Fidelity VIP Balanced Portfolio

Transcription

1 QUARTERLY FUND REVIEW AS OF SEPTEMBER 30, 2017 Fidelity VIP Balanced Investment Approach Fidelity VIP Balanced invests across a mix of stocks and bonds with a 60%/40% neutral allocation in seeking income and capital growth. The fund is managed by multiple portfolio managers, with each member dedicated to a particular asset class or market segment, plus a lead manager responsible for determining the appropriate asset allocation, general team oversight, cash management and risk monitoring. The equity subportfolio is largely sector-neutral and run by a team of sector-focused managers who look to add value through active stock selection. The investment-grade bond strategy seeks outperformance through sector and security selection and yield-curve positioning. The fund also has a dedicated high-yield bond portfolio, considered out-of-benchmark. Focused sector and asset class expertise, supported by our deep research infrastructure, is combined with disciplined portfolio construction to provide investment-process consistency in seeking to deliver attractive risk-adjusted returns. PERFORMANCE SUMMARY Cumulative 3 Month YTD 1 Year Annualized 3 Year 5 Year 10 Year/ LOF 1 VIP Balanced - Initial Class Gross Expense Ratio: 0.51% % 12.32% 13.24% 7.65% 10.04% 6.57% S&P % 14.24% 18.61% 10.81% 14.22% 7.44% Fidelity Balanced 60/40 Composite 3.02% 9.70% 10.90% 7.65% 9.34% 6.47% Morningstar Insurance Allocation--50% to 70% Equity 3.24% 10.61% 11.33% 5.99% 8.12% 5.19% % Rank in Morningstar Category (1% = Best) % 7% 7% 13% # of Funds in Morningstar Category Life of Fund (LOF) if performance is less than 10 years. Fund inception date: 01/03/ This expense ratio is from the most recent prospectus and generally is based on amounts incurred during the most recent fiscal year. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate; therefore, you may have a gain or loss when you sell your shares. Current performance may be higher or lower than the performance stated. Performance shown is that of the fund's Initial Class shares. You may own another share class of the fund with a different expense structure and, thus, have different returns. To learn more or to obtain the most recent month-end or other share-class performance, advisor.fidelity.com, or contact Fidelity. Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. For definitions and other important information, please see the Definitions and Important section of this Fund Review. FUND INFORMATION Manager(s): Team Managed Start Date: January 03, 1995 Size (in millions): $3, Morningstar Category: Insurance Allocation--50% to 70% Equity Stock 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. 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. This portfolio is available for investment only by the separate accounts of insurance companies. Annuities are long term investments. Access to this VIP portfolio may be limited by tax penalties and surrender charges, and income taxes are due upon withdrawal of funds. Taxable amounts withdrawn form variable insurance contracts prior to age 59 1/2 may be subject to a 10% IRS penalty tax as well as income tax. For use with broker-dealer registered representatives only. This material does not discuss charges at the separate account level such as policy charges and related insurance fees, and is not appropriate for distribution to the public as sales material. Not FDIC Insured May Lose Value No Bank Guarantee

2 Market Review U.S. stocks rose steadily for the three months ending September 30, 2017, with the S&P 500 index gaining 4.48%. The large-cap proxy has now marked 11 straight monthly gains. Markets generally cheered the quarter's economic reports, which continued to reflect fairly abundant jobs and strong consumer sentiment that likely was slowed somewhat due to the billions of dollars in damage caused by hurricanes Irma and Harvey. However, U.S. equity markets seemingly battled headwinds for much of the period, including stubbornly low inflation, lack of progress on legislation that could spur economic growth and escalating tension with nuclear-armed North Korea. Growth-oriented stocks continued the trend of outperforming value stocks, while, in a reversal from recent quarters, large-cap equities slightly lagged their small-cap counterparts. Looking at the S&P 500 from a sector standpoint, information technology performed best, climbing roughly 9% as Facebook, Intel