As filed with the SEC on April 28, 1998
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. [6]
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. [8]
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 BOROS CICCHETTI 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, 1997 was filed March 30, 1998.
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 29, 1998, 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
EXHIBIT INDEX
Exhibit Sequential Page Number
(9) Opinion and consent of David J. Pearlman,
as to the legality of securities being issued.
(10)(a) Written consent of Coopers & Lybrand LLP.
(10)(b) Written consent of Jorden Burt Berenson & Johnson LLP.
C-10
PART B
INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
PROSPECTUS
1.FIDELITY INCOME ADVANTAGE
This prospectus describes a single premium immediate variable annuity
contract (the "Contract") offered by Fidelity Investments Life
Insurance Company ("FILI", "we" or "us"), the insurance company that
is part of the group of financial service companies known as Fidelity
Investments. Under the Contract, we provide lifetime annuity income to
you (the "Annuitant") at regular intervals (the "Annuity Income
Dates"). You choose the first Annuity Income Date, which may be up to
one year from the day we issue the Contract (the "Contract Date"), and
whether you want the Annuity Income Dates to be monthly, quarterly,
semi-annual or annual. Annuity income can be for your lifetime, or for
your lifetime and the lifetime of a second person you name (the "Joint
Annuitant"). You may choose a guaranteed minimum number of years of
annuity income.
There are three types of Contracts. You may purchase a "Non-qualified
Contract" with money from any source. In addition, you may purchase a
"Qualified Contract" that is an Individual Retirement Annuity with
contributions rolled-over from tax-qualified plans such as 403(b)
plans, 401(k) plans, or IRAs. You may also arrange with your employer
to purchase a "Tax-Sheltered Annuity Contract" using money from a
403(b) tax-sheltered annuity plan.
You purchase a Contract with a single payment (the "Purchase
Payment"). You may not make additional purchase payments. The minimum
Purchase Payment for a Contract is generally $25,000. You allocate
your Purchase Payment between fixed and variable annuity income. You
may choose all fixed annuity income, all variable annuity income, or a
combination of the two. If you allocate all or a portion to variable
annuity income, you may choose one or more of the twenty-eight
Investment Options of the Fidelity Investments Variable Annuity
Account I (the "Variable Account"). Amounts allocated to the
Investment Options will result in annuity income that varies in amount
according to the investment results of the Investment Options. The
Investment Options invest in the mutual fund portfolios ("Portfolios")
of Variable Insurance Products Fund, Variable Insurance Products Fund
II, and Variable Insurance Products Fund III (the "Fidelity Funds").
Fidelity Management & Research Company ("FMR") manages the Fidelity
Funds. Also The Investment Options invest in the mutual fund
portfolios of corresponding portfolios of other eligible funds the
" Other Funds" . All mutual fund portfolios available in
this prospectus are collectively known as t he " Funds".
Additional Investment Options may be added in the future.
For a Non-qualified Contract, the portion of annuity income that is
considered a return of the Purchase Payment will generally be
non-taxable, and the portion of annuity income that is considered a
distribution of earnings will generally be taxable. For Qualified
Contracts and Tax-Sheltered Annuity Contracts the entire amount of
annuity income each year will generally be taxable. For a more
detailed discussion of the tax treatment of annuity income, see TAX
CONSIDERATIONS on page .
The portion of your Purchase Payment that you allocate to the
Investment Options will be allocated to the Money Market Investment
Option for the period we estimate or calculate your "free look" right
to be in existence. See FREE LOOK PRIVILEGE on page .
This prospectus provides information that you should know before
purchasing a Contract. Additional information about the Contract and
the Variable Account has been filed with the Securities and Exchange
Commission in a Statement of Additional Inform ation dated April 30,
1998. The Statement of Additional Information is incorporated by
reference in t his prospectus and is available without charge by
calling FILI at 800-544-2442. The table of contents of the Statement
of Additional Information appears on page .
LIKE ALL VARIABLE ANNUITIES, 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 EITHER THE CURRENT PROSPECTUS
FOR THE MONEY MARKET INVESTMENT OPTION OR THE PROSPECTUS FOR
ALL THE INVESTMENT OPTIONS AVAILABLE IN THE CONTRACT.
FOR FURTHER INFORMATION CALL FIDELITY INVESTMENTS
Nationally 1-800-544-2442
Date: April 30, 1998
PROSPECTUS CONTENTS
GLOSSARY iv
Summary of the Contract
FACTS ABOUT FILI, THE VARIABLE ACCOUNT AND THE FUNDS
FILI
The Variable Account
The Funds
FACTS ABOUT THE CONTRACT
Purchase of a Contract
Free Look Privilege
Investment Allocation of Your Purchase Payment
Charges
Annuity Income Dates
Signature Guarantee
Death Benefit
Fixed, Variable or Combination Annuity Income
Benchmark Rate of Return
Types of Annuity Income Options
Reports
MORE ABOUT THE CONTRACT
Tax Considerations
Other Contract Provisions
Selling the Contracts
Postponement of Benefits
MORE ABOUT THE VARIABLE ACCOUNT AND THE FUNDS
Changes in Investment Options
Net Rate of Return for an Investment Option
Voting Rights
Resolving Material Conflicts
Performance
Litigation
Appendix - Illustrations of Values
Table of Contents of the Statement of Additional Information
THE CONTRACT IS NOT AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS.
2.GLOSSARY
ANNUITANT - You are the Annuitant. You receive lifetime income.
For Qualified Contracts and Tax-Sheltered Annuity Contracts all
annuity income during your lifetime must be received only by you.
Either you or the Joint Annuitant generally must be no older than 85
years of age on the Contract Date. You must also be an Owner.
ANNUITY INCOME DATES - The dates we determine the amount of annuity
income. If the New York Stock Exchange is closed on an Annuity Income
Date, we will determine the amount of annuity income on the next day
it is open. You choose whether you want Annuity Income Dates to be
monthly, quarterly, semi-annual or annual.
ANNUITY INCOME UNIT - A unit of measure used to calculate the amount
of variable annuity income.
BENCHMARK RATE OF RETURN - The return that is assumed in the
calculation of each amount of variable annuity income. The Benchmark
Rate of Return applies only to the variable income portion of the
Contract.
The estimated first annuity income amount is calculated assuming that
the Investment Options will earn the Benchmark Rate of Return you
choose. If the performance (after all expenses) of the Investment
Options you choose matches the benchmark, annuity income will stay
constant. If the performance exceeds the benchmark, annuity income
will increase. If performance falls below the benchmark, annuity
income will decrease.
If you choose a higher benchmark, annuity income will start at a
higher amount but you will need better investment performance in order
to keep annuity income from declining.
You will be able to choose a Benchmark Rate of Return of 3.5% or 5.0%.
We may make other rates available, as permitted by state law.
BENEFICIARY(IES) - The person(s) who may receive certain benefits
under this Contract when there is no longer a living Annuitant or
Joint Annuitant.
CODE - The Internal Revenue Code of 1986, as amended.
CONTRACT - A Contract designed to provide you and the Joint Annuitant,
(if any), with annuity income for your life (or lives) beginning with
the first Annuity Income Date.
CONTRACT DATE - The date your Contract becomes effective. This will be
stated in your Contract.
FUNDS - Variable Insurance Products Fund, Variable Insurance Products
Fund II, Variable Insurance Products Fund III and Other Funds
available in the Contract.
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 it is used to refer to a Qualified
Contract, it means a Contract that qualifies as an Individual
Retirement Annuity as defined in Section 408(b) of the Code.
JOINT ANNUITANT - The Joint Annuitant, (if any), receives lifetime
annuity income. However, for Qualified Contracts and Tax-Sheltered
Annuity Contracts, all annuity income during the Annuitant's lifetime
must be received only by the Annuitant. Either the Annuitant or the
Joint Annuitant generally must be no older than 85 years of age on the
Contract Date. For Non-qualified Contracts the Joint Annuitant may,
but need not be, an Owner. For Qualified Contracts and Tax-Sheltered
Annuity Contracts the Joint Annuitant may not be an Owner.
NET RATE OF RETURN - An index used to measure the investment
performance of an Investment Option from one Valuation Period to the
next.
NON-QUALIFIED CONTRACT - A Contract other than a Qualified Contract or
Tax-Sheltered Annuity Contract. This type of Contract may be purchased
with money from any source.
OWNER(S) - The person(s) who have certain rights under the Contract.
You (the Annuitant) must be an Owner. If there is a Joint Annuitant,
he or she may also be an Owner (except for a Qualified Contract or
Tax-Sheltered Annuity Contract, where only one Owner is permitted).
The Joint Annuitant is never required to be an Owner. Only you and the
Joint Annuitant, (if any), may ever be Owners.
PORTFOLIO - An investment portfolio of a Fund.
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 Funds
available in this prospectus.
TAX-SHELTERED ANNUITY CONTRACT - A Contract purchased with money in a
tax-sheltered annuity under section 403(b) of the Code.
VALUATION PERIOD - The period of time from the time Annuity Income
Unit values are calculated to the next time such values are
calculated. These calculations 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.
YOU - The Annuitant. The Annuitant is always an Owner.
THIS PAGE INTENTIONALLY LEFT BLANK
3.SUMMARY OF THE CONTRACT
The purpose of this variable annuity contract is to provide periodic
annuity income for your life, or for your life and the life of a Joint
Annuitant. You may select from a number of annuity income options. You
may also choose a guaranteed minimum number of years of annuity
income. See TYPES OF ANNUITY INCOME OPTIONS on page . You may choose
annuity income that is entirely fixed, entirely variable, or a
combination of fixed and variable. See FIXED, VARIABLE OR COMBINATION
ANNUITY INCOME on page . We guarantee to provide annuity income for
each Annuity Income Date for your lifetime and for the lifetime of the
Joint Annuitant, (if any). We guarantee the amount of fixed annuity
income on each Annuity Income Date, but we do not guarantee the amount
of any variable annuity income. Neither do we guarantee any minimum
number of Annuity Income Dates, unless you choose an option that
provides for such a guarantee. The amount of variable annuity income
will fluctuate from one Annuity Income Date to the next according to
the investment results of the Investment Options you select. The
Investment Options invest in mutual fund portfolios that are managed
by Fidelity Management & Research Company ("FMR"), Morgan Stanley
Asset Management Inc., ("Morgan Stanley"), Pilgrim Baxter &
Associates, Ltd. or Pilgrim Baxter Value Investors, Inc.,
("PBHG"), Strong Capital Management, Inc. ("Strong") and Warburg
Pinc us Asset Management, Inc. ("Warburg Pincus").
You purchase the Contract with a single Purchase Payment. The minimum
Purchase Payment is generally $25,000. FILI reserves the right to
reject Purchase Payments in excess of limits it establishes from time
to time. You allocate your Purchase Payment between variable and fixed
annuity income on your application. This allocation may not be
changed. The portion of your Purchase Payment allocated to variable
annuity income will be placed in the Money Market Investment Option
during the free look period (see FREE LOOK PRIVILEGE on page ). You
may currently reallocate among the Investment Options at any time
after the end of the free look period.
You may return the Contract for a refund during the free look period.
ONCE THE FREE LOOK PERIOD EXPIRES, THE CONTRACT MAY NOT BE RETURNED
FOR A REFUND. If neither you nor the Joint Annuitant survives to the
first Annuity Income Date, the Contract will be canceled and we will
make a refund equal to your Purchase Payment to your Beneficiary or
Beneficiaries. See DEATH BENEFIT on page .
There are three types of Contracts. You may purchase a Non-qualified
Contract with money from any source. In addition, you may purchase a
Qualified Contract that is an Individual Retirement Annuity with
contributions rolled-over from tax-qualified plans such as 403(b)
plans, 401(k) plans, or IRAs. You may also arrange with your employer
to purchase a Tax-Sheltered Annuity Contract using money from a 403(b)
tax-sheltered annuity plan.
Under the Contract, we will distribute lifetime annuity income to you
or to you and the Joint Annuitant. The federal income tax laws have a
special requirement for Qualified and Tax-Sheltered Annuity Contracts
that have a Joint Annuitant. For these Contracts, during your lifetime
annuity income can be payable only to you.
You are an Owner of the Contract. The Joint Annuitant will also be an
Owner if so named on the application, except that for Qualified
Contracts and Tax-Sheltered Annuity Contracts you must be the only
Owner.
There are currently twenty-eight variable Subaccounts. Five
Subaccounts invest 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. Five
Investment Options 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
Manager: Growth Portfolio and Contrafund Portfolio. Three Investment
Options 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
remaining Investment Options invest in shares of one of the mutual
fund portfolios of Morgan Stanley, PBHG, Strong or Warburg Pincus.
We intend this summary to provide only an overview of the more
significant aspects of the Contract. You will find more detailed
information in the rest of this prospectus and in the Contract. Please
retain the Contract together with its attached application. Together
they are the entire agreement between you and FILI.
4.FEE TABLE
This information is intended to help you understand the various costs
and expenses that a Contract will bear directly or indirectly. It
reflects expenses of the Variable Account as well as the Portfolios.
The tables below do not reflect any deductions for taxes. Any
applicable premium taxes are deducted from a contract on the contract
date. See CHARGES on page of this Prospectus for additional
information.
CONTRACT EXPENSES
NONE
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of Portfolio average net assets)
Mortality and Expense Risk Charge 0.75%
Account Fees and Expenses:
Administrative Charge 0.25%
Total Separate Account Annual Expenses 1.00%
PORTFOLIO ANNUAL EXPENSES
(as a percentage of Portfolio average net assets)
MANAGEMENT OTHER TOTAL ANNUAL
FEES EXPENSES EXPENSES
FIDELITY 1
ASSET MANAGER 0.55% 0.10% 0.65%
MONEY MARKET 0.21% 0.10% 0.31%
INVESTMENT GRADE BOND 0.44% 0.14% 0.58%
HIGH INCOME 0.59% 0.12% 0.71%
EQUITY-INCOME 0.50% 0.08% 0.58%
INDEX 500 0.24% 0.04% 0.28%2
GROWTH 0.60% 0.09% 0.69%
OVERSEAS 0.75% 0.17% 0.92%
ASSET MANAGER: GROWTH 0.60% 0.17% 0.77%
CONTRAFUND 0.60% 0.11% 0.71%
GROWTH OPPORTUNITIES 0.60% 0.14% 0.74%
BALANCED 0.45% 0.16% 0.61%
GROWTH & INCOME 0.49% 0.21% 0.70%
MORGAN STANLEY
EMERGING MARKETS DEBT 0. 09% 1.21 % 0.30%3
EMERGING MARKETS EQUITY 0.00% 1.7 5% 1.75%3
GLOBAL EQUITY 0. 00% 1.1 5% 1.15%3
INTERNATIONAL MAGNUM 0. 00% 1.1 5% 1.15%3
PBHG
GROWTH II 0. 61% 0.59% 1.20 %4
LARGE CAP VALUE 0. 05% 0.95 % 1.00%4
SELECT 20 0. 61% 0.59 % 1.20%4
SMALL CAP VALUE 0.74% 0.46 % 1.20%4
TECHNOLOGY & COMMUNICATIONS 0. 58% 0.62 % 1.20%4
STRONG
DISCOVERY FUND II 1.00% 0.18% 1.18%
GROWTH FUND II 1.00% 0.20% 1.20%5
OPPORTUNITY FUND II 1.00% 0.15% 1.15%
WARBURG PINCUS
INTERNATIONAL EQUITY 1.00% 0.35% 1.35 %6
POST-VENTURE CAPITAL 1.07% 0.33% 1.40%6
SMALL COMPANY GROWTH 0.90% 0.2 4% 1.14 %6
1) A portion of the brokerage commissions that certain Funds pay was
used to reduce Fund expenses. In addition, certain Funds have entered
into arrangements with their custodian and transfer agent whereby
interest earned on uninvested cash balances w as used to reduce
custodian expenses. Including these reductions, the total operating
expenses presented in the table would have been .57% for Equity-Income
Portfolio, .67% for Growth Portfolio, .90% for Overseas Portfolio,
.64% for Asset Manager Portfolio, .68% for Contrafund Portfolio, .76%
for Asset Manager: Growth Portfolio, .73% for Growth Opportunities
Portfolio, .60% for Balanced Portfolio and .71% for High Income
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
.27%, .13% and .40%, respectively.
3) Morgan Stanley Asset Management Inc. ("MSAM") with respect to
the Portfolios, has voluntarily agreed to waive receipt of its
management fees and agreed to reimburse the Portfolio, if necessary,
if such fees would cause the total annual operating expenses of the
Portfolio to exceed the respective percentage of average daily net
assets. MSAM may terminate this voluntary waiver at any time at its
sole discretion. Absent such reductions, "Management Fees", "Other
Expenses" and "Total Annual Expenses", respectively, would be as
follows: Emerging Markets Debt Portfolio - 0.80%, 1.26%, 2.06%;
Emerging Markets Equity Portfolio - 1.25%, 2.62%, 4.12%; Global Equity
Portfolio - 0.80%, 1.63%, 2.43%; International Magnum Portfolio -
0.80%, 1.98%, 2.78%.
