As filed with the SEC on April 25, 1997
Registration No. 33-54926
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. []
Post-Effective Amendment No. [4]
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. [6]
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, R25C
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 -- Pursuant to Rule 24f-2 under the
Investment Company Act of 1940, the Registrant has registered an indefinite
number of securities. Registrant's Rule 24f-2 Notice for the fiscal year
ending December 31, 1996 was filed February 26, 1997.
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, 1997, 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 Page _
of _
on , pursuant to paragraph (a) (2) of rule 485 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 Not Applicable
Item 5. General Description of Facts About FILI
Registrant, Depositor, and The Variable Account, and
Portfolio Companies the Funds
a) Depositor FILI
b) Registrant The Variable 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
b) Sales load Not applicable
c) Special purchase plans Not applicable
d) Commissions Selling the Contracts
e) Registrant's expenses Charges
f) Portfolio company deductions The Funds
and expenses
g) Organizational expenses Not applicable
Item 7. General Description of Variable
Annuity Contracts
a) Rights Summary of the Contract;
Investment Allocation of
Your Purchase Payment;
Death Benefit; Facts About the
Contract; Types of
Annuity Income Options;
Voting Rights; Other
Contract Provisions
b) Provisions and limitations Investment Allocation of
Your Purchase Payment; Free Look
Privilege
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; Types of
Annuity Income Options
b) Annuity commencement date Annuity Income Dates
c) Annuity payments Types of Annuity Income
Options
d) Assumed investment return Fixed, Variable or
Combination Annuity
Income
e) Minimums Cover Page, Summary of the Contract
f) Rights to change options or Investment Allocation of
transfer contract value Your Purchase Payment
Item 9. Death Benefit
a) Death benefit calculation Death Benefit
b) Forms of benefits Death Benefit; Types of Annuity
Income Options; Fixed, Variable
or Combination Annuity Income
Item 10. Purchases and Contract Values
a) Procedures for purchases Purchase of a Contract
b) Accumulation unit value Not Applicable
c) Calculation of accumulation Not Applicable
unit value
d) Principal underwriter Selling the Contracts
Item 11. Redemptions
a) Redemption procedures Not Applicable
b) Texas Optional Retirement Not Applicable
Program
c) Delay Postponement of
Benefits
d) Lapse Not Applicable
e) Revocation rights Free Look Privilege
Item 12. Taxes
a) Tax Consequences Tax Considerations
b) Qualified plans 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 FILI
(prospectus)
b) Attribution of Assets Not Applicable
c) Control of Depositor FILI (prospectus)
Item 18. Services
a) Fees, expenses and costs Fee Table, (prospectus), Charges,
(prospectus); The Funds (prospectus)
b) Management - related Not applicable
services
c) Custodian and independent Independent Accountants
public accountant
d) Other custodianship Safekeeping of Variable Account
Assets
e) Administrative servicing Not applicable
agent
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 Not Applicable
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, Variable or Combination
Annuity Income
Item 23. Financial Statements
a) Registrant Financial Statements
b) Depositor Financial Statements
PROSPECTUS
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 t hirteen 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 , the Variable Insurance Products Fund II , and the Variable
Insurance Products Fund III (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 7 . 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 , THE VARIABLE INSURANCE PRODUCTS FUND II
AND THE VARIABLE INSURANCE PRODUCTS FUND III .
FOR FURTHER INFORMATION CALL FIDELITY INVESTMENTS:
Nationwide 800-544-2442
Date: April 30, 199 7
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 14
Free Look Privilege 15
Investment Allocation of Your Purchase Payments 15
Accumulation Units 17
Withdrawals 18
Signature Guarantee 18
Charges 18
Death Benefit 22
Required Distributions Upon Death 22
Annuity Date 23
Selection of Annuity Income Options 23
Fixed, Variable, or Combination Annuity Income Options 23
Types of Annuity Income Options 24
Reports to Owners 25
THE FIXED ACCOUNT
The Fixed Account 26
MORE ABOUT THE CONTRACT
Tax Considerations 26
Other Contract Provisions 29
Selling the Contracts 30
Automatic Deduction Plan 31
Special Provisions For Sponsored Arrangements 31
Dollar Cost Averaging 31
Postponement of Payment 32
MORE ABOUT THE VARIABLE ACCOUNT AND THE FUNDS
Changes in Investment Options 32
Net Rate of Return for a Subaccount 33
Voting Rights 33
Resolving Material Conflicts 34
Performance 34
Litigation 35
Table of Contents of the Statement of Additional
Information 36
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.
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 , the Variable Insurance Products Fund II
or the Variable Insurance Products Fund III.
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
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 thirteen 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. F ive 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. Three
Subaccounts invest exclusively in shares of one of the mutual fund
portfolios of Variable Insurance Products Fund III. The Variable Insurance
Products Fund III currently offers a Growth & Income Portfolio, Balanced
Portfolio, and Growth Opportunities Portfolio. The Variable Insurance
Products Fund , the Variable Insurance Products Fund II , and the
Variable Insurance Products Fund III 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
Growth & Income Portfolio
Balanced Portfolio
Growth Opportunities Portfolio
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 0.02% 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 MANAGER 0 .64 % 0. 10 % 0.7 4 % 1
MONEY MARKET 0.21% 0.09% 0.30%
INVESTMENT GRADE BOND 0.45% 0.13% 0.58%
HIGH INCOME 0.59% 0.12% 0.71%
EQUITY-INCOME 0.51% 0.07% 0.58%1
INDEX 500 0.13% 0.15% 0.28%2
GROWTH 0.61% 0.08% 0.69%1
OVERSEAS 0.76% 0.17% 0.93%1
ASSET MANAGER: GROWTH 0.65% 0.22% 0.87%1
CONTRAFUND 0.61% 0.13% 0.74%1
GROWTH OPPORTUNITIES 0.61% 0.16% 0.77%1
BALANCED 0.48% 0.24% 0.72%1
GROWTH & INCOME 0.50% 0.20% 0.70%
(1) A portion of the brokerage commissions that certain funds pay was
used to reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. Including these reductions, the total operating
expenses presented in the table would have been .56% for Equity-Income
Portfolio, .67% for Growth Portfolio, .92% for Overseas Portfolio, .73% for
Asset Manager Portfolio, .71% for Contrafund Portfolio, .85% for Asset
Manager: Growth Portfolio, .76% for Growth Opportunities Portfolio, and
.71% for Balanced Portfolio.
(2) FMR agreed to reimburse a portion of Index 500 Portfolio's expenses
during the period. Without this reimbursement, the fund's management fee,
other expenses and total expenses would have been .28%, .15% and .43%,
respectively.
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
annuitize your contract during the first year.
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
ASSET MANAGER $65 $8 5 $10 5 $2 07
MONEY MARKET 6 0 7 2 8 2 1 59
INVESTMENT GRADE BOND 63 8 0 9 7 19 0
HIGH INCOME 64 84 104 204
EQUITY-INCOME 63 8 0 9 7 19 3
GROWTH 64 84 103 20 2
OVERSEAS 66 9 1 11 5 22 7
INDEX 500 60 71 81 157
ASSET MANAGER: GROWTH 6 6 89 11 2 2 21
CONTRAFUND 6 5 85 10 5 20 7
GROWTH OPPORTUNITIES 65 86 107 211
BALANCED 64 85 104 205
GROWTH & INCOME 64 84 103 203
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 $18 $5 5 $9 5 $2 07
MONEY MARKET 1 3 4 2 7 2 1 59
INVESTMENT GRADE BOND 16 5 0 8 7 19 0
HIGH INCOME 18 54 94 204
EQUITY-INCOME 1 6 5 0 8 7 19 0
GROWTH 17 54 93 20 2
OVERSEAS 20 61 10 5 22 7
INDEX 500 13 41 71 157
ASSET MANAGER: GROWTH 1 9 59 10 2 2 21
CONTRAFUND 18 55 9 5 20 7
GROWTH OPPORTUNITIES 18 56 97 211
BALANCED 18 55 94 205
GROWTH & INCOME 17 54 93 203
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 Increase Number of
Unit Value at Unit Value at or (Decrease) Accumulation
Beginning of End of Period During Period Units at End
Period of Period
1996 14.66 15.30 4.34% 33,393,564
1995 13.99 14.66 4.82% 26,268,846
1994 13.55 13.99 3.21% 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 Increase Number of
Unit Value at Unit Value at or (Decrease) Accumulation
Beginning of End of Period During Period Units at End
Period of Period
1996 22.05 24.89 12.88% 9,856,952
1995 18.47 22.05 19.40% 7,797,315
1994 18.94 18.47 (2.53)% 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 Increase Number of
Unit Value at Unit Value at or (Decrease) Accumulation
Beginning of End of Period During Period Units at End
Period of Period
1996 27.44 31.05 13.13% 43,073,117
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 Increase Number of
Unit Value at Unit Value at or (Decrease) Accumulation
Beginning of End of Period During Period Units at End
Period of Period
1996 30.80 34.97 13.55% 26,772,269
1995 22.98 30.80 34.02% 23,019,869
1994 23.22 22.98 (1.02)% 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 Increase Number of
Unit Value at Unit Value at or (Decrease) Accumulation
Beginning of End of Period During Period Units at End
Period of Period
1996 19.00 21.30 12.08% 11,419,855
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 Increase Number of
Unit Value at Unit Value at or (Decrease) Accumulation
Beginning of End of Period During Period Units at End
Period of Period
1996 16.99 17.36 2.15% 4,615,384
1995 14.63 16.99 16.15% 3,993,107
1994 15.35 14.63 (4.72)% 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 Increase Number of
Unit Value at Unit Value at or (Decrease) Accumulation
Beginning of End of Period During Period Units at End
Period of Period
1996 18.29 20.76 13.45% 33,062,627
1995 15.80 18.29 15.79% 39,821,641
1994 16.99 15.80 (7.03)% 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 Increase Number of
Unit Value at Unit Value at or (Decrease) Accumulation
Beginning of End of Period During Period Units at End
Period of Period
1996 15.54 18.90 21.59% 18,160,844
1995 11.44 15.54 35.82% 7,333,800
1994 11.44 11.44 0.03% 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 End of Period During Period Units at End
Period of Period
1996 12.20 14.50 18.73% 12,261,937
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 End of Period During Period Units at End
Period of Period
1996 13.87 16.66 20.09% 53,010,249
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 contracts in this prospectus have been offered only as of December
7, 1988, and others only as of May 1, 199 7 . The financial
information in the above table includes periods prior to December 7, 1988
because an earlier class of variable annuity contracts is also being funded
through the Variable Account. Financial information reflects all classes of
contracts. Because the three 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.
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 Fidelit y
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 t hirteen
Subaccounts in the Variable Account. Five Subaccounts invest
exclusively in shares of a specific portfolio of the Variable Insurance
Products Fund. F ive Subaccounts invest exclusively in shares of a
specific portfolio of the Variable Insurance Products Fund II. The
remaining three portfolios invest exclusively in shares of a specific
portfolio of the Variable Insurance Products Fund III.
THE FUNDS
The Variable Insurance Products Fund , the Variable Insurance
Products Fund II , and the Variable Insurance Products Fund III,
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 ,
the Variable Insurance Products Fund II and the Variable Insurance
Products Fund III 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. The fund may be
appropriate for investors who would like to earn income at current money
market rates while preserving the value of their investment. The fund is
managed to keep its share price stable at $1.00. The rate of income will
vary from day to day, generally reflecting short-term interest rates.
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.
A fund's level of risk and potential reward depend on the quality and
maturity of its investments. The fund is for long-term, aggressive
investors who understand the potential risks and rewards of investing in
lower-quality debt, including defaulted securities. Investors must be
willing to accept the fund's greater price movements and credit risks.
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. The fund may be appropriate for investors who are willing to ride
out stock market fluctuations in pursuit of potentially high long-term
returns. The fund is designed for those who want some income from equity
and bond investments, but also want to be invested in the stock market for
its long-term growth potential.
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. The fund may be appropriate for investors who are willing to
ride out stock market fluctuations in pursuit of potentially high long-term
returns. The fund is designed for those who want to pursue growth wherever
it may arise, and who understand that this strategy often leads to
investments in smaller, less well-known companies. The fund invests for
growth and does not pursue an income strategy.
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. The fund may be appropriate
for investors who want to pursue their investment goals in markets outside
of the United States. By including international investments in your
portfolio, you can achieve additional diversification and participate in
growth opportunities around the world. However, it is important to note
that investments in foreign securities involve risks in addition to those
of U.S. investments.In addition to general risks, international investing
involves different or increased risks. The performance of international
funds depends upon currency values, the political and regulatory
environment, and overall economic factors in the countries in which the
fund invests.
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. The fund may be appropriate
for investors who want to diversify among domestic and foreign stocks,
bonds, short-term instruments and other types of securities, the fund
spreads its assets among all three asset classes moderating both its risk
and return potential. Because the fund owns different types of investments,
the performance is affected by a variety of factors. The value of each
fund's investments and the income generated will vary from day to day, and
generally reflect interest rates, market conditions, and other company,
political and economic news. Performance also depends on FMR's skills in
allocating assets.
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. The fund may be
appropriate for investors who want high current income from a portfolio of
investment-grade debt securities. A fund's level of risk and potential
reward depend on the quality and maturity of its investments. With its
focus on medium- to high-quality investments, the fund has a moderate risk
level and yield potential.
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. The
fund may be appropriate for investors who are willing to ride out stock
market fluctuations in pursuit of potentially high long-term returns. The
fund is designed for those who want to pursue growth of capital and current
income through a portfolio of securities that broadly represents the U.S.
stock market, as measured by the S&P 500. The fund seeks to keep expenses
low as it attempts to match the return of the S&P 500. Because the fund
seeks to track, rather than beat, the performance of the S&P 500, it is not
managed in the same manner as other funds.
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. The fund
may be appropriate for investors who want to diversify among domestic and
foreign stocks, bonds, short-term instruments and other types of
securities, in one fund. The fund, while spreading its assets among all
three asset classes, uses a more aggressive approach by focusing on stocks
for a higher potential return. Because the fund owns different types of
investments, their performance is affected by a variety of factors. The
value of each fund's investments and the income they generate will vary
from day to day, and generally reflect interest rates, market conditions,
and other company, political and economic news. Performance also depends on
FMR's skills in allocating assets.
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. The fund may be appropriate for investors who are
willing to ride out stock market fluctuations in pursuit of potentially
high long-term returns. The fund is designed for those who are looking for
an investment approach that follows a contrarian philosophy.
VARIABLE INSURANCE PRODUCTS FUND III
GROWTH & INCOME PORTFOLIO seeks 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 dividends, but offer the potential for capital appreciation of
future income. The fund may be appropriate for investors who are willing to
ride out stock market fluctuations in pursuit of potentially high long-term
returns. The fund is designed for those who seek a combination of growth
and income from equity and some bond investment.
GROWTH OPPORTUNITIES PORTFOLIO seeks capital growth by investing in a wide
range of common domestic and foreign stocks, and securities convertible
into common stocks. Although the fund invests primarily in common stock, it
has the ability to purchase securities, such as preferred stock and bonds
that may produce capital growth. The value of the fund's investments and,
as applicable, the income they generate will vary from day to day, and
generally reflect changes in market conditions, interest rates, and other
company, political, or economic news. In the short-term, stock prices can
fluctuate dramatically in response to these factors.
BALANCED PORTFOLIO seeks 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. The value of the fund's investments and,
as applicable, the income they generate will vary from day to day, and
generally reflect changes in market conditions, interest rates, and other
company, political, or economic news. In the short-term, stock prices can
fluctuate dramatically in response to these factors.
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 6 , it advised
funds having more than 29 million shareholder accounts with a total
value of more than $ 432 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.
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. For certain contracts issued after May 1, 1997,
FILI also reserves the right to charge for transfers in excess of 12 per
calendar 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.
In some cases, contracts may be sold to individuals who independently
utilize the services of a firm or individual engaged in market timing.
Generally, market timing services obtain authorization from Contract
Owner(s) to make transfers and exchanges among the sub-accounts on the
basis of perceived market trends. Because the large transfers of assets
associated with market timing services may disrupt the management of the
portfolios of the Funds, such transactions may become a detriment to
Contract Owners not utilizing the market timing service.
The right to exchange contract values among sub-accounts may be subject to
modification if such rights are executed by a market timing firm or similar
third party authorized to initiate transfers or exchange transactions on
behalf of a Contract Owner(s). In modifying such rights, the Company may,
among other things, decline to accept (1) the transfer or exchange
instructions of any agent acting under a power of attorney on behalf of
more than one Contract Owner, or (2) the transfer or exchange instructions
of individual Contract Owners who have executed pre-authorized transfer or
exchange forms which are submitted by market timing firms or other third
parties on behalf of more than one Contract Owner at the same time. The
Company will impose such restrictions only if it believes that doing so
will prevent harm to other Contract Owners.
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, 199 7 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. The 25% limitation will be reviewed monthly and
may be updated but will not be reduced below 25%. 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. Wyoming and South Dakota currently requires us to pay a premium
tax upon receipt of your purchase payment on non-qualified contracts.
Currently, there is no tax imposed on qualified premiums. 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%.
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 0.6 6 % 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. TRANSFER CHARGE. On certain contracts issued after May 1, 1997 we
reserve the right to charge for transfers in excess of 12 per calendar
year.
6 . FUNDS' EXPENSES. The expenses and charges incurred by the Funds are
described in the attached prospectuses for the Funds.
7 . 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
of 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, the 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, 199 7 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.
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,
199 7 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, 199 7 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 .
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 the
case of a Contract held in custody for a minor under the Uniform Gifts to
Minors Act or the Uniform Transfers to Minors Act, a distribution under the
Contract ordinarily is taxable to the minor. Whether the penalty tax
applies to such a distribution ordinarily is determined by the circumstance
or characteristics of the minor, not the custodian. Thus, for example, a
distribution taxable to a minor will not qualify for the exception to the
penalty tax for distributions made on or after age 59 1/2, even if the
custodian is 59 1/2 or older. 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 ". No Contingent
Beneficiary has the right to proceeds unless all of the Primary
Beneficiar ies die 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 . 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, 199 7 or later) or, if greater, the rate required by
law.
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.
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
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
1. Internal Revenue Service Regulations require you be given this
Disclosure Statement to make certain that you fully understand the nature
of an Individual Retirement Account (IRA). For this reason, it is important
that you read this statement carefully.
REVOCATION
2. You are allowed to revoke or cancel your IRA within ten (10) days of the
later of (1) the date of the application for the IRA; or (2) the date you
receive the IRA contract. A revocation treats an IRA as if it never
existed, and entitles you to a full refund of your entire contribution.
FILI will refund the greater of: (1) your Purchase Payment in full, neither
crediting your account for earnings, nor charging it with any
administrative expenses, or (2) your contract value at the time of
revocation plus any amount deducted from your contribution prior to such
time.
You may revoke your IRA by mailing or delivering a notice of revocation to:
Fidelity Investments Life Insurance Company
Annuity Service Center
P.O. Box 1306
Boston, MA 02104-9907
Any question regarding this procedure may be directed to a Fidelity
Insurance Specialist at 1-800-544-2442.
CONTRIBUTIONS
3. You may establish an IRA for the purpose of rolling over all or a
portion of your distribution from a qualified plan, tax sheltered annuity
or other IRA. If you retire, terminate your employment prior to retirement
age, or become disabled, and you are entitled to a single sum distribution,
all or a portion of the distribution may be transferred to a qualifying IRA
tax-free if done within 60 days of receipt of the single sum distribution.
The amount of your rollover IRA contribution will not be included in your
taxable income for the year in which you receive the qualified plan
distribution.
4. Subsequent contributions, other than additional rollover contributions
from another qualified plan, tax sheltered annuity or IRA, will not be
accepted.
5. No deduction is allowed for a rollover contribution which is not treated
as income to the individual.
INVESTMENTS
6 The assets in your IRA are nonforfeitable, subject to the surrender
charges specified in the IRA contract.
7. The assets in your IRA cannot be commingled with other property except
in a common trust fund or common investment fund.
8. No part of the IRA may be invested in life insurance or endowment
contracts.
DISTRIBUTIONS
9. Distributions from your IRA will be included in your gross income for
federal income tax purposes for the year in which you receive them.
10. To the extent they are included in taxable income, distribution from
your IRA made before age 59 1/2 will be subject to a 10% non-deductible
penalty tax (in addition to being taxable as ordinary income) unless the
distribution is rolled over to another qualified plan, tax sheltered
annuity or IRA, or the distribution is made on account of your death or
disability, or the distribution is one of a scheduled series of payments
over your life or life expectancy or the joint life expectancies of
yourself and the second person designated by you.
11. You must begin receiving distributions of the assets in your IRAs by
April 1 of the calendar year following the calendar year in which you reach
70 1/2. Subsequent distributions must be made by December 31 of each year.
12. You may select one of the following methods of distribution for the
assets of this IRA:
(a) Distribution over your life or your life and the life of a second
person designated by you;
(b) Distribution over a period certain not to exceed your life expectancy
or your life expectancy and that of a second person designated by you;
(c) Single sum payment; or
(d) Partial withdrawals that, together with withdrawals from your other
IRAs, satisfy the minimum distribution requirements discussed below.
(See Contract and Endorsement for a full description of these distribution
methods.)
13. Once distributions are required to begin, they must not be less than
the amount each year (determined by actuarial tables) which would exhaust
the value of all your IRAs over the required distribution period, which is
generally your life expectancy or the joint life and last survivor
expectancy of you and your spouse. You will be subject to a 50% excise tax
on the amount by which the distribution you actually received in any year
falls short of the minimum distribution required for the year.
14. If you die after distribution of the IRA has commenced, the remaining
balance must continue to be distributed under the same or a more rapid
method of distribution.
15. If you die before distribution of the IRA commences, the entire balance
must be distributed to the beneficiary within five (5) years unless:
(a) The beneficiary is your surviving spouse and the beneficiary either
treats the IRA as his or her own IRA or elects within a five (5) year
period to receive payments over his or her own life expectancy commencing
at any date prior to the date you would have reached age 70 1/2; or
(b) The beneficiary is not your surviving spouse and the beneficiary elects
to have the IRA distributed over his or her life expectancy commencing
within one (1) year of your death.
16. There is a 15% excise tax assessed against annual distribution from
tax-favored retirement plans, including IRAs, which exceed the greater of
(a) $150,000; and (b) $112,500 adjusted after 1988 to reflect
cost-of-living increases. To determine whether you have distributions in
excess of this limit you must aggregate the amounts of all distributions
received by you during the calendar year from all retirement plans,
including IRAs. Please consult with your tax advisor for more complete
information including favorable elections.
17. You may rollover all or a portion of your IRA into another IRA or
individual retirement annuity and maintain the tax-deferred status of these
assets. Tax-free rollovers between IRAs may be made no more than once every
twelve months.
OTHER TAX CONSIDERATIONS
18. Distributions are taxed as ordinary income under federal income tax
laws.
19. The tax treatment of single sum distributions under Section 402(e) of
the Code is not applicable to distributions from IRAs.
20. Reporting to the IRS will be required by you in the event that special
taxes or penalties described herein are due. You must file Treasury Form
5329 with the IRS for each taxable year in which a premature distribution
takes place or less than the required minimum amount is distributed from
your IRA. The Tax Reform Act of 1986 also requires you to report the amount
of all distributions you received from your IRA and the aggregate balance
of all IRAs as of the end of the calendar year.
PROHIBITED TRANSACTIONS
21. If any of the events prohibited by Section 4975 of the Code (such as
any sale, exchange or leasing of any property between you and your IRA)
occurs during the existence of your IRA, your account will be disqualified
and the entire balance in your account will be treated as if distributed to
you, as of the first day of the year in which the prohibited event occurs.
This "distribution" would be subject to ordinary income tax and, if you
were under age 59 1/2 at the time, to the 10% penalty tax on premature
distributions.
22. If you or your beneficiary borrow any money under, or by use of, all or
a portion of your IRA, then the portion pledged will be treated as if
distributed to you, and will be taxable to you as ordinary income and
subject to the 10% penalty during the year in which you make such a pledge.
IRS PROCEDURES
23. The form of your IRA has been submitted to the Internal Revenue Service
for approval. Approval by the IRS is a determination only as to the form of
the IRA and does not represent a determination on the merits of such IRA.
24. You may obtain further information with respect to your IRA from any
district office of the Internal Revenue Service.
FINANCIAL INFORMATION
25. The value of your investment will depend on how you allocate funds
between the Fixed Account and the subaccounts of the Variable Account. The
Company guarantees that the portion of your contract value that is held in
the Fixed Account will accrue interest daily at specified interest rates
that vary from time to time. With respect to funds allocated to the
Variable Account, the value will depend upon the actual investment
performance of the subaccounts that you choose; no minimum value is
guaranteed. See your prospectus for a more detailed description.
26. As further described in the prospectus, the following are all the
charges that the Company currently makes:
(a) ADMINISTRATIVE CHARGE
The Company currently deducts an annual maintenance charge of $30 on each
contract anniversary. This charge is currently waived if total payments,
less any withdrawals, equal at least $25,000.
The Company also deducts a daily charge from the assets of the subaccounts
equivalent to an effective annual rate of 0.25%. This charge is not made
against the Fixed Account.
(b) MORTALITY AND EXPENSE RISK CHARGE
The Company deducts a daily charge from the assets of the subaccounts
equivalent to an effective annual rate of 0.75%. This charge is not made
against the Guaranteed Account.
(c) WITHDRAWAL CHARGE
During the first five contract years the Company assesses a charge upon
the surrender of the contract or the withdrawal of more than the Exempt
Withdrawal Amount. This charge in the first year is 5% of the purchase
payments withdrawn. The factor decreases by 1% per year so that no
withdrawal charge is made after the fifth contract year.
(d) PORTFOLIO EXPENSES
The portfolios associated with the Variable Account incur operating
expenses and pay monthly management fees to Fidelity Management & Research
Company. The level of expenses vary by portfolio. This charge is not made
against the Fixed Account.
PART B
INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
FIDELITY RETIREMENT RESERVES
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 199 7
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, 199 7 , 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
$ 283.77 . The investment selection is 50% in Portfolio A and 50% in
Portfolio B.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
At Annuitization Portfolio A Portfolio B
(a) Initial Monthly Annuity Income Payment $ 14 1 . 89 $ 14 1 . 89
(b) Annuity Unit Value 1.23456 1.32465
(c) Income in Units 11 4 .9 28 107. 111
</TABLE>
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:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
# Annuity Annuity x = Annuity
Units Unit Value Income
Payment
Portfolio A 11 4 .9 28 1.23456 14 1 . 89
Portfolio B 107. 111 1.32465 14 1 . 89
$ 28 3 . 77
</TABLE>
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Portfolio A Portfolio B
(c) Monthly Income in Units 11 4 . 928 107. 111
(g) Annuity Unit Value (current) 1.23604 1.32303
(h) Monthly Income (in dollars) $ 142. 06 $ 14 1 .7 1
</TABLE>
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 $28 3.77 .
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 11 4.928 107. 111
(k) Annuity Unit Value (current) 1.42353 1.14774
(h) Monthly Income (in dollars) $ 16 3.60 $ 12 2.94
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 $2 86.54 .
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 -1.6 5 %, 3.50%, 4.2 5 %, 6. 21 %, 8.1 8 %
and 10.1 5 % 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%, 5.24 %, 6%, 8%,
10% and 12%. The values would be different from those shown if the returns
averaged 0%, 5.24 %, 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 0.17 %, 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: 3/1/3 2 STATE PREMIUM TAX: 0%
SEX: Male DATE OF ILLUSTRATION: 3/1/9 7
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: $ 312.73.
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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross 0% 5.25% 6% 8% 10% 12%
PAYME CALEND AG Net(2) -1.6 5 3.50% 4.2 5 6. 21 8.1 8 10.1 5
NT AR E : % % % % %
YEAR YEAR
1 199 7 65 28 4 28 4 28 4 28 4 28 4 28 4
2 199 8 66 27 0 28 4 28 6 29 1 29 7 30 2
3 199 9 67 25 6 28 4 28 8 299 31 0 32 1
4 2000 68 24 3 28 4 29 0 30 7 32 4 34 2
5 200 1 69 23 1 28 4 29 2 31 5 3 39 36 4
10 200 6 74 1 79 28 4 30 3 35 8 42 3 49 7
15 201 1 79 13 9 28 4 31 4 40 7 52 7 6 79
20 201 6 84 10 8 28 4 32 6 46 4 6 57 9 26
</TABLE>
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: 3/1/3 2 STATE PREMIUM TAX: 0%
SEX: Male DATE OF ILLUSTRATION: 3/1/9 7
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: $ 312.73 .
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 $ 156.37 . THE MONTHLY GUARANTEED PAYMENT OF
$31 2 . 73 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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gross 0% 5.25% 6% 8% 10% 12%
PAYME CALEND AG Net(2) -1.6 5 3.50% 4.2 5 6. 21 8.1 8 10.1 5
NT AR E : % % % % %
YEAR YEAR
1 199 7 65 29 8 29 8 29 8 29 8 29 8 29 8
2 199 8 66 29 1 29 8 299 30 2 30 5 30 7
3 199 9 67 28 4 29 8 30 0 30 6 31 1 31 7
4 2000 68 27 8 29 8 30 1 31 0 31 8 32 7
5 200 1 69 27 2 29 8 30 2 31 4 32 6 33 8
10 200 6 74 24 6 29 8 30 8 33 5 36 8 40 5
15 201 1 79 226 29 8 31 3 3 60 4 20 49 6
20 201 6 84 21 0 29 8 3 19 38 8 48 5 6 20
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL I VESTMENT 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 12/31/9 6 . 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,
199 6 . 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/ 31 /9 6
(a) One Year Average Annual Total Return For Contracts Issued on December
31, 199 5
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Return Return Return
If Contract If Contract If Contract
Surrendered Continued Continued
and and
Maintenance Maintenance
Charge Charge Not
Applied Applicable
Asset Manager 8.43 % 13.43 % 13.45 %
Money Market (0.39) % 4.32 % 4.34 %
Investment Grade Bond (2.48) % 2.13 % 2.15 %
Equity-Income 8.11 % 13.11 % 13.13 %
Growth 8.53 % 13.53 % 13.55 %
High Income 7.86 % 12.86 % 12.88 %
Overseas 7.06 % 12.06 % 12.08 %
Index 500 16.57 % 21.57 % 21.59 %
Asset Manager: Growth 13.71% 18.71% 18.73%
Contrafund 15.07% 20.07% 20.09%
</TABLE>
(b) Average Annual Total Return If Contract Issued at Commencement of
Portfolio
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Subaccount Portfolio's Return Return Return
Start If Contract If Contract If Contract
Date Surrendere Continued Continued
d and and
Maintenance Maintenance
Charge Charge Not
Applied Applicable
Asset Manager 9/6/89 10.54% 10.54 % 10.58 %
Investment Grade 12/5/88 7.07 % 7.07 % 7.12 %
Bond
High Income 9/19/85 10.80 % 10.80 % 10.88 %
Overseas 1/28/87 6.74 % 6.74 % 6.81 %
Index 500 8/27/92 15.76 % 15.76 % 15.93 %
Asset Manager: 1/3/95 18.68% 20.36% 20.38%
Growth
Contrafund 1/3/95 27.35% 28.92% 28.95%
</TABLE>
(c) Five Year Average Annual Total Return If Contract Issued on December
31, 199 1
If Contract Return Return
Surrendered If Contract If Contract
Continued Continued
and and
Maintenance Maintenance
Charge Charge Not
Applied Applicable
Asset Manager 9.98 % 10.11 % 10.13 %
Money Market 3.28 % 3.45 % 3.48 %
Investment Grade Bond 5.38 % 5.54 % 5.56 %
Equity-Income 16.66 % 16.75 % 16.78 %
Growth 13.87 % 13.97 % 14.00 %
High Income 13.66 % 13.77 % 13.79 %
Overseas 7.86 % 8.00 % 8.03 %
(d) Ten Year Average Annual Total For Contracts Issued on December
31 , 198 6
If Contract Return Return
Surrendered If Contract If Contract
Continued Continued
and and
Maintenance Maintenance
Charge Charge Not
Applied Applicable
Money Market 4.83 % 4.83 % 4.89 %
High Income 9.93 % 9.93 % 10.01 %
Equity-Income 12.52% 12.52% 12.59%
Growth 13.92% 13.92% 13.99%
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, 199 6 . 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/ 31 /9 6
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Subaccount Portfolio' Return Return Return
s If Contract If Contract If Contract
Start Surrendere Continued Continued
Date d and and
Maintenance Maintenance
Charge Charge Not
Applied Applicable
Asset Manager 9/6/89 108.26 % 108.26 % 108.83 %
Investment Grade 12/5/88 73.65 % 73.65 % 74.25 %
Bond
High Income 9/19/85 218.33 % 218.33 % 220.97 %
Overseas 1/28/87 91.07 % 91.07 % 92.32 %
Index 500 8/27/92 88.94 % 89.94 % 90.14 %
Asset Manager: 1/3/95 40.71% 44.71% 44.77%
Growth
Contrafund 1/3/95 61.97% 65.97% 66.04%
</TABLE>
(b) Cumulative Total Return For Five Year Period From 12/31/9 1
Through 12/31/9 6
Subaccount Return Return Return
If Contract If Contract If Contract
Surrendered Continued Continued
and and
Maintenance Maintenance
Charge Charge Not
Applied Applicable
Asset Manager 60.91 % 61.91 % 62.12 %
Money Market 17.50 % 18.50 % 18.66 %
Investment Grade Bond 29.96 % 30.96 % 31.13 %
Equity-Income 116.11 % 117.11 % 117.36 %
Growth 91.42 % 92.42 % 92.65 %
High Income 89.72 % 90.72 % 90.95 %
Overseas 46.00 % 47.00 % 47.19 %
(c) Cumulative Total Return For Ten Year Period From 12/31/8 6
Through 12/31/9 6
Return Return Return
If Contract If Contract If Contract
Surrendered Continued Continued
and and
Maintenance Maintenance
Charge Charge Not
Applied Applicable
Money Market 60.28 % 60.28 % 61.33 %
High Income 158.02 % 158.02 % 159.71 %
Equity-Income 225.65% 225.65% 227.72%
Growth 268.54% 268.54% 270.84%
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
12/31/9 6 , the Money Market Subaccount had a current yield of
4. 22 % and an effective yield of 4. 3 1%. For Contracts on which
there is currently no maintenance charge, the current yield would be
4. 24 % and the effective yield would be 4. 33 %.
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
12/29/9 6 was 4.98 % for the Investment Grade Bond Subaccount
and 6.25 % for the High Income Subaccount. For Contracts on which
there is no maintenance charge, the 30 day yield would be 5.00 % for
the Investment Grade Bond Subaccount and 6.27 % 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, 199 6 and 199 5 , 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,
199 6 , and the statement of assets and liabilities of the Fidelity
Investments Variable Annuity Account I as of December 31, 199 6 , and
the related statements of operations and changes in net assets for the
years ended December 31, 199 6 and 199 5 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
(A Wholly-Owned Subsidiary of FMR Corp.)
CONSOLIDATED FINANCIAL STATEMENTS
for the years ended December 31, 1996, 1995 and 1994
Page(s)
Report of Independent Accountants 1
Consolidated Statements of Financial Condition 2
Consolidated Statements of Income 3
Consolidated Statements of Stockholder's Equity 4
Consolidated Statements of Cash Flows 5
Notes to the Consolidated Financial Statements 6-13
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, 1996 and 1995, 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, 1996. 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, 1996 and 1995, and
the consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
January 29, 1997
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A Wholly-Owned Subsidiary of FMR Corp.)
