Fidelity VIP Strategic Income Portfolio · PORTFOLIO MANAGER Q&A | AS OF DECEMBER 31, 2019 2 | For...

PORTFOLIO MANAGER Q&A | AS OF JUNE 30, 2020

Fidelity® VIP Strategic Income Portfolio

Key Takeaways

• For the semiannual reporting period ending June 30, 2020, the fund's share classes returned approximately -1%, trailing the 5.17% increase in the fund's primary benchmark, the Bloomberg Barclays U.S. Universal Bond Index, as well as the 0.47% advance of the Fidelity Strategic Income Composite IndexSM.

• The fund's underperformance of the Composite benchmark the past six months was mainly derived from weak security selection in the emerging-markets debt and high-yield bond subportfolios.

• Within emerging markets specifically, bond picks in Mexico, coupled with a large underweighting in the outperforming Chinese market anda significant overweighting in the underperforming Argentinian market, detracted.

• Turning to the high-yield subportfolio, positioning in the lagging energy sector hurt the fund's relative result, though security selection in technology and telecommunications helped.

• Adding the most value during the period were investment choices among developed-international bonds. In particular, this subportfolio's defensive positioning during the market's sell-off in the first quarter paid off, as did the tactical addition of risk when the market recovered in the second quarter.

• Throughout the first half of 2020, Co-Portfolio Managers Adam Kramerand Ford O'Neil remained overweight high-yield bonds and floating-rate loans, which they saw as more attractive than U.S. government debt, the latter of which they reduced exposure to during the period.

• On April 1, 2019, Rick Patel assumed co-management responsibilities for the fund, succeeding Rose McMellin.

MARKET RECAP

Financial markets experienced a bumpy ride in the first half of 2020, as investors came to terms with the spread of the coronavirus. Declared a pandemic on March 11, the crisis and containment efforts led to increased uncertainty, broad-based contraction in economic activity, higher volatility and dislocation inthe financial markets. A historically rapid and expansive monetary/fiscal-policy response fueled a second-quarter reversal across many asset classes, especially riskier ones, as did progress onpotential treatments and early signs of aneconomic recovery. Against this backdrop, the Fidelity Strategic Income Composite IndexSM returned 0.47%. Within the index, lower-risk asset classes fared best, led by U.S. government bonds, gaining 8.61%, as measured by the Bloomberg Barclays U.S. GovernmentBond Index. Non-U.S. developed-markets debt, as measured by the Bloomberg Barclays Global Aggregate Developed Markets GDP Weighted Ex USD Index (Hedged), rose 2.79%. Meanwhile, the market's steep first-quarter drop weighed most on riskier assets. The ICE BofA® U.S. High Yield Constrained Index, a proxy for the high-yield bond market, for example, returned-4.84%, while floating-rate debt, as measured by the S&P/LSTA® Leveraged Performing Loan Index, returned -4.60%.while emerging-markets bonds, as reflected in the Bloomberg Barclays Emerging Markets Index, produced a result of -0.43%.

Not FDIC Insured • May Lose Value • No Bank Guarantee


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

Adam KramerCo-Lead Manager

Ford O'NeilCo-Lead Manager

Fund Facts

Start Date: December 23, 2003

Size (in millions): $1,454.66

Investment Approach• Fidelity® VIP Strategic Income Portfolio is a multi-asset-

class strategy that seeks high current income, and potentially also capital appreciation, by investing in a diversified mix of fixed-income securities.

• The fund's assets are allocated among domestic high-yield bonds (including floating-rate debt), U.S. government securities, foreign developed-markets debt and emerging-markets securities, using a target weighting of 45%, 25%, 15% and 15%, respectively. This strategic allocation attempts to take advantage of the low correlation among these fixed-income segments with a goal of optimizing total returns while containing volatility over time.

• Specialized subportfolio managers are responsible for security selection in their respective areas of expertise and represent the primary source of alpha (excess return), while the lead portfolio managers have the flexibility to make tactical allocation shifts around the target mix to help manage risk and capitalize on relative-value opportunities.

