102,943 
Net Assets  $4,743,641,621 
Initial Class:   
Net Asset Value, offering price and redemption price per share ($4,103,864,944 ÷ 19,879,854 shares)  $206.43 
Service Class:   
Net Asset Value, offering price and redemption price per share ($64,618,218 ÷ 313,959 shares)  $205.82 
Service Class 2:   
Net Asset Value, offering price and redemption price per share ($575,158,459 ÷ 2,815,996 shares)  $204.25 

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


Statement of Operations

  Year ended December 31, 2015 
Investment Income   
Dividends  $94,485,501 
Interest  4,311 
Income from Fidelity Central Funds  461,915 
Total income  94,951,727 
Expenses   
Management fee $2,053,757  
Transfer agent fees 2,510,148  
Distribution and service plan fees 1,412,895  
Independent trustees' compensation 19,589  
Interest 784  
Miscellaneous 6,390  
Total expenses before reductions 6,003,563  
Expense reductions (107) 6,003,456 
Net investment income (loss)  88,948,271 
Realized and Unrealized Gain (Loss)   
Net realized gain (loss) on:   
Investment securities:   
Unaffiliated issuers 260,788  
Futures contracts 1,240,704  
Total net realized gain (loss)  1,501,492 
Change in net unrealized appreciation (depreciation) on:
Investment securities 		(52,374,282)  
Futures contracts (861,192)  
Total change in net unrealized appreciation (depreciation)  (53,235,474) 
Net gain (loss)  (51,733,982) 
Net increase (decrease) in net assets resulting from operations  $37,214,289 

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


Statement of Changes in Net Assets

 Year ended December 31, 2015 Year ended December 31, 2014 
Increase (Decrease) in Net Assets   
Operations   
Net investment income (loss) $88,948,271 $73,306,066 
Net realized gain (loss) 1,501,492 10,964,072 
Change in net unrealized appreciation (depreciation) (53,235,474) 419,365,494 
Net increase (decrease) in net assets resulting from operations 37,214,289 503,635,632 
Distributions to shareholders from net investment income (94,599,871) (67,240,648) 
Distributions to shareholders from net realized gain (2,817,105) (3,785,052) 
Total distributions (97,416,976) (71,025,700) 
Share transactions - net increase (decrease) 449,403,160 335,970,800 
Total increase (decrease) in net assets 389,200,473 768,580,732 
Net Assets   
Beginning of period 4,354,441,148 3,585,860,416 
End of period (including undistributed net investment income of $151,183 and undistributed net investment income of $5,759,036, respectively) $4,743,641,621 $4,354,441,148 

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


Financial Highlights — VIP Index 500 Portfolio Initial Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $208.12 $186.29 $144.91 $129.33 $132.39 
Income from Investment Operations      
Net investment income (loss)A 4.15 3.75 3.31 3.12 2.58 
Net realized and unrealized gain (loss) (1.44) 21.58 42.98 17.29 .10 
Total from investment operations 2.71 25.33 46.29 20.41 2.68 
Distributions from net investment income (4.26) (3.31) (3.27) (3.06) (2.65) 
Distributions from net realized gain (.13) (.18) (1.64) (1.77) (3.09) 
Total distributions (4.40)B (3.50)C (4.91) (4.83) (5.74) 
Net asset value, end of period $206.43 $208.12 $186.29 $144.91 $129.33 
Total ReturnD,E 1.33% 13.57% 32.25% 15.91% 2.04% 
Ratios to Average Net AssetsF,G      
Expenses before reductions .10% .10% .10% .10% .10% 
Expenses net of fee waivers, if any .10% .10% .10% .10% .10% 
Expenses net of all reductions .10% .10% .10% .10% .10% 
Net investment income (loss) 1.98% 1.91% 1.98% 2.20% 1.96% 
Supplemental Data      
Net assets, end of period (000 omitted) $4,103,865 $3,823,973 $3,163,673 $2,294,364 $1,918,592 
Portfolio turnover rateH 9% 3% 5% 5% 5% 

 A Calculated based on average shares outstanding during the period.