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1996 and 1995
ASSETS 1996 1995
Debt securities available for
sale $167,973,832 $159,755,595
Common stocks 3,576,373 -
Policy loans 127,948 114,595
Total investments 171,678,153 159,870,190
Cash and cash equivalents 2,886,300 2,298,255
Accrued investment income 2,728,843 2,604,761
Deferred policy acquisition costs 16,865,993 13,240,829
Goodwill, net of accumulated
amortization of $1,271,328 in
1996 and $1,157,808 in 1995 3,515,380 3,628,900
Other assets 1,039,517 608,621
Deferred tax asset 13,109,839 7,940,026
Separate account assets 6,165,792,850 4,485,145,409
Total assets $6,377,616,875 $4,675,336,991
LIABILITIES
Future contract and policy
benefits 66,268,392 71,535,637
Payable to affiliates 1,684,839 2,894,161
Other liabilities and accrued
expenses 3,007,930 3,420,811
Federal income taxes payable 109,000 527,311
Separate account liabilities 6,164,194,468 4,480,757,963
Total liabilities 6,235,264,629 4,559,135,883
Commitments and contingencies (Note 7)
STOCKHOLDER'S EQUITY
Common stock, par value $10
per share - authorized,
1,000,000 shares; issued
and outstanding, 300,000
shares 3,000,000 3,000,000
Additional paid-in capital 68,048,088 68,048,088
Unrealized gain on securities
available for sale, net of tax 716,604 2,364,688
Retained earnings 70,587,554 42,788,332
Total stockholder's equity 142,352,246 116,201,108
Total liabilities and
stockholder's equity $6,377,616,875 $4,675,336,991
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A Wholly-Owned Subsidiary of FMR Corp.)
CONSOLIDATED STATEMENTS OF INCOME
for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Revenues:
Fees charged to
contractholders $56,600,909 $39,171,360 $28,423,041
Net investment
income 11,056,173 10,687,327 6,052,171
Realized gains
(losses), net (37,755) (14,021) (176,109)
67,619,327 49,844,666 34,299,103
Benefits and expenses:
Return credited to
contractholders
and other
benefits 3,630,146 4,179,438 2,100,679
Underwriting,
acquisition and
insurance
expenses (1) 21,332,521 16,859,410 11,958,754
Amortization of
goodwill 113,520 113,520 113,520
25,076,187 21,152,368 14,172,953
Income before
provision for
income taxes 42,543,140 28,692,298 20,126,150
Provision for income
taxes 14,743,918 10,344,880 7,016,062
Net income $27,799,222 $18,347,418 $13,110,088
(1) Includes affiliated party transaction (Note 5)
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A Wholly-Owned Subsidiary of FMR Corp.)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
for the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Unrealized
Gain (Loss)
Additional on Securities Total
Common Paid-In Available for Retained Stockholder's
Stock Capital Sale Earnings Equity
Balance at
January 1,
1994 $3,000,000 $60,048,088 $ - $11,330,826 $74,378,914
Adjustment to
beginning balance
for change in
accounting principle,
net of tax benefit
of $533,602 (990,956) (990,956)
Capital contribution
from parent 8,000,000 8,000,000
Net income 13,110,088 13,110,088
Change in unrealized
gain (loss), net of
tax benefit of
$594,591 (1,698,831) (1,698,831)
Balance at
December 31,
1994 3,000,000 68,048,088 (2,689,787) 24,440,914 92,799,215
Net income 18,347,418 18,347,418
Change in unrealized
gain (loss), net of
tax benefit of
$2,721,642 5,054,475 5,054,475
Balance at
December 31,
1995 3,000,000 68,048,088 2,364,688 42,788,332 116,201,108
Net income 27,799,222 27,799,222
Change in unrealized
gain (loss), net of tax
benefit of $887,431 (1,648,084) (1,648,084)
Balance at
December 31,
1996 $3,000,000 $68,048,088 $716,604 $70,587,554 $142,352,246
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(A Wholly-Owned Subsidiary of FMR Corp.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Cash flows from operating activities:
Net income $27,799,222 $18,347,418 $13,110,088
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization of bond discount
and premium 1,133,278 1,111,542 1,242,771
Realized loss on investments 37,755 14,021 176,109
Amortization of goodwill 113,520 113,520 113,520
Depreciation and amortization 1,240,837 870,009 763,483
Deferred taxes on earnings (4,282,382) (3,163,423) (2,090,239)
Increase in future contract
and policy benefits 3,296,023 1,875,338 1,930,775
Addition to deferred policy
acquisition costs (4,406,980) (3,380,870) (3,578,600)
Changes in assets and liabilities:
Accrued investment income (124,082) (522,944) (798,721)
Amounts due (from) to separate
accounts 2,789,064 (1,585,709) 389,538
Payable to parent and affiliates, net (1,209,322) 2,052,095 593,236
Other assets and liabilities (914,883) 2,054,180 1,308,402
Net cash provided by operating
activities 25,472,050 17,785,177 13,160,362
Cash flows from investing activities:
Purchase of investments (83,411,193) (54,337,078) (136,809,754)
Proceeds from disposal of investments 67,910,035 23,220,971 89,827,943
Additions to fixed assets (819,579) (570,316) (213,267)
Additions to separate accounts (1,007,857,631) (785,157,232) (868,356,472)
Net cash used in investing
activities (1,024,178,368) (816,843,655) (915,551,550)
Cash flows from financing activities:
Considerations and deposits on
variable annuity products 1,153,249,988 908,482,198 952,425,197
Payments to contractholders (153,955,625) (109,796,924) (60,291,338)
Capital contribution from parent - - 8,000,000
Net cash provided by
financing activities 999,294,363 798,685,274 900,133,859
Net (decrease) increase in cash
and cash equivalents 588,045 (373,204) (2,257,329)
Cash and cash equivalents:
Beginning of year 2,298,255 2,671,459 4,928,788
End of year $2,886,300 $2,298,255 $2,671,459
</TABLE>
The accompanying notes are an integral part of 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:
Organization
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 collectively, the "Company"). 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 Accounts, separate accounts of the Company. Amounts
invested in the variable life policies are allocated to the Variable Life
Account I, also a separate account of the Company. The assets of the
Variable Accounts are invested in the portfolios of the Variable Insurance
Products Fund and the Variable Insurance Products Fund II, which are
reported at the net asset value of such portfolios. During 1996, the
Company began offering a term life insurance product with level premium
paying periods of one, five, ten, fifteen and twenty years.
Basis of Presentation
The accompanying consolidated financial statements of 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).
Investments
Investments in debt securities available-for-sale and common stocks are
reported at fair value. Fair values are derived from external market
quotations. Unrealized gains or losses on debt securities and common stock
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 impracticable to determine the
market value of policy loans.
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.
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 fair value.
Separate Accounts
Separate account assets represent funds held for the exclusive benefit
of 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 income and
realized and unrealized gains and losses from such investments are offset
by an increase in the amount of liabilities related to the separate
account. The excess of separate account assets over separate account
liabilities represents funds of the Company retained in the separate
account.
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.
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
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.
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.
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.
Use of Estimates
The preparation of the consolidated statement of financial condition in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expense during the reporting period. Actual results
could differ from those estimates.
Reclassifications
Certain prior year balances have been reclassified to conform with
current year presentation.
2. Investments:
The components of net investment income are as follows:
Years ended December 31,
1996 1995 1994
Debt securities $10,509,919 $9,762,049 $5,956,902
Common stocks 216,340 - -
Short-term investments
and cash equivalents 551,046 459,245 453,138
Policy loans 8,814 8,288 9,329
Investment in separate
accounts 419,102 1,002,072 15,890
Total investment
income 11,705,221 11,231,654 6,435,259
Investment expenses 649,048 544,327 383,088
Net investment
income $11,056,173 $10,687,327 $6,052,171
Gross realized gains and losses from sales of debt securities were as
follows:
Years ended December 31,
1996 1995 1994
Gross realized gains $28,075 $4,605 $462
Gross realized losses 65,830 18,626 176,571
Gross unrealized appreciation (depreciation) for debt securities, by type
of issuer, and common stock were as follows:
<TABLE>
<CAPTION>
<S> <C>
December 31, 1996
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury securities and
obligations of U.S.
government corporations
and agencies $52,221,996 $274,739 $(93,624) $52,403,111
Corporate securities 97,184,021 1,068,425 (115,902) 98,136,544
Asset-backed securities 17,325,380 108,797 - 17,434,177
Total debt securities $166,731,397 $1,451,961 $(209,526) $167,973,832
Common stock $3,716,340 - $(139,967) $3,576,373
December 31, 1995
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury securities and
obligationsof U.S.
government corporations
and agencies $24,297,882 $834,737 $ - 25,132,619
Debt securities issued by
foreign governments 690,789 10,851 - 701,640
Corporate securities 105,871,089 2,436,331 (29,189) 108,278,231
Asset-backed securities 25,257,852 386,403 (1,150) 25,643,105
Totals $156,117,612 $3,668,322 $(30,339) $159,755,595
</TABLE>
The amortized cost and fair value of debt securities at December 31, 1996,
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 $42,248,904 $42,421,051
Due after 1 year through
5 years 70,557,387 71,281,586
Due after 5 years
through 10 years 34,951,519 35,054,851
Due after 10 years 1,648,207 1,782,167
Subtotal 149,406,017 150,539,655
Asset-backed securities 17,325,380 17,434,177
$166,731,397 $167,973,832
All debt securities are investment grade and there are no significant
concentrations by issuer or by industry other than U.S. government
securities.
3. Income Taxes:
Significant components of the provision for income taxes attributable to
operations were as follows:
Years ended December 31,
1996 1995 1994
Current $19,026,301 $13,508,303 $9,106,301
Deferred (4,282,383) (3,163,423) (2,090,239)
Provision for
income taxes $14,743,918 $10,344,880 $7,016,062
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 were as
follows:
Years ended December 31,
1996 1995
Deferred policy acquisition
costs $11,271,609 $8,303,903
Reserves 2,328,200 1,027,221
Unrealized (gain) loss on
securities available-for-sale (385,864) (1,273,295)
Other, net (104,106) (117,803)
Total net deferred tax assets $13,109,839 $7,940,026
Management believes that the Company's future income will be sufficient to
realize the net deferred tax assets.
FILI paid federal income taxes of $19,444,612, $13,790,214, and $8,642,087
in 1996, 1995, and 1994, respectively.
The effective tax rates approximate the statutory federal income tax rates
for the years ended 1996, 1995 and 1994.
4. Stockholders' 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,
1996 1995 1994
Net income $19,978,488 $12,651,624 $8,587,674
Capital stock
and surplus 105,642,545 86,495,098 74,227,508
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 renewal sales compensation of 0.10% of
the contract value each year. EFILI pays FIA sales compensation of 3% of
payments received. The Company compensated FIA in the amount of
$9,360,582, $6,833,848 and $6,044,200 in 1996, 1995 and 1994, respectively.
The Company has entered into administrative service agreements with its
affiliates whereby the Company provides certain administrative and
accounting functions. The Company received $806,704, $988,878 and $730,790
in 1996, 1995 and 1994, 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 $181,966,
$107,143 and $81,946 were charged to the Company in 1996, 1995 and 1994,
respectively.
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 $440,597, $424,336 and $330,683 in 1996, 1995 and 1994,
respectively.
The Company participates in various FMR Corp. stock-based compensatory
plans. The compensation is based on the change in the net asset value of
FMR Corp. common stock, as defined. The aggregate expenses related to
these plans charged to the Company were approximately $603,385, $708,538
and $579,345 in 1996, 1995 and 1994, respectively.
6. Underwriting, Acquisition and Insurance Expenses:
Underwriting, acquisition and insurance expenses were as follows:
Years ended December 31,
1996 1995 1994
Commissions $5,839,169 $4,215,653 $2,463,918
Taxes, licenses and
fees 1,882,452 1,351,008 1,057,712
Amortization of
deferred policy
acquisition costs 781,816 571,588 382,665
General insurance
expenses 12,829,084 10,721,161 8,054,459
$21,332,521 $16,859,410 $11,958,754
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.
The Company has 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 and deposits ceded under these reinsurance
contracts were not material to the consolidated financial statements.
(2_FIDELITY_LOGOS)FIDELITY INVESTMENTS
VARIABLE ANNUITY ACCOUNT I
ANNUAL REPORT
DECEMBER 31, 1996
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
VARIABLE ANNUITY OWNERS. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS. NEITHER FIDELITY INVESTMENTS LIFE INSURANCE COMPANY NOR
FIDELITY BROKERAGE SERVICES, INC. IS A BANK, AND NEITHER THE ANNUITY NOR
MUTUAL FUND SHARES ARE BACKED OR GUARANTEED BY ANY BANK OR INSURED BY THE
FDIC.
STATEMENT OF ASSETS AND LIABILITIES
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
<S> <C>
DECEMBER 31, 1996
ASSETS
Investments at Current Market Value:
Variable Insurance Products Fund (VIP)
Money Market Portfolio - 516,421,448 shares (cost $516,421,448) $ 516,421,448
High Income Portfolio - 20,350,982 shares (cost $237,197,853) 254,794,294
Equity-Income Portfolio - 65,552,276 shares (cost $1,058,931,535) 1,378,564,385
Growth Portfolio - 30,615,412 shares (cost $766,643,782) 953,363,919
Overseas Portfolio - 13,041,994 shares (cost $214,953,936) 245,711,153
Variable Insurance Products Fund II (VIP II)
Investment Grade Bond Portfolio - 6,800,548 shares (cost $81,300,775) 83,238,712
Asset Manager Portfolio - 41,464,924 shares (cost $605,056,011) 702,001,153
Index 500 Portfolio - 4,007,905 shares (cost $306,622,134) 357,224,531
Asset Manager Growth Portfolio - 14,139,054 shares (cost $172,034,926) 185,221,607
Contrafund Portfolio - 54,748,561 shares (cost $726,283,082) 906,636,168
Total Assets $ 5,583,177,370
LIABILITIES
Total Liabilities 0
NET ASSETS
Variable Annuity Contracts $ 5,442,772,112
Annuity Reserves 139,079,202
Retained in Variable Account by Fidelity Investments Life Insurance Company 1,326,056
Total Net Assets $ 5,583,177,370
</TABLE>
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1995
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SUBACCOUNTS INVESTING IN:
VIP - VIP - VIP -
MONEY MARKET HIGH INCOME EQUITY-INCOME
12/31/96 12/31/95 12/31/96 12/31/95 12/31/96 12/31/95
INCOME:
Dividends $ 22,183,498 $ 20,938,185 $ 16,728,273 $ 7,310,462 $ 55,685,270 $ 54,694,031
EXPENSES:
Mortality, 3,678,351
expense risk
and adminis- 4,265,461 2,133,584 1,424,671 13,282,629 8,919,504
trative charges
Net investment 17,918,037 17,259,834 14,594,689 5,885,791 42,402,641 45,774,527
income (loss)
Realized gain 0 4,215,546 3,468,694 44,973,966 4,662,258
Unrealized
appreciation
(depreciation) 0 0 6,407,080 14,660,109 71,715,782 205,095,093
during the year
Net increase
in net assets
from operations 17,918,037 17,259,834 25,217,315 24,014,594 159,092,38 255,531,878
9
Payments
received from
contract owners 716,350,463 589,374,91 19,246,520 12,599,198 67,800,413 57,511,018
3 4
Transfers
between sub- (572,043,36 (541,618,26 39,372,795 46,531,837 8,556,850 249,534,173
accounts and the 5) 8)
fixed account, net
Transfers
for contract
benefits and (34,497,387 (22,256,309 (4,602,693) (2,760,110) (27,944,559 (19,939,132
terminations ) ) ) )
Other transfers
(to) from
Fidelity Invest-
ments Life (117,521) (165,577) (16,920) (80,197) (375,090) (608,712)
Insurance
Co., net
Net increase
(decrease) in
net assets 109,692,19 25,334,760 53,999,702 56,290,728 48,037,614 286,497,347
from contract 0
transactions
Retained in
(returned from)
Variable (279,345) 78,923 (113,623) 77,233 (734,182) 602,520
Annuity
Account I, net
Total increase
(decrease) in 127,330,88 42,673,517 79,103,394 80,382,555 206,395,82 542,631,745
net assets 2 1
Net assets at
beginning 389,090,56 346,417,04 175,690,90 95,308,345 1,172,168,5 629,536,819
of period 6 9 0 64
Net assets at end
of period $ 516,421,4 $ 389,090,5 $ 254,794,2 $ 175,690,9 $ 1,378,564, $ 1,172,168,
48 66 94 00 385 564
VIP -
VIP - GROWTH OVERSEAS
12/31/96 12/31/95 12/31/96 12/31/95
INCOME:
Dividends $ 52,408,31 $ 2,257,895 $ 5,076,103 $ 1,831,239
1
EXPENSES:
Mortality,
expense risk
and adminis- 8,895,743 5,588,458 2,325,480
trative charges 2,035,083
Net investment 43,512,568 (3,330,563) 2,750,623
income (loss) (203,844)
Realized gain 34,665,280 11,540,837 4,977,991 12,959,632
Unrealized
appreciation
(depreciation) 25,231,481 132,834,43 17,808,822
during the year 6 2,395,325
Net increase
in net assets
from operations 103,409,32 141,044,71 25,537,436 15,151,113
9 0
Payments
received from
contract owners 65,624,862 45,108,759 15,310,022 8,380,232
Transfers
between sub- 88,618,608 138,179,18 27,187,801
accounts and the 1 (87,240,272
)
fixed account, net
Transfers
for contract
benefits and (19,664,847 (12,065,908 (5,076,410)
terminations ) ) (5,160,163)
Other transfers
(to) from
Fidelity Invest-
ments Life (325,787) (319,611) (58,320)
Insurance
Co., net (100,463)
Net increase
(decrease) in
net assets 134,252,83 170,902,42 37,363,093
from contract 6 1 (84,120,666
transactions )
Retained in
(returned from)
Variable (385,048) 338,618 (91,969)
Annuity
Account I, net (48,579)
Total increase
(decrease) in 237,277,11 312,285,74 62,808,560
net assets 7 9 (69,018,132
)
Net assets at
beginning 716,086,80 403,801,05 182,902,59
of period 2 3 3 251,920,72
5
Net assets at end
of period $ 953,363,9 $ 716,086,8 $ 245,711,1 $ 182,902,5
19 02 53 93
VIP II -
INVESTMENT VIP II - VIP II -
GRADE BOND ASSET MANAGER INDEX 500
12/31/96 12/31/95 12/31/96 12/31/95 12/31/95
12/31/96
INCOME:
Dividends $ 3,861,311 $ 1,682,779 $ 47,469,96 $ 17,964,09 $ 5,677,684 $ 502,158
3 3
EXPENSES:
Mortality,
expense risk
and adminis- 565,912 7,112,472 7,872,594 2,166,085 599,028
trative charges 785,033
Net investment 1,116,867 40,357,491 10,091,499 3,511,599 (96,870)
income (loss) 3,076,278
Realized gain 888,717 681,765 20,343,996 35,055,886 4,975,965 1,070,836
Unrealized
appreciation
(depreciation) 6,589,640 27,445,480 68,350,367 33,991,964 15,941,637
during the year (2,329,345)
Net increase
in net assets
from operations 1,635,650 8,388,272 88,146,967 113,497,75 42,479,528 16,915,603
2
Payments
received from
contract owners 4,922,193 3,797,513 13,647,683 14,616,755 33,319,804 9,671,827
Transfers
between sub- 12,837,639 (114,227,0 (264,298,1 167,661,29 67,965,310
accounts and the 37) 70) 1
9,167,153
fixed account, net
Transfers
for contract
benefits and (2,319,156) (25,764,39 (26,861,42 (3,781,296) (1,614,181)
terminations (2,141,175) 1) 4)
Other transfers
(to) from
Fidelity Invest-
ments Life (48,775) (237,492) (582,886) (64,159) (147,556)
Insurance
Co., net 56,907
Net increase
(decrease) in
net assets 14,267,221 (126,581,2 (277,125,7 197,135,64 75,875,400
from contract 37) 25) 0
transactions 12,005,078
Retained in
(returned from)
Variable 14,585 (616,502) (63,314) (30,838) 108,453
Annuity
Account I, net (109,244)
Total increase
(decrease) in 22,670,078 (39,050,77 (163,691,2 239,584,33 92,899,456
net assets 13,531,484 2) 87) 0
Net assets at
beginning 47,037,150 741,051,92 904,743,21 117,640,20 24,740,745
of period 69,707,228 5 2 1
Net assets at end
of period $ 83,238,71 $ 69,707,22 $ 702,001,1 $ 741,051,9 $ 357,224,5 $ 117,640,2
2 8 53 25 31 01
VIP II -
ASSET MANAGER: VIP II -
GROWTH CONTRAFUND TOTAL
12/31/96 12/31/95* 12/31/96 12/31/95* 12/31/95
12/31/96
INCOME:
Dividends $ 9,328,581 $ 2,142,569 $ 4,625,874 $ 5,839,546 $ 223,044,8 $ 115,162,9
68 57
EXPENSES:
Mortality,
expense risk
and adminis- 1,063,876 285,667 6,890,563 2,454,097 48,920,926 33,423,365
trative charges
Net investment 8,264,705 1,856,902 (2,264,689) 3,385,449 174,123,94 81,739,592
income (loss) 2
Realized gain 673,453 327,488 8,702,452 1,396,988 124,417,36 71,164,384
6
Unrealized
appreciation
(depreciation) 9,972,956 3,213,726 123,250,95 57,102,130 313,495,17 506,182,46
during the year 6 6 3
Net increase
in net assets
from operations 18,911,114 5,398,116 129,688,71 61,884,567 612,036,48 659,086,43
9 4 9
Payments
received from
contract owners 15,662,363 7,219,229 81,653,439 66,578,676 1,033,537, 814,858,12
762 1
Transfers
between sub- 101,765,22 38,869,985 248,553,82 331,463,99 4,613,143 (7,774,589)
accounts and the 4 3 6
fixed account, net
Transfers
for contract
benefits and (2,189,943) (418,914) (10,123,89 (2,955,853) (135,786,6 (96,351,150
terminations 9) 00) )
Other transfers
(to) from
Fidelity Invest-
ments Life (38,727) (6,713) (261,226) (51,336) (1,438,335) (2,111,826)
Insurance
Co., net
Net increase
(decrease) in
net assets 115,198,91 45,663,587 319,822,13 395,035,48 900,925,97 708,620,55
from contract 7 7 3 0 6
transactions
Retained in
(returned from)
Variable 4,437 45,436 (180,555) 385,817 (2,536,869) 1,539,692
Annuity
Account I, net
Total increase
(decrease) in 134,114,46 51,107,139 449,330,30 457,305,86 1,510,425, 1,369,246,6
net assets 8 1 7 585 87
Net assets at
beginning 51,107,139 0 457,305,86 0 4,072,751, 2,703,505,0
of period 7 785 98
Net assets at end
of period $ 185,221,6 $ 51,107,13 $ 906,636,1 $ 457,305,8 $5,583,177 $ 4,072,751,
07 9 68 67 ,370 785
</TABLE>
* FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS) THROUGH
DECEMBER 31, 1995.
NOTES TO FINANCIAL STATEMENTS
For the years ended December 31, 1996 and 1995
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
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 1983 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).
The preparation of the statement of assets and liabilities and the
statements of operations and changes in net assets in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of liabilities
at the date of the financial statements and the reported amounts of income
and expense during the reporting period. Actual results could differ from
those estimates.
Certain amounts in the financial statements for 1995 have been reclassified
to correspond to the 1996 presentation.
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 and FIA are the distributors and FBSI is the
principal underwriter of the contracts. Fidelity Management & Research
Company, an affiliate of FMR Corp., acts as investment advisor to each
portfolio. Fidelity Investments Institutional Operations 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, 1996:
PURCHASES SALES
Money Market $ $
390,849,861 263,518,979
High Income 114,872,935 46,392,168
Equity-Income 206,042,181 116,336,110
Growth 262,760,096 85,379,737
Overseas 73,653,371 33,631,624
Investment Grade 36,182,001 21,209,887
Asset Manager 49,130,239 135,970,488
Index 500 216,167,690 15,551,289
Asset Manager: 127,250,459 3,782,400
Growth
Contrafund 344,642,466 27,265,571
6. UNIT VALUES.
A summary of changes in accumulation unit values and accumulation units
outstanding for variable annuity contracts at December 31, 1996 and 1995
are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PAYMENTS
BEGINNING RECEIVED TRANSFERS CONTRACT
BALANCE FROM CONTRACT BETWEEN TERMINATION
OWNERS SUBACCOUNTS, S
NET
UNITS
JANUARY 1, 1996 TO DECEMBER 31,
1996
Money Market Subaccount 26,268,846 42,913,398 (38,375,363) 2,586,683
High Income Subaccount 7,797,315 816,399 1,649,890 (406,652)
Equity-Income Subaccount 41,937,122 2,359,548 324,284 (1,547,837)
Growth Subaccount 23,019,869 1,987,476 2,629,901 (864,978)
Overseas Subaccount 9,560,376 770,514 1,400,639 (311,673)
Investment Grade Subaccount 3,993,107 291,738 528,603 (198,064)
Asset Manager Subaccount 39,821,641 708,287 (6,035,625) (1,431,676)
Index 500 Subaccount 7,333,800 1,943,169 9,613,725 (729,850)
Asset Manager: Growth 4,035,434 1,168,481 7,592,101 (534,078)
Subaccount
Contrafund Subaccount 32,421,946 5,482,352 16,672,452 (1,566,501)
JANUARY 1, 1995 TO DECEMBER 31,
1995
Money Market Subaccount 24,546,739 38,644,291 (35,319,303) (1,602,881)
High Income Subaccount 5,106,950 605,925 2,334,094 (249,654)
Equity-Income Subaccount 30,415,281 2,381,915 10,482,774 (1,342,848)
Growth Subaccount 17,470,386 1,561,974 4,557,411 (569,902)
Overseas Subaccount 14,336,196 467,953 (4,944,962) (298,811)
Investment Grade Subaccount 3,151,087 239,183 796,388 (193,551)
Asset Manager Subaccount 56,621,559 875,715 (15,993,891) (1,681,742)
Index 500 Subaccount 2,102,667 687,171 4,837,242 (293,280)
Asset Manager: Growth 0 646,949 3,573,788 (185,303)
Subaccount*
Contrafund Subaccount* 0 5,345,476 27,832,893 (756,423)
ENDING BALANCE
UNITS UNIT VALUE DOLLARS
JANUARY 1, 1996 TO DECEMBER 31,
1996
Money Market Subaccount 33,393,564 $15.30 $ 510,850,998
High Income Subaccount 9,856,952 $24.89 245,332,651
Equity-Income Subaccount 43,073,117 $31.05 1,337,348,204
Growth Subaccount 26,772,269 $34.97 936,189,066
Overseas Subaccount 11,419,855 $21.29 243,142,393
Investment Grade Subaccount 4,615,384 $17.36 80,112,903
Asset Manager Subaccount 33,062,627 $20.75 686,200,145
Index 500 Subaccount 18,160,844 $18.89 343,086,654
Asset Manager: Growth 12,261,937 $14.49 177,691,548
Subaccount
Contrafund Subaccount 53,010,249 $16.65 882,817,550
$ 5,442,772,11
2
JANUARY 1, 1995 TO DECEMBER 31,
1995
Money Market Subaccount 26,268,846 $14.66 $ 385,129,503
High Income Subaccount 7,797,315 $22.05 171,920,260
Equity-Income Subaccount 41,937,122 $27.44 1,150,938,872
Growth Subaccount 23,019,869 $30.80 708,919,066
Overseas Subaccount 9,560,376 $19.00 181,618,833
Investment Grade Subaccount 3,993,107 $16.99 67,854,942
Asset Manager Subaccount 39,821,641 $18.29 728,500,356
Index 500 Subaccount 7,333,800 $15.54 113,950,091
Asset Manager: Growth 4,035,434 $12.21 49,254,936
Subaccount*
Contrafund Subaccount* 32,421,946 $13.87 449,633,817
$ 4,007,720,67
6
</TABLE>
* FOR THE PERIOD JANUARY 3, 1995 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1995.
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, 1996, 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, 1996, 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.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 29, 1997
(registered trademark)
America's largest privately-held investment management organization.
Fidelity Retirement Reserves (policy form FVA-88200), Fidelity Variable
Annuity and Fidelity Income Advantage (policy form FVIA-92100) are issued
by Fidelity Investments Life Insurance Company.
Fidelity Brokerage Services, Inc., member NYSE, SIPC, Fidelity Insurance
Agency, Inc. and Fidelity Investments Insurance
Agency of Texas, Inc. are the distributors.
82 Devonshire Street, Boston, MA 02109
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, 1996.
Statements of Operations and Changes in Net Assets for Fidelity
Investments Variable Annuity Account I for Years Ended December 31, 1996
and 1995.
Report of Coopers & Lybrand on the Financial Statements of Fidelity
Investments Variable Annuity Account I.
Balance Sheets of Fidelity Investments Life Insurance Company as of
December 31, 1996 and 1995.
Statements of Income for Fidelity Investments Life Insurance Company for
the Years Ended December 31, 1996, 1995, and 1994.
Statements of Changes in Stockholder's Equity for Fidelity Investments
Life Insurance Company for the Years Ended December 31, 1996, 1995 and
1994.
Statements of Cash Flows for Fidelity Investments Life Insurance Company
for the Years Ended December 31, 1996, 1995 and 1994.
Report of Coopers & Lybrand on Financial Statements of Fidelity
Investments Life Insurance Company.
There are no financial statements included in Part A.
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 1)
(b) Commission Schedule. (Note 1)
(4) (a) Specimen Variable Annuity Contract. (Note 2)
(c) Endorsement for Qualified Contracts. (Note 2)
C-1
(5) (a) Application for Variable Annuity Contract. (Note 2)
(6) (i) Articles of Domestication (Incorporation) of Fidelity
Investments Life. (Note 1)
(ii) Revised Bylaws of Fidelity Investments Life. (Note 1)
(7) Not Applicable.
(8) Not applicable
(9) Opinion and consent of David J. Pearlman, as to the Legality of
securities being issued.
(Note 2).
(10) Written consent of Coopers & Lybrand. (Note 2)
Written consent of Jorden Burt Berenson & Johnson LLP. (Note 2)
(11) Not Applicable.
(12) Not Applicable.
(13) Not applicable
(14) (a) Form of Participation Agreement between Fidelity Investments
Life and Variable Insurance Products Fund. (Note 1)
(b) Form of Participation Agreement between Fidelity Investments Life
and Variable Insurance Products Fund II. (Note 1)
(15) Powers of Attorney
Powers of Attorney (Note 3)
(Note 1) Incorporated by reference to Post-Effective Amendment No. 11 to
Registration Statement on Form N-4, Reg. No. 33-24400, on behalf of
Fidelity Investments Variable Annuity Account I, filed April 25, 1997.
(Note 2) Filed electronically herein.
(Note 3) Incorporated by reference to Post-Effective Amendment No. 10 to
Registration Statement 33-24400 filed April 26, 1996.
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:
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, 1996, there were 983 of Registrant's Qualified Contracts
and 337 of Registrant's Non-qualified contracts outstanding.
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 Revised Business Corporation Act Section 16-10a-902 et seq. provides,
in part, 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 FILI'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, Monarch 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.
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.
C-7
Item 31. Management Service
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.
(e) Fidelity Investment Life Insurance Company hereby represents that the
aggregate charges under the variable annuity policy ("the contract")
offered by Fidelity Investment Life Insurance Company are reasonable in
relation to services rendered, the expenses expected to be incurred, and
the risks assumed by Fidelity Investment Life Insurance Company
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. 4 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, 1997.
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. 4 to the Registration Statement has been signed below by the following
persons in the capacities indicated on this 24th day of April, 1997.
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
EXHIBIT INDEX
Exhibit Sequential Page Number
3(a) Form of Distribution Agreement between Fidelity
Investments Life, Fidelity Insurance Agency, and
Fidelity Brokerage Services, Inc.
(4) (a) Specimen Variable Annuity Contract.
(c) Endorsement for Qualified Contracts.
(5) (a) Application for Variable Annuity Contract.
(9) Opinion and consent of David J. Pearlman,
as to the legality of securities being issued.
(10)(a) Written consent of Coopers & Lybrand.
(10)(b) Written consent of Jorden Burt Berenson & Johnson LLP.
C-10
UNANIMOUS CONSENT OF DIRECTORS
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(formerly Providentmutual Variable Life Insurance Company)
Pursuant to the Pennsylvania Business Corporation Law, the undersigned
being all the directors of Fidelity Investments Life Insurance Company,
(formerly Providentmutual Variable Life Insurance Company), hereby
unanimously consent and agree that the following resolutions be and hereby
are adopted as the action of the Board of Directors of said Company.
BE IT RESOLVED, that Fidelity Investments Life Insurance Company (the
"Company") pursuant to the provisions of Section 406.2 of the Pennsylvania
Insurance Company Law of 1921, as amended, hereby establishes a separate
account designated Fidelity Investments Variable Annuity Account I (the
"Account") or such other name as the officers of the Company deem
appropriate.
FURTHER RESOLVED, that the Chairman, President, Vice President and
Treasurer, Secretary, or Assistant Secretary each be authorized to take all
necessary and appropriate action to accomplish the registration of the
Account as an investment company under the Investment Company Act of 1940
and the registration of the variable annuity contracts issued in connection
with the Account as securities under the Securities Act of 1933, and to
take all action necessary to comply with such Acts, including but not
limited to the execution and filing of registration statements and
amendments thereto, (including the payment of registration fees),
applications for exemptions from the provisions of the Acts as may be
necessary or desirable, and agreements for the management of the Account
and for the distribution of variable annuity contracts funded through the
Account;
FURTHER RESOLVED, that the Company receive and hold in the Account (i)
amounts arising from premium payments received by the Company under certain
variable annuity contracts (in accordance with the provisions of such
contracts) and (ii) such other assets of the Company as the officers of the
Company may deem prudent and appropriate to support the issuance and
maintenance of such variable annuity contracts; and
FURTHER RESOLVED, that the assets held in the Account be invested and
reinvested in shares of Variable Insurance Products Fund, a trust
registered as an open-end management investment company under the
Investment Company Act of 1940; and
FURTHER RESOLVED, that the signature of any Director or Officer of the
Company required by law to affix his or her signature to a registration
statement under the Investment Company Act of 1940 or Securities Act of
1933, or any amendment thereof, may be affixed by said Director or Officer
personally or by an attorney-in-fact duly constituted in writing by said
Director or Officer to sign his or her name thereto; and
FURTHER RESOLVED, that the President is hereby appointed agent of the
Company to receive any and all notices from the Securities and Exchange
Commission relating to the registration statements for the Account and the
contracts, and all amendments thereof;
AND FURTHER RESOLVED, that the Chairman, President, Vice President and
Treasurer, Secretary or Assistant Secretary each be authorized to take
whatever steps as may be necessary to comply with such laws and regulations
of the several states as may be applicable to the Account or the contracts.
Consent to have the same force and effect as though duly adopted at a
meeting of the Board of Directors.
/s/ Edward C. Johnson 3d /s/ J. Gary Burkhead
Edward C. Johnson 3d J. Gary Burkhead
/s/ John J. Remondi /s/ Rodney R. Rohda
John J. Remondi Rodney R. Rohda
/s/ John F. O'Brien, Jr. /s/ James C. Curvey
John F. O'Brien, Jr. James C. Curvey
/s/ Roger T. Servison
Roger T. Servison
Dated July 22, 1987
The foregoing Unanimous Consent of Directors was executed pursuant to the
Pennsylvania Business Corporation Law and Filed with the undersigned this
22nd day of July, 1987.