Q&AAn interview with Co-Lead Portfolio Managers Adam Kramer and Ford O'Neil

Q: Ford, how did the fund perform for the six months ending June 30, 2020

F.O. The fund's share classes returned roughly -1%, lagging the 5.17% increase in the primary benchmark, the Bloomberg Barclays U.S. Universal Bond Index, as well as the0.47% gain generated by the Fidelity Strategic Income Composite IndexSM. We see the Composite benchmark, given its mix of investments, as a closer match for the fund. The fund, however, outpaced the peer group average.

Taking a slightly longer-term view, the fund gained just under2% for the trailing 12 months, again underperforming both the Bloomberg Barclays and the Composite indexes, while topping the peer group average.

Q: Adam, how would you evaluate the fund's result for the first half of the year

A.K. On the whole, we're disappointed that security selection detracted from the fund's performance relative to the Composite benchmark. Asset allocation – the primary means Ford and I possess to potentially drive alpha (risk-adjusted relative outperformance) – also detracted to a lesserextent.

However, we're pleased with how the diversification benefitsof our strategy revealed themselves. The fund's Strategic benchmark – our reference point as we decide which asset classes to overweight and underweight – generated a roughly flat return for the six months amid extraordinarily volatile market conditions. In other words, because of the fund's investment strategy, we owned several complementary types of income-paying securities, allowing us to preserve shareholder capital in a challenging environment.

To put our investment strategy in a bit more context: In managing the fund, we strive to provide investors with a highlevel of income, as well as the potential for capital appreciation.

As the fund's co-lead portfolio managers, we allocate assets across several income-paying categories. Based on our research, we've established a baseline portfolio allocation of 40% high-yield bonds, 25% U.S. government bonds, 15% non-U.S. developed-markets bonds, 15% emerging-markets bonds and 5% floating-rate debt.



Given our income-oriented mandate, this "neutral" positioning represents the combination of asset classes and weightings we believe should provide the most favorable risk/reward balance for shareholders over time.

Depending on where we identify the most compelling investment opportunities – or lack thereof – at any given timein the market, we may decide to either overweight or underweight each of these asset classes relative to our neutral exposure. As a result, asset allocation is one potentialsource of either relative out- or underperformance, while security selection, at the individual subportfolio level, is another.

Q: Ford, relative to the Composite benchmark, what detracted most from the fund's performance

F.O. Security selection in the emerging-markets and high-yield bond subportfolios were the main challenges over the past six months .

Looking first at emerging-markets debt, this subportfolio lagged the Bloomberg Barclays Emerging Markets Index by nearly 3 percentage points, due largely to weak bond picks inMexico. A big underweighting in China also detracted, given that market's relative outperformance during the period. A significant overweighting in the lagging Argentinian market also hurt.

The fund's high-yield bond subportfolio trailed the ICE BofA U.S. High Yield Constrained index by about 1 percentage point. Energy, led by an overweighting in struggling oil and gas issuers, hampered performance. Investment choices here also detracted, especially a weak-performing holding in California Resources. Credit selection in banks & thrifts, as well as air transportation, also pressured the subportfolio's relative result.

Q: What else influenced the fund's relative return

F.O. Asset class positioning within both floating-rate loans and U.S. government debt detracted. The portfolio's overweighting in the former hurt results, given the category'sunderperformance of the Composite benchmark.

Our large underweighting in U.S. government bonds was another headwind in terms of the fund's relative return this period. As investors became risk averse in the first quarter with the spread of COVID-19, interest rates fell and the perceived safe haven of U.S. Treasuries proved beneficial. Security selection in this subportfolio was positive, however, due to a longer duration that allowed the fund to better capture the helpful effects of the decline in rates.

Adding the most value during the period were investment choices in the developed-international debt subportfolio, which outperformed its category benchmark by nearly 2

percentage points. Propelling this outperformance was the manager's defensive positioning during the first-quarter market sell-off, which paid off, as did the tactical addition of risk early in the second-quarter recovery.

