Fidelity VIP Growth Opportunities Portfolio

[Pages:11]PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2023

Fidelity? VIP Growth Opportunities Portfolio

Key Takeaways

? For the semiannual reporting period ending June 30, 2023, the fund's

share classes gained roughly 30%, topping the 29.02% advance of the benchmark, the Russell 1000? Growth Index.

? After a challenging 2022, U.S. stocks rebounded in the first half of

2023, aided by global economic expansion, falling commodity prices and a slowing in the pace of inflation.

? The benchmark's gain was concentrated in three growth-oriented

sectors this period: information technology (+49%), communication services (+41%) and consumer discretionary (+40%).

? Portfolio Manager Kyle Weaver says he aimed to capitalize on the

favorable fundamentals underpinning the semiconductor industry and increased the fund's allocation there, while reducing exposure to energy (-10%), the benchmark's weakest-performing sector this period.

? Stock selection and an underweight in the industrials sector

meaningfully lifted the fund's performance versus the benchmark for the six months. Stock picking in information technology and a sizable underweight in the lagging consumer staples sector also notably bolstered the fund's relative result.

? Conversely, an overweight in energy stocks and positioning in

financials detracted. Overweight exposure to the lagging utilities sector also hurt.

? As of midyear, Kyle remains focused on owning a mix of traditional

growth stocks that he believes can deliver rapid earnings growth and value-oriented names that can boost earnings per share through smart capital allocation.

Not FDIC Insured ? May Lose Value ? No Bank Guarantee

MARKET RECAP

U.S. equities gained 16.89% for the six months ending June 30, 2023, according to the S&P 500? index, as continued global economic expansion, falling commodity prices and a slowing in the pace of inflation provided a favorable backdrop for risk assets. U.S. large-cap stocks spearheaded the rally, which was driven by the shares of a narrow set of mega-cap companies concentrated in the information technology and communication services sectors, largely due to exuberance related to artificial intelligence. Aggressive monetary tightening by major central banks, including the U.S. Federal Reserve, continued amid signs of consistent pressure on core inflation, a closely watched measure that excludes food and energy. Since March 2022, the Fed has hiked its benchmark interest rate 10 times, by 5 percentage points ? the fastest-ever pace of monetary tightening ? while also shrinking its massive asset portfolio. The latest bump came in early May, a third consecutive raise of 25 basis points. In June, the Fed held interest rates steady and signaled it was prepared to raise rates next month. The S&P 500? gained 6.61% in June, which saw the long-awaited return of market breadth and lower dispersion. Smaller-cap stocks had a particularly strong month, achieving the best result for the category since January. By sector for the full six months, information technology (+46%) and communication services (+36%) led, whereas energy returned about -6% amid falling oil prices.

PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2023

Q&A

Kyle Weaver Portfolio Manager

Fund Facts

Start Date: Size (in millions):

January 03, 1995 $2,586.54

Investment Approach

? Fidelity? VIP Growth Opportunities Portfolio is a diversified domestic equity strategy that invests across a spectrum of companies, from blue chip to aggressive growth.

? Our investment approach is anchored by the philosophy that the market often underestimates the duration of a company's growth, particularly in cases where the resilience of the business model are underappreciated.

? We focus on companies that are inexpensive relative to our expectations of their earnings per share in three to five years.

? We establish conviction in our investments through deep fundamental research and industry analysis. We seek companies with revenue that is growing and durable, profit margins that are stable or improving, above-average capital stewardship, and valuations that are reasonable or reflect skepticism or misunderstanding.

An interview with Portfolio Manager Kyle Weaver

Q: Kyle, how did the fund perform in the first half of 2023

It did well. The fund's share classes gained roughly 30%, topping the 29.02% advance of the benchmark, the Russell 1000? Growth Index. The fund outpaced the 27.50% result of its peer group average of large growth funds.

Looking slightly longer term, the fund's share classes were up about 26% for the trailing 12 months, modestly lagging the benchmark and slightly topping the peer group average.

Q: What was significant about the investment backdrop the past six months

After a challenging 2022, U.S. stocks rebounded in the first half of 2023, aided by global economic expansion, falling commodity prices and a slowing in the pace of inflation. The benchmark's gains were concentrated in three growthoriented sectors this period: information technology (+49%), communication services (+41%) and consumer discretionary (+40%).

