<PAGE>
Fidelity INCOME PLUS
The Fidelity Variable Annuity Account
Semi-Annual Report/June 30, 1995
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
This Page Left Blank Intentionally
2
<PAGE>
DEAR FIDELITY INCOME PLUS OWNER:
Your semi-annual reports are enclosed--both your Annuity Semi-Annual Report
(Fidelity Income Plus) and the Semi-Annual Reports for its underlying mutual
funds (The Variable Insurance Products Funds).
Many owners of Fidelity Income Plus make additional contributions to their
annuities after their initial purchase. By doing this, their annuity is even
better positioned to help assure an adequate income at retirement.
An easy way to make additions to your contract is to simply write a check for
your annuity each month as you write out your regular monthly checks. The nice
part of this method is that you're actually paying yourself. We are including a
postage-paid return envelope for your convenience if you would like to use this
method. Remember, unlike many annuities, with Fidelity Income Plus there are no
surrender charges.
We value the confidence you have placed in us and will work to make Fidelity
Income Plus your continued choice for retirement savings.
Sincerely,
William L. Busler
President
PFL Life Insurance Company
3
<PAGE>
THE FIDELITY VARIABLE ANNUITY ACCOUNT
--------------------------------------------------------------------------------
BALANCE SHEET
June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Money High Equity
Market Income Income
Combined Subaccount Subaccount Subaccount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS
Cash.......................................................... $ 988 163 2 -
Investments in mutual funds, at current market value:
Variable Insurance Products Fund - Money Market Portfolio
125,947,625.500 shares (cost $125,947,626)............... 125,947,626 125,947,626 - -
Variable Insurance Products Fund - High Income Portfolio
4,788,471.014 shares (cost $50,996,435).................. 53,582,990 - 53,582,990 -
Variable Insurance Products Fund - Equity Income Portfolio
12,249,353.515 shares (cost $179,794,127)................ 206,891,581 - - 206,891,581
Variable Insurance Products Fund - Growth Portfolio
4,941,533.185 shares (cost $109,902,180)................. 131,939,817 - - -
Variable Insurance Products Fund - Overseas Portfolio
2,613,922.951 shares (cost $41,698,243).................. 42,319,413 - - -
Variable Insurance Products Fund II - Investment Grade
Bond Portfolio 1,324,889.951 shares (cost $14,986,026)... 15,580,706 - - -
Variable Insurance Products Fund II - Asset Manager
Portfolio 6,749,437.226 shares (cost $98,261,877)........ 96,719,435 - - -
Fidelity Daily Income Trust -
394,185.652 shares (cost $394,186)....................... 394,186 - - -
Fidelity Cash Reserves -
70,058.830 shares (cost $70,059)......................... 70,059 - - -
Fidelity Government Securities Fund, Ltd. -
3,496.891 shares (cost $33,549).......................... 34,558 - - -
Fidelity Capital and Income Fund -
18,408.784 shares (cost $173,002)........................ 167,205 - - -
------------ ----------- ---------- -----------
Total Assets................................................ $673,648,564 125,947,789 53,582,992 206,891,581
============ =========== ========== ===========
LIABILITIES AND CONTRACT OWNERS' EQUITY
Liabilities:
Contract terminations payable............................... $ 82 - - 48
Accrued mortality risk...................................... - - - -
------------ ----------- ---------- -----------
Total Liabilities........................................... 82 - - 48
============ =========== ========== ===========
Contract Owners' Equity:
Deferred annuity contracts terminable by owners
(Notes 2 and 5)............................................. 673,648,482 125,947,789 53,582,992 206,891,533
------------ ----------- ---------- -----------
$673,648,564 125,947,789 53,582,992 206,891,581
============ =========== ========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
<TABLE>
<CAPTION>
Investment Asset
Growth Overseas Grade Bond Manager
Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS
Cash.......................................................... 98 17 - 22
Investments in mutual funds, at current market value:
Variable Insurance Products Fund - Money Market Portfolio
125,947,625.500 shares (cost $125,947,626)............... - - - -
Variable Insurance Products Fund - High Income Portfolio
4,788,471.014 shares (cost $50,996,435).................. - - - -
Variable Insurance Products Fund - Equity Income Portfolio
12,249,353.515 shares (cost $179,794,127)................ - - - -
Variable Insurance Products Fund - Growth Portfolio