\s\ David C. Weinstein (SEAL)
David C. Weinstein, Secretary
Exhibit 3(a)
DISTRIBUTION AGREEMENT
This agreement is entered into as of October 1, 1993, by and among
Fidelity Insurance Agency, Inc. ("FIA Inc."), Fidelity Investments
Insurance Agency of Texas, Inc., ("FIA Texas"), Boston Fidelity Insurance
Agency of New Mexico, Inc. ("FIA New Mexico"), Fidelity Insurance Agency of
Arizona, Inc. ("FIA Arizona"), Ohio Fidelity Insurance Agency, Inc. ("FIA
Ohio"), Fidelity Insurance Agency of Alabama, Inc. ("FIA Alabama"),
(collectively the "FIAs" and each an "FIA"), Fidelity Brokerage Services,
Inc. ("FBSI"), Fidelity Investments Life Insurance Company ("FILI").
In consideration of the mutual covenants and promises set forth herein
below, the parties do hereby agree as follows:
ARTICLE I. DEFINITIONS
1. "Contracts" means all variable life insurance policies and variable
annuity contracts issued by FILI.
2. "Fund" means Variable Insurance Products Fund and Variable Insurance
Products Fund II, and any other investment companies that may be added in
the future as funding mechanisms to support the Contracts.
3. "1933 Act" means the Securities Act of 1933, as amended.
4. "1934 Act" means the Securities Exchange Act of 1934, as amended.
5. "1940 Act" means the Investment Company Act of 1940, as amended.
6. "Participation Agreement" refers to one or more participation
agreements among FILI, a Fund, and Fidelity Distributors Corporation. Each
Participation Agreement, whether currently in existence or entered into in
the future, is incorporated herein by this reference.
7. "Payments" means all purchase payments made with respect to any
Contract, including initial and any subsequent purchase payments.
8. "Prospectus" means any prospectus included within any Registration
Statement for any Contract or any Fund, including any prospectus filed
pursuant to Rule 424 or 497 under the 1933 Act.
9. "Registration Statement" means the currently effective registration
statement or currently effective post-effective amendment thereto relating
to any Contract and/or Variable Account, including financial statements and
all exhibits thereto.
10. "SEC means the United States Securities and Exchange Commission.
11. "Variable Account" means each separate account of FILI supporting any
Contract, whether now in existence or established by FILI in the future to
support any Contract. A Variable Account may consist of one or more
divisions, each investing in shares of a portfolio of a Fund.
ARTICLE II. AGREEMENTS OF FILI
1. FILI hereby appoints FBSI as principal underwriter for the sale of all
Contracts. FILI further appoints each FIA as its independent general agent
for the sale of the Contracts, but no appointment is effective with respect
to any jurisdiction where a particular FIA may not lawfully solicit
applications for the Contracts.
2. FILI, during the term of this Agreement, will immediately notify FBSI
and each affected FIA of the following:
(a) When the Registration Statement for any Contract has become effective
or when any amendment with respect to the Registration Statement thereafter
becomes effective;
(b) Any request by the SEC for any amendments or supplements to the
Registration Statement for any Contract or of any request for additional
information that must be provided by FBSI;
(c) The issuance by the SEC of any stop order with respect to the
Registration Statement for any Contact or any amendments thereto or the
initiation of any proceedings for that purpose or for any other purpose
relating to the registration and/or offering of the Contracts;
(d) The states or jurisdictions where approval of the Contract forms is
required under applicable insurance laws and regulations, and whether and
when such approvals have been obtained; and
(e) The states or jurisdictions where any Contract may not lawfully be
sold.
3. FILI will compile periodic marketing reports summarizing sales results
to the extent reasonably requested by FBSI or any FIA.
4. FILI will provide to FBSI at least one complete copy of all
registration statements, prospectuses, statements of additional
information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemption,
requests for no action letters, and all amendments to any of the above,
that relate to the Contracts or a Variable Account, contemporaneously with
the filing of such document with the SEC.
5. During the term of this Agreement, FILI will provide each FIA with as
many copies of the Prospectus for any Contract (and any amendments or
supplements thereto) as such FIA may reasonably request. If, however, the
prospectus for a Contract is to be printed and bound together with the
prospectus for a Fund or Funds, FILI shall, if requested by any FIA,
provide to such FIA typeset and camera ready copies of the Contract
prospectus and/or any other necessary documentation.
6. FILI and FIA, Inc. will keep appropriate books and records for FBSI,
in conformity with Rules 17a-3 and 17a-4 under the 1934 Act, showing all
commissions paid, all initial sales of contracts, all subsequent payments
made by contract owners, and such other information as may be required from
time to time by the SEC or the NASD. Such books and records shall be the
property of FILI, each FIA, and FBSI, available to each of them immediately
upon demand.
ARTICLE III. AGREEMENTS OF FBSI AND THE FIAs
1. FBSI represents and warrants that it is a broker-dealer duly
registered under the 1934 Act and a member of the National Association of
Securities Dealers, Inc. ("NASD").
2. Each FIA represents and warrants that it will not offer for sale or
sell any Contract in a jurisdiction unless it has first obtained in such
jurisdiction any required regulatory approvals and/or licenses to sell such
Contract.
3. FBSI and each FIA agree that they shall each be solely responsible for
carrying out their respective sales, administrative and supervisory
obligations under this Agreement, and that they will do so in material
compliance with all applicable federal and state laws and regulations.
4. FBSI and each FIA may engage in retail sales of Contracts. FBSI and
each FIA agree that they will not permit a registered representative of
FBSI or an agent of FIA to sell a Contract in a particular jurisdiction
unless such registered representative or agent is also (i) properly
insurance licensed, (ii) properly securities licensed, (iii) appointed as
an agent of FILI, and (iv) where required by law, a designated agent of an
FIA as is legally eligible to receive commissions in such jurisdiction.
FBSI shall use its best efforts to maintain its registration under the 1934
Act and shall use its best efforts to continue to be a member in good
standing of the NASD. Each FIA shall use its best efforts to maintain its
qualification as an insurance agency in each jurisdiction where it
currently maintains such qualification. FBSI shall be responsible for
ensuring that its registered representatives soliciting sales of the
Contracts pass all necessary NASD exams and obtain and maintain all
necessary NASD licenses. Each FIA shall be responsible for ensuring that
its agents obtain and maintain all necessary qualifications to maintain
such status, including continuing education requirements. If any
registered representative of FBSI or agent of any FIA fails to maintain the
required licenses and appointments or fails to meet the supervisory
standards imposed by FILI or the appropriate FIA, FBSI or such FIA shall
promptly notify FILI and shall advise such registered representative or
agent that he or she is no longer authorized to offer or sell the
Contracts. FBSI and such FIA shall immediately take all steps necessary to
ensure that such registered representative or agent ceases all sales
activity immediately. FBSI and each FIA shall investigate the business
reputation of all registered representatives offering the Contracts, and
their competence to sell the Contracts. FBSI and each FIA shall ensure
that its registered representatives or agents are adequately and diligently
trained, and shall be solely responsible for their supervision. FBSI and
each FIA shall establish any procedures necessary to ensure that all
required licenses, appointments and designations are maintained by its
registered representatives. Upon request by FILI or any FIA, FBSI or any
FIA shall furnish such records as are necessary to establish that the
foregoing requirements are being met. FBSI and the FIAs shall not engage
in servicing the Contracts. All service requests shall be directed to
FILI's Service Center in accordance with such procedures as FILI may adopt
from time to time. FBSI and each FIA shall ensure that retail sales of the
Contracts made by their registered representatives or agents are made only
where such sales constitute suitable purchases under all applicable
securities and insurance laws and regulations.
5. Each FIA agrees that it shall be fully responsible for ensuring that
no agent, representative, telephone salesperson or employee shall offer any
Contract on its behalf until such person is duly licensed and appointed by
FILI and appropriately licensed, registered or otherwise qualified to offer
and sell such Contract under federal securities laws, NASD rules and
regulations, and the insurance laws of each state or other jurisdiction in
which such person offers or intends to offer such Contract. FILI reserves
the right to refuse to appoint any proposed agent, or, once appointed, to
terminate such appointment.
6. FBSI and each FIA understand that the public offering of any Contract
will commence as soon as possible after the effective date of its
Registration Statement. Beginning at that time, and during the term of
this Agreement, each FIA agrees to use its best efforts to solicit
applications for the Contracts.
7. All Payments and application for Contracts sold by any FIA or their
agents, representatives, telephone sales persons or employees through
direct mail solicitation should be sent directly to FILI's Service Center.
To the extent that any FIA solicits applications for Contracts through an
agent or that Payments are incorrectly sent to an FIA rather than the
Service Center, all Payments received by FIA shall be remitted promptly in
full together with such application and such forms and other required
documentation to the Service Center. Checks or money orders in payment of
Payments shall be drawn to the order of "Fidelity Investments Life
Insurance Company." FILI shall have the unconditional right to reject, in
whole or in part, any application for any Contract. In the event an
application is rejected, the amount of the Payment received by FILI will be
returned directly to the purchaser and FILI will notify the affected FIA of
such action. In the event that a Contract is returned to FILI within the
applicable "free look" period, FILI will return to the purchaser the amount
required under the Contract and will notify the affected FIA of such
action. In the event that an FIA has received compensation based on any
Contract returned pursuant to its free look provision, such FIA agrees to
repay promptly such compensation to FILI. In the event that FBSI has
received compensation from any FIA based on any Contract returned pursuant
to its free look provision, FBSI agrees to repay promptly such compensation
to such FIA.
8. Each FIA shall, in soliciting applications for the Contracts, engage
in direct marketing of the Contracts using various means of communication.
Each FIA will provide telephone sales persons and such other personnel it
deems necessary to respond to inquiries from the general public regarding
the Variable Accounts, the Contract and the portfolios of the Funds
underlying the Variable Accounts. In connection with such marketing
efforts:
(a) Each FIA shall furnish, or shall cause to be furnished, to FILI, each
piece of sales literature or other promotional material in which FILI or a
Variable Account is named. No such material shall be used without the
prior written consent of FILI.
(b) Without the written consent of FILI, each FIA, its agents,
representatives, telephone salespersons or employees shall not give any
information, or make any representations on behalf of or concerning FILI, a
Variable Account, or a Contract, other than the information and
representations contained in a currently effective Registration Statement
(or post-effective amendment thereto) for a Contract, or in reports for the
Variable Accounts prepared for distribution to Contract owners, or in sales
literature or other promotional material approved in writing by FILI.
(c) FBSI, in accordance with its obligations under federal securities
laws and regulations, shall establish and implement reasonable procedures
acceptable to FILI for periodic inspection and ongoing supervision of sales
practices of agents, employees, telephone sales representatives and
representatives of each FIA, and, upon request, shall make available to
FILI periodic reports on the results of such inspections and compliance
with such procedures.
(d) In compliance with FILI's written rules and procedures and with
applicable rules and regulations of any governmental or other agency that
has jurisdiction over variable life insurance or variable annuity
activities, FBSI and each FIA are responsible for the training, supervision
and control of their agents, representatives, telephone salespersons and
other employees involved in the marketing program for the Contracts by each
FIA. FBSI and each FIA will also undertake to have duly licensed all
agents, representatives, telephone salespersons and employees of each FIA
who must be licensed pursuant to federal or state insurance and/or
securities laws in order to sell the Contracts.
(e) For purposes of this paragraph 7 and its subparagraphs and the
indemnification provisions in Articles V and VI hereof, the phrase "sales
literature or other promotional material" includes, but is not limited to,
advertisements (including material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone
script or sound recording, video display, signs or billboards, motion
pictures, or other public media), written communications distributed or
made generally available to customers or the public (including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published articles), education or training materials or other
communications distributed or made generally available to agents,
representatives, telephone salespersons or employees, and registration
statements, prospectuses, statements of additional information, shareholder
reports, proxy materials, applications for the Contracts and application
kits.
9. Each FIA shall act as an independent general agent, and nothing herein
contained shall constitute any FIA or its agents, representatives,
telephone salespersons or employees, as employees of FILI in connection
with the marketing program for the Contracts.
10. No FIA shall, directly or by means of its agents, representatives,
telephone salespersons or other employees offer, nor attempt to offer, nor
solicit applications for the Contracts or deliver Contracts in any state or
jurisdiction in which the Contracts may not legally be sold or offered for
sale.
11. Neither FBSI nor any FIA shall have authority on behalf of FILI to
(i) make, alter or discharge any Contract; or (ii) receive any monies or
Payments, except as set forth in Article III, Section 7 of this Agreement.
Neither FBSI nor any FIA shall expend, or contract for the expenditure of,
the funds of FILI nor shall FBSI nor any FIA possess or exercise any
authority on behalf of FILI other than that expressly conferred on FBSI or
FIA by this Agreement.
12. FBSI and each FIA agree to maintain appropriate books and records
concerning the variable annuity and variable life business transacted by
FBSI and each FIA under this Agreement as required by either (a) any
governmental authority (including without limitation the SEC, the NASD and
state insurance regulators) or (b) FILI. Such books and records shall be
the property of FILI and shall be made available to FILI at any time upon
its written request. FBSI and each FIA shall permit such governmental
authorities reasonable access to such books and records in connection with
any investigation or inquiry relating to this Agreement or the transactions
contemplated thereby. Without limiting the foregoing, FBSI shall be
responsible for confirming purchases and redemptions of units of FILI's
separate accounts by purchasers and/or owners of the contracts issued by
FILI. Such confirmations shall be the records of FBSI, even if located at
the offices of FILI, and if so located, shall be provided to FBSI
immediately upon demand. Similarly, all records showing the identity of
the person credited for any retail sale of the Contracts, whether
maintained at FBSI's offices, at FIA, Inc.'s offices, or at FILI's offices,
shall be the records of FBSI and, if located at FILI's offices or FIA,
Inc.'s offices, shall be the property of FBSI and shall be furnished to
FBSI immediately upon demand.
13. Each FIA shall pay the following expenses related to its distribution
of the Contracts: (i) expenses associated with the initial licensing and
training of its agents, representatives, telephone salespersons and
employees necessary for the marketing of the Contracts, (ii) the costs of
any advertisements and marketing materials which it develops for use in
connection with the marketing program for the Contracts. Any other
expenses incurred by FBSI, or an FIA, or the agents or employees of either
FBSI or such FIA for the purpose of carrying out the obligations of FBSI or
such FIA hereunder will be paid for by FBSI or such FIA.
ARTICLE IV. COMPENSATION
1. For each Contract that is a LIFE INSURANCE policy or DEFERRED ANNUITY
contract sold by a particular FIA, FILI shall pay such FIA, or its
designee, compensation consisting of two components: (a) first year
compensation equal to the lesser of (i) $50 per Contract and (ii) 2% of the
Payments received during the first Contract Year; and (b) each year, an
amount equal to .10% of the Contract Value. For each Contract that is an
IMMEDIATE ANNUITY contract, FILI shall pay such FIA compensation each year
of an amount not more than .10% of the reserves held to support the
Contracts.
2. For each Payment received by FILI as the result of the efforts of a
particular FIA utilizing only the FBSI branch system, such FIA shall pay to
FBSI compensation equal to 2.25% of the premium received by FILI. No sale
by any FIA shall be made through any person who is not properly registered
with the NASD as a registered representative of FBSI or another properly
licensed broker-dealer. If the sale is made through a combination of the
efforts of a FBSI Branch Representative and a telephone representative not
part of the FBSI Branch System, then such FIA shall pay to FBSI
compensation equal to 1.50% of the premium received by FILI.
ARTICLE V. INDEMNIFICATION BY FILI
1. FILI agrees to indemnify and hold harmless FBSI and each FIA against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of FILI) or litigation (including legal
and other expenses) to which FBSI or any FIA may become subject under any
statute, regulation, at common law or otherwise, insofar as such losses,
claims damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale of the Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement, Prospectus, Contracts or sales literature for the Contracts (or
any amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to
indemnify shall not apply to FBSI or a particular FIA if such statement or
omission or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to FILI by FBSI or such FIA
for use in the Registration Statement, Prospectus, Contracts or sales
literature for the Contracts (or any amendment or supplement) or otherwise
for use in connection with the sale of the Contracts; or
(b) arise as a result of any failure by FILI to provide the services and
furnish the materials under the terms of this Agreement; or
(c) arise out of or result from any material breach of any representation
and/or warranty made by FILI in this Agreement or arise out of or result
from any other material breach of this Agreement by FILI, as limited by and
in accordance with the provisions of Article V, Sections 1(a) and 1(b)
hereof.
2. FILI shall not be liable under this indemnification provision with
respect to any losses, claims damages, liabilities or litigation incurred
or assessed against FBSI or any FIA as such may arise from FBSI's, or such
FIA's, willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of
obligations or duties under this Agreement.
3. FILI shall not be liable under this indemnification provision with
respect to any claim made against FBSI or any FIA unless FBSI or such FIA
shall have notified FILI in writing within a reasonable time after the
summons or other first legal process giving information of the nature of
the claim shall have been served upon FBSI or such FIA (or after FBSI or
such FIA shall have received notice of such service on any designated
agent), but failure to notify FILI of any such claim shall not relieve FILI
from any liability which it may have to FBSI or FIA otherwise than on
account of this indemnification provision. In case any such action is
brought against FBSI or any FIA, FILI shall be entitled to participate, at
its own expense, in the defense of such action. FILI shall be entitled to
assume the defense thereof, with counsel satisfactory to FBSI or FIA.
After notice from FILI to FBSI or such FIA of the election by FILI to
assume the defense thereof, FBSI or such FIA shall bear the fees and
expenses of any additional counsel retained by it, and FILI will not be
liable to FBSI under this Agreement for any legal or other expenses
subsequently incurred by FBSI or such FIA independently in connection with
the defense thereof other than reasonable costs of investigation.
4. FBSI or any FIA will promptly notify FILI of the commencement of any
litigation or proceedings against it in connection with the issuance or
sale of any Contract.
ARTICLE VI. INDEMNIFICATION BY FBSI OR ANY FIA
1. FBSI and each FIA agree to indemnify and hold harmless FILI against
any and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of FBSI or any FIA) or litigation
(including legal and other expenses), to which FILI may become subject
under any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale of the Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement, Prospectus, Contracts or sales literature for the Contracts (or
any amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this agreement to
indemnify shall not apply if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to FBSI or any FIA by FILI for use in the
Registration Statement, Prospectus, Contracts or sales literature for the
Contracts (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts; or (b) arise as a result of any
failure by FBSI or any FIA to provide the services and furnish the
materials under the terms of this Agreement; or
(b) arise out of any failure by FBSI or an FIA to provide the services
and furnish the materials under the terms of this Agreement; or
(c) arise out of or result from any material breach of any representation
and/or warranty made by FBSI or FIA in this Agreement or arise out of or
result from any other material breach of this Agreement by FBSI or any FIA,
as limited by and in accordance with the provisions of Article VI, Sections
1(a) and 1(b) hereof.
2. Neither FBSI or any FIA shall be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against FILI as such may arise from FILI's
willful misfeasance, bad faith, or gross negligence in the performance of
their duties or by reason of their reckless disregard of obligations or
duties under this Agreement.
3. Neither FBSI nor any FIA shall be liable under this indemnification
provision with respect to any claim made against FILI unless FILI shall
have notified FBSI and such FIA in writing within a reasonable time after
the summons or other first legal process giving information of the nature
of the claim shall have been served upon FILI (or after FILI shall have
received notice of such service on any designated agent), but failure to
notify FBSI and such FIA of any such claim shall not relieve FBSI and such
FIA from any liability which they may have to FILI otherwise than on
account of this indemnification provision. In case any such action is
brought against FILI, FBSI and such FIA shall be entitled to participate,
at their own expense, in the defense of such action. FBSI and such FIA
shall be entitled to assume the defense thereof, with counsel satisfactory
to FILI. After notice from FBSI or such FIA to FILI of the election by
FBSI or such FIA to assume the defense thereof, FILI shall bear the fees
and expenses of any additional counsel retained by it, and FBSI or such FIA
will not be liable to FILI under this Agreement for any legal or other
expenses subsequently incurred by FILI independently in connection with the
defense thereof other than reasonable costs of investigation.
4. FILI will promptly notify FBSI and FIA of the commencement of any
litigation or proceedings against them in connection with the issuance or
sale of the Contracts.
ARTICLE VII. CONFIDENTIALITY
1. Subject to the requirements of legal process and regulatory authority,
each party hereto shall treat as confidential the names and addresses
contained in each FIA's mailing list and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent
of the affected party, provided, that to the extent any name and address is
available to a party through a source independent of the relationship
defined in this Agreement, such name and address shall not be treated as
confidential.
ARTICLE VIII. TERM OF AGREEMENT
1. The initial term of this Agreement shall be from the effective date
hereof through December 31, 1994. This Agreement shall renew automatically
from year to year thereafter. This Agreement may be terminated by any
party upon 30 days' prior written notice. Termination shall be automatic
at such time, if any, as there is no longer any Participation Agreement in
effect.
2. Upon termination of this Agreement, all authorizations, rights and
obligations shall cease except the indemnification provisions set forth
above between or among FILI, FBSI and any FIA, and the provisions of
Article III, Section 11 that require FBSI and the FIAs to maintain certain
books and records. No Participation Agreement shall be affected by the
termination of this Agreement.
ARTICLE IX. NON-EXCLUSIVITY OF AGREEMENT
FILI may at any time distribute any Contract through any other proper
party or distribution system of its choice.
ARTICLE X. ASSIGNABILITY
This Agreement may not be assigned without the prior written consent of
all parties hereto.
ARTICLE XI. GOVERNING LAW
This Agreement shall be in all respects governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
ARTICLE XII. NOTICE
Any notice shall be sufficiently given when personally received by the
other party, or when sent by registered or certified mail to the other
party to 82 Devonshire Street, Boston, Massachusetts 02109. Notices to
FILI shall be sent to the attention of FILI's Chairman or President.
Notices to any FIA shall be sent to the attention of its President.
Notices to FBSI shall be sent to the attention of its President.
ARTICLE XIII. INVESTIGATIONS AND COMPLAINTS
Each party agrees to cooperate fully with all other parties in any
insurance, securities or other regulatory or judicial investigation or
proceeding arising in connection with the Contracts, agents of any FIA,
and/or registered representatives of FBSI. Each party shall furnish to any
regulatory authority having jurisdiction any information which such
authority may request in order to ascertain whether sales of the Contracts
are made in compliance with applicable law and/or regulation. Each party
further agrees to cooperate with each of the others in resolving any
customer complaints with respect to the Contracts, FBSI, FIA, or any of
their agents, registered representatives, or employees.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.
FIDELITY INSURANCE AGENCY, INC.
By: \s\ Richard D. Jameison
Richard D. Jameison
Vice President
FIDELITY INVESTMENTS INSURANCE AGENCY OF TEXAS, INC.
By: \s\ Laurie McCartney
Laurie McCartney
President
BOSTON FIDELITY INSURANCE AGENCY OF NEW MEXICO, INC.
By: \s\ Richard D. Jameison
Richard D. Jameison
Vice President
FIDELITY INSURANCE AGENCY OF ARIZONA, INC.
By: \s\ Richard D. Jameison
Richard D. Jameison
Vice President
OHIO FIDELITY INSURANCE AGENCY, INC.
By: \s\ Richard D. Jameison
Richard D. Jameison
Vice President
FIDELITY INSURANCE AGENCY OF ALABAMA, INC.
By: \s\ Richard D. Jameison
Richard D. Jameison
Vice President
FIDELITY BROKERAGE SERVICES, INC.
By: \s\ Roger T. Servison
Roger T. Servison
President
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY ("FILI")
By: \s\ Rodney R. Rohda
Rodney R. Rohda
Chairman
EXHIBIT 3(b)
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
Commission Schedule--Variable Annuity
The variable annuity product being offered by FILI will be distributed by
Fidelity Insurance Agency (FIA), affiliated companies of FIA in those
states where FIA is not licensed to sell annuities and under contractual
agreement with Fidelity Investments Insurance Agency of Texas, Inc., in
Texas. The commission schedule describes the payments that compensate the
distributor for both its efforts as well as for related distribution
expenses which include advertising, direct mail material, promotional
material, and the services of insurance specialists.
The commission will be earned and paid over a period of time so that the
aggregate amount earned and paid reflects the value to FILI of the business
solicited. Since FILI desires to encourage the sale of business with
favorable persistency, the commission schedule will have two components: a
first year component and a renewal component. The first year part will be
higher (as a % of the contract value) to reflect solicitation activity and
associated expenses. The renewal component will be based on the contract
value, which directly reflects the persistency of the business produced by
the distributors. Commissions will be paid only during the accumulation
phase; no commissions will be paid after the Annuity Date (i.e., during the
pay-out phase).
The first year component will be the sum of $50 per contract issued and
paid for (with refunds during the Free-Look period being treated for
commission purposes as not paid for) and .25% of the contract value at the
end of the first contract year, provided that this component will not
exceed 2% of the purchase payments received in the first contract year.
The renewal component will be .25% of the contract value computed as of the
end of each contract year. No separate commission is paid for additional
purchase payments; there is implicit recognition of these payments since
they increase the size of the contract value. These commissions will be
paid each year in a manner that is administratively simple and acceptable
to the parties involved.
In recognition of the fact that FILI is a new company with no historical
experience to guide it and the fact that the direct response method of
distributing annuity products is still relatively new, the specific
elements of the commission schedule may be revised to reflect actual
experience should both FILI and its distributors mutually agree to such
revisions.
EXHIBIT 4
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
PHILADELPHIA, PENNSYLVANIA
A STOCK COMPANY
This contract is issued in consideration of the application and purchase
payments as provided in the contract.
Unless you elect a different payment option, beginning on the Annuity Date
the proceeds will be paid as a variable annuity. We will pay a monthly
income while the Annuitant is living, with payments guaranteed for 120
months.
THE BENEFITS AND VALUES OF THIS CONTRACT MAY INCREASE OR DECREASE DAILY,
DEPENDING ON THE INVESTMENT PERFORMANCE OF THE VARIABLE ACCOUNT AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNTS. NO MINIMUM AMOUNT OF CONTRACT VALUE
IS GUARANTEED.
RIGHT TO EXAMINE THE CONTRACT
This contract may be returned on or before the end of the free look period.
That period ends 10 days after you receive this contract. Mail or deliver
this contract to us or to the agent who sold it. The returned contract
will be treated as if we never issued it. We will promptly return the
purchase payment you paid.
Signed for us at our executive office, Boston, Massachusetts on the
contract date.
Secretary President
PLEASE READ YOUR CONTRACT CAREFULLY
THIS IS A LEGAL CONTRACT BETWEEN YOU AND US.
VARIABLE ANNUITY CONTRACT WITH PURCHASE PAYMENT FLEXIBILITY.
INITIAL PURCHASE PAYMENT WITH ADDITIONAL PURCHASE PAYMENTS PAYABLE DURING
THE LIFETIME OF THE ANNUITANT AND PRIOR TO THE ANNUITY DATE.
DEATH BENEFIT PAYABLE UPON DEATH OF THE ANNUITANT
PRIOR TO THE ANNUITY DATE.
VALUES AND BENEFITS REFLECT INVESTMENT RESULTS.
NON-PARTICIPATING.
FORM NO. VA-1/87 LG953250023
GUIDE TO CONTRACT PROVISIONS
PAGE
PROVISIONS
Contract Schedule 3
Definitions 4
Service 4
Purchase Payment 4
Initial Purchase Payment 4
Additional Purchase Payment Option 4
Allocation of Purchase Payments 4
Proceeds 5
Proceeds on Death of the Owner Prior to the Annuity Date 5
Proceeds on Death of the Owner After the Annuity Date 5
Interest on Proceeds 5
Death Benefit 5
The Variable Account 6
Sub-Accounts 6
Transfers Among Sub-Accounts 6
Reserved Rights 7
Valuation Periods and Valuation Days 7
Contract Values 7
Contract Value 7
Units/Unit Value 7
Net Investment Factor 8
Asset Charges Deducted from the Sub-Accounts 8
Net Purchase Payments 8
Cash Surrender 8
Partial Withdrawals 8
Amounts Subject to a Surrender Charge 9
Surrender Charges on Annuitization 9
Option to Change the Annuity Date 9
General Provisions 9
Entire Contract 9
Misstatement of Age 10
Assignment 10
Claims of Creditors 10
Quarterly Report 10
Owner and Beneficiary 10
Payment of Proceeds 11
Payment Options 11
Postponement of Payment 12
CONTRACT SCHEDULE
CONTRACT NUMBER 00000
CONTRACT DATE August 1, 1987
ANNUITY DATE
ANNUITANT John Doe
ISSUE AGE/SEX 35 Male
INITIAL PURCHASE PAYMENT:
VARIABLE PRODUCTS SERVICE CENTER, 82 DEVONSHIRE STREET, BOSTON,
MASSACHUSETTS 02109.
VARIABLE ACCOUNT SUB-ACCOUNTS
MONEY MARKET
HIGH INCOME
EQUITY INCOME
GROWTH
OVERSEAS
DEDUCTIONS FROM THE SUB-ACCOUNTS - A DAILY CHARGE CORRESPONDING TO THE
FOLLOWING ANNUAL ASSET CHARGES:
MORTALITY AND EXPENSE RISK CHARGE .75%
ADMINISTRATIVE CHARGE .25%
TABLE OF SURRENDER CHARGES
CONTRACT PERCENTAGE OF
YEAR PURCHASE PAYMENTS
1 5%
2 4%
3 3%
4 2%
5 1%
THEREAFTER 0%
DEFINITIONS
We, us, and our means Fidelity Investments Life Insurance Company,
Executive Office, 82 Devonshire Street, Boston, Massachusetts 02109.
You and your means the owner.
AGE
The annuitant's issue age, shown on page 3, is the annuitant's age at
nearest birthday on the contract date. Attained age means the annuitant's
age on the contract date increased by the number of whole years since the
contract date.
CONTRACT DATE
Contract years, contract months and contract anniversaries are measured
from the contract date.
SERVICE
ADDRESS
The mailing address of our Variable Products Service Center is shown on
page 3, unless later changed. We will notify you of any change of address.
SENDING NOTICE TO US
Any written notice should be sent to our Variable Products Service Center.
We reserve the right to require this contract to be returned to our service
center for endorsement of any change.
PURCHASE PAYMENT
INITIAL PURCHASE PAYMENT
The initial purchase payment shown on page 3 is due and payable on or
before the contract date.
ADDITIONAL PURCHASE PAYMENT OPTION
You may make additional purchase payments during the annuitant's lifetime
and before the annuity date. Any additional purchase payment must be at
least $500.
We reserve the right to limit the amount of additional purchase payments we
will accept.
We will furnish a receipt for an additional purchase payment.
ALLOCATION OF PURCHASE PAYMENTS
You may allocate your initial net purchase payment among one or more
Sub-Accounts of the Variable Account.
We will allocate the initial net purchase payment to the Money Market
Sub-Account until after the Right to Examine The Contract period. The
contract value in the Money Market Sub-Account will then be transferred to
the Sub-Accounts you elected in the application. The portion of the
purchase payment allocated to any Sub-Account is shown in the application.
Any additional net purchase payments will be allocated to the Sub-Accounts
you elected in the application unless you elect a different allocation.
The portion of any additional net purchase payment allocated to a
Sub-Account must be a whole number, not less than 10%.
PROCEEDS
Proceeds means the amount payable on the annuity date, on surrender prior
to the annuity date, or on the death of the annuitant or the owner prior to
the annuity date.
It is currently our practice to deduct any applicable tax at the time
proceeds become payable; however, we reserve the right to deduct the tax
when due.
On the annuity date, the proceeds will be the contract value, if any, less
any applicable surrender charge. If you surrender the contract, the
proceeds will be the cash surrender value.
The proceeds payable on death of the annuitant prior to the annuity date
will be the death benefit.
PROCEEDS ON DEATH OF THE OWNER PRIOR TO THE ANNUITY DATE
If you die before the annuity date, the proceeds are the contract value and
must be distributed within five years after the date of death, unless:
(a) the proceeds are payable over the lifetime of the beneficiary with
distributions beginning within one year of the date of the death; or
(b) your spouse is the beneficiary, in which case your spouse may elect to
continue this contract and become the owner.
PROCEEDS ON DEATH OF THE OWNER AFTER THE ANNUITY DATE
If you die on or after the annuity date, any remaining payments under this
contract must be distributed at least as rapidly as under the payment
option being used as of the date of death.
Any proceeds will be paid in accordance with the applicable law governing
such payments. To the extent this contract conflicts with any applicable
provision of the Internal Revenue Code with respect to distributions on
death, this contract shall be considered amended to conform to such code.
INTEREST ON PROCEEDS
If the proceeds are not paid in a single sum or under a payment option
within 30 days after they become payable, or the time provided by law,
whichever is less, we will pay interest on the unpaid proceeds. Interest
will accrue from the date the proceeds are payable to the date of payment,
but not for more than one year, at a yearly rate of 3 1/2% or the rate and
time provided by law, whichever is greater.
DEATH BENEFIT
The death benefit will be the greater of:
(a) the purchase payments paid, less any partial withdrawals and any
applicable surrender charge and any incurred taxes; and
(b) the contract value on the date of death.
THE VARIABLE ACCOUNT
VARIABLE ACCOUNT
We established the Fidelity Investments Variable Annuity Account I (called
"the Account") to support the operation of this contract and certain other
variable annuity contracts we may offer. We will not allocate assets to
the Account to support the operation of an[y contracts that are not similar
to this contract.
We own the assets in the Account. However, these assets are not part of
our general account. Income, gains and losses, whether or not realized,
from assets allocated to the Account will be credited to or charged against
the Account without regard to our other income, gains or losses.
Assets equal to the reserves and other liabilities of the Account will not
be charged with liabilities that arise from any other business we may
conduct. We shall have the right to transfer to our general account any
assets of the Account which are in excess of such reserves and other
liabilities.
The Account is registered with the Securities and Exchange Commission as a
unit investment trust under the Investment Company Act of 1940. The
Account is also subject to the laws of the Commonwealth of Pennsylvania.
SUB-ACCOUNTS
The Account consists of the Sub-Accounts designated on page 3. We reserve
the right to remove any Sub-Account of the Account, or to add new
Sub-Accounts. The assets of the Account are valued each valuation period.
Each of the Sub-Accounts will invest in one portfolio of the Variable
Insurance Product Fund (the "VIP Fund"), a series type of mutual fund.
Shares of a portfolio are purchased for a Sub-Account at their net asset
value.
You will share only the income, gains and losses of the Sub-Account to
which the net purchase payments for this contract have been applied. The
values and benefits of this contract depend on the investment performance
of the portfolios in which your elected Sub-Accounts are invested. We do
not guarantee the investment performance of the portfolios. You bear the
full investment risk for amounts applied to the elected Sub-Accounts.
The investment policies of a portfolio may not be changed without all
necessary approvals of the Pennsylvania Insurance Department.
TRANSFERS AMONG SUB-ACCOUNTS
You may transfer amounts among the Sub-Accounts without charge by request
to our Variable Products Service Center. You may request the transfers in
dollar amounts or as a percent. The minimum dollar amount you may transfer
is $250 or, if less, the entire amount in a Sub-Account. If you transfer a
percent of the amount in a Sub-Account, such percent must be in whole
numbers. We reserve the right to limit transfers among Sub-Accounts to 5
transfers per contract year.
ADDITIONS, DELETIONS OR SUBSTITUTIONS
We reserve the right to make additions to, deletions from, or substitutions
for the portfolios in the VIP Fund, as permitted by law. We also reserve
the right to substitute another mutual fund for the VIP Fund. Such a
substitution would be subject to all necessary approvals of regulatory
authorities.
RESERVED RIGHTS
When permitted by law, we also reserve the right to:
(a) combine the Account with other Variable Accounts; and/or
(b) deregister the Account under the Investment Company Act of 1940 if
registration is no longer required; and/or
(c) operate the Account as a management investment company under the
Investment Company Act of 1940 or in any other form permitted by law,
and/or
(d) make changes required by any change in the Investment Company Act of
1940.
