Fidelity VIP Floating Rate High Income

Objective And Strategy

Objective
The investment seeks a high level of current income.

Strategy
The fund normally invests at least 80% of its assets in floating rate loans, which are often lower-quality debt securities, and other floating rate securities. It invests in companies in troubled or uncertain financial condition. The fund also invests in money market and investment-grade debt securities, and repurchase agreements. It invests in domestic and foreign issuers. The advisor uses fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments.

Principal Risks

* This portfolio invests in securities of foreign issuers which involves risks not typically associated with domestic issuers, including currency fluctuations and the possibility of political and economic instability. Emerging markets involve risks in addition to those generally associated with foreign securities, because political and economic structures in many emerging markets may be undergoing significant evolution and rapid development.

* This fund has a risk of prepayment and extension. A mortgage backed bond, unlike other bonds can be hurt when interest rates fall because homeowners refinance and prepay principal. Receiving increasing prepayments in a falling interest rate environment cause the average maturity of the portfolio to shorten, reducing its potential for price gains. It requires the fund to reinvest at lower interest rates, which reduced the portfolio's total return and yield, and may cause certain bond prices to fall below the level the fund paid for them, resulting in a capital loss.

* A floating rate loan may not be fully collateralized which may cause the floating rate loan to decline significantly in value.

* Floating rate loans generally are subject to restrictions on resale. Floating rate loans sometimes trade infrequently in the secondary market. As a result, valuing a floating rate loan can be more difficult, and buying and selling a floating rate loan at an acceptable price can be more difficult or delayed, including extended trade settlement periods. Difficulty in selling a floating rate loan can result in a loss.