4,941,533.185 shares (cost $109,902,180)................. 131,939,817 - - -
Variable Insurance Products Fund - Overseas Portfolio
2,613,922.951 shares (cost $41,698,243).................. - 42,319,413 - -
Variable Insurance Products Fund II - Investment Grade
Bond Portfolio 1,324,889.951 shares (cost $14,986,026)... - - 15,580,706 -
Variable Insurance Products Fund II - Asset Manager
Portfolio 6,749,437.226 shares (cost $98,261,877)........ - - - 96,719,435
Fidelity Daily Income Trust -
394,185.652 shares (cost $394,186)....................... - - - -
Fidelity Cash Reserves -
70,058.830 shares (cost $70,059)......................... - - - -
Fidelity Government Securities Fund, Ltd. -
3,496.891 shares (cost $33,549).......................... - - - -
Fidelity Capital and Income Fund -
18,408.784 shares (cost $173,002)........................ - - - -
----------- ---------- ---------- ----------
Total Assets................................................ 131,939,915 42,319,430 15,580,706 96,719,457
=========== ========== ========== ==========
LIABILITIES AND CONTRACT OWNERS' EQUITY
Liabilities:
Contract terminations payable............................... - - - -
Accrued mortality risk...................................... - - - -
----------- ---------- ---------- ----------
Total Liabilities........................................... - - - -
Contract Owners' Equity:
Deferred annuity contracts terminable by owners
(Notes 2 and 5)............................................. 131,939,915 42,319,430 15,580,706 96,719,457
----------- ---------- ---------- ----------
131,939,915 42,319,430 15,580,706 96,719,457
=========== ========== ========== ==========
<CAPTION>
Fidelity Fidelity Fidelity
Daily Fidelity Government Capital and
Income Cash Securities Income
Trust Reserves Fund, Ltd. Fund
Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ASSETS
Cash.......................................................... - 26 571 89
Investments in mutual funds, at current market value:
Variable Insurance Products Fund - Money Market Portfolio
125,947,625.500 shares (cost $125,947,626)............... - - - -
Variable Insurance Products Fund - High Income Portfolio
4,788,471.014 shares (cost $50,996,435).................. - - - -
Variable Insurance Products Fund - Equity Income Portfolio
12,249,353.515 shares (cost $179,794,127)................ - - - -
Variable Insurance Products Fund - Growth Portfolio
4,941,533.185 shares (cost $109,902,180)................. - - - -
Variable Insurance Products Fund - Overseas Portfolio
2,613,922.951 shares (cost $41,698,243).................. - - - -
Variable Insurance Products Fund II - Investment Grade
Bond Portfolio 1,324,889.951 shares (cost $14,986,026)... - - - -
Variable Insurance Products Fund II - Asset Manager
Portfolio 6,749,437.226 shares (cost $98,261,877)........ - - - -
Fidelity Daily Income Trust -
394,185.652 shares (cost $394,186)....................... 394,186 - - -
Fidelity Cash Reserves -
70,058.830 shares (cost $70,059)......................... - 70,059 - -
Fidelity Government Securities Fund, Ltd. -
3,496.891 shares (cost $33,549).......................... - - 34,558 -
Fidelity Capital and Income Fund -
18,408.784 shares (cost $173,002)........................ - - - 167,205
--------- -------- -------- ---------
Total Assets................................................ 394,186 70,085 35,129 167,294
========= ======== ======== =========
LIABILITIES AND CONTRACT OWNERS' EQUITY
Liabilities:
Contract terminations payable............................... 34 - - -
Accrued mortality risk...................................... - - - -
--------- -------- -------- ---------
Total Liabilities........................................... 34 - - -
Contract Owners' Equity:
Deferred annuity contracts terminable by owners
(Notes 2 and 5)............................................. 394,152 70,085 35,129 167,294
--------- -------- -------- ---------
394,186 70,085 35,129 167,294
========= ======== ======== =========
</TABLE>
5
<PAGE>
THE FIDELITY VARIABLE ANNUITY ACCOUNT
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
Money High Equity
Market Income Income
Combined Subaccount Subaccount Subaccount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME
Income:
Dividends........................................................... $13,020,917 3,853,274 3,052,253 2,457,508
Expenses:
Administrative fee (Note 4)......................................... 841 333 131 254
Mortality and expense risk charge (Note 4).......................... 2,589,423 525,673 204,060 756,813
----------- ----------- ----------- -----------
Net investment income............................................... 10,430,653 3,327,268 2,848,062 1,700,441
