As filed with the SEC on April 24, 1996
Registration No. 33-24400
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 10 [x]
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 17 [x]
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
(Exact name of registrant)
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(Name of depositor)
82 Devonshire Street
Boston, Massachusetts 02109
(Address of depositor's principal executive offices)
Depositor's telephone number: (800) 544-8888
_________________________________________________
RODNEY R. ROHDA
Chairman
Fidelity Investments Life Insurance Company
82 Devonshire Street
Boston, Massachusetts 02109
(Name and address of agent for service)
___________________________________________________________
Copy to:
MICHAEL BERENSON
Jorden Burt Berenson & Johnson LLP
1025 Thomas Jefferson Street, Suite 400 East
Washington, D.C. 20007
___________________________________________________________
Individual Variable Annuity Contracts -- The Registrant has registered an
indefinite amount of securities pursuant to Rule 24f-2 of the Investment
Company Act of 1940. The Rule 24f-2 Notice for the fiscal year ending
December 31, 1995, was filed on February 26, 1996.
It is proposed that this filing will become effective (check appropriate
space):
immediately upon filing pursuant to paragraph (b) of rule 485
x on April 30, 1996, pursuant to paragraph (b) (1) (v) of rule 485
60 days after filing pursuant to paragraph (a) (1) of rule 485
on , pursuant to paragraph (a) (1) of rule 485
75 days after filing pursuant to paragraph (a) (2) of rule 485
on , pursuant to paragraph (a) (2) of rule 485 Page _ of _
Exhibit Index Appears on Page __
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
Part A
Item N-4 Item Heading in Prospectus
Item 1. Cover Page Cover Page
Item 2. Definitions Glossary
Item 3. Synopsis or Highlights Summary of the Contract
Item 4. Condensed Financial Information Accumulation Unit Values
Item 5. General Description of Facts About Fidelity
Registrant, Depositor, and Investments Life, The
Portfolio Companies Variable Account, and
the Funds
a) Depositor Fidelity Investments
Life
b) Registrant The Variable Account;
The Fixed Account
c) Portfolio Company The Funds
d) Prospectus The Funds
e) Voting Voting Rights
f) Administrator Charges
Item 6. Deductions and Expenses Charges
a) Deductions Charges; Premium Taxes
b) Sales load Withdrawal Charge
c) Special purchase plans Special Provisions
Applicable to Sales
under Sponsored
Arrangements; Automatic
Deduction Plan; Dollar
Cost Averaging
d) Commissions Selling the Contracts
e) Portfolio company deductions
and expenses Charges
f) Registrant's expenses Charges
Item 7. General Description of Variable
Annuity Contracts
a) Rights Summary of the Contract;
Investment Allocation of
Your Purchase Payments;
Withdrawals; Death
Benefit; Selection of
Annuity Income Options;
Reports to Owners;
Voting Rights; Other
Contract Provisions
b) Provisions and limitations Investment Allocation of
Your Purchase Payments
c) Changes in contracts or Changes in Investment
operations Options
d) Contract owner inquiries Cover Page
Item 8. Annuity Period
a) Level of benefits Fixed, Variable or
Combination Annuity
Income Options; Types of
Annuity Income Options
b) Annuity commencement date Annuity Date
c) Annuity payments Types of Annuity Income
Options
d) Assumed investment return Fixed, Variable or
Combination Annuity
Income Options
e) Minimums Types of Annuity Income Options
f) Rights to change options or Investment Allocation of
transfer contract value Your Purchase Payments
Item 9. Death Benefit
a) Death benefit calculation Death Benefit
b) Forms of benefits Death Benefit; Types of
Annuity Income Options
Item 10. Purchases and Contract Values
a) Procedures for purchases Purchase of a Contract
b) Accumulation unit value Accumulation Units
c) Calculation of accumulation Accumulation Units
unit value
d) Principal underwriter Selling the Contracts
Item 11. Redemptions
a) Redemption procedures Withdrawals
b) Texas Optional Retirement Not Applicable
Program
c) Delay Postponement of
Payment
d) Lapse Not Applicable
e) Revocation rights Free Look Privilege
Item 12. Taxes
a) Tax Consequences Tax Considerations; Contract Values
and Proceeds; Required Distributions
Upon Death
b) Qualified plans Purchase of A Contract;
Tax Considerations
c) Impact of taxes Tax Considerations
Item 13. Legal Proceedings Litigation
Item 14. Table of Contents for Table of Contents for
Statement of Additional Statement of Additional
Information Information
Part B Heading in Statement of
Form N-4 Item Additional Information
Item 15. Cover Page Cover Page
Item 16. Table of Contents Table of Contents
Item 17. General Information and
History
a) Name change Fidelity Investments Life
(Prospectus)
b) Attribution of Assets Not Applicable
c) Control of Depositor Fidelity Investments Life
(Prospectus)
Item 18. Services
a) Fees, expenses and costs Charges (Prospectus)
b) Management - related Not Applicable
c) Custodian and independent Independent Accountants
public accountant
d) Other custodianship Safekeeping of Account
Assets
e) Administrative servicing Fidelity Investments Life
agent (Prospectus); The Variable Account
(Prospectus)
f) Depositor as principal Not Applicable
underwriter
Item 19. Purchase of Securities Being
Offered
a) Manner of Offering Distribution of the
Contracts; Selling the Contracts (Prospectus)
b) Sales load Withdrawal Charge (Prospectus)
Item 20. Underwriters
a) Depositor or affiliate as Selling the Contracts
principal underwriter (Prospectus)
b) Continuous offering Distribution of Contracts
c) Underwriting commissions Not Applicable
d) Payments to underwriter Not Applicable
Item 21. Calculation of Performance Data Performance
Item 22. Annuity Payments Fixed Annuity Income
Payments; Variable
Annuity Income Payments;
Unavailability of
Annuity Income Payments
in Certain Circumstances
Item 23. Financial Statements
a) Registrant Financial Statements
b) Depositor Financial Statements
PART A
INFORMATION REQUIRED IN A PROSPECTUS
PROSPECTUS
1.FIDELITY RETIREMENT RESERVES
This prospectus describes a variable annuity contract (the "Contract")
offered by Fidelity Investments Life Insurance Company ("Fidelity
Investments Life", "We" or "Us"), the life insurance company that is part
of the group of financial service companies known as Fidelity Investments.
The Contract is designed for individual investors who desire to accumulate
capital on a tax-deferred basis for retirement or other long-term purposes.
It may be purchased on a non-qualified basis. It may also be purchased on
a qualified basis as an individual retirement annuity ("IRA") under Section
408(b) of the Internal Revenue Code of 1986, as amended, in connection with
a "rollover" of contributions from other qualified plans, tax sheltered
annuities or IRAs. You may choose to have amounts paid out in a single
payment or as a series of annuity payments, including payments guaranteed
for your lifetime.
You may purchase a Non-qualified Contract by making a payment of at least
$2,500. You may make additional payments to a Non-qualified Contract as
long as each payment is at least $250 (unless the payment is part of an
automatic deduction plan). You may purchase a Qualified Contract by making
a payment of at least $10,000. You may make additional payments to a
Qualified Contract as long as each payment is at least $2,500 unless your
Contract provides for a lower minimum. Your payments will be invested as
you direct in one or more of the ten Subaccounts of the Fidelity
Investments Variable Annuity Account I (the "Variable Account") and/or
allocated to a fixed-rate investment option funded through Fidelity
Investments Life's general account (the "Fixed Account"). The Fixed
Account may also be referred to as the "Guaranteed Account". YOUR INITIAL
PAYMENT ALLOCATED TO THE VARIABLE ACCOUNT WILL BE INVESTED INITIALLY IN THE
MONEY MARKET SUBACCOUNT FOR THE PERIOD WE ESTIMATE OR CALCULATE YOUR FREE
LOOK RIGHT TO BE IN EXISTENCE. The variable Subaccounts invest exclusively
in the mutual fund portfolios of the Variable Insurance Products Fund and
the Variable Insurance Products Fund II (the "Funds"). The Funds are each
managed by Fidelity Management & Research Company. Additional Subaccounts
and portfolios may be added in the future. Fidelity Investments Life
credits interest on amounts allocated to the Fixed Account at specified
interest rates that vary from time to time.
You may select a date on which annuity income payments may commence. Prior
to that Annuity Date, you may withdraw all or part of the Cash Surrender
Value of your Contract. The value allocated to the Variable Account will
vary with the investment performance of the Subaccounts you select, and the
value allocated to the Fixed Account will increase as interest is credited.
In certain circumstances, withdrawals are subject to a contingent deferred
sales charge and a tax penalty.
Annuity income payments may be fixed, variable, or a combination of both.
If you elect to receive fixed income, the value of your Contract on the
Annuity Date will be applied to provide fixed annuity payments. If you
elect variable income, the amount of your annuity income payments will
increase or decrease according to the investment performance of the
Subaccounts you select. If you elect a combination of fixed and variable
income, a portion of your payment will be fixed and a portion will vary
according to investment performance. This prospectus provides information
that a prospective investor should know before investing. Additional
information about the Contract and the Variable Account has been filed with
the Securities and Exchange Commission in a Statement of Additional
Information dated April 30, 199 6 . The Statement of Additional
Information is incorporated by reference in this prospectus and is
available without charge by calling Fidelity Investments Life at
800-544-2442. The table of contents of the Statement of Additional
Information appears on page .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS NOT
VALID UNLESS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE VARIABLE
INSURANCE PRODUCTS FUND AND THE VARIABLE INSURANCE PRODUCTS FUND II.
FOR FURTHER INFORMATION CALL FIDELITY INVESTMENTS:
Nationwide 800-544-2442
Date: April 30, 199 6
PROSPECTUS CONTENTS
Glossary iv
Summary of the Contract 1
FACTS ABOUT FILI, THE VARIABLE ACCOUNT AND THE FUNDS
Fidelity Investments Life 10
The Variable Account 10
The Funds 11
FACTS ABOUT THE CONTRACT
Purchase of a Contract 12
Free Look Privilege 13
Investment Allocation of Your Purchase Payments 14
Accumulation Units 15
Withdrawals 16
Signature Guarantee 16
Charges 16
Death Benefit 20
Required Distributions Upon Death 20
Annuity Date 21
Selection of Annuity Income Options 21
Fixed, Variable, or Combination Annuity Income Options 21
Types of Annuity Income Options 22
Reports to Owners 23
THE FIXED ACCOUNT
The Fixed Account 23
MORE ABOUT THE CONTRACT
Tax Considerations 24
Other Contract Provisions 27
Selling the Contracts 28
Automatic Deduction Plan 28
Special Provisions For Sponsored Arrangements 28
Dollar Cost Averaging 29
Postponement of Payment 29
MORE ABOUT THE VARIABLE ACCOUNT AND THE FUNDS
Changes in Investment Options 30
Net Rate of Return for a Subaccount 30
Voting Rights 30
Resolving Material Conflicts 31
Performance 31
Litigation 32
Table of Contents of the Statement of Additional Information 33
THE CONTRACT IS NOT AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS.
2.GLOSSARY
ACCUMULATION UNIT - A unit of measure used prior to the Annuity Date to
calculate the value of your Contract in the Subaccounts.
ANNUITANT - The person designated by the Contract Owner, upon whose life
annuity payments are based.
ANNUITY CONTRACT OR CONTRACT - A Contract designed to provide an Annuitant
with an income, which may be a lifetime income, beginning on the Annuity
Date.
ANNUITY DATE - The date when annuity payments begin.
ANNUITY UNIT - A unit of measure used after the Annuity Date to calculate
the amount of variable annuity payments.
BENEFICIARY OR BENEFICIARIES - The person or persons who
receive the proceeds in the event of the death of all the Owners or the
Annuitant .
CASH SURRENDER VALUE - The amount payable to you upon surrender of the
Contract prior to the Annuity Date during the Annuitant's lifetime, before
the deduction of any taxes.
CODE - The Internal Revenue Code of 1986, as amended.
CONTRACT ANNIVERSARY - The same day and month as the Contract Date in each
later year.
CONTRACT DATE - The date your Contract becomes effective. It will be
stated in your Contract.
CONTRACT OWNER (S) OR YOU - The person or persons who have the
ownership rights and privileges of the Contract. Two people
may purchase a Contract only if they are spouses.
CONTRACT VALUE - The total amount attributable to your Contract at any time
prior to the Annuity Date, representing amounts in the Subaccounts and the
Fixed Account.
CONTRACT YEAR - A year that starts on the Contract Date or on a Contract
Anniversary.
DEATH BENEFIT - Amount payable to the Beneficiary or Beneficiaries
upon the death of the Annuitant before the Annuity Date.
FIXED ACCOUNT - A fixed-rate investment option funded through Fidelity
Investments Life's general account. Fidelity Investments Life credits
interest to the amount allocated to the Fixed Account at a rate declared
periodically in advance. The Fixed Account may also be referred to as the
"Guaranteed Account."
INVESTMENT OPTIONS - The Subaccounts and the Fixed Account.
IRA - Refers generally to both an individual retirement account and an
individual retirement annuity as defined in Sections 408(a) and (b),
respectively, of the Code. When used to refer to a Qualified Contract
described herein, it means a Contract that qualifies as an individual
retirement annuity as defined in Section 408(b) of the Code.
NET RATE OF RETURN - An index used to measure the investment performance of
a Subaccount from one Valuation Period to the next.
NON-QUALIFIED CONTRACT - A Contract other than a Qualified Contract.
QUALIFIED CONTRACT - A Contract that qualifies as an individual retirement
annuity under Section 408(b) of the Code.
SUBACCOUNT - A division of the Variable Account, the assets of which are
invested in the shares of the corresponding portfolio of the Variable
Insurance Products Fund or the Variable Insurance Products Fund II.
VALUATION PERIOD - The period of time from one determination of
Accumulation Unit Values and Annuity Unit Values to the next determination
of such values. Such determinations are made as of the close of business
(normally 4:00 p.m. Eastern Time) each day the New York Stock Exchange is
open for trading.
VARIABLE ACCOUNT - Fidelity Investments Variable Annuity Account I.
THIS PAGE INTENTIONALLY LEFT BLANK
3.SUMMARY OF THE CONTRACT
The purpose of this variable annuity contract is to allow you, the
Owner (s) , to accumulate funds on a tax-deferred basis by investing
in one or more investment portfolios managed by Fidelity Management &
Research Company and to permit the Annuitant (who may or may not be
an Owner) to receive annuity income payments commencing on the
Annuity Date. There is no assurance that values invested in the Subaccounts
will increase. As the Contract Owner (s) , you bear the investment
risk with respect to those values. The Contract also allows you to allocate
funds to a fixed-rate investment option funded through Fidelity Investments
Life's general account (the "Fixed Account"). (The Fixed Account may also
be referred to as the "Guaranteed Account.") We guarantee that amounts
allocated to the Fixed Account will earn interest at declared rates.
The Contract is designed to provide income for retirement or to meet other
long-term investment goals. It may be purchased on a non-qualified basis
or, if you so choose, it may be purchased on a qualified basis as an
individual retirement annuity ("IRA") under Section 408(b) of the Code in
connection with the "rollover" of contributions from other qualified plans,
tax sheltered annuities or IRAs. It may also be purchased by exchanging
Fidelity Variable Annuity (another annuity contract issued by Fidelity
Investments Life). The minimum initial payment required to purchase a
Non-qualified Contract is $2,500. You may also make additional payments to
a Non-qualified Contract prior to the Annuity Date as long as each payment
is not less than $250 and the Annuitant is living. These minimum payments
may be reduced for individuals under certain sponsored arrangements or if
the payment is part of an automatic deduction plan. You may purchase a
Qualified Contract by making a payment of at least $10,000. You may make
additional payments to a Qualified Contract as long as each payment is at
least $2,500 unless your Contract provides for a lower minimum. Your
purchase payments will be invested as you direct in the Fixed Account and
in the Subaccounts of the Variable Account, except that the portion of your
first payment allocated to the Variable Account must be invested initially
in the Money Market Subaccount for the period we estimate or calculate your
free look right to be in existence, which is generally fifteen days after
the Contract Date. See INVESTMENT ALLOCATION OF YOUR PURCHASE PAYMENTS on
page . There are currently ten variable Subaccounts. Five Subaccounts
invest exclusively in the shares of one of the mutual fund portfolios of
Variable Insurance Products Fund. The Variable Insurance Products Fund
currently offers a Money Market Portfolio, High Income Portfolio,
Equity-Income Portfolio, Growth Portfolio and Overseas Portfolio. The
remaining five Subaccounts invest exclusively in shares of one of the
mutual fund portfolios of Variable Insurance Products Fund II. The Variable
Insurance Products Fund II currently offers an Investment Grade Bond
Portfolio, Asset Manager Portfolio, Index 500 Portfolio, Asset
Man a ger: Growth Portfolio and Contrafund Portfolio. The Variable
Insurance Products Fund and the Variable Insurance Products Fund II are
referred to collectively in this prospectus as the "Funds." Fidelity
Investments Life credits interest on amounts allocated to the Fixed Account
at interest rates that vary from time to time.
Prior to the Annuity Date, you may withdraw all or part of the Cash
Surrender Value of your Contract. During the first five Contract Years, the
withdrawal may be subject to a contingent deferred sales charge. This
charge is a maximum of 5% of the amount of purchase payments withdrawn in
the first Contract Year and decreases 1% per year until it disappears after
five Contract Years. However, in each of the first five Contract years you
may withdraw up to 10% of your purchase payments without incurring such a
charge. In certain circumstances, Fidelity Investments Life may waive the
contingent deferred sales charge. See WITHDRAWAL CHARGE on page . The
maximum partial withdrawal is one that, along with any applicable
withdrawal charge, would reduce your Contract Value to $2,500. Certain
withdrawals may be subject to a federal penalty tax as well as to federal
income tax. See TAX CONSIDERATIONS on page .
You may select from a number of annuity income options, including annuity
income payments for the life of the Annuitant, with or without a guaranteed
number of payments. See TYPES OF ANNUITY INCOME OPTIONS on page . You may
choose any of these annuity income options to be paid on a fixed basis, a
variable basis, or a combination of both. See FIXED, VARIABLE, OR
COMBINATION ANNUITY INCOME OPTIONS on page . If you elect a fixed income,
your Contract's participation in the investment experience of the Variable
Account will cease with the commencement of the annuity income payments. If
you elect a variable income, annuity income payments will vary in
accordance with the investment experience of the Subaccounts you select
during the payout period. If you elect a combination of fixed and variable
income, a portion of your income payment will be fixed, and a portion will
vary according to investment performance of the selected Subaccounts. On
the Annuity Date the Annuitant becomes the Owner of the Contract.
In the event that the Annuitant dies prior to the Annuity Date, we will pay
a Death Benefit to the Beneficiary you select. See DEATH BENEFIT on page .
In the event that any Owner dies before the entire value of the
Contract is distributed, the remaining value of the Contract must be
distributed according to certain specified rules in order for the Contract
to qualify as an annuity for tax purposes. See REQUIRED DISTRIBUTIONS UPON
DEATH on page .
In addition to the contingent deferred sales charge applicable to
withdrawals within the first five Contract Years (other than withdrawals in
each year of up to 10% of your purchase payments), we assess an annual
maintenance charge currently set at $30 per year and guaranteed not to
exceed $50 per year. Prior to the Annuity Date this charge is deducted from
your Contract Value, and after the Annuity Date it is deducted from each
annuity income payment on a pro rata basis. We currently waive this
annual charge if total purchase payments less any withdrawals equal at
least $25,000. In addition, we will waive this charge for Contracts
purchased after May 1, 1990 by exchanging Fidelity Variable Annuity
(another annuity contract issued by Fidelity Investments Life). We also
make a daily charge (equivalent to an effective annual rate of not more
than 0.25%) against the assets of each variable Subaccount for
administrative expenses and a daily asset charge (equivalent to an
effective annual rate of not more than 0.75%) for mortality and
expense risks. These daily asset charges are not assessed against amounts
allocated to the Fixed Account. Our current practice is generally to deduct
any applicable premium taxes from your Contract Value on the Annuity Date
or upon payment of proceeds. However, we may make a deduction for taxes
required by any state upon receipt of your payments for Contracts issued
for delivery in that jurisdiction. We reserve the right to deduct premium
taxes when we incur such taxes. See CHARGES on page . Further, the
portfolios in the Funds pay monthly management fees and other expenses. See
the attached prospectuses for the Funds for discussions of the Funds'
expenses.
You may return your Contract for a refund within 10 days after you receive
the Contract. When you are replacing an existing insurance product with the
Contract, the free look period will be extended to at least 20 days. We
will refund your purchase payment or, if greater, your Contract Value plus
any amount deducted from your payment prior to allocation to the variable
Subaccounts or the Fixed Account. This provision may vary by state. See
FREE LOOK PRIVILEGE on page .
This summary is intended to provide only an overview of the more
significant aspects of the Contract. More detailed information is provided
in the subsequent sections of this prospectus and in your Contract. The
Contract constitutes the entire agreement between you and us and should be
retained.
Following are the various investment options available to you under the
Contract.
FIDELITY RETIREMENT RESERVES
Guaranteed Account Variable Account
Guaranteed Interest Asset Manager Portfolio
Money Market Portfolio
Investment Grade Bond Portfolio
Equity-Income Portfolio
Growth Portfolio
High Income Portfolio
Overseas Portfolio
Index 500 Portfolio
Asset Manager: Growth Portfolio
Contrafund Portfolio
4.FEE TABLE
This information is intended to assist you in understanding the various
costs and expenses that a Contract Owner will bear directly or indirectly.
It reflects expenses of the Separate Account as well as the Portfolios. The
tables below do not reflect any deductions for premium taxes or federal
income tax expenses that are determined solely from the amount of premiums
received. We generally deduct any applicable premium taxes from your
Contract Value on the Annuity Date or when proceeds are paid. We do not
currently deduct any federal income tax expense. See CHARGES on page of
the prospectus for additional information.
CONTRACT OWNER EXPENSES (as a percentage of purchase payments)
Sales Charge Imposed on Purchases 0.00%
Maximum Contingent Deferred Sales Charge (1) 5.00%
Surrender Charge 0.00%
Exchange Fee 0.00%
ANNUAL MAINTENANCE CHARGE (2) $30.00
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Charge 0.75%
Account Fees and Expenses:
Administrative Charge 0.25%
Total Separate Account Annual Expenses 1.00%
(1) The Maximum Contingent Deferred Sales Charge decreases 1% each year so
there is no charge after 5 years. Each year up to 10% of total purchase
payments may be withdrawn without a contingent deferred sales charge. The
contingent deferred sales charge is based solely on the Contract Year -
additional purchase payments do not cause the contingent deferred sales
charge percentages to start over. The contingent deferred sales charge may
be reduced or waived for Contracts issued under certain sponsored
arrangements.
(2) The annual maintenance charge is a single $30 charge on a Contract. It
is deducted proportionally from the investment options in use at the time
of the charge. The annual maintenance charge is currently waived for
Contracts with at least $25,000 of accumulated purchase payments less any
withdrawals. This charge may be reduced or waived for Contracts issued
under certain sponsored arrangements. In the Examples, the annual
maintenance charge is approximated as a 0.0 2 % annual asset charge
based on the experience of the Contracts.
