Fidelity VIP Growth Portfolio

[Pages:11]PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2021

Fidelity? VIP Growth Portfolio

Key Takeaways

? For the semiannual reporting period ending June 30, 2021, the fund's

share classes gained roughly 14%, topping the 12.71% increase in the benchmark Russell 3000? Growth Index.

? Co-Portfolio Managers Jason Weiner and Asher Anolic's focus on

undervalued growth stories with the potential for price-to-earnings expansion, as well as industry leaders with proven track records, helped the fund outperform its benchmark the past six months.

? Security selection in the financials and industrials sectors, along with

positioning in consumer discretionary, contributed most to the fund's relative result. In contrast, the portfolio's positioning in health care and information technology detracted versus the benchmark.

? An overweight position in Google-parent Alphabet (+41%) was the

fund's biggest individual contributor this period, followed by an outsized stake in chipmaker Nvidia (+53%).

? Conversely, a larger-than-benchmark holding in chipmaker Qualcomm

(-5%) and modest underweighting in social-media giant Facebook (+27%) were the largest stock-specific detractors.

? As of June 30, Jason and Asher believe stock valuations already reflect

the initial leg of an economic recovery, which is why they remain focused on bottom-up security selection, as opposed to investing broadly in cyclical industries.

? The co-managers see three main types of opportunities at period end:

companies with increasing earnings whose stocks still trade at a discount to the market; recovery plays in which a rebound is not reflected in the current equity price; and select health care and communications firms.

Not FDIC Insured ? May Lose Value ? No Bank Guarantee

MARKET RECAP

The S&P 500? index gained 15.25% for the six months ending June 30, 2021, with U.S. equities rising on the prospect of a surge in economic growth amid widespread COVID-19 vaccinations, fiscal stimulus and fresh spending programs. As 2021 began, investors saw reasons to be hopeful. The rollout of three COVID19 vaccines was underway, the U.S. Federal Reserve pledged to hold interest rates near zero until the economy recovered, and the federal government would deploy trillions of dollars in aid to boost consumers and the economy. Many economists raised their expectations for a powerful recovery, as opposed to a sluggish rebound, bolstering stocks through April. Choppy trading in a flattish May reflected concerns about inflation and jobs, but the uptrend resumed to close the first half of the year. This backdrop fueled a powerful market rotation, with small-cap value stocks usurping long-standing leadership from large growth shares. As part of the "reopening" trade, investors moved out of tech-driven mega-caps that had thrived due to the work-from-home trend in favor of cheap smaller companies they believed stood to benefit from a broad cyclical recovery. Reflecting this shift, the energy sector gained about 46% for the six months, boosted by a sharp rally in the price of oil. Financials (+26%) rode strength among banks (+29%). Conversely, notable "laggards" included the defensive utilities (+2%), consumer staples (+5%) and health care (+12%) sectors. Industrials (+16%) and materials (+15%) roughly matched the index.

PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2021

Jason Weiner Co-Manager

Fund Facts

Start Date: Size (in millions):

Asher Anolic Co-Manager

October 09, 1986 $8,757.81

Investment Approach

? Fidelity? VIP Growth Portfolio is a diversified domestic equity strategy with a large-cap growth bias.

? Our core philosophy is that stock prices follow earnings growth, and the fund tends to focus on the fastest quartile of earnings growers: industry leaders and companies with proven track records.

? We employ a "go anywhere" investment approach, analyzing the entire value chain, which enables the fund to invest in broad themes and across market capitalizations.

? We look for undervalued growth stories and stocks with the potential for price-to-earnings (P/E) expansion, while avoiding names that have unreasonably high valuations or deteriorating business fundamentals.

Q&A

An interview with Co-Portfolio Managers Jason Weiner and Asher Anolic

Q: Jason, how did the fund perform for the six months ending June 30, 2021

J.W. The fund's share classes gained roughly 14%, topping the 12.71% increase in the benchmark Russell 3000? Growth Index. The fund outpaced the peer group average by a slightly narrower margin.