VALUATION PERIODS AND VALUATION DAYS
A valuation period for each Sub-Account means the period of time from the
beginning of the day following a valuation day to the end of the next
succeeding valuation day.
A valuation day will be:
(a) each day the New York Stock Exchange is open for trading; or
(b) any other day on which the Securities and Exchange Commission requires
mutual funds or unit investment trusts to be valued.
CONTRACT VALUES
CONTRACT VALUE
The contract value of this contract is not guaranteed and will vary with
the performance of the elected Sub-Accounts.
The contract value before the annuity date equals:
(a) the number of units credited to the Sub-Accounts of this contract;
times
(b) the value of the appropriate units.
UNITS
We will credit net purchase payments in the form of units. The number of
units to be credited to each Sub-Account of this contract will be
determined by dividing the net purchase payment allocated to that
Sub-Account by the unit value for that Sub-Account for the valuation period
during which the purchase payment is received. In the case of the initial
net purchase payment, we will credit units on the contract date. Units
will be adjusted for any transfers in or out of a Sub-Account.
UNIT VALUE
For each Sub-Account the unit value for the first valuation period was set
at $10.00. The unit value for each subsequent valuation period is the net
investment factor for that period, multiplied by the unit value for the
immediately preceding valuation period. The unit value for a valuation
period applies to each day in the period. The unit value may increase or
decrease from one valuation period to the next.
NET INVESTMENT FACTOR
Each Sub-Account has a net investment factor. In the following, "assets"
refers to the assets in each Sub-Account. The net investment factor is an
index that measures the investment performance of a Sub-Account from one
valuation period to the next.
The net investment factor for each Sub-Account for a valuation period is
(a) divided by (b), minus (c) where:
(a) is the net result of:
1) the asset value at the end of the previous valuation period; plus
2) the investment income and capital gains, realized and unrealized,
credited at the end of the current valuation period; minus
3) the capital losses, realized or unrealized, charged during the current
valuation period; minus
4) any amount charged for taxes or any amount we set aside during the
valuation period as a provision for taxes attributable to the operation or
maintenance of the Sub-Account; and
(b) is the value of the assets at the end of the preceding valuation
period; and
(c) is a factor representing the Deductions from the Sub-Accounts that are
deducted on a daily basis. These charges are shown on page 3.
The net investment factor may be greater than or less than one.
ASSET CHARGES DEDUCTED FROM THE SUB-ACCOUNTS
The equivalent of the Annual Asset Charges is deducted daily from the
Sub-Accounts and will not exceed the Annual Asset Charges shown on page 3.
NET PURCHASE PAYMENTS
A net purchase payment is a purchase payment less any applicable purchase
payment tax.
CASH SURRENDER
You may surrender this contract at any time before the earlier of the death
of the annuitant and the annuity date by sending a written request and this
contract to our Variable Products Service Center. The cash surrender value
may be paid in a single sum or under a payment option.
CASH SURRENDER VALUE
The cash surrender value is the contract value on the date we receive your
request for surrender, less any applicable surrender charge.
PARTIAL WITHDRAWALS
At any time before the earlier of the death of the annuitant and the
annuity date you may withdraw part of the cash surrender value by sending a
written request and this contract to our Variable Products Service Center.
The partial withdrawal may not be less than $500.
The amount of the partial withdrawal and any applicable surrender charge
will be deducted from the cash surrender value. On the date of withdrawal,
the amount withdrawn plus any surrender charge will be subtracted from the
death benefit and the contract value.
Unless you request otherwise, we will allocate partial withdrawals to
Sub-Accounts in the same proportion as the value in each Sub-Account bears
to the contract value on the date of the partial withdrawal.
The maximum withdrawal allowed will be an amount that, along with the
appropriate charges, will not reduce the contract value to less than
$5,000.
AMOUNTS SUBJECT TO A SURRENDER CHARGE
If, during the first five contract years, you surrender this contract for
its cash surrender value or make a partial withdrawal, we will deduct a
surrender charge from the contract value. The amount of the surrender
charge will be the applicable percentage of purchase payments withdrawn at
the time of surrender. The surrender charges are shown in the Table of
Surrender Charges on page 3. For purposes of this charge, any amount
deducted from your contract value based upon surrender or partial
withdrawals will be considered as a withdrawal of purchase payments until
an amount equal to all of your purchase payments has been withdrawn.
In each contract year, any purchase payments withdrawn which do not in
total exceed 10% of the total purchase payments will not incur a surrender
charge. "Total purchase payments" will equal all purchase payments made
less any amounts previously surrendered that were subject to a surrender
charge.
SURRENDER CHARGES ON ANNUITIZATION
The surrender charge as described above will apply if the annuity date
occurs within the first three contract years.
If the annuity date occurs after the third contract year, a surrender
charge will not be applied to the contract value before calculation of the
proceeds to be paid.
OPTION TO CHANGE THE ANNUITY DATE
You may change the annuity date by writing to our Variable Products Service
Center before the annuity date shown on page 3. The request must be
received by us at least 30 days before the then current annuity date.
The new annuity date must be:
(a) at least 30 days after the date we receive your notice;
(b) the first day of a month; and
(c) not later than the first day of the month following the annuitant's
80th birthday or, if later, the first day of the month following the fifth
contract anniversary.
BASIS OF VALUES
All values are at least as great as those required by law in the state in
which this contract is delivered. A detailed statement of the method used
to compute the minimum values has been filed with the insurance supervisory
official of the state in which this contract is delivered.
GENERAL PROVISIONS
ENTIRE CONTRACT
This contract and the application, a copy of which is attached, are the
entire contract.
All statements made in an application are deemed to be representations and
not warranties. No statement in an application will be used to void this
contract or defend against a claim unless it is contained in the
application and a copy of the application is attached to the contract when
issued.
No change in or waiver of any provision of this contract will be valid
unless the change or waiver is approved by one of our executive officers.
The approval must be endorsed on or attached to this contract. No agent
or other person has the right to change or waive any of the contract
provisions.
MISSTATEMENT OF AGE OR SEX
If the age or sex of the annuitant has been misstated, we will pay the
amount which the proceeds would have purchased for the correct age and sex.
If we make an overpayment because of an error in age or sex, the
overpayment plus interest at 6% compounded annually will be a debt against
this contract. If the debt is not repaid, future annuity payments will be
reduced accordingly.
If we make an underpayment because of an error in age or sex, any income
payments will be recalculated for the correct age and sex and future
payments will be adjusted. The underpayment, with interest at 6%
compounded annually, will be paid to you in a single sum.
ASSIGNMENT
You may assign this contract at any time during the lifetime of the
annuitant and before the annuity date. No assignment will be binding on us
unless it is written in a form acceptable to us and received at our
Variable Products 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.
CLAIMS OF CREDITORS
To the extent permitted by law, no payments under this contract will be
subject to the claims of the creditors of the owner, annuitant or any
beneficiary.
QUARTERLY REPORT
Four times each contract year, we will send you a report within 31 days
after the end of each contract quarter. The report will show the contract
value, purchase payments paid, withdrawals and charges made since the last
report.
The report will also include any other information that may be required by
the insurance supervisory official of the jurisdiction in which this
contract is delivered.
NON-PARTICIPATING
This contract does not share in our profits or surplus earnings.
OWNER AND BENEFICIARY
OWNER
Owner means the owner named in the application, unless later changed.
During the annuitant's lifetime, all rights granted by this contract belong
to the owner. If the owner dies before the annuitant, all of the owner's
rights will pass to the owner's estate.
BENEFICIARY
The beneficiary is named in the application and may be changed by you. The
beneficiary will receive the proceeds payable on the death of you or the
annuitant.
The interest of any beneficiary who dies before the annuitant will pass to
the surviving beneficiaries according to their respective interest. If no
beneficiary survives the annuitant, the proceeds payable on death of the
annuitant will be paid to the owner, if living, otherwise to the estate of
the owner.
CHANGE OF OWNER AND BENEFICIARY
The owner may change the owner and the beneficiary during the lifetime of
the annuitant and before the annuity date. Any change must be in writing.
A change 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 our Variable Products Service Center.
PAYMENT OF PROCEEDS
GENERAL
You may elect to have all or any part of the proceeds paid as either a
variable annuity or a fixed annuity under an available payment option.
PAYMENT OPTIONS
While the annuitant is living and prior to the annuity date you may elect
or change the election of a payment option by a written request sent to our
Variable Products Service Center. If no payment option is on file at our
Variable Products Service Center on the annuity date, the proceeds will be
paid as a variable annuity in accordance with Option 3 - Life Annuity with
10 Years Guaranteed.
If proceeds are paid as a variable annuity, the amount of the first monthly
annuity payment will be determined on a the annuity date from the
appropriate Annuity Table. Subsequent monthly annuity payments will vary
based on the investment experience of the elected Sub-Accounts used to fund
the annuity.
The minimum amount of proceeds that may be applied under a payment option
is $5,000.00. If monthly annuity payments under a payment option would be
less than $60.00 per month, we have the right to change the frequency of
payment to a frequency that would provide the minimum required.
Payment options are not available to the following:
(a) any corporate beneficiary, partnership or trustee;
(b) any assignee, unless that assignee is a beneficiary; or
(c) the executors or administrators of the annuitant's, owner's or the
beneficiary's estate.
We will pay the first annuity payment on the annuity date. We will require
proof acceptable to us of the age of the annuitant before any payment is
made. We may require proof that the annuitant is still living before we
make any payments after any guarantee period.
When a payment option is chosen, a payee may not assign the payments,
commute payments, or make any other changes to the payment option.
POSTPONEMENT OF PAYMENT
We will usually pay any proceeds payable on surrender or partial withdrawal
within seven days after we receive your written request. We will usually
pay proceeds payable as a result of the death of the annuitant within seven
days after we receive due proof of the annuitant's death. However any
payment involving a determination of the contract value may be postponed
whenever:
(a) the New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the exchange is restricted as determined by
the Securities and Exchange Commission; or
(b) the Securities and Exchange Commission by order permits postponement
for the protection of contract owners; or
(c) a state of emergency exists, as determined by the Securities and
Exchange Commission, which would make determination of the value of the net
assets of the Account impracticable.
VARIABLE ANNUITY
Annuity payments vary in amount in accordance with the investment
performance of the elected Sub-Accounts of the Account. On the annuity
date, the amount of the first annuity payment is calculated by applying the
proceeds payable to the Annuity Table for the option chosen.
Subsequent annuity payments will be based on the investment performance of
the elected Sub-Accounts. The amount of each subsequent payment is
determined by the number of annuity units credited for each Sub-Account.
The number of annuity units credited for a Sub-Account is determined by
dividing the portion of the first payment allocated to a Sub-Account by the
annuity unit value for that Sub-Account.
ANNUITY UNIT VALUE
The value of an annuity unit for each Sub-Account was initially set at
$1.00. The value of an annuity unit for each Sub-Account for any
subsequent valuation period is equal to (a) times (b) times (c) where:
(a) is the net investment factor for the valuation period for which the
annuity unit value is being calculated;
(b) is the value of the annuity unit for the preceding valuation period;
and
(c) is the investment result adjustment factor (.99990575 per day) which
recognizes an annual interest rate of 3.5% per year used in determining the
annuity payment amounts.
Annuity payments after the first will be equal to the sum of the annuity
units for each Sub-Account times the then current annuity unit value for
the respective Sub-Account. The number of annuity units remains fixed for
all annuity payments. The dollar amount of the annuity payments may vary
from month to month. We guarantee that the dollar amount of each variable
annuity payment will not be affected by changes in mortality and expense
experience.
TRANSFERS AMONG SUB-ACCOUNTS AFTER THE ANNUITY DATE
After the annuity date, you may transfer amounts among the Sub-Accounts
without charge by request to our Variable Products Service Center. Such
transfers, which must be in accordance with the Company's then current
rules, will be effective as of the end of the valuation period in which the
request is received and will affect payments determined after that
valuation period. The transfer will be based on the relative value of the
Sub-Account annuity values.
FIXED ANNUITY
The amount of annuity payments for a fixed annuity is calculated by
applying the proceeds payable to the appropriate Annuity Table.
Thereafter, the amount of the annuity payments will not be affected by the
investment performance of the Account. Income payments under a fixed
annuity will not vary in dollar amount. Amounts used to purchase a fixed
annuity may not be later transferred to a variable annuity.
BASIS OF PAYMENTS
The mortality table used in determining the annuity payment rates is the
1983a Individual Annuitant Mortality Table.
PAYMENT OPTIONS
The annuity payment rates in the Annuity Table show the dollar amount for
each $1000 of proceeds applied for:
(a) the first monthly variable annuity payment based on an assumed interest
rate of 3.5%; and
(b) the monthly fixed annuity payment, when this payment is based on the
guaranteed interest rate of 3.5% per year.
The company may make available variable payments based on other assumed
interest rates.
Annuity payments under the payment options will be based on the sex and age
at nearest birthday of the annuitant. The monthly annuity payable will be
the larger of:
(a) The payment based on the rates shown in the Annuity Table for the
option chosen; and
(b) the payment calculated by applying the proceeds as a single premium to
our single premium annuity rates in effect on the date of the first annuity
payment for the same plan.
Age is based on the adjusted age of the annuitant as of the annuity date.
The joint and survivor annuity payment rates are based on the adjusted ages
of both the annuitant and the designated second person as of the annuity
date. The adjusted age is:
o The age at the birthday nearest to the annuity date; less
o The age adjustment shown below which is based on the number of contract
years that have elapsed from the contract date to the annuity date.
AGE ADJUSTMENT TABLE
Contract Years
Elapsed 1 to 5 6 to 10 11 to 15 16 to 20 21 to 25 25+
Age Adjustment 0 1 2 3 4 5
OPTION 1 - LIFE ANNUITY
We will make monthly income payments for the life of the annuitant, ceasing
with the last payment due prior to the death of the annuitant.
OPTION 2 - JOINT AND SURVIVOR ANNUITY
We will make monthly payments during the joint lifetime of the annuitant
and a designated second person and thereafter during the lifetime of the
survivor.
OPTION 3 - INCOME FOR A GUARANTEED PERIOD AND LIFE THEREAFTER
We will make monthly income payments for a guaranteed period as elected.
If the annuitant lives beyond the guaranteed period, the payments will
continue until the annuitant's death.
If the Annuitant dies before the end of the guaranteed period payments will
be continued to the beneficiary until the end of the guaranteed period. We
may require proof that the beneficiary is living before any payment is
made.
The beneficiary may elect to have the remaining unpaid guaranteed payments
paid in a single sum. Also, if the beneficiary dies before the remaining
guaranteed payments have been paid, the remaining unpaid guaranteed
payments will be paid in a single sum to the estate of the beneficiary.
Such remaining unpaid guaranteed payments will be discounted to the date of
the beneficiary's death at the yearly rate used in determining the first
monthly payment. Discounted means we will deduct the amount of interest
the remaining payments would have earned.
ANNUITY TABLES
DOLLAR AMOUNT OF THE ANNUITY PAYMENT WHICH IS PURCHASED
WITH EACH $1,000 OF PROCEEDS APPLIED
Guaranteed Monthly Payments
OPTION 1 OPTION 3
Life Annuity Life Annuity Life Annuity
Adjusted 10 Years Guaranteed 20 Years Guaranteed
Age Male Female Male Female Male Female
55 4.99 4.54 4.91 4.51 4.66 4.38
56 5.09 4.62 5.00 4.58 4.72 4.44
57 5.20 4.71 5.10 4.66 4.78 4.51
58 5.32 4.80 5.20 4.75 4.85 4.57
59 5.44 4.90 5.31 4.84 4.91 4.64
60 5.57 5.00 5.42 4.93 4.97 4.70
61 5.71 5.11 5.54 5.03 5.04 4.77
62 5.86 5.23 5.67 5.14 5.10 4.84
63 6.02 5.36 5.80 5.25 5.16 4.91
64 6.20 5.49 5.94 5.37 5.22 4.98
65 6.38 5.64 6.08 5.50 5.28 5.05
66 6.58 5.79 6.23 5.63 5.33 5.12
67 6.79 5.95 6.38 5.77 5.38 5.19
68 7.02 6.13 6.54 5.91 5.43 5.25
69 7.26 6.32 6.71 6.07 5.48 5.32
70 7.52 6.53 6.87 6.23 5.52 5.38
71 7.80 6.75 7.05 6.40 5.55 5.43
72 8.09 6.99 7.22 6.58 5.59 5.48
73 8.41 7.26 7.40 6.76 5.62 5.52
74 8.75 7.54 7.57 6.95 5.64 5.57
75 9.12 7.85 7.75 7.14 5.66 5.60
76 9.51 8.18 7.92 7.34 5.68 5.63
77 9.92 8.54 8.09 7.54 5.70 5.66
78 10.37 8.94 8.26 7.74 5.71 5.68
79 10.85 9.36 8.42 7.94 5.72 5.70
80 11.37 9.82 8.57 8.13 5.73 5.71
JOINT AND SURVIVOR LIFE ANNUITY (OPTION 2)
Male
Adjusted
Age 55 60 65 70 75 80
55 4.06 4.24 4.40 4.54 4.65 4.73
60 4.17 4.40 4.64 4.86 5.04 5.18
65 4.25 4.54 4.86 5.18 5.49 5.73
70 4.32 4.65 5.05 5.50 5.96 6.37
75 4.36 4.73 5.20 5.76 6.40 7.05
80 4.39 4.79 5.30 5.96 6.78 7.70
Basis = 1983a Individual Annuitant Mortality at 3.5% annual interest.
The dollar amount of annuity payment for any age or combination of ages not
shown in the Annuity Tables or for any other form of annuity option agreed
to by us will be furnished on request.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
Philadelphia, Pennsylvania
VARIABLE ANNUITY CONTRACT WITH PURCHASE PAYMENT FLEXIBILITY.
INITIAL PURCHASE PAYMENT WITH ADDITIONAL PURCHASE PAYMENTS PAYABLE
DURING THE LIFETIME OF THE ANNUITANT AND PRIOR TO THE ANNUITY DATE.
DEATH BENEFIT PAYABLE UPON DEATH OF THE ANNUITANT
PRIOR TO THE ANNUITY DATE.
VALUES AND BENEFITS REFLECT INVESTMENT RESULTS.
NON-PARTICIPATING.
LG953250023
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
PHILADELPHIA, PENNSYLVANIA
DEFERRED ANNUITY
Flexible Purchase Payments
Optional Variable and Fixed Accumulation Values
Optional Variable and Fixed Annuity Payments
Nonparticipating!
Fidelity Investments Life Insurance Company agrees to pay monthly income to
the Annuitant starting on the Annuity Date and to provide the other rights
and benefits of this Contract
These agreements: are subject to all the provisions of this Contract.
This Contract has; been issued in consideration of the attached application
and the initial purchase payment.
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT. (SEE CONTRACT VALUE, PAGE 10.)
Signed for the Company at its Executive Office, Boston, Massachusetts
~;~ - /~
President Secretary
TEN DAY RIGHT TO RETURN THE CONTRACT
When this Contract is issued, you have 10 days after you receive it from
the Company to examine it. Within those 10 days you can return the Contract
to the Company or its agent for any reason. If you do, the Contract will be
cancelled. Any purchase payment paid will then be refunded and the Contract
will be void from the beginning.
PLEASE READ YOUR CONTRACT CAREFULLY
This is a legal contract between you and the Company.
GUIDE TO CONTRACT PROVISIONS
PAGE
Contract Schedule 4
Definitions 5
General Provisions 7
Entire Contract.
Misstatement of Age
Reports to Owner
Proof of Survival
Protection of Proceeds
Termination
Basis of Values
Nonparticipating
Purchase Payments 9
Purchase Payments
Net Purchase Payments
Additional Purchase Payments
Allocation of Purchase Payments
Contract Value 10
Contract Value
Deductions from the Contract Value
The Fixed Account 11
Fixed Account
Fixed Account Contract Value
Interest on the Fixed Account Contract Value
Transfers of Contract Value Between the Fixed and Variable Accounts
The Variable Account 12
Variable Account
Subaccounts
Accumulation Units
Accumulation Unit Value
Variable Account Contract Value
Net investment Factor
Charges Against the Subaccounts
Transfers Among Subaccounts
Additions, Deletions or Substitutions
Reserved Rights
Valuation Days and Valuation Periods
Proceeds 16
Proceeds
Proceeds on death of Owner During Accumulation Period
Proceeds on Death of Owner During Annuity Period
Interest on Proceeds
Postponement. of Payment
Death Benefit 18
Death Benefit During Accumulation Period
Owner and Beneficiary 19
Owner
Beneficiary
Change of Owner and Beneficiary
Assignments
Designation of Owner and Beneficiary
Surrender Provisions 21
Cash Surrender
Cash Surrender Value
Partial Withdrawals
Free Withdrawal Privilege
Amounts Subject to Surrender Charge
Surrender Charges on Annuity Date
Annuity Provisions 23
Annuity Payments
Deductions from Annuity Payment
Change of Annuity Date
Annuity Payment Options
Fixed Annuity
Variable Annuity
Annuity Unit Value
Determination of First Variable Annuity Payment
Variable Annuity Payments After the First Payment
Exchange of Annuity Units
Age Adjustment
Annuity Tables 27
FIDELITY INVESTMENTS LIFE INSURANCE
COMPANY
VARIABLE PRODUCTS SERVICE CENTER, P.O. BOX 994, PROVIDENCE, R.I.
02901-0994
CONTRACT SCHEDULE
CONTRACT NUMBER Z000000000
CONTRACT DATE August 8, 1988
ANNUITY DATE September 9, 1999
ANNUITANT John A. Nuitant
ISSUE AGE 35
INITIAL :PURCHASE PAYMENT: $5,000.00
VARIABLE A('COUNT SUB-ACCOUNTS
MONEY MARKET EQUITY-INCOME
SHORT TERM GROWTH
HIGH INCOME OVERSEAS
GUARANTEED FIXED ACCOUNT INTEREST RATE: 3.5% per year
compounded annually
MINIMUM ADDITIONAL PURCHASE PAYMENT: $250
DEDUCTIONS FROM THE CONTRACT VALUE:
MAINTENANCE CHARGE: $30.00 per year on the Contact Date
not to exceed 550 per year.
TABLE OF SURRENDER CHARGES
CONTRACT PERCENTAGE OF
YEAR PURCHASE PAYMENTS
1 5%
2 4%
3 3%
4 2%
5 1%
THEREAFTER 0%
DEFINITION'S
ACCUMULATION PERIOD:
The period the Contract is in force prior to the Annuity Date.
ACCUMULATION UNITS:
The measure used to calculate the Variable Account Contract Value prior to
the Annuity Date.
ANNUITANT:
The person on ,whose life monthly annuity payments depend.
ANNUITY DATE:
The date on which annuity payments begin. You may change this date as
provided in this
Contract.
ANNUITY PERIOD:
The period during which the Annuitant receives payments beginning on the
Annuity Date.
ANNUITY UNITS:
The measure used to calculate the amount of variable annuity payments
during the Annuity
Period.
BENEFICIARY:
The person who receives the proceeds in the event of the death of the Owner
or Annuitant.
THE COMPANY:
Fidelity investments Life insurance Company.
CONTRACT ANNIVERSARY:
The same day and month as the Contract Date each year that the Contract
remains in force.
CONTRACT DATE:
The date the Contract becomes effective, from which contract anniversaries,
contract years, and
contract months are determined. Your Contract Date is shown on the Contract
Schedule.
CONTRACT VALUE:
The sum of the Fixed Account Contract Value (which receives a declared
interest rate) and the
Variable Account Contract Value (which varies with the investment
performance of the elected
Subaccounts) for this Contract.
FIXED ANNUITY:
An annuity with fixed payments which are guaranteed during the Annuity
Period. Once
established, the amount of the annuity payment will not vary.
FREE WITHDRAWAL AMOUNT:
The amount that may be withdrawn from the Contract Value without incurring
a surrender
charge.
OWNER:
The person who has the ownership rights and privileges of the Contract.
SUBACCOUNTS:
The portfolios of the V;ariable Account. The Subaccounts available on the
Contract Dale are
named on the Contract Schedule.
VALUATION DAY:
Each day the blew York: Stock Exchange is open for Trading.
VALUATION PERIOD:
The interval of time beginning at the close of business on each Valuation
Day and ending at the
close of business on the next Valuation Day.
VARIABLE ANNUITY:
An annuity with payments which are not guaranteed as IO dollar amount and
which vary in
amount with the investment experience of elected Subaccounts.
WRITTEN REQUEST:
A request in a form acceptable IO the Company, signed by you and delivered
IO the Company at
the Variable Products Service Center.
YOU, YOUR:
The Owner of this Contract. The owner may be someone other than the
Annuitant. The Owner is
named on the application and may be changed as provided in this Contract.
GENERAL PROVISIONS
ENTIRE CONTRACT
This Contract and the application. a copy of which is attached. arc the
entire contract between you and the Company.
No change in or waiver of the provisions of the Contract is valid unless
the change or waiver is signed by the President or Secretary of the
Company.
MISSTATEMENT OF APE
If the Annuitant's age has been misstated, payments under this Contract
will be adjusted. They will be based or: what would have been provided at
the correct age. Any underpayments by THE Company will 'be paid in a single
sum, with interest at the rate of 6% per year compounded annually. Any
overpayments by the Company must be refunded and to the extent possible
will be subtracted from the future payments, with interest at the rate of
6% per year compounded annually.
REPORTS TO OWNER
At least once once year the Company will send you a report. The report will
show the Contract Value and purchase payments. withdrawals and maintenance
charges made since the last report. The report will also include any other
information that may be required by the insurance department of the state
in which this Contract is delivered.
PROOF OF SURVIVAL
Where any payments under this Contract depend on the Annuitant or other
recipient being alive on a given date, proof of survival may be required by
the Company prior to making the payments.
PROTECTION OF PROCEEDS
Payments under this Contract may not be assigned by any Beneficiary prior
to the time they are due. To the extent allowed by law, payments are not
subject to the claims of creditors or to legal process.
TERMINATION
This Contract WILL terminate on the earliest of:
The death of the Owner prior TO the Annuily Date;
The death of the Annuitant prior to the Annuity Date;
The Surrender of tho Contract; and
The final payment under any payment option.
The Company may at its option, prior TO the Annuity Date, cancel this
Contract if allof the following conditions exist at the same time:
(a) No purchase payments have been paid for a continuous period of 24
months; and
(b) Total purchase payments credited to this Contract are less than
52,000: and
(c) The Contract Value is less than 52,000.
Upon cancellation, the Contract Value will i be paid to you in a single
sum. The Contract Will then terminate.
BASIS OR VALUES
All values are at least as great as those required by the law of the state
in which this Contract is delivered. A statement of the method used to
compute the minimum values has been filed with the insurance department of
the state in which this Contract is delivered.
NONPARTICIPATING
This Contract does not participate in the profits or surplus of the
Company.
PURCHASE PAYMENTS
PURCHASE PAYMENTS
Purchase payments are the payments you make for this Contract.
NET PURCHASE PAYMENTS
A net purchase payment is a purchase payment less any premium tax required
by the state in which this Contract is delivered.
ADDITIONAL PURCHASE PAYMENTS
You may make additional purchase payments during the Accumulation Period.
The minimum additional purchase payment is shown on the Contract Schedule.
The Company reserves the right to limit the amount of additional purchase
payments it will accept. ~
ALLOCATION OF PURCHASE PAYMENTS
You may allocate your net purchase payments to the Fixed Account and among
one or more of the Subaccounts of the Variable Account.
Allocation of purchase payments to the Fixed Account will be permitted in
accordance with the Company's then current rules.
The entire portion of any net purchase payment that you allocate to the
Variable Account will be invested in the Money Market Subaccount until the
estimated end of the Right to Return the Contract period. The contract
value in the Money Market Subaccount will then be transferred to the
Subaccounts you elected on the application. The portion of the initial
purchase payment allocated to any Subaccount is shown on the application.
The entire portion of any net purchase payment that you allocate to the
Fixed Account will be invested in the Fixed Account when received.
Additional net purchase payments received after the Right to Return the
Contract period will be allocated to the Fixed Account and to the
Subaccounts as you elected on the application unless you elect a different
allocation. The portion of any additional net purchase payment allocated to
a Subaccount must be a whole percentage, not less than 10%.
CONTRACT VALUE
CONTRACT VALUE
The Contract Value at any time is:
The Fixed Account Contract Value;
PLUS
The Variable Account Contract Value.
The portion of the Contract Value invested in the Subaccounts of the
Variable Account is not guaranteed and will vary with the performance of
the elected subaccounts.
DEDUCTIONS FROM THE CONTRACT VALUE
The Maintenance Charge is deducted from the Contract Value on each contract
anniversary. A pro rata portion of the charge will be deducted from the
Contract Value on the Annuity Date or when the Contract is surrendered. The
Maintenance Charge is not guaranteed and may be changed by the Company. The
Maintenance Charge as of the Contract Date and the maximum Maintenance
Charge are shown on the Contract Schedule.
Deductions for the Maintenance Charge will be allocated to the Fixed
Account and to the Subaccounts of the Variable Account in the same
proportion as the value in each bears to the Contract Value on the date of
the deduction.
THE FIXED ACCOUNT
FIXED ACCOUNT
The Fixed Account is the Company's general account. The general account
consists of all of the Company's assets other than those in any separate
account.
FIXED ACCOUNT CONTRACT VALUE
The Fixed Account Contract Value at any time will be:
The sum of all amounts credited to the Fixed Account for this Contract;
LESS
Any amounts deducted for charges, transfers or withdrawals.
INTEREST ON THE FIXED ACCOUNT CONTRACT VALUE
The Company will credit interest on the Fixed Account Contract Value.
Interest will accrue from the date a purchase payment is received in the
Variable Products Service Center or an amount is transferred into the Fixed
Account. Different interest rates may apply to different amounts in the
Fixed Account depending on when the amount was initially allocated, and the
interest rate applicable to any particular amount may vary from time to
time. However, the interest rate credited to any amount in the Fixed
Account will never be less than that shown on the Contract Schedule.
When a purchase payment or a transfer from the Variable Account is received
by 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
that amount was allocated to the Fixed Account. All interest rates assigned
to that amount after the initial guarantee expires will be guaranteed for a
period of at least one year.
TRANSFERS OF CONTRACT VALUE BETWEEN THE FIXED AND VARIABLE ACCOUNTS
During the Accumulation Period and subject to the rules of the Company, you
may transfer values by written request or telephone. if previously
authorized:
Held in one or more of the Subaccounts of the Variable Account into the
Fixed Account; and
Held in the Fixed Account into one or more of the Subaccounts of the
Variable Account.
You may request the transfers in dollar amounts or as a percentage. The
minimum dollar amount you may transfer is $250 per Subaccount or, if less,
the entire amount in a Subaccount. If you transfer a percentage, the
percentage must be a whole number.
THE VARIABLE ACCOUNT
VARIABLE ACCOUNT
The Company established the Fidelity investments Variable Annuity Account I
("the Variable Account") t") support the: operation of this Contract and
other variable annuity contracts the Company may offer.
The Company owns the assets in the Variable Account. Income, gains and
losses. whether or not realized. from assets allocated to the Variable
Account will be credited to or charged against the Variable Account without
regard to the Company's other income, gains or losses.
Assets equal to the reserves and other liabilities of the Variable Account
will not be charged with liabilities that arise from any other business the
Company conducts. The Company has the right IO transfer to its general
account any assets of the Variable Account which are in excess of those
reserves and liabilities.
The Variable Account is registered with the Securities and Exchange
Commission as a unit investment trust under the investment Company Act of
1940. The Variable Account is also subject to the laws of the Commonwealth
of Pennsylvania.
SUBACCOUNTS
On the Contract Date the! Variable Account consists of the Subaccounts
listed on the Contract Schedule. The Company reserves the right to delete
any Subaccount of the Variable Account or to add new Subaccounts. The
Variable Account may invest in a series type of mutual fund, unit
investment trusts and other investment portfolios which the Company
determines to be suitable for this Contract. The assets of the Variable
Account are valued each valuation period. Each Subaccount invests in a
designated investment portfolio. Shares of a portfolio are purchased for a
Subaccount at their net. asset value,
You will share only the income, gains and losses of the Subaccounts to
which the net purchase payments for this Contract have been allocated. The
values and benefits of this Contract depend on the investment performance
of the portfolios in which your elected Sub accounts are invested. The
Company does not guarantee the investment performance of the portfolios.
You bear the full investment risk for amounts allocated to the elected
Subaccounts.
The investment policies of a portfolio may not be changed without all
necessary approvals of the Pennsylvania insurance Department.
ACCUMULATION UNITS
The Company will credit net purchase payments in the form of accumulation
units, The number of units to be credited to each Subaccount will be
determined by dividing the net purchase payment allocated to that
Subaccount by the unit value of the subaccount. In the case of the initial
net purchase payment, units will be credited on the Contract Date. For
additional payments, units will be credited as of the valuation period
during which the purchase payment is received.
The amount of any Maintenance Charge, partial withdrawal or surrender
charge deducted from the Variable Account Contract Value will reduce the
number of units credited to the Contract in the Subaccounts. A transfer out
of a Subaccount will reduce the number of units credited to the Contract in
that Subaccount while a transfer into a Subaccount will increase the number
of units.
ACCUMULATION UNIT VALUE
The accumulation unit value of each Subaccount was set at $10.00 at the
start of the first valuation period of the Subaccount. The unit value for
each subsequent valuation period is the net investment factor for that
period multiplied by the unit value for the immediately preceding valuation
period. The unit value for a valuation period applies to each day in the
period. The unit value may increase or decrease from one valuation period
to the next.
ACCUMULATION UNITS
The Company will credit net purchase payments in the form of accumulation
units, The number of units to be credited to each Subaccount will be
determined by dividing the net purchase payment allocated to that
Subaccount by the unit value of the subaccount. In the case of the initial
net purchase payment, units will be credited on the Contract Date. For
additional payments, units will be credited as of the valuation period
during which the purchase payment is received.
The amount of any Maintenance Charge, partial withdrawal or surrender
charge deducted from the Variable Account Contract Value will reduce the
number of units credited to the Contract in the Subaccounts. A transfer out
of a Subaccount will reduce the number of units credited to the Contract in
that Subaccount while a transfer into a Subaccount will increase the number
of units.
ACCUMULATION UNIT VALUE
The accumulation unit value of each Subaccount was set at $10.00 at the
start of the first valuation period of the Subaccount. The unit value for
each subsequent valuation period is the net investment factor for that
period multiplied by the unit value for the immediately preceding valuation
period. The unit value for a valuation period applies to each day in the
period. The unit value may increase or decrease from one valuation period
to the next.
VARIABLE ACCOUNT CONTRACT VALUE
The Variable Account Contract Value at any time will be the sum of the
values of all accumulation units credited to the Contract.
NET INVESTMENT FACTOR
The net investment factor is an index used to measure the investment
performance of a Subaccount from one valuation period to the next. The net
investment factor can be greater or less than one: therefore, the value of
a Subaccount unit may increase or decrease.
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:
The Variable Account Contract Value at any time will be the sum of the
values of all accumulation units credited to the Contract.
NET INVESTMENT FACTOR
The net investment factor is an index used to measure the investment
performance of a Subaccount from one valuation period to the next. The net
investment factor can be greater or less than one: therefore, the value of
a Subaccount unit may increase or decrease.
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
periods;
PLUS
(2) The deduction from the Subaccount during the current valuation period
representing a daily charge equivalent to an effective annual rate of 1%.
CHARGES AGAINST THE SUBACCOUNTS
in determining the unit values for both the accumulation and annuity units,
the Company makes a daily charge equivalent co an effective annual rate of
1* against the assets of each Subaccount.