 B Total distributions of $4.40 per share is comprised of distributions from net investment income of $4.262 and distributions from net realized gain of $.133 per share.

 C Total distributions of $3.50 per share is comprised of distributions from net investment income of $3.314 and distributions from net realized gain of $.184 per share.

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

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

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

 G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

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


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


Financial Highlights — VIP Index 500 Portfolio Service Class

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $207.49 $185.77 $144.53 $129.00 $132.07 
Income from Investment Operations      
Net investment income (loss)A 3.93 3.54 3.13 2.97 2.44 
Net realized and unrealized gain (loss) (1.43) 21.50 42.85 17.25 .10 
Total from investment operations 2.50 25.04 45.98 20.22 2.54 
Distributions from net investment income (4.03) (3.14) (3.10) (2.92) (2.52) 
Distributions from net realized gain (.13) (.18) (1.64) (1.77) (3.09) 
Total distributions (4.17)B (3.32) (4.74) (4.69) (5.61) 
Net asset value, end of period $205.82 $207.49 $185.77 $144.53 $129.00 
Total ReturnC,D 1.24% 13.46% 32.12% 15.80% 1.93% 
Ratios to Average Net AssetsE,F      
Expenses before reductions .20% .20% .20% .20% .20% 
Expenses net of fee waivers, if any .20% .20% .20% .20% .20% 
Expenses net of all reductions .20% .20% .20% .20% .20% 
Net investment income (loss) 1.88% 1.81% 1.88% 2.10% 1.86% 
Supplemental Data      
Net assets, end of period (000 omitted) $64,618 $64,442 $55,066 $41,443 $37,095 
Portfolio turnover rateG 9% 3% 5% 5% 5% 

 A Calculated based on average shares outstanding during the period.

 B Total distributions of $4.17 per share is comprised of distributions from net investment income of $4.033 and distributions from net realized gain of $.133 per share.

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

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

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

 F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

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


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


Financial Highlights — VIP Index 500 Portfolio Service Class 2

      
Years ended December 31, 2015 2014 2013 2012 2011 
Selected Per–Share Data      
Net asset value, beginning of period $206.02 $184.56 $143.64 $128.24 $131.31 
Income from Investment Operations      
Net investment income (loss)A 3.59 3.23 2.86 2.74 2.23 
Net realized and unrealized gain (loss) (1.42) 21.34 42.56 17.14 .11 
Total from investment operations 2.17 24.57 45.42 19.88 2.34 
Distributions from net investment income (3.80) (2.92) (2.86) (2.71) (2.32) 
Distributions from net realized gain (.13) (.18) (1.64) (1.77) (3.09) 
Total distributions (3.94)B (3.11)C (4.50) (4.48) (5.41) 
Net asset value, end of period $204.25 $206.02 $184.56 $143.64 $128.24 
Total ReturnD,E 1.08% 13.29% 31.92% 15.62% 1.78% 
Ratios to Average Net AssetsF,G      
Expenses before reductions .35% .35% .35% .35% .35% 
Expenses net of fee waivers, if any .35% .35% .35% .35% .35% 
Expenses net of all reductions .35% .35% .35% .35% .35% 
Net investment income (loss) 1.73% 1.66% 1.73% 1.95% 1.71% 
Supplemental Data      
Net assets, end of period (000 omitted) $575,158 $466,026 $367,122 $274,104 $240,172 
Portfolio turnover rateH 9% 3% 5% 5% 5% 

 A Calculated based on average shares outstanding during the period.

 B Total distributions of $3.94 per share is comprised of distributions from net investment income of $3.804 and distributions from net realized gain of $.133 per share.

 C Total distributions of $3.11 per share is comprised of distributions from net investment income of $2.923 and distributions from net realized gain of $.184 per share.

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

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

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

 G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from 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 expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.