PORTFOLIO ANNUAL EXPENSES
(as a percentage of Portfolio average net assets)
MANAGEMENT OTHER TOTAL ANNUAL
FEES EXPENSES EXPENSES
ASSET MANAGER1 0.7 1 % 0.08% 0. 79 %
MONEY MARKET 0.2 4 % 0.0 9 % 0. 33 %
INVESTMENT
GRADE BOND 0.4 5 % 0. 14 % 0. 59 %
HIGH INCOME 1 0.6 0 % 0.1 1 % 0.71%
EQUITY-INCOME 0.5 1 % 0. 10 % 0. 61 %
INDEX 5002 0.00% 0.28% 0.28%
GROWTH 0.6 1 % 0.0 9 % 0. 70 %
OVERSEAS 0.7 6 % 0.15% 0.9 1 %
ASSET MANAGER:
GROWTH 1,2 0.7 1 % 0.2 9 % 1.00 %
CONTRAFUND 1 0.6 1 % 0. 11 % 0. 72 %
(1) A portion of the brokerage commissions the fund paid was used to
reduce its expenses. Without this reduction total operating expenses would
have been 0.71% for High Income (please note-there were brokerage
commissions paid, but it did not affect the ratio); 0.81% for Asset
Manager, 1.13% for Asset Manager:Growth; and 0.73% for Contrafund.
(2) The Fund's expenses were voluntarily reduced by the Fund's investment
adviser. Absent reimbursement, management fee, other expenses, and total
expenses would have been 0.28%, 0.19% and 0.47%, respectively, for Index
500; and 0.71%, 0.42% and 1.13%, respectively, for Asset Manager:
Growth.
EXAMPLES
If you assume that Contract Owner expenses are as shown above, and that
each Portfolio's annual return is 5% annually and its operating expenses
are just as described above, then for every $1,000 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 , or if you annuitized
your contract during the first year.
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
ASSET MANAGER $65 $8 7 $10 8 $21 3
MONEY MARKET 6 1 7 3 8 4 1 62
INVESTMENT GRADE BOND 6 3 8 1 98 191
HIGH INCOME 64 8 4 104 204
EQUITY-INCOME 63 81 9 9 19 3
GROWTH 64 84 103 203
OVERSEAS 66 9 0 11 4 22 5
INDEX 500 60 7 1 8 1 157
ASSET MANAGER: GROWTH 6 7 9 3 11 9 2 35
CONTRAFUND 6 4 85 1 04 2 05
If you do not surrender your Contract or if you annuitize after the
first contract year , here is what your total expenses would be on a
$1,000 investment, assuming a 5% annual return on your assets:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
ASSET MANAGER $1 8 $5 7 $9 8 $21 3
MONEY MARKET 1 4 4 3 7 4 1 62
INVESTMENT GRADE BOND 1 6 5 1 88 191
HIGH INCOME 18 5 4 94 204
EQUITY-INCOME 1 7 51 8 9 193
GROWTH 17 54 93 203
OVERSEAS 20 61 10 4 22 5
INDEX 500 13 4 1 7 1 15 7
ASSET MANAGER: GROWTH 2 1 6 3 10 9 2 35
CONTRAFUND 1 8 55 94 2 05
THESE FIGURES ILLUSTRATE THE COMBINED EFFECT OF ALL CURRENT CHARGES. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Accumulation Unit Values
Fidelity Investments Variable Annuity Account 1
Condensed Financial Information
Money Market Subaccount
Accumulation Accumulation Percentage Number of
Unit Value Unit Value Increase or Accumulation
at Beginning at End of (Decrease) Units at End
of Period Period During Period of Period
1995 13.99 14.66 4.82% 26,268,846
1994 13.55 13.99 3.2 1 % 24,546,739
1993 13.26 13.55 2.20% 10,961,418
1992 12.89 13.26 2.86% 8,273,590
1991 12.27 12.89 5.03% 6,461,782
1990 11.48 12.27 6.95% 5,020,276
1989 10.62 11.48 8.06% 1,449,116
1988* 10.00 10.62 6.21% 204,424
* Period from 1/05/88 to 12/31/88
High Income Subaccount
Accumulation Accumulation Percentage Number of
Unit Value Unit Value Increase or Accumulation
at Beginning at End of (Decrease) Units at End
of Period Period During Period of Period
1995 18.47 22.05 19.40% 7,797,315
1994 18.94 18.47 (2.5 3 )% 5,106,950
1993 15.88 18.94 19.31% 5,122,946
1992 13.03 15.88 21.82% 2,624,011
1991 9.73 13.03 33.92% 859,030
1990 10.07 9.73 (3.35)% 356,960
1989 10.63 10.07 (5.23)% 273,152
1988* 10.00 10.63 6.26 % 69,632
* Period from 2/10/88 to 12/31/88
Equity-Income Subaccount
Accumulation Accumulation Percentage Number of
Unit Value Unit Value Increase or Accumulation
at Beginning at End of (Decrease) Units at End
of Period Period During Period of Period
1995 20.52 27.44 33.75% 41,937,122
1994 19.36 20.52 6.00% 30,415,281
1993 16.54 19.36 17.02% 19,318,902
1992 14.28 16.54 15.81% 8,648,323
1991 10.98 14.28 30.14% 3,225,101
1990 13.09 10.98 (16.14)% 1,391,751
1989 11.27 13.09 16.17% 714,730
1988* 10.00 11.27 12.67% 90,240
* Period from 2/10/88 to 12/31/88
Growth Subaccount
Accumulation Accumulation Percentage Number of
Unit Value Unit Value Increase or Accumulation
at Beginning at End of (Decrease) Units at End
of Period Period During Period of Period
1995 22.98 30.80 34.02% 23,019,869
1994 23.22 22.98 (1.0 2 )% 17,470,386
1993 19.64 23.22 18.18% 12,073,224
1992 18.15 19.64 8.23% 8,401,957
1991 12.60 18.15 44.06% 4,162,470
1990 14.42 12.60 (12.62)% 1,654,455
1989 11.08 14.42 30.09% 434,747
1988* 10.00 11.08 10.84% 47,640
* Period from 2/10/88 to 12/31/88
Overseas Subaccount
Accumulation Accumulation Percentage Number of
Unit Value Unit Value Increase or Accumulation
at Beginning at End of (Decrease) Units at End
of Period Period During Period of Period
1995 17.50 19.00 8.58% 9,560,376
1994 17.37 17.50 0.71% 14,336,196
1993 12.79 17.37 35.86% 8,857,429
1992 14.47 12.79 (11.61)% 1,983,970
1991 13.51 14.47 7.09% 1,413,997
1990 13.89 13.51 (2.73)% 1,086,588
1989 11.11 13.89 25.02% 160,830
1988* 10.00 11.11 11.08% 13,527
* Period from 2/10/88 to 12/31/88
Investment Grade Bond Subaccount
Accumulation Accumulation Percentage Number of
Unit Value Unit Value Increase or Accumulation
at Beginning at End of (Decrease) Units at End
of Period Period During Period of Period
1995 14.63 16.99 16.15% 3,993,107
1994 15.35 14.63 (4. 7 2)% 3,151,087
1993 13.98 15.35 9.85% 3,714,356
1992 13.24 13.98 5.59% 2,651,021
1991 11.48 13.24 15.33% 1,860,441
1990 10.93 11.48 5.04% 486,509
1989 10.01 10.93 9.19% 106,584
1988* 10.00 10.01 0.06% 270
* Period from 12/27/88 to 12/31/88
Asset Manager Subaccount
Accumulation Accumulation Percentage Number of
Unit Value Unit Value Increase or Accumulation
at Beginning at End of (Decrease) Units at End
of Period Period During Period of Period
1995 15.80 18.29 15.79% 39,821,641
1994 16.99 15.80 (7. 0 3)% 56,621,559
1993 14.18 16.99 19.84% 48,441,225
1992 12.80 14.18 10.76% 22,395,511
1991 10.55 12.80 21.33% 6,736,284
1990 9.98 10.55 5.75% 1,376,582
1989* 10.00 9.98 (0.23)% 223,855
* Period from 10/04/89 to 12/31/89
Index 500 Subaccount
Accumulation Accumulation Percentage Number of
Unit Value Unit Value Increase or Accumulation
at Beginning at End of (Decrease) Units at End
of Period Period During Period of Period
1995 11.44 15.54 35.82% 7,333,800
1994 11.44 11.44 0.0 3 % 2,102,667
1993 10.53 11.44 8.64% 1,509,615
1992* 10.00 10.53 5.26% 637,942
* Period from 9/1/92 to 12/31/92.
Asset Manager: Growth Subaccount
Accumulation Accumulation Percentage Increase Number of
Unit Value at Unit Value at or (Decrease) Accumulation
Beginning of Period End of Period During Period Units at End of Period
1995* 10.00 12.20 22.06% 4,035,434
* Period from 1/3/95 (commencement of operations) to 12/31/95
Contrafund Subaccount
Accumulation Accumulation Percentage Increase Number of
Unit Value at Unit Value at or (Decrease) Accumulation
Beginning of Period End of Period During Period Units at End of Period
1995* 10.00 13.87 38.68% 32,421,946
* Period from 1/3/95 (commencement of operations) to 12/31/95
Accumulation Unit Values shown above are rounded to two decimal places.
Percentage changes in Accumulation Unit Values were calculated using exact
Accumulation Unit Values (six decimal places). The percentage changes shown
are therefore more precise than the figures that would be obtained using
the rounded Accumulation Unit values shown for the beginning and end of
each period.
Certain c ontracts in this prospectus have been offered only as of
December 7, 1988 , and others only as of May 1, 1996. The financial
information in the above table includes periods prior to December 7, 1988
because a n earlier class of variable annuity contracts is also being
funded through the Variable Account. Financial information reflects
all classes of contracts. Because the t hree classes of
contracts funded through the Variable Account have the same total
asset-based charges, Accumulation Unit Values will be the same for
all classes of contracts.
The financial statements of the Variable Account appear in the Statement of
Additional Information.
5.FACTS ABOUT FIDELITY INVESTMENTS LIFE, THE VARIABLE ACCOUNT AND THE FUNDS
FIDELITY INVESTMENTS LIFE
Fidelity Investments Life is a stock life insurance company organized under
the laws of the State of Utah. Fidelity Investments Life was organized in
1981 under the laws of the Commonwealth of Pennsylvania and changed its
home state to Utah in 1992. Fidelity Investments Life is part of Fidelity
Investments, a group of companies that provides a variety of financial
services and products. Fidelity Investments Life is a wholly-owned
subsidiary of FMR Corp., the parent company of the Fidelity companies.
Through ownership of voting common stock, Edward C. Johnson 3d and various
trusts for the benefit of Johnson family members form a controlling group
with respect to FMR Corp. FMR Corp. acquired Fidelity Investments Life on
December 30, 1986. Immediately before the acquisition Fidelity Investments
Life (which was known by a different name) had no outstanding assets or
liabilities relating to annuity or insurance contracts. Fidelity
Investments Life's financial statements appear in the Statement of
Additional Information. Fidelity Investments Life's principal executive
offices are located at 82 Devonshire Street, Boston, Massachusetts 02109.
THE VARIABLE ACCOUNT
Fidelity Investments Variable Annuity Account I is a separate investment
account of Fidelity Investments Life established on July 22, 1987. It is
used to support the variable annuity contracts described herein and another
form of variable annuity contracts issued by Fidelity Investments Life, and
for other purposes permitted by law.
The Variable Account is registered with the Securities and Exchange
Commission ("SEC") as a unit investment trust under the Investment Company
Act of 1940 ("1940 Act"). The Variable Account's financial statements
appear in the Statement of Additional Information.
We are the legal owner of the assets in the Variable Account. As
required by law, however, the assets of the Variable Account are kept
separate from our general account assets and from any other separate
accounts we may have and may not be charged with liabilities from any other
business we conduct. The assets in the Variable Account will always be at
least equal to the reserves and other liabilities of the Variable Account.
If the assets exceed the required reserves and other liabilities, we may
transfer the excess to our general account. We are obligated to pay all
benefits provided under the Contracts. There are currently ten Subaccounts
in the Variable Account. Five Subaccounts invest exclusively in shares of a
specific portfolio of the Variable Insurance Products Fund. The remaining
five Subaccounts invest exclusively in shares of a specific portfolio of
the Variable Insurance Products Fund II.
THE FUNDS
The Variable Insurance Products Fund and the Variable Insurance Products
Fund II each is an open-end, diversified management investment company
organized by Fidelity Management & Research Company. Each is the type of
investment company commonly known as a series mutual fund.
The investment objectives of the Variable Insurance Products Fund and the
Variable Insurance Products Fund II portfolios are described below. There
is, of course, no assurance that any portfolio will meet its investment
objective.
VARIABLE INSURANCE PRODUCTS FUND
MONEY MARKET PORTFOLIO seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. It invests
only in high-quality money market instruments.
HIGH INCOME PORTFOLIO seeks to obtain a high level of current income by
investing primarily in high-yielding, lower-rated, fixed-income securities.
In choosing these securities growth of capital will also be considered.
EQUITY-INCOME PORTFOLIO seeks reasonable income by investing primarily in
income-producing equity securities. In choosing these securities the
portfolio will also consider the potential for capital appreciation. The
portfolio's goal is to achieve a yield which exceeds the composite yield on
the securities comprising the Standard & Poor's 500 Composite Stock Price
Index.
GROWTH PORTFOLIO seeks to achieve capital appreciation normally through the
purchase of common stocks (although the portfolio's investments are not
restricted to any one type of security). Capital appreciation may also be
found in other types of securities, including bonds and preferred stocks.
OVERSEAS PORTFOLIO seeks long-term growth of capital primarily through
investments in foreign securities. Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies
and economies outside of the United States.
VARIABLE INSURANCE PRODUCTS FUND II
ASSET MANAGER PORTFOLIO seeks high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign stocks, bonds
and short-term, fixed income instruments.
INVESTMENT GRADE BOND PORTFOLIO seeks as high a level of current income as
is consistent with the preservation of capital by investing in a broad
range of investment-grade fixed-income securities.
INDEX 500 PORTFOLIO seeks to provide investment results that correspond to
the total return (i.e. the combination of capital changes and income) of
common stocks publicly traded in the United States. In seeking this
objective, the portfolio attempts to duplicate the composition and total
return of the Standard & Poor's 500 Composite Stock Price Index.
ASSET MANAGER: GROWTH PORTFOLIO seeks maximum total return over the
long-term by allocating its assets among an aggressive mix of domestic and
foreign stocks, bonds and short-term fixed income instruments.
CONTRAFUND PORTFOLIO seeks long-term capital appreciation by investing in
equity securities of companies considered undervalued or out-of-favor by
the Fund's advisor.
Shares of the Funds may also be sold to a variable life separate account of
Fidelity Investments Life and to variable annuity and variable life
separate accounts of other insurance companies. For a discussion of the
possible consequences associated with having the Funds available to such
other separate accounts, see RESOLVING MATERIAL CONFLICTS on page .
The investment adviser for the Funds is Fidelity Management & Research
Company, a registered adviser under the Investment Advisers Act of 1940.
Fidelity Management & Research Company is the original Fidelity company and
was founded in 1946. It provides a number of mutual funds and other clients
with investment research and portfolio management services. It maintains a
large staff of experienced investment personnel and a full complement of
related support facilities. As of December 31, 199 5 , it advised
funds having more than 2 3 million shareholder accounts with a total
value of more than $ 350 billion. The portfolios of the Funds, as
part of their operating expenses, pay an investment management fee to
Fidelity Management & Research Company. These fees are part of the Funds'
expenses. See the attached prospectuses for the Funds for discussions of
the Funds' expenses.
You will find more complete information about the Funds, including the
risks associated with each portfolio, in the accompanying prospectuses. You
should read them in conjunction with this prospectus.
6.FACTS ABOUT THE CONTRACT
PURCHASE OF A CONTRACT
We offer the Contracts only in states in which we have obtained the
necessary approval. The Contracts are available on a non-qualified basis
("Non-qualified Contracts") and as individual retirement annuities ("IRAs")
that qualify for special federal income tax treatment ("Qualified
Contracts").
Generally, Qualified Contracts may be purchased only in connection with a
"rollover" of funds from another qualified plan, tax sheltered annuity or
IRA and contain certain other restrictive provisions limiting the timing
and amount of payments to and distributions from the Qualified Contract.
See TAX CONSIDERATIONS on page .
To purchase a Non-qualified Contract you must make a purchase payment of at
least $2,500 and complete an application form. To purchase a Qualified
Contract you must make a purchase payment of at least $10,000 and complete
an application form. For a Non-qualified Contract, the proposed Annuitant
must be no older than 80 years old. If your application and initial
purchase payment can be accepted in the form received, the payment will be
applied to the purchase of a Contract within two business days after
receipt at the Annuity Service Center. The date that the payment is
credited and your Contract issued is called the Contract Date. If an
incomplete application is received, we will request the information
necessary to complete the application. Once the completed application is
received, the initial payment will be applied to the purchase of a Contract
within two business days. If the application remains incomplete for five
business days, we will return your payment unless we obtain your specific
permission to retain the payment pending completion of the application.
A Non-qualified Contract may also be purchased by exchanging Fidelity
Variable Annuity (another annuity contract issued by Fidelity Investments
Life). In such an exchange, the original contract will be exchanged for a
new contract with a purchase price equal to the contract value of the
original contract on the date of the exchange. In addition, a Contract
purchased through such an exchange will be subject to certain special
provisions, which are described throughout the prospectus. For example, the
withdrawal charge is subject to special rules. See WITHDRAWAL CHARGE on
page .
You may make additional payments to a Non-qualified Contract during the
life of the Annuitant and before the Annuity Date. The smallest such
payment we will accept is $250. You may, however, elect to make regular
monthly payments of a minimum of $100 by authorizing regular transfers from
a checking account. See AUTOMATIC DEDUCTION PLAN on page . Furthermore, we
may offer Contracts with lower minimum payment requirements to individuals
under certain sponsored arrangements that meet our eligibility
requirements. See SPECIAL PROVISIONS APPLICABLE TO SALES UNDER SPONSORED
ARRANGEMENTS on page . You may make additional payments to a Qualified
Contract of additional rollover contributions from another qualified plan,
tax sheltered annuity or IRA. See TAX CONSIDERATIONS on page . The smallest
such payment we will accept is $2,500 unless your Contract provides for a
lower minimum. After the free look period, additional payments allocated to
the variable Subaccounts will be credited to your Contract based on the
next computed value of an Accumulation Unit following receipt of your
payment at the Annuity Service Center. See ACCUMULATION UNITS on page .
Payments allocated to the Fixed Account will be credited under your
Contract as of the date the payment is received at our Annuity Service
Center. See THE FIXED ACCOUNT on page . We may limit the maximum amount of
initial or subsequent payments that we will accept.
FREE LOOK PRIVILEGE
You may return your Contract for a refund within 10 days, (or longer where
required by applicable state insurance law), after you receive it (the
"free look period"). When you are replacing an existing insurance product
with the Contract, the free look period will be extended to at least 20
days, (or longer where required by applicable state insurance law) .
The entire portion of any net purchase payment allocated
to the Variable Account will be invested in the Money Market
Subaccount for the period we estimate or calculate your free look right to
be in existence, which is generally 15 days after the Contract Date (25
days if you are replacing an existing insurance product). The Contract
value in the Money Market Subaccount will then be transferred to the
Subaccounts you chose on the application or in any later instructions to
us. For Contracts with large initial payments, we will calculate the
exact date your free look right expires based on the actual date you
receive the Contract.
If you choose not to retain your Contract, return it to our Annuity Service
Center within the free look period. Upon written instruction, the Contract
will be canceled and we will refund promptly the greater of (1) your
purchase payment without interest, and (2) your Contract Value plus any
amount deducted from your payment prior to allocation to the variable
Subaccounts or the Fixed Account. This provision does not apply to
contracts purchased by exchanging Fidelity Variable Annuity (another
annuity contract issued by Fidelity Investments Life) and may vary by state
where required by applicable state insurance law.
INVESTMENT ALLOCATION OF YOUR PURCHASE PAYMENTS
At the end of the Valuation Period in which your free look period expires
(by our estimation or calculation), your Contract Value in the Money Market
Subaccount will be allocated among the variable Subaccounts according to
the instructions on your application or your later instructions to
us , based on the respective Accumulation Unit Values of the Subaccounts
at that time. The portion of your initial payment allocated to the Fixed
Account will be credited directly to the Fixed Account. Payments after the
free look period are allocated directly to the selected investment options.
All percentage allocations must be in whole numbers. Prior to the Annuity
Date, you generally may not allocate more than $100,000 (including
transfers) to the Fixed Account during any one Contract Year.
You may currently transfer amounts among variable Subaccounts before the
Annuity Date as often as you wish without charge. However, excessive
trading activity can disrupt portfolio management strategy and increase
portfolio expenses, which are borne by all Contract Owners participating in
the portfolio regardless of their transfer activity. Therefore, we reserve
the right to limit the number of transfers permitted, but not to fewer than
five per Contract Year. The request may be in terms of dollars, such as a
request to transfer $5,000 from one Subaccount to another, or may be in
terms of a percentage reallocation among Subaccounts. In the latter case,
the percentages must be in whole numbers. The minimum amount you may
transfer is $250 or, if less, the entire portion of your Contract Value
allocated to a particular Subaccount. You may transfer amounts or change
your investment allocation with respect to future payments by sending a
letter or calling the Annuity Service Center.
Fidelity Investments Life and the Funds reserve the right to revise or
terminate the telephone exchange provisions, limit the amount of or reject
any exchange, as deemed necessary, at any time. Telephone exchange
authorizations will be limited to eighteen per calendar year. Fidelity
Investments Life will not accept exchange requests via fax.
Fidelity Investments Life will not be responsible for any losses resulting
from unauthorized telephone reallocations if it follows reasonable
procedures designed to verify the identity of the caller. Fidelity
Investments Life will request your Personal Identification Number and may
also record calls. You should verify the accuracy of your confirmation
statements immediately after you receive them.
When a transfer between variable Subaccounts is requested, the redemption
of the requested amount from the Subaccount will always be effected as of
the end of the Valuation Period in which the request is received at our
Annuity Service Center. That amount will generally be credited to the new
Subaccount at the same time. However, when (1) you are making a transfer to
a Subaccount which invests in a portfolio that accrues dividends on a daily
basis and requires federal funds before accepting a purchase order and (2)
the Subaccount from which the transfer is being made is investing in an
equity portfolio in an illiquid position due to substantial redemptions or
transfers that require it to sell portfolio securities in order to make
funds available, then the crediting of the amount transferred to the new
Subaccount may be delayed until the Subaccount from which the transfer is
being made obtains liquidity through the earliest of the portfolio's
receipt of proceeds from sales of portfolio securities, new contributions
by Contract Owners, or otherwise, but no longer than seven days. During
this period, the amount transferred will be uninvested.
Transfers to and from the Fixed Account may be made only with our consent.