4) Pilgrim Baxter & Associates, Ltd. (the "Adviser") has
voluntarily agreed to waive or limit it's Advisory Fees or assume
Other Expenses in an amount that operates to limit Total Operating
Expenses of the Portfolios to not more than of the 1.20% of the
average daily net assets of the Growth II, Small Cap Value, Technology
& Communications and Select 20 Portfolios and to not more than 1.00%
of the average daily net assets of the Large Cap Value Portfolio,
through December 31, 1998. Total Operating Expenses include, but are
not limited to, expenses such as investment advisory fees, transfer
agent fees and legal fees. Such waivers of Advisory fees and possible
assumptions of Other Expenses by the Adviser is subject to a possible
reimbursement by the Portfolios in future years if such reimbursement
can be achieved within foregoing annual expense limits. Such fee
waiver/expense reimbursement arrangements may be modified or
terminated at any time after December 31, 1998. Absent such fee
waivers/expense reimbursements the Advisory Fees and estimated Total
Operating Expenses for the Growth II, Small Cap Value, Large Cap
Value, Technology & Communications and Select 20 Portfolios would be
0.85% and 1.44%; 1.00% and 1.46%; .65% and 1.60%; .85% and 1.47%; and
.85% and 1.44%, respectively.
5) Strong Capital Management, Inc., the investment Adviser, has
voluntarily agreed to cap the Fund's total operating expenses at
1.20%. The Adviser has no current intention to, but may in the future,
discontinue or modify any waiver of fees or absorption of expenses at
its discretion with appropriate notification to its shareholders.
6) Management Fees, Other Expenses and Total Annual Expenses for
the International Equity, Post-Venture Capital and Small Company
Growth Portfolios are based on actual expenses for the fiscal year
ended December 31, 1997, net any fee waivers or expense
reimbursements. Without such waivers or reimbursements, Management
Fees would have equaled 1.00%, 1.25% and 0.90%; Other Expenses would
have equalled 0.40%, 0.33% and 0.27%; and Total Annual Expenses would
have equalled 1.40%, 1.58% and 1.15% for the International Equity and
Small Company Growth Portfolios, respectively. The Portfolios'
investment Adviser and co-administrator have undertaken to limit each
Portfolio's Total Annual Expenses to the limits shown in the table
above through December 31, 1998.
5.FACTS ABOUT FILI, THE VARIABLE ACCOUNT, AND THE FUNDS
FILI
Fidelity Investments Life is a stock life insurance company
organized in 1981 and existing under the laws of the State of Utah.
FILI is part of Fidelity Investments, a group of companies that
provides a variety of financial services and products. FILI is a
wholly-owned subsidiary of FMR Corp., the parent company of the
Fidelity companies. Through ownership of voting common stock, Edward
C. Johnson 3d, Johnson family members, and various trusts for the
benefit of Johnson family members form a controlling group with
respect to FMR Corp. FILI's financial statements appear in the
Statement of Additional Information. Our principal executive offices
are located at 82 Devonshire Street, Boston, Massachusetts 02109.
THE VARIABLE ACCOUNT
Fidelity Investments Variable Annuity Account I was established as a
separate investment account on July 22, 1987. It supports the
Contracts and other forms of variable annuity contracts, and may be
used 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"). Financial statements for the
Variable Account are in the Statement of Additional Information.
FILI owns the assets in the Variable Account. The assets of the
Variable Account are kept separate from FILI's general account assets
and from any other separate accounts FILI may have, as required by
law. The assets of the Variable Account may not be charged with
liabilities from any other business FILI conducts. All income, gains
and losses concerning assets allocated to the Variable Account are
credited to or charged against the Variable Account without regard to
other income, gains or losses of FILI. Assets are maintained in the
Variable Account at least equal to the reserves and other liabilities
of the Variable Account. If the assets exceed the required reserves
and other liabilities, FILI may transfer the excess to its general
account. FILI is obligated to provide all benefits under the
Contracts.
THE FUNDS
FIDELITY
The Fidelity Funds are Variable Insurance Products Fund,
Variable Insurance Products Fund II, and Variable Insurance Products
Fund III. Each Fund is an open-end, diversified management investment
company organized by FMR and is the type of investment company
commonly known as a series mutual fund.
The investment objectives of the Portfolios of Variable Insurance
Products Fund, Variable Insurance Products Fund II, and Variable
Insurance Products Fund III are described below. There is of course no
assurance that any Portfolio will meet its investment objective.
Following the description of each Fidelity Portfolio is a graph
showing how your annuity income can fluctuate based on past investment
performance through December 31, 199 7 . Each graph shows the
effect that the Portfolio's investment performance would have had if a
Contract with a Benchmark Rate of Return of 5.0%, providing an initial
monthly annuity income of $500, was purchased on the date the
Portfolio commenced operations. Annuity income increases for a given
month if the annualized Net Rate of Return for that month is higher
than the Benchmark Rate of Return, and decreases for a given month if
the annualized Net Rate of Return is lower than the Benchmark Rate of
Return. The Purchase Payment necessary for an initial monthly annuity
income of $500 will vary depending on the age and sex of the Annuitant
(and Joint Annuitant, if any), the annuity income option and the first
Annuity Income Date. Suppose a 65 year old male who lives in a state
that does not charge a premium tax wishes to purchase $500 of initial
monthly variable annuity income beginning on the Contract Date. If
there is no Joint Annuitant and no guarantee period and he chooses a
5% Benchmark Rate of Return, the Purchase Payment needed would be
$7 4,036 . If the purchaser were female, the Purchase Payment
necessary would be $82, 932 . This is because females have a
longer life expectancy than males.
All the graphs take into account all charges under the Contract and
the actual expenses of the Portfolios.
Graphs for the Other Funds are not available.
N.FIA
7
6.THE PORTFOLIOS
ASSET MANAGER PORTFOLIO of Variable Insurance Products Fund II seeks
high total return with reduced risk over the long-term by allocating
its assets among 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 the
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. The graph below is based on a 5%
Benchmark Rate of Return and initial monthly annuity income of
$500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayAsset Manager
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30
Oct-86 31
Nov-86 30
Dec-86 31
Jan-87 31
Feb-87 28
Mar-87 31
Apr-87 30
May-87 31
Jun-87 30
Jul-87 31
Aug-87 31
Sep-87 30
Oct-87 31
Nov-87 30
Dec-87 31
Jan-88 31
Feb-88 29
Mar-88 31
Apr-88 30
May-88 31
Jun-88 30
Jul-88 31
Aug-88 31
Sep-88 30
Oct-88 31
Nov-88 30
Dec-88 31
Jan-89 31
Feb-89 28
Mar-89 31
Apr-89 30
May-89 31
Jun-89 30
Jul-89 31
Aug-89 31
Sep-89 30 $ 500
Oct-89 31 0.2002100.11 $ 499
Nov-89 30 0.3996100.32 $ 498
Dec-89 31 0.3085100.22 $ 497
Jan-90 31 -2.20697.71% $ 484
Feb-90 28 1.0256100.95 $ 486
Mar-90 31 0.8121100.73 $ 488
Apr-90 30 -1.30998.61% $ 479
May-90 31 5.1020105.01 $ 501
Jun-90 30 0.7766100.69 $503
Jul-90 31 -0.19299.72% $499
Aug-90 31 -3.28196.64% $480
Sep-90 30 -2.09597.82% $468
Oct-90 31 0.5096100.42 $468
Nov-90 30 4.8681104.78 $489
Dec-90 31 2.9013102.81 $500
Jan-91 31 4.7851104.70 $522
Feb-91 28 3.9142103.83 $540
Mar-91 31 1.6143101.53 $545
Apr-91 30 1.5004101.42 $551
May-91 31 2.2608102.17 $561
Jun-91 30 -1.78598.13% $548
Jul-91 31 2.5108102.42 $559
Aug-91 31 2.0270101.94 $567
Sep-91 30 0.5794100.50 $568
Oct-91 31 0.6584100.57 $569
Nov-91 30 -1.63598.28% $557
Dec-91 31 4.3225104.23 $578
Jan-92 31 1.2749101.19 $582
Feb-92 29 1.9420101.86 $591
Mar-92 31 -0.24399.67% $587
Apr-92 30 1.4657101.38 $592
May-92 31 1.0433100.96 $596
Jun-92 30 -0.07999.84% $592
Jul-92 31 1.6693101.58 $599
Aug-92 31 -0.31299.60% $594
Sep-92 30 0.6274100.54 $595
Oct-92 31 0.16100.07 $593
Nov-92 30 2.18102.10 $603
Dec-92 31 1.6101.51 $610
Jan-93 31 1.8101.71 $618
Feb-93 28 0.94100.86 $621
Mar-93 31 2.83102.74 $635
Apr-93 30 0.6100.52 $636
May-93 31 1.7101.61 $643
Jun-93 30 0.8100.72 $645
Jul-93 31 1.23101.14 $650
Aug-93 31 2.92102.83 $666
Sep-93 30 0.0799.99% $663
Oct-93 31 2.7102.61 $677
Nov-93 30 -0.1399.79% $673
Dec-93 31 4.05103.96 $697
Jan-94 31 3.18103.09 $716
Feb-94 28 -3.1896.75% $690
Mar-94 31 -4.795.22% $654
Apr-94 30 0.0799.99% $651
May-94 31 0.86100.77 $654
Jun-94 30 -1.9198.01% $638
Jul-94 31 1.73101.64 $646
Aug-94 31 2.34102.25 $658
Sep-94 30 -1.1898.74% $647
Oct-94 31 0.49100.40 $647
Nov-94 30 -1.4798.45% $634
Dec-94 31 -2.297.72% $617
Jan-95 31 -0.6599.27% $610
Feb-95 28 1.62101.54 $617
Mar-95 31 1.32101.23 $622
Apr-95 30 1.59101.51 $629
May-95 31 1.28101.19 $634
Jun-95 30 0.84100.76 $636
Jul-95 31 3.56103.47 $655
Aug-95 31 1.21101.12 $660
Sep-95 30 1.26101.18 $665
Oct-95 31 -1.3198.61% $653
Nov-95 30 2.6102.52 $667
Dec-95 31 2.53102.44 $680
Jan-96 31 2.15102.06 $692
Feb-96 29 -0.2799.65% $686
Mar-96 31 1.06100.97 $690
Apr-96 30 1.05100.97 $694
May-96 31 0.78100.69 $696
Jun-96 30 0.9100.82 $699
Jul-96 31 -1.6698.26% $684
Aug-96 31 0.2100.11 $682
Sep-96 30 3.64103.55 $703
Oct-96 31 2.57102.48 $718
Nov-96 30 4.95104.86 $750
Dec-96 31 -1.4698.46% $735
Listed in Order Max 750
to match MFPR Min 468
8
N.FIA
MONEY MARKET PORTFOLIO of Variable Insurance Products Fund 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. The graph below is based on a 5% Benchmark Rate of Return and
initial monthly annuity income of $500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of Days Money Market
Apr-82 $500
May-82 31 1.1551967 101.07% $503
Jun-82 30 1.1206 101.04% $506
Jul-82 31 1.1753961 101.09% $510
Aug-82 31 1.0274021 100.94% $513
Sep-82 30 0.8941036 100.81% $515
Oct-82 31 0.8633956 100.78% $516
Nov-82 30 0.796296 100.71% $518
Dec-82 31 0.7668009 100.68% $519
Jan-83 31 0.7207956 100.63% $521
Feb-83 28 0.6326003 100.56% $521
Mar-83 31 0.6980001 100.61% $523
Apr-83 30 0.6815044 100.60% $524
May-83 31 0.6908034 100.60% $525
Jun-83 30 0.6833043 100.60% $526
Jul-83 31 0.7715994 100.69% $527
Aug-83 31 0.8024995 100.72% $529
Sep-83 30 0.7852997 100.70% $530
Oct-83 31 0.8010033 100.71% $532
Nov-83 30 0.762901 100.68% $533
Dec-83 31 0.7701022 100.68% $535
Jan-84 31 0.7744037 100.69% $536
Feb-84 29 0.7273033 100.65% $537
Mar-84 31 0.7961988 100.71% $539
Apr-84 30 0.8027994 100.72% $541
May-84 31 0.8503022 100.76% $543
Jun-84 30 0.8510969 100.77% $545
Jul-84 31 0.9054974 100.82% $547
Aug-84 31 0.9200967 100.83% $549
Sep-84 30 0.8994014 100.82% $551
Oct-84 31 0.8951025 100.81% $553
Nov-84 30 0.7933963 100.71% $555
Dec-84 31 0.7501987 100.66% $557
Jan-85 31 0.7073964 100.62% $558
Feb-85 28 0.6158981 100.54% $559
Mar-85 31 0.6979029 100.61% $560
Apr-85 30 0.6827012 100.60% $561
May-85 31 0.6837033 100.60% $562
Jun-85 30 0.620502 100.54% $563
Jul-85 31 0.6286972 100.54% $563
Aug-85 31 0.6338018 100.55% $564
Sep-85 30 0.6170022 100.53% $565
Oct-85 31 0.647698 100.56% $566
Nov-85 30 0.6324972 100.55% $566
Dec-85 31 0.6539969 100.57% $567
Jan-86 31 0.6492981 100.56% $568
