<PAGE>
FIDELITY INCOME PLUS
SUPPLEMENT DATED AUGUST 1, 1995 TO PROSPECTUS DATED MAY 1, 1995
ADDITIONAL SUB-ACCOUNTS
Three additional Sub-accounts are available which invest exclusively in the
shares of Index 500 Portfolio, Asset Manager: Growth Portfolio, and Contrafund
Portfolio, mutual fund Portfolios of Variable Insurance Products Fund II. Index
500 Portfolio's investment objective is to seek to match the total return of the
Standard & Poor's Composite Index of 500 Stocks, while keeping transaction costs
and other expenses low. Asset Manager: Growth Portfolio's investment objective
is to seek to maximize total return by allocating its assets among domestic and
foreign stocks, bonds and short-term instruments. The Portfolio's "neutral" mix
is expected to be 65% stocks, 30% bonds and 5% short-term instruments.
Contrafund Portfolio's investment objective is to seek capital appreciation by
investing primarily in equity securities of companies that are considered to be
undervalued or out-of-favor by the Portfolio's adviser.
THERE IS NO ASSURANCE THAT ANY OF THE PORTFOLIOS WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. You will find more complete information about the Portfolios,
including management fees, and the risks associated with each Portfolio, in the
accompanying Portfolio prospectus. The three additional Sub-accounts may not be
available in all states as of the date of this Supplement due to various
insurance regulations.
The purpose of the following tables is to assist you in understanding the
various costs and expenses of the three new Sub-accounts as well as the
Portfolios. See "Contract Charges" on page INC-19 of the Prospectus for
additional information. The following table represents each Portfolio's annual
expenses for fiscal year 1995 (expressed as a percentage of each Portfolio's
average net assets; estimated for Asset Manager: Growth and Contrafund):
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEES EXPENSES EXPENSES*
---------- -------- ------------
<S> <C> <C> <C>
Index 500 0.00% 0.28% 0.28%
Asset Manager: Growth 0.72% 0.21% 0.93%
Contrafund 0.62% 0.27% 0.89%
</TABLE>
*The Portfolio's investment adviser has voluntarily agreed to limit total
expenses to 0.28% of Index 500 Portfolio's average net assets and to 1.00% of
Asset Manager: Growth, and Contrafund Portfolios' average net assets,
respectively. See the Portfolios' prospectus for more information.
If you assume that the Contract Owner expenses are as referred to above, and
that each Portfolio's annual return is 5% annually and its operating expenses
are just as described above, then for every $1000 of purchase payments, here's
how much you would have paid in total expenses if you surrendered your Contract
after the number of years indicated.
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
----- ------ ------ ------
<S> <C> <C> <C> <C>
Index 500 $12 $36 $63 $138
Asset Manager: Growth $18 $56 $97 $210
Contrafund $18 $55 $95 $206
</TABLE>
THESE FIGURES ILLUSTRATE THE COMBINED EFFECT OF ALL CURRENT CHARGES. THE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
PERFORMANCE
Performance information for the variable Sub-accounts may appear in reports and
advertising to current and prospective Contract Owners. The performance
information is based on historical investment experience of the Sub-accounts and
the Portfolios and does not indicate or represent future performance.
Total returns are based on the overall dollar or percentage change in value of
a hypothetical investment. Total return quotations reflect changes in Portfolio
share price, the automatic reinvestment by the separate account of all
distributions and the deduction of applicable administrative and mortality
charges.
An average annual total return reflects the hypothetical annually compounded
return that would have produced the same cumulative total return if the
performance had been constant over the entire period. Because average annual
total returns tend to smooth out variations in Sub-account's returns, you should
recognize that they are not the same as actual year-by-year results.
The Money Market Sub-account may advertise its current and effective yield.
Current yield reflects the income generated by an investment in the Sub-account
over a 7-day period. Effective yield is calculated in a similar manner except
that income earned is assumed to be reinvested. This income is annualized and
shown as a percentage. Yields do not take into account capital gains or losses.
The standard quotations of yield reflect the administrative and mortality
charges.
Additional information regarding yields and total returns calculated using the
standard formats briefly summarized above is contained in the Statement of
Additional Information, a copy of which may be obtained from PFL.
N.INC-STKR-895 August 1, 1995
<PAGE>
FIDELITY INCOME PLUS
SUPPLEMENT DATED AUGUST 1, 1995 TO
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1995
PERFORMANCE
Performance information for any Sub-account may be compared, in reports and
advertising to: (1) the Standard & Poor's Composite Index of 500 Stocks ("S & P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue's Money Market
Institutional Averages; (2) other variable annuity separate accounts or other
investment products tracked by Lipper Analytical Services, Morningstar, or the
Variable Annuity Research and Data Service, widely used independent research
firms which rank mutual funds and other investment companies by overall
performance, investment objectives, and assets; and (3) the Consumer Price Index
(measure for inflation) to assess the real rate of return from an investment in
a contract. Unmanaged indices may assume the reinvestment of dividends but
generally do not reflect deductions for annuity charges and investment
management costs.