The stocks leading the advance were quite familiar to most investors: Microsoft, Apple, Nvidia, Meta Platforms, Tesla and a few others. Because of their predominant influence on the benchmark, the fund's performance versus the benchmark this period was largely determined by its positioning in these mega-caps.

On the positive side, the fund's relative result benefited from overweight exposure to Nvidia and Meta Platforms, the parent company of Facebook and Instagram. With that said, my style of growth investing typically de-emphasizes bluechip leaders in favor of smaller companies that I believe have greater potential for long-term growth. Thus, the portfolio was underweight some other investor favorites this period ? notably Apple, Tesla and Microsoft. I'll note that despite the underweight, Microsoft was the fund's largest holding the past six months. Apple was also a top-10 holding in the fund.

At the same time, a number of resilient-growth holdings ? or what others might think of as value stocks ? disappointed me this period, reflecting a generally weak showing for that segment of the market. In sum, the combination of a narrow advance in growth stocks and overall weak results in the value area kept the fund from outperforming its benchmark by an even greater margin.

2 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2023

Q: Why did Nvidia perform so well this period

Nvidia (+189%) was one of the benchmark's top performers and by far the largest contributor to the fund's relative performance because of our overweight exposure. This stock was the primary beneficiary of the market's enthusiasm for generative artificial intelligence. Nvidia has a virtual monopoly in making the chips and software required for this kind of AI.

Nvidia's share price benefited from a couple of specific catalysts this period. In February, the company reported better-than-expected financial results for the three months ending January 29. Then, on May 25, the stock leaped about 24% after the company projected a massive jump in secondquarter sales that far exceeded even the most optimistic analyst estimates. I added a bit to this position, and it ended June as the fund's second-largest holding and overweight. Beyond Nvidia, I added to or initiated positions in several other chip stocks, given my positive outlook for those companies. For example, I considerably increased our nonbenchmark stake in Taiwan Semiconductor Manufacturing, and I added to positions in Marvell Technology, ON Semiconductor and NXP Semiconductors.

Q: What else helped versus the benchmark

Among sectors, stock selection and an underweight in industrials lifted the fund's relative performance most. Stock picking in information technology and a sizable underweight in the lagging consumer staples sector also notably bolstered the fund's relative result.

In the media & entertainment segment of communication services, Meta Platforms (+138%) was a meaningful contributor. Investors liked that the company improved its profitability and reduced its head count through successive layoffs totaling more than 20,000 workers. Also, Meta continued its rollout of Reels, its vehicle for enabling users to create short-form videos using friends and family data stored on the platform. This is seen as a rival of TikTok's short-formvideo capabilities. I added to this position, a top-10 holding in the fund as of June 30.

Overweighting Uber Technologies ? one of our holdings in the industrials sector ? also was timely, given the stock's 74% gain for the period. Bolstering the stock was the company's early-May announcement of quarterly revenue and earnings that topped consensus estimates, driven by growth in the firm's ride-hailing and delivery-services businesses. Investors seemed to view the financial results as a signal that consumers continue to pay up for rides and takeout food, even as spending in retail and other areas declines.

utilities sector also hurt. Investment choices in communication services further detracted, although the negative impact was largely offset by my decision to overweight this strong-performing group.

At the stock level, underweighting Apple detracted most, as the stock rose about 50%, even though its quarterly results were relatively lackluster. I reduced this position.

A sizable out-of-benchmark stake in T-Mobile US (-1%) also meaningfully detracted this period. Although all the major wireless carriers were hurt by concerns about subscriber growth, I continued to have confidence in T-Mobile, the fund's No. 5 holding as of June 30. My positive outlook here boils down to three factors: further synergies from the 2020 merger with Sprint, above-average growth in free cash flow and expectations for a sizable share buyback. In September 2022, the firm announced a $14 billion share-repurchase program, the start of a process that could result in retiring roughly a third of the company's outstanding shares by the end of 2025. I increased our allocation to the stock this period.

Overweight exposure to Antero Resources (-26%) further detracted this period. This producer of natural gas was hurt by the plunge in the price of that commodity due to a mild winter, along with Europe's success at reining in demand amid historically high prices. I roughly halved the fund's share count in Antero.