and Nvidia each posted a double-digit gain. Energy and telecommunications each rose about 7%. Energy stocks were supported by rising oil prices, which were driven by unwavering global demand and faster-than-expected shrinking supply as production cuts by the Organization of the Petroleum Exporting Countries (OPEC) finally took hold. In telecom, Verizon Communication's better-than-expected quarterly earnings helped bolster its shares. Conversely, consumers' shift toward online shopping weighed on many traditional brick-and-mortar retailers within the consumer discretionary sector, which notched an overall gain of 1%. Elsewhere, a move away from defensive sectors held back real estate (+1%), utilities (+3%) and consumer staples (-1%). In fixed income, U.S. taxable investment-grade bonds gained modest ground for the quarter, as muted inflation, geopolitical tension and lack of progress on fiscal reform in the U.S. suppressed the impact of upward-trending policy interest rates. The Bloomberg Barclays U.S. Aggregate Bond gained 0.85% the past three months, largely driven by coupon (stated interest) payments. Longer-term rates moved very little this period, while shorter-term rates continued to advance, contributing to a moderate flattening of the yield curve. The Federal Open Market Committee (FOMC) did not raise target interest rates, as it had in the first and second quarters. However, the FOMC confirmed plans to begin the gradual process of paring the $4.5 trillion worth of Treasury and mortgage-backed securities on the Fed's balance sheet, beginning in October, and took a slightly dimmer longer-term view, lowering its estimate of the socalled neutral rate the policy rate that is assumed to foster ideal economic conditions by 0.25%, to 2.75%. Within the Bloomberg Barclays index, yield-advantaged, creditsensitive sectors led the way amid a favorable environment for risk assets. U.S. corporate bonds advanced broadly, returning 1.34% for the quarter and outpacing the 0.38% rise of Treasuries. Within corporates, bonds issued by utility companies slightly outperformed those of financial and industrial firms. Among non-core fixed-income segments, U.S. corporate high yield again was a bright spot, gaining 1.98% for the quarter, according to Bloomberg Barclays, and soundly outperforming Treasuries. U.S. TREASURY YIELD CURVE THREE-MONTH EQUITY SECTOR RETURNS Percent (%) Sector Total Return Technology 8.65% Energy 6.84% Telecommunication Services 6.78% Materials 6.05% Financials 5.24% Industrials 4.22% Health Care 3.65% Utilities 2.87% Real Estate 0.93% Consumer Discretionary 0.84% Consumer Staples -1.35% Source: Standard & Poor's Years 06/30/ /30/2017 Source: Bloomberg Barclays 2 For definitions and other important information, please see Definitions and Important section of this Fund Review.

3 Performance Review For the third quarter, the fund's Initial Class shares gained 3.52%, topping the 3.02% advance of the Fidelity Balanced 60/40 Composite SM THIS. Equities represented roughly 67% of fund assets this period, on average, about the same as the prior quarter, and higher than the 60% allocation to stocks in the Composite index. Meanwhile, investment-grade bonds were 30% of assets, versus the index weighting of 40%. The remainder of fund assets went to a nonbenchmark stake in high-yield bonds, as well as cash. Asset allocation contributed to our result versus the Composite index this quarter, as stocks outperformed investment-grade bonds by a wide margin. Our high-yield investments did not have a meaningful impact on the fund's relative return. The largest driver of the fund's outperformance this quarter was security selection in the stock subportfolio, where picks in information technology were particularly rewarding. The fund's equity subportfolio gained 4.87% this quarter, outpacing the S&P 500. The fund's top individual contributor was Autodesk, a maker of design software for engineering and architectural firms. The company has been transitioning its business to a subscription model, and it reported another solid quarter in August, with strong growth in new-model subscriptions. Autodesk was the fund's largest holding at the end of September. An out-of-benchmark stake in China-based online advertising provider 58.com also proved rewarding this quarter. The company, which has been on an acquisition tear of late, has been one beneficiary of the rapid expansion in China's middle class. The stock saw a healthy rise in August, after the firm reported solid second-quarter earnings. LARGEST EQUITY CONTRIBUTORS VS. BENCHMARK Autodesk, Inc. 58.com, Inc. ADR Siltronic AG Technology Technology Technology Average Contribution (basis points)* 2.76% % % 12 HD Supply s, Inc. Industrials 0.69% 10 ON Semiconductor Corp. Technology 0.38% 10 Conversely, out-of-benchmark exposure to U.K.