For certain contracts issued May 1, 1996 or later, we may discontinue
the availability of the Fixed Account for transfers from the Variable
Account or for purchase payments at any time. You may currently
transfer amounts from the variable Subaccounts to the Fixed Account before
the Annuity Date as often as you wish (with one exception described below)
without charge. The minimum dollar amount you may transfer is $250 from any
Subaccount or, if less, the entire portion of your Contract Value allocated
to a particular Subaccount. If you request a percentage reallocation among
the investment options, the percentages must be in whole numbers. Transfers
from the Fixed Account before the Annuity Date are currently subject to the
following limitations. The maximum amount that currently may be transferred
out of the Fixed Account is 25% of the amount invested in the Fixed Account
or, if larger, the amount that you transferred from the Fixed Account in
the prior Contract Year. When this maximum amount is less than $1,000 we
permit a transfer of up to $1,000. You may make one transfer out of the
Fixed Account during each Contract Year. A transfer into the Fixed Account
is not permitted during the 12 months following a transfer out of the Fixed
Account. When amounts are withdrawn from or transferred out of the Fixed
Account, the amounts that have been credited to the Fixed Account for the
shortest time are withdrawn first. These limits are subject to change in
the future. See THE FIXED ACCOUNT on page .
The portion of your Contract Value allocated to the variable Subaccounts
will change with the investment performance of the selected Subaccounts.
You should periodically review your allocation of Contract Value in light
of market conditions and your financial objectives. Transfers after the
Annuity Date are subject to different limitations. See FIXED, VARIABLE, OR
COMBINATION ANNUITY INCOME OPTIONS on page .
ACCUMULATION UNITS
When your purchase payments are allocated to a selected variable
Subaccount, they result in a particular number of Accumulation Units being
credited to your Contract. The number of Accumulation Units credited is
determined by dividing the dollar amount allocated to each Subaccount by
the value of an Accumulation Unit for that Subaccount as of the end of the
Valuation Period in which the payment is received at the Annuity Service
Center. The value of each Subaccount's Accumulation Units varies each
Valuation Period (i.e., each day that there is trading on the New York
Stock Exchange) with the Net Rate of Return of the Subaccount. The Net Rate
of Return reflects the investment performance of the Subaccount for the
Valuation Period and is net of the asset charges to the Subaccount. See NET
RATE OF RETURN FOR A SUBACCOUNT on page .
WITHDRAWALS
You may at any time prior to the Annuity Date surrender your Contract for
its Cash Surrender Value. You may also make partial withdrawals of $500 or
more. Certain withdrawals, however, are subject to a penalty tax. See TAX
CONSIDERATIONS on page . You may not make a partial withdrawal that,
including the appropriate withdrawal charge, would reduce your Contract
Value to less than $2,500. Unless you provide other instructions, partial
withdrawals (plus any applicable withdrawal charge) will be taken from all
of your selected investment options in proportion to your Contract Value in
each investment option at the time of the withdrawal. We will pay you the
amount of any surrender or partial withdrawal, less any required tax
withholding, within seven days after we receive a properly completed
withdrawal request. We may defer payment from the Variable Account under
certain limited circumstances for a longer period, and we reserve the right
to defer payment from the Fixed Account under any circumstances for not
more than six months. See POSTPONEMENT OF PAYMENT on page .
SIGNATURE GUARANTEE
A signature guarantee is designed to protect you and Fidelity Investments
Life from fraud. Disbursement or free look requests must include a
signature guarantee if any of the following situations apply:
1. Your account registration has changed within the last 30 days.
2. The requested amount is more than $25,000.
3. The check is being mailed to a different address than the one on your
account (record address).
4. The check is made payable to someone other than the Owner.
5. In other circumstances where we deem it necessary for the protection of
you, the customer, (e.g. the signature does not resemble the signature we
have on file).
You should be able to obtain a signature guarantee from a bank, broker
dealer, (including Fidelity Investor Centers), credit union (if authorized
under state law), securities exchange or association, clearing agency, or
savings association. A notary public cannot provide a signature
guarantee.
CHARGES
The following are all the charges we make under your Contract.
1. PREMIUM TAXES. In general, we do not currently deduct any amount from
your payments for premium taxes. The entire amount of your purchase
payments will be allocated to the investment options you select. Several
states assess a premium tax upon the commencement of annuity income
payments. If you live in a jurisdiction which imposes such a tax and if
annuity income payments commence under your Contract, we will deduct a
charge from your Contract Value for the tax we incur at the Annuity Date.
A few states may require us to pay premium taxes upon receipt of your
payment. However, we may make a deduction for taxes required by any
state upon receipt of your payments for Contracts issued for delivery in
that jurisdiction. We reserve the right to make the deduction in any
jurisdiction when we incur these taxes. As of the date of this prospectus,
the current range of state premium taxes is from 0% to 3.5%.
2. ADMINISTRATIVE CHARGES. Administrative charges compensate us for the
expenses we incur in administering the Contracts. These expenses include
the cost of issuing the Contract, maintaining necessary systems and
records, and providing reports. We seek to cover these expenses by two
types of administrative charges: an annual maintenance charge and daily
administrative charge.
Currently, on each Contract Anniversary before the Annuity Date an annual
maintenance charge of $30 is deducted from your Contract Value. We
currently waive this annual charge prior to the Annuity Date if your total
purchase payments, less any withdrawals, equal at least $25,000. In
addition, we waive this annual maintenance charge for Contracts purchased
after May 1, 1990 by exchanging Fidelity Variable Annuity (another annuity
contract issued by Fidelity Investments Life). Although we do not now
intend to charge more than $30 per year, we reserve the right to increase
this annual charge to up to $50 if warranted by the expenses we incur.
We also reserve the right to assess this charge against all Contracts
(except for those Contracts issued after May 1, 1990 by exchanging Fidelity
Variable Annuity). The annual maintenance charge will be deducted from each
investment option in proportion to the amount of your total Contract Value
invested in that option on the date of deduction. We will deduct a pro rata
portion of the charge on the Annuity Date or the date the Contract is
surrendered. After the Annuity Date, we will deduct this charge on a pro
rata basis from each annuity income payment. The charge assessed after the
Annuity Date will never be greater than the charge that was in effect just
prior to the Annuity Date.
Each day, we also deduct from the assets of the Subaccounts a percentage of
those assets equivalent to an effective annual rate of not more than
0.25%. As a charge against the Subaccounts, this administrative charge
is not assessed against your Contract Value allocated to the Fixed Account.
This charge is guaranteed never to be increased above an effective annual
rate of 0.25%.
The administrative charges were established at these levels to reimburse us
for the expected actual costs of administering the Contracts over the
periods the Contracts are in force and contain no element of anticipated
profit.
3. MORTALITY AND EXPENSE RISK CHARGE. We deduct a daily asset charge for
our assumption of mortality and expense risks. This charge is made by
deducting daily from the assets of each Subaccount a percentage of those
assets equal to an effective annual rate of not more than 0.75%. As
with the daily administrative charge, this charge is not assessed against
your Contract Value allocated to the Fixed Account. We guarantee never to
increase this charge above an effective annual rate of 0.75%. For Contract
Owners effecting a life annuity, the mortality risk we bear is that of
making the annuity income payments for the life of the Annuitant (or the
life of the Annuitant and the life of a second person in the case of a
joint and survivor annuity) no matter how long that might be. We also bear
a mortality risk under the Contracts, regardless of whether an annuity
income payment option is actually effected, in that we make guaranteed
purchase rates available. In addition, we bear a mortality risk by
guaranteeing a Death Benefit if the Annuitant dies prior to the Annuity
Date and prior to age 70. This Death Benefit may be greater than the
Contract Value. See DEATH BENEFIT on page . The expense risk we assume is
the risk that the costs of issuing and administering the Contracts will be
greater than we expected when setting the administrative charges. Of this
0.75% charge, it is estimated that 0.65% is for assuming mortality risks
and it is estimated that 0.10% is for assuming expense risks. We will
realize a gain from the charge for these risks to the extent that it is not
needed to provide for benefits and expenses under the Contracts.
4. WITHDRAWAL CHARGE. We do not assess any sales charge if you keep your
Contract in force for more than five years. If you surrender your Contract
within the first five Contract Years, we will reduce the amount payable to
you by a withdrawal charge (i.e., a contingent deferred sales charge) to
compensate us for the expenses of selling and distributing the Contracts.
In addition, we will impose a withdrawal charge for sales expenses on
certain partial withdrawals during the first five Contract Years. We do not
assess any withdrawal charge on the death of the Owner or Annuitant. We
currently assess a withdrawal charge upon annuitization if the
Contract has been in existence for less than one year. Bearing this
in mind, the Contract should be viewed as a long-term investment and
insurance product. You may surrender the Contract without any withdrawal
charges for thirty days after notification is mailed to you of any of the
following events: (1) the renewal interest rate on any portion of your
Contract Value allocated to the Fixed Account decreased by more than 1%
from the expiring interest rate; (2) the maintenance charge is increased
above the amount shown in the Contract at issue; or (3) the maintenance
charge is imposed on your Contract as a result of a change in practice.
There is no withdrawal charge if you withdraw the value of your Contract in
whole or in part after five Contract Years. In addition, during the first
five Contract Years, no withdrawal charge is assessed against total
withdrawals in each Contract Year of an amount up to 10% of your total
purchase payments as of the date of withdrawal. For this purpose, "total
purchase payments" refers to all purchase payments made less any amounts
previously withdrawn that were subject to a withdrawal charge.
When a partial or full withdrawal is made within the first five Contract
Years, the amount of purchase payments withdrawn from your Contract Value
(less any amount entitled to the 10% exception) will be subject to a
withdrawal charge for sales expenses as follows:
Withdrawal Charge
As Percentage of Amount of
Contract Year Purchase Payments Withdrawn
1 5%
2 4%
3 3%
4 2%
5 1%
6 and later 0%
For purposes of determining this withdrawal charge, any amount you withdraw
in excess of amounts entitled to the 10% exception will be considered as a
withdrawal of purchase payments until you have withdrawn an amount equal to
all your payments. Amounts withdrawn after an amount equal to your
aggregate purchase payments has been withdrawn are considered to be
withdrawals of investment earnings and are not subject to any withdrawal
charge.
Additional purchase payments during the first five Contract Years will
increase the dollar amount of the potential withdrawal charge by increasing
the amount of payments that may be withdrawn while the withdrawal charge is
in effect. Additional payments do not, however, cause the schedule of
possible withdrawal charges to start over again. For example, if an
additional payment is made during the fifth Contract Year and withdrawn
later during that same year, it and all payments withdrawn that year will
be subject to a 1% withdrawal charge. Additional payments after the fifth
Contract Year will not be subject to any possible withdrawal charge.
Free withdrawals are not cumulative. For example, let us assume that you
(1) make an initial purchase payment of $10,000; (2) make no withdrawals
during the first Contract Year; (3) make no additional purchase payments;
and (4) make a withdrawal of $1,500 in the second Contract Year. Given this
example, $1,000 would be free from a withdrawal charge, but $500 would be
subject to a withdrawal charge.
We will waive the withdrawal charge during the free look period if (a) you
purchased your contract (1) by exchanging another annuity contract or life
insurance policy, or (2) by trustee to trustee transfer or direct rollover
from an IRA or other qualified plan, and (b) (1) you are exchanging the
Contract for another annuity contract, or (2) you are making a trustee to
trustee transfer or direct rollover of the money in a Qualified Contract to
another IRA or a qualified plan.
In connection with a Contract purchased after May 1, 1990 by exchanging
Fidelity Variable Annuity (another annuity contract issued by Fidelity
Investments Life), we will determine the withdrawal charge as if (1) the
new contract had been purchased on the date the original contract was
purchased, and (2) any additional purchase payments made under the original
contract had been made under the new contract on the same date they were
actually made under the original contract.
Since the Contract is intended to be long-term, we expect that the
withdrawal charge will not be sufficient to cover our expenses in selling
the Contracts. To the extent that the withdrawal charges are not
sufficient, we will pay these expenses from our general assets. These
assets may include proceeds from the mortality and expense risk charge
described above.
5. FUNDS' EXPENSES. The expenses and charges incurred by the Funds are
described in the attached prospectuses for the Funds.
6. OTHER TAXES. We reserve the right to charge for certain taxes (other
than premium taxes) that we may have to pay. See FIDELITY INVESTMENTS
LIFE'S TAXES on page .
DEATH BENEFIT
If the Annuitant dies prior to the Annuity Date, we will, upon receipt of
proof of death at the Annuity Service Center, pay a Death Benefit to the
Beneficiary you have designated. If the Annuitant dies on or before his or
her 70th birthday, the Death Benefit will equal the greater of: (1) the
purchase payments paid, less any partial withdrawals and charges thereon;
and (2) the Contract Value as of the end of the Valuation Period in which
proof of death is received at our Annuity Service Center. If the Annuitant
dies after his or her 70th birthday, the Death Benefit will equal the
Contract Value as of the end of the Valuation Period in which proof of
death is received at our Annuity Service Center. However, for Contracts
purchased after May 1, 1990 by exchanging Fidelity Variable Annuity
(another annuity contract issued by Fidelity Investments Life), the Death
Benefit will be the greater of: (1) the purchase payments paid, less any
partial withdrawals and charges thereon; and (2) the Contract Value as of
the end of the Valuation Period in which proof of death is received. No
withdrawal charge is made in connection with the payment of a Death
Benefit. The Death Benefit may be paid in a single sum or applied under a
fixed, variable or combination annuity.
During the lifetime of the Annuitant, you may elect that the Death Benefit
be applied under any one of the annuity income options listed in the
Contract or under any other income option acceptable to us. If you have not
selected an annuity income option and the Annuitant dies prior to the
Annuity Date, the Beneficiary may choose an income option for the Death
Benefit.
REQUIRED DISTRIBUTIONS UPON DEATH
Federal tax law requires that if any Owner dies before the Annuity
Date, the entire interest in the Contract must be distributed within five
years after the Owner's death, unless: the Beneficiary's or second
Owner's entire interest is payable over the Beneficiary's or second
Owner's lifetime (or a period not extending beyond the life
expectancy of the Beneficiary or second Owner ) with distributions
beginning within one year o f the date of death , or the
Beneficiary is the surviving spouse of the deceased Owner , in which
case the spouse may elect to continue the Contract as the Owner.
If the Contract is Jointly Owned and if either Owner dies before the
Annuity Date , t he entire interest will be distributed to the
surviving Owner unless the deceased Owner was the Annuitant. In that case,
the Beneficiary will receive the distribution.
If the Owner is a corporation or other non-individual and the
Annuitant dies before the Annuity Date, the Beneficiary's entire interest
in the Contract must be distributed in the same manner as if the
contract were owned by one individual who was also the Annuitant and
that individual had died prior to the Annuity Date .
The rules regarding required distributions upon the Owner's death are
described in the Statement of Additional Information. We intend to
administer the Contracts to comply with federal tax law.
ANNUITY DATE
When your Contract is issued, it will generally provide for the latest
permissible Annuity Date. The latest permissible date is the first day of
the calendar month following the Annuitant's 85th birthday or, if later,
the first day of the calendar month following the Contract's fifth Contract
Anniversary. You may change the Annuity Date by written notice received
at the Annuity Service Center at least 30 days prior to the current
Annuity Date then in effect . The Annuity Date must be the first day
of a month. The earliest permissible Annuity Date is the first day of the
calendar month following the expiration of the free look period.
SELECTION OF ANNUITY INCOME OPTIONS
While the Annuitant is living and at least 30 days prior to the Annuity
Date, you may elect any one of the annuity income options described in the
Contract. You may also change your election to a different annuity income
option by notifying us in writing at least 30 days prior to the Annuity
Date. Once annuity payments begin, depending on the annuity payment
option chosen, it may not be possible to change later to a different form
of payment, or to make any withdrawals.
In the case of a Qualified Contract, you must elect an option before we
make any annuity income payments. If, under a Non-qualified Contract, you
have not elected an annuity income option at least 30 days prior to the
Annuity Date, the automatic annuity income option will be a combination
annuity for life, with 120 monthly payments guaranteed. The Contract Value
allocated to the Fixed Account, less any maintenance charge and premium
taxes, will be applied to the purchase of the fixed portion of the annuity
and the Contract Value allocated to the Variable Account, less any
maintenance charge and premium taxes, will be applied to the purchase of
the variable portion of the annuity. See Annuity Income Option No. 3 under
TYPES OF ANNUITY INCOME OPTIONS on page .
FIXED, VARIABLE, OR COMBINATION ANNUITY INCOME OPTIONS
You may elect to have annuity income payments made on a fixed basis, a
variable basis, or a combination of both. If you choose a fixed annuity,
the amount of each payment will be set and will not change. Upon selection
of a fixed annuity, your Contract Value will be transferred to the Fixed
Account. The annuity income payments will be fixed in amount and duration
by the fixed annuity provisions selected, the adjusted age and sex
of the Annuitant (except Contracts utilizing unisex purchase rates), and
the then current guaranteed interest rate used to determine fixed annuity
income payments. In no event will the guaranteed interest rate be less than
3.5 % (3.0% for certain Contracts issued May 1, 1996 or
later) .
If you select a variable annuity, your Contract Value will be transferred
to the Variable Account. The dollar amount of the first variable annuity
income payment will be determined in accordance with the applicable annuity
payment rates, the age and sex of the Annuitant (except Contracts utilizing
unisex purchase rates), and an assumed annual interest rate of 3. 5 %
unless we also offer an alternative assumed interest rate on the Annuity
Date and you select that alternative. All subsequent variable annuity
income payments are calculated based on the Subaccount Annuity Units
credited to the Contract. Annuity Units are similar to Accumulation Units
except that built into the calculation of Annuity Unit Values is the
assumption that the Net Rate of Return of a Subaccount will equal the
assumed interest rate. Thus, with a 3. 5 % assumed interest rate, the
Subaccount Annuity Unit Value will not change if the daily Net Rate of
Return of the Subaccount is equivalent to an annual rate of return of
3. 5 %. If the Net Rate of Return is greater than the assumed interest
rate, the Subaccount Annuity Unit Value will increase; if the Net Rate of
Return is less than the assumed interest rate, the Subaccount Annuity Unit
Value will decrease.
When variable annuity income payments commence, the number of Annuity Units
credited to the Contract in a particular Subaccount is determined by
dividing that portion of the first variable income annuity payment
attributable to that Subaccount by the Annuity Unit Value of that
Subaccount for the Valuation Period in which the Annuity Date occurs. The
number of Annuity Units of each Subaccount credited to the Contract then
remains fixed unless there is a subsequent transfer involving the
Subaccount. The dollar amount of each variable annuity income payment after
the first may increase, decrease or remain constant. The income payment is
equal to the sum of the amounts determined by multiplying the number of
Annuity Units of each Subaccount credited to the Contract by the Annuity
Unit Value for the particular Subaccount for the Valuation Period in which
each subsequent annuity income payment is due.
If you select a combination annuity, your Contract Value will be split
between the Fixed Account and the Variable Account in accordance with your
instructions. Your annuity income payments will be the sum of the income
payment attributable to your fixed portion and the income payment
attributable to your variable portion.
After the Annuity Date, transfers between the Variable Account and the
Fixed Account are not permitted. Transfers among the variable Subaccounts,
however, are permitted subject to some limitations. See TRANSFERS AMONG
SUBACCOUNTS AFTER THE ANNUITY DATE in the Statement of Additional
Information.
TYPES OF ANNUITY INCOME OPTIONS
The Contract provides for three types of annuity income options. All are
available on a fixed, variable or combination basis. You may not select
more than one option. If your Contract Value on the Annuity Date would not
provide an initial monthly payment of at least $20, we may pay the proceeds
in a single sum rather than pursuant to the selected option.
1. LIFE ANNUITY. Income payments will be made monthly during the
Annuitant's lifetime ceasing with the last payment due prior to the
Annuitant's death. No income payments are payable after the death of the
Annuitant. Thus, it is quite possible that income payments will be made
that are less than the value of the Contract. Indeed, if the Annuitant were
to die within one month after the Annuity Date, only one monthly income
payment would have been made. Because of this risk, this option offers the
highest level of monthly payments.
2. JOINT AND SURVIVOR ANNUITY. This option provides monthly income payments
during the joint lifetimes of the Annuitant and a designated second person
and during the lifetime of the survivor. There are some limitations on the
use of this option in qualified annuities. As in the case of the life
annuity described above, there is no guaranteed number of income payments
and no income payments are payable after the death of the Annuitant and the
designated second person.
3. LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED. This option
provides monthly income payments during the lifetime of the Annuitant, and
in any event for one hundred twenty (120) or two hundred forty (240) months
certain as elected. In the case of a Qualified Contract, the guarantee
period may not exceed the life expectancy of the Annuitant. In the event of
the death of the Annuitant under this option, the Contract provides that
any guaranteed monthly income payments will be paid to the Beneficiary
or Beneficiaries during the remaining months of the term selected.
However, a Beneficiary may, at any time, elect to receive the
discounted value of his or her remaining income payments in a single sum.
In such event, the discounted value for fixed or variable annuity income
payments will be based on interest compounded annually at the applicable
interest rate used in determining the first annuity income payment. Upon
the death of a Beneficiary receiving annuity benefits under this
option, the present value of the guaranteed benefits remaining after we
receive notice of the death of the Beneficiary, computed at the applicable
interest rate, shall be paid in a single sum to the estate of the
Beneficiary. The present value is computed as of the Valuation Period
during which notice of the death of the Beneficiary is received at the
Annuity Service Center.
You may choose to have income payments made on a monthly basis or at
another frequency such as quarterly, semi-annually or annually. In addition
to the Annuity Income Options provided for in the Contracts, other Annuity
Income Options may be made available by the Company.
REPORTS TO OWNERS
During the Accumulation period, four times each Contract Year you will
receive a statement of your Contract Value, including a summary of all
transactions since the preceding quarterly statement.
In addition, you will receive semiannual reports containing financial
statements for the Variable Account and a list of portfolio securities of
the Funds, as required by the Investment Company Act of 1940.
7.THE FIXED ACCOUNT
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED
ACCOUNT OPTION UNDER THE CONTRACTS HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND THE GENERAL ACCOUNT HAS NOT BEEN REGISTERED AS
AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940.
ACCORDINGLY, INTERESTS IN THE FIXED ACCOUNT OPTION ARE NOT SUBJECT TO THE
PROVISIONS OF THOSE ACTS, AND FIDELITY INVESTMENTS LIFE HAS BEEN ADVISED
THAT THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED
THE DISCLOSURES IN THIS PROSPECTUS RELATING TO THE FIXED ACCOUNT OPTION.
DISCLOSURES REGARDING THE GENERAL ACCOUNT MAY, HOWEVER, BE SUBJECT TO
CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS
RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN
PROSPECTUSES.
As noted earlier, you may allocate purchase payments or transfer all or a
part of your Contract Value to a fixed-rate investment option funded
through Fidelity Investments Life's general account (the "Fixed Account").
The Fixed Account may also be referred to as the "Guaranteed
Account . " Funds allocated or transferred to the Fixed Account do not
fluctuate with the investment experience of Fidelity Investments Life's
general account. We guarantee that the portion of your Contract Value that
is held in the Fixed Account will accrue interest daily at an annual rate
that will never be less than 3.5 % (3.0% for certain contacts
issued May 1, 1996 or later) . When a purchase payment is received or an
amount is transferred into the Fixed Account, an interest rate will be
assigned to that amount. That rate will be guaranteed for a certain period
of time depending on when the amount was allocated to the Fixed Account.
