FIDELITY INVESTMENTS
VARIABLE LIFE ACCOUNT I
(2 Fidelity Logo Graphics)(registered trademark)
ANNUAL REPORT
DECEMBER 31, 1998
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE
SUBMITTED FOR THE GENERAL INFORMATION OF FIDELITY INVESTMENTS LIFE
INSURANCE COMPANY VARIABLE LIFE OWNERS. THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. NEITHER FIDELITY INVESTMENTS
LIFE INSURANCE COMPANY NOR FIDELITY BROKERAGE SERVICES, INC. IS A
BANK, AND NEITHER THE LIFE INSURANCE POLICIES NOR MUTUAL FUND SHARES
ARE BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE FDIC.
STATEMENT OF ASSETS AND LIABILITIES
FIDELITY INVESTMENTS VARIABLE LIFE ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
DECEMBER 31, 1998
ASSETS
Investments at current market
value:
Variable Insurance Products
Fund (VIP)
Money Market Portfolio - $ 288,526
288,526 shares (cost
$288,526)
High Income Portfolio - 192,401
16,687 shares (cost $213,177)
Equity-Income Portfolio - 1,822,247
71,686 shares (cost
$1,552,137)
Growth Portfolio - 52,742 2,366,514
shares (cost $1,875,118)
Overseas Portfolio - 19,513 391,234
shares (cost $407,273)
Variable Insurance Products
Fund II (VIP II)
Investment Grade Bond 242,093
Portfolio - 18,680 shares
(cost $222,765)
Asset Manager Portfolio - 158,437
8,725 shares (cost $130,203)
Total Assets $ 5,461,452
NET ASSETS COMPRISED OF:
Variable Life Contracts $ 5,452,263
Retained in Variable Account 9,189
by Fidelity Investments Life
Insurance Company
NET ASSETS $ 5,461,452
FIDELITY INVESTMENTS VARIABLE LIFE ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
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SUBACCOUNTS INVESTING IN:
VIP - MONEY MARKET VIP - HIGH INCOME
12/31/98 12/31/97 12/31/98 12/31/97
INCOME:
Dividends $ 18,404 $ 20,122 $ 17,704 $ 18,091
EXPENSES:
Mortality risk, expense risk 2,933 3,229 1,945 2,257
and administrative charges
Net investment income (loss) 15,471 16,893 15,759 15,834
Realized gain (loss) on sale 0 0 (232) 26,919
of fund shares
Realized gain distributions 0 0 11,250 2,236
Unrealized appreciation 0 0 (36,133) (5,861)
(depreciation)
Net increase in net assets 15,471 16,893 (9,356) 39,128
from operations
Transfers between 39,732 (219,223) (32,776) 52,719
subaccounts, net
Transfers for contract (1,356) (2,785) (15,937) (84,506)
terminations
Transfers for cost of (3,623) (3,625) (1,379) (1,731)
insurance
Other transfers to Fidelity (14,990) (293) 1,578 (5,333)
Investments Life Insurance
Co., net
Net increase (decrease) in 19,763 (225,926) (48,514) (38,851)
net assets from contract
transactions
Retained in (returned from) (529) (2,128) (491) (1,021)
Variable Life Account I,
net
Total increase (decrease) in 34,705 (211,161) (58,361) (744)
net assets
Net assets at beginning of 253,821 464,982 250,762 251,506
year
Net assets at end of year $ 288,526 $ 253,821 $ 192,401 $ 250,762
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VIP - EQUITY-INCOME VIP - GROWTH
12/31/98 12/31/97 12/31/98 12/31/97
INCOME:
Dividends $ 26,132 $ 23,082 $ 8,637 $ 10,089
EXPENSES:
Mortality risk, expense risk 15,575 13,488 14,757 13,230
and administrative charges
Net investment income (loss) 10,557 9,594 (6,120) (3,141)
Realized gain (loss) on sale 155,409 151,510 232,706 204,992
of fund shares
Realized gain distributions 92,999 116,052 225,912 45,162
Unrealized appreciation (72,355) 89,946 140,966 62,028
(depreciation)
Net increase in net assets 186,610 367,102 593,464 309,041
from operations
Transfers between (192,690) 172,052 168,543 (20,662)
subaccounts, net
Transfers for contract (27,457) (45,696) (10,686) (51,997)
terminations
Transfers for cost of (10,081) (10,048) (8,677) (10,282)
insurance
Other transfers to Fidelity 7,499 (9,028) (3,409) (4,260)