Returning to the high-yield subportfolio, security selection in technology and telecommunications further contributed, as did an overweighting in the outperforming banks & thrifts category. A 6% average cash stake also helped in a falling market. This is a typical level of cash for this subportfolio, as the managers seek to balance the volatility associated with their common stock holdings.

Q: Where were you focusing the fund's investments, Adam

A.K. We continued to prioritize risk assets – especially high-yield bonds and floating-rate debt and emerging-markets bonds to a lesser extent – over the strategy's risk-free assets, U.S. government bonds and developed international debt. As interest rates declined and these asset classes rallied during the period, we concluded that they were offering our shareholders less upside opportunity and income.

In the callout portion of this review, I'll discuss in detail abouthow we came to this conclusion, and why we remained overweighted in high-yield and floating-rate debt as of June 30.

Q: What should shareholders expect in the coming months

F.O. Until we get an effective vaccine or treatment for COVID-19, or clarity about the U.S. election in November, investors will probably continue to lack a clear picture of the market's direction.

Given how investment-grade bonds have rallied and their potential for significant relative underperformance moving forward if the economy and inflation surprise to the upside, we're comfortable with our current underweighting in this part of the market.

A.K. In our view, investors are getting a premium yield in these asset classes relative to high-quality bonds, while maintaining less interest rate risk. Although being overweightin risk assets does provide less upside if the global economy deteriorates beyond current expectations, we think we're being well-compensated for these assets' added risk.

Overall, we continue to have a great deal of confidence in the mix of assets in the Strategic benchmark – given how it combines a diversified composition of income, geographies, credit risk and interest rate risk – as well as the fund's ability to deliver a consistent income stream along with less volatility relative to owning any one asset class. ■



Adam Kramer explains why the fund remains "risk-on" as of June 30:

"Even after a rally in risk assets during the second quarter, these asset classes in the portfolio, especially high-yield bonds and floating-rate loans, remain more appealing to us than the lower-risk alternatives within our investment universe. This view isn't due to any inherent optimism we have about the future – we think today's substantial uncertainty will remain until investors gain more clarity about COVID-19 and the November election. It instead stems from our analysis of credit spreads in each of the asset classes that make up the fund's investment universe. Our approach compares these spreads relative to history, their duration (interest-rate) risk and those of the other asset classes that make up the fund. We're trying to determine how much bad news is already priced into securities, andif it's worth it to take on such risk in an uncertain market environment.

"As of June 30, even after a robust second-quarter rally, both high-yield bonds and floating-rate debt remain priced below the highs they attained earlier in 2020. Amid continued uncertainty surrounding these asset classes, we believe investors are being sufficiently compensated for potentially negative news in the marketplace. In other words, if the economy underperforms expectations, or if other bad news weighs on investor sentiment, we think those concerns may be adequately priced into risk-on asset classes – unlike in U.S. Treasuries or developed-international debt. If better-than-expected news emerges, though, we think investorscould benefit not only from high-yield and floating-rate loans' attractive coupons, but, also from possible capital appreciation accompanying tightening credit spreads. Clearly, if the news surrounding COVID-19 or the economy worsens, risk-free assets are likely to outperform their riskier counterparts. But, given that the Federal Reserve has suggested negative rates are unlikely, we see a limit to what investors can expect from these 'low-risk' securities. This is why we feel very comfortable with riskier asset classes right now. In fact, within ourinvestment universe, we believe they're offering investors the best upside/downside potential."

ASSET ALLOCATION PERFORMANCE SUMMARY

Asset Class Benchmark

Average Relative Weight

Relative Contribution

(basis points)*

High-Yield Debt ICE BofA US HY Const 3.0% -35

Floating-Rate Debt S&P/LSTA Lev Perf Loan 4.4% -25

U.S. Government & Investment Grade Debt

BBgBarc Government Bond -3.8% -8

Foreign-Developed Markets Debt

BBG G.AGG xUS GDP Wgt HGD (as of12/17/19)

-4.7% 11

Emerging Markets Debt

BBgBarc Emerging Markets 0.3% -39

Invested Assets Subtotals

FID Strat Inc Comp Idx -0.8% -96

Top-Level Cash & Net Other Assets -- 0.8% 0

Net Expenses -- -- -37

Total Value Added -134

*1 basis point = 0.01%.