Performance information may be quoted numerically or in a table, graph, or
similar illustration. Reports and advertising may also contain other information
including (i) the ranking of any Sub-account derived from rankings of variable
annuity separate accounts or other investment products tracked by Lipper
Analytical Services or by rating services, companies, publications or other
persons who rank separate accounts or other investment products on overall
performance or other criteria, and (ii) the effect of tax deferred compounding
on a Sub-account's investment returns, or returns in general, which may be
illustrated by graphs, charts, or otherwise, and which may include a comparison,
at various points in time, of the return from an investment in a Contract (or
returns in general) on a tax-deferred basis (assuming one or more tax rates)
with the return on a taxable basis.
The table below provides performance results for each Sub-account through
12/31/94. The performance information is based on the historical investment
experience of the Sub-accounts and of the Portfolios. It does not indicate or
represent future performance.
Total Return
- ------------
Total returns quoted in advertising reflect all aspects of a Sub-account's
return, including the automatic reinvestment by the separate account of all
distributions and any change in the Sub-account's value over the period. Average
annual returns are calculated by determining the growth or decline in value of a
hypothetical historical investment in the Sub-account over a stated period and
then calculating the annually compounded percentage rate that would have
produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over ten
years would produce an average annual return of 7.18%, which is the steady rate
that would equal 100% growth on a compounded basis in ten years. While average
annual returns are a convenient means of comparing investment alternatives,
investors should realize that the Sub-account's performance is not constant over
time, but changes from year to year, and that average annual returns represent
averaged figures as opposed to the actual year-to-year performance of a
Sub-account.
Table 1 shows the average annual total return on a hypothetical investment in
the Sub-accounts for the last year, three years, five years, and from the date
that the Portfolios began operations, assuming that the Contract was surrendered
December 31, 1994. For any Portfolio in existence ten years or more, figures are
shown for a ten year period rather than for the life of the Portfolio. The
average annual total returns shown in Table 1 are computed by finding the
average annual compounded rates of return over the periods shown that would
equate the initial amount invested to the withdrawal value, in accordance with
the following formula. P(1+T)/n/=ERV where P is a hypothetical investment
payment of $1,000, T is the average annual total return, n is the number of
years, and ERV is the withdrawal value at the end of the periods shown. The
returns reflect the mortality charge (.80% on an annual basis) and the
administrative charge.
N.INC-SAISTKR-895 August 1, 1995
<PAGE>
Table 1: Average Annual Total Return for Period Ending on 12/31/94
<TABLE>
<CAPTION>
Sub-account
1 Year 3 Year Year Life Inception Date
----- ------ ---- ---- --------------
<S> <C> <C> <C> <C> <C>
Money Market* 3.38% 2.91% 4.19% 5.40% ** 03/31/82
High Income -2.38% 12.48% 13.04% 9.91% 09/11/85
Equity Income 6.16% 13.00% 9.56% 9.97% 10/08/86
Growth -0.87% 8.34% 9.92% 11.57% 10/08/86
Overseas 0.87% 6.70% 4.87% 6.07% 01/27/87
Investment Grade Bond 4.57% 3.54% 6.16% 6.60% 06/05/89
Asset Manager -6.89% 7.42% N/A 10.27% 05/29/90
Index 500*** 0.17% N/A N/A 6.36% 08/27/92
Asset Manager: Growth N/A N/A N/A N/A N/A
Contrafund N/A N/A N/A N/A N/A
</TABLE>
Total returns are historical and include change in unit price and the automatic
reinvestment of dividends and capital gains. Principal, investment returns
(except Money Market Portfolio) and yields will fluctuate and there is no
guarantee you will receive back your original principal. Average Annual Total
Returns and Yield include all insurance contract charges.
* The underlying Money Market Portfolio seeks to maintain a stable $1.00
share price, there is no assurance that it will be able to do so. An
investment in the Portfolio is not insured by the U.S. government.
** Figure for 10 years.
*** Hypothetical results shown. This Sub-account was not available under the
separate account at year end 1994. The results shown are not actual results
of the Sub-account. The performance data for periods indicated is based on
the performance of the corresponding portfolio and the assumption that the
applicable Sub-account was in existence for the same period as the
corresponding portfolio with a level of charges equal to those currently
assessed against the Sub-account or against Owner's contract values under
the Policies.
Yields
- ------
Yields quoted in advertising for the Money Market Sub-account reflect the change
in value of a hypothetical investment in the Sub-account over a stated period of
time, not taking into account capital gains or losses. Yields are annualized and
stated as a percentage. Current yield for the Money Market Sub-account reflects
the income generated by a Sub-account over a 7-day period. Current yield is
calculated by determining the net change, exclusive of capital changes, in the
value of a hypothetical account having one Accumulation Unit at the beginning of
the period adjusting for the administrative charge, and dividing the difference
by the value of the account at the beginning of the base period to obtain the
base period return, and multiplying the base period return by (365/7). The
resulting yield figure is carried to the nearest hundredth of a percent.
Effective yield for the Money Market Sub-account is calculated in a similar
manner to current yield except that investment income is assumed to be
reinvested throughout the year at the 7-day rate. Effective yield is obtained by
taking the base period returns as computed above, and then compounding the base
period return by adding 1, raising the sum to a power equal to (365/7) and
subtracting one from the result, according the formula Effective Yield = [(Base
Period Return + 1)/365/7/]-1. Since the reinvestment of income is assumed in
the calculation of effective yield, it will generally be higher than current
yield. For the 7-day period ending on 12/31/94, the Money Market Sub-account had
a current yield of 4.80% and an effective yield of 4.92%.