Investments Life Insurance
Co., net
Net increase (decrease) in (222,729) 107,280 145,771 (87,201)
net assets from contract
transactions
Retained in (returned from) (2,779) (89) (1,729) (466)
Variable Life Account I,
net
Total increase (decrease) in (38,898) 474,293 737,506 221,374
net assets
Net assets at beginning of 1,861,145 1,386,852 1,629,008 1,407,634
year
Net assets at end of year $ 1,822,247 $ 1,861,145 $ 2,366,514 $ 1,629,008
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FIDELITY INVESTMENTS VARIABLE LIFE ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
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VIP - OVERSEAS VIP II - INVESTMENT
GRADE BOND
12/31/98 12/31/97 12/31/98 12/31/97
INCOME:
Dividends $ 6,535 $ 6,861 $ 10,825 $ 13,807
EXPENSES:
Mortality risk, expense risk 4,644 3,623 2,001 1,951
and administrative charges
Net investment income (loss) 1,891 3,238 8,824 11,856
Realized gain (loss) on sale (31,690) 33,483 423 596
of fund shares
Realized gain distributions 19,259 27,238 1,284 0
Unrealized appreciation (21,186) (26,453) 7,536 5,673
(depreciation)
Net increase in net assets (31,726) 37,506 18,067 18,125
from operations
Transfers between 24,230 12,114 (4,212) 0
subaccounts, net
Transfers for contract (4) (31,009) 0 (16,783)
terminations
Transfers for cost of (3,434) (3,341) (2,068) (2,200)
insurance
Other transfers to Fidelity 4,748 (16,173) (140) (137)
Investments Life Insurance
Co., net
Net increase (decrease) in 25,540 (38,409) (6,420) (19,120)
net assets from contract
transactions
Retained in (returned from) (692) (1,247) (342) (56)
Variable Life Account I,
net
Total increase (decrease) in (6,878) (2,150) 11,305 (1,051)
net assets
Net assets at beginning of 398,112 400,262 230,788 231,839
year
Net assets at end of year $ 391,234 $ 398,112 $ 242,093 $ 230,788
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VIP II - ASSET MANAGER TOTAL
12/31/98 12/31/97 12/31/98 12/31/97
INCOME:
Dividends $ 5,222 $ 5,278 $ 93,459 $ 97,330
EXPENSES:
Mortality risk, expense risk 1,294 1,290 43,149 39,068
and administrative charges
Net investment income (loss) 3,928 3,988 50,310 58,262
Realized gain (loss) on sale 5,949 2,812 362,565 420,312
of fund shares
Realized gain distributions 15,668 13,240 366,372 203,928
Unrealized appreciation (4,249) 7,854 14,579 133,187
(depreciation)
Net increase in net assets 21,296 27,894 793,826 815,689
from operations
Transfers between (2,827) 3,000 0 0
subaccounts, net
Transfers for contract (24,075) (9,943) (79,515) (242,719)
terminations
Transfers for cost of (1,191) (1,279) (30,453) (32,506)
insurance
Other transfers to Fidelity (238) (1,800) (4,952) (37,024)
Investments Life Insurance
Co., net
Net increase (decrease) in (28,331) (10,022) (114,920) (312,249)
net assets from contract
transactions
Retained in (returned from) (111) (1,312) (6,673) (6,319)
Variable Life Account I,
net
Total increase (decrease) in (7,146) 16,560 672,233 497,121
net assets
Net assets at beginning of 165,583 149,023 4,789,219 4,292,098
year
Net assets at end of year $ 158,437 $ 165,583 $ 5,461,452 $ 4,789,219
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FIDELITY INVESTMENTS VARIABLE LIFE ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
1. ORGANIZATION
Fidelity Investments Variable Life Account I (the "Account"), a unit
investment trust registered under the Investment Company Act of 1940
as amended, was established by Fidelity Investments Life Insurance
Company (FILI) on July 22, 1987 and exists in accordance with the
regulations of the State of Utah Insurance Department. The Account is
a funding vehicle for individual variable life insurance contracts.