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


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


Notes to Financial Statements

For the period ended December 31, 2015

1. Organization.

VIP Index 500 Portfolio (the Fund) is a fund of Variable Insurance Products Fund II (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 and Service Class 2 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, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.

3. Significant Accounting Policies.

The 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 Fidelity Management & Research Company (FMR) Fair Value Committee (the Committee). 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. U.S. government and government agency obligations are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.

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

Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of December 31, 2015 is included at the end of the Fund's Schedule of Investments.

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

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 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.

Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.

Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of December 31, 2015, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction.

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 futures contracts, market discount, 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 $2,368,147,015 
Gross unrealized depreciation (160,474,402) 
Net unrealized appreciation (depreciation) on securities $2,207,672,613 
Tax Cost $2,781,340,950 

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

Undistributed ordinary income $190,953 
Undistributed long-term capital gain $4,767,769 
Net unrealized appreciation (depreciation) on securities and other investments $2,207,672,613 

The tax character of distributions paid was as follows:

 December 31, 2015 December 31, 2014 
Ordinary Income $95,404,758 $ 71,025,700 
Long-term Capital Gains 2,012,218 – 
Total $97,416,976 $ 71,025,700 

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 $1,240,704 and a change in net unrealized appreciation (depreciation) of $(861,192) 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, other than short-term securities, aggregated $851,506,506 and $389,366,139, respectively.

6. Fees and Other Transactions with Affiliates.

Management Fee and Expense Contract. 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 based on an annual rate of .045% of the Fund's average net assets. Under the management contract, the investment adviser pays all other fund-level expenses, except the compensation of the independent Trustees and certain other expenses such as interest expense, including commitment fees. In addition, under an expense contract, the investment adviser pays class-level expenses as necessary so that total expenses do not exceed an annual rate of .10% of each class' average net assets, excluding the distribution and service fee for each applicable class, with certain exceptions.

Sub-Adviser. Geode Capital Management, LLC (Geode), serves as sub-adviser for the Fund. Geode provides discretionary investment advisory services to the Fund and is paid by the investment adviser for providing these services.

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 $64,627 
Service Class 2 1,348,268 
 $1,412,895 

Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing, and shareholder servicing agent for each class. FIIOC receives asset-based fees of .07% of each class's average net assets for transfer agent services, typesetting, printing and mailing of shareholder reports, excluding mailing of proxy statements and out of pocket expenses. Under the expense contract, each class pays a portion of the transfer agent fees equal to an annual rate of .055% of class-level average net assets. For the period, transfer agent fees for each class, including out of pocket expenses, were as follows:

Initial Class $2,177,984 
Service Class 35,545 
Service Class 2 296,619 
 $2,510,148 

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

Borrower or Lender Average Loan Balance Weighted Average Interest Rate Interest Expense 
Borrower $13,617,400 .41% $784 

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 $6,390 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. 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. 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 $371,854.

9. Expense Reductions.

Through arrangements with the Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $107.

10. Distributions to Shareholders.

Distributions to shareholders of each class were as follows:

Years ended December 31, 2015 2014 
From net investment income   
Initial Class $81,979,682 $59,778,108 
Service Class 1,236,538 964,455 
Service Class 2 11,383,651 6,498,085 
Total $94,599,871 $67,240,648 
From net realized gain   
Initial Class $2,464,544 $3,319,370 
Service Class 40,908 56,538 
Service Class 2 311,653 409,144 
Total $2,817,105 $3,785,052 

11. Share Transactions.

Transactions for each class of shares were as follows:

 Shares Shares Dollars Dollars 
Years ended December 31, 2015 2014 2015 2014 
Initial Class     
Shares sold 3,162,148 3,319,575 $663,026,404 $652,017,440 
Reinvestment of distributions 415,051 298,991 84,444,226 63,097,478 
Shares redeemed (2,070,988) (2,227,193) (432,681,340) (438,600,626) 
Net increase (decrease) 1,506,211 1,391,373 $314,789,290 $276,514,292 
Service Class     
Shares sold 36,097 38,635 $7,586,924 $7,586,589 
Reinvestment of distributions 6,296 4,853 1,277,446 1,020,993 
Shares redeemed (39,010) (29,328) (8,131,171) (5,767,815) 
Net increase (decrease) 3,383 14,160 $733,199 $2,839,767 
Service Class 2     
Shares sold 2,406,847 583,624 $505,411,905 $115,933,018 
Reinvestment of distributions 58,109 33,065 11,695,304 6,907,229 
Shares redeemed (1,911,012) (343,791) (383,226,538) (66,223,506) 
Net increase (decrease) 553,944 272,898 $133,880,671 $56,616,741 

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 39% of the total outstanding shares of the Fund.

Report of Independent Registered Public Accounting Firm

To the Trustees of Variable Insurance Products Fund II and Shareholders of VIP Index 500 Portfolio:

We have audited the accompanying statement of assets and liabilities of VIP Index 500 Portfolio (the Fund), a fund of Variable Insurance Products Fund II, including the schedule of investments, as of December 31, 2015, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2015, by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of VIP Index 500 Portfolio as of December 31, 2015, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
February 16, 2016

Trustees and Officers

The Trustees, Members of the Advisory Board (if any), and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance.  Each of the Trustees oversees 170 funds. 

The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust.  Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the fund is referred to herein as an Independent Trustee.  Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs.  The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees.  Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years. 

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

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

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

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

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

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

Interested Trustees*:

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

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

James C. Curvey (1935)

Year of Election or Appointment: 2007

Trustee

Chairman of the Board of Trustees

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

Charles S. Morrison (1960)

Year of Election or Appointment: 2014

Trustee

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

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

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

Independent Trustees:

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

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

Dennis J. Dirks (1948)

Year of Election or Appointment: 2005

Trustee

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

Alan J. Lacy (1953)

Year of Election or Appointment: 2008

Trustee

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

Ned C. Lautenbach (1944)

Year of Election or Appointment: 2000

Trustee

Chairman of the Independent Trustees

Mr. Lautenbach also serves as Trustee of other Fidelity® funds. Mr. Lautenbach currently serves as the Lead Director of the Eaton Corporation Board of Directors (diversified industrial, 1997-present). Mr. Lautenbach is Chairman of the Board of Directors of Artis-Naples in Naples, Florida (2012-present), a member of the Council on Foreign Relations (1994-present), and a member of the Board of Governors, State University System of Florida (2013-present). Previously, Mr. Lautenbach was a Partner/Advisory Partner at Clayton, Dubilier & Rice, LLC (private equity investment, 1998-2010), as well as a Director of Sony Corporation (2006-2007).

Joseph Mauriello (1944)

Year of Election or Appointment: 2008

Trustee

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

Robert W. Selander (1950)

Year of Election or Appointment: 2011

Trustee

Mr. Selander also serves as Trustee of other Fidelity® funds. Mr. Selander serves as a Director of The Western Union Company (global money transfer, 2014-present) and a non-executive Chairman of Health Equity, Inc. (health savings custodian, 2015-present). Previously, Mr. Selander served as a Member of the Advisory Board of other Fidelity® funds (2011), and Executive Vice Chairman (2010), Chief Executive Officer (2009-2010), and President and Chief Executive Officer (1997-2009) of Mastercard, Inc.

Cornelia M. Small (1944)

Year of Election or Appointment: 2005

Trustee

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

William S. Stavropoulos (1939)

Year of Election or Appointment: 2001

Trustee

Vice Chairman of the Independent Trustees

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

David M. Thomas (1949)

Year of Election or Appointment: 2008

Trustee

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

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

Advisory Board Members and Officers:

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

Name, Year of Birth; Principal Occupation

Peter S. Lynch (1944)

Year of Election or Appointment: 2003

Member of the Advisory Board

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

Marc R. Bryant (1966)

Year of Election or Appointment: 2015

Secretary and Chief Legal Officer (CLO)

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

William C. Coffey (1969)

Year of Election or Appointment: 2009

Assistant Secretary

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

Jonathan Davis (1968)

Year of Election or Appointment: 2010

Assistant Treasurer

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

Adrien E. Deberghes (1967)

Year of Election or Appointment: 2008

Deputy Treasurer

Mr. Deberghes also serves as an officer of other funds. He is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005).