Feb-86 28 0.5747013 100.50% $569
Mar-86 31 0.6217 100.54% $570
Apr-86 30 0.5702999 100.49% $570
May-86 31 0.5577013 100.47% $570
Jun-86 30 0.5377009 100.45% $571
Jul-86 31 0.5469971 100.46% $571
Aug-86 31 0.5245982 100.44% $571
Sep-86 30 0.4765015 100.39% $571
Oct-86 31 0.4853992 100.40% $571
Nov-86 30 0.465399 100.38% $571
Dec-86 31 0.4898978 100.40% $571
Jan-87 31 0.4959014 100.41% $571
Feb-87 28 0.4339993 100.36% $571
Mar-87 31 0.4838032 100.40% $570
Apr-87 30 0.4793971 100.40% $570
May-87 31 0.5206027 100.43% $571
Jun-87 30 0.5225005 100.44% $571
Jul-87 31 0.5405006 100.45% $571
Aug-87 31 0.5392987 100.45% $571
Sep-87 30 0.5335983 100.45% $572
Oct-87 31 0.5748011 100.49% $572
Nov-87 30 0.5404031 100.46% $572
Dec-87 31 0.5941027 100.51% $573
Jan-88 31 0.5755989 100.49% $573
Feb-88 29 0.5129999 100.43% $573
Mar-88 31 0.5410021 100.46% $574
Apr-88 30 0.5224008 100.44% $574
May-88 31 0.5544983 100.47% $574
Jun-88 30 0.5581998 100.48% $575
Jul-88 31 0.5988009 100.51% $575
Aug-88 31 0.6322979 100.55% $576
Sep-88 30 0.634001 100.55% $577
Oct-88 31 0.6583016 100.57% $578
Nov-88 30 0.6482004 100.57% $579
Dec-88 31 0.7118006 100.63% $580
Jan-89 31 0.7367008 100.65% $581
Feb-89 28 0.6686995 100.59% $582
Mar-89 31 0.7767009 100.69% $584
Apr-89 30 0.7711993 100.69% $586
May-89 31 0.7940976 100.71% $587
Jun-89 30 0.7485009 100.67% $589
Jul-89 31 0.7510998 100.67% $590
Aug-89 31 0.7271001 100.64% $592
Sep-89 30 0.7142016 100.63% $593
Oct-89 31 0.6886017 100.60% $594
Nov-89 30 0.6751022 100.59% $595
Dec-89 31 0.7064995 100.62% $597
Jan-90 31 0.6572006 100.57% $597
Feb-90 28 0.604301 100.53% $598
Mar-90 31 0.6900978 100.60% $600
Apr-90 30 0.6282014 100.55% $600
May-90 31 0.6695999 100.58% $601
Jun-90 30 0.6415996 100.56% $602
Jul-90 31 0.6609007 100.58% $603
Aug-90 31 0.6495014 100.56% $604
Sep-90 30 0.6266014 100.54% $605
Oct-90 31 0.6520019 100.57% $606
Nov-90 30 0.6280996 100.55% $607
Dec-90 31 0.6477023 100.56% $608
Jan-91 31 0.6361001 100.55% $608
Feb-91 28 0.536698 100.46% $609
Mar-91 31 0.4989003 100.41% $609
Apr-91 30 0.559899 100.48% $609
May-91 31 0.5006005 100.41% $609
Jun-91 30 0.4399003 100.36% $609
Jul-91 31 0.5182996 100.43% $609
Aug-91 31 0.4647019 100.38% $609
Sep-91 30 0.4693988 100.39% $609
Oct-91 31 0.4531011 100.37% $609
Nov-91 30 0.4097006 100.33% $608
Dec-91 31 0.4390991 100.35% $608
Jan-92 31 0.4072994 100.32% $607
Feb-92 29 0.338802 100.26% $606
Mar-92 31 0.3670011 100.28% $606
Apr-92 30 0.3301992 100.25% $605
May-92 31 0.3033992 100.22% $604
Jun-92 30 0.3294019 100.25% $603
Jul-92 31 0.3101017 100.22% $601
Aug-92 31 0.3006013 100.22% $600
Sep-92 30 0.2839007 100.20% $599
Oct-92 31 0.28 100.19% $598
Nov-92 30 0.29 100.21% $597
Dec-92 31 0.3 100.21% $595
Jan-93 31 0.28 100.19% $594
Feb-93 28 0.26 100.18% $593
Mar-93 31 0.29 100.20% $592
Apr-93 30 0.26 100.18% $590
May-93 31 0.24 100.15% $589
Jun-93 30 0.29 100.21% $588
Jul-93 31 0.26 100.17% $586
Aug-93 31 0.27 100.18% $585
Sep-93 30 0.25 100.17% $584
Oct-93 31 0.24 100.15% $582
Nov-93 30 0.27 100.19% $581
Dec-93 31 0.27 100.18% $580
Jan-94 31 0.27 100.18% $578
Feb-94 28 0.24 100.16% $577
Mar-94 31 0.29 100.20% $576
Apr-94 30 0.28 100.20% $575
May-94 31 0.34 100.25% $574
Jun-94 30 0.34 100.26% $573
Jul-94 31 0.34 100.25% $572
Aug-94 31 0.4 100.31% $571
Sep-94 30 0.38 100.30% $571
Oct-94 31 0.41 100.32% $570
Nov-94 30 0.41 100.33% $570
Dec-94 31 0.45 100.36% $570
Jan-95 31 0.5 100.41% $570
Feb-95 28 0.45 100.37% $569
Mar-95 31 0.5 100.41% $569
Apr-95 30 0.45 100.37% $569
May-95 31 0.53 100.44% $569
Jun-95 30 0.48 100.40% $569
Jul-95 31 0.49 100.40% $569
Aug-95 31 0.48 100.39% $569
Sep-95 30 0.45 100.37% $569
Oct-95 31 0.49 100.40% $569
Nov-95 30 0.46 100.38% $569
Dec-95 31 0.44 100.35% $568
Jan-96 31 0.49 100.40% $568
Feb-96 29 0.42 100.34% $568
Mar-96 31 0.41 100.32% $568
Apr-96 30 0.45 100.37% $567
May-96 31 0.43 100.34% $567
Jun-96 30 0.39 100.31% $567
Jul-96 31 0.47 100.38% $566
Aug-96 31 0.43 100.34% $566
Sep-96 30 0.45 100.37% $566
Oct-96 31 0.45 100.36% $565
Nov-96 30 0.42 100.34% $565
Dec-96 31 0.46 100.37% $565
Listed in Order Max 609
to match MFPR Min 500
N.FIA
9
INVESTMENT GRADE BOND PORTFOLIO of Variable Insurance Products Fund II
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. The graph
below is based on a 5% Benchmark Rate of Return and initial monthly
annuity income of $500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of Days Investment Grade Bond
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30
Oct-86 31
Nov-86 30
Dec-86 31
Jan-87 31
Feb-87 28
Mar-87 31
Apr-87 30
May-87 31
Jun-87 30
Jul-87 31
Aug-87 31
Sep-87 30
Oct-87 31
Nov-87 30
Dec-87 31
Jan-88 31
Feb-88 29
Mar-88 31
Apr-88 30
May-88 31
Jun-88 30
Jul-88 31
Aug-88 31
Sep-88 30
Oct-88 31
Nov-88 30
Dec-88 31 $ 500
Jan-89 31 0.869186 100.78% $ 502
Feb-89 28 0.221311 100.14% $ 501
Mar-89 31 0.620951 100.54% $ 501
Apr-89 30 1.113731 101.03% $ 504
May-89 31 1.114192 101.03% $ 507
Jun-89 30 1.923973 101.84% $ 515
Jul-89 31 1.559888 101.47% $ 520
Aug-89 31 -0.79695 99.12% $ 513
Sep-89 30 0.39447 100.31% $ 513
Oct-89 31 1.548237 101.46% $518
Nov-89 30 0.860446 100.78% $520
Dec-89 31 0.408394 100.32% $520
Jan-90 31 -0.22762 99.69% $516
Feb-90 28 0.567202 100.49% $517
Mar-90 31 0.303621 100.22% $516
Apr-90 30 0.042414 99.96% $513
May-90 31 1.569926 101.48% $519
Jun-90 30 0.780087 100.70% $520
Jul-90 31 0.99278 100.91% $523
Aug-90 31 -0.00955 99.91% $520
Sep-90 30 0.391026 100.31% $520
Oct-90 31 0.006187 99.92% $517
Nov-90 30 0.602254 100.52% $518
Dec-90 31 1.040954 100.95% $521
Jan-91 31 0.201613 100.12% $519
Feb-91 28 1.006036 100.93% $522
Mar-91 31 1.693227 101.61% $528
Apr-91 30 1.469148 101.39% $533
May-91 31 0.772201 100.69% $535
Jun-91 30 0.191571 100.11% $533
Jul-91 31 0.860421 100.77% $535
Aug-91 31 2.085308 102.00% $543
Sep-91 30 1.85701 101.77% $551
Oct-91 31 1.093892 101.01% $554
Nov-91 30 1.082056 101.00% $557
Dec-91 31 2.984977 102.90% $571
Jan-92 31 -0.99278 98.92% $563
Feb-92 29 0.54725 100.47% $563
Mar-92 31 -0.18198 99.73% $559
Apr-92 30 0.729262 100.65% $561
May-92 31 1.538462 101.45% $566
Jun-92 30 1.158645 101.08% $570
Jul-92 31 2.026432 101.94% $579
Aug-92 31 0.604491 100.52% $580
Sep-92 30 1.201717 101.12% $584
Oct-92 31 -1.27 98.65% $573
Nov-92 30 -0.26 99.66% $569
Dec-92 31 1.42 101.33% $574
Jan-93 31 2.1 102.01% $583
Feb-93 28 1.7 101.62% $591
Mar-93 31 0.44 100.35% $590
Apr-93 30 0.61 100.53% $591
May-93 31 0.17 100.08% $589
Jun-93 30 1.91 101.83% $597
Jul-93 31 0.68 100.59% $599
Aug-93 31 1.78 101.69% $606
Sep-93 30 0.5 100.42% $606
Oct-93 31 0.5 100.41% $606
Nov-93 30 -0.49 99.43% $600
Dec-93 31 0.59 100.50% $601
Jan-94 31 1.13 101.04% $605
Feb-94 28 -1.64 98.28% $592
Mar-94 31 -2.28 97.64% $576
Apr-94 30 -0.9 99.02% $568
May-94 31 -0.27 99.64% $563
Jun-94 30 -0.27 99.65% $559
Jul-94 31 1.64 101.55% $566
Aug-94 31 0.09 100.00% $563
Sep-94 30 -1.08 98.84% $554
Oct-94 31 0.09 100.00% $552
Nov-94 30 0.18 100.10% $550
Dec-94 31 -0.45 99.47% $545
Jan-95 31 1.45 101.36% $550
Feb-95 28 1.93 101.85% $559
Mar-95 31 0.64 100.55% $559
Apr-95 30 1.36 101.28% $564
May-95 31 4.01 103.92% $584
Jun-95 30 0.77 100.69% $586
Jul-95 31 -0.34 99.57% $581
Aug-95 31 1.19 101.10% $585
Sep-95 30 0.93 100.85% $587
Oct-95 31 1.34 101.25% $592
Nov-95 30 1.48 101.40% $598
Dec-95 31 1.38 101.29% $603
Jan-96 31 0.64 100.55% $604
Feb-96 29 -1.83 98.09% $590
Mar-96 31 -0.77 99.15% $583
Apr-96 30 -0.6 99.32% $576
May-96 31 -0.17 99.74% $573
Jun-96 30 1.21 101.13% $577
Jul-96 31 0.26 100.17% $575
Aug-96 31 -0.09 99.82% $572
Sep-96 30 1.62 101.54% $578
Oct-96 31 2.19 102.10% $588
Nov-96 30 1.65 101.57% $595
Dec-96 31 -0.89 99.03% $587
Listed in Order Max 606
to match MFPR Min 500
10
N.FIA
HIGH INCOME PORTFOLIO of Variable Insurance Products Fund 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.
The graph below is based on a 5% Benchmark Rate of Return and initial
monthly annuity income of $500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayHigh Income
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30 $ 500
Oct-85 31 1.25101.16 $ 504
Nov-85 30 1.44101.36 $ 509
Dec-85 31 3.34103.25 $ 523
Jan-86 31 1.24101.15 $ 527
Feb-86 28 3.38103.30 $ 542
Mar-86 31 2.47102.38 $ 553
Apr-86 30 1.7101.62 $ 559
May-86 31 1.53101.44 $ 565
Jun-86 30 1.26101.18 $ 569
Jul-86 31 -0.399.61% $ 565
Aug-86 31 0.4100.31 $ 564
Sep-86 30 0.85100.77 $ 566
Oct-86 31 2.99102.90 $ 580
Nov-86 30 0.32100.24 $ 579
Dec-86 31 0.63100.54 $ 580
Jan-87 31 3.65103.56 $ 598
Feb-87 28 1.73101.65 $ 606
Mar-87 31 0.91100.82 $ 608
Apr-87 30 -3.1396.79% $ 587
May-87 31 -0.9398.99% $ 578
Jun-87 30 2.16102.08 $ 588
Jul-87 31 0.11100.02 $ 586
Aug-87 31 0.83100.74 $ 588
Sep-87 30 -3.4896.44% $ 564
Oct-87 31 -4.7895.14% $ 535
Nov-87 30 2.95102.86 $ 548
Dec-87 31 1.6101.51 $ 554
Jan-88 31 3.29103.20 $ 569
Feb-88 29 2.99102.91 $ 583
Mar-88 31 -0.7299.20% $ 576
Apr-88 30 0.78100.70 $ 578
May-88 31 -0.1599.76% $ 574
Jun-88 30 2.1102.02 $ 584
Jul-88 31 1.04100.95 $ 587
Aug-88 31 -0.4899.44% $ 581
Sep-88 30 0.8100.72 $ 583
Oct-88 31 1.09101.00 $ 586
Nov-88 30 -0.3899.54% $ 581
Dec-88 31 0.79100.70 $ 583
Jan-89 31 2.4102.31 $ 594
Feb-89 28 0.49100.41 $ 594
Mar-89 31 -1.2898.64% $ 584
Apr-89 30 -1.1198.81% $ 574
May-89 31 1.85101.76 $ 582
Jun-89 30 2.86102.78 $ 596
Jul-89 31 -0.6699.26% $ 589
Aug-89 31 -0.5899.34% $ 582
Sep-89 30 -3.596.42% $ 559
Oct-89 31 -4.2995.63% $ 533
Nov-89 30 0.08100.00 $ 531
Dec-89 31 -0.2799.64% $ 527
Jan-90 31 -2.2197.71% $ 512
Feb-90 28 -1.5498.38% $ 502
Mar-90 31 -1.0698.86% $ 494
Apr-90 30 0.3100.22 $ 493
May-90 31 2.05101.96 $ 501
Jun-90 30 1.58101.50 $ 507
Jul-90 31 1.54101.45 $ 512
Aug-90 31 -1.6798.25% $ 501
Sep-90 30 -2.3797.55% $ 486
Oct-90 31 -2.4397.49% $ 472
Nov-90 30 2.35102.27 $ 481
Dec-90 31 1.4101.31 $ 485
Jan-91 31 2.12102.03 $ 493
Feb-91 28 5.54105.46 $ 518
Mar-91 31 3.54103.45 $ 534
Apr-91 30 3.55103.46 $ 550
May-91 31 1.47101.38 $ 555
Jun-91 30 2.17102.09 $ 565
Jul-91 31 3.78103.69 $ 583
Aug-91 31 1.37101.28 $ 588
Sep-91 30 2.24102.16 $ 598
Oct-91 31 3.4103.31 $ 616
Nov-91 30 0.85100.77 $ 618
Dec-91 31 0.53100.44 $ 618
Jan-92 31 5.34105.25 $ 648
Feb-92 29 3.63103.55 $ 668
Mar-92 31 3.23103.14 $ 686
Apr-92 30 0.71100.63 $ 688
May-92 31 1.2101.11 $ 693
Jun-92 30 1.09101.01 $ 697
Jul-92 31 1.96101.87 $ 707
Aug-92 31 2.12102.03 $ 718
Sep-92 30 1.04100.96 $ 722
Oct-92 31 -1.4998.43% $ 708
Nov-92 30 1.23101.15 $ 713
Dec-92 31 1.03100.94 $ 717
Jan-93 31 2.68102.59 $ 733
Feb-93 28 1.71101.63 $ 742
Mar-93 31 2.31102.22 $ 755
Apr-93 30 0.66100.58 $ 756
May-93 31 1.49101.40 $ 764
Jun-93 30 2.58102.50 $ 780
Jul-93 31 0.99100.90 $ 784
Aug-93 31 1.07100.98 $ 788
Sep-93 30 0.35100.27 $ 787
Oct-93 31 2.36102.27 $ 802
Nov-93 30 0.94100.86 $ 805
Dec-93 31 1.61101.52 $ 814
Jan-94 31 3.34103.25 $ 837
Feb-94 28 -0.1299.80% $ 832
Mar-94 31 -3.3796.55% $ 800
Apr-94 30 -1.0198.91% $ 788
May-94 31 0.19100.10 $ 786
Jun-94 30 -0.3799.55% $ 779
Jul-94 31 0.37100.28 $ 778
Aug-94 31 099.91% $ 774
Sep-94 30 0.74100.66 $ 776
Oct-94 31 -0.9299.00% $ 765
Nov-94 30 -0.8399.09% $ 755
Dec-94 31 0.56100.47 $ 756
Jan-95 31 1.12101.03 $ 760
Feb-95 28 3.43103.35 $ 783
Mar-95 31 1.25101.16 $ 789
Apr-95 30 2.93102.85 $ 808
May-95 31 2.57102.48 $ 825
Jun-95 30 0.27100.19 $ 823
Jul-95 31 2.41102.32 $ 838
Aug-95 31 0.79100.70 $ 841
Sep-95 30 1.65101.57 $ 851
Oct-95 31 0.94100.85 $ 854
Nov-95 30 0.51100.43 $ 855
Dec-95 31 1.18101.09 $ 860
Jan-96 31 2.32102.23 $ 876
Feb-96 29 1.65101.57 $ 886
Mar-96 31 -0.2699.65% $ 880
Apr-96 30 1.49101.41 $ 888
May-96 31 1.38101.29 $ 896
Jun-96 30 0.51100.43 $ 896
Jul-96 31 -0.3499.57% $ 889
