Fidelity Retirement Reserves
Supplement to teh Prospectus
Dated April 30, 1996
Variable Insurance Products Fund III is an open-end, diversified management
investment company organized by Fidelity Management & Research Company. It
is the type of investment company commonly known as a series mutual fund.
Three Subaccounts are available which invest exclusively in the shares of
Growth Opportunities Portfolio, Growth & Income Portfolio and Balanced
Portfolio, mutual fund Portfolios of Variable Insurance Products Fund III.
Growth Opportunities Portfolio's objective is to seek capital growth by
investing in a wide range of common stocks, convertible and foreign
securities and bonds that may offer long-term growth potential. Growth &
Income Portfolio's objective is to seek high total return through a
combination of current income and capital appreciation by investing mainly
in equity securities. The fund may also invest in equity securities that
are not paying current dividends, but offer potential for capital
appreciation of future income. Balanced Portfolio's objective is to seek
both income and growth of capital by investing in a broad selection of
stocks, bonds, and convertible securities. When FMR's outlook is neutral,
it will invest approximately 60% of the fund's assets in equity securities
and will always invest at least 25% of the fund's assets in fixed-income
securities.
You will find more complete information about the Portfolios, including
management fees, and the risks associated with each Portfolio, in the
accompanying Fund prospectus.
The purpose of the tables is to assist you in understanding the various
costs and expenses of the Separate Account as well as the Portfolios. See
"Charges" on page 13 of the prospectus for additional information. The
following table represents each Portfolios' estimated annual expenses for
fiscal year 1996 (expressed as a percentage of each Portfolio's average net
assets):
MANAGEMENT OTHER TOTAL ANNUAL
FEES EXPENSES EXPENSES *
Growth Opportunities 0.61% 0.16% 0.77%***
Growth & Income 0.50% 0.20% 0.70%
Balanced 0.46%** 0.32% 0.78%***
* The Portfolios' investment advisor has voluntarily agreed to limit total
expenses to 1.50%, 1.50% and 1.00% for the Growth Opportunities, Balanced
and Growth & Income Portfolio's average net assets, respectively. See the
Portfolio's prospectus for more information.
**Effective August 1, 1996, FMR voluntarily agreed to reduce VIP III
Balanced Fund's individual fund fee rate from .20% to .15%
***A portion of the brokerage commissions that the funds pay is used to
reduce fund expenses. In addition, Balanced and Growth Opprtunities have
entered into arrangements with their custodians whereby interest earned on
uninvested cash balances is used to reduce custodian expense. Including
these reductions, the total operating expenses presented in the table would
have been .75% and .76% for Balanced and Growth Opportunities respectively.
See Reverse Side for Additional Information
The Portfolios May not be Available in all States
N.NRR-STK-0197 JANUARY 27, 1997
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 $1000 of purchase payments,
here's how much you would have paid in total expenses if you surrendered
your Contract after the number of years indicated.
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
Growth Opportunities $65 $86 $107 $211
Growth & Income $64 $84 $103 $203
Balanced $65 $87 $107 $212
If you do not surrender your Contract or if you annuitize at the end of the
applicable time period, here is what your total expenses would be on a
$1,000 investment, assuming 5% annual return on your assets:
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
Growth Opportunities $18 $56 $97 $211
Growth & Income $17 $54 $93 $203
Balanced $18 $57 $97 $212
THESE FIGURES ILLUSTRATE THE COMBINED EFFECT OF ALL CURRENT CHARGES. THE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