When this initial period expires, a new interest rate will be assigned to
that amount which will be guaranteed for a period of at least a year.
Thereafter, interest rates credited to that amount will be similarly
guaranteed for successive periods of at least one year. Therefore,
different interest rates may apply to different amounts in the Fixed
Account depending on when the amount was initially allocated. Furthermore,
the interest rate applicable to any particular amount may vary from time to
time.
For certain contracts issued May 1, 1996 or later, we may discontinue
the availability of the Fixed Account for transfers from the Variable
Account or for purchase payments at any time.
The amount of your Contract Value in the Fixed Account and the amount of
interest credited will be included in the quarterly statements we send to
you. See REPORTS TO OWNERS on page .
8.MORE ABOUT THE CONTRACT
TAX CONSIDERATIONS
The following discussion is not intended as tax advice. For tax advice you
should consult a tax advisor. Although the following discussion is based on
our understanding of federal income tax laws as currently interpreted,
there is no guarantee that those laws or interpretations will not change.
The following discussion does not take into account state or local income
tax or other considerations which may be involved in the purchase of a
Contract or the exercise of options under the Contracts. In addition, the
following discussion assumes that the Contract is owned by an individual,
and we do not intend to offer the Contracts to "non natural" persons such
as corporations, unless the Contract is held by such person as a nominee
for an individual. (If the Contract is not owned by or held for a natural
person, the contract will generally not be treated as an annuity for tax
purposes.)
The following discussion assumes that the Contract will be treated as an
annuity for federal income tax purposes. Section 817(h) of the Code
provides that the investments of a separate account underlying a variable
annuity contract (or the investments of a mutual fund, the shares of which
are owned by the variable annuity separate account) must be "adequately
diversified" in order for the Contract to be treated as an annuity for tax
purposes. The Treasury Department has issued regulations prescribing such
diversification requirements. The Variable Account, through each of the
portfolios of the Funds, intends to comply with these requirements. We have
entered into agreements with the Funds that require the Funds to operate in
compliance with the Treasury Department's requirements. In connection with
the issuance of prior regulations relating to diversification requirements,
the Treasury Department announced that such regulations do not provide
guidance concerning the extent to which owners may direct their investments
to particular divisions of a separate account. Additional guidance relating
to this subject is expected in the near future. It is not clear what this
guidance will provide or whether it will be prospective only. It is
possible that when this guidance is issued the Contract may need to be
modified to comply with it.
In addition, to qualify as an annuity for federal tax purposes, the
Contract must satisfy certain requirements for distributions in the event
of the death of the Owner of the Contract. The Contract contains such
required distribution provisions. For further information on these
requirements see the Statement of Additional Information.
The individual situation of each Owner or Beneficiary will determine the
federal estate taxes and the state and local estate, inheritance and other
taxes due if an Owner or the Annuitant dies.
QUALIFIED CONTRACTS
The Contract may be used as a qualified individual retirement annuity.
Under Section 408(b) of the Code, eligible individuals may contribute to an
individual retirement annuity ("IRA"). The Code permits certain "rollover"
contributions to be made to an IRA. In particular, certain qualifying
distributions from another qualified plan, tax sheltered annuity or IRA may
be received tax-free if rolled over to an IRA within 60 days of receipt.
Because the Contract's minimum initial payment of $10,000 is greater than
the maximum annual contribution permitted to an IRA, a Qualified Contract
may be purchased only in connection with a "rollover" of the proceeds from
another qualified plan, tax sheltered annuity or IRA. IN ADDITION,
QUALIFIED CONTRACTS WILL NOT ACCEPT ANY SUBSEQUENT CONTRIBUTIONS OTHER THAN
ADDITIONAL ROLLOVER CONTRIBUTIONS FROM ANOTHER QUALIFIED PLAN, TAX
SHELTERED ANNUITY OR IRA. In order to qualify as an IRA under Section
408(b) of the Code, a Contract must contain certain provisions: (1) the
Owner of the Contract must be the Annuitant and, except for certain
transfers incident to a divorce decree, the Owner cannot be changed and the
Contract cannot be transferable; (2) the Owner's interest in the Contract
cannot be forfeitable; and (3) annuity and death benefit payments must
satisfy certain minimum distribution requirements. Contracts issued on a
qualified basis will conform to the requirements for an IRA and will be
amended to conform to any future changes in the requirements for an IRA.
CONTRACT VALUES AND PROCEEDS
Under current law, you will not be taxed on increases in the value of your
Contract until a distribution occurs. A distribution may occur in the form
of a withdrawal, death benefit payment, or payments under an Annuity Income
Option. An amount received as a loan under, or the assignment or pledge of
any portion of the value of, a Contract may also be treated as a
distribution. In the case of a Qualified Contract, you may not receive or
make any such loan or pledge. Any such loan or pledge will result in
disqualification of the Contract and inclusion of the value of the entire
Contract in income. Additionally, a transfer of a Non-qualified Contract
for less than full and adequate consideration will result in a deemed
distribution, unless the transfer is to your spouse (or to a former spouse
pursuant to a divorce decree). The taxable portion of a distribution is
generally taxed as ordinary income.
If you fully surrender your Contract before annuity income payments
commence, you will be taxed on the portion of the distribution that exceeds
your cost basis in your Contract. For Non-qualified Contracts, the cost
basis is generally the amount of your payments, and the taxable portion of
the proceeds is taxed as ordinary income. For Qualified Contracts, the cost
basis is generally zero, and the entire amount of the surrender payment is
generally taxed as ordinary income. In addition, for both Qualified and
Non-qualified Contracts, amounts received as the result of the death of the
Owner or Annuitant that are in excess of your cost basis will also be
taxed.
Partial withdrawals under a Non-qualified Contract are treated for tax
purposes as first being taxable withdrawals of investment income, rather
than as return of purchase payments, until all investment income earned by
your Contract has been withdrawn. You will be taxed on the amount withdrawn
to the extent that your Contract Value at that time, unreduced by the
withdrawal charge, exceeds your payments. Partial withdrawals under a
Qualified Contract are prorated between taxable income and non-taxable
return of investment. Generally, the cost basis of a Qualified Contract is
zero, and the partial withdrawal will be fully taxed.
All annuity contracts issued by the same company (or an affiliated company)
to the same contract owner during any calendar year are treated as one
annuity contract for purposes of determining the amount includible in
income of any distribution that is not received as an annuity payment. In
the case of a Qualified Contract, the tax law requires for all post-1986
contributions and distributions that all individual retirement accounts and
annuities be treated as one contract.
Although the tax consequences may vary depending on the form of annuity
selected under the Contract, the recipient of an annuity income payment
under the Contract generally is taxed on the portion of such income payment
that exceeds the cost basis in the Contract. For variable annuity income
payments, the taxable portion is determined by a formula that establishes a
specific dollar amount that is not taxed. This dollar amount is determined
by dividing the Contract's cost basis by the total number of expected
periodic income payments. However, the entire distribution will be fully
taxable once the recipient is deemed to have recovered the dollar amount of
the investment in the Contract. For Qualified Contracts, the cost basis is
generally zero and each annuity income payment is fully taxed.
A penalty tax equal to 10% of the amount treated as taxable income may be
imposed on distributions. The penalty tax applies to early withdrawals or
distributions. The penalty tax is not imposed on: (1) distributions made to
persons on or after age 59 1/2; (2) distributions made after death of the
Owner; (3) distributions to a recipient who has become disabled; (4)
distributions in substantially equal installments made for the life of the
taxpayer or the lives of the taxpayer and a designated second person; and
(5) in the case of Qualified Contracts, distributions received from the
rollover of the Contract into another qualified contract or IRA. In
addition, in the case of a Qualified Contract, a 50% excise tax is imposed
on the amount by which minimum required annuity or death benefit
distributions exceed actual distributions. Penalty taxes also are imposed
on aggregate distributions from specified retirement programs (including
IRAs) in excess of a specified amount annually and in certain other
circumstances.
We will withhold and remit to the U.S. Government a part of the taxable
portion of each distribution made under the Contract, unless the Owner,
Annuitant or Beneficiary files a written election prior to the distribution
stating that he or she chooses not to have any amounts withheld.
FIDELITY INVESTMENTS LIFE'S TAXES
The earnings of the Variable Account are taxed as part of the operations of
Fidelity Investments Life. Under the current provisions of the Code, we do
not expect to incur federal income taxes on earnings of the Variable
Account to the extent the earnings are credited under the Contracts. Based
on this, no charge is being made currently to the Variable Account for our
federal income taxes. We will periodically review the need for a charge to
the Variable Account for company federal income taxes. Such a charge may be
made in future years for any federal income taxes that would be
attributable to the Contracts.
Under current laws we may incur state and local taxes (in addition to
premium taxes) in several states. At present, these taxes are not
significant and are not charged against the Contracts or the Variable
Account. If the amount of these taxes changes substantially, we may make
charges for such taxes against the Variable Account.
OTHER CONTRACT PROVISIONS
You should also be aware of the following important provisions of your
Contract.
1. OWNER. As an Owner named in the application, you have the rights
and privileges specified in the Contract. If there are two Owners they
must be spouses. Owners own the Contract in accordance with its terms.
Because they are inconsistent with the operation of the Contract, we will
not accept applications with additional legal terms such as "tenancy by the
entirety," "joint tenants in common" or "joint ownership by husband and
wife."
Prior to the Annuity Date and during the lifetime of the Annuitant, you may
change an Owner or Beneficiary (but not the Annuitant) by notifying
us in writing. You may not, however, change the Owner of a Qualified
Contract. A change in the Owner of a Non-qualified Contract will take
effect on the date the request was signed, but it will not apply to any
payments made by us before the request was received and recorded at the
Annuity Service Center . If there are two Owners, any written
authorizations must come from both Owners.
2. BENEFICIARY. The Beneficiary (ies) is (are) named on the application
unless later changed. The proceeds will be paid to the Beneficiary or
Beneficiaries if all the Owners or the Annuitant dies before the Annuity
Date. No Beneficiary has rights in the contract until all the Owners or the
Annuitant has died. If no Beneficiary survives the deceased Annuitant or
the last deceased Owner, the proceeds will be paid to the surviving
Owner(s) or to the estate or estates of the deceased Owner(s). All
Beneficiaries must be identified by name. A Beneficiary may be a "Primary
Beneficiary" or a "Contingent Beneficiary." A Contingent Beneficiary has
the right to proceeds only if the corresponding Primary Beneficiary dies
before proceeds are determined."
3. MISSTATEMENT OF AGE OR SEX. If the age or sex of the Annuitant has been
misstated, we will change the benefits to those which the proceeds would
have purchased had the correct age and sex been stated.
If the misstatement is not discovered until after annuity income payments
have started, we will take the following action: (1) if we made any
overpayments, we may add interest at the rate of 6% per year compounded
annually and charge them against income payments to be made in the future;
(2) if we made any underpayments, the balance plus interest at the rate of
6% per year compounded annually will be paid in a single sum.
4. ASSIGNMENT. You may assign a Non-qualified Contract at any time during
the lifetime of the Annuitant and before the Annuity Date. See TAX
CONSIDERATIONS on page . No assignment will be binding on us unless it is
written in a form acceptable to us and received at our Annuity Service
Center. Your rights and the rights of any Beneficiary will be affected by
an assignment. We will not be responsible for the validity of any
assignment. No assignment may be made of a Qualified Contract.
5. DIVIDENDS. Our variable annuity Contracts are "non-participating." This
means that they do not provide for dividends. Investment results under the
Contracts are reflected in benefits.
SELLING THE CONTRACTS
The Contracts will be distributed through Fidelity Brokerage Services, Inc.
and Fidelity Insurance Agency, Inc., both of which are affiliated with FMR
Corp., the parent company of Fidelity Investments Life. Fidelity Brokerage
Services, Inc. is the principal underwriter (distributor) of the Contracts.
Fidelity Distributors Corporation is the distributor of the Fidelity family
of funds, including the Funds. The principal business address of Fidelity
Brokerage Services, Inc. and Fidelity Distributors Corporation is 82
Devonshire Street, Boston, Massachusetts 02109. We pay Fidelity Insurance
Agency, Inc. first year sales compensation of not more than 2% of payments
received in the first Contract Year as well as renewal sales compensation
in later years based on persistency of Contracts and the size of Contract
Values. Our renewal sales compensation payments will be approximately equal
to 0.10% of the Contract Value as of the end of each Contract Year.
AUTOMATIC DEDUCTION PLAN
Under the automatic deduction plan you can make regular payments by
pre-authorized transfers from a checking account. Your checking account
must be at a banking institution which is a member of ACH (Automatic
Clearing House). The minimum regular payment is $100. This minimum may be
reduced for Contracts issued under certain sponsored arrangements.
Transactions pursuant to an automatic deduction plan will be confirmed in
your quarterly statement. We reserve the right to restrict your
participation in the automatic deduction plan if your checking account has
insufficient funds to cover the transfer.
SPECIAL PROVISIONS APPLICABLE TO SALES UNDER SPONSORED ARRANGEMENTS
We may reduce the annual maintenance charge and/or the withdrawal charge on
Contracts offered to individuals under a sponsored arrangement. See CHARGES
on page 24. We determine the eligibility of groups for such reduced
charges, and the amount of such reductions for particular groups, by
considering the following factors: (1) the size of the group; (2) the total
amount of purchase payments expected to be received from the group; (3) the
nature of the group and the persistency expected in that group; (4) the
purpose for which the Contracts are purchased and whether that purpose
makes it likely that expenses will be reduced; and (5) any other
circumstances which we believe to be relevant in determining whether
reduced sales or administrative expenses may be expected. Some of the
reductions in charges for these sales may be contractually guaranteed;
other reductions may be withdrawn or modified on a uniform basis. Our
reductions in charges for sponsored sales will not be unfairly
discriminatory to the interests of any Contract Owners.
Contracts issued under a sponsored arrangement generally utilize unisex
annuity purchase rates.
We may also reduce minimum purchase payment requirements on Contracts
issued under these arrangements. Because of these reductions, we include a
provision in such Contracts that allows us to cancel smaller, inactive
Contracts. If we cancel your Contract under this provision, we will pay you
your Contract Value in a single sum payment. Specifically, we may, at our
option, cancel such a Contract prior to the Annuity Date if all of the
following conditions exist at the same time: (1) no purchase payments have
been made during the previous 24 months; (2) the total purchase payments
credited to the Contract are less than $2,000; and (3) the Contract Value
is less than $2,000.
DOLLAR COST AVERAGING
Dollar cost averaging allows you to make automatic monthly dollar amount
transfers from the Money Market Subaccount to any of the other variable
Subaccounts. Dollar cost averaging transfers are not permitted to the Fixed
Account.
These monthly transfers will take effect on the same day each month. You
may select any date between the 1st and 28th as the date of your dollar
cost averaging transfers (the "Transfer Date"). If the Transfer Date occurs
on a day the New York Stock Exchange is closed, (i.e., weekend or holiday),
the dollar cost averaging transfer will take effect as of the next business
day which the New York Stock Exchange is open. Your transfers will continue
until the amount in your Money Market Subaccount is not sufficient to make
the monthly transfer for the amount you requested or until you notify us of
cancellation of dollar cost averaging for your Contract.
The minimum monthly transfer allowed to any variable Subaccount is $250.
Dollar cost averaging is currently available at no charge to the Contract
Owner. Fidelity Investments Life reserves the right to modify or terminate
the dollar cost averaging feature.
POSTPONEMENT OF PAYMENT
In general, we will ordinarily pay any partial or full cash withdrawal
within seven days after we receive your written request at our Annuity
Service Center. We will usually pay any Death Benefit within seven days
after we receive proof of the Annuitant's death. However, we may delay
payment if (1) the disposal or valuation of the Variable Account's assets
is not reasonably practicable because the New York Stock Exchange is closed
for other than a regular holiday or weekend, trading is restricted by the
SEC, or the SEC declares that an emergency exists; or (2) the SEC by order
permits postponement of payment to protect our Contract Owners. In
addition, we reserve the right to delay payment of any partial or full cash
withdrawal from the Fixed Account for not more than six months. If payment
from the Fixed Account is delayed for more than 30 days, it will be
credited with interest from the date of withdrawal at a rate not less than
3. 5 % per year compounded annually (3.0% per year for certain
contracts issued May 1, 1996 or later) or, if greater, the rate
required by law.
9.MORE ABOUT THE VARIABLE ACCOUNT AND THE FUNDS
CHANGES IN INVESTMENT OPTIONS
We may from time to time make additional Subaccounts available to you.
These Subaccounts will invest in investment portfolios that we find
suitable for the Contracts.
We also have the right to eliminate Subaccounts from the Variable Account,
to combine two or more Subaccounts, or to substitute a new portfolio or
fund for the portfolio in which a Subaccount invests. A substitution may
become necessary if, in our judgment, a portfolio or fund no longer suits
the purposes of the Contracts. This may happen due to a change in laws or
regulations, or a change in a portfolio's investment objectives or
restrictions, or because the portfolio is no longer available for
investment, or for some other reason. We would obtain prior approval from
the SEC and any other required approvals before making such a substitution.
We also reserve the right to operate the Variable Account as a management
investment company under the 1940 Act or any other form permitted by law or
to deregister the Variable Account under such Act in the event such
registration is no longer required.
NET RATE OF RETURN FOR A SUBACCOUNT
A Subaccount's Net Rate of Return depends on how the investments of the
Subaccount perform. We determine the Net Rate of Return of a Subaccount at
the end of each Valuation Period. Such determinations are made as of the
close of business each day the New York Stock Exchange is open for
business. The Net Rate of Return reflects the investment performance of the
Subaccount for the Valuation Period and is net of the asset charges to the
Subaccounts.
Shares of the Funds are valued at net asset value. Any dividends or capital
gains distributions of a portfolio of the Funds are reinvested in shares of
that portfolio.
VOTING RIGHTS
We will vote shares of the Funds owned by the Variable Account according to
your instructions. However, if the Investment Company Act of 1940 or any
related regulations or interpretations should change, and we decide that we
are permitted to vote the shares of the Funds in our own right, we may
decide to do so.
Before the Annuity Date, we calculate the number of shares that you may
instruct us to vote by dividing your Contract Value in a Subaccount by the
net asset value of one share of the corresponding portfolio. If variable
annuity income payments have commenced, we calculate the number of shares
that the payee may instruct us to vote by dividing the reserve maintained
in each Subaccount to meet the obligations under the Contract by the net
asset value of one share of the corresponding portfolio. Fractional votes
will be counted. We reserve the right to modify the manner in which we
calculate the weight to be given to your voting instructions where such a
change is necessary to comply with then current federal regulations or
interpretations of those regulations.
We will determine the number of shares you can instruct us to vote 90 days
or less before the applicable Fund shareholder meeting. At least 14 days
before the meeting, we will send you material by mail for providing us with
your voting instructions.
If your voting instructions are not received in time, we will vote the
shares in the same proportion as the instructions received from other
Contract Owners. We will also vote shares we hold in the Variable Account
that are not attributable to Contract Owners in the same proportionate
manner. Under certain circumstances, we may be required by state regulatory
authorities to disregard voting instructions. This may happen if following
such instructions would change the sub-classification or investment
objectives of the portfolios, or result in the approval or disapproval of
an investment advisory contract.
Under federal regulations, we may also disregard instructions to vote for
Contract Owner-initiated changes in investment policies or the investment
adviser if we disapprove of the proposed changes. We would disapprove a
proposed change only if it were contrary to state law, prohibited by state
regulatory authorities, or if we decided that the change would result in
overly speculative or unsound investments. If we ever disregard voting
instructions, we will include a summary of our actions in the next
semiannual report.
RESOLVING MATERIAL CONFLICTS
The investment portfolios of the Funds are available to registered separate
accounts offering variable annuity and variable life products of other
participating insurance companies, as well as to the Variable Account and
other separate accounts we establish.
Although we do not anticipate any disadvantages to this, there is a
possibility that a material conflict may arise between the interest of the
Variable Account and one or more of the other separate accounts
participating in the Funds. A conflict may occur due to a change in law
affecting the operations of variable life and variable annuity separate
accounts, differences in the voting instructions of our Contract Owners and
those of other companies, or some other reason. In the event of a conflict,
we will take any steps necessary to protect our Contract Owners and
variable annuity payees.
PERFORMANCE
Performance information for the variable Subaccounts may appear in reports
and advertising to current and prospective Contract Owners. The performance
information is based on historical investment experience of the Subaccounts
and the Funds 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
Fund share price, the automatic reinvestment by the separate account of all
distributions and the deduction of applicable annuity charges (including
any contingent deferred sales charges that would apply if a Contract Owner
surrendered the Contract at the end of the period indicated). Quotations of
total return may also be shown that do not take into account certain
contractual charges such as a maintenance charge or a contingent deferred
sales load. The total return percentage will be higher under this method
than under the standard method described above.
A cumulative total return reflects performance over a stated period of
time. 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 a
Subaccount's returns, you should recognize that they are not the same as
actual year-by-year results.
Some Subaccounts may also advertise yield. These measures reflect the
income generated by an investment in the Subaccount over a specified period
of time. This income is annualized and shown as a percentage. Yields do not
take into account capital gains or losses or the contingent deferred sales
load. The standard quotations of yield reflect the maintenance charge.
Quotations of yield may also be shown that do not reflect the maintenance
charge. The yield calculation will be higher under this method than under
the standard method.
The Money Market Subaccount may advertise its current and effective yield.
Current yield reflects the income generated by an investment in the
Subaccount over a 7 day period. Effective yield is calculated in a similar
manner except that income earned is assumed to be reinvested. The
Investment Grade Bond and the High Income Subaccounts may advertise a 30
day yield which reflects the income generated by an investment in the
Subaccount over a 30 day period.
LITIGATION
No litigation is pending that would have a material effect on us or the
Variable Account.
10.TABLE OF CONTENTS
OF THE STATEMENT OF ADDITIONAL INFORMATION
Accumulation Units
Fixed Annuity Income Payments
Variable Annuity Income Payments
Hypothetical Illustrations of Annuity Income Payouts
General Information
Performance
Transfers Among Subaccounts After the Annuity Date
Unavailability of Annuity Income Options in Certain Circumstances
IRS Required Distributions
Safekeeping of Variable Account Assets
Distribution of the Contracts
State Regulation
Legal Matters
Registration Statement
Independent Accountants
Financial Statements
THIS PAGE INTENTIONALLY LEFT BLANK
PART B
INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
FIDELITY RETIREMENT RESERVES
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1996
This Statement of Additional Information supplements the information found
in the current Prospectus for the variable annuity contracts ("Contracts")
offered by Fidelity Investments Life Insurance Company through its Fidelity
Investments Variable Annuity Account I (the "Variable Account"). You may
obtain a copy of the Prospectus dated April 30, 1996, without charge by
calling 800-544-2442.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND SHOULD BE
READ TOGETHER WITH THE PROSPECTUS FOR THE CONTRACT.