Aug-96 31 1.45101.36 $ 897
Sep-96 30 2.94102.86 $ 919
Oct-96 31 -0.3399.58% $ 912
Nov-96 30 1.06100.98 $ 917
Dec-96 31 1.38101.29 $ 925
Listed in Order Max 925
to match MFPR Min 472
N.FIA
11
EQUITY-INCOME PORTFOLIO of Variable Insurance Products Fund 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. The graph below is
based on a 5% Benchmark Rate of Return and initial monthly annuity
income of $500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayEquity Income
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30
Oct-86 31 $ 500
Nov-86 30 2.1760102.09 $ 508
Dec-86 31 -3.00096.92% $ 491
Jan-87 31 11.477111.38 $ 544
Feb-87 28 2.3276102.25 $ 554
Mar-87 31 2.5387102.45 $566
Apr-87 30 -2.48997.43% $549
May-87 31 0.6161100.53 $550
Jun-87 30 2.0845102.00 $558
Jul-87 31 3.8095103.72 $577
Aug-87 31 2.7522102.66 $590
Sep-87 30 -2.09897.82% $574
Oct-87 31 -19.5180.42% $460
Nov-87 30 -4.47495.45% $437
Dec-87 31 5.1119105.02 $457
Jan-88 31 7.1125107.02 $488
Feb-88 29 4.9554104.87 $509
Mar-88 31 -1.74098.18% $498
Apr-88 30 1.6553101.57 $504
May-88 31 1.3409101.25 $508
Jun-88 30 5.6892105.60 $534
Jul-88 31 -0.18199.73% $531
Aug-88 31 -1.72498.19% $519
Sep-88 30 2.9714102.89 $532
Oct-88 31 1.7257101.64 $538
Nov-88 30 -1.60798.31% $527
Dec-88 31 0.9128100.83 $529
Jan-89 31 6.1762106.09 $559
Feb-89 28 -0.51399.41% $554
Mar-89 31 2.1660102.08 $563
Apr-89 30 3.8593103.77 $582
May-89 31 2.9727102.88 $596
Jun-89 30 0.068599.99% $594
Jul-89 31 5.8299105.74 $625
Aug-89 31 1.6067101.52 $632
Sep-89 30 -1.12498.79% $622
Oct-89 31 -5.76994.15% $583
Nov-89 30 0.5714100.49 $584
Dec-89 31 0.8345100.75 $585
Jan-90 31 -6.75393.17% $543
Feb-90 28 0.5926100.52 $544
Mar-90 31 0.1648100.08 $542
Apr-90 30 -3.46796.45% $521
May-90 31 6.6162106.53 $552
Jun-90 30 -0.99598.92% $544
Jul-90 31 -2.44597.47% $528
Aug-90 31 -7.98591.94% $484
Sep-90 30 -7.75792.17% $444
Oct-90 31 -2.54997.37% $431
Nov-90 30 7.1672107.08 $459
Dec-90 31 2.3267102.24 $468
Jan-91 31 5.3627105.27 $490
Feb-91 28 6.8862106.80 $522
Mar-91 31 2.0743101.99 $530
Apr-91 30 0.4672100.38 $530
May-91 31 5.4883105.40 $556
Jun-91 30 -4.08895.83% $531
Jul-91 31 5.6691105.58 $558
Aug-91 31 2.1108102.02 $567
Sep-91 30 -0.68699.23% $560
Oct-91 31 1.6652101.58 $567
Nov-91 30 -4.31095.61% $540
Dec-91 31 7.9025107.81 $579
Jan-92 31 1.3502101.26 $584
Feb-92 29 3.2472103.16 $601
Mar-92 31 -1.22598.69% $590
Apr-92 30 3.1327103.05 $606
May-92 31 0.7993100.71 $608
Jun-92 30 -0.87599.04% $599
Jul-92 31 3.0645102.98 $615
Aug-92 31 -2.19097.73% $598
Sep-92 30 1.0381100.95 $601
Oct-92 31 1.2101.11 $606
Nov-92 30 3.63103.54 $625
Dec-92 31 2.82102.73 $639
Jan-93 31 2.99102.90 $655
Feb-93 28 2.25102.17 $667
Mar-93 31 2.98102.89 $683
Apr-93 30 -0.4299.50% $677
May-93 31 1.81101.72 $686
Jun-93 30 1.18101.10 $690
Jul-93 31 1.36101.27 $696
Aug-93 31 3.83103.74 $719
Sep-93 30 -0.3899.54% $713
Oct-93 31 0.91100.82 $716
Nov-93 30 -1.7598.17% $700
Dec-93 31 2.31102.22 $713
Jan-94 31 4.4104.31 $740
Feb-94 28 -2.5897.34% $718
Mar-94 31 -4.1895.74% $685
Apr-94 30 3.45103.36 $705
May-94 31 0.95100.86 $708
Jun-94 30 -0.6299.30% $700
Jul-94 31 3.34103.25 $720
Aug-94 31 5.15105.06 $753
Sep-94 30 -1.6498.28% $737
Oct-94 31 2.05101.96 $749
Nov-94 30 -3.2796.65% $721
Dec-94 31 0.33100.24 $720
Jan-95 31 1.56101.47 $727
Feb-95 28 3.81103.73 $751
Mar-95 31 3.45103.36 $773
Apr-95 30 2.78102.70 $791
May-95 31 3.01102.92 $811
Jun-95 30 1.44101.36 $819
Jul-95 31 3.85103.76 $846
Aug-95 31 1.25101.16 $852
Sep-95 30 3.32103.23 $876
Oct-95 31 -1.1598.77% $862
Nov-95 30 4.32104.23 $895
Dec-95 31 2.93102.84 $916
Jan-96 31 2.91102.82 $938
Feb-96 29 0.34100.26 $937
Mar-96 31 1.05100.96 $942
Apr-96 30 1.3101.22 $950
May-96 31 1.08100.99 $955
Jun-96 30 -0.9299.00% $942
Jul-96 31 -4.8895.04% $892
Aug-96 31 2.05101.96 $905
Sep-96 30 4.28104.19 $939
Oct-96 31 1.62101.53 $950
Nov-96 30 6.69106.60$1,009
Dec-96 31 -1.6498.28% $987
Listed in Order Max 1,009
to match MFPR Min 431
12
N.FIA
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 portfolio may not always hold all
of the same securities as the S&P 500. The Adviser may choose, if
extraordinary circumstances warrant, to exclude an index stock from
the fund and substitute a similar stock if doing so will help the fund
achieve its objective. 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. The Fund is managed by
FMR, which handles its business affairs. Bankers Trust Company, (BT),
Index 500 Portfolio's sub-adviser, chooses the fund's investments. FMR
supervises the sub-adviser and, in conjunction with the Board of
Trustees, reviews the sub-adviser's performance of its duties. BT also
acts as Index 500 Portfolio's custodian. The graph below is based on a
5% benchmark Rate of Return and initial annuity income of $500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayIndex 500
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30
Oct-86 31
Nov-86 30
Dec-86 31
Jan-87 31
Feb-87 28
Mar-87 31
Apr-87 30
May-87 31
Jun-87 30
Jul-87 31
Aug-87 31
Sep-87 30
Oct-87 31
Nov-87 30
Dec-87 31
Jan-88 31
Feb-88 29
Mar-88 31
Apr-88 30
May-88 31
Jun-88 30
Jul-88 31
Aug-88 31
Sep-88 30
Oct-88 31
Nov-88 30
Dec-88 31
Jan-89 31
Feb-89 28
Mar-89 31
Apr-89 30
May-89 31
Jun-89 30
Jul-89 31
Aug-89 31
Sep-89 30
Oct-89 31
Nov-89 30
Dec-89 31
Jan-90 31
Feb-90 28
Mar-90 31
Apr-90 30
May-90 31
Jun-90 30
Jul-90 31
Aug-90 31
Sep-90 30
Oct-90 31
Nov-90 30
Dec-90 31
Jan-91 31
Feb-91 28
Mar-91 31
Apr-91 30
May-91 31
Jun-91 30
Jul-91 31
Aug-91 31
Sep-91 30
Oct-91 31
Nov-91 30
Dec-91 31
Jan-92 31
Feb-92 29
Mar-92 31
Apr-92 30
May-92 31
Jun-92 30
Jul-92 31
Aug-92 31
Sep-92 30 1.16 $500
Oct-92 31 0.22100.13 $499
Nov-92 30 3.41103.32 $513
Dec-92 31 1.26101.17 $517
Jan-93 31 0.64100.55 $518
Feb-93 28 1.32101.24 $522
Mar-93 31 2.2102.11 $531
Apr-93 30 -2.5597.37% $515
May-93 31 2.6102.51 $526
Jun-93 30 0.26100.18 $525
Jul-93 31 -0.4699.46% $520
Aug-93 31 3.79103.70 $537
Sep-93 30 -0.8199.11% $530
Oct-93 31 2.04101.95 $538
Nov-93 30 -0.9798.95% $530
Dec-93 31 1.2101.11 $534
Jan-94 31 3.37103.28 $549
Feb-94 28 -2.7197.22% $532
Mar-94 31 -4.3495.58% $506
Apr-94 30 1.2101.12 $510
May-94 31 1.55101.46 $515
Jun-94 30 -2.4497.48% $500
Jul-94 31 3.3103.21 $514
Aug-94 31 3.99103.90 $532
Sep-94 30 -2.4397.49% $516
Oct-94 31 2.22102.13 $525
Nov-94 30 -3.6396.29% $504
Dec-94 31 1.46101.37 $508
Jan-95 31 2.65102.56 $519
Feb-95 28 3.83103.75 $537
Mar-95 31 2.92102.83 $550
Apr-95 30 2.94102.86 $563
May-95 31 3.93103.84 $582
Jun-95 30 2.27102.19 $593
Jul-95 31 3.34103.25 $609
Aug-95 31 0.25100.16 $608
Sep-95 30 4.18104.09 $630
Oct-95 31 -0.3499.57% $625
Nov-95 30 4.35104.26 $649
Dec-95 31 1.83101.74 $658
Jan-96 31 3.42103.33 $677
Feb-96 29 0.93100.85 $680
Mar-96 31 1.03100.94 $683
Apr-96 30 1.4101.32 $690
May-96 31 2.55102.46 $704
Jun-96 30 0.43100.35 $703
Jul-96 31 -4.4395.49% $669
Aug-96 31 2.06101.97 $679
Sep-96 30 5.59105.50 $714
Oct-96 31 2.76102.67 $730
Nov-96 30 7.5107.41 $781
Dec-96 31 -1.9797.95% $761
Listed in Order Max 781
to match MFPR Min 499
N.FIA
13
GROWTH PORTFOLIO of Variable Insurance Products Fund 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. The graph below is
based on a 5% Benchmark Rate of Return and initial monthly annuity
income of $500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayGrowth
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30 NEED #S
Oct-86 31 $ 500
Nov-86 30 2.2102.12 $ 509
Dec-86 31 -1.8698.06% $ 497
Jan-87 31 10.67110.58 $547
Feb-87 28 4.95104.87 $571
Mar-87 31 1.63101.54 $578
Apr-87 30 099.92% $575
May-87 31 0.68100.59 $576
Jun-87 30 2.94102.86 $590
Jul-87 31 4103.91 $611
Aug-87 31 2.98102.89 $626
Sep-87 30 -1.1498.78% $616
Oct-87 31 -21.9777.96% $478
Nov-87 30 -7.0292.90% $442
Dec-87 31 10.31110.22 $485
Jan-88 31 2.17102.08 $493
Feb-88 29 8.11108.02 $531
Mar-88 31 -0.8999.03% $524
Apr-88 30 1.26101.18 $528
May-88 31 -0.8999.03% $520
Jun-88 30 5.03104.94 $544
Jul-88 31 -0.5199.41% $538
Aug-88 31 -2.4197.51% $523
Sep-88 30 2.82102.74 $535
Oct-88 31 0.26100.17 $534
Nov-88 30 -0.9498.98% $526
Dec-88 31 1.03100.94 $529
Jan-89 31 7.17107.08 $564
Feb-89 28 -2.0797.85% $550
Mar-89 31 3.02102.93 $564
Apr-89 30 5.29105.20 $591
May-89 31 3.58103.49 $609
Jun-89 30 -1.3298.60% $598
Jul-89 31 8.94108.85 $648
Aug-89 31 1.71101.62 $656
Sep-89 30 0.87100.79 $658
Oct-89 31 -2.897.12% $637
Nov-89 30 1.64101.56 $644
Dec-89 31 2.36102.27 $656
Jan-90 31 -5.894.12% $615
Feb-90 28 0.96100.88 $618
Mar-90 31 1.22101.13 $622
Apr-90 30 -2.9197.01% $601
May-90 31 8.85108.76 $651
Jun-90 30 2.08102.00 $661
Jul-90 31 -1.5898.34% $648
Aug-90 31 -10.389.62% $578
Sep-90 30 -10.2989.64% $516
Oct-90 31 -3.5796.35% $495
Nov-90 30 8.1108.01 $533
Dec-90 31 2.95102.86 $546
Jan-91 31 6.66106.57 $579
Feb-91 28 7.46107.38 $620
Mar-91 31 3.02102.93 $635
Apr-91 30 -0.9398.99% $626
May-91 31 5.91105.82 $660
Jun-91 30 -7.4292.50% $608
Jul-91 31 9.53109.44 $663
Aug-91 31 4.44104.35 $689
Sep-91 30 0.78100.70 $691
Oct-91 31 3.09103.00 $708
Nov-91 30 -5.7194.21% $665
Dec-91 31 13.21113.11 $749
Jan-92 31 6.1106.01 $791
Feb-92 29 2.09102.01 $803
Mar-92 31 -6.1393.79% $750
Apr-92 30 -3.9296.00% $717
May-92 31 -0.8599.07% $708
Jun-92 30 -3.8896.04% $677
Jul-92 31 3.86103.77 $700
Aug-92 31 -2.7597.17% $677
Sep-92 30 1.76101.68 $686
Oct-92 31 3.87103.78 $709
Nov-92 30 6.68106.59 $752
Dec-92 31 3.08102.99 $772
Jan-93 31 1.97101.88 $783
Feb-93 28 -2.0697.86% $763
Mar-93 31 3.99103.90 $790
Apr-93 30 -1.0598.87% $778
May-93 31 7.45107.36 $831
Jun-93 30 1.03100.95 $836
Jul-93 31 -0.2899.63% $830
Aug-93 31 5.02104.93 $867
Sep-93 30 1.86101.78 $879
Oct-93 31 0.96100.87 $883
Nov-93 30 -4.0595.87% $843
Dec-93 31 3.54103.45 $868
Jan-94 31 2.51102.42 $886
Feb-94 28 -1.0398.89% $873
Mar-94 31 -4.5495.38% $829
Apr-94 30 0.62100.54 $830
May-94 31 -2.3297.60% $807
Jun-94 30 -5.0894.84% $762
Jul-94 31 3.47103.38 $785
Aug-94 31 5.67105.58 $825
Sep-94 30 -1.2198.71% $811
Oct-94 31 4.06103.97 $840
Nov-94 30 -3.9995.93% $802
Dec-94 31 2.55102.46 $819
Jan-95 31 -1.8998.03% $799
Feb-95 28 4.14104.06 $828
Mar-95 31 3.63103.54 $854
Apr-95 30 3.37103.28 $879
May-95 31 3.9103.81 $909
Jun-95 30 8.85108.76 $984
Jul-95 31 9.89109.80$1,076
Aug-95 31 1.23101.14$1,084
Sep-95 30 2.59102.51$1,107
Oct-95 31 -1.0298.90%$1,090
Nov-95 30 -0.0799.85%$1,084
Dec-95 31 -3.1296.80%$1,045
Jan-96 31 1.58101.49$1,056
Feb-96 29 3.35103.27$1,086
Mar-96 31 0.39100.30$1,085
Apr-96 30 3.91103.82$1,122
May-96 31 3.13103.04$1,151
Jun-96 30 -1.9697.96%$1,123
Jul-96 31 -7.6592.27%$1,032
Aug-96 31 2.99102.90$1,058
Sep-96 30 6.72106.63$1,124
Oct-96 31 -0.2399.68%$1,115
Nov-96 30 5.55105.46$1,172
Dec-96 31 -3.0896.84%$1,130
Listed in Order Max 1,172
to match MFPR Min 442
14
N.FIA
OVERSEAS PORTFOLIO of Variable Insurance Products Fund 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. The graph below is based on a 5% Benchmark
Rate of Return and initial monthly annuity income of $500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayOverseas
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30
Oct-86 31
Nov-86 30
Dec-86 31
Jan-87 31 $ 500
Feb-87 28 0.1100.02 $ 498
Mar-87 31 4.4955104.41 $518
Apr-87 30 7.2657107.18 $553
May-87 31 -1.42698.49% $542
Jun-87 30 -4.88295.04% $513
Jul-87 31 -1.14098.77% $505
Aug-87 31 8.8461108.75 $547
Sep-87 30 -2.20897.71% $532
Oct-87 31 -20.8679.07% $419
Nov-87 30 0.9132100.83 $421
Dec-87 31 7.0380106.95 $448
Jan-88 31 -3.42296.50% $431
Feb-88 29 2.6578102.58 $440
Mar-88 31 4.5307104.44 $458
Apr-88 30 1.6511101.57 $463
May-88 31 -1.82798.09% $452
Jun-88 30 -1.75898.16% $442
Jul-88 31 -0.73699.18% $437
Aug-88 31 -3.49996.42% $419
Sep-88 30 4.2857104.20 $435