Stephanie J. Dorsey (1969)

Year of Election or Appointment: 2010

Assistant Treasurer

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

Howard J. Galligan III (1966)

Year of Election or Appointment: 2014

Chief Financial Officer

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

Scott C. Goebel (1968)

Year of Election or Appointment: 2015

Vice President

Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and FMR Investment Management (U.K.) Limited (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).

Brian B. Hogan (1964)

Year of Election or Appointment: 2009

Vice President

Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager.

Chris Maher (1972)

Year of Election or Appointment: 2013

Assistant Treasurer

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

John F. Papandrea (1972)

Year of Election or Appointment: 2016

Anti-Money Laundering (AML) Officer

Mr. Papandrea also serves as AML Officer of other funds. Mr. Papandrea is Vice President of FMR LLC (diversified financial services company, 2008-present) and is an employee of Fidelity Investments (2005-present).

Kenneth B. Robins (1969)

Year of Election or Appointment: 2008

President and Treasurer

Mr. Robins also serves as an officer of other funds. Mr. Robins serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2013-present) and is an employee of Fidelity Investments (2004-present). Previously, Mr. Robins served in other fund officer roles.

Stacie M. Smith (1974)

Year of Election or Appointment: 2013

Deputy Treasurer

Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (1996-2009).

Renee Stagnone (1975)

Year of Election or Appointment: 2013

Deputy Treasurer

Ms. Stagnone also serves as Deputy Treasurer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present).

Linda J. Wondrack (1964)

Year of Election or Appointment: 2014

Chief Compliance Officer

Ms. Wondrack also serves as Chief Compliance Officer of other funds. Ms. Wondrack is Executive Vice President and head of the Ethics Office and Asset Management Compliance for Fidelity Investments (2012-present). Ms. Wondrack also serves as Chief Compliance Officer of Fidelity SelectCo, LLC (investment adviser firm, 2014-present); Chief Compliance Officer of Impresa Management LLC (2013-present); and Chief Compliance Officer of FMR Co., Inc. (investment adviser firm), Fidelity Investments Money Management, Inc. (investment adviser firm), FMR Investment Management (U.K.) Limited (investment adviser firm), Fidelity Management & Research (Hong Kong) (investment adviser firm), Fidelity Management & Research Company (investment adviser firm), FIAM LLC (investment adviser firm), and Strategic Advisers, Inc. (investment adviser firm), Ballyrock Investment Advisors LLC, and Northern Neck Investors LLC (2012-present). Previously, Ms. Wondrack served as Chief Compliance Officer of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2012-2016); Senior Vice President and Chief Compliance Officer for Columbia Management Investment Advisers, LLC (2005-2012); Chief Compliance Officer for certain funds within the Columbia Family of Funds (2007-2012); and Senior Vice President of Compliance Risk Management at Bank of America (2005-2010).

Joseph F. Zambello (1957)

Year of Election or Appointment: 2011

Deputy Treasurer

Mr. Zambello also serves as Deputy Treasurer of other funds. Mr. Zambello is an employee of Fidelity Investments (1991-present). Previously, Mr. Zambello served as Vice President of the Program Management Group of FMR (investment adviser firm, 2009-2011) and Vice President of the Transfer Agent Oversight Group (2005-2009).

Shareholder Expense Example

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

The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2015 to December 31, 2015).