TABLE OF CONTENTS PAGE
Accumulation Units
Fixed Annuity Income Payments
Variable Annuity Income Payments
Hypothetical Illustrations of Annuity Income Payouts
General Information
Performance
Transfers Among Subaccounts After the Annuity Date
Unavailability of Annuity Income Options in Certain Circumstances
IRS Required Distributions
Safekeeping of Variable Account Assets
Distribution of the Contracts
State Regulation
Legal Matters
Registration Statement
Independent Accountants
Financial Statements
ACCUMULATION UNITS
We credit your payments allocated to the variable Subaccounts in the form
of Accumulation Units. The number of Accumulation Units credited to each
Subaccount is determined by dividing the net payment allocated to that
Subaccount by the Accumulation Unit Value for that Subaccount for the
Valuation Period during which the payment is received. In the case of the
initial payment, we credit Accumulation Units as explained in the
prospectus. Accumulation Units are adjusted for any transfers into or out
of a Subaccount.
For each variable Subaccount the Accumulation Unit Value for the first
Valuation Period of the Subaccount was set at $10.00. The Accumulation Unit
Value for each subsequent Valuation Period is the Net Investment Factor for
that period, multiplied by the Accumulation Unit Value for the immediately
preceding Valuation Period. The Accumulation Unit Value may increase or
decrease from one Valuation Period to the next.
Each variable Subaccount has a Net Investment Factor (also referred to as
the "Net Rate of Return"). The Net Investment Factor is an index that
measures the investment performance of a Subaccount from one Valuation
Period to the next. The Net Investment Factor for each Subaccount for a
Valuation Period is determined by adding (a) and (b), subtracting (c) and
then dividing the result by (a) where:
(a) Is the value of the assets at the end of the preceding Valuation
Period;
(b) Is the investment income and capital gains, realized or unrealized,
credited during the current valuation period;
(c) Is the sum of:
(1) The capital losses, realized or unrealized, charged during the current
valuation period plus any amount charged or set aside for taxes during the
current Valuation Period; plus
(2) The deduction from the Subaccount during the current Valuation Period
representing a daily charge equivalent to an effective annual rate of 1%.
The Net Investment Factor may be greater than or less than one. If it is
greater than one, the Accumulation Unit Value will increase; if less than
one, the Accumulation Unit Value will decrease.
FIXED ANNUITY INCOME PAYMENTS
The amount of monthly annuity income payments for a selected fixed annuity
income option or the fixed portion of a selected combination annuity income
option is calculated by applying the proceeds payable to the income payment
rates for the option selected. Annuity income payments will be the larger
of:
(a) The income based on the rates shown in the contract's Annuity Tables
for the option chosen; and
(b) The income calculated by applying the proceeds as a single premium to
our single premium annuity rates in effect on the date of the first income
payment for the same plan.
Annuity income payments under a fixed annuity or fixed portion of a
combination annuity will not vary in dollar amount and will not be affected
by the investment performance of the Variable Account. Amounts used to
purchase a fixed annuity may not be later transferred to a variable
annuity.
VARIABLE ANNUITY INCOME PAYMENTS
If a variable annuity is selected, annuity income payments will vary in
amount in accordance with the investment performance of the elected
Subaccounts of the Variable Account. If a combination annuity is selected,
annuity income payments attributable to the variable portion of the annuity
will likewise vary. On the Annuity Date, the amount of the first annuity
income payment is calculated by applying the proceeds payable to the
annuity table shown in the Contract (or any more favorable annuity rates we
may offer on the Annuity Date) for the option chosen.
The dollar amount of the first annuity income payment attributable to each
variable Subaccount is then divided by each Subaccount's then current
Annuity Unit Value (Annuity Units are explained in the prospectus) to
establish the total number of Annuity Units that will be the basis for
determining later annuity income payments. Annuity income payments after
the first will be equal to the sum of the number of Annuity Units
determined in this manner for each Subaccount multiplied by the then
current Annuity Unit Value for each Subaccount, which (as explained in the
prospectus) depends upon the Net Investment Factor for the subaccount
adjusted by a factor to neutralize the assumed rate of return used in the
calculation of annuity income payments. The number of Annuity Units remains
fixed for all annuity income payments, unless a transfer is made. The
dollar amount of the annuity income payments may change from payment to
payment. We guarantee that the dollar amount of each annuity income payment
after the first will not be affected by variations in mortality experience
from the mortality assumptions used to determine the first annuity income
payment.
To illustrate the above description of how annuity income payments are
determined, consider the following example. A male age 65 applies $50,000
to purchase a lifetime income for himself with payments to be made for at
least 10 years (even if the Annuitant dies shortly after payments have
begun). Annuity income payments are to be made on a monthly basis with the
first annuity income payment to be made immediately. The variable pay-out
option is chosen with the amount of each income payment dependent on the
actual investment performance of the subaccounts that are selected. Using
an Assumed Investment Rate of 3.5%, the initial monthly income amount is
$284.68. The investment selection is 50% in Portfolio A and 50% in
Portfolio B.
At Annuitization Portfolio A Portfolio B
(a) Initial Monthly Annuity
Income Payment $142.34 $142.34
(b) Annuity Unit Value 1.23456 1.32465
(c) Income in Units 115.296 107.455
The monthly annuity income payment allocated to each Subaccount is
translated into Annuity Units using the Annuity Unit Value at the time of
annuitization. Since each Subaccount is likely to have a different Annuity
Unit Value, the total number of Annuity Units is not informative - rather
you need to look at:
X = Annuity
# Annuity Annuity Income
Units Unit Value Payment
Portfolio A 115.296 1.23456 142.34
Portfolio B 107.455 1.32465 142.34
$284.68
Assume that during the next month, the investment results for each
subaccount are:
Portfolio A Portfolio B
(d) Actual Net Investment Results .4074% .1652%
(e) Assumed Investment Results .2871% .2871%
(f) Relative Performance Factor 1.00120 .99878
Line (d) shows the net investment result after the charge for assuming
mortality and expense risks and the administrative charge (1% on an annual
basis) and the charge for investment advisory fees and fund expenses. Line
(e) shows the investment results that were assumed in the calculation of
the initial monthly annuity income payment, 3.5% on an annual basis. Line
(f) represents how much $1 invested at the start of the month in each of
the subaccounts would have grown relative to $1 earning 3.5%. (The formula
for calculating the Relative Performance Factor is 1+ (d) divided by 1 +
(e)).
Note that since line (f) is more than 1 for Portfolio A and less than 1 for
Portfolio B, the Portfolio A subaccount has earned more than 3.5% on an
annual basis while the Portfolio B subaccount has earned less than 3.5% on
an annual basis.
The Annuity Unit Value grows with the actual investment performance
relative to the assumption of 3.5%. If a Subaccount earns more than 3.5% on
an annual basis, then the Annuity Unit Value will increase. Conversely, if
less than 3.5% is earned, the Annuity Unit Value will decrease. The Annuity
Unit Value at the time of the second monthly income payment is the Annuity
Unit Value for the prior month (line b) multiplied by the Relative
Performance Factor (line f).
Portfolio A Portfolio B
(b) Annuity Unit Value (prior) 1.23456 1.32465
(f) Relative Performance Factor 1.00120 .99878
(g) Annuity Unit Value (current) 1.23604 1.32303
Except for exchanges between Subaccounts, the number of Annuity Units
remains fixed throughout the lifetime of the Annuitant. The value of each
annuity income payment, however, varies because the Annuity Unit Value is
usually changing as a result of investment experience. The second monthly
payment is calculated by multiplying the number of payment units by the
current Annuity Unit Value.
Portfolio A Portfolio B
(c) Monthly Income in Units 115.296 107.455
(g) Annuity Unit Value (current) 1.23604 1.32303
(h) Monthly Income (in dollars) $142.51 $142.17
Note that the Annuity Unit Value and the Monthly Income for the Portfolio A
portion of the payment has increased whereas the opposite is true for the
Portfolio B portion. The second monthly annuity income payment would be the
sum for each Subaccount, or $284.68.
To illustrate the possible volatility of the annuity income payments,
assume that during the following month, the investment results for each
Subaccount are:
Portfolio A Portfolio B
i) Actual Net Investment Results 15.50% -13.00%
e) Assumed Investment Results .2871% .2871%
j) Relative Performance Factor 1.15169 .86751
The Annuity Unit Value at the time of the third monthly annuity income
payment is the Annuity Unit Value for the prior month (line g) multiplied
by the Relative Performance Factor (line j):
Portfolio A Portfolio B
(g) Annuity Unit Value (prior) 1.23604 1.32303
(j) Relative Performance Factor 1.15169 .86751
(k) Annuity Unit Value (current) 1.42353 1.14774
The third monthly annuity income amount is calculated by multiplying the
number of payment units by the current Annuity Unit Value:
Portfolio A Portfolio B
(c) Income in Units 115.296 107.455
(k) Annuity Unit Value (current) 1.42353 1.14774
(h) Monthly Income (in dollars) $164.13 $123.33
Note that the Annuity Unit Value and the Monthly Income for Portfolio A
portion of the income amount have again increased but to a much greater
extent than before whereas the opposite is true for the Portfolio B
portion. The third monthly annuity income payment would be the sum for each
subaccount, or $287.46.
An illustration of annuity income payments under various rates appears in
the tables on pages 6 and 7. The monthly equivalents of the annual net
returns of -1.65%, 3.50%, 4.25%, 6.21%, 8.18% and 10.15% shown in the
tables are - 0.14%, 0.29%, 0.35%, 0.50%, 0.66% and 0.81%.
HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS
The following tables have been prepared to show how variable annuity income
payments under the Contract change with investment performance over an
extended period of time. The tables illustrate how monthly annuity income
payments would vary over time if the return on the assets in the selected
portfolios were a uniform gross annual rate of 0%, 5.2 5 %, 6%, 8%,
10% and 12%. The values would be different from those shown if the returns
averaged 0%, 5.2 5 %, 6%, 8%, 10% or 12% but fluctuated over and under
those averages throughout the years.
The tables reflect the fact that the Net Investment Return on the assets
held in the Subaccounts is lower than the gross return of the selected
portfolios. The tables reflect the daily charge to the Subaccounts for
assuming mortality and expense risks, which is equivalent to an effective
annual charge of 0.75% and the daily administrative charge which is
equivalent to an effective annual charge of 0.25%. The amounts shown in the
tables also take into account the portfolios' management fees and operating
expenses which are assumed to be at an annual rate of 0.66% of the average
daily net assets of the selected portfolios. This 0.66% figure consists of
assumed management fees of 0.52% and assumed operating expenses of 0.14%,
figures based on the average of current management fees and operating
expenses. Actual fees and expenses of the portfolios associated with your
Contract may be more or less than 0.66%, will vary from year to year, and
will depend on how you allocate your investment base. See the current
prospectuses for the Funds for more complete information. The monthly
annuity income payments illustrated are on a pre-tax basis. The federal
income tax treatment of annuity income payments is generally described in
the section of your current prospectus entitled "Tax Considerations."
The tables show both the gross rate and the net rate. The difference
between gross and net rates represent the 1% risk and administrative
charges and the assumed 0.66% for investment management and operating
expenses. Since these charges are deducted daily from assets, the
difference between the gross and net rate is not exactly 1.66%.
Two tables follow. The first table assumes 100% of the Contract Value is
allocated to a variable annuity income option; the second table assumes 50%
of the Contract Value is placed under a fixed annuity income option, using
the fixed crediting rate Fidelity Investments Life offered on the fixed
annuity income option at the date of the illustration. Both illustrations
assume that the final value of the accumulation account is $50,000 and is
applied at age 65 to purchase a life annuity for a guaranteed period of 10
years certain and life thereafter. When part of the Contract Value has been
allocated to the fixed annuity income option, the guaranteed minimum
annuity income payment resulting from this allocation is also shown. The
illustrated variable annuity income payments are determined through the use
of standard mortality tables and the assumption that the net investment
return will be 3.5% per year. Thus, actual performance greater than a net
return of 3.5% will result in increasing annuity income payments and
performance less than 3.5% per year will result in decreasing annuity
income payments. We may offer alternative Assumed Investment Returns from
which you may select. Fixed annuity income payments remain constant.
Initial monthly annuity income payments under a fixed annuity income payout
are generally higher than initial payments under a variable income payout
option.
These tables show the monthly income payments for several hypothetical
constant rates of return. Of course, actual investment performance will not
be constant and may be volatile. Actual monthly income amounts would differ
from those shown if the actual rate of return averaged the rate shown over
a period of years, but also fluctuated above or below those averages for
individual contract years. Upon request and when you are considering an
annuity income option, we will furnish a comparable illustration based on
your individual circumstances.
ANNUITY PAY-OUT ILLUSTRATION
(100% VARIABLE PAYOUT)
ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE APPLIED: $50,000
DATE OF BIRTH: 3/1/31 STATE PREMIUM TAX: 0%
SEX: Male DATE OF ILLUSTRATION: 3/1/96
ANNUITY OPTION SELECTED: Lifetime Income with annuity income payments
guaranteed for 10 years(1)
FREQUENCY OF ANNUITY
INCOME PAYMENTS: Monthly payments with first payment the first of
the month after annuitization
FIXED MONTHLY ANNUITY INCOME PAYMENT AVAILABLE ON THE DATE OF THE
ILLUSTRATION IF 100% FIXED ANNUITY OPTION SELECTED: $313.62
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS
ALLOCATED TO THE VARIABLE PAYOUT
NET RETURN AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.50%
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE, NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED
AMOUNT OF FIRST MONTHLY ANNUITY INCOME
PAYMENT IN YEAR SHOWN ASSUMING A CONSTANT
ANNUAL INVESTMENT RETURN OF:
Gross: 0% 5.25 % 6% 8% 10% 12%
PAYMENT CALENDAR
YEAR YEAR AGE Net(2): -1.65% 3.50% 4.25% 6.21% 8.1 8 % 10.15%
1 1996 65 285 285 285 285 285 285
2 1997 66 271 285 287 292 298 303
3 1998 67 257 285 289 300 311 322
4 1999 68 244 285 291 308 325 342
5 2000 69 232 285 293 316 340 364
10 2005 74 180 285 304 359 424 493
15 2010 79 139 285 315 409 529 669
20 2015 84 108 285 327 465 660 907
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN
ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER AND THE VARIOUS RATES
OF RETURN OF THE PORTFOLIOS SELECTED. THE AMOUNT OF THE INCOME PAYMENT
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN
AVERAGED THE RATES SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. SINCE IT IS
HIGHLY LIKELY THAT INVESTMENT RETURNS WILL FLUCTUATE FROM MONTH TO MONTH,
MONTHLY INCOME (TO THE EXTENT THAT IS BASED ON THE VARIABLE ACCOUNT) WILL
ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY FIDELITY INVESTMENTS LIFE
OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR
ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
(1) Monthly annuity income payments cease upon the death of the Annuitant
if the Annuitant dies after the 10 year Guarantee Period. If the Annuitant
dies during the Guarantee period, annuity income payments will continue
until the end of the Period. The cumulative amount of annuity income
payments received under the annuity depends on how long the Annuitant lives
after the Guarantee Period. An annuity pools the mortality experience of
annuitants. Annuitants who die earlier, in effect, subsidize the payments
for those who live longer.
(2) The illustrated net return reflects the deduction of average fund
expenses and the 1% risk/administrative charge from the gross return.
ANNUITY PAY-OUT ILLUSTRATION
(50% VARIABLE - 50% FIXED PAYOUT)
ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE APPLIED: $50,000
DATE OF BIRTH: 3/1/31 STATE PREMIUM TAX: 0%
SEX: Male DATE OF ILLUSTRATION: 3/1/96
ANNUITY OPTION SELECTED: Lifetime Income with annuity income payment
guaranteed for 10 years(1)
FREQUENCY OF ANNUITY Monthly payments with first payment the first of
INCOME PAYMENTS: the month after annuitization
FIXED MONTHLY ANNUITY INCOME PAYMENT AVAILABLE ON THE DATE OF THE
ILLUSTRATION IF 100% FIXED ANNUITY OPTION SELECTED: $313.62.
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 50% OF THE CONTRACT VALUE IS
ALLOCATED TO THE VARIABLE PAYOUT AND 50% TO THE FIXED PAYOUT
NET RETURN AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.50%
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE, BUT WILL
NEVER BE LESS THAN $156.81. THE MONTHLY GUARANTEED PAYMENT OF $313.62 IS
BEING PROVIDED BY THE $25,000 APPLIED UNDER THE FIXED ANNUITY OPTION.
AMOUNT OF FIRST MONTHLY ANNUITY INCOME PAYMENT IN YEAR SHOWN ASSUMING A
CONSTANT ANNUAL INVESTMENT RETURN OF:
Gross: 0% 5.25% 6% 8% 10% 12%
PAYMENT CALENDAR
YEAR YEAR AGE Net(2): -1.65% 3.50% 4.25% 6.21% 8.18% 10.15%
1 1996 65 299 299 299 299 299 299
2 1997 66 292 299 300 303 306 308
3 1998 67 285 299 301 307 312 318
4 1999 68 279 299 302 311 319 328
5 2000 69 273 299 303 315 327 339
10 2005 74 247 299 309 336 369 406
15 2010 79 226 299 314 361 421 497
20 2015 84 211 299 320 389 487 622
IT IS EMPHASIZED THAT THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN
ABOVE ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE
MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS,
INCLUDING THE INVESTMENT ALLOCATIONS MADE BY AN OWNER AND THE VARIOUS RATES
OF RETURN OF THE PORTFOLIOS SELECTED. THE AMOUNT OF THE INCOME PAYMENT
WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS RATES OF RETURN
AVERAGED THE RATES SHOWN ABOVE OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY YEARS. SINCE IT IS
HIGHLY LIKELY THAT INVESTMENT RETURNS WILL FLUCTUATE FROM MONTH TO MONTH,
MONTHLY INCOME (TO THE EXTENT THAT IS BASED ON THE VARIABLE ACCOUNT) WILL
ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY FIDELITY INVESTMENTS LIFE
OR THE FUNDS THAT THESE HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR
ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
(1) Monthly annuity income payments cease upon the death of the Annuitant
if the Annuitant dies after the 10 year Guarantee Period. If the Annuitant
dies during the Guarantee period, annuity income payments will continue
until the end of the Period. The cumulative amount of annuity income
payments received under the annuity depends on how long the Annuitant lives
after the Guarantee Period. An annuity pools the mortality experience of
annuitants. Annuitants who die earlier, in effect, subsidize the payments
for those who live longer.
(2) The illustrated net return reflects the deduction of average fund
expenses and the 1% risk/administrative charge from the gross return.
GENERAL INFORMATION
We may advertise quotes of Contract Owners discussing Fidelity Retirement
Reserves or services provided by Fidelity Investments Life. We may also
advertise examples of the effects of periodic investment plans, including
the principle of dollar cost averaging. In such a plan, a policyowner
invests a fixed dollar amount in a Subaccount thereby purchasing fewer
units when prices are high and more units when prices are low. While such a
strategy does not assume a profit nor guard against a loss in a declining
market, the Contract Owner's average cost per unit can be lower than if
fixed numbers of units had been purchased at those intervals. In evaluating
such a plan, Contract Owners should consider their ability to continue
purchasing units through periods of low price levels. In addition, we may
from time to time use statistics in advertising to support the growth of
annuity sales. Information to support these statistics may be obtained from
the Life Insurance Marketing Research Association, A.M. Best, American
Council of Life Insurance or the Variable Annuity Research and Data
Service.
From time to time, we may reprint and use as advertising and sales
literature, articles or quotes from financial or business publications and
periodicals. In addition, we may reference or discuss the products and
services of other affiliated companies, which may include: Fidelity funds;
retirement investing; brokerage products and services; saving for college;
charitable giving; and the Fidelity credit card.
We may also provide information to help individuals understand their
investment goals and explore various financial strategies. In communicating
these strategies, we may:
(solid bullet) compare the differences between tax deferred and taxable
investments;
(solid bullet) discuss factors to consider when purchasing the contract;
(solid bullet) discuss the effects of probate when transferring the
contract to heirs;
(solid bullet) discuss traditional sources of retirement income and
products which may be used to supplement that income;
(solid bullet) discuss effects of inflation on fixed-income sources and how
the variable investment options may be used as a potential hedge against
inflation during the deferral and income periods;
(solid bullet) illustrate and compare the effects additional payments have
on a contract;
(solid bullet) discuss strategies of reducing risk through diversification
of purchase payments and providing hypothetical investment mixes;
(solid bullet) discuss past returns of different classes of investments
based on data supplied through various sources such as Ibbotson Associates
of Chicago, Illinois; and
(solid bullet) assist policyholders with inquiries regarding their annuity.
This information may be obtained from various sources such as The U.S.
Department of the Treasury, U.S. Department of Labor, Statistical Abstract
of the U.S. and Individual Annuitant Mortality Table. We may present this
information through various methods such as charts, graphs, illustrations,
and tables.
You may purchase the contract with proceeds from various sources such as
transactions qualifying for a tax-free exchange under Section 1035 of the
Internal Revenue Code.
PERFORMANCE
Performance information for any Subaccount may be compared, in reports and
advertising to: (1) the Standard & Poor's 500 Composite Stock Price Index
("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.
Total returns, yields and other 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 subaccount derived from rankings of variable annuity separate accounts
or other investment products tracked by Lipper Analytical Series 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 subaccount'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 following tables below provide performance results for each Subaccount
through 12/31/95. The performance information is based on the historical
investment experience of the Subaccounts and of the Portfolios. It does not
indicate or represent future performance.
Total Return
Total returns quoted in advertising reflect all aspects of a Subaccount's
return, including the automatic reinvestment by the separate account of all
distributions and any change in the Subaccount'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 Subaccount 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 subaccount'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
subaccount.
Table 1 shows the average annual total return on a hypothetical investment
in the Subaccounts for the last year, from the date that the Portfolios
began operations, and, for Portfolios in existence for five years or more,
for five years, assuming that the Contract was surrendered December 31,
1995. 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 risk and administrative charge (1%
on an annual basis) and the maintenance charge. Since the Contract is
intended as a long-term product, the table also shows the average annual
total return assuming that no money was withdrawn from the Contract. The
average annual total return is also shown for Contracts with at least
$25,000 of premium and assuming no money is withdrawn from the Contract.
The average annual total return would be larger for these Contracts because
there is currently no maintenance charge on these larger Contracts. The
first column shows the average annual total return if you surrender the
contract at the end of the period, the second column shows the average
annual total return if you do not surrender the Contract and the third
column shows the average annual total return if you do not surrender the
Contract and no maintenance charge is applied to the Contract.