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 areheld for future settlement, Net Other Assets can be a negative number.

LARGEST HOLDINGS BY ISSUER

IssuerPortfolio Weight

Portfolio Weight Six Months Ago

UNITED STATES TREASURY 15.52% 17.08%

GERMANY FEDERAL REPUBLIC OF 3.05% 2.51%

CCO HLDGS LLC/CAP CORP 1.90% 1.59%

ALLY FINL INC 1.50% 1.51%

PACIFIC GAS & ELECTRIC CO 1.42% --

Five Largest Issuers as a % of Net Assets

23.39% 25.00%

Total Number of Holdings 1638 1660

The five largest issuers 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.



SUBPORTFOLIO COMPOSITION

Asset Class Portfolio Weight Strategic Allocation Relative Weight

Relative Change From Six Months

Ago

High-Yield Debt 44.96% 40.00% 4.96% 2.81%

Corporate Bonds 33.39% -- -- --

Bank Loans 2.08% -- -- --

Convertibles Securities 0.01% -- -- --

Equity, Rights & Warrants 5.30% -- -- --

Cash & Net Other Assets 4.17% -- -- --

Floating-Rate Debt 9.81% 5.00% 4.81% 1.02%

Term & Revolving Loans 9.08% -- -- --

Other Floating-Rate Securities 0.11% -- -- --

Fixed-Rate Bonds 0.35% -- -- --

Equity, Rights & Warrants 0.04% -- -- --


U.S. Government & Investment-Grade Debt 19.94% 25.00% -5.06% -1.41%

Sovereign Bonds 16.07% -- -- --

Securitized Debt 2.44% -- -- --

Futures, Options & Swaps -0.03% -- -- --


Foreign Developed-Markets Debt 9.34% 15.00% -5.66% -1.88%




Emerging-Markets Debt 16.06% 15.00% 1.06% 0.94%



Floating-Rate Debt 0.39% -- -- --


Top Level Fund -0.10% -- -0.10% -1.48%

Top-Level Cash & Net Other Assets -0.10% -- -- --

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 ofthe portfolio composition categories. Depending on the extent to which the fund invests in derivatives and the number of positions that are held for futuresettlement, Net Other Assets can be a negative number.



COUNTRY DIVERSIFICATION

CountryPortfolio Weight


United States 66.26% 63.83%

Germany 3.43% 3.06%

Canada 1.71% 2.23%

Mexico 1.41% 1.38%

Brazil 1.30% 1.25%

Ukraine 1.21% 1.15%

Argentina 1.00% 1.12%

Other Countries 8.24% 4.81%

Cash & Net Other Assets 15.44% 18.59%

CREDIT-QUALITY DIVERSIFICATION

Credit QualityPortfolio Weight


U.S. Government 18.49% 19.76%

AAA 2.72% 3.10%

AA 1.43% 1.35%

A 2.21% 1.45%

BBB 6.65% 6.01%

BB 17.89% 17.59%

B 22.28% 19.72%

CCC & Below 7.60% 7.84%

Short-Term Rated 0.00% 0.00%

Not Rated/Not Available 1.17% 0.34%

Cash & Net Other Assets 19.56% 22.84%

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.

Credit ratings for a rated issuer or security are categorized using Moody'sInvestors Service (Moody's). If Moody's does not publish a rating for a security or issuer, then the Standard & Poor's Ratings Services (S&P) rating is used. When S&P and Moody's provide different ratings for the same issuer or security, the Moody's rating is used. Securities that are not rated by these NRSROs (e.g. equity securities) are categorized as Not Rated. All U.S. government securities are included in the U.S. Government category. The table information is based on the combined investments of the fund and its pro-rata share of any investments in other Fidelity funds.