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED CAPITAL GAIN FROM INVESTMENTS
Net realized capital gain (loss) from sales of investments:
Proceeds from sales................................................. 230,879,802 84,625,142 31,890,646 15,353,944
Cost of investments sold............................................ 228,570,733 84,625,142 33,302,256 11,793,509
----------- ----------- ----------- -----------
2,309,069 - (1,411,610) 3,560,435
Capital gain dividends.............................................. 8,737,747 - - 8,540,519
Net realized capital gain (loss).................................... 11,046,816 - (1,411,610) 12,100,954
----------- ----------- ----------- -----------
Net change in unrealized appreciation (depreciation) of investments:
Beginning of the period............................................. 3,434,817 - (1,595,528) 11,700,733
End of the period................................................... 51,390,266 - 2,586,555 27,097,454
----------- ----------- ----------- -----------
Net change in unrealized appreciation
(depreciation) of investments....................................... 47,955,449 - 4,182,083 15,396,721
----------- ----------- ----------- -----------
Net realized and unrealized capital gain from investments............. 59,002,265 - 2,770,473 27,497,675
----------- ----------- ----------- -----------
INCREASE FROM OPERATIONS.............................................. 69,432,918 3,327,268 5,618,535 29,198,116
=========== =========== =========== ===========
</TABLE>
See accompanying Note to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
Investment Asset
Growth Overseas Grade Bond Manager
Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME
Income:
Dividends........................................................... 533,430 198,313 493,651 2,403,680
Expenses:
Administrative fee (Note 4)......................................... 49 60 14 -
Mortality and expense risk charge (Note 4).......................... 415,315 186,948 63,545 437,063
----------- ----------- ----------- -----------
Net investment income............................................... 118,066 11,305 430,092 1,966,617
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED CAPITAL GAIN FROM INVESTMENTS
Net realized capital gain (loss) from sales of investments:
Proceeds from sales................................................. 24,293,554 33,935,929 8,661,723 31,862,493
Cost of investments sold............................................ 23,900,714 35,154,347 8,841,296 30,713,408
----------- ----------- ----------- -----------
392,840 (1,218,418) (179,573) 1,149,085
Capital gain dividends.............................................. - 197,228 - -
Net realized capital gain (loss).................................... 392,840 (1,021,190) (179,573) 1,149,085
----------- ----------- ----------- -----------
Net change in unrealized appreciation (depreciation) of investments:
Beginning of the period............................................. (330,152) (1,629,557) (514,722) (4,193,221)
End of the period................................................... 22,037,637 621,170 594,680 (1,542,442)
----------- ----------- ----------- -----------
Net change in unrealized appreciation
(depreciation) of investments....................................... 22,367,789 2,250,727 1,109,402 2,650,779
----------- ----------- ----------- -----------
Net realized and unrealized capital gain from investments............. 22,760,629 1,229,537 929,829 3,799,864
----------- ----------- ----------- -----------
INCREASE FROM OPERATIONS.............................................. 22,878,695 1,240,842 1,359,921 5,766,481
=========== =========== =========== ===========
<CAPTION>
Fidelity Fidelity Fidelity
Daily Fidelity Government Capital and
Income Cash Securities Income
Trust Reserves Fund, Ltd. Fund
Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME
Income:
Dividends........................................................... 14,538 2,054 1,157 11,053
Expenses:
Administrative fee (Note 4)......................................... - - - -
Mortality and expense risk charge (Note 4).......................... - - - -
----------- ----------- ----------- -----------
Net investment income............................................... 14,538 2,054 1,157 11,053
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED CAPITAL GAIN FROM INVESTMENTS
Net realized capital gain (loss) from sales of investments:
Proceeds from sales................................................. 177,883 14,228 1,835 62,425
Cost of investments sold............................................ 177,883 14,228 1,821 46,129
----------- ----------- ----------- -----------
- - 14 16,296