Table 1: Average Annual Total Return for Period Ending on 12/29/95
(a) One Year Average Annual Total Return For Contracts Issued on December
31, 1994
Return Return
If Contract If Contract
Return Continued and Continued and
If Contract Maintenance Maintenance
Surrendered Charge Applied Charge Not Applicable
Asset Manager 10.76% 15.76% 15.79%
Money Market 0.05% 4.79% 4.82%
Investment
Grade Bond 11.12% 16.12% 16.15%
Equity-Income 28.72% 33.72% 33.75%
Growth 28.99% 33.99% 34.02%
High Income 14.37% 19.37% 19.40%
Overseas 3.63% 8.55% 8.58%
Index 500 30.79% 35.79% 35.82%
(b) Average Annual Total Return If Contract Issued at Commencement of
Portfolio
Return
Return If Contract
If Contract Continued and
Return Continued and Maintenance
Portfolio's If Contract Maintenance Charge Not
Subaccount Start Date Surrendered Charge Applied Applicable
Asset Manager 9/6/89 10.10% 10.10% 10.14%
Investment
Grade Bond 12/5/88 7.80% 7.80% 7.85%
Equity-Income 10/9/86 12.13% 12.13% 12.21%
Growth 10/9/86 13.61% 13.61% 13.69%
High Income 9/19/85 10.61% 10.61% 10.70%
Overseas 1/28/87 6.16% 6.16% 6.24%
Index 500 8/27/92 13.86% 14.30% 14.33%
(c) Five Year Average Annual Total Return If Contract Issued on December
31, 1990
Return Return
If Contract If Contract
Continued and Continued and
If Contract Maintenance Maintenance
Surrendered Charge Applied Charge Not Applicable
Asset Manager 11.47% 11.61% 11.64%
Money Market 3.41% 3.58% 3.62%
Investment
Grade Bond 7.98% 8.13% 8.17%
Equity-Income 19.99% 20.09% 20.13%
Growth 19.44% 19.55% 19.58%
High Income 17.63% 17.74% 17.78%
Overseas 6.87% 7.03% 7.06%
(d) Ten Year Average Annual Total For Contracts Issued on December 29, 1985
Return Return
If Contract If Contract
Continued and Continued and
If Contract Maintenance Maintenance
Surrendered Charge Applied Charge Not Applicable
Money Market 4.95% 4.95% 5.03%
High Income 10.28% 10.28% 10.36%
In addition to average annual returns, the Subaccounts may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Table 2 shows the cumulative total return
on a hypothetical investment in the Subaccounts for from the date the
Portfolios began operations, and assuming that the Contract was surrendered
December 31, 1995. For any Portfolio in existence five years or more, five
year figures are also shown. 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 returns reflect the risk and administrative charge (1%
on an annual basis) and the maintenance charge. Since the Contract is
intended as a long-term product, the table also shows the cumulative total
return assuming that no money was withdrawn from the Contract. The
cumulative total return is also shown for Contracts with at least $25,000
of premium and assuming no money is withdrawn from the Contract. The
cumulative total return for these Contracts would be larger because there
is currently no maintenance charge on these larger Contracts. The first
column shows the cumulative total return if you surrender the Contract at
the end of the period, the second column shows the cumulative total return
if you do not surrender the Contract and the third column shows the
cumulative total return if you do not surrender the Contract and no
maintenance charge is applied to the Contract.
Table 2: (a) Cumulative Total Return For Periods Beginning at Commencement
of Portfolios and Ending on 12/29/95
Return
Return If Contract
If Contract Continued and
Return Continued and Maintenance
Portfolio's If Contract Maintenance Charge Not
Subaccount Start Date Surrendered Charge Applied Applicable
Asset Manager 9/6/89 83.60% 83.60% 84.08%
Investment
Grade Bond 12/5/88 70.01% 70.01% 70.58%
Equity-Income 10/9/86 187.71% 187.71% 189.59%
Growth 10/9/86 224.72% 224.72% 226.81%
High Income 9/19/85 182.05% 182.05% 184.33%
Overseas 1/28/87 70.51% 70.51% 71.60%
Index 500 8/27/92 54.24% 56.24% 56.39%
(b) Cumulative Total Return For Five Year Period From 12/31/90 Through
12/31/95
Return If Contract Return If Contract
Return Continued and Continued and
If Contract Maintenance Maintenance
Subaccount Surrendered Charge Applied Charge Not Applicable
Asset Manager 72.11% 73.11% 73.38%
Money Market 18.24% 19.24% 19.44%
Investment
Grade Bond 46.81% 47.81% 48.06%
Equity-Income 148.68% 149.68% 150.04%
Growth 143.07% 144.07% 144.42%
High Income 125.20% 126.20% 126.53%
Overseas 39.40% 40.40% 40.63%
(c) Cumulative Total Return For Ten Year Period From 12/31/85 Through
12/31/95
Return If Contract Return If Contract
Return Continued and Continued and
If Contract Maintenance Maintenance
Subaccount Surrendered Charge Applied Charge Not Applicable
Money Market 62.05% 62.05% 63.33%
High Income 165.97% 165.97% 168.03%
Yields
Some Subaccounts may also advertise yields. Yields quoted in advertising
reflect the change in value of a hypothetical investment in the Subaccount
over a stated period of time, not taking into account capital gains or
losses. Yields are annualized and stated as a percentage. Yields do not
reflect the impact of any contingent deferred sales load. Yields quoted in
advertising may be based on historical seven day periods.
Current yield for Money Market Subaccount reflects the income generated by
a Subaccount 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 maintenance 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 Subaccount 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
12/31/95, the Money Market Subaccount had a current yield of 4.50% and an
effective yield of 4.61%. For Contracts on which there is currently no
maintenance charge, the current yield would be 4.53% and the effective
yield would be 4.64%.
A 30 day yield for bond subaccounts reflects the income generated by a
Subaccount over a 30 day period. Yield will be computed by dividing the net
investment income per Accumulation Unit earned during the period by the
maximum offering price per Accumulation Unit on the last day of the period,
according to the following formula: Yield = 2[(a-b/cd + 1)6 - 1] where a=
net investment income earned by the applicable portfolio, b = expenses for
the period including expenses charged to the contract owner accounts, c =
the average daily number of Accumulation Units outstanding during the
period, and d = the maximum offering price per Accumulation Unit on the
last day of the period. The 30 day yield for the period ending on 12/29/95
was 4.50% for the Investment Grade Bond Subaccount and 8.12% for the High
Income Subaccount. For Contracts on which there is no maintenance charge,
the 30 day yield would be 4.53% for the Investment Grade Bond Subaccount
and 8.15% for the High Income Subaccount.
TRANSFERS AMONG SUBACCOUNTS AFTER THE ANNUITY DATE
After the Annuity Date, you may instruct us to reallocate the value of some
or all of the Annuity Units of a variable Subaccount then credited to your
Contract into an equal value of Annuity Units of one or more other
Subaccounts. The transfer shall be based on the relative value of the
Subaccount Annuity Units at the end of the Valuation Period in which the
request is received and will affect income payments determined after that
Valuation Period. To make such a transfer, you must contact the Annuity
Service Center. The value of the Annuity Units exchanged must provide at
least a $50 annuity income payment at the time of the exchange, unless all
of the Annuity Units of a Subaccount are being exchanged.
UNAVAILABILITY OF ANNUITY INCOME OPTIONS IN CERTAIN CIRCUMSTANCES
We do not offer annuity income options to any corporate beneficiary,
partnership or trustee; any assignee, unless that assignee is a
beneficiary; or the executors or administrators of the Annuitant's estate.
IRS REQUIRED DISTRIBUTIONS
If the Owner of the Contract dies (or either Joint Owner if the Contract is
owned jointly) before the entire interest in the Contract is distributed,
the value of the Contract must be distributed to the designated beneficiary
as described in this section so that the Contract qualifies as an annuity
under the Internal Revenue Code.
If the death occurs on or after the Annuity Date, the remaining portion of
the interest in the Contract must be distributed at least as rapidly as
under the method of distribution being used as of the date of death. If the
death occurs before the Annuity Date, the entire interest in the Contract
must be distributed within five years after the date of death, unless the
following conditions are met.
If an annuity income option is selected by the designated beneficiary and
if annuity income payments begin within one year of the Owner's death, the
value of the Contract may be distributed over the beneficiary's life or a
period not exceeding the beneficiary's life expectancy. However, for
Qualified Contracts where the owner's spouse is the beneficiary, annuity
income payments need not begin within one year after the Owner's death,
rather they need only begin on or before April 1 of the calendar year
following the calendar year in which the Owner would have attained age 70
1/2. The Owner's designated beneficiary is the person to whom proceeds of
the Contract pass by reason of the death of the Owner.
If the Contract Owner is a trust or other "non-natural person," and the
Annuitant dies before the Annuity Date, the required distribution upon
death rules will apply.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
The assets of the Variable Account are held by Fidelity Investments Life.
The assets of the Variable Account are held apart from our general account
assets and any other separate accounts we may establish. We maintain
records of all purchases and redemptions of the shares of the Funds held by
the variable Subaccounts. We maintain fidelity bond coverage for the acts
of our officers and employees.
DISTRIBUTION OF THE CONTRACTS
As explained in the Prospectus, the Contracts are distributed through
Fidelity Brokerage Services, Inc. and Fidelity Insurance Agency, Inc.,
which are affiliated with FMR Corp. and Fidelity Investments Life. The
offering of the contracts is continuous, and we do not anticipate
discontinuing offering the Contracts. However, we reserve the right to
discontinue offering the contracts.
STATE REGULATION
Fidelity Investments Life is subject to regulation by the Department of
Insurance of the State of Utah, which periodically examines our financial
condition and operations. We are also subject to the insurance laws and
regulations of all jurisdictions where we do business. The Contract
described in the Prospectus and Statement of Additional Information has
been filed with and, where required, approved by, insurance officials in
those jurisdictions where it is sold.
We are required to submit annual statements of our operations, including
financial statements, to the insurance departments of the various
jurisdictions where we do business to determine solvency and compliance
with applicable insurance laws and regulations.
LEGAL MATTERS
The legal validity of the Contracts described in the Prospectus and
Statement of Additional Information has been passed on by David J.
Pearlman, Senior Legal Counsel of FILI Jorden Burt Berenson & Johnson LLP
of Washington, D.C. has passed on matters relating to federal securities
laws.
REGISTRATION STATEMENT
We have filed a Registration Statement under the Securities Act of 1933
with the SEC relating to the Contracts. The Prospectus and Statement of
Additional Information do not include all the information in the
Registration Statement. We have omitted certain portions pursuant to SEC
rules. You may obtain the omitted information from the SEC's main office in
Washington, D.C. by paying the SEC's prescribed fees.
INDEPENDENT ACCOUNTANTS
The consolidated statements of financial condition of
Fidelity Investments Life Insurance Company as of December 31, 1995 and
199 4, and the related consolidated statements of income,
stockholder's equity, and cash flows for each of the three years in the
period ended December 31, 1995, and the statement of assets and liabilities
of the Fidelity Investments Variable Annuity Account I as of December 31,
1995, and the related statements of operations and changes in net assets
for the years ended December 31, 1995 and 1994 included in this
registration statement have been included herein in reliance on the reports
of Coopers & Lybrand L.L.P., independent accountants, on the authority of
that firm as experts in accounting and auditing.
FINANCIAL STATEMENTS
The financial statements of Fidelity Investments Life included herein
should be distinguished from the financial statements of the Variable
Account and should be considered only as bearing upon our ability to meet
our obligations under the Contracts.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
___________________________________
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of Fidelity Investments Life
Insurance Company:
We have audited the accompanying consolidated statements of financial
condition of Fidelity Investments Life Insurance Company (a
wholly - owned subsidiary of FMR Corp.) as of December 31, 1995 and
1994, and the related consolidated statements of income, stockholder's
equity, and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial condition of Fidelity
Investments Life Insurance Company as of December 31, 1995 and 1994, and
the consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
Boston, Massachusetts
January 26, 1996
THIS PAGE INTENTIONALLY LEFT BLANK
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1995 AND 1994
ASSETS 1995 1994
Debt securities $ 159,755,595 $ 121,988,934
available-for-sale
Policy loans 114,595 138,058
Total investments 159,870,190 122,126,992
Cash and cash 2,298,255 2,671,459
equivalents
Accrued investment 2,604,761 2,081,817
income
Deferred policy 13,240,829 10,431,547
acquisition costs
Goodwill, net of 3,628,900 3,742,420
accumulated
amortization of
$1,157,808 in 1995
and $1,044,288 in
1994
Other assets 608,621 353,283
Deferred taxes 7,940,026 7,498,245
Separate account 4,485,145,40 2,972,641,92
assets 9 1
Total assets $ 4,675,336,9 $ 3,121,547,6
91 84
LIABILITIES
Future contract and $ 71,535,637 $ 56,132,257
policy benefits
Payable to affiliates 2,894,161 842,066
Other liabilities and 3,420,811 1,124,740
accrued expenses
Federal income taxes 527,311 809,222
payable
Separate account 4,480,757,96 2,969,840,18
liabilities 3 4
Total liabilities 4,559,135,88 3,028,748,46
3 9
Commitments and
contingencies (Note
7)
STOCKHOLDER'S
EQUITY
Common stock, par 3,000,000 3,000,000
value $10 per share -
authorized,
1,000,000 shares;
issued and
outstanding,
300,000 shares
Additional paid-in 68,048,088 68,048,088
capital
Unrealized gain (loss) 2,364,688 (2,689,787)
on securities
available-for-
sale, net of tax
Retained earnings 42,788,332 24,440,914
Total 116,201,108 92,799,215
stockholder's equity
Total liabilities and $ 4,675,336,9 $ 3,121,547,6
stockholder's equity 91 84
See accompanying notes to the consolidated financial statements
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
REVENUES 1995 1994 1993
Fees charged to $ 39,171,36 $ 28,423,04 $ 15,447,16
contractholders 0 1 3
Net investment 10,758,217 6,052,171 4,450,771
income
Realized losses, net (14,021) (176,109) (39,719)
Cost sharing and -- -- 2,472,863
miscellaneous
revenue (1)
49,915,556 34,299,103 22,331,078
BENEFITS AND
EXPENSES
Return credited to 4,179,438 2,100,679 1,608,434
contractholders and
other benefits
Underwriting, 16,930,300 11,958,754 10,625,888
acquisition and
insurance expenses
(1)
Amortization of 113,520 113,520 113,520
goodwill
21,223,258 14,172,953 12,347,842
Income before federal 28,692,298 20,126,150 9,983,236
income tax
Federal income tax 10,344,880 7,016,062 3,521,587
Net income $ 18,347,41 $ 13,110,08 $ 6,461,649
8 8
(1) Includes affiliated party transactions. (Note 5)
See accompanying notes to the consolidated financial statements
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Common Additional Unrealized Retained Total
stock paid-in gain (loss) on earnings stockholder'
capital securities s
available-for- equity
sale
Balance at $ 3,000,00 $ 42,048,08 $ -- $ 4,869,17 $ 49,917,2
January 1, 0 8 7 65
1993
Net income 6,461,649 6,461,649
Capital 18,000,000 18,000,00
contribution 0
from parent
Balance at 3,000,000 60,048,088 0 11,330,826 74,378,91
December 4
31, 1993
Adjustment (990,956) (990,956
to )
beginning
balance for
change in
accounting
principle,
net of tax
benefit of
$533,602
Net income 13,110,088 13,110,08
8
Capital 8,000,000 8,000,000
contribution
from parent
Change in (1,698,831 (1,698,83
unrealized ) 1)
gain (loss),
net of tax
benefit of
$594,591
Balance at 3,000,000 68,048,088 (2,689,787 24,440,91 92,799,21
December ) 4 5
31, 1994
Net income 18,347,41 18,347,41
8 8
Change in 5,054,475 5,054,475
unrealized
gain (loss),
net of tax
of
$2,721,642
Balance at $ 3,000,00 $ 68,048,08 $ 2,364,68 $ 42,788,33 $ 116,201,1
December 0 8 8 2 08
31, 1995
</TABLE>
See accompanying notes to the consolidated financial statements
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
Cash flows from
operating activities:
Net income $ 18,347,418 $ 13,110,088 $ 6,461,649
Adjustments to reconcile net income to
net
cash provided by (used in) operating
activities:
Amortization of bond 1,118,451 1,358,067 1,101,600
discount and
premium
Realized loss on 14,021 176,109 39,719
investments
Amortization of 113,520 113,520 113,520
goodwill
Depreciation and 847,767 763,484 475,062
amortization
Increase in future 1,875,338 1,930,775 1,441,368
contract and
policy benefits
Changes in assets and
liabilities:
Deferred policy (3,380,870) (3,578,600) (4,671,454)
acquisition costs
Deferred taxes (3,238,592) (2,179,003) (1,918,693)
Accrued investment (522,944) (798,721) (338,433)
income
Amounts due (from) to (1,585,709) 389,538 (1,850,599)
separate
accounts
Other liabilities and 4,141,424 1,864,380 (1,621,763)
amounts due (to)
from affiliates
Net cash provided by 17,729,824 13,149,637 (768,024)
(used in)
operating activities
Cash flows from
investing activities:
Purchase of (49,253,987) (71,233,114) (32,046,597)
investments
Proceeds from 18,130,971 24,136,007 8,161,730
investments sold
Increase in other (508,054) (87,246) (374,942)
assets
Additions to separate (785,157,232 (868,356,472 (1,021,822,031
accounts ) ) )
Net change in -- -- 3,329,185
short-term investments
Net cash used in (816,788,302 (915,540,825 (1,042,752,655
investing activities ) ) )
Cash flows from
financing activities:
Considerations and 908,482,198 952,425,197 1,051,127,59
deposits on variable 3
annuity products
Payments to (109,796,924 (60,291,338) (22,899,307)
contractholders )
Capital contribution -- 8,000,000 18,000,000
from parent
Net cash provided by 798,685,274 900,133,859 1,046,228,28
financing activities 6
Net (decrease) increase (373,204) (2,257,329) 2,707,607
in cash and cash
equivalents
Cash and cash
equivalents:
Beginning of year 2,671,459 4,928,788 2,221,181
End of year $ 2,298,255 $ 2,671,459 $ 4,928,788
See accompanying notes to the consolidated financial statements
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements of Fidelity Investments
Life Insurance Company ("the Company") have been prepared on the basis of
generally accepted accounting principles ("GAAP"), which vary in certain
respects from reporting practices prescribed by state insurance regulatory
authorities (Note 4).
The consolidated financial statements include the accounts of Fidelity
Investments Life Insurance Company (FILI), a Utah domiciled insurance
company, and Empire Fidelity Investments Life Insurance Company (EFILI), a
wholly-owned insurance company operating exclusively in the State of New
York. All intercompany accounts have been eliminated in consolidation.
The Company issues variable deferred and immediate annuity contracts and
is licensed in all states. Amounts invested in the fixed option of the
contracts are allocated to the General Account of the Company. Amounts
invested in the variable option of the contracts are allocated to the
Variable Annuity Account, a separate account of the Company. Amounts
invested in the variable life policies are allocated to the Variable Life
Account, also a separate account of the Company. The assets of the Variable
Annuity and Life Accounts are invested in the portfolios of the Variable
Insurance Products Fund and the Variable Insurance Products Fund II and are
reported at the net asset value of such portfolios.
The use of estimates and assumptions is inherent in the preparation of
financial statements in conformity with GAAP. Actual results could differ
from those estimates.
INVESTMENTS
Investments in debt securities available-for-sale are reported at fair
value. Fair values are derived from external market quotations. Unrealized
gains or losses on these debt securities are excluded from earnings and
reported as a separate component of stockholder's equity, net of taxes,
until realized.
The discount or premium on debt securities is amortized using the interest
method. Loan-backed and structured securities are amortized including
anticipated prepayments at the date of purchase.
Policy loans are carried at outstanding principal balances, not in excess
of policy cash surrender value. These loans are an integral part of the
insurance products and have no maturity dates. Consequently, it is
impractical to determine the market value of policy loans.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
INVESTMENTS (CONTINUED)
Investment income is recognized on the accrual basis. Realized gains or
losses on investments sold are determined on the basis of the specific
identification method. Unrealized gains or losses on the Company's funds
retained in the separate accounts are reflected in income.
In May 1993, the Financial Accounting Standard Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" (SFAS 115). The Company adopted the
provisions of the statement on January 1, 1994. SFAS 115 requires that
investments in debt securities be classified into three categories and
carried at fair value if they are not classified as held to maturity. The
Company classifies all its debt securities as available-for-sale. In
accordance with SFAS 115, prior period financial statements have not been
restated to reflect the change in accounting principle. The cumulative
effect, as of January 1, 1994, of adopting SFAS 115 was not material to the
financial statements.
CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with an
original maturity date of three months or less to be cash equivalents. Cash
equivalents are stated at cost which approximates market.
SEPARATE ACCOUNTS
Separate account assets represent managed funds held for the benefit of
the variable annuity and variable life insurance contractholders and are
reported at fair value. Since the contractholders receive the full benefit
and bear the full risk of the separate account investments, the investment
results of the separate accounts are reflected in the liabilities related
to separate accounts. The excess of the separate account assets over
separate account liabilities represents funds of the Company retained in
the separate accounts.
FUTURE CONTRACT AND POLICY BENEFITS AND FEES CHARGED TO CONTRACTHOLDERS
Future contract and policy benefits represent the reserve liability which
approximates the contractholder's account balance. Fees charged to
contractholders include the cost of providing insurance protection for
variable life contractholders, mortality and expense risk charges,
surrender charges and an annual administrative charge for variable annuity
contractholders.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally first-year commissions
and certain expenses of policy issue and underwriting, all of which vary
with and are related to the production of new business, have been deferred.
These acquisition costs are being amortized in proportion to the present
value of expected future gross profits from interest margins, mortality and
other elements of performance under the contracts.
INCOME TAXES
In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" (SFAS 109). The Company adopted the provisions of this new standard
in its financial statements for the year ended December 31, 1993 (Note 3).
Under SFAS 109, the liability method is used in accounting for income
taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
The cumulative impact of this change was not material to the consolidated
financial statements.
GOODWILL
Goodwill, representing the excess of FMR Corp.'s cost over the net assets
of the Company at the date of acquisition, has been reflected in these
financial statements net of certain identifiable tax benefits realized and
is being amortized on a straight-line basis over 40 years.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENTS
The components of net investment income are as follows:
Years ended December 31,
1995 1994 1993
Debt securities $ 9,762,049 $ 5,956,902 $ 4,109,816
Short-term 459,245 453,138 167,374
investments and
cash equivalents
Policy loans 8,288 9,329 10,030
Investment in 1,002,072 15,890 416,681
separate accounts
Total investment 11,231,654 6,435,259 4,703,901
income
Investment expenses 473,437 383,088 253,130
Net investment $ 10,758,217 $ 6,052,171 $ 4,450,771
income
Gross realized gains and losses from sales of debt securities were as
follows:
Years ended December 31,
1995 1994 1993
Gross $ 4,605 $ 462 $ 45,861
realized gains
Gross $ 18,626 $ 176,571 $ 85,580
realized
losses
Gross unrealized appreciation (depreciation) for debt securities by type
of issuer were as follows:
December 31, 1995
Amortized Gross Gross Fair
cost unrealized unrealized value
gains losses
U.S. Treasury $ 24,297,882 $ 834,737 $ -- $ 25,132,619
securities and
obligations of
U.S.
government
corporations
and agencies
Debt 690,789 10,851 -- 701,640
securities
issued by
foreign
governments
Corporate 131,128,941 2,822,734 (30,339) 133,921,336
securities
Totals $ 156,117,61 $ 3,668,32 $ (30,339) $ 159,755,59
2 2 5
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. INVESTMENTS (continued)
December 31, 1994
Amortized Gross Gross Fair
cost unrealized unrealized value
gains losses
U.S. Treasury $ 24,292,963 $ -- $ (876,595) $ 23,416,368
securities
and
obligations of
U.S.
government
corporations
and agencies
Debt 944,440 1,350 (6,583) 939,207
securities
issued by
foreign
governments
Corporate 100,889,665 30,881 (3,287,187) 97,633,359
securities
Totals $ 126,127,06 $ 32,231 $ (4,170,36 $ 121,988,93
8 5) 4
The amortized cost and fair value of debt securities at December 31, 1995,
by contractual maturity, are shown below. Expected maturities may differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
Amortized Fair
cost value
Due in 1 year or less $ 39,893,761 $ 40,186,313
Due after 1 year 99,858,902 102,302,187
through 5 years
Due after 5 years 14,255,849 14,860,598
through 10 years
Due after 10 years 2,109,100 2,406,497
$ 156,117,612 $ 159,755,59
5
All debt securities are investment grade and there are no significant
concentrations by issuer or by industry other than U.S. government
securities.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INCOME TAXES
Significant components of the provision for income taxes attributable to
operations were as follows:
Years ended December 31,
1995 1994 1993
Current $ 13,508,303 $ 9,106,301 $ 5,440,280
Deferred (3,163,423) (2,090,239) (1,918,693)
Net tax $ 10,344,880 $ 7,016,062 $ 3,521,587
provision
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets are as follows:
Years ended December 31,
1995 1994
Deferred $ 8,303,903 $ 5,977,348
policy
acquisition
costs
Unrealized (1,273,295) 1,448,347
(gain) loss on
securities
available-for-s
ale
Reserves 1,027,221 46,953
Other, net (117,803) 25,597
Total net $ 7,940,026 $ 7,498,245
deferred tax
assets
Management believes that the Company's future and carryback income will be
sufficient to realize the net deferred tax assets.