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 againstthe 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 www.fidelity.com/annuityperformance or call Fidelity. The performance data featured represents past performance, which is no guarantee of future results.

Performance and disclosure information continued on next page.



PERFORMANCE SUMMARY (continued):

Fiscal periods ending June 30, 2020

Total Returns for the Fund

Cumulative Annualized

6Month YTD

1Year

3Year

5Year

10 Year/ LOF1

VIP Strategic Income Portfolio - Initial Class Gross Expense Ratio: 0.67%2 -0.80% -0.80% 1.77% 3.31% 3.94% 4.67%

VIP Strategic Income Portfolio - Investor Class Gross Expense Ratio: 0.70%2 -0.80% -0.80% 1.74% 3.28% 3.92% 4.63%

Bloomberg Barclays U.S. Universal Bond Index 5.17% 5.17% 7.88% 5.15% 4.42% 4.12%

Fidelity Strategic Income Composite Index 0.47% 0.47% 2.99% 3.86% 4.34% 4.96%

Morningstar Insurance Multisector Bond -2.35% -2.35% 0.19% 2.53% 3.33% 4.47%1 Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 12/23/2003.2 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.

Fiscal periods ending June 30, 2020

Total Returns for the Variable Subaccount**

Annualized Cumulative Annualized

New York Only:10 Year/Life

of Subaccount6

Month YTD1

Year3

Year5

Year

10 Year/Lifeof

Subaccount

Fidelity Retirement Reserves A 3.83% -1.19% -1.19% 0.95% 2.48% 3.11% 3.83%

Fidelity Income Advantage B 3.62% -1.29% -1.29% 0.75% 2.27% 2.90% 3.62%

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

4.37% -0.92% -0.92% 1.49% 3.02% 3.66% 4.37%

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

4.37% -0.92% -0.92% 1.49% 3.02% 3.66% 4.37%

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

4.52% -0.85% -0.85% 1.64% 3.18% 3.81% 4.52%

Fidelity Retirement Reserves - Subaccount Inception: April 30, 2004; New York Only Inception: April 30, 2004. Fidelity Income Advantage - Subaccount Inception: April 30, 2004; New York Only Inception: April 30, 2004. 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 ReservesB In NY, Income AdvantageC 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.


9 |

Definitions and Important Information

Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client's investment decisions. Fidelity, and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in, and receive compensation, directly or indirectly, in connection with the management, distribution and/or servicing of these products or services including Fidelity funds, certain third-party funds and products, and certain investment services.

Fidelity Income Advantage (policy form nos. FVIA-92100, et al. and FVIA-99100, et al.), Fidelity Retirement Reserves (policy form no. NRR-96100, et al.), Fidelity Personal Retirement Annuity (policy form no. DVA-2005, et al.), Fidelity Freedom Lifetime Income (policyform nos. FFLI-Q-2005, et al. and FFLI-NQ-2005, et al.), and Fidelity Growth and Guaranteed Income (policy form no. DVA-GWB-2007, et al.) are issued by Fidelity Investments Life Insurance Company, 100 Salem Street, Smithfield, RI 02917, and for NY residents, Income Advantage (policy form nos. EFVIA-92100, et al. and EFVIA-99100, et al.), Retirement Reserves (policy form no. EVA-91100, et al.), Personal Retirement Annuity (policy form no. EDVA-2005, et al.), Fidelity Freedom Lifetime Income (policy form nos. EFLI-Q-2005, et al. and EFLI-NQ-2005, et al.), and Growth andGuaranteed Income (policy form no. EDVA-GWB-2007, et al.) are issued by Empire Fidelity Investments Life Insurance Company, New York, NY. Annuities are distributed by Fidelity Brokerage Services (Member NYSE, SIPC) and Fidelity Insurance Agency, Inc.