The earnings of the Variable Account are taxed as part of the operations of
the Company. Al the present time. the Company does not expect IO incur
taxes on earnings of any Subaccount lo the extent that earnings are
credited under the Contract. If the Company incurs taxes due to the
operation of the Variable Account, it may make charges for such taxes
against the Subaccounts
TRANSFERS AMONG SUBACCOUNTS
You may transfer amounts among the Subaccounts without charge either by
written request or telephone, if previously authorized, to the Variable
Products Service Center. You may request the transfers in dollar amounts or
as a percentage. The minimum dollar amount you may transfer is 5250 per
Subaccount or, if less, the entire amount in a Subaccount. If you transfer
a percentage, the percentage must be a whole number. The Company reserves
the right to limit transfers among Subaccounts, but not to fewer than five
transfers per contract year.
ADDITIONS, DELETIONS OR SUBSTITUTIONS
The Company retains the right to make additions to, deletions from or
substitutions for any of the investment portfolios in which the Subaccounts
invest. Such an addition, deletion or substitution would be subject to all
necessary approvals.
RESERVED RIGHTS
The Company reserves the right to:
(a) Combine the Variable Account with other variable accounts.
(b) Deregister the Variable Account under the investment Company Act of
1940 if registration is no longer required.
(c) Operate the Variable Account as a management investment company under
the Investment Company Act of 1940 or in any other form allowed by law.
(d) Make changes required by any change in the investment Company Act of
1940.
VALUATION DAYS AND VALUATION PERIODS
A valuation day is:
(a) Each day the New York Stock Exchange is open for trading; and
(b) Any other day on which the Securities and Exchange Commission requires
mutual funds,or unit investment trusts to be valued.
A valuation period is the interval of time beginning at the close of
business on each valuation day and ending at the close of business on the
next valuation day.
PROCEEDS
PROCEEDS
Proceeds is the amount payable on:
The Annuity Date:
Surrender prior to the Annuity Date:
The death of the Annuitant prior to the Annuity Date;
The death of the Owner prior to the Annuily Date.
Proceeds can be applied to a payment option or paid as a single sum.
It is currently the Company's practice to deduct any applicable tax at the
time proceeds become payable; however. the Company reserves the right to
deduct the tax when due.
On the Annuity Date, the proceeds will be the Contract Value, if any, less
any applicable surrender charge. If you surrender the Contract, the
proceeds will be the cash surrender value.
The proceeds payable on the death of the Annuitant prior to the Annuity
Date will be the Death Benefit.
The Company may require that you return this Contract before the proceeds
are paid.
PROCEEDS ON DEATH OF OWNER DURING THE ACCUMULATION PERIOD
If you die before the Annuity Date, the proceeds are the Contract Value on
the date proof of death is received by the Company. The proceeds must be
distributed to the Beneficiary within five years after the date of death.
unless:
(a) The proceeds are payable over the lifetime of the Beneficiary with
distributions beginning within one year of the date of death: or
(b) Your spouse is the Beneficiary, in which case your spouse may elect to
continue this Contract and become the Owner.
PROCEEDS ON DEATH OF OWNER DURING ANNUITY PERIOD
If you die on or after the Annuity Date, any remaining payments under this
Contract must be distributed at least as rapidly as under the payment
option being used as of the date of death.
Any proceeds will be paid in accordance with the applicable law governing
such payments. To the extent this Contract conflicts with any applicable
provision of the internal Revenue Code with respect to distributions on
death. this Contract will be considered amended to conform to the Code.
INTEREST ON PROCEEDS
If the proceeds are not paid in a single sum or under a payment option
within 30 days after they
become payable. or the time provided by law, whichever is less, the Company
will pay interest on the unpaid proceeds. interest will accrue from the
date the proceeds are payable lo the dale of payment al a rate of 3.5% per
year compounded annually or the rate and lime provided by law, whichever is
greater.
POSTPONEMENT OF PAYMENT
The Company will usually pay proceeds payable on surrender or partial
withdrawal within seven days after it receives your written request. The
Company will usually pay proceeds payable as a result of the death of the
Annuitant or Owner within seven days after it receives proof. However, any
payment involving a determination of the Contract Value may be postponed
whenever:
(a) The New York Stock Exchange is closed other than customary weekend and
holiday closings, or trading on the exchange is resiricled as determined by
the Securilies and Exchange Commis'sion: or
(b) The Securities and Exchange Commission by order permits postponemenl
for the protection of conlracl owners; or
(c) A state of emergency exisis, as determined by the Securities and
Exchange Commission. which would make delermination of the value of the net
assets of the Variable Accounl impraclicable.
The Company can postpone the date of any surrender or partial withdrawal
paymenl from the Fixed Accounl for not more than six months. If paymenl is
posiponed for more than 30 days, it will be crediled with interest from the
date of surrender or partial withdrawal. The rate of interest will not be
less than 3.5% per year compounded annually or, if greater, the rate
required by law.
DEATH BENEFIT
DEATH BENEFIT DURING ACCUMULATION PERIOD
If the death of the Annuitant occurs on or before his or her 70th birthday,
the Death Benefit will be the greater of:
(a) The purchase payments paid, less any partial wilhdrawals and any
applicable surrender charges and any incurred taxes; and
(b) The Contract Value on the date that proof of death is received by the
Company.
If the death of the Annuitant occurs after his or her 70th birthday, the
Death benefit will be the Contract Value on the date that proof of death is
received by the Company.
OWNER AND BENEFICIARY
OWNER
The Owner of the Contract is named on the application unless later changed.
The new Owner will succeed to all rights of ownership, including the right
to make a further change of owner. On the Annuity Date the Annuitant
becomes the Owner and all rights of ownership pass to the Annuitant.
BENEFICIARY
The Beneficiary is named on the application unless later changed. The
proceeds will be paid to the Beneficiary upon the death of:
(a) The Owner prior to the Annuity Date: or
(b) The Annuitant prior to the Annuity Date.
The Beneficiary has no rights in the Contract until the death of the Owner
or the Annuitant. If no Beneficiary survives, the proceeds will be paid to
the Owner or to the Owner's estate.
CHANGE OF OWNER AND BENEFICIARY
A change of Owner or Beneficiary must be in written form satisfactory to
the Company, and must be dated and signed by the Owner who is making the
change. The change will be subject to all payments made and actions taken
by the Company under the Contract before the form is received by the
Company at the Variable Products Service Center.
ASSIGNMENTS
An absolute assignment of the Contract by the Owner is a change of owner
and beneficiary to the assignee. A collate:ral assignment of the Contract
by the Owner is not a change of owner or beneficiary; but their rights will
be subject to the terms of the assignment. Assignments will be subject to
all payments made and actions taken by the Company before a signed copy of
the assignment form is received by the Company at the Variable Products
Service Center. The Company will not be responsible for determining whether
or not an assignment is valid.
DESIGNATION OF OWNER AND BENEFICIARY
A numbered sequence can be used to name contingent beneficiaries.
Co~beneficiaries will receive equal shares unless otherwise stated. In
naming owners or beneficiaries, unless otherwise stated:
"Child" includes an adopted or posthumous child:
'Provision for issue' means that if a Beneficiary does not survive the
Owner or Annuitant the share of that Beneficiary will be taken by his or
her living issue by right of representation; and
A family relation such as "wife", "husband. or -child. means the relation
to the Annuitant.
At the time for payment of benefits the Company can rely on an affidavit of
any Owner or other responsible person to determine family relations or
members of a class.
SURRENDER PROVISIONS
CASH SURRENDER
You may surrender this Contract for the cash surrender value at any time
during the Accumulation Period by sending a written request to the Variable
Products Service Center.
CASH SURRENDER VALUE
The cash surrender value is the Contract Value on the date the Company
receives your request for surrender, less any surrender charge.
PARTIAL WITHDRAWALS
You may withdraw part of the cash surrender value at any time during the
Accumulation Period by sending a written request to the Variable Products
Service Center. The partial withdrawal may not be less than 5500.
On the date of withdrawal. the amount withdrawn plus any surrender charge
will be subtracted from the Death BENEFIT AND THE CONTRACT VALUE.
Unless you request otherwise. the Company will allocate partial withdrawals
to the Fixed Account and to the Subaccounts of the Variable Account in the
same proportion as the value in each bears to the' Contract Value on the
date of the partial withdrawal.
The maximum withdrawal allowed will be an amount that, along with the
appropriate surrender charges, will not reduce the Contract Value to less
than $2,500
FREE WITHDRAWAL PRIVILEGE
During each of the first five contract years, you may withdraw up to the
free withdrawal amount without incurring a surrender charge.
The free withdrawal amount equals:
(a) 10% of total purchase payments;
LESS
(b) Any amounts previously withdrawn during the contract year that were not
subject to a surrender charge.
AMOUNTS SUBJECT TO SURRENDER CHARGE
After the fifth contract year there will never be a surrender charge. In
each of the first five contract years, a surrender or partial withdrawal in
excess of the free withdrawal amount will incur a surrender charge. The
amount of the surrender charge deducted from the Contract Value will equal:
(a) The applicable surrender charge percentage;
MULTIPLIED BY
(b) The lesser of:
(1) The amount surrendered or withdrawn in excess of the free withdrawal
amount; and
(2) Total purchase payments.
The surrender charge percentages are shown in the Table of Surrender Charge
Percentages on the Contract Schedule. Total purchase payments equal all
purchase payments made less any amounts previously withdrawn that were
subject to a surrender charge.
Unless you request otherwise. the Company will allocate surrender charges
to the Fixed Account and to the Subaccounts of the Variable Account in the
same proportion as the value in each bears to the Contract Value,
SURRENDER CHARGES ON ANNUITY DATE
The surrender charge will apply if the Annuity Date occurs within the first
three contract years. If the Annuity Date occurs after the third contract
year, there will be no surrender charge.
ANNUITY PROVISIONS
ANNUITY PAYMENTS
On the Annuity Bate the proceeds may be applied to make annuity payments.
All annuity payments will be paid as of the first of the month. The first
payment will be made as of the Annuity Date. this date is shown on the
Contract Schedule unless later changed. Before payments begin the Company
may require proof of the Annuitant's age. The Company may also require that
you exchange this Contract for a supplemental contract which provides the
annuity payments.
Annuity payments under the payment options will be based on the age on the
nearest birthday of the Annuitant. The annuity payable will be the greater
of:
(a) The payment based on the rates shown in the Annuity Table for the
payment option chosen: and
(b) The payment based on the annuity rates in effect on the Annuity Date
for the same payment option.
DEDUCTIONS FROM ANNUITY PAYMENT
During the Annuity Period. the Maintenance Charge will never be higher than
the charge that was in effect immediately before the Annuity Date. The
Maintenance Charge will be deducted on a pro rata basis from each annuity
payment.
CHANGE OF ANNUITY ANNUITY
You may change the Annuity Date shown for this Contract by written request
to the Variable Products Service Center. The Annuity Date must be the first
of a month. Any change must be received by the Company at least 30 days
prior to the Annuity Date being changed. However, the Annuity Date may not
be later than the Annuitant's 80th Birthday or, if later, the fifth
contract anniversary. The new date you select must be at least 30 days
after the Company receives your written request.
ANNUITY PAYMENT OPTIONS
Subject to the terms of this Contract, annuity payments may be made on a
fixed dollar basis, a variable basis, or a combination of both. You can
choose annuity payments according to one of the Options below or another
option agreed to by the Company.
OPTION 1: LIFE ANNUITY
This provides monthly annuity payments during the lifetime of the
Annuitant. No payments will be made after the Annuitant dies.
OPTION 2: JOINT AND SURVIVOR ANNUITY
Monthly payments will be paid during the lifetime of the Annuitant and a
designated second person.
OPTION 3: INCOME FOR A GUARANTEED PERIOD AND LIFE THEREAFTER
The Company will make income payments for a guaranteed period as elected.
If the Annuitant lives beyond the guaranteed period, the payments will
continue until the Annuitant's death.
If the Annuitant dies before the end of the guaranteed period, payments
will be continued to the Beneficiary until the end of the guaranteed
period.
The Beneficiary may elect to have the remaining unpaid guaranteed payments
paid in a single sum. If the Beneficiary dies before the remaining
guaranteed payments have been paid, the remaining unpaid guaranteed
payments will be paid in a single sum to the estate of the Beneficiary. The
remaining unpaid guaranteed payments will be discounted to the date of the
most recent prior annuity payment. Discounted means that the Company will
deduct the amount of interest the remaining payments would have earned.
By written request to the Company at least 30 days before the Annuity Date,
you may select an option and whether payments are to be made on a fixed
dollar basis, or a combination of both. The payment option may not be
changed during the Annuity Period.
If at least 30 days before the Annuity Date the Company has not received at
the Variable Products Service Center your written request:
(a) Payments will be made according to Option 3 with payments guaranteed
for ten years.
(b) The Fixed Account Contract Value, less any surrender charge, will be
applied to purchase a fixed annuity and the Variable Account Contract
Value, less any surrender charge, will be applied to purchase a variable
annuity.
If the amount to be applied to an option would not provide an initial
monthly payment of at least $20, the Company has the right to make a single
sum payment of the proceeds.
FIXED ANNUITY
A fixed annuity is an annuity with payments that are guaranteed by the
Company as to
dollar amount. The payment is determined by applying the Fixed Account
Contract Value, less any surrender charge, to the appropriate Annuity
Table for the option chosen. Income
payments under a fixed annuity Will not vary in dollar amount.
VARIABLE ANNUITY
A variable annuity is an annuity with payments which:
(a) Are not guaranteed as to dollar amount: and
(b) Vary in amount with the investment experience of the elected
Subaccounts.
ANNUITY UNIT VALUE
The value of an annuity unit for each Subaccount was initially set at $1.00
at the start of the first valuation period of the Subaccount. The annuity
unit value for each Subaccount for any subsequent valuation period is equal
to (a) multiplied by (b) multiplied by (c) where:
(a) Is the net investment factor for the valuation period for which the
annuity unit value is being calculated;
(b) Is the,annuity unit value for the preceding valuation period: and
(c) Is the investment result adjustment factor (.99990575 per day) which
recognizes an annual interest rate of 3.5% used in determining the variable
annuity payment amounts
DETERMINATION OF FIRST VARIABLE ANNUITY PAYMENT
The Variable Account Contract Value, less any surrender charge, will be
applied to the appropriate Annuity Table. This will be done for the
valuation period in which the Annuity Date occurs and in accordance with
the payment option chosen. The amount payable for the first payment for
each $ 1,000 so applied is shown in the Annuity Table for the option chosen
based on an assumed interest rate of 3.5%. The Company may make available
variable payments based on other assumed interest rates.
VARIABLE ANNUITY PAYMENTS AFTER THE FIRST PAYMENT
Variable annuity payments after the first vary in amount. The amount
changes with the investment performance of the elected Subaccounts. The
dollar amount of variable annuity payments after the first is not fixed. It
may change from month to month. The dollar amount of such payments is
determined as follows:
(a) The dollar amount of the first annuity payment is divided by the value
of an annuity unit as of the valuation period in which the Annuity Date
occurs. This result establishes the fixed number of annuity units for each
monthly annuity payment after the first. This number of annuity units
remains fixed during the Annuity Period, except for the effect of any
exchange of annuity units.
(b) The fixed number of annuity units is multiplied by the annuity unit
value as of the valuation period in which the payment is due. This result
establishes the dollar amount of the payment.
The dollar amount of each payment after the first will not be affected by
variations in expenses or mortality experience.
EXCHANGE OF ANNUITY UNITS
Annuity units of any Subaccount may be exchanged for units of any other
Subaccount by request to the Variable Products Service Center. The
Exchange, which must be in accordance with the Company's then current
rules, will be effective as of the end of the valuation period in which the
request is received and will affect payments determined after that
valuation period. The exchange will be based on the relative value of the
Subaccount annuity units. Once annuity payments start no exchanges may be
made to or from any fixed annuity.
AGE ADJUSTMENT
Age is based on the adjusted age of the Annuitant &5 of the Annuity Date.
The joint and survivor annuity payment rates are based on the adjusted ages
of both the Annuitant and the designated second person as of the Annuity
Date. The adjusted age is:
(a) The age on the birthday nearest to the Annuity Date;
LESS
(b) The age adjustment shown below which is based on the number of contract
years that have elapsed from the Contract Date to the Annuity Date.
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Contract Years Elapsed 1 to 5 6 to 10 11 to 15 16 to 20 21 to 25 25+
Age adjustment 0 1 2 3 4 5
</TABLE>
ANNUITY TABLES
DOLLAR AMOUNT OF THE ANNUITY PAYMENT WHICH IS PURCHASED WITH EACH 51,000 OF
PROCEEDS APPLIED
GUARANTEED MONTHLY
PAYMENTS
OPTION 1 OPTION 3
Adjusted Age Life Annuity Life Annuity Life Annuity
10 Years Guaranteed 20 Years Guaranteed
55 4.54 4.51 4.38
56 4.62 4.58 4.44
57 4.71 4.66 4.51
58 4.80 4.75 4.57
59 4.90 4.84 4.64
60 5.00 4.93 4.70
61 5.11 5.03 4 77
62 5.23 5.14 4.84
63 5.36 5.25 4.91
64 5.49 5.37 4.98
65 5.64 5.50 5.05
66 5.79 5.63 5.12
67 5.95 5.77 5.19
68 6.13 5.91 5.25
69 6.32 6.07 5.32
70 6.53 6.23 5.38
71 6.75 6.40 5.43
72 6.99 6.58 5.48
73 7.26 6.76 5.52
74 7.54 6.95 5.57
75 7.85 7.14 5.60
76 8.18 7.34 5.63
77 8.54 7.54 5.66
78 8.94 7.74 5.68
79 9.36 7.94 5.70
80 9.82 8.13 5.71
JOINT AND SURVIVOR LIFE ANNUITY (OPTION 2)
ADJUSTED AGE ADJUSTED AGE SECOND ANNUITANT
FIRST ANNUITANT
Age 55 60 65 70 75 80
55 3.96 4.09 4.19 4.27 4.33 4.37
60 4.09 4.27 4.44 4.58 4.69 4.76
65 4.19 4.44 4.69 4.92 5.11 5.25
70 4.27 4.58 4.92 5.27 5.60 5.86
75 4.33 4.69 5.11 5.60 6.11 6.58
80 4.37 4.76 5.25 5.86 6.58 7.33
Basis =1983a Individual Annuitant Mortality at 3.5% annual interest
The dollar amount of annuity payment for any age or combination of ages not
shown in the Annuity Tables or for any other form of annuity option agreed
toe by us will be furnished on request.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
PHILADELPHIA, PENNSYLVANIA
DEFERRED ANNUITY
FLEXIBLE PURCHASE PAYMENTS
OPTIONAL VARIABLE AND FIXED ACCUMULATION VALUES
OPTIONAL VARIABLE AND FIXED ANNUITY PAYMENTS
NONPARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT. (SEE CONTRACT VALUE, PAGE 10.)
Exhibit 4(c)
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
ENDORSEMENT: INDIVIDUAL RETIREMENT ANNUITY
This Endorsement is a part of the Contract. The effective date of this
Endorsement is the Contract Date shown on the Contract Schedule.
This Contract is issued on a tax qualified basis under Section 408(b) of
the Internal Revenue Code of 1986, as amended (the "Code"), so the
following provisions apply and replace any contrary Contract provisions:
(1) The Owner of the Contract must also be the Annuitant. The Contract is
not transferable (other than a transfer incident to a divorce decree in
accordance with Section 408(d)(6) of the Code) and is established for the
exclusive benefit of the Owner and his or her designated beneficiary.
(2) Any premium for this Contract must be a rollover contribution, as
permitted by Sections 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8), or
408(d)(3) of the Code. No other premium may be paid. Premiums will not be
refunded except that within 10 days of the date of the receipt of the
Contract, the application may be revoked and a full refund of the premium
shall be made.
(3) The Owner's entire interest in the Contract is nonforfeitable, subject
to the surrender charges specified in the Contract.
(4) In order to satisfy the minimum distribution requirements of Code
Section 408(b)(3), the Owner's interest in the Contract must be paid in a
single sum or distributed in equal or substantially equal payments at least
annually over: the life of the Owner or the lives of the Owner and a second
person designated by the Owner; or a period not to extend beyond the life
expectancy of the Owner or the joint and last survivor expectancy of the
Owner and a designated second person. If the designated second person is
not the Owner's spouse, payments will comply with the minimum distribution
incidental benefit requirements applicable to IRAs. This will require a
specified percentage of the distributions be distributed to the Owner
depending on the age of the Owner and the designated second person. The
Owner may elect:
(a) that the Company pay the Cash Surrender Value;
(b) that the Contract Value be applied to an Annuity Income Option that
complies with Code Section 408(b)(3); or
(c) to take a series of partial withdrawals from the Contract that,
together with distributions from other IRA's, comply with Code Section
408(b)(3).
(5) Unless the Owner elects otherwise by written request, the Annuity Date
will be April 1 of the calendar year following the calendar year in which
the Owner attains age 70 1/2 (the "Required Beginning Date.")
(6) If this Contract is the Owner's only IRA, the Owner must begin taking
distributions from the
Contract no later than the Required Beginning Date.
(7) If this Contract is not the Owner's only IRA, the Owner may satisfy
the minimum distribution requirements by taking a series of partial
withdrawals from this Contract or from any other IRAs he or she owns
beginning no later than the Required Beginning Date.
(8) By written request to the Company at least 30 days prior to the
Annuity Date, the Owner may elect an Annuity Income Option or other
disposition of any amount to be paid under the contract. Unless the Owner
elects otherwise by written request, payments will be made according to
Annuity Income Option 3 of the Contract with Annuity Income Payments
guaranteed for ten years.
(9) In the event of the Owner's death, the entire interest in this
Contract must be distributed in accordance with Code Section 408(b)(3), and
the Contract's provisions relating to the death of the Owner are changed to
the extent necessary to conform with the Code as follows:
(a) If the Owner dies after the Required Beginning Date, the remaining
portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the Owner's
death.
(b) If the Owner dies before the Required Beginning Date, the Owner's
entire interest will be distributed in accordance with one of the following
four provisions:
(1) The Owner's entire interest will be paid in full before December 31
of the calendar year containing the fifth anniversary of the date of the
Owner's death.
(2) If the Owner's interest is payable to a designated Beneficiary of
the Owner and the designated Beneficiary has not elected (1) above, then
the entire interest will be distributed in substantially equal installments
at least annually over the life or a period not to extend beyond the life
expectancy of the designated Beneficiary commencing no later than December
31 of the year following the date of the Owner's death. The designated
Beneficiary may, at any time prior to the commencement of distribution,
elect to accelerate the payments, that is, increase the frequency or amount
of the payments.
(3) If the designated Beneficiary of the Owner is the Owner's surviving
spouse, distributions are not required to begin until December 31 of the
later of: (i) the calendar year following the date of death of the Owner
or (ii) the calendar year in which the deceased Owner would have attained
age 70 1/2. The surviving spouse may, at any time prior to the
commencement of distribution, elect to accelerate the payments, that is,
increase the frequency or amount of the payments.
(4) If the designated Beneficiary of the Owner is the Owner's surviving
spouse, the spouse may treat the Contract as his or her own individual
retirement annuity (IRA).
For purposes of this requirement, any amount paid to a child of the Owner
will be treated as if it had been paid to the surviving spouse if the
remainder of the interest becomes payable to the surviving spouse when the
child reaches the age of majority.
(10) For purposes of any distribution rule, life expectancies will be
calculated by use of the return multiples specified in Section 1.72-9 of
the Treasury Regulations.
(11) This Contract cannot be sold, assigned, discounted or pledged as
collateral for a loan or a security for the performance of an obligation or
for any other purpose (other than a transfer incident to a divorce decree
in accordance with Section 408(d)(6) of the Code).
(12) The Company reserves the right to amend this Endorsement in any
aspect at any time so that it may conform to the applicable provisions of
the Code as in effect from time to time. Any such amendment will be
subject to any necessary regulatory approvals.
Signed for the Company at its Executive Office, Boston, Massachusetts.
President Secretary
EXHIBIT 5
APPLICATION FOR FIDELITY VARIABLE ANNUITY CONTRACT
ISSUED AND ADMINISTERED BY FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(FILI)
Complete this application and return it in the enclosed postage-paid
envelope or send it to the
Variable Products Service Center, P. O. Box 000, Boston, Massachusetts
02109
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I PLEASE PROVIDE THE FOLLOWING INFORMATION IV WHICH PORTFOLIO(S) WOULD YOU LIKE?
ABOUT THE PROPOSED ANNUITANT. Allocate my initial purchase to the following portfolio(s).
Name _______________________________ The amounts allocated are in dollars or percentages (in
First Middle Initial Last whole numbers of not less than 10% or $500).
Permanent Address ____________________ Money Market Portfolio ___% or $_____________
Number and Street High Income Portfolio ___% or ___________
___________________________________________________________ Equity-Income Portfolio ___% or $_____________
City State Zip Growth Portfolio ___% or $_____________
Home Phone (____) __________ Overseas Portfolio ___% or $_____________
Business Phone (____) ___________ __________ TOTAL 100% or $_____________
Sex: ____ Soc. Security No. _____________ I understand the initial purchase is allocated to the
Place of Birth _______ Date of Birth: ______ Money Market Portfolio until the end of the free look
City/State Mo/Day/Year period.
Occupation/Duties:_____________________
</TABLE>
<TABLE>
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II WHO WILL BE THE OWNER OF THIS CONTRACT? V WHO WILL BE THE BENEFICIARY(IES) OF THIS CONTRACT?
Proposed Annuitant (INDICATE FULL NAME AND RELATIONSHIP TO PROPOSED
Other (If other, complete below) ANNUITANT.)
Name _______________________________ Primary Beneficiary(ies):
First Middle Initial Last Name _____________________________________
Permanent Address ____________________ First Middle Initial Last
No. and Street Relationship to Proposed Annuitant _____________
____________________________________ Name _____________________________________
City State Zip First Middle Initial Last
Home Phone (____) ____________________ Relationship to Proposed Annuitant _____________
Business Phone (____) __________________
Relationship to Proposed Annuitant ________ Will this contract replace or change an existing
Soc. Sec. Or Tax ID No. _________________ insurance policy or annuity? (If yes, list all companies
and policy numbers on a separate page and attach).
YES NO
III HOW ARE YOU PAYING FOR YOUR CONTRACT? VI PLEASE READ THESE SECTIONS AND SIGN ATTACHED PAGE.
By check for Initial Purchase Amount $_____ SUITABILITY
Check enclosed made payable to FILI. BY SIGNING THE ATTACHED PAGE, YOU ACKNOWLEDGE
By Exchange of Shares: (See Exchange
Authorization.) RECEIPT OF THE PROSPECTUS. THE CONTRACT'S CASH
from _________________ in ___________ SURRENDER VALUE MAY INCREASE OR DECREASE ON ANY
FIDELITY FUND NAME ACCOUNT NUMBER DAY DEPENDING UPON THE INVESTMENT RESULTS. NO
registered to _________________________ MINIMUM CONTRACT VALUE IS GUARANTEED.
Name
By exchange of _________ (number) shares.
By exchange of $________ amount of shares.
</TABLE>
FORM # FILI-AP-2/87
VI (Continued)
AGREEMENT
You agree that to the best of your knowledge and belief, all statements and
answers in this application are complete and true and may be relied upon in
determining whether to issue the contract. Your answers will form a part
of any contract to be issued, and to registered representative has
authority to modify this agreement or waive any of FILI's rights or
requirements.
We will furnish any information that may be currently required by the
insurance supervisory official of the jurisdiction in which this contract
is delivered.
Signed at ________________________________________ on
______________________________________________
City, State Date
________________________________________________
______________________________________________
Proposed Annuitant Witness
________________________________________________
______________________________________________
Applicant/Owner (if other than Proposed Annuitant) Witness
__________________________________________________________________________
______________________
EXCHANGE AUTHORIZATION If you are purchasing the contract by exchange of
shares, AND the Fidelity Fund is registered other than the Applicant or
Proposed Annuitant then complete below:
____________________________ ____________________________
___________________________
PRINT NAME OF FIDELITY FUND OWNER(S) FIDELITY FUND OWNER SIGNATURE JOINT
OWNER SIGNATURE
Signature Guaranteed By: _______________________________________________
Guaranteed by: _______________________________________________
Name of Bank or Firm Signature of Officer and Title
YOUR SIGNATURE MUST BE GUARANTEED BY A NATIONAL BANK, OR STATE CHARTERED
COMMERCIAL BANK OR TRUST COMPANY EXCEPT A SAVINGS BANK) OR BY ANY MEMBER
FIRM OF THE NEW YORK, AMERICAN, BOSTON, MIDWEST OR PACIFIC STOCK EXCHANGE.
For Use Of: ABC, Inc. Employees
APPLICATION FOR VARIABLE AND FIXED ANNUITY CONTRACT
ISSUED AND ADMINISTERED BY FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
Complete this application and mail it to Fidelity Investments Life
Insurance Company
Variable Products Service Center, P.O. Box 994, Providence, Rhode Island
02901-0994
__________________________________________________________________________
I. WHO IS THE PROPOSED ANNUITANT? II. WHO WILL BE THE OWNER OF THIS
CONTRACT?
Name Joe A. Nuitant X Proposed Annuitant _ Other
Soc. Sec.#000-00-0000 X Male _ Female If Other, please complete below:
Permanent Five Quaker Way Name_____________________________
Address Philadelphia, PA 19001 Soc. Sec. or Tax I.D.#___________
Date of Birth July 4, 1953 Permanent Address________________
Place of Birth Philadelphia, PA ________________
Best time Best time
to call to call
Home Phone (111)555-1234 _ AM X PM Home Phone (111)555-1234 _ AM X PM
Business Business
Phone (111)555-5678 X AM _ PM Phone (111)555-5678 X AM _ PM
__________________________________________________________________________
III. PLEASE SELECT ONE OR MORE OF THE FOLLOWING PAYMENT METHODS:
A. X Periodic Payment of $100.00 _ Biweekly X Monthly
_ Other: __________________
B. _ Check for an initial payment of $_______ made payable to Fidelity
Investments Life Insurance Company.
C. _ Exchange of shares from ___________ in ____________ registered to ___
Fidelity Fund Account Number Name
_ Exchange of ______ shares.
Number
_ Exchange of $_____________ worth of shares.
Dollar amount
The following signature guarantee is required ONLY for payment by exchange
of Fidelity mutual fund shares that are not registered to you or the
Proposed Annuitant.
Fidelity Fund Owner(s)____________________________________________________
Share Owner Authorization_____________ Joint Owner Authorization _________
Signature Signature
Signature Guaranteed By: _________________ ____________________________
Name of Bank or Firm Signature of Officer and Title
Signature must be guaranteed by a national bank or state chartered
commercial bank or trust company (except a savings bank) or by a member
firm of the New York, American, Boston, Midwest or Pacific Stock Exchange.
__________________________________________________________________________
IV. WHO WILL BE THE BENEFICIARY(IES) OF V. PLEASE ALLOCATE THE
THIS CONTRACT? PAYMENT TO THE FOLLOWING:
Please list the Name and Relationship The amounts allocated are in
to the Proposed Annuitant percentages (in whole num-
Martha Nuitant, Spouse_________ bers of not less than 10%).
_______________________________ X Fixed Account 40%
_______________________________ X Money Market Subaccount 10%
Who will the Contingent Beneficiary X Short Term Subaccount 10%
(ies), if any, of this contract? X High Income Subaccount 10%
Please list the Name and Relationship X Equity-Income Subaccount 10%
to the Proposed Annuitant. X Growth Subaccount 10%
_______________________________ X Overseas Subaccount 10%
_______________________________ _ Other %
_______________________________ Total 100%
I understand the entire
portion of any net purchase
payment that I allocate to the
Variable Account will be
invested in the Money Market
Subaccount until the end of
the Right to Return the
Contract Period.
__________________________________________________________________________
VI. WILL THIS CONTRACT REPLACE ANY EXISTING LIVE INSURANCE
OR ANNUITIES? _ YES X NO
If yes, please list below:
Company Name Policy Number Face Amount
_________________________ ______________________ ___________________
_________________________ ______________________ ___________________
__________________________________________________________________________
VII. ADDITIONAL INFORMATION
____________________________________________________________________
____________________________________________________________________
__________________________________________________________________________
VIII. PLEASE READ THESE SECTIONS AND SIGN BELOW:
SUITABILITY
BY SIGNING BELOW, YOU ACKNOWLEDGE RECEIPT OF THE PROSPECTUS. THE CONTRACT
VALUE AND CASH SURRENDER VALUE WHEN BASED ON A SEPARATE ACCOUNT MAY
INCREASE OR DECREASE ON ANY DAY DEPENDING UPON THE INVESTMENT RESULTS. NO
MINIMUM CASH SURRENDER VALUE IS GUARANTEED. ALL VALUES AND PAYMENTS UNDER
THE VARIABLE ANNUITY PROVISIONS OF THE CONTRACT ARE VARIABLE AND ARE NOT
GUARANTEED AS TO FIXED DOLLAR AMOUNTS.
__________________________________________________________________________
AGREEMENT
Each signer agrees that to the best of his or her knowledge and belief, all
statements and answers on this application are complete and true and may be
relied upon in determining whether to issue the contract. The answers will
form a part of any contract issued, and no registered representative has
the authority to modify this agreement or waive any of the Company's rights
or requirements. Any change in plan, benefits applied for, amount of
annuity, age at issue or underwriting class must be agreed to in writing.
The company will furnish any information that may be currently required by
the insurance supervisory official of the jurisdiction in which this policy
is delivered.
I recognize that neither Fidelity Investments Life Insurance Company nor
Fidelity Distributors is a bank and shares of the subaccounts are not
backed or guaranteed by any bank or insured by the FDIC.
ALL PREMIUM CHECKS MUST BE MADE PAYABLE TO FIDELITY INVESTMENTS LIFE
INSURANCE COMPANY. DO NOT MAKE THE CHECK PAYABLE TO ANY AGENT. PLEASE DO
NOT LEAVE PAYEE BLANK.
__________________________________________________________________________
Signed at Philidelphis, Pennsylvania on 1 September 1988
City, State Date
X /s/ /s/
Proposed Annuitant (Parent or Legal Guardian Witness
if Proposed Annuitant is under 15 years old)
X /s/ /s/
Applicant/Owner (if other than Proposed Witness
Annuitant
__________________________________________________________________________
EXHIBIT 6(i)
THIS FILING SHALL BECOME EFFECTIVE AT 12:01 A.M. ON NOVEMBER 10, 1992
ARTICLES OF DOMESTICATION
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
1. The name of the corporation is Fidelity Investments Life Insurance
Company (the "Corporation").
2. The Corporation was incorporated under the laws of the Commonwealth of
Pennsylvania.
3. The Corporation's Articles of Agreement were approved by the Secretary
of the Commonwealth of Pennsylvania on May 13, 1981. On that date the
Corporation was known as Independence Square Pension Life Insurance
Company.
The period of duration of the Corporation is perpetual.
4. The Corporation is organized for the following purposes:
(1) To insure the lives of persons, and every insurance appertaining
thereto; to grant and dispose of annuities, including variable life
insurance contracts and variable annuity contracts under which values or
payments or both vary in relation to the investment experience of the
issuer or a separate account or accounts maintained by the issuer and to
insure against personal injury, disablement, or death resulting from
traveling or general accidents, and against disablement resulting from
sickness, and every insurance appertaining thereto, when written as a part
of a policy of life insurance.
(2) To insure against personal injury, disablement, or death resulting
from traveling or general accidents, and against disablement resulting from
sickness, and every insurance appertaining thereto.
5. The aggregate number of shares which the Corporation has authority to
issue is one million (1,000,000) shares, each with a par value of Ten
Dollars ($10.00).