Capital gain dividends.............................................. - - - -
Net realized capital gain (loss).................................... - - 14 16,296
----------- ----------- ----------- -----------
Net change in unrealized appreciation (depreciation) of investments:
Beginning of the period............................................. - - (1,361) (1,375)
End of the period................................................... - - 1,009 (5,797)
----------- ----------- ----------- -----------
Net change in unrealized appreciation
(depreciation) of investments....................................... - - 2,370 (4,422)
----------- ----------- ----------- -----------
Net realized and unrealized capital gain from investments............. - - 2,384 11,874
----------- ----------- ----------- -----------
INCREASE FROM OPERATIONS.............................................. 14,538 2,054 3,541 22,927
=========== =========== =========== ===========
</TABLE>
7
<PAGE>
THE FIDELITY VARIABLE ANNUITY ACCOUNT
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
Six Months Ended June 30, 1995 and
Twelve Months Ended December 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Money High
Market Income
Combined Subaccount Subaccount
---------------------- ---------------------- ----------------------
1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment
income (loss)................ $ 10,430,653 11,596,587 3,327,268 4,234,133 2,848,062 3,693,998
Net realized capital
gain (loss).................. 11,046,816 41,265,302 - - (1,411,610) 2,129,093
Net change in
unrealized
appreciation
(depreciation)............... 47,955,449 (53,761,588) - - 4,182,083 (6,772,747)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease)
from operations.............. 69,432,918 (899,699) 3,327,268 4,234,133 5,618,535 (949,656)
----------- ----------- ----------- ----------- ----------- -----------
Contract Transactions
Net contract
purchase
payments
(Note 4)..................... 9,263,523 62,285,269 1,632,598 9,120,437 1,916,565 3,369,795
Transfers between
funds........................ - - (8,128,325) 67,470,241 5,337,388 (22,995,715)
Contract
terminations,
withdrawals, and
other deductions............. (41,655,690) (41,145,719) (15,627,730) (18,186,396) (1,377,826) (2,241,305)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease)
from contract
transactions................. (32,392,167) 21,139,550 (22,123,457) 58,404,282 5,876,127 (21,867,225)
----------- ----------- ----------- ----------- ----------- -----------
Net increase
(decrease) in
contract owners'
equity....................... 37,040,751 20,239,851 (18,796,189) 62,638,415 11,494,662 (22,816,881)
Contract Owners'
Equity
Beginning of
period..................... 636,607,731 616,367,880 144,743,978 82,105,563 42,088,330 64,905,211
----------- ----------- ----------- ----------- ----------- -----------
End of period................ $673,648,482 636,607,731 125,947,789 144,743,978 53,582,992 42,088,330
=========== =========== =========== =========== =========== ===========
<CAPTION>
Equity
Income Growth
Subaccount Subaccount
---------------------- ----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operations
Net investment
income (loss)................ 1,700,441 2,477,610 118,066 (273,694)
Net realized capital
gain (loss).................. 12,100,954 14,739,208 392,840 9,577,553
Net change in
unrealized
appreciation
(depreciation)............... 15,396,721 (8,604,317) 22,367,789 (10,510,469)
----------- ----------- ----------- -----------
Increase (decrease)
from operations.............. 29,198,116 8,612,501 22,878,695 (1,206,610)
----------- ----------- ----------- -----------
Contract Transactions
Net contract
purchase
payments
(Note 4)..................... 2,914,690 12,038,431 1,671,206 6,686,141
Transfers between
funds........................ 18,421,638 3,244,268 17,104,513 (1,233,845)
Contract
terminations,
withdrawals, and
other deductions............. (7,874,368) (5,994,171) (3,769,083) (3,645,699)
----------- ----------- ----------- -----------
Increase (decrease)
from contract
transactions................. 13,461,960 9,288,528 15,006,636 1,806,597
----------- ----------- ----------- -----------
Net increase
(decrease) in
contract owners'
equity....................... 42,660,076 17,901,029 37,885,331 599,987
Contract Owners'
Equity
Beginning of
period..................... 164,231,457 146,330,428 94,054,584 93,454,597
----------- ----------- ----------- -----------
End of period................ 206,891,533 164,231,457 131,939,915 94,054,584
=========== =========== =========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
8
<PAGE>
<TABLE>
<CAPTION>
Fidelity
Daily
Investment Asset Income