In fact, I significantly reduced our holdings in energy overall, given the opportunities I saw elsewhere. The past six months were a wake-up call for me regarding how quickly the energy markets can shift due to weather factors. I still believe our current energy holdings are favorably positioned to return capital to shareholders via share repurchases and dividend increases, and the fund carried an overweight in energy at period end; it was just not nearly as large as it had been at the end of 2022.

Q: What are your thoughts for shareholders as of June 30, Kyle

I remain focused on a mix of traditional growth stocks and value-oriented names. What they have in common is that I believe they are cheap on a three- to seven-year view, and I expect subsequent events ? either rapid revenue and earnings growth, or boosting earnings per share through smart capital allocation ? to render them very inexpensive at current prices.

Q: What about noteworthy detractors

Overweighting energy stocks and positioning in financials notably detracted. Overweight exposure to the lagging

3 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2023

Portfolio Manager Kyle Weaver on the promise of generative AI:

"Artificial intelligence, or AI, has been around for a while, but generative AI is a big step forward. Through its large language models, generative AI is capable of fairly sophisticated 'conversations' with users in natural language. Summarizing a web page, crafting a coherent email and completing a nuanced internet search are all within the capabilities of generative AI. The technology made a big splash last November, with the release of ChatGPT, a chatbot incorporating generative AI capabilities.

"The technology is still a work in progress, though, and has been known to generate false, biased and even, at times, offensive results. For the most part, undesirable results have occurred with consumer applications that are tasked with responding to a virtually limitless range of queries, which pushes the limits of programming. In my view, the most exciting near-term applications of generative AI are more topic-specific ? for example, cellular biology or fluid mechanics, where a specific, well-defined vocabulary and set of principles are in use.

"Nvidia, a major fund holding at about 8% of assets as of June 30, is a primary beneficiary of the recent surge of interest in generative AI. The company makes not only the graphics processing units, or GPUs, that power the computing-intensive AI algorithms, but also networking solutions for AI applications, as well as libraries of algorithms for training topic-specific AI applications. Advanced Micro Devices, another fund overweight, also makes GPUs.

"Lastly, I'll mention Microsoft, the fund's largest holding as of June 30, at 10% of assets. The company has three opportunities with generative AI. First, its Azure cloud business benefits from increased third-party AI activity. In addition, Microsoft's massive installed base of its Office 365 (now Microsoft 365) productivity software provides opportunities to incorporate generative AI features in Word, Excel and other applications. Finally, its XBox video-gaming franchise can use generative AI to make games more personalized."

LARGEST CONTRIBUTORS VS. BENCHMARK

Holding

Market Segment

NVIDIA Corp.

Information Technology

Meta Platforms, Inc. Class A

Communication Services

Uber Technologies, Inc.

Industrials

Advanced Micro Devices, Inc.

Information Technology

AbbVie, Inc.

Health Care

* 1 basis point = 0.01%.

Average Relative Relative Contribution Weight (basis points)*

2.09%

206

1.47%

115

2.26%

87

1.80%

80

-1.38%

73

LARGEST DETRACTORS VS. BENCHMARK

Holding

Market Segment

Apple, Inc.

Information Technology

T-Mobile U.S., Inc.

Communication Services

Antero Resources Corp.

Energy

Tesla, Inc.

Consumer Discretionary

EPAM Systems, Inc.

Information Technology

* 1 basis point = 0.01%.

Average Relative Relative Contribution Weight (basis points)*

-9.66%

-182

3.69%

-116

1.07%

-101

-1.30%

-83

0.87%

-74

4 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2023

ASSET ALLOCATION

Asset Class

Portfolio Weight Index Weight

Relative Weight

Relative Change From Six Months

Ago

Domestic Equities

93.75%

99.74%

-5.99%

3.94%

International Equities

5.82%

0.26%

5.56%

-4.13%

Developed Markets

3.99%

0.05%

3.94%

-3.99%

Emerging Markets

1.83%

0.21%

1.62%

-0.14%

Tax-Advantaged Domiciles

0.00%

0.00%

0.00%

0.00%

Bonds

0.13%

0.00%

0.13%

-0.02%

Cash & Net Other Assets

0.30%

0.00%

0.30%

0.21%

Net Other Assets can include fund receivables, fund payables, and offsets to other derivative positions, as well as certain assets that do not fall into any of the portfolio composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for future settlement, Net Other Assets can be a negative number.