FILI files a consolidated life insurance return with its subsidiary,
EFILI. Under a tax sharing agreement, each company is charged or credited
its share of taxes as determined on a separate-company basis. FILI paid
federal income taxes of $13,790,214, $8,642,087, and $5,095,000, in 1995,
1994 and 1993, respectively.
The effective tax rates approximate the statutory federal income tax rates
for the years ended 1995, 1994 and 1993.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. STOCKHOLDER'S EQUITY AND DIVIDEND RESTRICTIONS
Generally, the net assets of the Company available for transfer to FMR
Corp. are limited to the excess of FILI's net assets, as determined in
accordance with statutory accounting practices, over minimum statutory
capital requirements; however, payments of such amounts as dividends may be
subject to approval by regulatory authorities.
Net income and capital stock and surplus as determined in accordance with
statutory accounting practices were as follows:
Years ended December 31,
1995 1994 1993
Net income $ 12,651,624 $ 8,587,674 $ 2,680,974
Capital stock $ 86,495,098 $ 74,227,508 $ 58,330,526
and surplus
5. AFFILIATED COMPANY TRANSACTIONS
The Company's insurance contracts are distributed through Fidelity
Brokerage Services, Inc. (FBSI) and Fidelity Insurance Agency, Inc. (FIA),
both of which are affiliated with FMR Corp. FILI and EFILI have entered
into agreements with FIA under which FILI pays FIA first year sales
compensation of $50 a contract and, prior to 1994, renewal sales
compensation of 0.35% of the contract value as of the end of each contract
year. The renewal sales compensation rate was decreased to 0.10% during
1993. EFILI pays FIA first year sales compensation of 3% of payments
received in the first contract year. The Company compensated FIA in the
amount of $6,833,848, $6,044,200, and $8,420,388, in 1995, 1994, and 1993,
respectively.
The Company has entered into administrative service agreements with its
affiliates whereby the Company provides certain administrative and
accounting functions. The Company received $988,878, $730,790, and
$1,075,732, in 1995, 1994, and 1993, respectively, for such services. The
reimbursements are accounted for as a direct reduction of the Company's
expenses.
FMR Corp. maintains a noncontributory trusteed defined benefit pension
plan covering substantially all eligible Company employees. The benefits
earned are based on years of service and the employees' compensation during
the last five years of employment. FMR Corp.'s policy for the plan is to
fund the maximum amount deductible for income tax purposes, and to charge
each subsidiary for its share of such contributions. Pension costs of
$107,143, $81,946, and $53,145, were charged to the Company in 1995, 1994,
and 1993, respectively.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A WHOLLY-OWNED SUBSIDIARY OF FMR CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. AFFILIATED COMPANY TRANSACTIONS (continued)
FMR Corp. sponsors a trusteed Profit-Sharing Plan and a contributory
401(k) Thrift Plan covering substantially all eligible Company employees.
Payments are made to the trustee by FMR Corp. annually for the
Profit-Sharing Plan and monthly for the 401(k) Thrift Plan. FMR Corp.'s
policy is to fund all costs accrued and to charge each subsidiary for its
share of the cost. The cost charged to the Company for these plans amounted
to $424,336, $330,683, and $227,149, in 1995, 1994, and 1993, respectively.
FILI had a market penetration agreement with Fidelity Management and
Research Company (FMR), an affiliate of FMR Corp., in which FMR compensated
FILI for a portion of FILI's annual operating expenses. Under this
agreement, FMR paid FILI $2,472,863 in 1993. The Agreement was terminated
in 1993.
6. UNDERWRITING, ACQUISITION AND INSURANCE EXPENSES
Underwriting, acquisition and insurance expenses were as follows:
Years ended December 31,
1995 1994 1993
Commissions $ 4,215,653 $ 2,463,918 $ 3,770,114
Taxes, 738,365 1,057,712 740,107
licenses and
fees
Amortization 571,588 382,665 189,625
of deferred
policy
acquisition
costs
General 11,404,694 8,054,459 5,926,042
insurance
expenses
$ 16,930,30 $ 11,958,75 $ 10,625,88
0 4 8
7. COMMITMENTS AND CONTINGENCIES
Reinsurance
FILI reinsures certain of its life contracts risks with other companies.
FILI retains a maximum coverage per individual life of $25,000 plus 30% of
the excess over $25,000; the maximum initial retention not to exceed
$100,000.
In 1994, the Company entered into agreements to reinsure certain guarantee
provisions and mortality losses on its annuity contracts. The Company is
contingently liable for claims reinsured that the assuming company is
unable to pay.
Premiums ceded under these reinsurance contracts for all periods, were not
material to the consolidated financial statements.
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31,
1995
ASSETS
Investments at
Current Market
Value:
Variable Insurance
Products Fund (VIP)
Money Market $ 389,090,566
Portfolio -
389,090,566 shares
(cost
$389,090,566)
High Income 175,690,900
Portfolio -
14,580,158 shares
(cost
$164,501,539)
Equity-Income 1,172,168,564
Portfolio -
60,828,670 shares
(cost
$924,251,496)
Growth Portfolio - 716,086,802
24,523,521 shares
(cost $554,598,145)
Overseas Portfolio 182,902,593
- - 10,727,425 shares
(cost $169,954,198)
Variable Insurance
Products Fund II
(VIP II)
Investment Grade 69,707,228
Bond Portfolio -
5,585,515 shares
(cost
$65,439,944)
Asset Manager 741,051,925
Portfolio -
46,931,724 shares
(cost
$671,552,263)
Index 500 Portfolio 117,640,201
- - 1,553,826 shares
(cost $101,029,768)
Asset Manager 51,107,139
Growth Portfolio -
4,338,467 shares
(cost
$47,893,413)
Contrafund 457,305,867
Portfolio -
33,186,202 shares
(cost
$400,203,737)
Total Assets $ 4,072,751,78
5
LIABILITIES
Total Liabilities 0
NET ASSETS
Variable Annuity $ 4,007,720,67
Contracts 6
Annuity Reserves 61,168,184
Retained in Variable 3,862,925
Account by Fidelity
Investments Life
Insurance Company
Total Net Assets $ 4,072,751,78
5
See accompanying notes which are an integral part of the financial
statements
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 1995 AND 1994
SUB-ACCOUNTS INVESTING IN:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
VIP - VIP -
MONEY MARKET HIGH INCOME
12/31/95 12/31/94 12/31/95 12/31/94
INCOME:
Dividends $ 20,938,185 $ 11,686,931 $ 7,310,462 $ 9,735,149
EXPENSES:
Mortality, 3,678,351 2,723,808 1,424,671 991,614
expense
risk and
administrative
charges
Net investment 17,259,834 8,963,123 5,885,791 8,743,535
income (loss)
Realized gain 0 0 3,468,694 854,088
Unrealized 0 0 14,660,109 (12,216,013)
appreciation
(depreciation)
during the year
Net increase 17,259,834 8,963,123 24,014,594 (2,618,390)
(decrease)
in net assets
from
operations
Payments 589,374,914 645,128,307 12,599,198 10,302,633
received
from contract
owners
Transfers (537,429,13 (440,313,06 46,281,625 (7,640,512)
between 7) 8)
subaccounts,
net
Transfers for (22,365,620) (10,448,768) (2,787,385) (1,753,628)
contract
benefits and
terminations
Other transfers (4,245,397) (6,617,738) 197,290 (335,197)
(to) from
Fidelity
Investments
Life
Insurance
Co., net
Net increase in 25,334,760 187,748,733 56,290,728 573,296
net assets
from contract
transactions
Retained in 78,923 83,389 77,233 (66,040)
(returned
from) Variable
Annuity
Account I, net
Total increase 42,673,517 196,795,245 80,382,555 (2,111,134)
(decrease)
in net assets
Net assets at 346,417,049 149,621,804 95,308,345 97,419,479
beginning
of period
Net assets at $ 389,090,56 $ 346,417,04 $ 175,690,90 $ 95,308,34
end 6 9 0 5
of period
</TABLE>
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 1995 AND 1994
SUB-ACCOUNTS INVESTING IN: (CONTINUED)
VIP - VIP - VIP -
EQUITY-INCOME GROWTH OVERSEAS
12/31/95 12/31/94 12/31/95 12/31/94 12/31/95 12/31/94
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
$ 54,694,031 $ 31,623,795 $ 2,257,895 $ 17,356,335 $ 1,831,239 $ 927,365
4,897,920 5,588,458 3,309,856 2,035,083 2,337,367
8,919,504
45,774,527 26,725,875 (3,330,563) 14,046,479 (203,844) (1,410,002)
4,662,258 1,613,266 11,540,837 3,529,822 12,959,632 2,699,999
(3,051,717) 132,834,436 (18,591,886) 2,395,325 (3,980,894)
205,095,093
25,287,424 141,044,710 (1,015,585) 15,151,113 (2,690,897)
255,531,878
49,775,058 45,108,759 33,823,761 8,380,232 36,453,091
57,511,018
188,039,121 137,989,441 97,577,220 (86,638,426) 68,743,917
249,610,294
(8,045,269) (12,135,047) (6,747,012) (5,189,348) (4,757,369)
(20,090,771)
(1,005,641) (60,732) (733,767) (673,124) (321,867)
(533,194)
228,763,269 170,902,421 123,920,202 (84,120,666) 100,117,772
286,497,347
(35,387) 338,618 38,235 (48,579) 41,762
602,520
254,015,306 312,285,749 122,942,852 (69,018,132) 97,468,637
542,631,745
375,521,513 403,801,053 280,858,201 251,920,725 154,452,088
629,536,819
$ 629,536,81 $ 716,086,80 $ 403,801,05 $ 182,902,59 $ 251,920,72
$ 1,172,168,56 9 2 3 3 5
4
</TABLE>
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 1995 AND 1994
SUB-ACCOUNTS INVESTING IN: (CONTINUED)
VIP II -
INVESTMENT VIP II -
GRADE BOND ASSET MANAGER
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
12/31/95 12/31/94 12/31/95 12/31/94
INCOME:
Dividends $ 1,682,779 $ 146,009 $ 17,964,093 $ 43,505,789
EXPENSES:
Mortality, expense 565,912 493,299 7,872,594 9,305,324
risk and administrative
charges
Net investment income 1,116,867 (347,290) 10,091,499 34,200,465
(loss)
Realized gain 681,765 164,646 35,055,886 8,525,009
Unrealized appreciation 6,589,640 (2,318,772) 68,350,367 (111,856,429
(depreciation) during the )
year
Net increase (decrease) 8,388,272 (2,501,416) 113,497,752 (69,130,955)
in net assets from
operations
Payments received 3,797,513 2,843,791 14,616,755 74,008,649
from contract owners
Transfers between 12,841,617 (8,909,404) (259,695,78 97,040,979
subaccounts, net 9)
Transfers for contract (2,353,886) (1,772,096) (27,122,697) (19,839,734)
benefits and terminations
Other transfers (to) from (18,023) (282,453) (4,923,994) (4,640,807)
Fidelity Investments Life
Insurance Co., net
Net increase in net assets 14,267,221 (8,120,162) (277,125,72 146,569,087
from contract transactions 5)
Retained in (returned 14,585 (84,606) (63,314) (365,925)
from) Variable
Annuity Account I, net
Total increase (decrease) 22,670,078 (10,706,184) (163,691,28 77,072,207
in net assets 7)
Net assets at beginning 47,037,150 57,743,334 904,743,212 827,671,005
of period
Net assets at end $ 69,707,22 $ 47,037,15 $ 741,051,92 $ 904,743,2
of period 8 0 5 12
</TABLE>
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 1995 AND 1994
SUB-ACCOUNTS INVESTING IN: (CONTINUED)
VIP II -
ASSET
VIP II - MANAGER: VIP II -
INDEX 500 GROWTH CONTRAFU TOTAL
ND
12/31/94 12/31/95* 12/31/95* 12/31/94
12/31/95 12/31/95
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
$ 502,158 $ 31,421 $ 2,142,569 $ 5,839,546 $ 115,162,957 $ 115,012,794
203,190 285,667 2,454,097 33,423,365 24,262,378
599,028
(96,870) (171,769) 1,856,902 3,385,449 81,739,592 90,750,416
1,070,836 122,245 327,488 1,396,988 71,164,384 17,509,075
116,393 3,213,726 57,102,130 506,182,463 (151,899,318
15,941,637 )
66,869 5,398,116 61,884,567 659,086,439 (43,639,827)
16,915,603
2,126,520 7,219,229 66,578,676 814,858,121 854,461,810
9,671,827
5,461,747 38,762,122 330,539,95 0 0
67,738,298 5
(553,236) (419,868) (2,976,326) (97,101,098) (53,917,112)
(1,660,150)
(50,148) 102,104 893,178 (9,136,467) (13,987,618)
125,425
6,984,883 45,663,587 395,035,48 708,620,556 786,557,080
75,875,400 3
(17,417) 45,436 385,817 1,539,692 (405,989)
108,453
7,034,335 51,107,139 457,305,86 1,369,246,68 742,511,264
92,899,456 7 7
17,706,410 0 0 2,703,505,09 1,960,993,83
24,740,745 8 4
$ 24,740,745 $ 51,107,139 $ 457,305,86 $ 4,072,751,78 $ 2,703,505,09
$ 117,640,20 7 5 8
1
</TABLE>
* FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH
DECEMBER 31, 1995.
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED DECEMBER 31, 1995 AND 1994
1. ORGANIZATION
Fidelity Investments Variable Annuity 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 Utah Insurance Department. The Account is a funding vehicle for
individual Fidelity Retirement Reserves and Fidelity Income Advantage
variable annuity contracts. FILI is a wholly-owned subsidiary of FMR Corp.
Beginning in 1995, FILI added two new subaccounts to the Account; Asset
Manager: Growth and Contrafund.
2. SIGNIFICANT ACCOUNTING POLICIES
Investments are made in the portfolios of the Variable Insurance Products
Fund and the Variable Insurance Products Fund II and are valued at the
reported net asset values of such portfolios. 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.
In addition to the Account, a contractholder may also allocate funds to the
Fixed Account, which is part of FILI's general account. Because of
exemptive and exclusionary provisions, interests in the Fixed Account have
not been registered under the Securities Act of 1933 and FILI's general
account has not been registered as an investment company under the
Investment Company Act of 1940.
Annuity reserves are computed for contracts in the income stage according
to the 1983a Individual Annuitant Mortality Table. The assumed investment
return is 3.5% unless the annuitant elects otherwise, in which case the
rate may vary from 3.5% to 7%, as regulated by the laws of the respective
states. The mortality risk is fully borne by FILI and may result in
additional amounts being transferred into the Account by FILI.
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).
3. EXPENSES
FILI deducts a daily charge from the net assets of the Account (equivalent
to an effective annual rate of 1% of net assets) for administrative
expenses and for the assumption of mortality and expense risks. FILI also
deducts an annual maintenance charge of $30 from the Fidelity Retirement
Reserves contract value. The maintenance charge is waived on certain
contracts.
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. FILI incurs federal income taxes
on the difference between the financial statement carrying value of
reserves for contracts in the income stage and those reserves held for
federal income tax purposes. The tax effect of this temporary difference is
expected to be recovered by FILI. As such, 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.
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 is the distributor and 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 Co., 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, 1995:
Purchases Sales
Money Market $ 236,741,106 $ 194,067,589
High Income $ 101,496,876 $ 39,243,123
Equity-Income $ 344,537,096 $ 11,662,701
Growth $ 198,936,009 $ 31,025,534
Overseas $ 10,616,367 $ 94,989,474
Investment Grade $ 26,555,526 $ 11,156,850
Asset Manager $ 18,248,586 $ 285,346,129
Index 500 $ 81,288,083 $ 5,401,100
Asset Manager: $ 51,152,381 $ 3,586,459
Growth
Contrafund $ 404,441,045 $ 5,634,299
6. UNIT VALUES
A summary of changes in accumulation unit values and accumulation units
outstanding for variable annuity contracts at December 31, 1995 and 1994
are as follows:
Beginning Payments
Balance Received
Units from Contract
Owners
JANUARY 1, 1995 TO DECEMBER 31, 1995
Money Market 24,546,739 38,644,291
Subaccount
High Income 5,106,950 605,925
Subaccount
Equity-Income 30,415,281 2,381,915
Subaccount
Growth Subaccount 17,470,386 1,561,974
Overseas Subaccount 14,336,196 467,953
Investment Grade 3,151,087 239,183
Subaccount
Asset Manager 56,621,559 875,715
Subaccount
Index 500 Subaccount 2,102,667 687,171
Asset Manager: Growth 0 646,949
Subaccount*
Contrafund 0 5,345,476
Subaccount*
JANUARY 1, 1994 TO DECEMBER 31,
1994
Money Market 10,961,418 45,986,781
Subaccount
High Income 5,122,946 543,753
Subaccount
Equity-Income 19,318,902 2,475,299
Subaccount
Growth Subaccount 12,073,224 1,498,018
Overseas Subaccount 8,857,429 2,027,482
Investment Grade 3,714,356 189,214
Subaccount
Asset Manager 48,441,225 4,435,210
Subaccount
Index 500 Subaccount 1,509,615 186,966
6. UNIT VALUES (CONTINUED)
Transfers Contract Units Ending Balance
between Terminations Unit Value Dollars
Subaccount
s, Net Units
(35,319,303) (1,602,881) 26,268,846 $14.66 $ 385,129,503
2,334,094 (249,654) 7,797,315 $22.05 171,920,260
10,482,774 (1,342,848) 41,937,122 $27.44 1,150,938,872
4,557,411 (569,902) 23,019,869 $30.80 708,919,066
(4,944,962) (298,811) 9,560,376 $19.00 181,618,833
796,388 (193,551) 3,993,107 $16.99 67,854,942
(15,993,891) (1,681,742) 39,821,641 $18.29 728,500,356
4,837,242 (293,280) 7,333,800 $15.54 113,950,091
3,573,788 (185,303) 4,035,434 $12.21 49,254,936
27,832,893 (756,423) 32,421,946 $13.87 449,633,817
$ 4,007,720,676
(31,511,315) (890,145) 24,546,739 $13.99 $ 343,347,546
(428,508) (131,241) 5,106,950 $18.47 94,304,578
9,202,615 (581,535) 30,415,281 $20.52 624,110,772
4,281,623 (382,479) 17,470,386 $22.98 401,457,004
3,743,391 (292,108) 14,336,196 $17.50 250,816,040
(615,576) (136,909) 3,151,087 $14.63 46,099,576
5,336,152 (1,591,026) 56,621,559 $15.80 894,583,891
474,149 (68,063) 2,102,667 $11.44 24,053,586
$ 2,678,772,993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
* FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1995.
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Contract Owners of Fidelity Investments Variable Annuity Account I:
We have audited the accompanying statement of assets and liabilities of
Fidelity Investments Variable Annuity Account I (comprised of Money Market
Subaccount, High Income Subaccount, Equity-Income Subaccount, Growth
Subaccount, Overseas Subaccount, Investment Grade Bond Subaccount, Asset
Manager Subaccount, Index 500 Subaccount, Asset Manager: Growth Subaccount
and Contrafund Subaccount) of Fidelity Investments Life Insurance Company
as of December 31, 1995, and the related statements of operations and
changes in net assets for each of the periods indicated therein. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the aforementioned
subaccounts comprising Fidelity Investments Variable Annuity Account I of
Fidelity Investments Life Insurance Company as of December 31, 1995, and
the results of their operations and the changes in their net assets for
each of the periods indicated therein, in conformity with generally
accepted accounting principles.
Boston, Massachusetts
January 26, 1996 COOPERS & LYBRAND L.L.P.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a) Financial Statements included in Part B
The following financial statements of Fidelity Investments Variable
Annuity Account I and of Fidelity Investments Life Insurance Company are
filed in Part B.
Statement of Assets and Liabilities for Fidelity Investments Variable
Annuity Account I as of December 31, 1995.
Statements of Operations and Changes in Net Assets for Fidelity
Investments Variable Annuity Account I for Years Ended December 31, 1995
and 1994.
Report of Coopers & Lybrand L.L.P. on the Financial Statements of
Fidelity Investments Variable Annuity Account I.
Balance Sheets of Fidelity Investments Life Insurance Company as of
December 31, 1995 and 1994.
Consolidated Statements of Income for Fidelity Investments Life Insurance
Company for the Years Ended December 31, 1995, 1994 and 1993.
Consolidated Statements of Changes in Stockholder's Equity for Fidelity
Investments Life Insurance Company for the Years Ended December 31, 1995,
1994 and 1993.
Consolidated Statements of Cash Flows for Fidelity Investments Life
Insurance Company for the Years Ended December 31, 1995, 1994 and 1993.
Report of Coopers & LybrandL.L.P. on Financial Statements of Fidelity
Investments Life Insurance Company.
There are no financial statements included in Part A, other than
Accumulation Unit Values.
b) Exhibits
(1) Resolution of Board of Directors of Fidelity Investments Life
Insurance Company ("Fidelity Investments Life") establishing the Fidelity
Investments Variable Annuity Account I. (Note 1)
(2) Not Applicable.
(3) (a) Distribution Agreement between Fidelity Investments Life,
Fidelity Insurance Agency and Fidelity Brokerage Services, Inc. (Note 16)
(b) Commission Schedule. (Note 4)
(4) (a) Specimen Variable Annuity Contract. (Note 7)
(b) Specimen Variable Annuity Contract for Use with Sponsored
Arrangements.
(Note 7)
(c) Endorsement for Qualified Contracts. (Note 14)
(5) (a) Application for Variable Annuity Contract. (Note 7)
(b) Application for Variable Annuity Contract for Use
with Sponsored Arrangements. (Note 7)
(6) (i) Articles of Domestication of Fidelity Investments Life. (Note
15)
(ii) Revised Bylaws of Fidelity Investments Life. (Note 15)
C-1
(7) Not Applicable.
(8) Not Applicable
(9) Opinion and consent of David J. Pearlman, as to the legality of
securities being issued.