FILI is a wholly-owned subsidiary of FMR Corp. Under applicable
insurance law, the assets and liabilities of the Account are clearly
identified and distinguished from the other assets and liabilities of
FILI. The Account cannot be charged with liabilities arising out of
any other business of FILI.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
consistently by the Account in preparation of the financial statements
in conformity with generally accepted accounting principals.
INVESTMENT VALUATION
Investments are made in the subaccounts and are valued at the reported
net asset values of such subaccounts.
ACCOUNTING FOR INVESTMENTS
Investment transactions are recorded on the trade date. Income from
dividends is recorded on the ex-dividend date. Realized gains and
losses on the sales of investments are computed on the basis of the
identified cost of the investment sold.
FEDERAL INCOME TAXES
The operations of the Account are included in the federal income tax
return of FILI, which is taxed as a life insurance company under the
provisions of the Internal Revenue Code (the "Code").
Under the current provisions of the Code, FILI does not expect to
incur federal income taxes on the earnings of the Account to the
extent the earnings are credited under the contracts. Based on this,
no charge is being made currently to the Account for federal income
taxes. FILI will review periodically the status of such decision based
on changes in the tax law. Such a charge may be made in future years
for any federal income taxes that would be attributable to the
contracts.
ESTIMATES
The preparation of the statement of assets and liabilities and the
statements of operations and changes in net assets in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the related amounts and
disclosures in the financial statements. Actual results could differ
from those estimates.
RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform with the
current year presentation.
3. EXPENSES
FILI deducts a daily charge from the net assets of the Account
(equivalent to an effective annual rate of .85%) for administrative
expenses and for the assumption of mortality risk and expense risk. In
addition, the cost of providing insurance protection is deducted
monthly.
4. AFFILIATED COMPANY TRANSACTIONS
The contracts are distributed through Fidelity Brokerage Services,
Inc. (FBSI) and Fidelity Insurance Agency, Inc. (FIA), both of which
are affiliated with FMR Corp. FBSI and FIA are the distributors and
FBSI is the principal underwriter of the contracts. Fidelity
Management & Research Company, an affiliate of FMR Corp., acts as
investment advisor to each portfolio. Fidelity Investments
Institutional Operations Company, Inc., an affiliate of FMR Corp., is
the transfer and shareholder servicing agent for the portfolios.
5. PURCHASES AND SALES OF INVESTMENTS
The following table shows aggregate cost of shares purchased and
proceeds from sales of each subaccount for the year ended December 31,
1998:
PURCHASES SALES
VIP - Money Market $ 1,098,827 $ 1,064,122
VIP - High Income 102,605 124,601
VIP - Equity-Income 419,962 541,914
VIP - Growth 1,198,621 834,787
VIP - Overseas 750,507 704,509
VIP II - Investment Grade Bond 12,258 8,912
VIP II - Asset Manager 21,287 30,133
REPORT OF INDEPENDENT ACCOUNTANTS
To the Policyholders of Fidelity Investments Variable Life Account 1:
In our opinion, the accompanying statement of assets and liabilities
and the related statements of operations and changes in net assets
present fairly, in all material respects, the financial position of
Fidelity Investments Variable Life Account I (comprised of VIP - Money
Market, VIP - High Income, VIP - Equity-Income, VIP - Growth, VIP -
Overseas, VIP II - Investment Grade Bond, and VIP II - Asset Manager)
of Fidelity Investments Life Insurance Company at December 31, 1998,
and the results of its operations and the changes in its net assets
for each of the two years in the period then ended, in conformity with
generally accepted accounting principles. These financial statements
are the responsibility of Fidelity Investments Life Insurance
Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which
included confirmation of investments at December 31, 1998 by
correspondence with the funds, provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 25, 1999
(fidelity logo graphic)FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(registered trademark)
Fidelity Variable Life
is issued by Fidelity Investments Life Insurance Company
Fidelity Brokerage Services, Inc., member NYSE, SIPC, Fidelity
Insurance Agency, Inc., and Fidelity Investments Insurance
Agency of Texas, Inc. are the distributors.
82 Devonshire Street, Boston, MA 02109