6. The shares of the Corporation are not divided into classes.
7. The Corporation has not issued any preferred shares or any class of
special shares.
8. The Corporation will not commence business until consideration of the
value of at least $1,000 has been received for the issuance of shares. The
stated capital of the corporation is Three Million Dollars ($3,000,000).
9. No shareholder shall have any preemptive rights regarding any shares of
the Corporation.
10. The Corporation's Registered Agent in the State of Utah is
Prentice-Hall Corporation System, Inc. The address of the Registered Agent
is One Utah Center, 201 South Main Street, Salt Lake City, Utah 84111.
11. There shall be a number of Directors neither less than seven nor more
than fourteen (14).
12. The number of Directors constituting the Board of Directors on this
date is seven. Said directors are Edward C. Johnson 3d, J. Gary Burkhead,
James C. Curvey, Robert C. Pozen, John J. Remondi and Rodney R. Rohda. The
address of each Director is 82 Devonshire Street, Boston, Massachusetts
02109.
13. The incorporators of the Corporation are David C. Weinstein, David J.
Pearlman and Gregory A. Ball. The address of each of them is 82 Devonshire
Street, Boston, Massachusetts 02109.
14. The Corporation does hereby accept the Utah Constitution.
15. Pursuant to Utah Business Corporation Act (sub-section)16-10-51.5, (a)
the Corporation shall continue as if it had been incorporated under the
laws of the State of Utah on May 13, 1981, and (b) these Articles of
Domestication, upon the issuance of the certificate of domestication by the
Division of Corporations and Commercial Code, shall constitute the articles
of incorporation of the Corporation.
16. The filing and acceptance of these Articles of Domestication and their
acceptance by the Utah Department of Commerce shall not alter the status of
debts previously incurred by the Corporation.
IN WITNESS WHEREOF, the undersigned have set their hand on the 14th day of
October, 1992.
\s\ Gregory A. Ball \s\ David J. Pearlman
Gregory A. Ball David J. Pearlman
Incorporator Incorporator
\s\ David C. Weinstein \s\ Samantha Suvak
David C. Weinstein Prentice - Hall Corporation System, Inc.
Incorporator Registered Agent
By Samantha Suvak, Assistant Secretary
Note to file:
Send form of Articles of Domestication to
Division of Corporations
Utah Department of Commerce
P.O. Box 45801
Salt Lake City, Utah 84145-0801
Attn: Janeen Erickson
Erickson (new name Standing) can review document for form and state
whether it will be approved when filed.
Commerce Dept. says that three incorporators and registered agent must
sign articles.
June 5, 1992
Division of Corporations
Utah Department of Commerce
P.O. Box 45801
Salt Lake City, Utah 84145-0801
Attn: Janeen Erickson
Re: Fidelity Investments Life Insurance Company
Proposed Articles of Domestication
Dear Ms. Erickson:
Enclosed for your review are proposed Articles of Domestication for
Fidelity Investments Life Insurance Company. Please review them and advise
me whether they are in the proper form. Please also advise me of what
additional papers, if any, the Department will require with this filing,
the amount of the filing fee, and whether the fee must be paid in a
particular form, such as a certified check.
The process of domestication of this company is a complicated one
involving your Department, the Insurance Department, and regulators in
Pennsylvania. It would be a great help if the Articles of Domestication
could be filed with a delayed effective date. Please advise me how this
can be done.
Thank you for your assistance. Please do not hesitate to call me, collect
if necessary, to discuss the contents of this letter and any other relevant
matters that I may have missed.
Sincerely,
EXHIBIT 6(ii)
BYLAWS OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
ARTICLE I
NAME AND PLACE OF BUSINESS
Section 1 - NAME: The name by which the Corporation shall be known is
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY.
Section 2 - LOCATION: The principal executive office of this Corporation
shall be in Boston, Massachusetts. The Corporation may maintain additional
offices in Salt Lake City, Utah and such other places as the President or
the Directors may from time to time designate.
ARTICLE II
PURPOSE
Section 1 - PURPOSE: The purpose of this Corporation shall be to write
insurance against loss from hazards permitted to be insured against in
accordance with the Corporation's Articles of Domestication, as they may be
amended from time to time, and in accordance with the provisions of the
Utah Insurance Code as the same has been or may hereafter be amended. This
purpose shall include, without limitation, the issuance of such annuity
contracts and policies of insurance and ceding or accepting contracts of
reinsurance, all as may be lawful for this Corporation to issue and as the
Board of Directors may, from time to time, determine.
ARTICLE III
SEAL
Section 1 - SEAL: The form of the Common seal of the Corporation and any
alteration thereof shall be as prescribed, from time to time, by the Board
of Directors.
ARTICLE IV
MEETINGS OF SHAREHOLDERS
Section 1 - ANNUAL MEETINGS: The Annual Meeting of the shareholders shall
be held at the Corporation's offices in Boston, Massachusetts on the last
Friday in April in each year, and if such day be a legal holiday, the
annual meeting shall be held on the following business day.
Section 2 - SPECIAL MEETINGS: Special Meetings of the shareholders shall
be held whenever called by Chairman of the Board of Directors, the
Chairman, the President, or by the Board of Directors, or by the holders of
not less than one-tenth of the shares entitled to vote at the meeting. The
call of the Special Meeting must specifically set forth the purpose of said
meeting. No matters except those set forth in the notice of the Special
Meeting may be acted upon at any Special Meeting of the Corporation.
Notice of the meeting shall be delivered not less than ten (10) nor more
than fifty (50) days in advance of the meeting.
Section 3 - NOTICE OF SHAREHOLDERS' MEETINGS: Notice of shareholders'
meetings shall be delivered not less than ten (10) nor more than fifty (50)
days in advance of the meeting. The notice shall be printed or written and
shall state the place, day and hour of the meeting, and, in case of a
special meeting, the purpose or purposes for which the meeting is called.
Notice may be given personally or by mail. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail addressed
to the shareholder at his address as it appears on the stock transfer books
of the Corporation, with postage thereon prepaid.
Section 4 - QUORUM: A quorum at any meeting of the shareholders shall be
the presence in person or by proxy of a majority of the shares entitled to
vote.
Section 5 - VOTING: Every shareholder of record shall be entitled to one
(1) vote on each question voted at any shareholder meeting for each share
owned.
ARTICLE V
BOARD OF DIRECTORS
Section 1 - FORMATION: The management of the affairs of the Corporation
shall be vested in a Board of not less than seven (7) nor more than
fourteen (14) Directors, to be elected by the shareholders by majority
ballot at the Annual Meeting of the shareholders for a term of one (1)
year.
Section 2 - ANNUAL MEETING; The Annual Meeting of the Board of Directors
shall be held at the place of and immediately following the Annual Meeting
of the shareholders.
Section 3 - REGULAR MEETINGS: Regular Meetings of the Board of Directors
may be held at any time at the principal office of the Corporation, or at
such other place as may be approved by the Board of Directors.
Section 4 - SPECIAL MEETINGS: Special Meetings of the Board of Directors
shall be held whenever called by the Chairman, the President or by not less
than a majority of the Board of Directors.
Section 5 - NOTICE OF MEETINGS: No notice of any meeting need be given to
any member of the Board of Directors.
Section 6 - QUORUM: A majority of the Board of Directors shall constitute
a quorum for the transaction of business at any meeting of the Board of
Directors but in no event fewer than four (4).
Section 7 - FILLING OF VACANCIES: All vacancies upon the Board of
Directors, however caused, including death, resignation, or otherwise, may
be filled by a new incumbent elected by a majority of the remaining
Directors, though less than a quorum, at any Annual, Regular, or Special
Meeting of the Board of Directors. Any person so elected shall serve the
unexpired term of the Director he has been elected to replace, and until a
duly qualified successor shall have been elected.
ARTICLE VI
OFFICERS
Section 1 - ELECTIONS: The Board of Directors, at the Annual Meeting,
shall elect a Chairman from among their own number and shall also elect
(not necessarily from among their own number) a President, at least one
Vice-President, a Secretary and a Treasurer. The Board of Directors may
also elect such Assistant Vice Presidents, Assistant Secretaries, Assistant
Treasurers and any other officers it may deem necessary. Any two or more
offices may be held by the same person at the same time except that three
different persons shall hold the offices of President, Secretary and
Treasurer. All officers elected by the Board of Directors, unless sooner
removed from office, shall serve until their respective successors shall
have been elected and shall have been qualified.
Section 2 - REMOVAL OF OFFICERS: Any officer may be removed by the Board
of Directors, whenever in its judgment the best interests of the
Corporation will be served thereby.
Section 3 - FILLING OF VACANCIES: All vacancies may be filled by the
Board of Directors at any meeting thereof. In the event of a vacancy in an
office other than that of Chairman or President, the President may appoint
a person to fill such office.
ARTICLE VII
POWERS AND DUTIES OF OFFICERS
Section 1 - THE CHAIRMAN: The Chairman shall be the chief executive
officer of the Corporation and subject to the Board of Directors, shall
have general supervisory charge of the overall affairs of the Corporation.
The Chairman shall keep the Board of Directors fully informed and shall
freely consult them concerning the business of the Corporation in the
Chairman's charge. He shall, if present, preside at all meetings of the
Board of Directors and of the shareholders. He shall be an ex officio
member of all committees of the Board of Directors and shall have the right
to vote at meetings of all committees as a member thereof
Section 2 - THE PRESIDENT: The President shall be the chief operating
officer of the Corporation and, subject to the Board of Directors, shall
have charge of the day to day business, affairs, property and corporate
functions of the Corporation and shall keep the Chairman fully informed
with respect thereto. He shall preside at any meetings of the Corporation
and of the Board of Directors not attended by the Chairman.
Section 3 - VICE PRESIDENT: Each Vice President shall have such powers
and shall perform such duties, as, from time to time, may be assigned to
him or them by the Board of Directors, the Chairman or by the President.
Section 4 - SECRETARY: The Secretary shall, in general, do all things
required by law to be done or by incident to the office of the Secretary,
including but not limited to, retention of custody of the Corporate Seal,
attendance at and keeping minutes of all meetings of shareholders, Board of
Directors, and of each committee, the giving of all notices required, and
such further powers or duties as are provided for in the Bylaws or as the
Board of Directors, the Chairman or the President shall assign or delegate
to him.
Section 5 - TREASURER: The Treasurer shall have care and custody of the
corporate funds and securities of the Corporation and shall cause the same
to be invested in authorized securities held in the name of and for the
account of the Corporation in such bank or banks as may be directed by the
Board of Directors. He shall keep a current record of all receipts and
disbursements and shall render an annual account of his trust to the Board
of Directors, and to the shareholders of the Corporation, and more often
when so requested, and shall, in addition, do all things required by law to
be done or by incident to the office of Treasurer and shall have such
further powers and duties as are provided by these Bylaws or as the Board
of Directors, the Chairman or the President shall assign or delegate to
him.
Section 6 - OTHER OFFICERS; The Board of Directors and the President
shall each have the power, from time to time, to make appointments of
persons to other corporate offices whether or not they are specifically
created by, or designated by title in these Bylaws, and to employ such
persons as shall be deemed necessary therefore. Such persons shall have
such duties and powers as, from time to time, shall be assigned to them by
the Board of Directors, the Chairman or the President. If said other
officer shall perform powers and duties delegated to him by a specific
elected officer such powers and duties shall be performed under the
direction and supervision of said elected officer.
Section 7 - REMUNERATION OF OFFICERS: The Board of Directors shall set
the compensation of the officers.
Section 8 - DELEGATION OF POWERS: In the event of the death, resignation,
absence, disability or removal of any officer, the Board of Directors, the
Chairman or the President may delegate the powers and duties of such
officer to any other officer or officers for the time being.
ARTICLE VIII
COMMITTEES
Section 1 - FORMATION: The Board of Directors may designate at least two
(2) Directors who shall constitute an Executive Committee which, to the
fullest extent permitted by law, during the interval between the meetings
of the Board of Directors, shall possess and may exercise every power,
right and privilege conferred by law, the Bylaws, or otherwise, upon the
Board of Directors, and such additional duties as may be from time to time
specified by the Board of Directors.
Section 2 - QUORUM: A majority of the members of the Executive Committee
shall constitute a quorum for the transaction of business at any meeting of
such committee.
Section 3 - REGULAR MEETING: The Executive Committee may hold Regular
Meetings at such other time and place as may be prescribed from time to
time by a majority of the members of such committee. The Executive
Committee, by resolution, may elect to waive the holding of any Regular
Meeting.
Section 4 - NOTICE OF MEETINGS: No notice of Regular Meetings of the
Executive Committee need be given to the members thereof.
Section 5 - SPECIAL MEETINGS: A Special Meeting of the Executive
Committee may be called by a majority of the members of said committee by
giving written notice to all members of said committee at least seventy-two
(72) hours prior to the time designated for the convening of such Special
Meeting.
Section 6 - RATIFICATION OF BOARD OF DIRECTORS: All acts and resolutions
of the Executive Committee shall be recorded in an appropriate minute book
and reported to the Board of Directors at the next succeeding Regular,
Annual or Special Meeting thereof at which time the Board of Directors may
revise, modify, or disapprove any of the acts and resolutions reported;
provided, however, that the rights of third parties shall not be affected
by any such revision, modification, or disapproval. Except to the extent
that the Board of Directors may so revise, modify or disapprove any act or
resolution so reported, the Board of Directors shall be deemed to ratify,
confirm, and adopt the acts and resolutions so reported at such meeting of
the Board.
Section 7 - REMOVAL: Any member of the Executive Committee or the Board
of Directors may, from time to time, create any other committee as may be
deemed necessary. The provisions of Section 2 through 7 of this Article
shall be applicable to these committees.
ARTICLE IX
FISCAL YEAR
Section 1 - FISCAL YEAR: The fiscal year of the Corporation shall
commence on the 1st day of January and end at the close of business on the
31st day December in each year.
ARTICLE X
CONTRACT OF INSURANCE
Section 1 - POLICIES: The Corporation shall issue annuity contracts and
policies of insurance or enter into contracts for reinsurance of such kind,
character, and under such terms and conditions, as may be allowed by law,
and as provided for in the Articles of the Corporation.
Section 2 - VALIDATION OF POLICIES: Contracts of insurance or reinsurance
may be made or entered into, on behalf of the Corporation either with or
without the seal thereof, when subscribed by the President and attested by
the Board of Directors for that purpose. Any such subscription or
attestation may be made by personal subscription or by facsimile as duly
authorized by the Board of Directors.
Section 3 - REINSURANCE: The Corporation reserves the right to reinsure
in any amount, all risks without the consent of the insured.
ARTICLE XI
SAFEKEEPING OF FUNDS AND ASSETS OF THE CORPORATION
Section 1 - BANK ACCOUNTS: All uninvested funds of the Corporation except
petty cash to cover office expenses, shall be deposited in the name of the
Corporation with such banks or trust companies as may be designated from
time to time by the Board of Directors. Withdrawals from such deposits of
the Corporation shall be made only by check or draft signed by two (2)
officers or employees of the Corporation who shall be specifically
authorized by the Board of Directors with respect thereto.
Section 2 - INVESTMENTS: All funds of the Corporation in excess of those
required for normal operations shall be invested as required and permitted
by the Utah Insurance Code, as amended. The purchase, sale or transfer of
any investment shall be approved by the Board of Directors or by a duly
authorized committee thereof.
Section 3 - SAFEKEEPING OF SECURITIES: All stocks, bonds, and other
investment securities of the Corporation and any other instruments or
documents of the Corporation shall be deposited in such safe deposit vault
or in such custodian account in a bank or trust company as may be
authorized by the Board of Directors. The presence of two (2) officers or
other persons duly authorized by the Board of Directors shall be required
at the opening and closing of the vault or for the removal of securities
from custodian accounts.
ARTICLE XII
DIVIDENDS
Section 1 - DIVIDENDS: The Board of Directors from time to time, in
accordance with law and with due regard to the prudent and proper operation
of the Corporation may declare and cause to be paid dividends in a manner
to be determined by the Board of Directors if and when required.
ARTICLE XIII
PERSONAL LIABILITY OF DIRECTORS AND OFFICERS
No Director or officer of the Corporation shall be personally liable for
any action undertaken by him as such Director or officer except as provided
by law.
ARTICLE XIV
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 or 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 liabilities, costs and expenses,
including amounts paid in satisfaction of judgments, in compromise and or
as fines or reasonably incurred by him or them in connection with or
arising out of any action, suit, or proceeding, civil or criminal, in which
he or they may be involved, or incurred in anticipation of any action, suit
or proceeding, by reason of his being or having 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 proceeding to constitute willful misconduct or
recklessness or to the extent that such matter relates to service with
respect to an employee benefit plan, to be not in the best interests 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 capacity or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability.
ARTICLE XV
STATUTORY CONFORMITY AND SEVERABILITY
Section 1 - STATUTORY CONFORMITY AND SEVERABILITY: Any portion of the
Bylaws which may not in conformity with any present or future statute or
regulation of any governing or regulating body are hereby amended or
modified to achieve such conformity. Such amendment or modification shall
not affect any other portion of these Bylaws not so amended or modified and
to this end the various portions of these Bylaws are severable.
ARTICLE XVI
AMENDMENT OF BY-LAWS
Section 1 - AMENDMENT: These Bylaws may be replaced, altered, or amended
by a vote of a majority of the Directors present at any Regular, Annual or
Special Meeting.
April 24, 1997
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. 11 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
April 22, 1997
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. 11 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.
Very truly yours,
JORDEN BURT BERENSON & JOHNSON LLP
By: /s/Michael Berenson
Michael Berenson
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 29, 1997, on our audits of
the consolidated financial statements of Fidelity Investments Life
Insurance Company and the financial statements of Fidelity Investments
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 21, 1997
30-DAY YIELD - SHORT TERM ANNUITY
..................................
WORKSHEET TO DETERMINE ACCURED INTEREST AND ASSET CHARGE
FOR THE PERIOD: 30-Nov-89 THRU 29-Dec-89
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DATE ASSETS UNIT VALUE # UNITS CUSTOMER
MONEY COMPANY ALLOC % FOR DAILY ASSET ACC INT ASSET
MONEY CUSTOMER ACCRUED CHARGES CHARGE
INTEREST
30-Nov-89 916,523.88 10.890793 83,903.608 913,777.57 2,746,31 99.70% 203.78 25.26 203.17 25.18
O1-Dec-89 924,640.84 10.897620 84,593.456 921,867.36 2,773.48 99.70% 604.75 25.44 602.94 25.36
02-Dec-89 924,640.84 10.899151 84,593.456 921,996.81 2,644.03 99.71% 0.00 0.00 0.00 0.00
03-Dec-89 924,640.84 10.899151 84,593.456 921,996.81 2,644.03 99.71% 0.00 0.00 0.00 0.00
04-Dec-89 942,675.63 10.899151 86,229.098 939,823.92 2,851.71 99.70% 210.19 77.85 209.56 77.62
05-Dec-89 1,053,570.06 10.911880 96,288.272 1,050,686.02 2,884.04 99.73% 226.08 28.98 225.47 28.90
06-Dec-89 1,050,863.54 10.903211 96,114.150 1,047,952.85 2,910.69 99.72% 223.52 28.96 222.89 28.88
07-Dec-89 1,059,148.31 10.894603 96,948.064 1,056,210.71 2,937.60 99.72% 231.37 29.19 230.72 29.11
08-Dec-89 1,066,500.35 10.912131 97,462.968 1,063,528.71 2,971.64 99.72% 697.91 29.32 695.96 29.24
09-Dec-89 1,066,500.35 10.913608 97,462.968 1,063,672.61 2,827.74 99.73% 0.00 0.00 0.00 0.00
10-Dec-89 1,066,500.35 10.913608 97,462.968 1,063,672.61 2,827.74 99.73% 0.00 0.00 0.00 0.00
11-Dec-89 1,066,977.79 10.913608 97,485.420 1,063,917.64 3,060.15 99.71% 232.45 88.12 231.78 87.86
12-Dec-89 1,068,170.18 10.905062 97,668.678 1,065,083.01 3,087.17 99.71% 239.06 29.43 238.37 29.34
13-Dec-89 1,081,992.54 10.917813 98,817.596 1,078,871.99 3,120.55 99.71% 234.35 29.76 233.67 29.67
14-Dec-89 1,083,290.10 10.930605 98,817.596 1,080,136.09 3,154.01 99.71% 238.58 29.79 237.89 29.70
lS-Dec-89 1,083,982.14 10.937287 98,817.596 1,080,796.38 3,185.76 99.71% 692.04 29.82 690.03 29.73
16-Dec-89 1,083,982.14 10.938855 98,817.596 1,080,951.32 3,030.82 99.72% 0.00 0.00 0.00 0.00
17-Dec-89 1,083,982.14 10.938855 98,817.596 1,080,951.32 3,030.82 99.72% 0.00 0.00 0.00 0.00
18-Dec-89 1,071,413.60 10.938855 97,646.320 1,068,138.90 3,274.70 99.69% 242.04 88.48 241.29 88.21
19-Dec-89 1,071,101.16 10.930248 97,692.158 1,067,799.52 3,301.64 99.69% 233.04 29.51 232.32 29.42
20-Dec-89 1,091,401.14 10.932328 99,527.647 1,088,068.85 3,332.29 99.69% 237.64 30.04 236.90 29.95
21-Dec-89 1,127,391.21 10.934371 102,797.615 1,124,027.25 3,363.96 99.70% 241.70 31.04 240.97 30.95
22-Dec-89 1,128,866.08 10.943521 102,843.342 1,125,468.24 3,397.84 99.70% 974.87 31.06 971.95 30.97
23-Dec-89 1,128,866.08 10.923259 102,843.342 1,123,384.44 5,481.64 99.51% 0.00 0.00 0.00 0.00
24-Dec-89 1,128,866.08 10.923259 102,843.342 1,123,384.44 5,481.64 99.51% 0.00 0.00 0.00 0.00
25-Dec-89 1,128,866.08 10.923259 102,843.342 1,123,384.44 5,481.64 99.51% 0.00 0.00 0.00 0.00
26-Dec-89 1,133,851.17 10.923259 103,479.608 1,130,334.53 3,516.64 99.69% 244.46 125.09 243.70 124.70
27-Dec-89 1,133,250.07 10.914612 103,503.903 1,129,704.99 3,545.08 99.69% 244.96 31.23 244.20 31.13
28-Dec-89 1,133,993.70 10.916858 103,547,798 1,130,416.65 3,577.05 99.68% 264.52 31.22 263.67 31.12
29-Dec-89 1,163,427.51 10.926431 106,147.684 1,159,815.35 3,612.16 99.69% 1051.22 32.01 1047.96 31.91
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AVERAGE DAILY # OF UNITS 97,353.691 7745.41 878.95
</TABLE>
FORMULA=
2 ((A-B/C*D) +1)'6-1)
<TABLE>
<CAPTION>
<S> <C>
WHERE A= ACCRUED INTEREST = 7745.41 30-DAY YIELD
B= ASSET CHARGE = 878.95
(A-B)= NET INVESTMENT AFTER ASSET CHARGES = 6866.46
C=AVERAGE NUMBER OF UNIIS 97,353.691 REFLECTING MAINTENANCE 7.77%
D=ENDING UNIT VALUE = 10.926431
(C-D)=INVESTMENT BASE - 1063728.39 WITHOUT REFLECTING MAINTENANCE 7.87%
CHARGE
YIELD BEFORE MAINTENANCE CHARGE = 0.006455
LESS ADJUSTMENT FOR MAINTENANCE CHARGE (30/365) * .001 0.000082
********
0.006373
</TABLE>
VARIABLE ANNUITY PERFORMANCE ADVERTISING
MONEY MARKET 7 DAY YIELD
************************
PERIOD ENDING: December 29, 1989
DATE UNIT VALUE
BEGINNING OF PERIOD: 22-Dec-89 11.461296
END OF PERIOD: 29-Dec-89 11.476754
RATIO OF UNIT VALUES: 1.001349
PRO-RATA MAINTENANCE CHARGE: 0.000019
7-DAY RETURN AFTER MAINTENANCE CHARGE: 0.001330
CURRENT YIELD: 6.94% EFFECTIVE YIELD: 7.18%
30-DAY YEILD - HIGH INCOME ANNUITY
..............................
WORKSHEET TO DETERMINE ACCRUED INTEREST AND ASSET CHARGE
FOR THE PERIOD: 30-Nov-89 THRU 29-Dec-69
<TABLE>
<CAPTION>
<S> <C>
ALLOC DAILY CUSTOMER SHARE
CUSTOMER COMPANY % FOR ACCRUED ASSET ACC ASSET
DATE ASSETS UNIT VALUE # UNITS MONEY MONEY CUSTOMER INTEREST CHARGES INT CHARGE
30-Nov-89 2,409,523.43 10.106305 236,675.817 2,391,917.98 17,610.45 99.27% 943.64 66.40 936.75 65.92
01-Dec-89 2,417,694.43 10.129590 236,927.364 2,399,976.98 17,717.45 99.27% 2,700.06 66.42 2680.35 65.94
02-Dec-89 2,417,694.43 10.120360 236,927.364 2,397,790.26 19,904.17 99.18% 0.00 0.00 0.00 0.00
03-Dec-89 2,417,694.43 10.120360 236,927.364 2,397,790.26 19,904.17 99.18% 0.00 0.00 0.00 0.00
04-Dec-89 2,527,244.74 10.120360 247,949.129 2,509,334.50 17,910.24 99.29% 963.24 208.93 956.40 207.45
O5-Dec-89 2,444,659.31 1O.123936 239,695.634 2,426,675.34 17,933.97 99.26% 942.90 67.29 935.92 66.79
06-Dec-89 2,452,455.01 10.123191 240,353.440 2,434,396.09 16,058.92 99.26% 1,085.47 67.50 1077.44 67.00
07-Dec-89 2,451,919.26 10.132161 240,204.027 2,433,785.79 18,133.47 99.26% 1,028.17 67.48 1020.56 66.98
08-Dec-89 2,481,100.59 10.157879 242,457.392 2,462,852.95 18,247.64 99.26% 3,358.32 68.14 3333.47 67.64
09-Dec-89 2,481,100.59 10.161599 242,457.392 2,463,754.78 17,345.81 99.30% 0.00 0.00 0.00 0.00
10-Dec-89 2,481,100.59 l0.161599 242,457.392 2,463,754.78 17,345.81 99.30% 0.00 0.00 0.00 0.00
11-Dec-89 2,482,009.26 10.161599 242,437.242 2,463,550.02 18,459.24 99.26% 1,113.36 204.93 1105.12 203.41
12-Dec-89 2,560,513.43 1O.165927 250,043.605 2,541,975.86 13,537.57 99.28% 1,160.55 70.47 1152.19 69.9
13-Dec-89 2,573,723.40 10.170152 251,723.011 2,560,112.14 13,616.26 99.23% 1,142.25 70.97 1134.03 70.46
14-Dec-89 2,576,988.44 10.162025 251,752.593 2,558,316.06 18,672.38 99.28% 1,115.95 71.01 1107.92 70.50
l5-Dec-89 2,530,077.75 10.150882 247,402.745 2,511,356.12 18,721.63 99.26% 3,397.25 69.74 3372.11 69 22
16-Dec-89 2,530,077.75 10.117331 247,402.745 2,503,179.24 26,898.51 98.94% 0.00 0.00 0.00 0.00
17-Dec-89 2,530,077.75 10.117331 247,402.745 2,503,179.24 26,898.51 98.94% 0.OO 0.00 0.00 0.00
18-Dec-89 2,521,628.19 10.117831 247,361.168 2,502,758.57 18,869.62 99.25% 1,127.95 208.95 1119.49 207.38
19-Dec-89 2,612,052.77 10.109820 256,495.769 2,593,126.11 18,926.66 99.28% 1,166.76 71.98 1158.36 71.46
20-Dec-89 2,608,426.00 10.089722 256,643.846 2,589,465.01 18,960.99 99.27% 1,208.92 71.96 1200.09 71.43
21-Dec-89 2,637,797.89 1O.081935 259,749.619 2,628,778.84 19,019.05 99.28% 1,240.22 72.69 1231.29 72.17
22-Dec-89 2,647,576.32 10.112451 259,919.872 2,628,427.04 19,149.28 99.28% 4,855.13 72.68 4820.17 72.16
23-Dec-89 2,647,576.32 10.091428 259,919.872 2,622,962.56 24,613.76 99.07% 0.00 0.00 0.00 0.00
24-Dec-89 2,647,576.32 10.09T428 259,919.872 2,622,962.56 24,613.76 99.07% 0.O0 0.OO 0.00 0.00
25-Dec-89 2,647,576.32 10.091428 259,919.872 2,622,962.56 24,613.76 99.07% 0.00 0.00 0.00 0.00
26-Dec-89 2,643,584.32 10.091428 260,040.824 2,624,183.14 19,401.18 99.27% 1,201.51 291.72 1192.74 289.59
27-Dec-89 2,671,278.71 10.095898 262,660.667 2,651,795.43 19,483.28 99.27% 1,256.44 73.52 1247.27 72.98
28-Dec-89 2,719,594.05 10.088016 267,649.350 2,700,051.04 19,543.01 99.28% 1,252.66 74.94 1243.64 74.40
29-Dec-89 2,766,725.88 10.070522 272,790.279 2,747,140.51 19,585.37 99.29% 5,368.85 76.31 5330.73 75.77
AVERAGE DAILY # OF UNITS 250,142.767 37,356.04 2,098.61
</TABLE>
FORMULA
2 ((A-B/C*D) +1) 6-1)
wHERE A= ACCRUED INTEREST = 37,356.04 30-DAY
YIELD
b= ASSET CHARGE = 2,098.61
(A-B)=NET iNVESTMENT AFTER ASSET CHARGES = 35,257.43
C=AVERAGE NUMBER OF UNLPS = 250,142.77
REFLECING MAINTENANCE 17.29%
D=ENDING UNIT VALUE = 10.070522
(C*D)=INVESTMENT BASE = 2,519,068.24 WITHOUT
REFLECTING MAINTENANCE
CHARGE
17.39%
YIELD BEFORE MAINTENANCE CHARGE = 0.013996
LESS ADJUSTMENT FOR MAINTENANCE
CHARGE (30/365) * .001 0.000082
.........
0.013914
0AVERAGE ANNUAL TOTAL RETURN CALCULATION -
ONE YEAR
...............................................
ASSUMING $1000 INITIAL
PAYMENT
DATE
********
FOR THE PERIOD 30-Dec-88
THROUGH 29-Dec-89
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET MONEY SHORT E0UITY GROWTH HIGH OVERSEAS
MANAGER MARKET TERM INCOME INCOME
******* ****** ***** ****** ****** ****** *****
30-Dec-88 UNIT VALUE: N/A 10.620882 10.006473 11.266630 11.084288 10.622821 11.108041
29-Dec-89 UNIT VALUE: 9.977231 11.476754 10.926431 13.088943 14.419721 10.070522 13.887547
RATIO OF UNIT VALUES: N/A 1.080584 1.091936 1.161744 1.300915 0.948008 1.250225
ADJUSTMENT FOR
MAINTENANCE CHARGE -0.001 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001
******* ****** ***** ****** ****** ****** *****
1.079584 1.090936 1.160744 1.299915 0.947008 1.249225
VALUE ON 12/29/89 N/A 1080.58 1091.94 1161.74 1300.91 948.01 1250.23
WITHOUT CHARGES
REFLECTING MAINTENANCE 1079.58 1090.94 1160.74 1299.91 947.01 1249.23
CHARGE
REFLECTING REDEMPTION N/A 1030.60 1041.39 1110.74 1249.91 904.66 1199.23
VALUE WITH MAINTENANCE
CHARGE
REFLECTING REDEMPTION N/A 1031.55 1042.34 1111.74 1250.91 905.61 1200.23
VALUE WITHOUT
MAINTENANCE CHARGE
</TABLE>
AVERAGE ANNUAL TOTAL RETURN - ONE YEAR
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET MONEY SHORT E0UITY GROWTH HIGH OVERSEAS
MANAGER MARKET TERM INCOME INCOME
******* ****** ***** ****** ****** ****** *****
REFLECTING MAINTENANCE
CHARGE AND REDEMPTION
CHARGES N/A 3.06% 4.14% 11.07% 24.99% -9.53% 19.92%
REFLECTlNG ONLY
REDEMPTION CHARGES N/A 3.16% 4.23% 11.17% 25.09% -9.44% 20.02%
WITHOUT REFLECTING
MAINTENANCE CHARGE AND
REDEMPTION CHARGES N/A 8.06% 9.19% 16.17% 30.09% -5.20% 25.02%
</TABLE>
0AVERAGE ANNUAL TOTAL RETURN CALCULATION -
LIFE OF FUND
...............................................
ASSUMING $1000 INITIAL
PAYMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET MONEY SHORT E0UITY GROWTH HIGH OVERSEAS
MANAGER MARKET TERM INCOME INCOME
******* ****** ***** ****** ****** ****** *****
COMMENCED ON: 04-Oct-89 05-Jan-88 27-Dec-88 10-Feb-88 10-Feb-88 10-Feb-88 10-Fcb-88
BEGINNING UNIT VALUE: 10.000000 10.000000 10.000000 10.000000 10.000000 10.000000 10.000000
12/30/88 UNIT VALUE: N/A 10.620882 10.006473 11.266630 11.084288 10.622821 11.108041
12/30/89 UNIT VALUE: 9.977231 11.476754 10.926431 13.088943 14.419721 10.070522 13.887547
RATIO OF UNIT VALUES
1988: N/A 1.062088 1.000647 1.126663 1.108429 1.062282 1.110804
RATIO OF UNIT VALUES
1989: 0.997723 1.147675 1.092643 1.308894 1 441972 1.007052 1.388755
VALUE ON 12/29/89
WITHOUT CHARGES 997.72 1147.67 1092.64 1308.89 1441.97 1007.05 1388.76
ADJUSTMENT FOR
MAINTENANCE CHARGE N/A 0.001578 0.000017 0.001421 0.001421 0.001421 0.001421
IMPACT OF MAINTENANCE
CHARGE N/A 1.060510 1.000630 1.125242 1.107008 1.060861 1.109383
REFLECTING MAINTENANCE
CHARGE N/A 1144.91 1091.62 1306.12 1439.02 1004.64 1385.87
REFLECTING REDEMPTION
VALUE
WITH MAINTENANCE
CHARGE N/A 1104.91 1051.96 1266.12 1399.02 968.45 1345.87
REFLECTING REDEMPTION
VALUE WITHOUT
MAINTENANCE CHARGE N/A 1107.67 1056.36 1268.89 1401.97 970.77 1348.76
</TABLE>
AVERAGE ANNUAL TOTAL RETURN - LIFE
OF FUND
...............................................
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET MONEY SHORT E0UITY GROWTH HIGH OVERSEAS
MANAGER MARKET TERM INCOME INCOME
******* ****** ***** ****** ****** ****** *****
REFLECTING MAINTENANCE
CHARGE AND REDEMPTION
CHARGES N/A 5.l5% 5.15% 13.31% 19.46% -1.68% 17.04%
REFLECTlNG ONLY
REDEMPTION CHARGES N/A 5.28% 5.59% 13.44% 19.60% -1.56% 17.17%
WITHOUT REFLECTING
MAINTENANCE CHARGE AND
REDEMPTION CHARGES N/A 7.18% 9.19% 15.32% 21.39% 0.37% 19.00%
</TABLE>
CUMMULATIVE TOTAL RETURN - LIFE
OF FUND
...............................................