Oct-88 31 4.4257104.34 $452
Nov-88 30 1.8163101.73 $458
Dec-88 31 0.1982100.11 $457
Jan-89 31 2.9673102.88 $468
Feb-89 28 1.7291101.65 $474
Mar-89 31 -0.09099.82% $471
Apr-89 30 2.9523102.87 $483
May-89 31 -3.70096.22% $463
Jun-89 30 -0.38499.53% $459
Jul-89 31 9.3539109.26 $499
Aug-89 31 -0.70599.21% $493
Sep-89 30 6.2166106.13 $521
Oct-89 31 -5.43494.48% $490
Nov-89 30 5.3934105.31 $514
Dec-89 31 6.2919106.20 $544
Jan-90 31 -1.34198.57% $534
Feb-90 28 -2.33497.59% $519
Mar-90 31 3.7797103.69 $536
Apr-90 30 0.5542100.47 $537
May-90 31 6.5354106.44 $569
Jun-90 30 2.2172102.13 $579
Jul-90 31 5.0614104.97 $605
Aug-90 31 -10.1889.74% $541
Sep-90 30 -9.50190.42% $487
Oct-90 31 9.3141109.22 $530
Nov-90 30 -3.09896.82% $511
Dec-90 31 -0.71999.20% $504
Jan-91 31 0.9661100.88 $507
Feb-91 28 3.3689103.29 $522
Mar-91 31 -2.92496.99% $504
Apr-91 30 2.1986102.11 $512
May-91 31 0.2390100.15 $511
Jun-91 30 -5.48494.44% $481
Jul-91 31 4.9621104.87 $502
Aug-91 31 0.3205100.23 $501
Sep-91 30 4.0734103.99 $519
Oct-91 31 0.6907100.60 $520
Nov-91 30 -3.58296.34% $499
Dec-91 31 3.4782103.39 $514
Jan-92 31 1.2223101.14 $517
Feb-92 29 -2.08397.84% $504
Mar-92 31 -2.03197.89% $492
Apr-92 30 6.2200106.13 $520
May-92 31 4.3543104.27 $539
Jun-92 30 -1.87098.05% $527
Jul-92 31 -6.37893.54% $491
Aug-92 31 -0.86199.05% $484
Sep-92 30 -4.02895.89% $ 462
Oct-92 31 -6.8393.09% $ 429
Nov-92 30 -0.5399.39% $ 424
Dec-92 31 2.49102.40 $ 433
Jan-93 31 2.86102.77 $ 443
Feb-93 28 1.96101.88 $ 450
Mar-93 31 6.94106.85 $ 478
Apr-93 30 6.65106.56 $ 508
May-93 31 2.15102.06 $ 516
Jun-93 30 -2.4797.45% $ 501
Jul-93 31 3.95103.86 $ 518
Aug-93 31 5.44105.35 $ 543
Sep-93 30 -0.4899.44% $ 538
Oct-93 31 3.62103.53 $ 555
Nov-93 30 -4.2295.70% $ 529
Dec-93 31 6.61106.52 $ 561
Jan-94 31 6.52106.43 $ 595
Feb-94 28 -1.7698.16% $ 582
Mar-94 31 -2.4897.44% $ 564
Apr-94 30 3.31103.22 $ 580
May-94 31 -1.2398.69% $ 570
Jun-94 30 -1.0698.86% $ 562
Jul-94 31 2.65102.56 $ 574
Aug-94 31 1.17101.08 $ 577
Sep-94 30 -2.6197.31% $ 560
Oct-94 31 2.06101.97 $ 568
Nov-94 30 -3.7996.13% $ 544
Dec-94 31 -0.5799.35% $ 538
Jan-95 31 -4.1595.77% $ 513
Feb-95 28 0.26100.18 $ 512
Mar-95 31 3.08102.99 $ 526
Apr-95 30 2.86102.78 $ 538
May-95 31 1.39101.30 $ 543
Jun-95 30 0.81100.73 $ 544
Jul-95 31 4.44104.35 $ 566
Aug-95 31 -2.7897.14% $ 547
Sep-95 30 1.46101.38 $ 553
Oct-95 31 -1.9897.94% $ 539
Nov-95 30 1.16101.08 $ 543
Dec-95 31 2.96102.87 $ 556
Jan-96 31 1.88101.79 $ 564
Feb-96 29 0.22100.14 $ 562
Mar-96 31 1.53101.44 $ 568
Apr-96 30 2.78102.70 $ 581
May-96 31 0.0699.97% $ 578
Jun-96 30 0.73100.65 $ 580
Jul-96 31 -2.9696.96% $ 560
Aug-96 31 0.75100.66 $ 561
Sep-96 30 2.92102.84 $ 575
Oct-96 31 -198.92% $ 566
Nov-96 30 5.22105.13 $ 593
Dec-96 31 0.53100.44 $ 593
Listed in Order Max 605
to match MFPR Min 419
15
N.FIA
ASSET MANAGER: GROWTH PORTFOLIO of Variable Insurance Products Fund II
seeks to maximize total return by allocating its assets among a 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 the
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. The graph below is based on a 5%
Benchmark Rate of Return and initial monthly annuity income of
$500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayAsset Manager:Growth
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30
Oct-86 31
Nov-86 30
Dec-86 31
Jan-87 31
Feb-87 28
Mar-87 31
Apr-87 30
May-87 31
Jun-87 30
Jul-87 31
Aug-87 31
Sep-87 30
Oct-87 31
Nov-87 30
Dec-87 31
Jan-88 31
Feb-88 29
Mar-88 31
Apr-88 30
May-88 31
Jun-88 30
Jul-88 31
Aug-88 31
Sep-88 30
Oct-88 31
Nov-88 30
Dec-88 31
Jan-89 31
Feb-89 28
Mar-89 31
Apr-89 30
May-89 31
Jun-89 30
Jul-89 31
Aug-89 31
Sep-89 30
Oct-89 31
Nov-89 30
Dec-89 31
Jan-90 31
Feb-90 28
Mar-90 31
Apr-90 30
May-90 31
Jun-90 30
Jul-90 31
Aug-90 31
Sep-90 30
Oct-90 31
Nov-90 30
Dec-90 31
Jan-91 31
Feb-91 28
Mar-91 31
Apr-91 30
May-91 31
Jun-91 30
Jul-91 31
Aug-91 31
Sep-91 30
Oct-91 31
Nov-91 30
Dec-91 31
Jan-92 31
Feb-92 29
Mar-92 31
Apr-92 30
May-92 31
Jun-92 30
Jul-92 31
Aug-92 31
Sep-92 30
Oct-92 31
Nov-92 30
Dec-92 31
Jan-93 31
Feb-93 28
Mar-93 31
Apr-93 30
May-93 31
Jun-93 30
Jul-93 31
Aug-93 31
Sep-93 30
Oct-93 31
Nov-93 30
Dec-93 31
Jan-94 31
Feb-94 28
Mar-94 31
Apr-94 30
May-94 31
Jun-94 30
Jul-94 31
Aug-94 31
Sep-94 30
Oct-94 31
Nov-94 30
Dec-94 31
Jan-95 31 $500
Feb-95 28 1.5101.42 $505
Mar-95 31 1.38101.29 $510
Apr-95 30 2.62102.54 $520
May-95 31 1.42101.33 $525
Jun-95 30 4.01103.92 $544
Jul-95 31 3.67103.58 $561
Aug-95 31 4.49104.40 $583
Sep-95 30 1.49101.41 $589
Oct-95 31 -3.8396.09% $564
Nov-95 30 1.78101.70 $571
Dec-95 31 2.52102.43 $582
Jan-96 31 2.38102.29 $593
Feb-96 29 0.35100.27 $592
Mar-96 31 1.8101.71 $600
Apr-96 30 2.36102.28 $611
May-96 31 1.56101.47 $618
Jun-96 30 0.4100.32 $617
Jul-96 31 -2.597.42% $599
Aug-96 31 0.74100.65 $600
Sep-96 30 4.11104.02 $622
Oct-96 31 2.92102.83 $637
Nov-96 30 6.51106.42 $675
Dec-96 31 -1.998.02% $659
Listed in Order Max 675
to match MFPR Min 500
16
N.FIA
CONTRAFUND PORTFOLIO of Variable Insurance Products Fund II seeks
capital appreciation by investing primarily in equity securities of
companies that are considered to be undervalued or out-of-favor by the
Fund's Adv iser. The Fund normally invests primarily in common
stocks and securities convertible into common stocks, but it has the
flexibility to invest in other types of securities. 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. The graph below is based on a 5%
Benchmark Rate of Return and initial monthly annuity income of
$500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayContrafund
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30
Oct-86 31
Nov-86 30
Dec-86 31
Jan-87 31
Feb-87 28
Mar-87 31
Apr-87 30
May-87 31
Jun-87 30
Jul-87 31
Aug-87 31
Sep-87 30
Oct-87 31
Nov-87 30
Dec-87 31
Jan-88 31
Feb-88 29
Mar-88 31
Apr-88 30
May-88 31
Jun-88 30
Jul-88 31
Aug-88 31
Sep-88 30
Oct-88 31
Nov-88 30
Dec-88 31
Jan-89 31
Feb-89 28
Mar-89 31
Apr-89 30
May-89 31
Jun-89 30
Jul-89 31
Aug-89 31
Sep-89 30
Oct-89 31
Nov-89 30
Dec-89 31
Jan-90 31
Feb-90 28
Mar-90 31
Apr-90 30
May-90 31
Jun-90 30
Jul-90 31
Aug-90 31
Sep-90 30
Oct-90 31
Nov-90 30
Dec-90 31
Jan-91 31
Feb-91 28
Mar-91 31
Apr-91 30
May-91 31
Jun-91 30
Jul-91 31
Aug-91 31
Sep-91 30
Oct-91 31
Nov-91 30
Dec-91 31
Jan-92 31
Feb-92 29
Mar-92 31
Apr-92 30
May-92 31
Jun-92 30
Jul-92 31
Aug-92 31
Sep-92 30
Oct-92 31
Nov-92 30
Dec-92 31
Jan-93 31
Feb-93 28
Mar-93 31
Apr-93 30
May-93 31
Jun-93 30
Jul-93 31
Aug-93 31
Sep-93 30
Oct-93 31
Nov-93 30
Dec-93 31
Jan-94 31
Feb-94 28
Mar-94 31
Apr-94 30
May-94 31
Jun-94 30
Jul-94 31
Aug-94 31
Sep-94 30
Oct-94 31
Nov-94 30
Dec-94 31
Jan-95 31 $500
Feb-95 28 5.07104.99 $523
Mar-95 31 5.01104.92 $546
Apr-95 30 5.42105.33 $573
May-95 31 2.18102.09 $583
Jun-95 30 6.56106.47 $618
Jul-95 31 7.85107.76 $663
Aug-95 31 1.26101.17 $668
Sep-95 30 2.2102.12 $680
Oct-95 31 -2.0897.84% $662
Nov-95 30 1.83101.75 $671
Dec-95 31 0.44100.35 $671
Jan-96 31 0.73100.64 $672
Feb-96 29 0.36100.28 $672
Mar-96 31 3.26103.17 $690
Apr-96 30 3.3103.21 $709
May-96 31 1.15101.06 $714
Jun-96 30 -0.8199.11% $705
Jul-96 31 -4.6795.25% $668
Aug-96 31 3.83103.74 $691
Sep-96 30 4.24104.15 $716
Oct-96 31 3.08102.99 $735
Nov-96 30 5.98105.89 $775
Dec-96 31 -0.699.32% $766
Listed in Order Max 775
to match MFPR Min 500
17
N.FIA
GROWTH OPPORTUNITIES PORTFOLIO of Variable Insurance
Products Fund III 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 stocks 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. The graph below is based on a 5% Benchmark Rate of
Return and initial monthly annuity income of $500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayGrowth Opportunities
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30
Oct-86 31
Nov-86 30
Dec-86 31
Jan-87 31
Feb-87 28
Mar-87 31
Apr-87 30
May-87 31
Jun-87 30
Jul-87 31
Aug-87 31
Sep-87 30
Oct-87 31
Nov-87 30
Dec-87 31
Jan-88 31
Feb-88 29
Mar-88 31
Apr-88 30
May-88 31
Jun-88 30
Jul-88 31
Aug-88 31
Sep-88 30
Oct-88 31
Nov-88 30
Dec-88 31
Jan-89 31
Feb-89 28
Mar-89 31
Apr-89 30
May-89 31
Jun-89 30
Jul-89 31
Aug-89 31
Sep-89 30
Oct-89 31
Nov-89 30
Dec-89 31
Jan-90 31
Feb-90 28
Mar-90 31
Apr-90 30
May-90 31
Jun-90 30
Jul-90 31
Aug-90 31
Sep-90 30
Oct-90 31
Nov-90 30
Dec-90 31
Jan-91 31
Feb-91 28
Mar-91 31
Apr-91 30
May-91 31
Jun-91 30
Jul-91 31
Aug-91 31
Sep-91 30
Oct-91 31
Nov-91 30
Dec-91 31
Jan-92 31
Feb-92 29
Mar-92 31
Apr-92 30
May-92 31
Jun-92 30
Jul-92 31
Aug-92 31
Sep-92 30
Oct-92 31
Nov-92 30
Dec-92 31
Jan-93 31
Feb-93 28
Mar-93 31
Apr-93 30
May-93 31
Jun-93 30
Jul-93 31
Aug-93 31
Sep-93 30
Oct-93 31
Nov-93 30
Dec-93 31
Jan-94 31
Feb-94 28
Mar-94 31
Apr-94 30
May-94 31
Jun-94 30
Jul-94 31
Aug-94 31
Sep-94 30
Oct-94 31
Nov-94 30
Dec-94 31
Jan-95 31 $ 500
Feb-95 28 3.08103.00 $ 513
Mar-95 31 1.83101.74 $ 520
Apr-95 30 3.5103.41 $ 535
May-95 31 4.67104.58 $ 558
Jun-95 30 3.06102.97 $ 572
Jul-95 31 3.31103.22 $ 588
Aug-95 31 0.66100.57 $ 589
Sep-95 30 1.71101.63 $ 596
Oct-95 31 0.72100.63 $ 597
Nov-95 30 2.87102.79 $ 612
Dec-95 31 2.57102.48 $ 624
Jan-96 31 1.45101.36 $ 630
Feb-96 29 -0.0799.85% $ 627
Mar-96 31 -0.399.61% $ 622
Apr-96 30 1.6101.52 $ 629
May-96 31 2.24102.15 $ 639
Jun-96 30 0.8100.72 $ 641
Jul-96 31 -2.997.02% $ 620
Aug-96 31 0.6100.51 $ 620
Sep-96 30 4.83104.74 $ 647
Oct-96 31 4.11104.02 $ 670
Nov-96 30 7.56107.47 $ 718
Dec-96 31 -2.5397.39% $ 696
Listed in Order Max 718
to match MFPR Min 500
18
N.FIA
BALANCED PORTFOLIO of Variable Insurance Products Fund III
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. The graph below is based on a 5% benchmark Rate of
Return and initial monthly annuity income of $500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayBalanced
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30
Oct-86 31
Nov-86 30
Dec-86 31
Jan-87 31
Feb-87 28
Mar-87 31
Apr-87 30
May-87 31
Jun-87 30
Jul-87 31
Aug-87 31
Sep-87 30
Oct-87 31
Nov-87 30
Dec-87 31
Jan-88 31
Feb-88 29
Mar-88 31
Apr-88 30
May-88 31
Jun-88 30
Jul-88 31
Aug-88 31
Sep-88 30
Oct-88 31
Nov-88 30
Dec-88 31
Jan-89 31
Feb-89 28
Mar-89 31
Apr-89 30
May-89 31
Jun-89 30
Jul-89 31
Aug-89 31
Sep-89 30
Oct-89 31
Nov-89 30
Dec-89 31
Jan-90 31
Feb-90 28
Mar-90 31
Apr-90 30
May-90 31
Jun-90 30
Jul-90 31
Aug-90 31
Sep-90 30
Oct-90 31
Nov-90 30
Dec-90 31
Jan-91 31
Feb-91 28
Mar-91 31
Apr-91 30
May-91 31
Jun-91 30
Jul-91 31
Aug-91 31
Sep-91 30
Oct-91 31
Nov-91 30
Dec-91 31
Jan-92 31
Feb-92 29
Mar-92 31
Apr-92 30
May-92 31
Jun-92 30
Jul-92 31
Aug-92 31
Sep-92 30
Oct-92 31
Nov-92 30
Dec-92 31
Jan-93 31
Feb-93 28
Mar-93 31
Apr-93 30
May-93 31
Jun-93 30
Jul-93 31
Aug-93 31
Sep-93 30
Oct-93 31
Nov-93 30
Dec-93 31
Jan-94 31
Feb-94 28
Mar-94 31
Apr-94 30
May-94 31
Jun-94 30
Jul-94 31
Aug-94 31
Sep-94 30
Oct-94 31
Nov-94 30
Dec-94 31
Jan-95 31 $ 500
Feb-95 28 2101.92 $ 508
Mar-95 31 0.69100.60 $ 509
Apr-95 30 1.27101.19 $ 513
May-95 31 2.12102.03 $ 521
Jun-95 30 1.23101.15 $ 525
Jul-95 31 1.3101.21 $ 529
Aug-95 31 0.37100.28 $ 528
Sep-95 30 0.92100.84 $ 531
Oct-95 31 -1.1898.74% $ 522
Nov-95 30 2.94102.86 $ 534
Dec-95 31 1.62101.53 $ 540
Jan-96 31 0.72100.63 $ 542
Feb-96 29 -1.3498.58% $ 532
Mar-96 31 -0.8199.11% $ 525
Apr-96 30 0.27100.19 $ 524
May-96 31 1.09101.00 $ 527
Jun-96 30 0.63100.55 $ 528
Jul-96 31 -1.9797.95% $ 515
Aug-96 31 0.64100.55 $ 515
Sep-96 30 4.26104.17 $ 535
Oct-96 31 2.7102.61 $ 546
Nov-96 30 5.25105.16 $ 572
Dec-96 31 -1.6198.31% $ 560
Listed in Order Max 572
to match MFPR Min 500
19
N.FIA
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. The graph below is based on a 5% benchmark
Rate of Return and initial monthly annuity income rate of $500.