Overseas Grade Bond Manager Trust
Subaccount Subaccount Subaccount Subaccount
------------------------ ------------------------ ------------------------ ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ---- ---- ----
<S>
Operations
Net investment
income (loss)........ 11,305 (226,079) 430,092 (114,735) 1,966,617 1,753,069 14,538 19,918
Net realized capital
gain (loss).......... (1,021,190) 5,355,067 (179,573) (384,725) 1,149,085 9,816,695 - -
Net change in
unrealized
appreciation
(depreciation)....... 2,250,727 (5,078,416) 1,109,402 (210,086) 2,650,779 (22,504,562) - -
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease)
from operations...... 1,240,842 50,572 1,359,921 (709,546) 5,766,481 (10,934,798) 14,538 19,918
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Contract Transactions
Net contract
purchase
payments
(Note 4)............. 470,018 9,930,629 106,368 1,399,181 552,078 19,629,724 - 110,931
Transfers between
funds................ (14,703,962) (9,356,057) 2,831,988 (4,916,111) (20,805,211) (32,141,231) - (10,000)
Contract
terminations,
withdrawals, and
other deductions..... (2,097,270) (1,920,604) (962,375) (1,077,700) (9,752,954) (8,048,389) (177,363) (9,000)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease)
from contract
transactions......... (16,331,214) (1,346,032) 1,975,981 (4,594,630) (30,006,087) (20,559,896) (177,363) 91,931
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase
(decrease) in
contract owners'
equity............... (15,090,372) (1,295,460) 3,335,902 (5,304,176) (24,239,606) (31,494,694) (162,825) 111,849
Contract Owners'
Equity
Beginning of
period............. 57,409,802 58,705,262 12,244,804 17,548,980 120,959,063 152,453,757 556,977 445,128
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
End of period........ 42,319,430 57,409,802 15,580,706 12,244,804 96,719,457 120,959,063 394,152 556,977
=========== =========== =========== =========== =========== =========== =========== ===========
<CAPTION>
Fidelity
Fidelity Investment Fidelity
Fidelity Government Grade Capital And
Cash Securities Bond Income
Reserves Fund, Ltd. Fund Fund
Subaccount Subaccount Subaccount Subaccount
------------------------ ------------------------ ------------------------ ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ---- ---- ----
<S>
Operations
Net investment
income (loss)........ 2,054 3,016 1,157 2,190 - 1,998 11,053 25,163
Net realized capital
gain (loss).......... - - 14 299 - 1,517 16,296 30,595
Net change in
unrealized
appreciation
(depreciation)....... - - 2,370 (3,441) - (5,504) (4,422) (72,046)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease)
from operations...... 2,054 3,016 3,541 (952) - (1,989) 22,927 (16,288)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Contract Transactions
Net contract
purchase
payments
(Note 4)............. - - - - - - - -
Transfers between
funds................ - - - - - (40,730) (58,029) (20,820)
Contract
terminations,
withdrawals, and
other deductions..... (13,302) (4,801) - 121 - (32) (3,419) (17,743)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease)
from contract
transactions......... (13,302) (4,801) - 121 - (40,762) (61,448) (38,563)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase
(decrease) in
contract owners'
equity............... (11,248) (1,785) 3,541 (831) - (42,751) (38,521) (54,851)
Contract Owners'
Equity
Beginning of
period............. 81,333 83,118 31,588 32,419 - 42,751 205,815 260,666
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
End of period........ 70,085 81,333 35,129 31,588 - - 167,294 205,815
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
9
<PAGE>
THE FIDELITY VARIABLE ANNUITY ACCOUNT
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization-The Fidelity Variable Annuity Account ("Variable Account") is a
segregated investment account of PFL Life Insurance Company ("PFL Life"), an
indirect, wholly owned subsidiary of AEGON USA, Inc. ("AUSA"), a holding
company. AUSA is an indirect, wholly owned subsidiary of AEGON nv, a holding
company organized under the laws of The Netherlands.
The Variable Account is registered with the Securities and Exchange Commission
as a Unit Investment Trust pursuant to provisions of the Investment Company Act
of 1940.
Investments-Net purchase payments received by the Variable Account are invested
in the portfolios of the eligible mutual funds, Variable Insurance Products Fund
and Variable Insurance Products Fund II ("VIPF II"), as selected by the contract
owner. Variable Insurance Products Fund, formerly known as Fidelity Cash
Reserves II, was established on April 1, 1982 to comply with the Internal
Revenue Service guidelines for tax-deferred variable annuity contracts.