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 Annualized Expense Ratio-A Beginning
Account Value
July 1, 2015 		Ending
Account Value
December 31, 2015 		Expenses Paid
During Period-B
July 1, 2015
to December 31, 2015 
Initial Class .10%    
Actual  $1,000.00 $1,001.30 $.50 
Hypothetical-C  $1,000.00 $1,024.70 $.51 
Service Class .20%    
Actual  $1,000.00 $1,000.80 $1.01 
Hypothetical-C  $1,000.00 $1,024.20 $1.02 
Service Class 2 .35%    
Actual  $1,000.00 $1,000.10 $1.76 
Hypothetical-C  $1,000.00 $1,023.44 $1.79 

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

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

 C 5% return per year before expenses


Distributions (Unaudited)

The Board of Trustees of VIP Index 500 Portfolio voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:

 Pay Date Record Date Dividends Capital Gains 
Initial Class 02/05/2016 02/05/2016 $0.009 $0.216 
     
Service Class 02/05/2016 02/05/2016 $0.009 $0.216 
     
Service Class 2 02/05/2016 02/05/2016 $0.009 $0.216 

The fund hereby designates as a capital gain dividend with respect to the taxable year ended December 31, 2015, $4,854,971, or, if subsequently determined to be different, the net capital gain of such year.

Initial Class designates 30% and 100%; Service Class designates 32% and 100%; and Service Class 2 designates 34% and 100%; of the dividends distributed in February and December 2015, respectively during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.

Board Approval of Investment Advisory Contracts and Management Fees

VIP Index 500 Portfolio

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

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

At its July 2015 meeting, the Board unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationship with the fund; and (iv) the extent to which (if any) economies of scale exist and would be realized as the fund grows, and whether any economies of scale are appropriately shared with fund shareholders.

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

Nature, Extent, and Quality of Services Provided.  The Board considered staffing as it relates to the fund, including the backgrounds of investment personnel of Fidelity and Geode, and also considered the fund's investment objective, strategies, and related investment philosophy. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups and with representatives of Geode. The Board considered the portfolio managers' investments, if any, in the funds that they manage.

Resources Dedicated to Investment Management and Support Services.  The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of Fidelity's and Geode's investment staff, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. Additionally, in its deliberations, the Board considered Fidelity's and Geode's trading, risk management, and compliance capabilities and resources, which are integral parts of the investment management process.

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

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

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

Investment in a Large Fund Family.  The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) reducing management fees and total expenses for certain index funds and diversified international funds; (v) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vi) rationalizing product lines and gaining increased efficiencies through fund mergers; (vii) launching active fixed-income exchange-traded funds; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and information security and to increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; (x) modifying the eligibility criteria for certain share classes to accommodate roll-over assets from employer-sponsored retirement plans; (xi) launching a new Class W of the Freedom Index Funds to attract and retain Fidelity record-kept retirement plan assets; and (xii) implementing changes to Fidelity's money market product line in response to recent money market regulatory reforms.

Investment Performance.  The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.

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

In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to a fund's benchmark index, over appropriate time periods taking into account relevant factors including the following: general market conditions; the characteristics of the fund's benchmark index; the extent to which statistical sampling is employed; securities lending revenues; and fund cash flows and other factors.

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

VIP Index 500 Portfolio


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

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

Management Fee.  The Board considered two proprietary management fee comparisons for the 12-month periods shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group is broader than the Lipper peer group used by the Board for performance comparisons because the Total Mapped Group combines several Lipper investment objective categories while the Lipper peer group does not. The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates, regardless of whether their management fee structures also are comparable. Funds with comparable investment mandates offer exposure to similar types of securities. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board. Because the vast majority of competitor funds' management fees do not cover non-management expenses, for a more meaningful comparison of management fees, the fund is compared on the basis of a hypothetical "net management fee," which is derived by subtracting payments made by FMR for "fund-level" non-management expenses (including pricing and bookkeeping fees and fees paid to non-affiliated custodians) from the fund's management fee. In this regard, the Board considered that net management fees can vary from year to year because of differences in "fund-level" non-management expenses. The Board noted that, although FMR does not pay transfer agent fees or other "class-level" expenses under the fund's management contract, such expenses (excluding 12b-1 fees, if applicable) are paid by FMR pursuant to expense limitation arrangements in effect for the fund and, as a result, are also subtracted from the management fee for purposes of calculating the hypothetical "net management fee."