FUND RISKSStock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Fixed income investments entail interest rate risk (as interest rates rise bond prices usually fall), the risk of issuer default, issuer credit risk and inflation risk. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks all of which are magnified in emerging markets. Although a forward foreign currencyexchange contract is used to reduce or hedge a fund's exposure to changes in the value of the currency, suitable hedging transactions may not be available, may not be successful, and may eliminate any benefits to the fund from favorable foreign currency fluctuations. Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds. Leverage can increase market exposure and magnify investment risk.

IMPORTANT FUND INFORMATIONRelative positioning data presented in this commentary is based on the fund's primary benchmark (index) unless a secondary benchmarkis provided to assess performance.

VIP refers to Variable Insurance Products

INDICESIt is not possible to invest directly in an index. All indices representedare unmanaged. All indices include reinvestment of dividends and

interest income unless otherwise noted.

Bloomberg Barclays U.S. Universal Bond Index represents the union of the Bloomberg Barclays U.S. Aggregate Bond Index, the Bloomberg Barclays U.S. Corporate High Yield Bond Index, the Bloomberg Barclays 144A Bond Index, the Bloomberg Barclays Eurodollar Bond Index, the Bloomberg Barclays U.S. Emerging Markets Bond Index, and the non-ERISA portion of the Bloomberg Barclays U.S. CMBS Index. Municipal debt, private placements, and non-dollar-denominated issues are excluded from the index. The only constituent of the index that includes floating-rate debt is the Bloomberg Barclays U.S. Emerging Markets Bond Index.

Fidelity Strategic Income Composite Index is a customized blend ofunmanaged indices, weighted as follows: ICE BofA US High Yield Constrained Index - 40%; Bloomberg Barclays US Government Bond Index - 25%; Bloomberg Barclays Emerging Markets Aggregate USD Bond Index - 15%; Bloomberg Barclays Global Aggregate DevelopedMarkets ex USD GDP Weighted Index (Hedged) - 15%; and S&P/LSTA Leveraged Performing Loan Index - 5%. The composition differed in periods prior to December 17, 2019.

Bloomberg Barclays Global Aggregate Developed Markets GDP Weighted Ex USD Index is a variant of the Barclays Global Aggregate Index that excludes bonds that are either USD-denominated or belong to the EM GDP country blocs (with the exception of bonds with a country of risk of Hong Kong or Singapore). It is a rules-based alternative-weight benchmark that weights index-eligible country blocs by the size of their economies as measured by GDP, rather than the total amount of outstanding debt. The GDP weights are applied at a country bloc level only, all index-eligible securities within each bloc remain market-value-weighted in order to best reflect the investment choice set available to investors in that bloc. The Barclays Global Aggregate Developed Markets GDP Weighted Ex USD Index has the same underlying bonds and inclusion rules as its market-value-weighted counterpart. This multicurrency investment-grade global benchmark offers expanded spread sector security coverage, including bonds from thetreasury, government-related, corporate, and securitized sectors. The index contains more than 7300 securities with a market value of approximately $22.7trn, including 13 different local currency debt markets and 33 different countries of risk as of February 27, 2014.

Bloomberg Barclays Emerging Markets Aggregate USD Bond Index is a market-value-weighted index of U.S. dollar-denominated fixed- and floating-rate emerging-markets debt securities that are below investment grade. The index is designed to measure the performance of emerging-markets debt securities in the Americas, Europe, Asia, Middle East, and Africa.

Bloomberg Barclays U.S. Government Bond Index is a market-value-weighted index of U.S. Government fixed-rate debt issues withmaturities of one year or more.

S&P/LSTA Leveraged Performing Loan Index is a market-value-weighted index designed to represent the performance of U.S. dollar-denominated institutional leveraged performing loan portfolios (excluding loans in payment default) using current market weightings, spreads and interest payments.