(Note 16).
(10) Written consent of Coopers & Lybrand L.L.P. (Note 16)
Written consent of Jorden Burt Berenson & Johnson LLP (Note 16)
(11) Not Applicable.
(12) Not Applicable.
(13) Performance Advertising Calculations (Note 11)
(14) (a) Form of Participation Agreement between Fidelity Investments
Life and Variable Insurance Products Fund. (Note 2)
(b) Form of Participation Agreement between Fidelity Investments Life
and Variable Insurance Products Fund II. (Note 7)
`
(15) Powers of Attorney (Note 16)
(Note 1) Incorporated by reference to original Registration Statement on
Form N-4 filed September 2, 1987, Reg. No. 33-16966, on behalf of Fidelity
Investments Variable Annuity Account I.
(Note 2) Incorporated by reference to Registration Statement on Form S-6
filed July 28, 1987, Reg. No. 33-16105, on behalf of Fidelity Investments
Variable Life Account I.
(Note 3) Incorporated by reference to Pre-Effective Amendment No. 1 to
Registration Statement referenced in Note 2, filed November 10, 1987.
(Note 4) Incorporated by reference to Pre-Effective Amendment No. 1 to
Registration Statement referenced in Note 1, filed December 9, 1987.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 1 to
Registration Statement referenced in Note 2, filed March 2, 1988.
(Note 6) Incorporated by reference to Post-Effective Amendment No. 1 to
Registration Statement referenced in Note 1, file April 28, 1988.
(Note 7) Incorporated by reference to Registration Statement on Form N-4,
filed September 23, 1988, Reg. No. 33-24400, on behalf of Fidelity
Investments Variable Annuity Account I.
There is no Note 8.
(Note 9) Incorporated by reference to Post-Effective Amendment No. 3 to
Registration Statement referenced in Note 2, filed May 1, 1989.
(Note 10) Incorporated by reference to Post-Effective Amendment No. 3 to
Registration Statement referenced in Note 1, filed March 2, 1990.
C-2
(Note 11) Incorporated by reference to Post-Effective Amendment No. 3 to
Registration Statement referenced in Note 7, filed April 26, 1990.
(Note 12) Incorporated by reference to Post-Effective Amendment No. 4 to
Registration Statement referenced in Note 7, filed March 1, 1991.
(Note 13) Incorporated by reference to Post-Effective Amendment No. 5 to
Registration Statement filed April 29, 1991.
(Note 14) Incorporated by reference to Post-Effective Amendment No. 6 to
this Registration Statement filed on April 27, 1992.
(Note 15) Incorporated by reference to Post-Effective Amendment No. 7 to
this Registration Statement filed on April 20, 1993.
(Note 16) Filed herein
C-3
Item 25. Directors and Officers of the Depositor
The directors and officers of Fidelity Investments Life are as follows:
Directors of Fidelity Investments Life
EDWARD C. JOHNSON 3d, Director and Chairman of the Board
J. GARY BURKHEAD, Director
JAMES C. CURVEY, Director
ROBERT C. POZEN, Director
JOHN J. REMONDI, Director
RODNEY R. ROHDA, Director and Chairman
DENIS M. McCARTHY, Director
Executive Officers Who Are Not Directors
Executive officers of Fidelity Investments Life who are not
directors are as follows:
RICHARD D. JAMEISON, President
JOSEPH L. KURTZER, JR., Treasurer
DAVID J. PEARLMAN, Vice President, Senior Legal Counsel and Secretary
The principal business address of all persons listed in Item 25 is 82
Devonshire Street, Boston, Massachusetts 02109.
C-4
Item 26. Persons Controlled By or Under Common Control with the Depositor
or Registrant.
See Exhibit 26 of the original registration statement on Form N-4 filed
August 17, 1991, Reg. No. 33-42376, on behalf of Empire Fidelity
Investments Variable Annuity Account A, which is incorporated herein by
reference.
Item 27. Number of Contract Owners.
On December 31, 1995, there were 5,318 Qualified Contracts and 66,207
Non-qualified Contracts.
Item 28. Indemnification
FMR Corp. and its subsidiaries own a directors' and officers' liability
reimbursement contract (the "Policy"), issued by National Union Fire
Insurance Company, that provides coverage for "Loss" (as defined in the
Policy) arising from any claim or claims by reason of any breach of duty,
neglect, error, misstatement, misleading statement, omission or other act
done or wrongfully attempted by a person while he or she is acting in his
or her capacity as a director or officer. The coverage is provided to
these insureds, including Fidelity Investments Life, to the extent required
or permitted according to applicable law, common or statutory, or under
their respective charters or by-laws, to indemnify directors or officers
for Loss arising from the above-described matters. Coverage is also
provided to the individual directors or officers for such Loss, for which
they shall not be indemnified, subject to relevant contract exclusions.
Loss is essentially the legal liability on claims against a director or
officer, including damages, judgements, settlements, costs, charges and
expenses (excluding salaries of officers or employees) incurred in the
defense of actions, suits or proceedings and appeals therefrom.
There are a number of exclusions from coverage. Among the matters excluded
are Losses arising as the result of (1) fines or penalties imposed by law
or other matters that may be deemed uninsurable under the law pursuant to
which the Policy is construed, (2) claims brought about or contributed to
by the fraudulent, dishonest, or criminal acts of a director or officer,
(3) any claim made against the directors or officers for violation of any
of the responsibilities, obligations, or duties imposed upon fiduciaries by
the Employee Retirement Income Security Act of 1974 or amendments thereto,
(4) professional errors or omissions, and (5) claims for an accounting of
profits in fact made from the purchase or sale by a director or officer of
any securities of the insured corporations within the meaning of Section
16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any state statutory law.
The limit of coverage of the Policy is $10 million, as an annual aggregate
limit, with 95% co-insurance for the first $1 million of coverage, and with
a deductible of $500,000 in the event that Fidelity Investments Life
indemnifies the director or officer, or a deductible of $5,000 per
individual director or officer (with a maximum aggregate per loss
deductible of $25,000) if Fidelity Investments Life does not indemnify the
director or officer.
Utah law (Revised Business Corporation Act (sub-section)16-10a-901 et seq.)
provides, in substance, that a corporation may indemnify a director,
officer, employee or agent against liability if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The Text of Article XIV of Fidelity's By-Laws, which relates to
indemnification of the directors and officers, is as follows:
C-5
INDEMNIFICATION OF DIRECTORS, OFFICERS AND PERSONS
ADMINISTERING EMPLOYEE BENEFIT PLANS
Each officer or Director or former officer or Director of the Corporation,
and each person who shall, at the Corporation's request, have served as an
officer or director of another corporation or as trustee, partner or
officer of a trust, partnership or association, and each person who shall,
at the Corporation's request, have served in any capacity with respect to
any employee benefit plan, whether or not then in office then serving with
respect to such employee benefit plan, and the heirs, executors,
administrators, successors and assigns of each of them, shall be
indemnified by the Corporation against all satisfaction of judgements, in
compromise and or as fines or penalties and fees and disbursement of
counsel, imposed upon or reasonably incurred by him or them in connection
with or arising out of any action, suit or proceeding, by reason of his
being or having been such officer, trustee, partner or director, or by
reason of any alleged act or omission by him in such capacity or in serving
with respect to an employee benefit plan, including the cost of reasonable
settlements (other than amounts paid to the Corporation itself) made with a
view to curtailment of costs of litigation.
The Corporation shall not, however, indemnify any such person, or his
heirs, executors, administrators, successors, or assigns, with respect to
any matter as to which his conduct shall be finally adjudged in any such
action, suit, or proceedings to constitute willful misconduct or
recklessness or to the extent that such matter relates to service with
respect to any employee benefit plan, to not be in the best interest of the
participants or beneficiaries of such employee benefit plan.
Such indemnification may include payment by the Corporation of expenses
incurred in defending any such action, suit, or proceeding in advance of
the final disposition thereof, upon receipt of an undertaking by or on
behalf of the person indemnified to repay such payment if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation. Such undertaking may be accepted by the corporation without
reference to the financial ability of such person to make repayment.
The foregoing rights of indemnification shall not be exclusive of other
rights to which any such director, officer, trustee, partner or person
serving with respect to an employee benefit plan may be entitled as a
matter of law. These indemnity provisions shall be separable, and if any
portion thereof shall be finally adjudged to be invalid, such invalidity
shall not affect any other portion which can be given effect.
The Board of Directors may purchase and maintain insurance on behalf of any
persons who is or was a Director, officer, trustee, partner, employee or
other agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, trustee, partner, employee or other
agent of another corporation, association, trust or partnership, against
any liability incurred by him in any such, whether or not the Corporation
would have the power to indemnify him against such liability.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director or officer, or
controlling persons of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by its is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
C-6
Item 29. Principal Underwriters.
(a) Fidelity Brokerage Services, Inc. acts as distributor for other
variable life and variable annuity contracts registered by separate
accounts of Fidelity Investments Life, Empire Fidelity Investments Life
Insurance Company, and PFL Life Insurance Company.
(b)
Name and Principal Positions and Offices with Underwriter
Business Address
Roger T. Servison Director
Steven Akin Director and President
Rodney Rohda Director
Edward L. McCartney Executive Vice President
Thomas E. Lewis Executive Vice President
Bruce MacAlpine Executive Vice President
Shaugn S. Stanley Treasurer and Chief Financial Officer
Jeffrey R. Larsen Legal Counsel & Clerk
Linda Holland Compliance Officer
(c) Commissions and other compensation received by principal underwriter.
See Item 24 (b)(3)(b). No compensation was received by the principal
underwriter from the registrant or depositor during the registrant's or
depositor's last fiscal year.
The address for each person named in Item 29 is 82 Devonshire Street,
Boston, Massachusetts 02109.
C-7
Item 30. Location of Accounts and Records
The records regarding the Account required to be maintained by Section
31(a) of the Investment Company Act of 1940, and Rules 31a-1 to 31a-3
promulgated thereunder, are maintained at Fidelity Investments Life
Insurance Company at 82 Devonshire Street, Boston, Massachusetts 02109.
Item 31. Management Services
Not applicable
Item 32. Undertakings
(a) Registrant undertakes to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more
than 16 months old for so long as payments under the variable annuity
contracts may be accepted.
(b) Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that
an applicant can check to request a Statement of Additional Information, or
(2) a postcard or similar written communication affixed to or included in
the prospectus that the applicant can remove to send for a Statement of
Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request.
(d) Registrant represents that it meets the definition of a "separate
account" under the federal
securities laws.
C-8
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant, Fidelity Investments Variable Annuity Account I,
certifies that it meets the requirements of the Securities Act Rule 485(b)
for effectiveness of this Registration Statement and has caused this
Post-Effective Amendment No. 10 to the Registration Statement to be signed
on its behalf in the city of Boston and the Commonwealth of Massachusetts,
on this 24th day of April, 1996.
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
(Registrant)
By: FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(Depositor)
By: _________________________ Attest:_____________________
Rodney R. Rohda, Chairman and David J. Pearlman,
Chief Executive Officer Secretary
As required by the Securities Act of 1933, this Post-Effective Amendment
No.10 to the Registration Statement has been signed below by the following
persons in the capacities indicated on this 24th day of April, 1996.
Signature Title
_________________ Chairman and Director )
Rodney R. Rohda (Chief Executive Officer) )
)
_________________ )
Joseph L. Kurtzer Jr. Treasurer )
)
________________ )
Edward C. Johnson 3d Director )
)
________________ Director )
J. Gary Burkhead ) By: _______________
) David J. Pearlman
_________________ Director ) (Attorney-in-Fact)
James C. Curvey )
)
_________________ Director )
John J. Remondi )
)
_________________ Director )
Robert C. Pozen )
)
_________________ Director )
Denis M. McCarthy )
C-9
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant, Fidelity Investments Variable Annuity Account I,
certifies that it meets the requirements of the Securities Act Rule 485(b)
for effectiveness of this Registration Statement and has caused this
Post-Effective Amendment No. 10 to the Registration Statement to be signed
on its behalf in the city of Boston and the Commonwealth of Massachusetts,
on this 24th day of April, 1996.
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
(Registrant)
By: FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(Depositor)
By: \s\Rodney R. Rohda Attest:_\s\ David J. Pearlman
Rodney R. Rohda, Chairman and David J. Pearlman,
Chief Executive Officer Secretary
As required by the Securities Act of 1933, this Post-Effective Amendment
No.10 to the Registration Statement has been signed below by the following
persons in the capacities indicated on this 24th day of April, 1996.
Signature Title
_________________
Rodney R. Rohda Chairman and Director )
(Chief Executive Officer) )
_________________ )
Joseph L. Kurtzer Jr. Treasurer )
)
________________ )
Edward C. Johnson 3d Director )
)
)
________________ Director )
J. Gary Burkhead ) By: \s\ David J. Pearlman
) David J. Pearlman
_________________ Director ) (Attorney-in-Fact)
James C. Curvey )
)
_________________ Director )
John J. Remondi )
)
_________________ Director )
Robert C. Pozen )
)
_________________ Director )
Denis M. McCarthy )
C-9
EXHIBIT INDEX
Exhibit Page
(9) Opinion and consent of David J. Pearlman,
as to the legality of securities being issued. C-11
(10) (a) Written consent of Coopers & Lybrand L.L.P. C-12
(b) Written consent of Jorden Burt Berenson & Johnson LLP C-13
C-10
POWER OF ATTORNEY
I, the undersigned Director of Fidelity Investments Life Insurance Company
(the "Company"), hereby constitute and appoint David J. Pearlman, my true
and lawful attorney-in-fact, with full power of substitution, to sign for
me and in my name in the appropriate capacities, all initial Registration
Statements of the Company, all Pre-Effective Amendments to any Registration
Statements, any and all subsequent Post-Effective Amendments to said
Registration Statements, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name and
behalf in connection therewith as said attorney-in-fact deem necessary or
appropriate, to comply with the provisions of the Securities Act of 1933
and Investment Company Act of 1940, and all related requirements of the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof.
Signature Date
\s\ Edward C. Johnson 3d April 4, 1996
Edward C. Johnson 3d
Expires: December 31, 1996
POWER OF ATTORNEY
I, the undersigned Director of Fidelity Investments Life Insurance Company
(the "Company"), hereby constitute and appoint David J. Pearlman, my true
and lawful attorney-in-fact, with full power of substitution, to sign for
me and in my name in the appropriate capacities, all initial Registration
Statements of the Company, all Pre-Effective Amendments to any Registration
Statements, any and all subsequent Post-Effective Amendments to said
Registration Statements, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name and
behalf in connection therewith as said attorney-in-fact deem necessary or
appropriate, to comply with the provisions of the Securities Act of 1933
and Investment Company Act of 1940, and all related requirements of the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof.
Signature Date
\s\ J. Gary Burkhead April 4, 1996
J. Gary Burkhead
POWER OF ATTORNEY
I, the undersigned Director of Fidelity Investments Life Insurance Company
(the "Company"), hereby constitute and appoint David J. Pearlman, my true
and lawful attorney-in-fact, with full power of substitution, to sign for
me and in my name in the appropriate capacities, all initial Registration
Statements of the Company, all Pre-Effective Amendments to any Registration
Statements, any and all subsequent Post-Effective Amendments to said
Registration Statements, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name and
behalf in connection therewith as said attorney-in-fact deem necessary or
appropriate, to comply with the provisions of the Securities Act of 1933
and Investment Company Act of 1940, and all related requirements of the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof.
Signature Date
\s\ James C. Curvey April 4, 1996
James C. Curvey
POWER OF ATTORNEY
I, the undersigned Director of Fidelity Investments Life Insurance Company
(the "Company"), hereby constitute and appoint David J. Pearlman, my true
and lawful attorney-in-fact, with full power of substitution, to sign for
me and in my name in the appropriate capacities, all initial Registration
Statements of the Company, all Pre-Effective Amendments to any Registration
Statements, any and all subsequent Post-Effective Amendments to said
Registration Statements, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name and
behalf in connection therewith as said attorney-in-fact deem necessary or
appropriate, to comply with the provisions of the Securities Act of 1933
and Investment Company Act of 1940, and all related requirements of the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof.
Signature Date
\s\ John J. Remondi April 4, 1996
John J. Remondi
POWER OF ATTORNEY
I, the undersigned Director of Fidelity Investments Life Insurance Company
(the "Company"), hereby constitute and appoint David J. Pearlman, my true
and lawful attorney-in-fact, with full power of substitution, to sign for
me and in my name in the appropriate capacities, all initial Registration
Statements of the Company, all Pre-Effective Amendments to any Registration
Statements, any and all subsequent Post-Effective Amendments to said
Registration Statements, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name and
behalf in connection therewith as said attorney-in-fact deem necessary or
appropriate, to comply with the provisions of the Securities Act of 1933
and Investment Company Act of 1940, and all related requirements of the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof.
Signature Date
\s\ Rodney R. Rohda April 4, 1996
Rodney R. Rohda
POWER OF ATTORNEY
I, the undersigned Director of Fidelity Investments Life Insurance Company
(the "Company"), hereby constitute and appoint David J. Pearlman, my true
and lawful attorney-in-fact, with full power of substitution, to sign for
me and in my name in the appropriate capacities, all initial Registration
Statements of the Company, all Pre-Effective Amendments to any Registration
Statements, any and all subsequent Post-Effective Amendments to said
Registration Statements, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name and
behalf in connection therewith as said attorney-in-fact deem necessary or
appropriate, to comply with the provisions of the Securities Act of 1933
and Investment Company Act of 1940, and all related requirements of the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof.
Signature Date
\s\ Robert C. Pozen April 4, 1996
Robert C. Pozen
POWER OF ATTORNEY
I, the undersigned Director of Fidelity Investments Life Insurance Company
(the "Company"), hereby constitute and appoint David J. Pearlman, my true
and lawful attorney-in-fact, with full power of substitution, to sign for
me and in my name in the appropriate capacities, all initial Registration
Statements of the Company, all Pre-Effective Amendments to any Registration
Statements, any and all subsequent Post-Effective Amendments to said
Registration Statements, and any supplements or other instruments in
connection therewith, and generally to do all such things in my name and
behalf in connection therewith as said attorney-in-fact deem necessary or
appropriate, to comply with the provisions of the Securities Act of 1933
and Investment Company Act of 1940, and all related requirements of the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof.
Signature Date
\s\ Denis M. McCarthy April 4, 1996
Denis M. McCarthy
POWER OF ATTORNEY
I, the undersigned Treasurer of Fidelity Investments Life Insurance
Company (the "Company"), hereby constitute and appoint David J. Pearlman,
my true and lawful attorney-in-fact, with full power of substitution, to
sign for me and in my name in the appropriate capacities, all initial
Registration Statements of the Company, all Pre-Effective Amendments to any
Registration Statements, any and all subsequent Post-Effective Amendments
to said Registration Statements, and any supplements or other instruments
in connection therewith, and generally to do all such things in my name and
behalf in connection therewith as said attorney-in-fact deem necessary or
appropriate, to comply with the provisions of the Securities Act of 1933
and Investment Company Act of 1940, and all related requirements of the
Securities and Exchange Commission, hereby ratifying and confirming all
that said attorney-in-fact or his substitutes may do or cause to be done by
virtue hereof.
Signature Date
\s\ Joseph L. Kurtzer, Jr. April 4, 1996
Joseph L. Kurtzer Jr.
April 24, 1996
Board of Directors
Fidelity Investments Life Insurance Company
82 Devonshire Street
Boston, MA 02109
Ladies and Gentlemen:
In my capacity as Associate General Counsel of FMR Corp., the parent
company of Fidelity Investments Life Insurance Company ("Fidelity Life"), I
have provided legal advice to Fidelity Life with respect to the
establishment of Fidelity Investments Variable Annuity Account I (the
"Account") pursuant to the laws of the Commonwealth of Pennsylvania, and
its continuance following the redomestication of Fidelity Life under the
applicable provisions of the laws of the State of Utah. The Account was
established by unanimous consent of the Board of Directors of Fidelity Life
on July 22, 1987 and its existence continued without interruption following
the redomestication of Fidelity Life to Utah on November 10, 1992. The
Account exists for the investment of assets under certain variable annuity
contracts (the "Contracts") issued by Fidelity Life. I have participated
in the preparation and review of Post-Effective Amendment No. 10 to the
Registration Statement on Form N-4 for the registration of the Contracts
with the Securities and Exchange Commission under the Securities Act of
1933, Reg. No. 33-24400 and the registration of the Account under the
Investment Company Act of 1940.
I am of the following opinion:
(1) Fidelity Life is duly organized and validly existing under the laws of
the State of Utah.
(2) The Account is duly organized and validly existing as a separate
account of Fidelity Life under the laws of the State of Utah.
(3) The portion of the assets to be held in the Account equal to the
reserve and other liabilities for variable benefits under the Contracts is
not chargeable with liabilities arising out of any other business Fidelity
Life may conduct.
(4) The Contracts, when issued as set forth in the Registration Statement,
will be legal and binding obligations of Fidelity Life in accordance with
their terms.
In arriving at the foregoing opinion, I have made such examination of law
and examined such records and other documents as I judged to be necessary
or appropriate.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement, and to the reference to my name under the heading
"Legal Matters" in the Statement of Additional Information.
Very truly yours,
David J. Pearlman
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form N-4
(File No. 33-24400) of our reports dated January 26, 1996, on our audits of
the consolidated financial statements of Fidelity Investments Life
Insurance Company and the financial statements of Fidelity Invesments
Variable Annuity Account I. We also consent to the reference of our Firm
under the caption "Independent Accountants" in the Statement of Additional
Information.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 22, 1996
JORDEN BURT BERENSON & JOHNSON LLP
SUITE 400 EAST
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007-0805
(202) 965-8100
TELECOPIER (202) 965-8104
AFFILIATED COUNSEL:
IN WASHINGTON, D.C.
SUITE 500 JONES & BLOUCH L.L.P.
777 BRICKELL AVENUE
MIAMI, FLORIDA 33131-2803 IN MIAMI, FLORIDA
(305) 371-2600 CANTOR & MORANTE, P.A.
April 12, 1996
Fidelity Investments Life Insurance Company
Fidelity Investments Variable Annuity Account I
82 Devonshire Street
Boston, Massachusetts 02109
Re: Registration No. 33-24400
Ladies and Gentlemen:
We hereby consent to the reference to our name under the caption "Legal
Matters" in the Statement of Additional Information contained in
Post-Effective Amendment No. 10 to the Registration Statement on Form N-4
(File No. 33-24400) for Fidelity Investments Variable Annuity Account I
filed by the Account with the Securities and Exchange Commission pursuant
to the Securities Act of 1933 and the Investment Company Act of 1940.
Very truly yours,
Jorden Burt Berenson & Johnson LLP
By:\s\ Michael Berenson
Michael Berenson
JORDEN BURT BERENSON & JOHNSON LLP
SUITE 400 EAST
1025 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007-0805
(202) 965-8100
TELECOPIER (202) 965-8104
AFFILIATED COUNSEL:
IN WASHINGTON, D.C.
SUITE 500 JONES & BLOUCH L.L.P.
777 BRICKELL AVENUE
MIAMI, FLORIDA 33131-2803 IN MIAMI, FLORIDA
(305) 371-2600 CANTOR & MORANTE, P.A.
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