Looking a bit longer term, results were stronger for the trailing 12 months, as the fund gained about 43%, again surpassing both the benchmark and peer group average.

Q: Asher, what influenced the market environment for growth stocks that the past six months

A.A. Growth stocks underperformed their value and cyclical counterparts, as the latter categories benefited more from optimism about a possible return to relatively normal economic conditions amid emergency use authorizations that prompted a nationwide rollout of three COVID-19 vaccines. For some context, the Russell 3000? Value Index was up 17.67% the past six months, compared with the roughly 13% gain of the fund's growth-oriented benchmark.

In addition, the U.S. government poured trillions of dollars into supporting the economy through massive fiscal stimulus programs, the latest of which was the $1.9 trillion American Rescue Plan, which became law in March.

Nonetheless, growth stocks gained traction relative to value in June, after the nation's central bank, the Federal Reserve, made a more hawkish pivot amid inflation concerns following a protracted period of supportive interest rate policies and quantitative easing.

Q: Which investments helped the fund outperform the benchmark this period

A.A. Generally speaking, our decision to opportunistically purchase certain undervalued industrials and financial services companies aided the fund's relative result. Security selection in these sectors proved helpful, as the stocks within them rallied because the market realized the potential for a strong economic recovery due to COVID-19 vaccines. For instance, larger-than-benchmark exposure to industrials company Generac Holdings was a notable positive for the fund. Our position in Generac gained 81% the past six

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, 2021

months, driven by brisk demand in the company's highermargin residential stand-by generator business and growth in its solar and battery storage segments.

In financials, an out-of-benchmark stake in Capital One Financial (+55%) also added value. The company's consumer-focused credit portfolio held up amid the pandemic and the stock performed well due to prospects for an improved economic recovery. Even after shares of the firm more than doubled the past six months, we still saw Capital One as one of the better-positioned financial companies, given its focus on consumer credit, solid liability portfolio and high-yielding asset base. That said, we pared our holdings in the stock the past six months and invested realized profits in other names we felt were more undervalued.

Elsewhere, the portfolio's positioning in consumer discretionary further contributed, as did an overweighting in the strong-performing communication services sector, although lackluster investment choices here partially mitigated the positive impact.

relative detractor. We reduced our stake in the company this period, though we remain bullish on Qualcomm and chipmakers in general.

Untimely ownership of social-media leader Facebook (+27%) weighed on the fund's relative result. We overweighted this stock early on but then reduced our exposure prior to June 30. With the proceeds from this reduction, we added to the fund's Alphabet position, where we saw better potential for advertising growth. In hindsight, rather than selling, we should have added to our stake in Facebook.

Lastly, positioning in health care also detracted, particularly the portfolio's overweighting in Haemonetics (-48%), a provider of equipment for collecting blood plasma. We thought the firm would benefit from demand for its new plasma-collection platform as worldwide shortages stood to drive an increase in demand for plasma. That said, we didn't anticipate that CSL Plasma, a Haemonetics customer, would decline to renew an agreement during the period, and instead move its plasma collection in house. Consequently, we sold our stake in Haemonetics.

Q: Jason, which other stocks performed well Q: Asher, what's your outlook as of June 30

J.W. An outsized holding in Alphabet (+39%) was the fund's top relative contributor this period. The company and its stock continued to benefit from growth in digital advertising and in its cloud business. We increased exposure to Alphabet the past six months, and the stock was our secondlargest position as of June 30.

An overweighting in graphics chipmaker Nvidia was another key contributor and sizable fund holding at the end of the period. Within the tech sector as a whole, we generally focus on areas that offer faster growth, including differentiated semiconductor companies, which I'll describe further in the callout portion of this review. This includes Nvidia, a maker of chips that support artificial intelligence (AI). The stock gained about 53% the past six months after Nvidia saw higher demand for its chips and the introduction of new products.