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL RETURNS
M&E 0.01
BRR 0.05
Month # of DayGrowth & Income
Apr-82
May-82 31
Jun-82 30
Jul-82 31
Aug-82 31
Sep-82 30
Oct-82 31
Nov-82 30
Dec-82 31
Jan-83 31
Feb-83 28
Mar-83 31
Apr-83 30
May-83 31
Jun-83 30
Jul-83 31
Aug-83 31
Sep-83 30
Oct-83 31
Nov-83 30
Dec-83 31
Jan-84 31
Feb-84 29
Mar-84 31
Apr-84 30
May-84 31
Jun-84 30
Jul-84 31
Aug-84 31
Sep-84 30
Oct-84 31
Nov-84 30
Dec-84 31
Jan-85 31
Feb-85 28
Mar-85 31
Apr-85 30
May-85 31
Jun-85 30
Jul-85 31
Aug-85 31
Sep-85 30
Oct-85 31
Nov-85 30
Dec-85 31
Jan-86 31
Feb-86 28
Mar-86 31
Apr-86 30
May-86 31
Jun-86 30
Jul-86 31
Aug-86 31
Sep-86 30
Oct-86 31
Nov-86 30
Dec-86 31
Jan-87 31
Feb-87 28
Mar-87 31
Apr-87 30
May-87 31
Jun-87 30
Jul-87 31
Aug-87 31
Sep-87 30
Oct-87 31
Nov-87 30
Dec-87 31
Jan-88 31
Feb-88 29
Mar-88 31
Apr-88 30
May-88 31
Jun-88 30
Jul-88 31
Aug-88 31
Sep-88 30
Oct-88 31
Nov-88 30
Dec-88 31
Jan-89 31
Feb-89 28
Mar-89 31
Apr-89 30
May-89 31
Jun-89 30
Jul-89 31
Aug-89 31
Sep-89 30
Oct-89 31
Nov-89 30
Dec-89 31
Jan-90 31
Feb-90 28
Mar-90 31
Apr-90 30
May-90 31
Jun-90 30
Jul-90 31
Aug-90 31
Sep-90 30
Oct-90 31
Nov-90 30
Dec-90 31
Jan-91 31
Feb-91 28
Mar-91 31
Apr-91 30
May-91 31
Jun-91 30
Jul-91 31
Aug-91 31
Sep-91 30
Oct-91 31
Nov-91 30
Dec-91 31
Jan-92 31
Feb-92 29
Mar-92 31
Apr-92 30
May-92 31
Jun-92 30
Jul-92 31
Aug-92 31
Sep-92 30
Oct-92 31
Nov-92 30
Dec-92 31
Jan-93 31
Feb-93 28
Mar-93 31
Apr-93 30
May-93 31
Jun-93 30
Jul-93 31
Aug-93 31
Sep-93 30
Oct-93 31
Nov-93 30
Dec-93 31
Jan-94 31
Feb-94 28
Mar-94 31
Apr-94 30
May-94 31
Jun-94 30
Jul-94 31
Aug-94 31
Sep-94 30
Oct-94 31
Nov-94 30
Dec-94 31
Jan-95 31
Feb-95 28
Mar-95 31
Apr-95 30
May-95 31
Jun-95 30
Jul-95 31
Aug-95 31
Sep-95 30
Oct-95 31
Nov-95 30
Dec-95 31
Jan-96 31
Feb-96 29
Mar-96 31
Apr-96 30
May-96 31
Jun-96 30
Jul-96 31
Aug-96 31
Sep-96 30
Oct-96 31
Nov-96 30
Dec-96 31
Listed in Order Max 0
to match MFPR Min 0
MORGAN STANLEY ASSET MANAGEMENT INC.
EMERGING MARKETS DEBT PORTFOLIO seeks high total return by investing
primarily in Fixed Income Securities of government and
government-related issuers located in emerging market countries, which
securities provide a high level of current income, while at the same
time holding the potential for capital appreciation if the perceived
credit worthiness of the issuer improves due to improving economic,
financial, political, social or other conditions in the country in
which the issuer is located. Under normal market conditions, the
Portfolio will invest a large portion of its total assets in
Government Fixed Income Securities, including Loan Participations and
Assignments between governments and financial institutions, securities
issued by government owned, controlled or sponsored entities and
securities of entities organized to restructure outstanding debt of
such issuers. In selecting Emerging Market Country Fixed Income
Securities for the Portfolio, Morgan Stanley Asset Management Inc.
( " MSAM") will apply a market risk analysi s,
contemplating assessment of factors such as liquidity, volatility, tax
implications, interest rate sensitivity, counterparty risks and
technical market considerations. As opportunities to invest in debt
securities in other countries develop, the Portfolio expects to expand
and further diversify the universe of emerging market countries in
which it invests. The Portfolio maybe appropriate for those who seek a
high level of current income from Emerging Market Country Securities
that are Fixed Income Securities, while holding the potential for
capital appreciation.
EMERGING MARKETS EQUITY PORTFOLIO seeks long-term capital appreciation
by investing primarily in Equity Securities of emerging market country
issuers with a focus on those in which MSAM believes the economies are
developing strongly and in which the markets are becoming more
sophisticated. The Portfolio may be appropriate for those who seek to
achieve long-term capital appreciation by investing in Emerging Market
Country Securities. By including emerging market country investments
in their portfolio, investors can achieve additional diversification
and participate in growth opportunities in emerging market countries.
Under normal market conditions, a large percentage of the total assets
of the Portfolio will be invested in Emerging Market Country Equity
Securities. There are currently over 130 countries which, in the
opinion of MSAM, are generally considered to be emerging or developing
countries by the international financial community, approximately 40
of which currently have stock markets. As marke t s in other
countries develop, the Portfolio expects to expand and further
diversify the emerging market countries in which it invests.
GLOBAL EQUITY PORTFOLIO seeks long-term capital appreciation by
investing primarily in Equity Securities of issuers throughout the
world, including U.S. issuers and issuers in emerging market
countries, using an approach that is oriented to the selection of
individual stocks that MSAM believes are undervalued. The Portfolio
may be appropriate for investors who seek to pursue their investment
goals in markets throughout the world, including the United States. By
including international investments in their portfolio, investors can
achieve additional diversification and participate in growth
opportunities around the world. Under normal circumstances, a
substantial amount of the total assets of the Portfolio will be
invested in Equity Securities, and a lesser percentage of the
Portfolio's assets will be invested in Common Stocks of U.S. issuers
and the remaining equity position will be invested in at least three
countries other than the United States. MSAM's approach is oriented to
individual stock selection and is value driven. In selecting stocks
for the Portfolio, MSAM initially identifies those stocks that it
believes to be undervalued in relation to the issuer ' s assets,
cash flow, earnings and revenues, and then evaluates the future value
of such stocks by running the results of an in-depth study of the
issuer through a dividend discount model. In selecting investments,
MSAM utilizes the research of a number of sources, including Morgan
Stanley Capital International, an affiliate of MSAM located in Geneva,
Switzerland.
INTERNATIONAL MAGNUM PORTFOLIO seeks long-term capital appreciation by
investing primarily in Equity Securities of non U.S. issuers domiciled
in EAFE countries, pursuant to weightings determined by MSAM. The
Portfolio may be appropriate for investors who seek to pursue their
investment goals in markets outside of the United States. By including
international investments in their portfolio, investors can achieve
additional diversification and participate in growth opportunities
around the world. The countries in which the Portfolio will
primarily invest are those comprising the Morgan Stanley Capital
International EAFE Index, which include Australia, Japan, New Zealand,
most nations located in Western Europe and certain developed countries
in Asia, such as Hong Kong and Singapore (each an " EAFE
country", and collectively the " EAFE countries"). The
Portfolio may invest up to 5% of its total assets in the securities of
issuers domiciled in non-EAFE countries. Under normal market
conditions, a large percentage of the total assets of the Portfolio
will be invested in Equity Securities of issuers in at least three
different EAFE countries.
PBHG
SELECT 20 PORTFOLIO seeks long-term growth of capital. The Portfolio
will normally be substantially invested in equity securities
(including ADRs and foreign equity securities). The equity securities
in which the Portfolio will invest are common stocks, warrants and
rights to purchase common stocks, and debt securities and preferred
stocks that are convertible into common stocks. Under normal market
conditions, the Portfolio will invest at least 65%of its total assets
in equity securities of a limited number (i.e., no more than 20
stocks) of large capitalization companies that, in Pilgrim Baxter &
Associates, Ltd.'s (the " Adviser") opinion, have a strong
earnings growth outlook and potential for capital appreciation. Such
large companies have market capitalization in excess of $1 billion.
Because the Portfolio focuses on equity securities of a small number
of companies, the impact of a change in value of a single stock
holding may be magnified.
GROWTH II PORTFOLIO seeks capital appreciation and will normally be as
fully invested as practicable in common stocks and securities
convertible into common stocks. Under normal market conditions, the
Portfolio will invest at least 65%of its total assets in common stocks
and convertible securities of small and medium sized growth companies
(market capitalization or annual revenues up to $4 billion). The
Portfolio will seek to achieve its objective by investing in companies
believed by the Adviser to have an outlook for strong earnings growth
and the potential for significant capital appreciation. Securities
will be sold when the Adviser believes that anticipated appreciation
is no longer probable, alternative investments offer superior
appreciation prospects, or the risk of a decline in market price is
too great. The Portfolio will likely have somewhat greater volatility
than the stock market in general. Because the investment techniques
employed by the Adviser are responsive to near-term earnings trends of
the companies whose securities are owned by the Portfolio, the
p ortfolio turnover can be expected to be fairly high.
LARGE CAP VALUE PORTFOLIO seeks long-term growth of capital and
income. Current income is a secondary objective. Under normal market
conditions, the Portfolio will invest at least 65% of its total assets
in a diversified Portfolio of equity securities of large
capitalization companies which, in the opinion of the Adviser and
Pilgrim Baxter Value Investors, Inc. (the "Sub-Adviser"), are
undervalued or overlooked by the market. In selecting investments for
the Portfolio, the Adviser and Sub-Adviser emphasize fundamental
investment value and consider the following factors, among others, in
identifying and analyzing a security's fundamental value: the
relationship of a company's potential earnings power to its current
stock price; continuing dividend income and the potential for
increasing dividend growth; a strong balance sheet with low financial
leverage; low price/earnings ratio relative to other similar
companies; and potential for favorable business developments.
SMALL CAP VALUE PORTFOLIO seeks to achieve above-average total
return over a market cycle of three to five years, consistent with
reasonable risk, by investing primarily in a diversified Portfolio of
common stocks of small companies with market capitalizations in the
range of companies represented in the Russell 2000 Index which are
considered to be relatively undervalued based on certain proprietary
measures of value. In selecting investments for the Portfolio, the
Adviser and Sub-Adviser emphasize fundamental investment value and
consider the following factors, among others, in identifying and
analyzing a security's fundamental value: the relationship of a
company's potential earnings power to its current stock price; current
dividend income and the potential for current dividends; low
price/earnings ratio relative to other similar companies; strong
competitive advantages, including a recognized brand or trade name or
niche market position; sufficient resources for expansion; capability
of management; and favorable overall business prospects.
TECHNOLOGY & COMMUNICATIONS PORTFOLIO seeks long-term growth of
capital. Current income is incidental to the Portfolio's objective.
Under normal market conditions, the Portfolio will invest at least 65%
of its total assets in common stocks of companies which rely
extensively on technology or communications in their product
development or operations, or which are expected to benefit from
technological advances and improvements, and that may be experiencing
exceptional growth in sales and earnings driven by technology-or
communication-related products and services. Such technology and
communications companies may be in different industries or fields,
including computer software and hardware, electronic components and
systems, network and cable broadcasting, telecommunications, mobile
communications, satellite communications, defense and aerospace,
transportation systems, data storage and retrieval, biotechnology and
medical, and environmental. As a result of this focus, the Portfolio
offers investors the significant growth potential of companies that
may be responsible for breakthrough products or technologies or that
are positioned to take advantage of cutting-edge developments. The
Portfolio's stock holdings can range from small companies developing
new technologies or pursuing scientific breakthroughs to large, blue
chip firms with established track records in developing and marketing
such scientific advances.
STRONG
DISCOVERY FUND II PORTFOLIO seeks capital growth. The Fund invests in
securities that the Adviser believes represent attractive growth
opportunities. The Fund normally emphasizes equity securities,
although it has the flexibility to invest in any type of security that
the Adviser believes has the potential for capital appreciation. The
Fund may invest up to 100% of its total assets in equity securities,
including common stocks, preferred stocks, and securities that are
convertible into common or preferred stocks, such as warrants and
convertible bonds. The Fund may also invest up to 100% of its assets
in debt obligations, including intermediate-to-long term corporate or
U.S. government debt securities. When the Adviser determines that
market conditions warrant a temporary defensive position, the Fund may
invest without limitation in cash and short-term fixed-income
securities. Although the debt obligations in which it invests will be
primarily investment-grade, the Fund may invest up to 5% of its net
assets in non-investment grade debt obligations. The Fund may also
invest up to 25% of its net assets in foreign securities, including
both direct investments and investments made through depository
receipts. The Adviser attempts to identify companies that are poised
for accelerated earnings growth due to innovative products or
services, new management, or favorable economic or market cycles.
These companies may be small, unseasoned firms in early stages of
development, or they may be mature organizations.
GROWTH FUND II PORTFOLIO seeks capital growth. The Fund invests
primarily in equity securities that the Adviser believes have
above-average growth prospects. Under normal market conditions, the
Fund will invest at least 65% of its total assets in equity
securities, including common stocks, preferred stocks, and securities
that are convertible into common or preferred stocks, such as warrants
and convertible bonds. While the emphasis of the Fund is clearly on
equity securities, the Fund may invest a limited portion of its assets
in debt obligations when the Adviser perceives that they are more
attractive than stocks on a long-term basis. The Fund may invest up to
35% of its total assets in debt obligations, including
intermediate-to-long term corporate or U.S. government debt
securities. When the Adviser determines that market conditions warrant
a temporary defensive position, the Fund may invest without limitation
in cash and short-term fixed-income securities. Although the debt
obligations in which it invests will be primarily investment grade,
the Fund may invest up to 5% of its net assets in non-investment grade
debt obligations. The Fund may invest up to 25% of its assets in
foreign securities, including both direct investments and investments
made through depository receipts. The Fund generally will invest in
companies whose earnings are believed to be in a relatively strong
growth trend, and, to a lesser extent, in companies in which
significant further growth is not anticipated but whose market value
is thought to be undervalued. In identifying companies with favorable
growth prospects, the Adviser ordinarily looks to certain other
characteristics, such as prospects for above-average sales and
earnings growth; high return on invested capital; overall financial
strength, including sound financial and accounting policies and a
strong balance sheet; competitive advantages, including innovative
products and service s ; effective research, product development
and marketing; and stable, capable management.
OPPORTUNITY FUND II PORTFOLIO seeks capital growth. The Fund invests
primarily in equity securities and currently emphasizes investments in
medium-sized companies the Adviser believes are
unde r- researched and attractively valued. The Fund will invest
at least 70% of its total assets in equity securities, including
common stocks, preferred stocks, and securities that are convertible
into common or preferred stocks, such as warrants and convertible
bonds. Under normal market conditions, the Fund expects to be fully
invested in equities. The Fund may, however, invest up to 30% of its
net assets in debt obligations, including intermediate-to long-term
corporate or U.S. government debt securities, and when the Adviser
determines that market conditions warrant a temporary defensive
position, it may use that allowance to invest up to 30% of its net
assets in cash and short-term fixed-income securities. Although the
debt obligations in which it invests will be primarily investment
grade, the Fund may invest up to 5% of its net assets in
non-investment grade debt obligations. The Fund may also invest up to
25% of its assets in foreign securities, including both direct
investments and investments made through depository receipts. In
selecting its equity investments, the Adviser seeks to identify
attractive investment opportunities that have not become widely
recognized by other stock analysts or the financial press. Through
first-hand research that often includes on-site visits with the
leaders of companies, the Adviser looks for companies with fundamental
value or growth potential that is not yet reflected in their current
market prices. In many cases, companies in the small- and
medium-capitalization markets are under-followed and, as a result,
less efficiently priced than their larger, better-known counterparts.
The Fund's investments are therefore likely to consist, in part, of
securities in small- and medium-sized companies. Many of these
companies may have successfully emerged from the start-up phase and
have potential for future growth. Because of their longer track
records and more seasoned management, they generally pose less
investment uncertainty than do the smallest companies. In general,
smaller-capitalization companies often involve greater risks than
investments in established companies.
WARBURG PINCUS
INTERNATIONAL EQUITY PORTFOLIO seeks long-term capital appreciation by
investing in equity securities of non-U.S. issuers. The Portfolio
pursues its investment objective by investing primarily in a broadly
diversified portfolio of equity securities of companies, wherever
organized, that in the judgement of the Adviser, have their principal
business activities and interests outside of the United States. The
Portfolio will ordinarily invest substantially all of its assets in
common stocks, warrants and securities convertible into or
exchangeable for common stocks, and will generally invest in at least
three countries other than the United States. The Portfolio intends to
be widely diversified across securities of many corporations located
in a number of foreign countries. The Adviser anticipates, however,
that the Portfolio from time to time may invest a significant
portion of its assets in a single country such as Japan, which may
involve special risks. In appropriate circumstances, such as when a
direct investment by the Portfolio in the securities of a particular
country cannot be made or when the securities of an investment company
are more liquid than the underlying portfolio securities, the
Portfolio may invest in the securities of closed-end investment
companies that invest in foreign securities. The Portfolio intends to
invest principally in the securities of financially strong companies
with opportunities for growth within growing international economies
and markets through increased earning power and improved utilization
or recognition of assets. International investment entails special
risk considerations, including currency fluctuations, lower liquidity,
economic instability, political uncertainty and differences in
accounting methods.