Transfers into the portfolios of the eligible Funds are permitted from the
formerly eligible funds. Transfers into the formerly eligible funds are
permitted only on deposits made prior to 1981. Investments are stated at the
closing net asset values per share as of June 30, 1995.
Realized capital gains and losses from sale of shares in the mutual funds are
determined on the first-in, first-out basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date. Unrealized gains or losses
from investments in the mutual funds are credited or charged to contract owners'
equity.
Dividend Income-Dividends received from the mutual fund investments are
reinvested to purchase additional mutual fund shares.
2. CONTRACT OWNERS' EQUITY
At June 30, 1995 and December 31, 1994, contract owners' equity included an
amount of $0 and $271,006, respectively, which represented the current value of
PFL Life's initial capital contribution. In June 1995, PFL Life redeemed its
capital contribution.
A summary of deferred annuity contracts terminable by owners at June 30, 1995
follows:
<TABLE>
<CAPTION>
Accumulation
Accumulation Unit Total
Sub-Account Units Owned Value Contract Value
----------- ------------ ------------ --------------
<S> <C> <C> <C>
Variable Insurance Products Fund-Money Market................... 55,905,633.231 $2.252864 $125,947,789
Variable Insurance Products Fund-High Income.................... 19,786,216.046 2.708097 53,582,992
Variable Insurance Products Fund-Equity Income.................. 80,508,963.989 2.569795 206,891,533
Variable Insurance Products Fund-Growth......................... 43,143,843.994 3.058140 131,939,915
Variable Insurance Products Fund-Overseas....................... 25,403,114.907 1.665915 42,319,430
Variable Insurance Products Fund II-Investment Grade Bond....... 9,867,476.585 1.578996 15,580,706
Variable Insurance Products Fund II-Asset Manager............... 58,204,319.981 1.661723 96,719,457
Fidelity Daily Income Trust..................................... 131,187.278 3.004499 394,152
Fidelity Cash Reserves.......................................... 23,221.921 3.018075 70,085
Fidelity Government Securities Fund, Ltd........................ 8,076.528 4.349513 35,129
Fidelity Capital and Income Fund................................ 26,014.066 6.430890 167,294
------------
$673,648,482
============
</TABLE>
10
<PAGE>
THE FIDELITY VARIABLE ANNUITY ACCOUNT
--------------------------------------------------------------------------------
A summary of changes in contract owner's account units follows:
<TABLE>
<CAPTION>
Investment
Money High Equity Grade
Market Income Income Growth Overseas Bond
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding
at 1/1/94........................ 38,655,266 26,114,131 70,574,631 37,369,701 36,890,366 11,685,282
Units purchased.................... 4,152,571 1,393,573 5,628,529 2,701,508 6,073,666 940,153
Units redeemed..................... 23,076,369 (10,170,652) (1,632,017) (2,154,214) (7,216,511) (4,086,145)
---------- ---------- ---------- ---------- ---------- ----------
Units outstanding
at 12/31/94...................... 65,884,206 17,337,052 74,571,143 37,916,995 35,747,521 8,539,290
Units purchased.................... 733,441 742,187 1,208,887 626,472 296,931 70,047
Units redeemed and transferred..... (10,712,014) 1,706,977 4,728,934 4,600,377 (10,641,337) 1,258,140
---------- ---------- ---------- ---------- ---------- ----------
Units outstanding
at 6/30/95....................... 55,905,633 19,786,216 80,508,964 43,143,844 25,403,115 9,867,477
========== ========== ========== ========== ========== ==========
<CAPTION>
Fidelity
Fidelity Fidelity Investment Fidelity
Daily Government Grade Capital and
Asset Income Fidelity Securities Bond Income
Manager Trust Cash Fund, Ltd. Fund Fund
Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding
at 1/1/94........................ 90,364,012 158,276 29,444 8,085 10,102 43,009
Units purchased.................... 11,630,547 39,217 - - - -
Units redeemed..................... (25,038,996) (6,825) (1,723) (8) (10,102) (7,387)
---------- ---------- ---------- ---------- ---------- ----------
Units outstanding
at 12/31/94...................... 76,955,563 190,668 27,721 8,077 - 35,622
Units purchased.................... 344,756 - - - - -
Units redeemed and transferred..... (19,095,999) (59,481) (4,499) - - (9,608)
---------- ---------- ---------- ---------- ---------- ----------
Units outstanding
at 6/30/95....................... 58,204,320 131,187 23,222 8,077 - 26,014
========== ========== ========== ========== ========== ==========
</TABLE>
3. Taxes
Operations of the Variable Account form a part of PFL Life, which is taxed as a
life insurance company under Subchapter L of the Internal Revenue Code of 1986,
as amended (the "Code"). The operations of the Variable Account are accounted
for separately from other operations of PFL Life for purposes of federal income
taxation. The Variable Account is not separately taxable as a regulated
investment company under Subchapter M of the Code and is not otherwise taxable
as an entity separate from PFL Life. Under existing federal income tax laws, the
income of the Variable Account, to the extent applied to increase reserves under
the variable annuity contracts, is not taxable to PFL Life.