A.A. We believe stock valuations are already reflecting the initial leg of a global economic recovery.

Although we don't yet have a clear view on where the market moves from here, we believe a bottom-up stock-picking mentality may yield more benefit in the next 12 to 24 months than investing broadly in cyclical industries, which have led the way as of late.

At period end, we're seeing three types of opportunities: stocks of well-known companies with increasing earnings that still trade at a discount to the market; recovery plays in which a rebound is not currently reflected in equity prices; and select health care and communications firms, where we believe an overreaction to U.S. regulations could be corrected.

The portfolio also owned a sizable position in consumer electronics giant Apple (+4%), but we underweighted this stock because we saw faster growth in other mega-cap techoriented firms. This decision proved to be the right one this period, as Apple underperformed.

Lastly, we didn't own benchmark component and electric vehicle maker Tesla. We've become more skeptical of the company's corporate governance and the ability to produce cash flow on a consistent basis. This contributed to relative performance, as shares of Tesla returned -4% this period.

Q: Which investments detracted most

J.W. Among individual stocks, industry-wide supply constraints weighed heavily on the fund's overweight position in chipmaker Qualcomm (-6%), making it the largest

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, 2021

Jason Weiner on the importance of the semiconductor industry:

"Semiconductors are powering autonomous driving, artificial intelligence and 5G, yet they also are playing a role in evolving our nation's factories and facilities.

"More specifically, industries such as aerospace & defense, energy, and health care are being transformed by innovation that wouldn't be possible without the computation power provided by everfaster chips.

"The semiconductor industry includes equipment companies that help companies produce silicon wafers, such as ASML Holding and LAM Research. It also includes semiconductor designers, including NXP Semiconductors. We held each in the fund as of June 30.

"The fund is overweighted in semiconductors & semiconductor equipment at period end, even though the investment environment for chip stocks has gotten more complicated the past year.

"Today, Taiwan and South Korea produce the most advanced chips in the world. In the U.S., this is fueling debate about whether the country should bring back some or most of its advanced semiconductor manufacturing.

"In April, President Biden proposed $50 billion for the semiconductor industry as part of his expansive infrastructure proposal. It could help address supply constraints, as well as provide a lift to domestic manufacturing and research.

"At midyear, there is a global shortage of semiconductors brought on by lingering economic effects due to the pandemic, and this is further complicating investing in the industry.

"In the past, bouts of double ordering by customers and capacity expansion among suppliers left the industry with a bit of a hangover, and we believe we could be headed in this direction.

"Still, we continue to favor the firms involved in some of the faster-growing areas of tech, such as AI and 5G, through our investments in Nvidia and Qualcomm, respectively."

LARGEST CONTRIBUTORS VS. BENCHMARK

Holding

Market Segment

Alphabet, Inc. Class A

Communication Services

NVIDIA Corp.

Information Technology

Apple, Inc.

Information Technology

Tesla, Inc.

Consumer Discretionary

Generac Holdings, Inc. Industrials

* 1 basis point = 0.01%.

Average Relative Relative Contribution Weight (basis points)*

3.18%

58

1.45%

48

-5.10%

47

-2.62%

45

0.59%

32

LARGEST DETRACTORS VS. BENCHMARK

Holding

Market Segment

Qualcomm, Inc.

Information Technology

Facebook, Inc. Class A

Communication Services

FireEye, Inc.

Information Technology

Haemonetics Corp. Health Care

Applied Materials, Inc.

Information Technology

* 1 basis point = 0.01%.