POST-VENTURE CAPITAL PORTFOLIO seeks long-term growth of capital. The
Portfolio pursues an aggressive investment strategy by investing
primarily in equity securities of companies considered by the Adviser
to be in their post-venture capital stage of development. Although the
Portfolio may invest up to 10% of its assets in venture capital and
other investment Funds, the Portfolio is not designed primarily to
provide venture capital financing. Rather, under normal market
conditions, the Portfolio will invest up to at least 65% of its total
assets in equity securities of " post-venture capital
companies." A post-venture capital company is a company that has
received venture capital financing either (a) during the early stages
of the company's existence or the early stages of the development of a
new product or service or (b) as part of a restructuring or
recapitalization of the company. The investment of venture capital
financing, distribution of such company's securities to venture
capital investors, or initial public offering ( " IPO"),
whichever is later, will have been made within ten years prior to the
Portfolio's purchase of the company's securities. The Adviser believes
that venture capital participation in a company's capital structure
can lead to revenue/earnings growth rates above those of older, public
companies such as those in the Dow Jones Industrial Average or the
Fortune 500. Up to 10% of the Portfolio's assets may be invested in
United States or foreign private limited partnerships or other
investment Funds ( " Private Funds") that themselves invest in
equity or debt securities of (a) companies in the venture capital or
post-venture capital stages of development or (b) companies engaged in
special situations or changes in corporate control, including buyouts.
Because of the nature of the Portfolio's investments and certain
strategies it may use, such as investing in Private Funds, an
investment in the Portfolio should be considered only for the
aggressive portion of an investor's portfolio and may not be
appropriate for all investors.
SMALL COMPANY GROWTH PORTFOLIO seeks capital growth by investing
primarily in equity securities of small sized domestic companies that
represent attractive opportunities for capital growth. The
Portfolio considers a "small" company to be one that has a market
capitalization, measured at the time of the Portfolio purchases a
security of that company, within the range of capitalizations of
companies represented in the Russell 2000 Index. (As of January 31,
1998, the Russell 2000 Index included companies with market
capitalizations between $23.7 million and $2.7 billion.) It is
anticipated that the Portfolio will invest primarily in companies
whose securities are traded on domestic stock exchanges or in the
over-the-counter market. Small companies may still be in the
development stage, may be older companies that appear to be entering a
new stage of growth progress owing to factors such as management
changes or development of new technology, products or markets or may
be companies providing products or services with a high unit volume
growth rate. The Portfolio's investments will be made on the basis of
their equity characteristics and securities ratings generally will not
be a factor in the selection process. The Portfolio may also invest in
securities of emerging growth companies, which can be either small- or
medium-sized companies that have passed their start up phase and that
show positive earnings and prospects of achieving significant profit
and gain in a relatively short period of time. Emerging growth
companies generally stand to benefit from new products or services,
technological developments or changes in management and other factors
and include smaller companies experiencing unusual developments
affecting their market value.
Other separate accounts of FILI and separate accounts of other
insurance companies may also purchase shares of the Funds. It is
possible that in the future there may be conflicts between separate
accounts. See RESOLVING MATERIAL CONFLICTS on page .
The investment Adviser for the Fidelity 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 7 , it advised funds
having more than 34 million shareholder accounts with a total
value of more than $ 529 billion. The portfolios of the Fidelity
Funds, as part of their operating expenses, pay an investment
management fee to Fidelity Management & Research Company. These fees
are part of the Funds' expe nses. See the prospectuses for the Funds
for discussions of the Funds' expenses. Fidelity Investments Money
Management, Inc. (FIMM), a subsidiary of FMR, chooses investments for
Money Market Portfolio. Beginning January 1, 1999, FIMM will choose
investments for Investment Grade Bond Portfolio. Beginning January 1,
1999, FIMM will choose certain types of investments for Asset Manager,
Asset Manager: Growth, and Balanced Portfolios. Foreign affiliates of
FMR may help choose investments for some of the Funds. Bankers Trust
Company (BT) is a wholly-owned subsidiary of Bankers Trust New York
Corporation, the seventh largest bank holding company in the United
States. BT currently serves as sub-adviser to Index 500 Portfolio and
manages the Fund's portfolio.
The investment Adviser for the Morgan Stanley Universal Funds, Inc.
is Morgan Stanley Asset Management Inc., which is a wholly-owned
subsidiary of Morgan Stanley Dean Witter, & Co., which is a preeminent
global financial services firm that maintains leading market positions
in each of its three primary businesses - securities, asset management
and credit services. MSAM, a registered Investment Adviser under the
Investment Advisers Act of 1940, as amended, serves as investment
Adviser to numerous open-end and closed-end investment companies, as
well as to employee benefit plans, endowment funds, foundations and
other institutional investors. MSAM's principal business office is
located at 1221 Avenue of the Americas, New York, New York 10020.
The investment Adviser for the PBHG Insurance Series Fund, Inc. is
Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter"), a professional
investment management firm and registered investment Adviser that,
along with its predecessors, has been in business since 1982. The
controlling shareholder of Pilgrim Baxter is United Asset Management
Corporation ("UAM"), a New York stock exchange listed holding company
principally engaged through affiliated firms, in providing
institutional investments management services and acquiring
institutional investment management firms. UAM's headquarters are
located at One International Place, Boston, Massachusetts 02110. The
principal business address of the Adviser is 825 Dupertail Road,
Wayne, Pennsylvania 19087. Pilgrim Baxter Value Investors, Inc., the
Sub-Adviser, is a wholly owned subsidiary of Pilgrim Baxter and is a
registered investment Adviser that was formed in 1940. As with the
Adviser, the controlling shareholder of the Sub-Adviser is UAM. The
principal business address of the Sub-Adviser is 825 Dupertail Road,
Wayne, Pennsylvania 19087.
The investment Adviser for the Strong Funds is Strong Capital
Management, Inc. The Adviser began conducting business in 1974. Since
then, its principal business has been providing continuous investment
supervision for individuals and institutional accounts, such as
pension funds and profit-sharing plans, as well as mutual funds,
several of which are funding vehicles for variable insurance products.
The Advisers principal mailing address is P.O. Box 2936, Milwaukee,
Wisconsin 53201. Mr. Richard S. Strong, the Chairman of the Board of
the Fund, is the controlling shareholder of the Adviser.
The investment Adviser for the Warburg Pincus Funds is Warburg
Pincus Asset Management, Inc . Incorporated in 1970, Warburg
Pincus is indirectly controlled by Warburg, Pincus &
Co.( " WP&Co."), which Warburg G.P has no business other
than being a holding company of Warburg Pincus and its affiliates.
Lionel I. Pincus, the managing partner of WP&Co., may be deemed to
control both WP&Co. and Warburg Pincus. Warburg Pincus' address is 466
Lexington Avenue, New York, New York 10017-3147.
You will find more complete information about the Funds, including the
risks associated with each Portfolio, in their respective
prospectuses. You should read them in conjunction with this
prospectus.
7.FACTS ABOUT THE CONTRACT
PURCHASE OF A CONTRACT
FILI offers the Contracts only in states in which it has obtained
approval. Three types of Contracts are available. You can purchase a
Non-qualified Contract using money from any source. Qualified
Contracts may be purchased with money rolled over from a qualified
retirement plan, such as a 401(k) plan, 403(b) plan or IRA. You may
also arrange with your employer to purchase a Tax-Sheltered Annuity
Contract with money in a tax-sheltered annuity under section 403(b) of
the Code.
The minimum Purchase Payment for a Contract is generally $25,000. You
may purchase a Qualified Contract only with a "rollover" (including a
direct trustee-to-trustee transfer, where permitted) of funds from
another qualified plan, tax-sheltered annuity or IRA.
You must be the Annuitant and the Owner of the Contract. If, in
addition to you, another person is named as an Owner, that person must
be the Joint Annuitant. However, if you purchase the Contract as a
Qualified Contract (IRA) or a Tax-Sheltered Annuity Contract, you must
be the sole Owner of the Contract.
For all Contracts, either you or the Joint Annuitant must generally be
no more than 85 years old. When FILI receives your properly completed
application, your payment is applied to the purchase of a Contract
within two valuation periods after receipt at the Annuity
Service Center. Your application will be considered properly completed
as soon as (1) you have provided all the information requested on the
application form, including your choice of annuity income option, (2)
we have received adequate proof of your date of birth (and the date of
birth of the Joint Annuitant, if any), and (3) the entire amount of
your Purchase Payment has been received.
The date FILI credits the payment and issues your Contract is called
the Contract Date. If your application is incomplete, FILI will
request the information necessary to complete the application. If you
do not furnish the information within five days of the time FILI
receives your application, FILI will return your payment unless it
obtains your specific permission to keep it until you complete the
application.
FREE LOOK PRIVILEGE
You may return a 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 annuity or
life insurance policy with a Contract, FILI will extend the free look
period to 20 days, (or longer where required by applicable state
insurance law). If you choose to cancel the Contract, return it to the
Annuity Service Center with a written request within the free look
period. FILI will promptly refund the greater of (1) your Purchase
Payment (without interest) and (2) the amount of your Purchase Payment
plus the investment performance of the Money Market Investment Option.
FILI will also make an adjustment for the amount of any annuity income
it paid before it received the Contract. This provision may vary by
state where required by applicable state insurance law. ONCE THE FREE
LOOK PERIOD EXPIRES, THE CONTRACT MAY NOT BE RETURNED FOR A REFUND.
For most Contracts (other than replacements and exchanges), we
estimate the free look right to be in existence for 15 days after the
Contract is mailed to you. The Contract value in the Money
Market Subaccount will then be transferred to the Subaccounts you
choose on the application or in any later instructions to us. For
Contracts with large Purchase Payments, we may calculate the exact
date your free look right expires based on the actual date you receive
the Contract.
INVESTMENT ALLOCATION OF YOUR PURCHASE PAYMENT
The portion of your Purchase Payment you allocate to the Investment
Options will be invested in the Money Market Investment Option for the
period FILI estimates or calculates your free look privilege to be in
existence. At the end of the Valuation Period in which your free look
period expires, any amount then in the Money Market Investment Option
will be exchanged for Annuity Income Units in the percentages you have
chosen. You allocate percentages that are whole numbers, not
fractions. Immediately following the reallocations, the total dollar
value of the Annuity Income Units will be the same as the Free Look
Units that were exchanged.
At least 10% of the variable portion of your Purchase Payment must be
allocated to each Investment Option you select.
You may currently transfer amounts among Investment Options as often
as you wish without charge. However, excessive trading activity can
disrupt Portfolio management strategy and increase Portfolio expenses,
which are borne by everyone participating in the Portfolio regardless
of their transfer activity. Therefore, FILI reserves the right to
limit the number of transfers permitted, but not to fewer than six per
calendar year. You tell us the percentage you want for your new
allocation in each Investment Option. Your allocation percentages will
be in whole numbers, not fractions.
You may change the allocations among the Investment Options by writing
or telephoning the Annuity Service Center. FILI and the Funds reserve
the right to change telephone reallocation provisions, or to eliminate
them, and to limit or reject any telephone reallocation at any time.
You may make up to eighteen telephone reallocations per calendar year.
Fidelity Investments Life will not accept exchange requests via fax.
F ILI 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. FILI may
record calls. You should verify the accuracy of your confirmation
statements immediatel y 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 you reallocate among Investment Options, FILI will redeem shares
of the appropriate Portfolios at their prices as of the end of the
current Valuation Period. Generally any Investment Option you transfer
to is credited at the same time. However, we may wait to credit the
amount to a new Investment Option until an Investment Option you
transfer from becomes liquid. This will happen only if (1) the
Investment Option you transfer to invests in a Portfolio that accrues
dividends on a daily basis and requires federal funds before accepting
a purchase order, and (2) the Investment Option you transfer from 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. The Investment Option you
transfer from will be liquid when it receives proceeds from sales of
Portfolio securities, the purchase of new Contracts, or otherwise.
During any period that we wait to credit an Investment Option for this
reason, the amount you transfer will be uninvested. After seven days
the transfer will be made even if the Investment Option you transfer
from is not liquid.
The amount of the allocation in each Investment Option will change
with its investment performance. You should periodically review the
allocations in light of market conditions and financial objectives.
CHARGES
The following are all the charges made under the Contract.
1. PREMIUM TAXES. Some states charge a "premium tax" based on the
amount of your Purchase Payment. State premium taxes range from 0% to
3.5%. In addition, some counties, cities or towns may charge
additional premium taxes. If you reside in a place where premium taxes
apply, any amount needed to provide for the applicable premium taxes
is deducted from your Purchase Payment. The remainder of your Purchase
Payment will be allocated to the Investment Options and/or applied to
the purchase of fixed annuity income.
2. ADMINISTRATIVE CHARGES. Administrative charges compensate FILI for
the expenses incurred in administering the Contracts. These expenses
include the cost of issuing the Contract, making electronic funds
transfers to your bank account or issuing checks, maintaining
necessary systems and records, and providing reports. These expenses
are covered by a daily administrative charge.
Each day, a deduction is made from the assets of the Investment
Options at an effective annual rate of 0.25%. We guarantee this charge
will never increase. This charge does not affect the amount of fixed
annuity income.
3. MORTALITY AND EXPENSE RISK CHARGE. A daily asset charge is deducted
for our assumption of mortality and expense risks. Each day an amount
is deducted from the assets of each Investment Option at an effective
annual rate of 0.75%.
The mortality risk is our obligation to provide annuity income for
your life (and the life of the Joint Annuitant, if any) no matter how
long that might be. The expense risk is our obligation to cover the
cost of issuing and administering the Contracts, no matter how large
that cost may be. FILI 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. This charge does not affect the amount
of fixed annuity income.
4. EXPENSES OF THE FUNDS. The Funds are charged management fees and
incur operating expenses. The effect of these fees and expenses is
reflected in the performance of the Investment Options. See the
prospectuses for the Funds for a description of the Funds' fees and
expenses.
5. OTHER TAXES. FILI reserves the right to charge for certain taxes
(other than premium taxes) that it may have to fund. Currently, no
such charges are being made. See FILI'S TAX STATUS on page .
ANNUITY INCOME DATES
We provide annuity income for each Annuity Income Date. You select the
first Annuity Income Date when you purchase the Contract. The first
Annuity Income Date may be either the first or the fifteenth day of a
month. All subsequent Annuity Income Dates will be on the same day of
the month as the first Annuity Income Date. The first Annuity Income
Date may be up to one year after the Contract Date. The first Annuity
Income Date generally may not be earlier than 30 days after the
Contract Date.
On the application, you choose the frequency of annuity income. You
can choose monthly, quarterly, semi-annual or annual annuity income.
If an Annuity Income Date falls on a day that is not the last day
of a Valuation Period, the amount of annuity income will be determined
based on the value of your selected Investment Options at the close of
the Valuation Period. Annuity income will generally be sent at the end
of the Valuation Period immediately following the day on which the
amount is determined.
SIGNATURE GUARANTEE
A signature guarantee is designed to protect you and Fidelity
Investments Life from fraud. Free look requests must include a
signature guarantee if any of the following situations apply:
1. The requested amount is more than $25,000.
2. 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.
DEATH BENEFIT
If no Annuitant or Joint Annuitant is alive on the first Annuity
Income Date, the Contract will be canceled and we will make a refund
equal to your Purchase Payment to your Beneficiary or Beneficiaries.
If your contract is a joint and survivor annuity and either you or the
Joint Annuitant die before the first Annuity Income Date we will
adjust the annuity income so that it equals what would have been paid
under a single life annuity issued to the survivor. This will usually
result in greater annuity income.
FIXED, VARIABLE OR COMBINATION ANNUITY INCOME
At the time of purchase, you allocate your Purchase Payment between
fixed and variable annuity income. You may choose all fixed annuity
income, all variable annuity income, or a combination of the two. Any
portion of your Purchase Payment allocated to fixed annuity income
will always remain allocated to fixed annuity income. Similarly, any
portion of your Purchase Payment allocated to variable annuity income
will always remain allocated to variable annuity income, but you can
reallocate the variable portion of your Contract among the various
Investment Options after the free look period.
If you allocate all of your Purchase Payment to fixed annuity income,
FILI will guarantee a specific amount of fixed annuity income that
will be the same on each Annuity Income Date, except as described for
Options 3 and 4 under TYPES OF ANNUITY INCOME OPTIONS on page .
If you choose a combination of fixed and variable annuity income, a
portion of your annuity income will be fixed and a portion will vary
according to the investment experience of the Investment Options. We
will guarantee the dollar amount of the fixed annuity income portion
on each Annuity Income Date. Both fixed and variable annuity income
decrease upon the death of the Annuitant or Joint Annuitant as
described for Options 3 and 4 under TYPES OF ANNUITY INCOME OPTIONS on
page .
If you choose all variable annuity income, all of your annuity income
will vary according to the investment experience of the Investment
Options. Variable annuity income may decrease upon the death of the
Annuitant or Joint Annuitant, as described for Options 3 and 4 under
TYPES OF ANNUITY INCOME OPTIONS on page .