-based British American Tobacco detracted the most on a relative basis. Our holdings returned about -8% for the quarter, suffering along with others in its industry in July after the U.S. Food and Drug Administration announced plans to lower nicotine levels in tobacco products. The news appeared to eclipse largely upbeat first-half 2017 financial results, announced in late July. Shares of Allergan returned about -15% for the quarter, penalizing the fund's overweighting here. The maker of Botox wrinkle treatment and dry-eye drug Restasis continued to report minimal revenue growth not tied to acquisitions. The Irish company faces eventual new entrants to challenge Restasis, as well as questions from some investors surrounding a controversial patent-transfer agreement with the Saint Regis Mohawk tribe to help protect Restasis' intellectual property. Allergan posted mixed clinical data for a potential treatment for nonalcoholic steatohepatitis (NASH), a liver condition. Looking at the fund's investment-grade bond subportfolio, the U.S. Federal Reserve held its key interest rate steady the past three months. Longer-term rates declined for most of the quarter before moving higher in September. Consequently, the bellwether 10-year Treasury yield was little changed for the quarter. Against this backdrop, the investment-grade bond subportfolio rose 1.20%, comfortably ahead of the Bloomberg Barclays U.S. Aggregate Bond. Security selection was a key contributor to performance versus the benchmark, especially certain government-related names in Central and South America tied to the energy sector. Certain taxable municipals for example, those issued by the State of Illinois also contributed, as did picks in industrials, particularly names in the communications area. LARGEST EQUITY DETRACTORS VS. BENCHMARK British American Tobacco PLC sponsored ADR Average Contribution (basis points)* Consumer Staples 1.12% -15 The Boeing Co. Industrials -0.60% -13 Allergan PLC Health Care 0.60% -13 AbbVie, Inc. Health Care -0.57% -11 L Brands, Inc. * 1 basis point = 0.01%. Consumer Discretionary 0.21% -11 * 1 basis point = 0.01%. 3 For definitions and other important information, please see Definitions and Important section of this Fund Review.

4 Outlook and Positioning Although overall equity valuations are higher than they've been for a while, we remain positive about the prospects for our holdings. Our best-case scenario sees the stock market rising more or less in line with earnings growth. We believe there is cause for cautious optimism, as second-quarter earnings for companies in the S&P 500 were strong in aggregate, expanding at roughly a 10% pace, according to late-september estimates. Although third-quarter earnings for S&P 500 companies could slow considerably, they are expected to rebound to double digits in the fourth quarter. We think the market likely will face continued political uncertainty both domestically and abroad. On the positive side, Chancellor Angela Merkel won re-election in Germany, and France has a pro-business president, Emmanuel Macron. However, Brexit the U.K.'s June 2016 decision to depart the European Union continues to be a wild card, as the negotiations there have not been going smoothly. And, as we saw this quarter, there appears to be no global consensus on how to deal with provocateurs such as North Korea's dictator. We remain confident in the equity subportfolio's investment process, in which the fund is supported by a team of sectorfocused co-managers charged with adding value through security selection, as well as a group leader who is responsible for general team oversight, asset allocation, cash management and risk monitoring. Against this backdrop, we continue to favor companies that appear poised to deliver improving fundamentals and whose stocks are trading at what we believe to be attractive valuations. In line with its essentially sector-neutral strategy, the fund ended the quarter with minor deviations in relative sector weightings. The largest sector overweighting at the end of September was consumer