Average Relative Relative Contribution Weight (basis points)*

2.06%

-49

-0.35%

-29

0.91%

-26

0.31%

-21

-0.54%

-21

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, 2021

ASSET ALLOCATION

Asset Class

Portfolio Weight Index Weight

Relative Weight

Relative Change From Six Months

Ago

Domestic Equities

82.32%

99.75%

-17.43%

-1.32%

International Equities

17.31%

0.25%

17.06%

1.18%

Developed Markets

10.07%

0.12%

9.95%

1.91%

Emerging Markets

7.24%

0.13%

7.11%

-0.73%

Tax-Advantaged Domiciles

0.00%

0.00%

0.00%

0.00%

Bonds

0.00%

0.00%

0.00%

0.00%

Cash & Net Other Assets

0.37%

0.00%

0.37%

0.14%

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 Health Care Industrials Consumer Discretionary Financials Consumer Staples Materials Energy Real Estate Other

Portfolio Weight 33.80% 17.53% 14.76% 11.19% 10.56% 4.04% 3.06% 2.91% 1.28% 0.45% 0.05%

Index Weight 42.57% 11.97% 10.52% 6.84% 18.27% 2.52% 3.85% 1.16% 0.44% 1.81% 0.05%

Relative Weight -8.77% 5.56% 4.24% 4.35% -7.71% 1.52% -0.79% 1.75% 0.84% -1.36% 0.00%

Relative Change From Six Months

Ago -2.49% 1.67% 1.98% 1.48% -3.24% 0.13% 0.36% 0.73% -0.61% -0.29% 0.12%

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, 2021

10 LARGEST HOLDINGS

Holding

Market Segment

Portfolio Weight

Portfolio Weight Six Months Ago

Microsoft Corp.

Information Technology

9.53%

8.78%

Alphabet, Inc. Class A

Communication Services

8.98%

5.93%

, Inc.

Consumer Discretionary

5.58%

5.01%

Apple, Inc.

Information Technology

4.11%

5.58%

UnitedHealth Group, Inc.

Health Care

3.83%

3.05%

NVIDIA Corp.

Information Technology

3.73%

3.21%

Facebook, Inc. Class A

Communication Services

3.43%

4.72%

Adobe, Inc.

Information Technology

3.23%

2.90%

Qualcomm, Inc.

Information Technology

2.22%

3.76%

Tencent Holdings Ltd.

Communication Services

1.82%

1.99%

10 Largest Holdings as a % of Net Assets

46.46%

44.92%

Total Number of Holdings

200

186

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, 2021

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 annuityperformance or call Fidelity. The performance data featured represents past performance, which is no guarantee of future results.

Fiscal periods ending June 30, 2021

Cumulative

Annualized

Total Returns for the Fund

6

Month

YTD

1 Year

3 Year

5 Year

10 Year/ LOF1

VIP Growth Portfolio - Initial Class Gross Expense Ratio: 0.62%2

13.60%

13.60%

43.42%

25.86%

25.22%

17.77%

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

Russell 3000 Growth Index

13.54% 12.71%

13.54% 12.71%

43.30% 42.99%

25.75% 24.47%

25.12% 23.31%

17.67% 17.54%

Morningstar Insurance Large Growth

13.04%

13.04%

41.77%

23.65%

23.12%

16.81%

1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 10/09/1986.

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. 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, 2021

PERFORMANCE SUMMARY (continued):

Fiscal periods ending June 30, 2021

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

16.83%

13.14%

13.14%

42.27%

24.85%

24.23%

16.83%

Fidelity Income Advantage B

16.59%

13.03%

13.03%

41.99%

24.60%

23.98%

16.59%

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

17.38%

13.41%

13.41%

42.95%

25.44%

24.81%

17.38%

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

17.38%

13.41%

13.41%

42.95%

25.44%

24.81%

17.38%

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

17.56%

13.50%

13.50%

43.17%

25.63%

25.00%

17.56%

Fidelity Retirement Reserves - Subaccount Inception: February 10, 1988; New York Only Inception: June 03, 1992. Fidelity Income Advantage Subaccount Inception: February 10, 1988; New York Only Inception: June 03, 1992. 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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