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET MONEY SHORT E0UITY GROWTH HIGH OVERSEAS
MANAGER MARKET TERM INCOME INCOME
******* ****** ***** ****** ****** ****** *****
REFLECTING MAINTENANCE
CHARGE AND REDEMPTION
CHARGES N/A 10.49% 5.20% 26.61% 39.90% -3.15% 34.59%
REFLECTING ONLY
REDEMPTION CHARGES N/A 10.77% 5.64% 26.89% 40.20% -2.92% 34.88%
WITHOUT REFLECTING
MAINTENANCE
CHARGE AND REDEMPTION
CHARGES N/A 14.77% 9.26% 30.89% 44.20% 0.70% 38.88%
</TABLE>
EXHIBIT 1(A)(8)
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND,
FIDELITY DISTRIBUTORS CORPORATION
and
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into this ... day of ..., 1987 by and
among Fidelity Investments Life Insurance Company, (hereinafter the
"Company") on its own behalf and on behalf of Fidelity Investments Variable
Life Account I and Fidelity Investments Variable Annuity Account I (each
hereinafter referred to as the "Account"), each a segregated asset account
of the Company, and the VARIABLE INSURANCE PRODUCTS FUND, an unincorporated
business trust organized under the laws of the Commonwealth of
Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS
CORPORATION (hereinafter the "Underwriter").
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate
accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation
agreements substantially identical to this Agreement (hereinafter
"Participating Insurance Companies); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T)
(b) (15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance
companies (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life
and variable annuity contracts under the 1933 Act; and
WHEREAS, the Fidelity Investments Variable Annuity Account I is a duly
organized, validly existing segregated asset account, established by
resolution of the Board of Directors of the Company of July __, 1987, to
set aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Fidelity Investments Variable Life Account I is a duly
organized, validly existing segregated asset account, established by
resolution of the Board of Directors of the Company on July __, 1987, to
set aside and invest assets attributable to the aforesaid variable life
insurance contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such
shares to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee
of the order for the shares of the Fund. For purposes of this Section 1.1,
the Company shall be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee shall constitute receipt by
the Fund. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Fund calculates its net asset
value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Fund
shall use reasonable efforts to calculate such net asset value on each day
which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the "Trustees")
may refuse to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Trustees acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Sections
2.5 and 2.12 of Article II of this Agreement is in effect to govern such
sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund
for receipt of requests for redemption from each Account.
1.6. The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in
accordance with the provisions of such prospectus. The Company agrees that
all net amounts available under the variable life and variable annuity
contracts with the form number(s) which are listed on Schedule A attached
hereto and incorporated herein by this reference, as such Schedule A may be
amended from time to time hereafter by mutual written agreement of all the
parties hereto, (the "Contracts") shall be invested in the Fund, in such
other Funds advised by the Adviser as may be mutually agreed to in writing
by the parties hereto, or in the Company's general account, provided that
such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has
investment objectives or policies that are substantially different from the
investment objectives and policies of all the Portfolios of the Fund; or
(b) the Company gives the Fund and the Underwriter 45 days written notice
of its intention to make such other investment company available as a
funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to
their signing this Agreement; or (d) the Fund or Underwriter consents to
the use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1. hereof. Payment shall be in federal funds transmitted by
wire.
1.8. Issuance and transfer of the Funds' shares will be by book entry
only. Stock certificates will not be issued to the Company or either
Account. Shares ordered from the Fund will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends
or capital gain distributions payable on the Funds' shares. The Company
hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares
of that Portfolio. The Company reserves the right to revoke this election
and to receive all such income dividends and capital gain distributions in
cash. The Fund shall notify the Company of the number of shares so issued
as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its best
efforts to make such net asset value per share available by 7 p.m. Boston
time.
ARTICLE III Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold
in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally
and validly established each Account prior to any issuance or sale thereof
as a segregated asset account under Section 6.2 of the Pennsylvania
Insurance Code and has registered or, prior to any issuance or sale of the
Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the Commonwealth of
Massachusetts and all applicable federal and state securities laws and that
the Fund is and shall remain registered under the 1940 Act. The Fund shall
amend the Registration Statement for its shares under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous of
its shares. The Fund shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986,
as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.4. The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment
and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes
to have a board of trustees, a majority of whom are not interested persons
of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the
Fund shares in accordance with the laws of the Commonwealth of Pennsylvania
and all applicable state and federal securities laws, including without
limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the
laws of the Commonwealth of Pennsylvania and any applicable state and
federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund
are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund in an amount not less
than $500,000. The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are and shall continue
to be at all times covered by a blanket fidelity bond or similar coverage
for the benefit of the Fund, in an amount not less than $500,000. The
aforesaid Bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.12. The Company represents and warrants that it will not, without the
prior written consent of the Fund and the Underwriter, purchase Fund shares
with Account assets derived from the sale of Contracts to individuals or
entities which qualify under current or future state or federal law for any
type of tax advantage (whether by a reduction or deferral of, deduction or
exemption from, or credit against income or otherwise). Examples of such
types of funds under current law include: any tax-advantaged retirement
program, whether maintained by an individual, employer, employee
association or otherwise (including without limitation, retirement programs
which qualify under Sections 401(a), 401(k), 403(a), 403(b), 408(a), 408(b)
and 457 of the Internal Revenue Code of 1986, as may be amended), and any
retirement programs maintained for employees of the Government of the
United States or by the government of any State or political subdivision
thereof, or by any agency or instrumentality of any of the foregoing.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company (at the Company's expenses)
with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the new
prospectus as set in type at the Fund's expense) and other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund is amended) to have the
prospectus for the Contracts and the Fund's prospectus printed together in
one document (such printing to be at the Company's expense).
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund), and the Underwriter (or the Fund), at its
expense, shall print and provide such Statement free of charge to the
Company and to any owner of a Contract or prospective owner who requests
such Statement.
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract Owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
portfolio for which instructions have been received:
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the Investment Company Act to require pass-through
voting privileges for variable contract owners. The Company reserves the
right to vote Fund shares held in any segregated asset account in its own
right, to the extent permitted by law. Participating Insurance Companies
shall be responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a manner
consistent with the standards set forth on Schedule B attached hereto and
incorporated herein by this reference, which standards will also be
provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as
well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with
respect to periodic elections of trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material
shall be used if the Fund or its designee object to such use within fifteen
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for
the Fund shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee or by the Underwriter, except
with the permission of the Fund or the Underwriter or the designee of
either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its
use. No such material shall be used if the Company or its designee object
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Account
which are in the public domain or approved by the Company for distribution
to Contract owners, or in sales literature or other promotional material
approved by the Company or its designee, except with the permission of the
Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or
its shares, contemporaneously with the filing of such document with the
Securities and Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of the above,
that relate to the Contracts or each Account, contemporaneously with the
filing of such document with the Securities and Exchange Commission.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public
media), sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other
communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, Statements
of Additional Information, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation to
the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or
other resources available to the Underwriter. No such payments shall be
made directly by the Fund. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares
are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall
bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, setting the prospectus
in type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required
by any federal or state law, all taxes on the issuance or transfer of the
Fund's shares.
5.3. The Company shall bear the expenses of printing and distributing the
Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract
owners.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Temporary Regulation (sub-section)1.817-5T,
dated, September 12, 1986 relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments
or other modifications to such Section or Regulations.
ARTICLE VII. Potential Conflicts
7.1. The Board of Trustees of the Fund (the "Board") will monitor the Fund
for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts investing in the
Fund. An irreconcilable material conflict may arise for a variety of
reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists
and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts
from the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract
owners, life insurance contract owners, or variable contract owners of one
or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the option of
making such a change; and (2), establishing a new registered management
investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to withdraw the
Account's investment in the Fund and terminate this Agreement; provided,
however that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by
a majority of the disinterested members of the Board. Any such withdrawal
and termination must take place within six (6) months after the Fund gives
written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept
and implement orders by the Company for the purchase (and redemption) of
shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts
with the majority of other state regulators, then the Company will withdraw
the affected Account's investment in the Fund and terminate this Agreement
within six months after the Board informs the Company in writing that it
has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the
Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company shall not be required by
Section 7.3 to establish a new funding medium for the Contracts if an offer
to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In
the event that the Board determines that any proposed action does not
adequately remedy any irreconcilable material conflict, then the Company
will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any
such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted,
to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to
the extent that terms and conditions substantially identical to such
Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII.Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each of its Trustees and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Company) or litigation (including legal and
other expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the Registration Statement or
prospectus for the Contracts or contained in the Contracts or sales
literature for the Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to the Company
by or on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration Statement,
prospectus or sales literature of the Fund not supplied by the Company, or
persons under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of the
Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or sales
literature of the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance upon
information furnished to the Fund by or on behalf of the Company: or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any other material breach of this Agreement by the Company, as
limited by and in accordance with the provisions of Section 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in the
defense of such action. The Company also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the
operation of the Fund.
8.2. Indemnification By The Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or
litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or
prospectus or sales literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf of the Company for use
in the Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares: or (ii) arise
out of or as a result of statements or representations (other than
statements or representations contained in the Registration Statement,
prospectus or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their control, with respect to the
sale or distribution of the Contracts or Fund shares; or (iii) arise out of
any untrue statement or alleged untrue statement of a material fact
contained in a Registration Statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in reliance
upon information furnished to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to comply
with the diversification requirements specified in Article VI of this
Agreement); or (v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Underwriter; as limited by and in accordance with the provisions of
Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company or each Account, whichever is
applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure
to notify the Underwriter of any such claim shall not relieve the
Underwriter from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Underwriter will be entitled to participate, at
its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Underwriter will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.3) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or
willful misconduct of the Trustees or any member thereof, are related to
the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including a
failure to comply with the diversification requirements specified in
Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company, the Fund, the Underwriter or each Account,
whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Fund of any such claim shall not relieve the Fund from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Fund will be
entitled to participate, at its own expense, in the defense thereof. The
Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Fund
to such party of the Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Fund will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the Fund
of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance written notice to
the other parties; provided, however such notice shall not be given earlier
than one year following the date of this Agreement; or
(b) at the option of the Company to the extent that shares of Portfolios
are not reasonably available to meet the requirements of the Contracts as
determined by the Company, provided however, that such termination shall
apply only to the Portfolio(s) not reasonably available. Prompt notice of
the election to terminate for such cause shall be furnished by the Company;
or
(c) at the option of the Fund in the event that formal administrative
proceedings are instituted against the Company by the National Association
of Securities Dealers, Inc. ("NASD"), the Securities and Exchange
Commission, the Insurance Commissioner or any other regulatory body
regarding the Company's duties under this Agreement or related to the sale
of the Contracts, with respect to the operation of either Account, or the
purchase of the Fund shares, provided, however, that the Fund determines in
its sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the
Company to perform its obligations under this Agreement; or
(d) at the option of the Company in the event that formal administrative
proceedings are instituted against the Fund or Underwriter by the NASD, the
Securities and Exchange Commission, or any state securities or insurance
department or any other regulatory body, provided, however, that the
Company determines in its sole judgment exercised in good faith, that any
such administrative proceedings will have a material adverse effect upon
the ability of the Fund or Underwriter to perform its obligations under
this Agreement; or
(e) with respect to either Account, upon requisite authority (by vote of
the Contract owners having an interest in such Account or any subaccounts,
or otherwise) to substitute the shares of another investment company for
the corresponding Portfolio shares of the Fund in accordance with the terms
of the Contracts for which those Portfolio shares had been selected to
serve as the underlying investment media. The Company will give 30 days'
prior written notice to the Fund of the date of any proposed vote to
replace the Fund's shares; or
(f) at the option of the Company, in the event any of the Fund's shares
are not registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such shares as the
underlying investment media of the Contracts issued or to be issued by the
Company; or
(g) at the option of the Company, if the Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably believes that
the Fund may fail to so qualify; or
(h) at the option of the Company, if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of either the Fund or the Underwriter, if (1) the Fund
or the Underwriter, respectively, shall determine, in their sole judgment
reasonably exercised in good faith, that the Company has suffered a
material adverse change in its business or financial condition or is the
subject of material adverse publicity and such material adverse change or
material adverse publicity will have a material adverse impact upon the
business and operations of either the Fund or the Underwriter, (2) the Fund
or the Underwriter shall notify the Company in writing of such
determination and its intent to terminate this Agreement, and (3) after
considering the actions taken by the Company and any other changes in
circumstances since the giving of such notice, such determination of the
Fund or the Underwriter shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be the
effective date of termination; or
(j) at the option of the Company, if (1) the Company shall determine, in
its sole judgment reasonably exercised in good faith, that either the Fund
or the Underwriter has suffered a material adverse change in its business
or financial condition or is the subject of material adverse publicity and
such material adverse change or material adverse publicity will have a
material adverse impact upon the business and operations of the Company,
(2) the Company shall notify the Fund and the Underwriter in writing of
such determination and its intent to terminate the Agreement, and (3) after
considering the actions taken by the Fund and/or the Underwriter and any
other changes in circumstances since the giving of such notice, such
determination shall continue to apply on the sixtieth (60th) day following
the giving of such notice, which sixtieth day shall be the effective date
of termination; or
(k) at the option of either the Fund or the Underwriter, if the Company
gives the Fund and the Underwriter the written notice specified in Section
1.6(b) hereof and at the time such notice was given there was no notice of
termination outstanding under any other provision of this Agreement;
provided, however any termination under this Section 10.1(k) shall be
effective forty five (45) days after the notice specified in Section 1.6(b)
was given.
10.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for
any reason or for no reason.
10.3. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to
terminate which notice shall set forth the basis for such termination.
Furthermore,
(a) In the event that any termination is based upon the provisions of
Article VII, or the provision of Section 10.1(a), 10.1(i), 10.1(j) or
10.1(k) of this Agreement, such prior written notice shall be given in
advance of the effective date of termination as required by such
provisions; and
(b) in the event that any termination is based upon the provisions of
Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice
shall be given at least ninety (90) days before the effective date of
termination.
10.4. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investments in the
Fund, redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 10.4 shall not apply to any terminations
under Article VII and the effect of such Article VII terminations shall be
governed by Article VII of this Agreement.
10.5. The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets
held in either Account) except (i) as necessary to implement Contract Owner
initiated transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"). Upon
request, the Company will promptly furnish to the Fund and the Underwriter
the opinion of counsel for the company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts
without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Fund;
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Fidelity Investments Life Insurance Company
82 Devonshire Street
Boston, Massachusetts 02109
Attention: President
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither
the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent
of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance
regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby.
12.7 The Fund and Underwriter agree that to the extent any advisory or
other fees received by the Fund, the Underwriter or the Adviser are
determined to be unlawful in appropriate legal or administrative
proceedings, the Underwriter shall indemnify and reimburse the Company for
any out of pocket expenses and actual damages the Company has incurred as a
result of any such proceeding, provided however that the provisions of
Section 8.2(b) of this and 8.2(c) shall apply to such indemnification and
reimbursement obligation. Such indemnification and reimbursement
obligation shall be in addition to any other indemnification and
reimbursement obligations of the Fund and/or the Underwriter under this
Agreement.
12.8 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
Company:
By its authorized officers,
FIDELITY INVESTMENTS LIFE INSURANCE
COMPANY
SEAL By: _______________________
Title: _______________________
Date: _______________________
VARIABLE INSURANCE PRODUCTS FUND
By its authorized officer,
By: ______________________
SEAL Title: ______________________
Date: ______________________
Underwriter:
FIDELITY DISTRIBUTORS CORPORATION
By its authorized officer,
SEAL By: _______________________
Title: _______________________
Date: _______________________
Schedule A
1Contracts
1. .....................................................
Contract Form ...........
EXHIBIT 14(B)
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND II,
FIDELITY DISTRIBUTORS CORPORATION
and
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into this ... day of ..., 1987 by and
among Fidelity Investments Life Insurance Company, (hereinafter the
"Company") on its own behalf and on behalf of Fidelity Investments Variable
Life Account I and Fidelity Investments Variable Annuity Account I (each
hereinafter referred to as the "Account"), each a segregated asset account
of the Company, and the VARIABLE INSURANCE PRODUCTS FUND II, an
unincorporated business trust organized under the laws of the Commonwealth
of Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS
CORPORATION (hereinafter the "Underwriter").
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate
accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation
agreements substantially identical to this Agreement (hereinafter
"Participating Insurance Companies); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each designated a "Portfolio" and representing the
interest in a particular managed portfolio of securities and other assets;
and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated October 15, 1985 (File No. 812-6102), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T)
(b) (15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance
companies (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life
and variable annuity contracts under the 1933 Act; and
WHEREAS, the Fidelity Investments Variable Annuity Account I is a duly
organized, validly existing segregated asset account, established by
resolution of the Board of Directors of the Company of July __, 1987, to
set aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Fidelity Investments Variable Life Account I is a duly
organized, validly existing segregated asset account, established by
resolution of the Board of Directors of the Company on July __, 1987, to
set aside and invest assets attributable to the aforesaid variable life
insurance contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, (hereinafter the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such
shares to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee
of the order for the shares of the Fund. For purposes of this Section 1.1,
the Company shall be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee shall constitute receipt by
the Fund. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Fund calculates its net asset
value pursuant to the rules of the Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Fund
shall use reasonable efforts to calculate such net asset value on each day
which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the "Trustees")
may refuse to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Trustees acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws,
necessary in the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Sections
2.5 and 2.12 of Article II of this Agreement is in effect to govern such
sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund
for receipt of requests for redemption from each Account.
1.6. The Company agrees to purchase and redeem the shares of each
Portfolio offered by the then current prospectus of the Fund and in
accordance with the provisions of such prospectus. The Company agrees that
all net amounts available under the variable life and variable annuity
contracts with the form number(s) which are listed on Schedule A attached
hereto and incorporated herein by this reference, as such Schedule A may be
amended from time to time hereafter by mutual written agreement of all the
parties hereto, (the "Contracts") shall be invested in the Fund, in such
other Funds advised by the Adviser as may be mutually agreed to in writing
by the parties hereto, or in the Company's general account, provided that
such amounts may also be invested in an investment company other than the
Fund if (a) such other investment company, or series thereof, has
investment objectives or policies that are substantially different from the
investment objectives and policies of all the Portfolios of the Fund; or
(b) the Company gives the Fund and the Underwriter 45 days written notice
of its intention to make such other investment company available as a
funding vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to
their signing this Agreement; or (d) the Fund or Underwriter consents to
the use of such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1. hereof. Payment shall be in federal funds transmitted by
wire.
1.8. Issuance and transfer of the Funds' shares will be by book entry
only. Stock certificates will not be issued to the Company or either
Account. Shares ordered from the Fund will be recorded in an appropriate
title for each Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends
or capital gain distributions payable on the Funds' shares. The Company
hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares
of that Portfolio. The Company reserves the right to revoke this election
and to receive all such income dividends and capital gain distributions in
cash. The Fund shall notify the Company of the number of shares so issued
as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical
after the net asset value per share is calculated and shall use its best
efforts to make such net asset value per share available by 7 p.m. Boston
time.
ARTICLE III Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will be
registered under the 1933 Act; that the Contracts will be issued and sold
in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally
and validly established each Account prior to any issuance or sale thereof
as a segregated asset account under Section 6.2 of the Pennsylvania
Insurance Code and has registered or, prior to any issuance or sale of the
Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the Commonwealth of
Massachusetts and all applicable federal and state securities laws and that
the Fund is and shall remain registered under the 1940 Act. The Fund shall
amend the Registration Statement for its shares under the 1933 Act and the
1940 Act from time to time as required in order to effect the continuous of
its shares. The Fund shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986,
as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.4. The Company represents that the Contracts are currently treated as
endowment, annuity or life insurance contracts, under applicable provisions
of the Code and that it will make every effort to maintain such treatment
and that it will notify the Fund and the Underwriter immediately upon
having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes
to have a board of trustees, a majority of whom are not interested persons
of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the
Fund shares in accordance with the laws of the Commonwealth of Pennsylvania
and all applicable state and federal securities laws, including without
limitation the 1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and shall
remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the
laws of the Commonwealth of Pennsylvania and any applicable state and
federal securities laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund
are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund in an amount not less
than $500,000. The aforesaid Bond shall include coverage for larceny and
embezzlement and shall be issued by a reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are and shall continue
to be at all times covered by a blanket fidelity bond or similar coverage
for the benefit of the Fund, in an amount not less than $500,000. The
aforesaid Bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.12. The Company represents and warrants that it will not, without the
prior written consent of the Fund and the Underwriter, purchase Fund shares
with Account assets derived from the sale of Contracts to individuals or
entities which qualify under current or future state or federal law for any
type of tax advantage (whether by a reduction or deferral of, deduction or
exemption from, or credit against income or otherwise). Examples of such
types of funds under current law include: any tax-advantaged retirement
program, whether maintained by an individual, employer, employee
association or otherwise (including without limitation, retirement programs
which qualify under Sections 401(a), 401(k), 403(a), 403(b), 408(a), 408(b)
and 457 of the Internal Revenue Code of 1986, as may be amended), and any
retirement programs maintained for employees of the Government of the
United States or by the government of any State or political subdivision
thereof, or by any agency or instrumentality of any of the foregoing.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company (at the Company's expenses)
with as many copies of the Fund's current prospectus as the Company may
reasonably request. If requested by the Company in lieu thereof, the Fund
shall provide such documentation (including a final copy of the new
prospectus as set in type at the Fund's expense) and other assistance as is
reasonably necessary in order for the Company once each year (or more
frequently if the prospectus for the Fund is amended) to have the
prospectus for the Contracts and the Fund's prospectus printed together in
one document (such printing to be at the Company's expense).
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter (or in the
Fund's discretion, the Prospectus shall state that such Statement is
available from the Fund), and the Underwriter (or the Fund), at its
expense, shall print and provide such Statement free of charge to the
Company and to any owner of a Contract or prospective owner who requests
such Statement.
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy material, reports to stockholders and other communications to
stockholders in such quantity as the Company shall reasonably require for
distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract Owners;
(ii) vote the Fund shares in accordance with instructions
received from Contract owners; and
(iii) vote Fund shares for which no instructions have been
received in the same proportion as Fund shares of such
portfolio for which instructions have been received:
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the Investment Company Act to require pass-through
voting privileges for variable contract owners. The Company reserves the
right to vote Fund shares held in any segregated asset account in its own
right, to the extent permitted by law. Participating Insurance Companies
shall be responsible for assuring that each of their separate accounts
participating in the Fund calculates voting privileges in a manner
consistent with the standards set forth on Schedule B attached hereto and
incorporated herein by this reference, which standards will also be
provided to the other Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as
well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with
respect to periodic elections of trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material
shall be used if the Fund or its designee object to such use within fifteen
Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for
the Fund shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee or by the Underwriter, except
with the permission of the Fund or the Underwriter or the designee of
either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its
use. No such material shall be used if the Company or its designee object
to such use within fifteen Business Days after receipt of such material.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Account
which are in the public domain or approved by the Company for distribution
to Contract owners, or in sales literature or other promotional material
approved by the Company or its designee, except with the permission of the
Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or
its shares, contemporaneously with the filing of such document with the
Securities and Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of the above,
that relate to the Contracts or each Account, contemporaneously with the
filing of such document with the Securities and Exchange Commission.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, advertisements
(such as material published, or designed for use in, a newspaper, magazine,
or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures, or other public
media), sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or
published article), educational or training materials or other
communications distributed or made generally available to some or all
agents or employees, and registration statements, prospectuses, Statements
of Additional Information, shareholder reports, and proxy materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation to
the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or
other resources available to the Underwriter. No such payments shall be
made directly by the Fund. Currently, no such payments are contemplated.
5.2. All expenses incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares
are registered and authorized for issuance in accordance with applicable
federal law and, if and to the extent deemed advisable by the Fund, in
accordance with applicable state laws prior to their sale. The Fund shall
bear the expenses for the cost of registration and qualification of the
Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, setting the prospectus
in type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required
by any federal or state law, all taxes on the issuance or transfer of the
Fund's shares.
5.3. The Company shall bear the expenses of printing and distributing the
Fund's prospectus to owners of Contracts issued by the Company and of
distributing the Fund's proxy materials and reports to such Contract
owners.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Temporary Regulation (sub-section)1.817-5T,
dated, September 12, 1986 relating to the diversification requirements for
variable annuity, endowment, or life insurance contracts and any amendments
or other modifications to such Section or Regulations.
ARTICLE VII. Potential Conflicts
7.1. The Board of Trustees of the Fund (the "Board") will monitor the Fund
for the existence of any material irreconcilable conflict between the
interests of the contract owners of all separate accounts investing in the
Fund. An irreconcilable material conflict may arise for a variety of
reasons, including: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling,
no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or
judicial decision in any relevant proceeding; (d) the manner in which the
investments of any Portfolio are being managed; (e) a difference in voting
instructions given by variable annuity contract and variable life insurance
contract owners; or (f) a decision by an insurer to disregard the voting
instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists
and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts
from the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract
owners, life insurance contract owners, or variable contract owners of one
or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the option of
making such a change; and (2), establishing a new registered management
investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to withdraw the
Account's investment in the Fund and terminate this Agreement; provided,
however that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by
a majority of the disinterested members of the Board. Any such withdrawal
and termination must take place within six (6) months after the Fund gives
written notice that this provision is being implemented, and until the end
of that six month period the Underwriter and Fund shall continue to accept
and implement orders by the Company for the purchase (and redemption) of
shares of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts
with the majority of other state regulators, then the Company will withdraw
the affected Account's investment in the Fund and terminate this Agreement
within six months after the Board informs the Company in writing that it
has determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable
conflict as determined by a majority of the disinterested members of the
Board. Until the end of the foregoing six month period, the Underwriter
and Fund shall continue to accept and implement orders by the Company for
the purchase (and redemption) of shares of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company shall not be required by
Section 7.3 to establish a new funding medium for the Contracts if an offer
to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In
the event that the Board determines that any proposed action does not
adequately remedy any irreconcilable material conflict, then the Company
will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any
such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted,
to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to
the extent that terms and conditions substantially identical to such
Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII.Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each of its Trustees and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act (collectively, the
"Indemnified Parties" for purposes of this Section 8.1) against any and all
losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Company) or litigation (including legal and
other expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged untrue
statements of any material fact contained in the Registration Statement or
prospectus for the Contracts or contained in the Contracts or sales
literature for the Contracts (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made in
reliance upon and in conformity with information furnished to the Company
by or on behalf of the Fund for use in the Registration Statement or
prospectus for the Contracts or in the Contracts or sales literature (or
any amendment or supplement) or otherwise for use in connection with the
sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration Statement,
prospectus or sales literature of the Fund not supplied by the Company, or
persons under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of the
Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or sales
literature of the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance upon
information furnished to the Fund by or on behalf of the Company: or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Company in this Agreement or arise out of or
result from any other material breach of this Agreement by the Company, as
limited by and in accordance with the provisions of Section 8.1(b) and
8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in the
defense of such action. The Company also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the
operation of the Fund.
8.2. Indemnification By The Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or
litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or
prospectus or sales literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf of the Company for use
in the Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares: or (ii) arise
out of or as a result of statements or representations (other than
statements or representations contained in the Registration Statement,
prospectus or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their control, with respect to the
sale or distribution of the Contracts or Fund shares; or (iii) arise out of
any untrue statement or alleged untrue statement of a material fact
contained in a Registration Statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or supplement thereto, or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement or statements
therein not misleading, if such statement or omission was made in reliance
upon information furnished to the Company by or on behalf of the Fund; or
(iv) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to comply
with the diversification requirements specified in Article VI of this
Agreement); or (v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Underwriter; as limited by and in accordance with the provisions of
Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company or each Account, whichever is
applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure
to notify the Underwriter of any such claim shall not relieve the
Underwriter from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Underwriter will be entitled to participate, at
its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Underwriter will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.3) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or
willful misconduct of the Trustees or any member thereof, are related to
the operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including a
failure to comply with the diversification requirements specified in
Article VI of this Agreement); or
(ii) arise out of or result from any material breach of any representation
and/or warranty made by the Fund in this Agreement or arise out of or
result from any other material breach of this Agreement by the Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation to
which an Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations and duties under this
Agreement or to the Company, the Fund, the Underwriter or each Account,
whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Fund of any such claim shall not relieve the Fund from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Fund will be
entitled to participate, at its own expense, in the defense thereof. The
Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Fund
to such party of the Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Fund will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the Fund
of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall terminate:
(a) at the option of any party upon one year advance written notice to
the other parties; provided, however such notice shall not be given earlier
than one year following the date of this Agreement; or
(b) at the option of the Company to the extent that shares of Portfolios
are not reasonably available to meet the requirements of the Contracts as
determined by the Company, provided however, that such termination shall
apply only to the Portfolio(s) not reasonably available. Prompt notice of
the election to terminate for such cause shall be furnished by the Company;
or
(c) at the option of the Fund in the event that formal administrative
proceedings are instituted against the Company by the National Association
of Securities Dealers, Inc. ("NASD"), the Securities and Exchange
Commission, the Insurance Commissioner or any other regulatory body
regarding the Company's duties under this Agreement or related to the sale
of the Contracts, with respect to the operation of either Account, or the
purchase of the Fund shares, provided, however, that the Fund determines in
its sole judgment exercised in good faith, that any such administrative
proceedings will have a material adverse effect upon the ability of the
Company to perform its obligations under this Agreement; or
(d) at the option of the Company in the event that formal administrative
proceedings are instituted against the Fund or Underwriter by the NASD, the
Securities and Exchange Commission, or any state securities or insurance
department or any other regulatory body, provided, however, that the
Company determines in its sole judgment exercised in good faith, that any
such administrative proceedings will have a material adverse effect upon
the ability of the Fund or Underwriter to perform its obligations under
this Agreement; or
(e) with respect to either Account, upon requisite authority (by vote of
the Contract owners having an interest in such Account or any subaccounts,
or otherwise) to substitute the shares of another investment company for
the corresponding Portfolio shares of the Fund in accordance with the terms
of the Contracts for which those Portfolio shares had been selected to
serve as the underlying investment media. The Company will give 30 days'
prior written notice to the Fund of the date of any proposed vote to
replace the Fund's shares; or
(f) at the option of the Company, in the event any of the Fund's shares
are not registered, issued or sold in accordance with applicable state
and/or federal law or such law precludes the use of such shares as the
underlying investment media of the Contracts issued or to be issued by the
Company; or
(g) at the option of the Company, if the Fund ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code or under any
successor or similar provision, or if the Company reasonably believes that
the Fund may fail to so qualify; or
(h) at the option of the Company, if the Fund fails to meet the
diversification requirements specified in Article VI hereof; or
(i) at the option of either the Fund or the Underwriter, if (1) the Fund
or the Underwriter, respectively, shall determine, in their sole judgment
reasonably exercised in good faith, that the Company has suffered a
material adverse change in its business or financial condition or is the
subject of material adverse publicity and such material adverse change or
material adverse publicity will have a material adverse impact upon the
business and operations of either the Fund or the Underwriter, (2) the Fund
or the Underwriter shall notify the Company in writing of such
determination and its intent to terminate this Agreement, and (3) after
considering the actions taken by the Company and any other changes in
circumstances since the giving of such notice, such determination of the
Fund or the Underwriter shall continue to apply on the sixtieth (60th) day
following the giving of such notice, which sixtieth day shall be the
effective date of termination; or
(j) at the option of the Company, if (1) the Company shall determine, in
its sole judgment reasonably exercised in good faith, that either the Fund
or the Underwriter has suffered a material adverse change in its business
or financial condition or is the subject of material adverse publicity and
such material adverse change or material adverse publicity will have a
material adverse impact upon the business and operations of the Company,
(2) the Company shall notify the Fund and the Underwriter in writing of
such determination and its intent to terminate the Agreement, and (3) after
considering the actions taken by the Fund and/or the Underwriter and any
other changes in circumstances since the giving of such notice, such
determination shall continue to apply on the sixtieth (60th) day following
the giving of such notice, which sixtieth day shall be the effective date
of termination; or
(k) at the option of either the Fund or the Underwriter, if the Company
gives the Fund and the Underwriter the written notice specified in Section
1.6(b) hereof and at the time such notice was given there was no notice of
termination outstanding under any other provision of this Agreement;
provided, however any termination under this Section 10.1(k) shall be
effective forty five (45) days after the notice specified in Section 1.6(b)
was given.
10.2. It is understood and agreed that the right of any party hereto to
terminate this Agreement pursuant to Section 10.1(a) may be exercised for
any reason or for no reason.
10.3. Notice Requirement. No termination of this Agreement shall be
effective unless and until the party terminating this Agreement gives prior
written notice to all other parties to this Agreement of its intent to
terminate which notice shall set forth the basis for such termination.
Furthermore,
(a) In the event that any termination is based upon the provisions of
Article VII, or the provision of Section 10.1(a), 10.1(i), 10.1(j) or
10.1(k) of this Agreement, such prior written notice shall be given in
advance of the effective date of termination as required by such
provisions; and
(b) in the event that any termination is based upon the provisions of
Section 10.1(c) or 10.1(d) of this Agreement, such prior written notice
shall be given at least ninety (90) days before the effective date of
termination.
10.4. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investments in the
Fund, redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 10.4 shall not apply to any terminations
under Article VII and the effect of such Article VII terminations shall be
governed by Article VII of this Agreement.
10.5. The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets
held in either Account) except (i) as necessary to implement Contract Owner
initiated transactions, or (ii) as required by state and/or federal laws or
regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"). Upon
request, the Company will promptly furnish to the Fund and the Underwriter
the opinion of counsel for the company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the
Contracts, the Company shall not prevent Contract Owners from allocating
payments to a Portfolio that was otherwise available under the Contracts
without first giving the Fund or the Underwriter 90 days notice of its
intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Fund;
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Fidelity Investments Life Insurance Company
82 Devonshire Street
Boston, Massachusetts 02109
Attention: President
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither
the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent
of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the NASD and state insurance
regulators) and shall permit such authorities reasonable access to its
books and records in connection with any investigation or inquiry relating
to this Agreement or the transactions contemplated hereby.
12.7 The Fund and Underwriter agree that to the extent any advisory or
other fees received by the Fund, the Underwriter or the Adviser are
determined to be unlawful in appropriate legal or administrative
proceedings, the Underwriter shall indemnify and reimburse the Company for
any out of pocket expenses and actual damages the Company has incurred as a
result of any such proceeding, provided however that the provisions of
Section 8.2(b) of this and 8.2(c) shall apply to such indemnification and
reimbursement obligation. Such indemnification and reimbursement
obligation shall be in addition to any other indemnification and
reimbursement obligations of the Fund and/or the Underwriter under this
Agreement.
12.8 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
Company:
By its authorized officers,
FIDELITY INVESTMENTS LIFE INSURANCE
COMPANY
SEAL By: _______________________
Title: _______________________
Date: _______________________
VARIABLE INSURANCE PRODUCTS FUND II
By its authorized officer,
By: ______________________
SEAL Title: ______________________
Date: ______________________
Underwriter:
FIDELITY DISTRIBUTORS CORPORATION
By its authorized officer,
SEAL By: _______________________
Title: _______________________
Date: _______________________
Schedule A
1Contracts
1. .....................................................
Contract Form ...........
PARTICIPATION AGREEMENT
Among
VARIABLE INSURANCE PRODUCTS FUND III,
FIDELITY DISTRIBUTORS CORPORATION
and
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the 27th day of January, 1997
by and among FIDELITY INVESTMENTS LIFE INSURANCE COMPANY, (hereinafter the
"Company"), a Utah corporation, on its own behalf and on behalf of each
segregated asset account of the Company set forth on Schedule A hereto as
may be amended from time to time (each such account hereinafter referred to
as the "Account"), and the VARIABLE INSURANCE PRODUCTS FUND III, an
unincorporated business trust organized under the laws of the Commonwealth
of Massachusetts (hereinafter the "Fund") and FIDELITY DISTRIBUTORS
CORPORATION (hereinafter the "Underwriter"), a Massachusetts corporation.