discretionary, while the biggest underweighting was information technology. The two largest equity overweightings on September 30 were Autodesk and Capital One Financial. British American Tobacco, mentioned earlier as a contributor, was the fund's largest out-ofbenchmark position. Among the fund's largest individual underweightings at period end were Johnson & Johnson and Procter & Gamble, neither of which was held in the fund, and Microsoft, where we had notable underexposure. Looking at the investment-grade bond subportfolio, we continue to favor credit and structured sectors, such as corporate bonds, commercial mortgage-backed securities (CMBS) and emergingmarkets debt, over U.S. Treasuries, agencies and agency MBS. That said, much of the corporate credit market appears fully valued, and the yield advantage of these bonds over comparablematurity Treasuries has declined. Therefore, it has become harder to find attractively valued securities. We think there is a likelihood that policy-driven interest rates will continue to move higher, which could bring increased volatility for risk assets. The path for Fed policy is unclear, however, with investors now debating the pace of economic growth, the fiscal outlook, the degree of inflationary pressures in the system, and future Fed leadership. Against this backdrop, the bond market may continue to be choppy. Although volatility can be challenging for investors in the short term, we believe it will provide us with increased opportunities to position the bond subportfolio for longer-term outperformance. EQUITY MARKET-SEGMENT DIVERSIFICATION * Change From Prior Quarter Technology 22.11% 23.23% -1.12% -0.16% Financials 14.52% 14.61% -0.09% -0.03% Health Care 13.59% 14.51% -0.92% -0.55% Consumer Discretionary 12.13% 11.85% 0.28% -0.52% Industrials 9.90% 10.23% -0.33% 0.16% Consumer Staples 8.65% 8.23% 0.42% 0.38% Energy 6.25% 6.09% 0.16% 0.13% Real Estate 2.87% 2.99% -0.12% -0.20% Utilities 2.79% 3.12% -0.33% 0.01% Materials 2.63% 2.98% -0.35% -0.06% Multi Sector 2.47% % 0.85% Telecommunication Services 2.09% 2.17% -0.08% -0.02% Other 0.00% -0.01% 0.01% 0.01% * % of equity assets FIXED-INCOME MARKET-SEGMENT DIVERSIFICATION * Change From Prior Quarter U.S. Treasury 35.41% 37.08% -1.67% 1.62% U.S. Agency 0.00% 1.74% -1.74% 0.09% Mortgage Pass- Through 21.47% 27.95% -6.48% -0.93% Asset-Backed Securities 0.63% 0.49% 0.14% -0.01% CMBS 0.60% 1.81% -1.21% -0.29% CMOs 0.21% 0.00% 0.21% -0.02% Investment-Grade Credit 19.93% 21.16% -1.23% -0.82% Municipal Bonds 1.83% 0.67% 1.16% -0.16% High-Yield Credit 10.02% 0.62% 9.40% 0.10% Non-U.S. Developed 5.91% 6.68% -0.77% 0.30% Emerging Markets 3.99% 1.80% 2.19% 0.13% Other Debt Assets 0.00% 0.00% 0.00% -0.02% * % of debt assets 4 For definitions and other important information, please see Definitions and Important section of this Fund Review.

5 LARGEST EQUITY OVERWEIGHTS Autodesk, Inc. Technology 2.60% CME E-mini S&P 500 Contracts Futures and Options 2.47% Capital One Financial Corp. Financials 1.25% British American Tobacco PLC Consumer Staples 1.17% sponsored ADR Citigroup, Inc. Financials 1.10% LARGEST EQUITY UNDERWEIGHTS Johnson & Johnson Health Care -1.62% Microsoft Corp. Technology -1.33% Apple, Inc. Technology -1.16% Berkshire Hathaway, Inc. Class A Financials -1.12% Procter & Gamble Co. Consumer Staples -1.08% 10 LARGEST HOLDINGS U.S. Treasury Notes 2% 12/31/21 Autodesk, Inc. Apple, Inc. Alphabet, Inc. Class C U.S. Treasury Notes 1.25% 10/31/21 U.S. Treasury Notes 1.875% 3/31/22 Citigroup, Inc. Amazon.com, Inc. Facebook, Inc. Class A UnitedHealth Group, Inc. 10 Largest s as a % of Net Assets Bonds Technology Technology Technology Bonds Bonds Financials Consumer Discretionary Technology Health Care 15.29% Total Number of s 1495 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. s do not include money market investments. ASSET ALLOCATION Asset Class Strategic Allocation Change From Prior Quarter Domestic Equities 63.97% 60.00% 3.97% -0.01% International Equities 2.71% % 0.10% Developed Markets 2.14% Emerging Markets 0.57% Tax-Advantaged Domiciles 0.00% Bonds 28.35% 40.00% % -0.85% Cash & Net Other Assets 4.97% % 0.76% 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. 3-YEAR RISK/RETURN STATISTICS Beta Standard Deviation 7.30% 5.98% Sharpe Ratio Tracking Error 2.07% -- Ratio R-Squared For definitions and other important information, please see Definitions and Important section of this Fund Review.