"Tax-Advantaged Domiciles" represent countries whose tax policies may be favorable for company incorporation.

MARKET-SEGMENT DIVERSIFICATION

Market Segment Information Technology Communication Services Financials Health Care Consumer Discretionary Industrials Energy Utilities Multi Sector Consumer Staples Other

Portfolio Weight 45.01% 17.04% 9.66% 9.18% 8.07% 5.01% 2.47% 2.00% 0.81% 0.30% 0.14%

Index Weight 43.33% 10.74% 6.39% 10.98% 15.98% 5.96% 0.49% 0.05% -4.41% 1.67%

Relative Weight 1.68% 6.30% 3.27% -1.80% -7.91% -0.95% 1.98% 1.95% 0.81% -4.11% -1.53%

Relative Change From Six Months

Ago -0.61% -2.39% 8.95% -1.46% -2.78% 2.99% -6.36% -0.75% 0.81% 2.17% -0.79%

5 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2023

10 LARGEST HOLDINGS

Holding

Market Segment

Portfolio Weight

Portfolio Weight Six Months Ago

Microsoft Corp.

Information Technology

10.02%

8.23%

NVIDIA Corp.

Information Technology

7.78%

3.30%

Alphabet, Inc. Class C

Communication Services

4.74%

4.65%

, Inc.

Consumer Discretionary

4.72%

3.79%

T-Mobile U.S., Inc.

Communication Services

3.42%

4.05%

Meta Platforms, Inc. Class A

Communication Services

2.87%

1.35%

Uber Technologies, Inc.

Industrials

2.76%

2.19%

Apple, Inc.

Information Technology

2.42%

2.92%

onsemi

Information Technology

2.24%

1.63%

Flex Ltd.

Information Technology

2.03%

0.83%

10 Largest Holdings as a % of Net Assets

43.00%

35.76%

Total Number of Holdings

221

249

The 10 largest holdings are as of the end of the reporting period, and may not be representative of the fund's current or future investments. Holdings do not include money market investments.

6 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2023

PERFORMANCE SUMMARY

Variable annuity contracts are issued by insurance companies through separate accounts that are part of the insurer. The value of a variable annuity contract depends on the values of units of subaccounts of the separate account. Each subaccount purchases shares of a corresponding mutual fund. Subaccount investment performance is based on the performance of the mutual fund in which it invests, less insurance company charges made against the assets of the separate account. A subaccount is not a mutual fund.

The information provided in this Performance Summary contains performance information for the fund, or class, and each variable subaccount, with comparisons over different time periods to the fund's relevant benchmarks ? including an appropriate index as well as a group of similar funds whose average returns are compiled and monitored by an independent mutual fund research company. Figures for more than one year assume a steady compounded rate of return and are not a class' year-by-year results, which fluctuated over the periods shown. Fund 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 fund performance information included the effect of these additional charges, the total returns would have been lower. The performance table also contains performance information for certain insurance company subaccounts that invest in the fund. Each variable subaccount's performance, as shown, is net of all fees and expenses, including those charges imposed by your insurance company. Seeing the returns over different time periods can help you assess the performance against relevant measurements and across multiple market environments. The performance information includes average annual total returns and cumulative total returns and is further explained in this section.*

Investing in a variable annuity involves risk of loss ? investment returns, contract value, and, for variable income annuities, payment amounts are not guaranteed and will fluctuate. Withdrawals of taxable amounts from an annuity are subject to ordinary income tax, and, if taken before age 59 1/2, may be subject to a 10% IRS penalty.

Current performance may be higher or lower than the performance data quoted below. An investor's shares, when redeemed, may be worth more or less than their original cost. For month-end performance figures, please visit fidelity. com/annuityperformance or call Fidelity. The performance data featured represents past performance, which is no guarantee of future results.