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate
accounts established for variable life insurance policies and variable
annuity contracts (collectively, the "Variable Insurance Products") to be
offered by insurance companies which have entered into participation
agreements with the Fund and the Underwriter (hereinafter "Participating
Insurance Companies"); and
WHEREAS, the beneficial interest in the Fund is divided into several
series of shares, each representing the interest in a particular managed
portfolio of securities and other assets, any one or more of which may be
made available under this Agreement, as may be amended from time to time by
mutual agreement of the parties hereto (each such series hereinafter
referred to as a "Portfolio"); and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, dated September 17, 1986 (File No. 812-6422), granting
Participating Insurance Companies and variable annuity and variable life
insurance separate accounts exemptions from the provisions of sections
9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as
amended, (hereinafter the "1940 Act") and Rules 6e-2(b) (15) and 6e-3(T)
(b) (15) thereunder, to the extent necessary to permit shares of the Fund
to be sold to and held by variable annuity and variable life insurance
separate accounts of both affiliated and unaffiliated life insurance
companies (hereinafter the "Shared Funding Exemptive Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, Fidelity Management & Research Company (the "Adviser") is duly
registered as an investment adviser under the federal Investment Advisers
Act of 1940 and any applicable state securities law; and
WHEREAS, the Company has registered or will register certain variable life
insurance and variable annuity contracts under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Company, on the date shown for such Account on Schedule A hereto, to set
aside and invest assets attributable to the aforesaid variable annuity
contracts; and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
WHEREAS, the Underwriter is registered as a broker dealer with the
Securities and Exchange Commission ("SEC") under the Securities Exchange
Act of 1934, as amended, (hereinafter the "1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD"); and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on
behalf of each Account to fund certain of the aforesaid variable life and
variable annuity contracts and the Underwriter is authorized to sell such
shares to unit investment trusts such as each Account at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the Company,
the Fund and the Underwriter agree as follows:
ARTICLE I. Sale of Fund Shares
1.1. The Underwriter agrees to sell to the Company those shares of the
Fund which each Account orders, executing such orders on a daily basis at
the net asset value next computed after receipt by the Fund or its designee
of the order for the shares of the Fund. For purposes of this Section 1.1,
the Company shall be the designee of the Fund for receipt of such orders
from each Account and receipt by such designee shall constitute receipt by
the Fund; provided that the Fund receives notice of such order by 9:00 a.m.
Boston time on the next following Business Day. "Business Day" shall mean
any day on which the New York Stock Exchange is open for trading and on
which the Fund calculates its net asset value pursuant to the rules of the
Securities and Exchange Commission.
1.2. The Fund agrees to make its shares available indefinitely for
purchase at the applicable net asset value per share by the Company and its
Accounts on those days on which the Fund calculates its net asset value
pursuant to rules of the Securities and Exchange Commission and the Fund
shall use reasonable efforts to calculate such net asset value on each day
which the New York Stock Exchange is open for trading. Notwithstanding the
foregoing, the Board of Trustees of the Fund (hereinafter the "Board") may
refuse to sell shares of any Portfolio to any person, or suspend or
terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or is, in
the sole discretion of the Board acting in good faith and in light of their
fiduciary duties under federal and any applicable state laws, necessary in
the best interests of the shareholders of such Portfolio.
1.3. The Fund and the Underwriter agree that shares of the Fund will be
sold only to Participating Insurance Companies and their separate accounts.
No shares of any Portfolio will be sold to the general public.
1.4. The Fund and the Underwriter will not sell Fund shares to any
insurance company or separate account unless an agreement containing
provisions substantially the same as Articles I, III, V, VII and Section
2.5 of Article II of this Agreement is in effect to govern such sales.
1.5. The Fund agrees to redeem for cash, on the Company's request, any
full or fractional shares of the Fund held by the Company, executing such
requests on a daily basis at the net asset value next computed after
receipt by the Fund or its designee of the request for redemption. For
purposes of this Section 1.5, the Company shall be the designee of the Fund
for receipt of requests for redemption from each Account and receipt by
such designee shall constitute receipt by the Fund; provided that the Fund
receives notice of such request for redemption on the next following
Business Day.
1.6. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Company agrees that
all net amounts available under the variable annuity contracts with the
form number(s) which are listed on Schedule A attached hereto and
incorporated herein by this reference, as such Schedule A may be amended
from time to time hereafter by mutual written agreement of all the parties
hereto, (the "Contracts") shall be invested in the Fund, in such other
Funds advised by the Adviser as may be mutually agreed to in writing by the
parties hereto, or in the Company's general account, provided that such
amounts may also be invested in an investment company other than the Fund
if (a) such other investment company, or series thereof, has investment
objectives or policies that are substantially different from the investment
objectives and policies of all the Portfolios of the Fund; or (b) the
Company gives the Fund and the Underwriter 45 days written notice of its
intention to make such other investment company available as a funding
vehicle for the Contracts; or (c) such other investment company was
available as a funding vehicle for the Contracts prior to the date of this
Agreement and the Company so informs the Fund and Underwriter prior to
their signing this Agreement (a list of such funds appearing on Schedule C
to this Agreement); or (d) the Fund or Underwriter consents to the use of
such other investment company.
1.7. The Company shall pay for Fund shares on the next Business Day after
an order to purchase Fund shares is made in accordance with the provisions
of Section 1.1 hereof. Payment shall be in federal funds transmitted by
wire. For purpose of Section 2.10 and 2.11, upon receipt by the Fund of
the federal funds so wired, such funds shall cease to be the responsibility
of the Company and shall become the responsibility of the Fund.
1.8. Issuance and transfer of the Fund's shares will be by book entry
only. Stock certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for
each Account or the appropriate subaccount of each Account.
1.9. The Fund shall furnish same day notice (by wire or telephone,
followed by written confirmation) to the Company of any income, dividends
or capital gain distributions payable on the Fund's shares. The Company
hereby elects to receive all such income dividends and capital gain
distributions as are payable on the Portfolio shares in additional shares
of that Portfolio. The Company reserves the right to revoke this election
and to receive all such income dividends and capital gain distributions in
cash. The Fund shall notify the Company of the number of shares so issued
as payment of such dividends and distributions.
1.10. The Fund shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated (normally by
6:30 p.m. Boston time) and shall use its best efforts to make such net
asset value per share available by 7 p.m. Boston time.
ARTICLE II. Representations and Warranties
2.1. The Company represents and warrants that the Contracts are or will
be registered under the 1933 Act; that the Contracts will be issued and
sold in compliance in all material respects with all applicable Federal and
State laws and that the sale of the Contracts shall comply in all material
respects with state insurance suitability requirements. The Company
further represents and warrants that it is an insurance company duly
organized and in good standing under applicable law and that it has legally
and validly established each Account prior to any issuance or sale thereof
as a segregated asset account under Section 31A-5-217.5 of the Utah
Insurance Code and has registered or, prior to any issuance or sale of the
Contracts, will register each Account as a unit investment trust in
accordance with the provisions of the 1940 Act to serve as a segregated
investment account for the Contracts.
2.2. The Fund represents and warrants that Fund shares sold pursuant to
this Agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in compliance with the laws of the State of Utah and all
applicable federal and state securities laws and that the Fund is and shall
remain registered under the 1940 Act. The Fund shall amend the
Registration Statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of
its shares. The Fund shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent
deemed advisable by the Fund or the Underwriter.
2.3. The Fund represents that it is currently qualified as a Regulated
Investment Company under Subchapter M of the Internal Revenue Code of 1986,
as amended, (the "Code") and that it will make every effort to maintain
such qualification (under Subchapter M or any successor or similar
provision) and that it will notify the Company immediately upon having a
reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
2.4. The Company represents that the Contracts are currently treated as
endowment or annuity insurance contracts, under applicable provisions of
the Code and that it will make every effort to maintain such treatment and
that it will notify the Fund and the Underwriter immediately upon having a
reasonable basis for believing that the Contracts have ceased to be so
treated or that they might not be so treated in the future.
2.5. The Fund currently does not intend to make any payments to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. The Fund has
adopted a "no fee" or "defensive" Rule 12b-1 Plan under which it makes no
payments for distribution expenses. To the extent that it decides to
finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes
to have a board of trustees, a majority of whom are not interested persons
of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states except that the Fund represents that the Fund's investment policies,
fees and expenses are and shall at all times remain in compliance with the
laws of the State of Utah and the Fund and the Underwriter represent that
their respective operations are and shall at all times remain in material
compliance with the laws of the State of Utah to the extent required to
perform this Agreement.
2.7. The Underwriter represents and warrants that it is a member in good
standing of the NASD and is registered as a broker-dealer with the SEC.
The Underwriter further represents that it will sell and distribute the
Fund shares in accordance with the laws of the State of Utah and all
applicable state and federal securities laws, including without limitation
the 1933 Act, the 1934 Act, and the 1940 Act.
2.8. The Fund represents that it is lawfully organized and validly
existing under the laws of the Commonwealth of Massachusetts and that it
does and will comply in all material respects with the 1940 Act.
2.9. The Underwriter represents and warrants that the Adviser is and
shall remain duly registered in all material respects under all applicable
federal and state securities laws and that the Adviser shall perform its
obligations for the Fund in compliance in all material respects with the
laws of the State of Utah and any applicable state and federal securities
laws.
2.10. The Fund and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals/entities dealing with the money and/or securities of the Fund
are and shall continue to be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Fund in an amount not less
than the minimal coverage as required currently by Rule 17g-(1) of the 1940
Act or related provisions as may be promulgated from time to time. The
aforesaid Bond shall include coverage for larceny and embezzlement and
shall be issued by a reputable bonding company.
2.11. The Company represents and warrants that all of its directors,
officers, employees, investment advisers, and other individuals/entities
dealing with the money and/or securities of the Fund are covered by a
blanket fidelity bond or similar coverage for the benefit of the Fund, and
that said bond is issued by a reputable bonding company, includes coverage
for larceny and embezzlement, and is in an amount not less than $5 million.
The Company agrees to make all reasonable efforts to see that this bond or
another bond containing these provisions is always in effect, and agrees to
notify the Fund and the Underwriter in the event that such coverage no
longer applies.
ARTICLE III. Prospectuses and Proxy Statements; Voting
3.1. The Underwriter shall provide the Company with as many printed
copies of the Fund's current prospectus and Statement of Additional
Information as the Company may reasonably request. If requested by the
Company in lieu thereof, the Fund shall provide camera-ready film
containing the Fund's prospectus and Statement of Additional Information,
and such other assistance as is reasonably necessary in order for the
Company once each year (or more frequently if the prospectus and/or
Statement of Additional Information for the Fund is amended during the
year) to have the prospectus for the Contracts and the Fund's prospectus
printed together in one document, and to have the Statement of Additional
Information for the Fund and the Statement of Additional Information for
the Contracts printed together in one document. Alternatively, the Company
may print the Fund's prospectus and/or its Statement of Additional
Information in combination with other fund companies' prospectuses and
statements of additional information. Except as provided in the following
three sentences, all expenses of printing and distributing Fund
prospectuses and Statements of Additional Information shall be the expense
of the Company. For prospectuses and Statements of Additional Information
provided by the Company to its existing owners of Contracts in order to
update disclosure annually as required by the 1933 Act and/or the 1940 Act,
the cost of printing shall be borne by the Fund. If the Company chooses to
receive camera-ready film in lieu of receiving printed copies of the Fund's
prospectus, the Fund will reimburse the Company in an amount equal to the
product of A and B where A is the number of such prospectuses distributed
to owners of the Contracts, and B is the Fund's per unit cost of
typesetting and printing the Fund's prospectus. The same procedures shall
be followed with respect to the Fund's Statement of Additional Information.
The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the
Fund's expenses do not include the cost of printing any prospectuses or
Statements of Additional Information other than those actually distributed
to existing owners of the Contracts.
3.2. The Fund's prospectus shall state that the Statement of Additional
Information for the Fund is available from the Underwriter or the Company
(or in the Fund's discretion, the Prospectus shall state that such
Statement is available from the Fund).
3.3. The Fund, at its expense, shall provide the Company with copies of
its proxy statements, reports to shareholders, and other communications
(except for prospectuses and Statements of Additional Information, which
are covered in Section 3.1) to shareholders in such quantity as the Company
shall reasonably require for distributing to Contract owners.
3.4. If and to the extent required by law the Company shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received from
Contract owners; and
(iii) vote Fund shares for which no instructions have been received in a
particular separate account in the same proportion as Fund shares of such
portfolio for which instructions have been received in that separate
account,
so long as and to the extent that the Securities and Exchange Commission
continues to interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. The Company reserves the right to
vote Fund shares held in any segregated asset account in its own right, to
the extent permitted by law. Participating Insurance Companies shall be
responsible for assuring that each of their separate accounts participating
in the Fund calculates voting privileges in a manner consistent with the
standards set forth on Schedule B attached hereto and incorporated herein
by this reference, which standards will also be provided to the other
Participating Insurance Companies.
3.5. The Fund will comply with all provisions of the 1940 Act requiring
voting by shareholders, and in particular the Fund will either provide for
annual meetings or comply with Section 16(c) of the 1940 Act (although the
Fund is not one of the trusts described in Section 16(c) of that Act) as
well as with Sections 16(a) and, if and when applicable, 16(b). Further,
the Fund will act in accordance with the Securities and Exchange
Commission's interpretation of the requirements of Section 16(a) with
respect to periodic elections of trustees and with whatever rules the
Commission may promulgate with respect thereto.
ARTICLE IV. Sales Material and Information
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee, each piece of sales literature or other promotional
material in which the Fund or its investment adviser or the Underwriter is
named, at least fifteen Business Days prior to its use. No such material
shall be used if the Fund or its designee reasonably objects to such use
within fifteen Business Days after receipt of such material.
4.2. The Company shall not give any information or make any
representations or statements on behalf of the Fund or concerning the Fund
in connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for
the Fund shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee or by the Underwriter, except
with the permission of the Fund or the Underwriter or the designee of
either.
4.3. The Fund, Underwriter, or its designee shall furnish, or shall cause
to be furnished, to the Company or its designee, each piece of sales
literature or other promotional material in which the Company and/or its
separate account(s), is named at least fifteen Business Days prior to its
use. No such material shall be used if the Company or its designee
reasonably objects to such use within fifteen Business Days after receipt
of such material.
4.4. The Fund and the Underwriter shall not give any information or make
any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts other than the information or
representations contained in a registration statement or prospectus for the
Contracts, as such registration statement and prospectus may be amended or
supplemented from time to time, or in published reports for each Account
which are in the public domain or approved by the Company for distribution
to Contract owners, or in sales literature or other promotional material
approved by the Company or its designee, except with the permission of the
Company.
4.5. The Fund will provide to the Company at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, proxy statements, sales literature and other
promotional materials, applications for exemptions, requests for no-action
letters, and all amendments to any of the above, that relate to the Fund or
its shares, contemporaneously with the filing of such document with the
Securities and Exchange Commission or other regulatory authorities.
4.6. The Company will provide to the Fund at least one complete copy of
all registration statements, prospectuses, Statements of Additional
Information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of the above,
that relate to the Contracts or each Account, contemporaneously with the
filing of such document with the SEC or other regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following that refer to the Fund or any affiliate of the Fund:
advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or
tape recording, videotape display, signs or billboards, motion pictures, or
other public media), sales literature (i.e., any written communication
distributed or made generally available to customers or the public,
including brochures, circulars, research reports, market letters, form
letters, seminar texts, reprints or excerpts of any other advertisement,
sales literature, or published article), educational or training materials
or other communications distributed or made generally available to some or
all agents or employees, and registration statements, prospectuses,
Statements of Additional Information, shareholder reports, and proxy
materials.
ARTICLE V. Fees and Expenses
5.1. The Fund and Underwriter shall pay no fee or other compensation to
the Company under this agreement, except that if the Fund or any Portfolio
adopts and implements a plan pursuant to Rule 12b-1 to finance distribution
expenses, then the Underwriter may make payments to the Company or to the
underwriter for the Contracts if and in amounts agreed to by the
Underwriter in writing and such payments will be made out of existing fees
otherwise payable to the Underwriter, past profits of the Underwriter or
other resources available to the Underwriter. No such payments shall be
made directly by the Fund.
5.2. All expenses incident to performance by the Fund under this
Agreement shall be paid by the Fund. The Fund shall see to it that all its
shares are registered and authorized for issuance in accordance with
applicable federal law and, if and to the extent deemed advisable by the
Fund, in accordance with applicable state laws prior to their sale. The
Fund shall bear the expenses for the cost of registration and qualification
of the Fund's shares, preparation and filing of the Fund's prospectus and
registration statement, proxy materials and reports, setting the prospectus
in type, setting in type and printing the proxy materials and reports to
shareholders (including the costs of printing a prospectus that constitutes
an annual report), the preparation of all statements and notices required
by any federal or state law, and all taxes on the issuance or transfer of
the Fund's shares.
5.3. The Company shall bear the expenses of distributing the Fund's
prospectus, proxy materials and reports to owners of Contracts issued by
the Company.
ARTICLE VI. Diversification
6.1. The Fund will at all times invest money from the Contracts in such a
manner as to ensure that the Contracts will be treated as variable
contracts under the Code and the regulations issued thereunder. Without
limiting the scope of the foregoing, the Fund will at all times comply with
Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the
diversification requirements for variable annuity, endowment, or life
insurance contracts and any amendments or other modifications to such
Section or Regulations. In the event of a breach of this Article VI by the
Fund, it will take all reasonable steps (a) to notify Company of such
breach and (b) to adequately diversify the Fund so as to achieve compliance
within the grace period afforded by Regulation 1.817-5.
ARTICLE VII. Potential Conflicts
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material
conflict may arise for a variety of reasons, including: (a) an action by
any state insurance regulatory authority; (b) a change in applicable
federal or state insurance, tax, or securities laws or regulations, or a
public ruling, private letter ruling, no-action or interpretative letter,
or any similar action by insurance, tax, or securities regulatory
authorities; (c) an administrative or judicial decision in any relevant
proceeding; (d) the manner in which the investments of any Portfolio are
being managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (f) a
decision by an insurer to disregard the voting instructions of contract
owners. The Board shall promptly inform the Company if it determines that
an irreconcilable material conflict exists and the implications thereof.
7.2. The Company will report any potential or existing conflicts of which
it is aware to the Board. The Company will assist the Board in carrying
out its responsibilities under the Shared Funding Exemptive Order, by
providing the Board with all information reasonably necessary for the Board
to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Board whenever contract owner
voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of its
disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense
and to the extent reasonably practicable (as determined by a majority of
the disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1),
withdrawing the assets allocable to some or all of the separate accounts
from the Fund or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of the
Fund, or submitting the question whether such segregation should be
implemented to a vote of all affected Contract owners and, as appropriate,
segregating the assets of any appropriate group (i.e., annuity contract
owners, life insurance contract owners, or variable contract owners of one
or more Participating Insurance Companies) that votes in favor of such
segregation, or offering to the affected contract owners the option of
making such a change; and (2), establishing a new registered management
investment company or managed separate account.
7.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote,
the Company may be required, at the Fund's election, to withdraw the
affected Account's investment in the Fund and terminate this Agreement with
respect to such Account; provided, however that such withdrawal and
termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Any such withdrawal and termination
must take place within six (6) months after the Fund gives written notice
that this provision is being implemented, and until the end of that six
month period the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares
of the Fund.
7.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts
with the majority of other state regulators, then the Company will withdraw
the affected Account's investment in the Fund and terminate this Agreement
with respect to such Account within six months after the Board informs the
Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six
month period, the Underwriter and Fund shall continue to accept and
implement orders by the Company for the purchase (and redemption) of shares
of the Fund.
7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Fund be required to establish a new
funding medium for the Contracts. The Company shall not be required by
Section 7.3 to establish a new funding medium for the Contracts if an offer
to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In
the event that the Board determines that any proposed action does not
adequately remedy any irreconcilable material conflict, then the Company
will withdraw the Account's investment in the Fund and terminate this
Agreement within six (6) months after the Board informs the Company in
writing of the foregoing determination, provided, however, that such
withdrawal and termination shall be limited to the extent required by any
such material irreconcilable conflict as determined by a majority of the
disinterested members of the Board.
7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then (a) the Fund and/or the Participating Insurance
Companies, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted,
to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1,
7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to
the extent that terms and conditions substantially identical to such
Sections are contained in such Rule(s) as so amended or adopted.
ARTICLE VIII. Indemnification
8.1. Indemnification By The Company
8.1(a). The Company agrees to indemnify and hold harmless the Fund and
each trustee of the Board and officers and each person, if any, who
controls the Fund within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.1)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the Registration
Statement or prospectus for the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment or supplement to any
of the foregoing), or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Fund for use in the
Registration Statement or prospectus for the Contracts or in the Contracts
or sales literature (or any amendment or supplement) or otherwise for use
in connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration Statement,
prospectus or sales literature of the Fund not supplied by the Company, or
persons under its control) or wrongful conduct of the Company or persons
under its control, with respect to the sale or distribution of the
Contracts or Fund Shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or sales
literature of the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading if such a statement or omission was made in reliance upon
information furnished to the Fund by or on behalf of the Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Company, as limited by and in accordance with the provisions of
Sections 8.1(b) and 8.1(c) hereof.
8.1(b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation incurred or assessed against an Indemnified Party as such may
arise from such Indemnified Party's willful misfeasance, bad faith, or
gross negligence in the performance of such Indemnified Party's duties or
by reason of such Indemnified Party's reckless disregard of obligations or
duties under this Agreement or to the Fund, whichever is applicable.
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
such Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Company of any such claim shall not relieve the Company from any liability
which it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties, the
Company shall be entitled to participate, at its own expense, in the
defense of such action. The Company also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Company to such party of the Company's
election to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
Company will not be liable to such party under this Agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection
with the issuance or sale of the Fund Shares or the Contracts or the
operation of the Fund.
8.2. Indemnification by the Underwriter
8.2(a). The Underwriter agrees to indemnify and hold harmless the Company
and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" for purposes of this Section 8.2)
against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter) or
litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of the Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or
prospectus or sales literature of the Fund (or any amendment or supplement
to any of the foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with information
furnished to the Underwriter or Fund by or on behalf of the Company for use
in the Registration Statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for use in
connection with the sale of the Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations (other
than statements or representations contained in the Registration Statement,
prospectus or sales literature for the Contracts not supplied by the
Underwriter or persons under its control) or wrongful conduct of the Fund,
Adviser or Underwriter or persons under their control, with respect to the
sale or distribution of the Contracts or Fund shares; or
(iii) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a Registration Statement, prospectus, or sales
literature covering the Contracts, or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statement or
statements therein not misleading, if such statement or omission was made
in reliance upon information furnished to the Company by or on behalf of
the Fund; or
(iv) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including a
failure, whether unintentional or in good faith or otherwise, to comply
with the diversification requirements specified in Article VI of this
Agreement); or
(v) arise out of or result from any material breach of any representation
and/or warranty made by the Underwriter in this Agreement or arise out of
or result from any other material breach of this Agreement by the
Underwriter; as limited by and in accordance with the provisions of
Sections 8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or
litigation to which an Indemnified Party would otherwise be subject by
reason of such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to each Company or the Account, whichever is
applicable.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party
unless such Indemnified Party shall have notified the Underwriter in
writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been
served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure
to notify the Underwriter of any such claim shall not relieve the
Underwriter from any liability which it may have to the Indemnified Party
against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against the
Indemnified Parties, the Underwriter will be entitled to participate, at
its own expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Underwriter to such party
of the Underwriter's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Underwriter will not be liable to such
party under this Agreement for any legal or other expenses subsequently
incurred by such party independently in connection with the defense thereof
other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of the
Contracts or the operation of each Account.
8.3. Indemnification By the Fund
8.3(a). The Fund agrees to indemnify and hold harmless the Company, and
each of its directors and officers and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act (collectively,
the "Indemnified Parties" for purposes of this Section 8.3) against any and
all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Fund) or litigation (including
legal and other expenses) to which the Indemnified Parties may become
subject under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements result from the gross negligence, bad faith or
willful misconduct of the Board or any member thereof, are related to the
operations of the Fund and:
(i) arise as a result of any failure by the Fund to provide the services
and furnish the materials under the terms of this Agreement (including a
failure to comply with the diversification requirements specified in
Article VI of this Agreement);or
(ii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Fund;
as limited by and in accordance with the provisions of Sections 8.3(b) and
8.3(c) hereof.
8.3(b). The Fund shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from
such Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties or by
reason of such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company, the Fund, the Underwriter or
each Account, whichever is applicable.
8.3(c). The Fund shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Fund in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received
notice of such service on any designated agent), but failure to notify the
Fund of any such claim shall not relieve the Fund from any liability which
it may have to the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In case any
such action is brought against the Indemnified Parties, the Fund will be
entitled to participate, at its own expense, in the defense thereof. The
Fund also shall be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from the Fund
to such party of the Fund's election to assume the defense thereof, the
Indemnified Party shall bear the fees and expenses of any additional
counsel retained by it, and the Fund will not be liable to such party under
this Agreement for any legal or other expenses subsequently incurred by
such party independently in connection with the defense thereof other than
reasonable costs of investigation.
8.3(d). The Company and the Underwriter agree promptly to notify the Fund
of the commencement of any litigation or proceedings against it or any of
its respective officers or directors in connection with this Agreement, the
issuance or sale of the Contracts, with respect to the operation of either
Account, or the sale or acquisition of shares of the Fund.
ARTICLE IX. Applicable Law
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
9.2. This Agreement shall be subject to the provisions of the 1933, 1934
and 1940 acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited
to, the Shared Funding Exemptive Order) and the terms hereof shall be
interpreted and construed in accordance therewith.
ARTICLE X. Termination
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason by sixty (60) days advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio based upon the Company's
determination that shares of such Portfolio are not reasonably available to
meet the requirements of the Contracts; or
(c) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event any of the
Portfolio's shares are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such
shares as the underlying investment media of the Contracts issued or to be
issued by the Company; or
(d) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
ceases to qualify as a Regulated Investment Company under Subchapter M of
the Code or under any successor or similar provision, or if the Company
reasonably believes that the Fund may fail to so qualify; or
(e) termination by the Company by written notice to the Fund and the
Underwriter with respect to any Portfolio in the event that such Portfolio
fails to meet the diversification requirements specified in Article VI
hereof; or
(f) termination by either the Fund or the Underwriter by written notice
to the Company, if either one or both of the Fund or the Underwriter
respectively, shall determine, in their sole judgment exercised in good
faith, that the Company and/or its affiliated companies has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(g) termination by the Company by written notice to the Fund and the
Underwriter, if the Company shall determine, in its sole judgment exercised
in good faith, that either the Fund or the Underwriter has suffered a
material adverse change in its business, operations, financial condition or
prospects since the date of this Agreement or is the subject of material
adverse publicity; or
(h) termination by the Fund or the Underwriter by written notice to the
Company, if the Company gives the Fund and the Underwriter the written
notice specified in Section 1.6(b) hereof and at the time such notice was
given there was no notice of termination outstanding under any other
provision of this Agreement; provided, however any termination under this
Section 10.1(h) shall be effective forty five (45) days after the notice
specified in Section 1.6(b) was given.
10.2. Effect of Termination. Notwithstanding any termination of this
Agreement, the Fund and the Underwriter shall at the option of the Company,
continue to make available additional shares of the Fund pursuant to the
terms and conditions of this Agreement, for all Contracts in effect on the
effective date of termination of this Agreement (hereinafter referred to as
"Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to reallocate investments in the
Fund, redeem investments in the Fund and/or invest in the Fund upon the
making of additional purchase payments under the Existing Contracts. The
parties agree that this Section 10.2 shall not apply to any terminations
under Article VII and the effect of such Article VII terminations shall be
governed by Article VII of this Agreement.
10.3 The Company shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or
federal laws or regulations or judicial or other legal precedent of general
application (hereinafter referred to as a "Legally Required Redemption") or
(iii) as permitted by an order of the SEC pursuant to Section 26(b) of the
1940 Act. Upon request, the Company will promptly furnish to the Fund and
the Underwriter the opinion of counsel for the Company (which counsel shall
be reasonably satisfactory to the Fund and the Underwriter) to the effect
that any redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under the terms
of the Contracts, the Company shall not prevent Contract Owners from
allocating payments to a Portfolio that was otherwise available under the
Contracts without first giving the Fund or the Underwriter 90 days notice
of its intention to do so.
ARTICLE XI. Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Fund:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
If to the Company:
Fidelity Investments Life Insurance Company
82 Devonshire Street, R25B
Boston, MA 02109
Attention: President
If to the Underwriter:
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Treasurer
ARTICLE XII. Miscellaneous
12.1 All persons dealing with the Fund must look solely to the property
of the Fund for the enforcement of any claims against the Fund as neither
the Board, officers, agents or shareholders assume any personal liability
for obligations entered into on behalf of the Fund.
12.2 Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and
addresses of the owners of the Contracts and all information reasonably
identified as confidential in writing by any other party hereto and, except
as permitted by this Agreement, shall not disclose, disseminate or utilize
such names and addresses and other confidential information until such time
as it may come into the public domain without the express written consent
of the affected party.
12.3 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
12.4 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby.
12.6 Each party hereto shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC,
the NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any
investigation or inquiry relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the generality of the foregoing, each
party hereto further agrees to furnish the California Insurance
Commissioner with any information or reports in connection with services
provided under this Agreement which such Commissioner may request in order
to ascertain whether the insurance operations of the Company are being
conducted in a manner consistent with the California Insurance Regulations
and any other applicable law or regulations.
12.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to
under state and federal laws.
12.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all
parties hereto; provided, however, that the Underwriter may assign this
Agreement or any rights or obligations hereunder to any affiliate of or
company under common control with the Underwriter, if such assignee is duly
licensed and registered to perform the obligations of the Underwriter under
this Agreement. The Company shall promptly notify the Fund and the
Underwriter of any change in control of the Company.
12.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee copies of the following reports:
(a) the Company's annual statement (prepared under statutory accounting
principles) and annual report (prepared under generally accepted accounting
principles ("GAAP"), if any), as soon as practical and in any event within
90 days after the end of each fiscal year;
(b) the Company's quarterly statements (statutory) (and GAAP, if any),
as soon as practical and in any event within 45 days after the end of each
quarterly period:
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as practical
after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial reports
of the Company filed with the Securities and Exchange Commission or any
state insurance regulator, as soon as practical after the filing thereof;
(e) any other report submitted to the Company by independent accountants
in connection with any annual, interim or special audit made by them of the
books of the Company, as soon as practical after the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by its duly authorized
representative and its seal to be hereunder affixed hereto as of the date
specified below.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
By: _________________________
Richard C. Murphy
Senior Vice President
VARIABLE INSURANCE PRODUCTS FUND III
By: ________________________
J. Gary Burkhead
Senior Vice President
FIDELITY DISTRIBUTORS CORPORATION
By: _______________________
Paul J. Hondros
President
Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Contracts Funded
Date Established by Board of Directors By Separate Account
Variable Annuity Account I Fidelity Retirement Reserves
(July 22, 1987) Fidelity Income Advantage
SCHEDULE B
PROXY VOTING PROCEDURE
The following is a list of procedures and corresponding responsibilities
for the handling of proxies relating to the Fund by the Underwriter, the
Fund and the Company. The defined terms herein shall have the meanings
assigned in the Participation Agreement except that the term "Company"
shall also include the department or third party assigned by the Insurance
Company to perform the steps delineated below.
1. The number of proxy proposals is given to the Company by the Underwriter
as early as possible before the date set by the Fund for the shareholder
meeting to facilitate the establishment of tabulation procedures. At this
time the Underwriter will inform the Company of the Record, Mailing and
Meeting dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape run",
or other activity, which will generate the names, addresses and number of
units which are attributed to each contractowner/policyholder (the
"Customer") as of the Record Date. Allowance should be made for account
adjustments made after this date that could affect the status of the
Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in the
number of Customers to Fidelity, as soon as possible, but no later than two
weeks after the Record Date.
3. The Fund's Annual Report no longer needs to be sent to each Customer by
the Company either before or together with the Customers' receipt of a
proxy statement. Underwriter will provide the last Annual Report to the
Company pursuant to the terms of Section 3.3 of the Agreement to which this
Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or "Card")
is provided to the Company by the Fund. The Company, at its expense, shall
produce and personalize the Voting Instruction Cards. The Legal Department
of the Underwriter or its affiliate ("Fidelity Legal") must approve the
Card before it is printed. Allow approximately 2-4 business days for
printing information on the Cards. Information commonly found on the Cards
includes:
a. name (legal name as found on account registration)
b. address
c. Fund or account number
d. coding to state number of units
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund)
(This and related steps may occur later in the chronological process due to
possible uncertainties relating to the proposals.)
5. During this time, Fidelity Legal will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one document).
Printed and folded notices and statements will be sent to Company for
insertion into envelopes (envelopes and return envelopes are provided and
paid for by the Insurance Company). Contents of envelope sent to Customers
by Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the Company
or its tabulation agent
d. "urge buckslip" - optional, but recommended. (This is a small, single
sheet of paper that requests Customers to vote as quickly as possible and
that their vote is important. One copy will be supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and approved
in advance by Fidelity Legal.
6. The above contents should be received by the Company approximately 3-5
business days before mail date. Individual in charge at Company reviews
and approves the contents of the mailing package to ensure correctness and
completeness. Copy of this approval sent to Fidelity Legal.
7. Package mailed by the Company.
* The Fund must allow at least a 15-day solicitation time to the Company
as the shareowner. (A 5-week period is recommended.) Solicitation time is
calculated as calendar days from (but not including) the meeting, counting
backwards.
8. Collection and tabulation of Cards begins. Tabulation usually takes
place in another department or another vendor depending on process used.
An often used procedure is to sort Cards on arrival by proposal into vote
categories of all yes, no, or mixed replies, and to begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure and
has not been required by Fidelity in the past.
9. Signatures on Card checked against legal name on account registration
which was printed on the Card.
Note: For Example, If the account registration is under "Bertram C. Jones,
Trustee," then that is the exact legal name to be printed on the Card and
is the signature needed on the Card.
10. If Cards are mutilated, or for any reason are illegible or are not
signed properly, they are sent back to Customer with an explanatory letter,
a new Card and return envelope. The mutilated or illegible Card is
disregarded and considered to be not received for purposes of vote
tabulation. Any Cards that have "kicked out" (e.g. mutilated, illegible)
of the procedure are "hand verified," i.e., examined as to why they did not
complete the system. Any questions on those Cards are usually remedied
individually.
11. There are various control procedures used to ensure proper tabulation
of votes and accuracy of that tabulation. The most prevalent is to sort
the Cards as they first arrive into categories depending upon their vote;
an estimate of how the vote is progressing may then be calculated. If the
initial estimates and the actual vote do not coincide, then an internal
audit of that vote should occur. This may entail a recount.
12. The actual tabulation of votes is done in units which is then converted
to shares. (It is very important that the Fund receives the tabulations
stated in terms of a percentage and the number of shares.) Fidelity Legal
must review and approve tabulation format.
13. Final tabulation in shares is verbally given by the Company to Fidelity
Legal on the morning of the meeting not later than 10:00 a.m. Boston time.
Fidelity Legal may request an earlier deadline if required to calculate the
vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will be
required from the Company as well as an original copy of the final vote.
Fidelity Legal will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards received from
the Customers. In the event that any vote is challenged or if otherwise
necessary for legal, regulatory, or accounting purposes, Fidelity Legal
will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must always be
followed up in writing.
SCHEDULE C
Non-Fidelity investment companies currently available under variable
annuities or variable life insurance issued by the Company:
None
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