6 EQUITY CHARACTERISTICS Valuation Price/Earnings Trailing 25.9x 21.6x Price/Earnings (IBES 1-Year Forecast) 19.2x 18.0x Price/Book 3.0x 3.2x Price/Cash Flow 14.2x 14.3x Return on Equity (5-Year Trailing) 12.4% 14.6% Growth Sales/Share Growth 1-Year (Trailing) 7.3% 6.1% Earnings/Share Growth 1-Year (Trailing) 2.7% 7.3% Earnings/Share Growth 1-Year (IBES Forecast) 29.9% 22.4% Earnings/Share Growth 5-Year (Trailing) 12.5% 11.1% Size ed Average Market Cap ($ Billions) ed Median Market Cap ($ Billions) Median Market Cap ($ Billions) FIXED-INCOME CHARACTERISTICS Duration 4.75 years 5.85 years 30-Day SEC Yield Day SEC Restated Yield Net Asset Value $ CREDIT-QUALITY DIVERSIFICATION Credit Quality Change From Prior Quarter U.S. Government 57.08% 67.42% % 0.69% AAA 0.30% 4.58% -4.28% -0.13% AA 1.09% 5.59% -4.50% -0.07% A 10.77% 12.61% -1.84% -0.27% BBB 21.08% 9.77% 11.31% -0.65% BB 5.91% 0.00% 5.91% 0.09% B 2.81% 0.00% 2.81% 0.14% CCC & Below 0.73% 0.00% 0.73% 0.01% Short-Term Rated 0.00% 0.00% 0.00% 0.00% Not Rated/Not Available 0.23% 0.03% 0.20% 0.19% Cash & Net Other Assets 0.00% 0.00% 0.00% 0.00% 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 the highest credit rating among the following three Nationally Recognized Statistical Rating Organizations ("NRSRO"): Moody's Investors Service (Moody's); Standard & Poor's Rating Services (S&P); or Fitch, Inc. Securities that are not rated by any of these three NRSRO's 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 debt investments of the fund and its pro-rata share of any debt investments in other Fidelity funds. 6 For definitions and other important information, please see Definitions and Important section of this Fund Review.

7 Definitions and Important Unless otherwise disclosed to you, in providing this information, Fidelity is not undertaking to provide impartial investment advice, act as an impartial adviser, or to give advice in a fiduciary capacity. EQUITY CHARACTERISTICS Earnings-Per-Share Growth measures the growth in reported earnings per share over the specified past time period. Median Market Cap identifies the median market capitalization of the portfolio or benchmark as determined by the underlying security market caps. Price-to-Book (P/B) Ratio is the ratio of a company's current share price to reported accumulated profits and capital. Price/Cash Flow is the ratio of a company's current share price to its trailing 12-months cash flow per share. Price-to-Earnings (P/E) Ratio (IBES 1-Year Forecast) is the ratio of a company's current share price to Wall Street analysts' estimates of earnings. Price-to-Earnings (P/E) Ratio Trailing is the ratio of a company's current share price to its trailing 12-months earnings per share. Return on Equity (ROE) 5-Year Trailing is the ratio of a company's last five years historical profitability to its shareholders' equity. Preferred stock is included as part of each company's net worth. Sales-Per-Share Growth measures the growth in reported sales over the specified past time period. ed Average Market Cap identifies the market capitalization of the average equity holding as determined by the dollars invested in the portfolio or benchmark. ed Median Market Cap identifies the market capitalization of the median equity holding as determined by the dollars invested in the portfolio or benchmark. Net Asset Value is the dollar value of one share of a fund; determined by taking the total assets of a fund, subtracting the total liabilities, and dividing by the total number of shares outstanding. IMPORTANT FUND INFORMATION positioning data presented in this commentary is based on the fund's primary benchmark (index) unless a secondary benchmark is provided to assess performance. Effective 8/3/17, Nicola Stafford was added as co-portfolio manager while Peter Dixon transitioned off the fund. VIP refers to Variable Insurance Products INDICES It is not possible to invest directly in an index. All indices represented are unmanaged. All indices include reinvestment of dividends and interest income unless otherwise noted. Fidelity Balanced 60/40 Composite is a customized blend of unmanaged indexes, weighted as follows: S&P %; and Bloomberg Barclays U.S. Aggregate Bond - 40%. S&P 500 is a market-capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. Bloomberg Barclays U.S. Aggregate Bond is a broad-based, market-value-weighted benchmark that measures the performance of the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. Sectors in the index include Treasuries, governmentrelated and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS. FIXED INCOME CHARACTERISTICS Duration is a measure of a security's price sensitivity to changes in interest rates. Duration differs from maturity in that it considers a security's interest payments in addition to the amount of time until the security reaches maturity, and also takes into account certain maturity shortening features (e.g., demand features, interest rate resets, and call options) when applicable. Securities with longer durations generally tend to be more sensitive to interest rate changes than securities with shorter durations. A fund with a longer average duration generally can be expected to be more sensitive to interest rate changes than a fund with a shorter average duration. 