VIP Index 500 Portfolio


The Board noted that the fund's hypothetical net management fee rate ranked below the median of its Total Mapped Group and below the median of its ASPG for 2014.

Furthermore, the Board considered that it had approved an amended and restated management contract for the fund (effective September 1, 2011) that lowered the fund's management fee from 0.10% to 0.045%. The Board considered that the chart reflects the fund's lower management fee for 2011, as if the lower fee were in effect for the entire year.

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

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

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

The Board noted that the total expense ratio of each class ranked below its competitive median for 2014.

The Board considered that current contractual arrangements for the fund oblige FMR to pay all "class-level" expenses of each class of the fund to the extent necessary to limit total expenses, with certain exceptions, as follows: Initial Class: 0.10%; Service Class: 0.20%; and Service Class 2: 0.35%. These contractual arrangements may not be increased without the approval of the Board and the shareholders of the applicable class.

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

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

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

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

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

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

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

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

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

Additional Information Requested by the Board.  In order to develop fully the factual basis for consideration of the Fidelity funds' Advisory Contracts, the Board requested and received additional information on certain topics, including: (i) fund performance trends and Fidelity's long-term strategies for certain funds; (ii) the various share classes employed by Fidelity and the attributes of each class, together with similar information on the distribution and servicing payments made by Fidelity or the funds to third-party participants in the distribution channels; (iii) fund profitability, and fund performance in relation to fund profitability; (iv) the methodology with respect to evaluating competitive fund data and peer group classifications and fee comparisons; (v) annual fund profitability margins, with particular focus on certain funds with negative margins; (vi) the realization of fall-out benefits in certain Fidelity business units; (vii) economies of scale and the way in which they are shared with fund shareholders;(viii) Fidelity's group fee structures, including the group fee schedule of breakpoints;(ix) the impact of cost containment measures on the funds; and (x) the transfer agent fee structure.

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





Fidelity Investments

VIPIDX-ANN-0216
1.540028.118


Item 2.

Code of Ethics


As of the end of the period, December 31, 2015, Variable Insurance Products Fund II (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer.  A copy of the code of ethics is filed as an exhibit to this Form N-CSR.


Item 3.

Audit Committee Financial Expert


The Board of Trustees of the trust has determined that Joseph Mauriello is an audit committee financial expert, as defined in Item 3 of Form N-CSR.   Mr. Mauriello is independent for purposes of Item 3 of Form N-CSR.  


Item 4.  

Principal Accountant Fees and Services


Fees and Services


The following table presents fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, “Deloitte Entities”) in each of the last two fiscal years for services rendered to VIP Contrafund Portfolio, VIP Disciplined Small Cap Portfolio, VIP Emerging Markets Portfolio and VIP Index 500 Portfolio (the “Funds”):


Services Billed by Deloitte Entities


December 31, 2015 FeesA

 

Audit Fees

Audit-Related Fees

Tax Fees

All Other Fees

VIP Contrafund Portfolio

 $56,000  

                 $-

 $6,500

     $4,700

VIP Disciplined Small Cap

 Portfolio      

          $42,000           

        $-

  

  $6,000

    $700

VIP Emerging Markets

Portfolio

        

          $48,000         

        $-

  

  $6,000

    $700

VIP Index 500 Portfolio                   $48,000        

        $-  

  $6,300    

 $1,600



December 31, 2014 FeesA

 

Audit Fees

Audit-Related Fees

Tax Fees

All Other Fees

VIP Contrafund Portfolio

 $53,000  

                 $-

 $6,100

     $4,600

VIP Disciplined Small Cap

 Portfolio      

          $39,000           

        $-

  

  $6,000

    $700

VIP Emerging Markets

Portfolio

        

          $47,000         

        $-

  

  $6,000

    $700

VIP Index 500 Portfolio                    $45,000        

        $-  

  $6,300    

 $1,400



A Amounts may reflect rounding.