4. Administrative And Mortality Risk charge
Administrative charges include an annual charge of $35 per contract. Charges for
administrative fees to the variable annuity contracts are an expense of the
Variable Account.
PFL Life deducts a daily charge equal to an annual rate of 0.8% of the value of
the contract owners' individual account of the eligible funds as a charge for
assuming the mortality risk.
11
<PAGE>
THE FIDELITY VARIABLE ANNUITY ACCOUNT
--------------------------------------------------------------------------------
5. NET ASSETS
At June 30, 1995 contract owners' equity was comprised of:
<TABLE>
<CAPTION>
Investment
Money High Equity Grade Asset
Market Income Income Growth Overseas Bond Manager
Total Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unit transactions
accumulated
net investment
income and
realized capital
gains............ $622,258,216 125,947,789 50,996,437 179,794,079 109,902,278 41,698,260 14,986,026 98,261,899
Adjustment for
appreciation
(depreciation) to
market value..... 51,390,266 -- 2,586,555 27,097,454 22,037,637 621,170 594,680 (1,542,442)
----------- ----------- ---------- ----------- ----------- ---------- ---------- ----------
Total Contract
Owners' Equity... $673,648,482 125,947,789 53,582,992 206,891,533 131,939,915 42,319,430 15,580,706 96,719,457
=========== =========== ========== =========== =========== ========== ========== ==========
<CAPTION>
Fidelity Fidelity Fidelity
Daily Fidelity Government Capital and
Income Cash Securities Income
Trust Reserves Fund, Ltd. Fund
Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Unit transactions
accumulated
net investment
income and
realized capital
gains............ 394,152 70,085 34,120 173,091
Adjustment for
appreciation
(depreciation) to
market value..... - - 1,009 (5,797)
----------- ----------- ---------- -----------
Total Contract
Owners' Equity... 394,152 70,085 35,129 167,294
=========== =========== ========== ===========
</TABLE>
6. PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
--------------------------- ----------------------------
Purchases Sales Purchases Sales
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Variable Insurance Products Fund-Money Market Portfolio............ $ 61,528,209 $ 84,625,142 $184,706,003 $121,670,069
Variable Insurance Products Fund-High Income Portfolio............. 37,675,790 31,890,646 43,563,970 59,788,039
Variable Insurance Products Fund-Equity Income Portfolio........... 28,199,578 15,353,944 53,686,271 34,789,414
Variable Insurance Products Fund-Growth Portfolio.................. 39,170,931 24,293,554 67,390,261 61,114,116
Variable Insurance Products Fund-Overseas Portfolio................ 17,327,391 33,935,929 62,112,924 63,649,976
Variable Insurance Products Fund II-Investment Grade Bond Portfolio 10,641,916 8,661,723 7,045,524 11,795,007
Variable Insurance Products Fund II-Asset Manager Portfolio........ 1,344,989 31,862,493 36,879,077 50,830,885
Fidelity Daily Income Trust........................................ 259 177,883 189,204 77,643
Fidelity Cash Reserves............................................. 402 14,228 3,143 4,943
Fidelity Government Securities Fund, Ltd. ......................... 2,562 1,835 202,290 199,516
Fidelity Investment Grade Bond Fund................................ - - 2,484 40,738
Fidelity Capital and Income Fund................................... 1,510 62,425 96,801 110,968
------------ ------------ ------------ ------------
$195,893,537 $230,879,802 $455,877,952 $404,071,314
============ ============ ============ ============
</TABLE>
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