30-day SEC Yield is a standard yield calculation developed by the Securities and Exchange Commission for bond funds. The yield is calculated by dividing the net investment income per share earned during the 30-day period by the maximum offering price per share on the last day of the period. The yield figure reflects the dividends and interest earned during the 30-day period, after the deduction of the fund's expenses. It is sometimes referred to as "SEC 30-Day Yield" or "standardized yield". 30-Day SEC Restated Yield is the fund's 30-day yield without applicable waivers or reimbursements, stated as of month-end. 7

8 MARKET-SEGMENT WEIGHTS Market-segment weights illustrate examples of sectors or industries in which the fund may invest, and may not be representative of the fund's current or future investments. Should not be construed or used as a recommendation for any sector or industry. RANKING INFORMATION 2017 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. % Rank in Morningstar Category is the fund's total-return percentile rank relative to all funds that have the same Morningstar Category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will always receive a rank of 1%. % Rank in Morningstar Category is based on total returns which include reinvested dividends and capital gains, if any, and exclude sales charges. Multiple share classes of a fund have a common portfolio but impose different expense structures. a fund's return over a specified time period. Fidelity calculates standard deviations by comparing a fund's monthly returns to its average monthly return over a 36-month period, and then annualizes the number. Investors may examine historical standard deviation in conjunction with historical returns to decide whether a fund's volatility would have been acceptable given the returns it would have produced. A higher standard deviation indicates a wider dispersion of past returns and thus greater historical volatility. Standard deviation does not indicate how the fund actually performed, but merely indicates the volatility of its returns over time. Tracking Error is the divergence between the price behavior of a position or a portfolio and the price behavior of a benchmark, creating an unexpected profit or loss. YIELD CURVE The relationship at a given point in time between yields on a group of fixed-income securities with varying maturities - commonly, Treasury bills, notes, and bonds. The curve typically slopes upward since longer maturities normally have higher yields, although it can be flat or even inverted. RELATIVE WEIGHTS weights represents the % of fund assets in a particular market segment, asset class or credit quality relative to the benchmark. A positive number represents an overweight, and a negative number is an underweight. The fund's benchmark is listed immediately under the fund name in the Performance Summary. 3-YEAR RISK/RETURN STATISTICS Beta is a measure of the volatility of a fund relative to its benchmark index. A beta greater (less) than 1 is more (less) volatile than the index. Ratio measures a fund's active return (fund's average monthly return minus the benchmark's average monthly return) in relation to the volatility of its active returns. R-Squared measures how a fund's performance correlates with a benchmark index's performance and shows what portion of it can be explained by the performance of the overall market/index. R- Squared ranges from 0, meaning no correlation, to 1, meaning perfect correlation. An R-Squared value of less than 0.5 indicates that annualized alpha and beta are not reliable performance statistics. Sharpe Ratio is a measure of historical risk-adjusted performance. It is calculated by dividing the fund's excess returns (the fund's average annual return for the period minus the 3-month "risk free" return rate) and dividing it by the standard deviation of the fund's returns. The higher the ratio, the better the fund's return per unit of risk. The three month "risk free" rate used is the 90-day Treasury Bill rate. Standard Deviation is a statistical measurement of the dispersion of 8

9 Before investing, have your client consider the portfolio's investment objectives, risks, charges, and expenses. Contact Fidelity for a VIP prospectus or, if available, a summary prospectus containing this information. Have your client read it carefully. 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 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. 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. 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 Fidelity Investments Institutional Services Company, Inc., 500 Salem Street, Smithfield, RI FMR LLC. All rights reserved. Not NCUA or NCUSIF insured. May lose value. No credit union guarantee