The following table presents fees billed by PricewaterhouseCoopers LLP (“PwC”) in each of the last two fiscal years for services rendered to VIP International Capital Appreciation Portfolio (the “Fund”):


Services Billed by PwC

December 31, 2015 FeesA

 

Audit Fees

Audit-Related Fees

Tax Fees

All Other Fees

VIP International Capital Appreciation Portfolio

 $60,000

$-

 $5,600

 $1,700



December 31, 2014 FeesA

 

Audit Fees

Audit-Related Fees

Tax Fees

All Other Fees

VIP International Capital Appreciation Portfolio

 $57,000

$-

 $5,300

 $1,700



A Amounts may reflect rounding.


The following table presents fees billed by PwC and Deloitte Entities that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Funds and that are rendered on behalf of Fidelity Management & Research Company (“FMR”) and entities controlling, controlled by, or under common control with FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Funds (“Fund Service Providers”):



Services Billed by Deloitte Entities



 

December 31, 2015A

December 31, 2014A

Audit-Related Fees

$-

$-

Tax Fees

$10,000

$-

All Other Fees

$-

$650,000


A Amounts may reflect rounding.



Services Billed by PwC



 

December 31, 2015A

December 31, 2014A

Audit-Related Fees

$5,290,000

$5,950,000

Tax Fees

$-

$-

All Other Fees

 $-

 $-


A Amounts may reflect rounding.



“Audit-Related Fees” represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.


“Tax Fees” represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.


“All Other Fees” represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.  


Assurance services must be performed by an independent public accountant.


* * *


The aggregate non-audit fees billed by PwC and Deloitte Entities for services rendered to the Funds, FMR (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any Fund Service Provider for each of the last two fiscal years of the Funds are as follows:


Billed By

December 31, 2015 A

December 31, 2014 A,B

PwC

$5,650,000

$8,105,000

Deloitte Entities

$70,000

$1,835,000



A Amounts may reflect rounding.

B Reflects current period presentation.


The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC and Deloitte Entities to Fund Service Providers to be compatible with maintaining the independence of PwC and Deloitte Entities in their  audits of the Funds, taking into account representations from PwC and Deloitte Entities, in accordance with Public Company Accounting Oversight Board rules, regarding their independence from the Funds and their related entities and FMR’s review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.


Audit Committee Pre-Approval Policies and Procedures

 

The trust’s Audit Committee must pre-approve all audit and non-audit services provided by a fund’s independent registered public accounting firm relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.


The Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee’s consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund (“Covered Service”) are subject to approval by the Audit Committee before such service is provided.


All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair’s absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.


Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.


Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X (“De Minimis Exception”)


There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Funds’ last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.


Item 5.

Audit Committee of Listed Registrants


Not applicable.


Item 6.  

Investments


(a)

Not applicable.


(b)

Not applicable


Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies


Not applicable.


Item 8.

Portfolio Managers of Closed-End Management Investment Companies


Not applicable.


Item 9.  

Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers


Not applicable.


Item 10.

Submission of Matters to a Vote of Security Holders


There were no material changes to the procedures by which shareholders may recommend nominees to the trust’s Board of Trustees.


Item 11.

Controls and Procedures


(a)(i)  The President and Treasurer and the Chief Financial Officer have concluded that the trust’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.


(a)(ii)  There was no change in the trust’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust’s internal control over financial reporting.


Item 12.

Exhibits


(a)

(1)

Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH.

(a)

(2)

Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

(a)

(3)

Not applicable.

(b)

 

Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT.




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Variable Insurance Products Fund II


By:

/s/Kenneth B. Robins

 

Kenneth B. Robins

 

President and Treasurer

 

 

Date:

February 24, 2016



Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



By:

/s/Kenneth B. Robins

 

Kenneth B. Robins

 

President and Treasurer

 

 

Date:

February 24, 2016



By:

/s/Howard J. Galligan III

 

Howard J. Galligan III

 

Chief Financial Officer

 

 

Date:

February 24, 2016