ICE BofA U.S. High Yield Constrained Index is a modified market-capitalization-weighted index of U.S. dollar-denominated below-investment-grade corporate debt publicly issued in the U.S. domestic market. Qualifying securities must have a below-investment-grade rating (based on an average of Moody's, S&P and Fitch). The country of risk of qualifying issuers must be an FX-G10


10 |

member, a Western European nation, or a territory of the U.S. or a Western European nation. The FX-G10 includes all Euro members, the U.S., Japan, the U.K., Canada, Australia, New Zealand, Switzerland, Norway and Sweden. In addition, qualifying securities must have at least one year remaining to final maturity, a fixed coupon schedule and at least $100 million in outstanding face value. Defaulted securities are excluded. The index contains all securities ofThe BofA Merrill Lynch US High Yield Index but caps issuer exposureat 2%.

MORNINGSTAR INFORMATION© 2020 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the fund's current prospectus for the most up-to-date information concerning applicable loads, fees and expenses.



Manager Facts

Adam Kramer is a portfolio manager in the Fixed Income division at Fidelity Investments. Fidelity Investments is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing, and other financial products and services to institutions, financial intermediaries, and individuals.

In this role, he manages several multi-asset income funds: Fidelity and Advisor Convertible Securities Funds, Fidelity and Advisor Multi-Asset Income Funds, and Fidelity's Strategic Fund lineup—Fidelity and Advisor Strategic Dividend & Income Funds, Fidelity and Advisor Strategic Real Return Funds, Fidelity and Advisor Strategic Income Funds, and Fidelity VIP Strategic Income Portfolio. Additionally, he manages Fidelity Advisor Equity Income Fund. He also manages opportunistic high-yield bond strategies for institutional investors as well as a high income fund available exclusively to Canadian investors.

Prior to assuming his current responsibilities, Mr. Kramer workedas a portfolio assistant on Fidelity Leveraged Company Stock Fund, Fidelity Convertible Securities Fund, and Fidelity Advisor High Income Advantage Fund. He began working at Fidelity in 2000 as a research analyst and has since covered a variety of industries.

Prior to joining Fidelity, Mr. Kramer worked for RSM Richter in Montreal as a chartered accountant and auditor. He has been in the financial industry since 1994.

Mr. Kramer earned his bachelor of commerce degree in accounting and a graduate diploma in public accountancy from McGill University. He also earned his master of business administration degree from Cornell University. Mr. Kramer is a Chartered Professional Accountant (CPA) and was awarded a Chartered Accountant (CA) designation.

Ford O'Neil is a portfolio manager in the Fixed Income division at Fidelity Investments. Fidelity Investments is a leading providerof investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing, and other financial products and services to institutions, financial intermediaries, and individuals.

In this role, Mr. O'Neil manages various retail and institutional taxable bond funds and portfolios. He currently serves as manager of Fidelity and Fidelity Advisor Total Bond Funds, Fidelity Total Bond ETF, and Fidelity's Strategic Suite of Funds—Fidelity and Fidelity Advisor Strategic Dividend & Income Funds, Fidelity and Fidelity Advisor Strategic Income Funds, and Fidelityand Fidelity Advisor Strategic Real Return Funds. He is also a manager on Fidelity and Fidelity Advisor Balanced Funds, Fidelity and Fidelity Advisor Multi-Asset Income Funds, and several Fidelity VIP Portfolios as well as various institutional comingled pools.

Prior to assuming his current position in August 1992, Mr. O'Neil was an analyst in Fidelity's Asset Management division. In this capacity, he was responsible for the electric utility sector.

Before joining Fidelity in 1990, Mr. O'Neil was an associate in theInvestment Banking department at Advest, Inc, where he advised corporations on capital raising. He has been in the financial industry since 1985.

Mr. O'Neil earned his bachelor of arts degree in government from Harvard College and his master of business administration degree from The Wharton School at the University of Pennsylvania. Additionally, Mr. O'Neil and team received Morningstar's 2016 U.S. Fixed-Income Manager of the Year Award for Fidelity Total Bond Fund.