Fiscal periods ending June 30, 2023

Cumulative

Annualized

Total Returns for the Fund

6

Month

YTD

1 Year

3 Year

5 Year

10 Year/ LOF1

VIP Growth Opportunities Portfolio - Initial Class Gross Expense Ratio: 0.63%2

30.15%

30.15%

26.39%

7.71%

15.57%

16.59%

VIP Growth Opportunities Portfolio - Investor Class Gross Expense Ratio: 0.70%2

Russell 1000 Growth Index

30.09% 29.02%

30.09% 29.02%

26.29% 27.11%

7.62% 13.73%

15.48% 15.14%

16.49% 15.74%

S&P 500/Russell 1000 Growth

29.02%

29.02%

27.11%

13.73%

15.14%

15.74%

Morningstar Insurance Large Growth

27.50%

27.50%

25.18%

9.44%

11.87%

13.87%

1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 01/03/1995.

2 This expense ratio is from the prospectus in effect as of the date shown above and generally is based on amounts incurred during that fiscal year, or estimated amounts for the current fiscal year in the case of a newly launched fund. It does not include any fee waivers or reimbursements, which would be reflected in the fund's net expense ratio.

Performance and disclosure information continued on next page.

7 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2023

PERFORMANCE SUMMARY (continued):

Fiscal periods ending June 30, 2023

Total Returns for the Variable Subaccount**

Annualized

New York Only: 10 Year/Life

of Subaccount

Cumulative

6

Month

YTD

1 Year

Annualized

3 Year

5 Year

10 Year/Life of

Subaccount

Fidelity Retirement Reserves A

15.65%

29.63%

29.63%

25.38%

6.86%

14.64%

15.65%

Fidelity Income Advantage B

15.42%

29.50%

29.50%

25.13%

6.64%

14.41%

15.42%

Fidelity Personal Retirement Annuity C (for contracts purchased prior to 1/1/09 and on or after 9/7/10)

16.20%

29.93%

29.93%

25.98%

7.36%

15.19%

16.20%

Fidelity Personal Retirement Annuity C (for contracts purchased between 1/1/09 and 9/6/10)

16.20%

29.93%

29.93%

25.98%

7.36%

15.19%

16.20%

Fidelity Personal Retirement Annuity C (for contracts purchased on or after 9/7/10 with an initial purchase payment of $1M+)

16.37%

30.02%

30.02%

26.17%

7.52%

15.36%

16.37%

Fidelity Retirement Reserves - Subaccount Inception: January 03, 1995; New York Only Inception: January 27, 1997. Fidelity Income Advantage Subaccount Inception: January 03, 1995; New York Only Inception: January 27, 1997. Fidelity Personal Retirement Annuity - Subaccount Inception: August 15, 2005; New York Only Inception: October 28, 2005.

Fidelity Retirement Reserves' underlying fund options are Initial Class fund offerings. Fidelity Income Advantage's underlying fund options are Initial Class fund offerings. Fidelity Personal Retirement Annuity's underlying fund options are Investor Class fund offerings.

A In NY, Retirement Reserves B In NY, Income Advantage C In NY, Personal Retirement Annuity

* Total returns are historical and include changes in share price (for the fund) and unit price (for the variable subaccount) and reinvestment of dividends and capital gains, if any.

** Returns for Fidelity Retirement Reserves include the 0.80% annual annuity charge. For Fidelity Retirement Reserves contracts, returns do not reflect the annual $30 maintenance fee which applies to contracts where purchase payments less any withdrawals are less than $25,000. Returns for Fidelity Income Advantage include the 1.00% annual annuity charge. Returns for Fidelity Personal Retirement Annuity ("FPRA") include the 0.25% annual annuity charge for contracts purchased prior to 1/1/2009, and on or after 9/7/2010. For FPRA contracts purchased between 1/1/2009 and 9/6/2010, returns include a 0.35% annual annuity charge prior to 9/7/2010 and 0.25% thereafter. For FPRA contracts purchased on or after 9/7/2010 with an initial purchase payment of $1,000,000 or more, returns include a 0.10% annual annuity charge. Life of subaccount returns are from the subaccount inception, the date the portfolio was first available in the insurance company's variable product. Please see the last page(s) of this Q&A document for most-recent calendar-quarter performance.

8 | For definitions, fund risks and other important information, please see the Definitions and Important Information section of this Q&A.

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