"Established in 1988, the Morningstar Fund Manager of the Year award recognizes portfolio managers who demonstrate excellent investment skill and the courage to differ from the consensus to benefit investors. To qualify for the award, managers' funds must have not only posted impressive returns for the year, but the managers also must have a record of delivering outstanding long-term risk-adjusted performance and of aligning their interests with shareholders'. Nominated funds must be Morningstar Medalists – a fund that has garnered a Morningstar Analyst Rating™ of Gold, Silver, or Bronze. The Fund Manager of the Year award winners are chosen based on research and in-depth qualitative evaluation by Morningstar's Manager Research Group. The Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including,but not limited to, Morningstar Research Services LLC. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based onMorningstar's Manager Research Group's current expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they be viewed as an assessment of a fund's or the fund's underlying securities' creditworthiness. The Morningstar Analyst Rating is a subjective, forward-looking evaluation that considers a combination of qualitative and quantitative factors to rate funds on five key pillars: process, performance, people, parent, and price. Gold is the highest of four Analyst Rating categories. For the full rating methodology, go to: https://s21.q4cdn.com/198919461/files/doc_downloads/2019/11/Morningstar_Analyst_Rating_for_Funds_Methodology_062019-(1)-(2).pdf

Morningstar's Fixed-Income Fund Manager of the Year award recognizes Ford O'Neil and team for Fidelity Total Bond Fund (FTBFX). Fidelity Advisor Total Bond Fund Classes A, M, C, I, andZ are classes of Fidelity Total Bond Fund and have different expense and performance characteristics as well as eligibility requirements. See prospectus for more details."

PERFORMANCE SUMMARYQuarter ending June 30, 2020Total Returns for the Variable Subaccount

Annualized

New York Only:10 Year/Life

of Subaccount1

Year3

Year5

Year10 Year/Life

of Subaccount

Fidelity Retirement Reserves 3.83% 0.95% 2.48% 3.11% 3.83%

Fidelity Income Advantage 3.62% 0.75% 2.27% 2.90% 3.62%

Fidelity Personal Retirement Annuity(for contracts purchased prior to 1/1/09 and on or after 9/7/10) 4.37% 1.49% 3.02% 3.66% 4.37%

Fidelity Personal Retirement Annuity(for contracts purchased between 1/1/09 and 9/6/10) 4.37% 1.49% 3.02% 3.66% 4.37%

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

4.52% 1.64% 3.18% 3.81% 4.52%

Current performance may be higher or lower than the performance data quoted above. For month-end performance figures, please visit www.fidelity.com/annuityperformance or call Fidelity. The performance data featured represents past performance, which is no guarantee of future results. 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.

Please see the Fiscal Performance Summary section of this Q&A document for performance footnotes and additional information.

Before investing, please carefully consider the investment objectives, risks, charges, and expenses of the fund or annuity and its investment options. For this and other information, call or write Fidelity for a free prospectus or, if available, a summaryprospectus. Read it carefully before you invest.Past performance is no guarantee of future results.

Views expressed are through the end of the period stated and do not necessarily represent the views of Fidelity. Views are subject to change at any time based upon market or other conditions and Fidelity disclaims anyresponsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund. The securities mentioned are not necessarily holdings invested in by the portfolio manager(s) or FMR LLC. References to specific company securities should not be construed as recommendations or investment advice.

Diversification does not ensure a profit or guarantee against a loss.

Information included on this page is as of the most recent calendar quarter.S&P 500 is a registered service mark of Standard & Poor's Financial Services LLC. 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. Fidelity Brokerage Services LLC, Member NYSE, SIPC., 900 Salem Street, Smithfield, RI 02917. Fidelity Distributors Company LLC, 500 Salem Street, Smithfield, RI 02917.© 2020 FMR LLC. All rights reserved. Not NCUA or NCUSIF insured. May lose value. No credit union guarantee.

713636.12.0

Fidelity VIP Strategic Income Portfolio · PORTFOLIO MANAGER Q&A | AS OF DECEMBER 31, 2019 2 | For...

Documents

Transcript of Fidelity VIP Strategic Income Portfolio · PORTFOLIO MANAGER Q&A | AS OF DECEMBER 31, 2019 2 | For...