Any portion of your Purchase Payment allocated to variable annuity
income will initially purchase Free Look Units. FILI will determine
the number of Free Look Units based upon (a) your age and sex (and the
age and sex of the Joint Annuitant, if any); (b) the type of annuity
income option you choose; (c) the frequency of Annuity Income Dates
you choose; (d) the first Annuity Income Date you choose; (e) the
Benchmark Rate of Return you choose; and (f) the value of the Free
Look Units on the Contract Date. The value of the Free Look Units
reflects the investment performance of the Money Market Investment
Option. On the date the free look period ends, FILI will exchange Free
Look Units for Annuity Income Units in the Investment Options you
select. The total dollar value of the Annuity Income Units will be the
same as the Free Look Units that were exchanged.
The number of Annuity Income Units allocated to each Investment Option
under a single life Contract will not change unless you reallocate
among the Investment Options. If you choose a joint life Contract and
benefits are reduced due to your death or the death of the Joint
Annuitant, the number of Annuity Units will be reduced at that time.
FILI calculates the amount of your variable annuity income based on
the number of Annuity Income Units credited to each Investment Option.
At the close of business on each Annuity Income Date (or on the next
Valuation Date if the Annuity Income Date falls on a non-business
day), the number of Annuity Income Units is multiplied by the value of
the Annuity Income Units for each Investment Option. The amount of
variable annuity income on the Annuity Income Date will be the sum of
annuity income amounts for each Investment Option.
BENCHMARK RATE OF RETURN
When you purchase a Contract, FILI calculates an estimated first
annuity income amount, assuming that the Investment Options will earn
the Benchmark Rate of Return you choose. If the annualized investment
return of the Investment Options is greater than the Benchmark Rate of
Return between the Contract Date and the first Annuity Income Date,
the first annuity income amount will be higher than the estimate. If
it is less, the first annuity income amount will be lower than the
estimate.
Income will increase from one Annuity Income Date to the next if the
annualized Net Rate of Return during that time is greater than the
Benchmark Rate of Return you choose, and will decrease if the
annualized Net Rate of Return is less than the Benchmark Rate of
Return. Choosing a 5.0% Benchmark Rate of Return instead of a 3.5%
Benchmark Rate of Return will result in a higher initial amount of
income, but income will increase more slowly during periods of good
investment performance and decrease more rapidly during periods of
poor investment performance.
The following graph illustrates the effect that your choice of a
Benchmark Rate of Return would have on your annuity income for a
hypothetical Contract. The graph assumes the following: (a) a Purchase
Payment of $100,000; (b) annuity income is entirely variable; (c) the
Contract is a single life Contract providing annuity income for ten
years or the rest of your life, whichever is longer; (d) you are a 65
year old male; and (f) the selected Portfolios earn a constant 10%
gross investment return before fees and expenses (equal to an
8. 07 % Net Rate of Return after fees and expenses). Monthly
income amounts are shown for two Benchmark Rates of Return: 3.5% and
5.0% annually. Notice that with the lower Benchmark Rate of Return
your monthly income starts at a lower level but increases more
rapidly. With the higher Benchmark Rate of Return monthly income
starts at a higher level but increases less rapidly.
Year 3.50% 5.00%
1 $574.87 $660.97
2 $601 $681
3 $628 $702
4 $656 $723
5 $686 $745
6 $717 $767
7 $750 $791
8 $784 $815
9 $819 $839
10 $856 $865
11 $895 $891
12 $935 $918
13 $977 $946
14 $1,022 $974
15 $1,068 $1,004
16 $1,116 $1,034
17 $1,167 $1,066
18 $1,219 $1,098
19 $1,275 $1,131
20 $1,332 $1,165
21 $1,393 $1,201
22 $1,455 $1,237
23 $1,521 $1,275
24 $1,590 $1,313
25 $1,662 $1,353
TYPES OF ANNUITY INCOME OPTIONS
At the time of purchase, you have a choice among a number of annuity
income options. You also choose whether you want a minimum guaranteed
number of years of annuity income. For any income option, you may
choose to receive annuity income monthly, quarterly, semi-annually or
annually. Once you make these choices, they cannot be changed. The
options FILI currently offers are described below. Other annuity
income options may be made available. The federal income tax laws may
limit your annuity income options where the Contract is used as a
Qualified Contract or a Tax-Sheltered Annuity Contract.
1. SINGLE LIFE ANNUITY. We will provide annuity income for your entire
life, no matter how long that may be. Annuity income stops when you
are no longer living. It is possible that your total annuity income
under this option will be less than your Purchase Payment. It is even
possible that you might receive annuity income only once under this
option. This would happen if you were to die before the second Annuity
Income Date. Because of this risk, this option offers you the highest
level of annuity income. The Contract, like many annuities, pools the
mortality experience of all Annuitants and Joint Annuitants. In
effect, Annuitants and Joint Annuitants who live longer are subsidized
by those who do not.
2. JOINT AND SURVIVOR ANNUITY WITH FULL ANNUITY INCOME TO THE
SURVIVOR. Under this option, we will provide annuity income jointly to
you and the Joint Annuitant while you are both living, except that for
a Qualified Contract or Tax-Sheltered Annuity Contract during your
lifetime we provide the income only to you. After the death of either
of you, we will continue to provide the full amount of annuity income
to the survivor. Annuity income stops when both you and the Joint
Annuitant are no longer living. As in the case of the single life
annuity described above, there is the risk that you may receive
annuity income only once.
3. JOINT AND SURVIVOR ANNUITY WITH REDUCED ANNUITY INCOME TO THE
SURVIVOR. This option is like Option 2 above, except that annuity
income is higher while both you and the Joint Annuitant are living,
and lower when only one of you is still living. You indicate on your
application whether annuity income to the survivor is reduced to
two-thirds, or one-half, of the amount that it would have been were
you both still alive.
4. JOINT AND SURVIVOR ANNUITY WITH FULL ANNUITY INCOME TO THE
ANNUITANT IF THE JOINT ANNUITANT DIES, BUT REDUCED ANNUITY INCOME TO
THE JOINT ANNUITANT IF THE ANNUITANT DIES. This option is like Option
3 above, but annuity income is not reduced upon the death of the Joint
Annuitant if the Joint Annuitant is the first to die. In case you are
the first to die, you indicate on your application whether annuity
income to the Joint Annuitant is reduced to two-thirds, or one-half,
of the amount that it would have been were you both still alive. While
you and the Joint Annuitant are both still alive, this option provides
greater annuity income than Option 2 but not as much annuity income as
Option 3.
For Options 2, 3 and 4, if either you or the Joint Annuitant die
before the first Annuity Income Date, we will adjust the annuity
income so that it equals what would have been paid under a single life
annuity issued to the survivor. This will generally result in greater
annuity income.
GUARANTEE PERIOD
On your application, you may choose a guaranteed number of years of
annuity income beginning with the first Annuity Income Date. You may
choose a number of years from five (5) to thirty (30). You may do this
for any annuity income option. If neither you nor the Joint Annuitant
lives to the end of the guarantee period, any remaining annuity income
will go to your Beneficiary or Beneficiaries. For Options 3 and 4
above, if you and the Joint Annuitant die at the same time, the
annuity income due to any Beneficiary will be the same as if you died
before the Joint Annuitant. If you choose to have a guarantee period,
the amount of annuity income on each Annuity Income Date will be lower
than if you had not chosen the guarantee.
If (a) you choose Option 2, 3 or 4 with a guarantee period, (b) an
Owner dies before the first Annuity Income Date, and (c) the survivor
(whether it is you or the Joint Annuitant) is not the deceased Owner's
spouse, we will adjust the guarantee period, as required by the
federal income tax laws, so that it is not longer than the life
expectancy of the survivor. This may result in a shorter guarantee
period and a generally higher amount of annuity income.
If a Beneficiary is entitled to annuity income, the Beneficiary may
choose (a) to continue receiving annuity income on each remaining
Annuity Income Date, or (b) to receive a lump sum instead. The
Beneficiary must notify us within 60 days of the date we receive
notice of the relevant death to elect a lump sum. Otherwise, the
Beneficiary will receive annuity income for the remaining guaranteed
Annuity Income Dates.
A lump sum will become due under a Contract if there are guaranteed
Annuity Income Dates remaining and either: (a) a Beneficiary elects a
lump sum on the death of the last survivor of you and the Joint
Annuitant, (if any); (b) a Beneficiary receiving guaranteed annuity
income dies, or (c) the last survivor of you and the Joint Annuitant
(if any) dies and the Beneficiary is no longer living. For (b) the
lump sum will be paid to the Beneficiary's estate. For (c) it will go
to the estate of the last to die of you and the Joint Annuitant (if
any).
Any lump sum attributable to the fixed annuity portion of a
Contract will generally be the present value of the annuity income for
the remaining guaranteed Annuity Income Dates, discounted at a rate
that is one percent greater than the ten year United States Treasury
Bond rate at the close of the first Valuation Period after the day
FILI receives due proof of the Beneficiary's death or the
Beneficiary's election at the Annuity Service Center.
Any lump sum attributable to the variable annuity income portion of
a Contract will generally be the present value of the
annuity income for the remaining guaranteed Annuity Income Dates,
based on interest compounded annually at the Benchmark Rate of Return
that FILI used in determining the annuity income on the first Annuity
Income Date.
If FILI believes that the first annuity income amount due to any
Beneficiary will be less than $50, FILI may instead provide a lump sum
for the value of all remaining annuity income. The amount of the lump
sum will be determined on the same basis as described above for other
lump sums.
REPORTS
If part or all of your Purchase Payment is allocated to variable
income, we will send you a statement showing the number of Annuity
Income Units in each variable Investment Option, and the value of each
Annuity Income Unit, at least once each calendar quarter, and each
time you transfer Annuity Income Units among the Investment Options.
We will also send you semiannual reports containing financial
statements for the Funds, and a list of portfolio securities of the
Funds, as required by the Investment Company Act of 1940.
8.MORE ABOUT THE CONTRACT
TAX CONSIDERATIONS
TREATMENT OF DISTRIBUTIONS
TAXATION OF DISTRIBUTIONS. The portion of an annuity income
distribution that is includible in ordinary income may vary depending
on the annuity income option selected under the Contract, but
generally is the excess of the distribution over the "exclusion
amount". In the case of a variable annuity income distribution, the
exclusion amount is generally the "investment in the contract"
allocated to the variable annuity income, adjusted for any guaranteed
period, divided by the expected number of periodic annuity income
distributions (determined under Treasury Department regulations). In
the case of fixed annuity income distributions, the exclusion amount
is generally the amount determined by multiplying the distribution by
the ratio (determined under Treasury Department regulations) of (1)
the investment in the contract allocated to the fixed annuity income,
adjusted for any guaranteed period, to (2) the "expected return" under
the fixed annuity income distributions. For Qualified Contracts and
Tax-Sheltered Annuity Contracts, the investment in the contract is
generally zero. When the investment in the contract is zero, annuity
income distributions are fully taxable as ordinary income.
After the dollar amount of the investment in the contract is deemed to
be recovered, the entire amount of each annuity income distribution
will be fully includible in income. On the other hand, should the
annuity income distributions cease before the adjusted investment in
the contract is fully recovered, the person receiving those
distributions at the time of their death will be allowed a deduction
for the unrecovered amount of the adjusted investment in the contract
Where a guaranteed period of annuity income distributions is selected
and no Annuitant or Joint Annuitant lives to the end of that period,
the annuity income distributions made to the Beneficiary for the
remainder of that period are includible in income as follows: (1) if
received in a lump sum, they are included in income to the extent that
they exceed the unrecovered investment in the contract at the time; or
(2) if distributed as annuity income distributions, they are fully
excluded from income until the remaining investment in the contract is
deemed to be recovered, and all annuity income distributions
thereafter are fully includible in income.
PENALTY TAX. Certain distributions under the Contract may be subject
to a penalty tax equal to 10% of the portion of the distribution which
is includible in income. Annuity income distributions under Qualified
Contracts and Tax-Sheltered Annuity Contracts typically will not be
subject to the penalty tax. Also, the penalty tax generally will not
be imposed on distributions under a Non-qualified Contract that are
made (1) on or after the taxpayer attains age 59 1/2; (2) as part of a
series of "substantially equal periodic payments" over the life (or
life expectancy) of the taxpayer or the joint lives (or joint life
expectancies) of the taxpayer and his or her beneficiary; (3) under an
"immediate annuity" (as that term is defined in the tax law); or (4)
in certain other situations. 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. It is unclear at this time whether
annuity distributions under a Non-qualified Contract prior to the
recipient attaining age 59 1/2 satisfy an exception to the penalty
tax. Accordingly, a prospective purchaser of a Non-qualified Contract
who expects to receive distributions prior to attaining age 59 1/2
should consult a qualified tax Adviser regarding the application of
the penalty tax to those distributions.
WITHHOLDING AND REPORTING. FILI will, as required by law, withhold and
remit to the U.S. Government a part of the taxable portion of each
distribution under the Contract, unless a written election not to have
any amounts withheld is filed prior to the distribution. Also, FILI
will report all annuity income distributions made while you are alive
as being distributed in full to you, even if you name a Joint
Annuitant.
QUALIFIED CONTRACTS AND TAX-SHELTERED ANNUITY CONTRACTS
The Contract may be used as an Individual Retirement Annuity under
Section 408(b) of the Internal Revenue Code and as a qualified
tax-sheltered annuity under Section 403(b) of the Code. Section 408(b)
of the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual Retirement
Annuity." Also, Section 403(b) of the Code permits public school
employees and employees of certain types of charitable, educational
and scientific organizations specified in Section 501(c)(3) of the
Code to have their employers purchase tax-sheltered annuities for them
and, subject to certain limitations, to exclude the amount of purchase
payments from gross income for tax purposes. You should seek competent
advice as to the tax consequences associated with the use of a
Contract as a Qualified Contract or Tax-Sheltered Annuity Contract.
Because the Contract's minimum Purchase Payment is greater than the
maximum annual contribution permitted to an Individual Retirement
Annuity or a tax-sheltered annuity, a Qualified Contract and a
Tax-Sheltered Annuity Contract may be purchased only in connection
with a "rollover" (including a direct trustee-to-trustee transfer,
where permitted). Specifically, a Qualified Contract may be purchased
only in connection with a rollover of amounts from a qualified plan,
tax-sheltered annuity, or IRA. Also, a Tax-Sheltered Annuity Contract
may be purchased only in connection with a rollover of amounts from
another tax-sheltered annuity.
If the Contract is used as a Qualified Contract or a Tax-Sheltered
Annuity Contract, you must be the sole Owner of the Contract and the
Annuitant. If you name a Joint Annuitant, all distributions made while
you are alive must be made to you. Also, if you name a Joint Annuitant
who is not your spouse, the annuity income options from which you may
select may be limited, depending on the difference in ages between you
and the Joint Annuitant. Furthermore, if you choose a guaranteed
period, the length of the period may have to be limited in order to
satisfy certain minimum distribution requirements of the Code.
In order to satisfy the requirements in the Code, you generally may
not purchase a Tax-Sheltered Annuity Contract unless you have reached
age 59 1/2, separated from service, or become disabled (within the
meaning of the tax law). Certain payments, known as "eligible rollover
distributions," from a Tax-Sheltered Annuity Contract will be subject
to the new direct rollover and mandatory withholding requirements
enacted by Congress in 1992. Generally, distributions from a
Tax-Sheltered Annuity Contract will not constitute eligible rollover
distributions. However, if an eligible rollover distribution is made
under a Tax-Sheltered Annuity Contract, you will receive prior to the
distribution a notice (from the plan administrator or FILI) explaining
generally the new direct rollover and mandatory withholding
requirements and how to avoid the mandatory withholding thereunder by
electing to have the distribution directly transferred to certain
qualified retirement plans.
TAX DEFERRAL UNTIL DISTRIBUTIONS ARE MADE
Under existing provisions of the Code, any increase in the value of
the Contract is generally not taxable until distributions are made
under one of the Contract's annuity income options. However, as
discussed below, this tax deferral generally applies only if (1) the
Owner is an individual, (2) the investments in the Variable Account
are adequately diversified in accordance with Treasury Department
regulations, (3) FILI, rather than the Owner, is considered the owner
of the assets of the Variable Account for Federal tax purposes, and
(4) certain distribution requirements are met in the event that you
die.
NON-NATURAL OWNER. In certain circumstances, if an Owner were a
"non-natural" person, such as a corporation or a trust, the Contract
would not be treated as an annuity contract for Federal tax purposes,
and the Owner would be taxable currently on the income and gain from
the assets of the Variable Account. Accordingly, the Contract must be
owned by an individual (or individuals), and will not be issued to
"non-natural" persons.
DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an
annuity contract for Federal income tax purposes, the investments of
the Variable Account must be "adequately diversified." The Treasury
Department has issued regulations which prescribe standards for
determining whether the investments of the Variable Account are
"adequately diversified." If the Variable Account failed to comply
with these diversification standards, the Contracts would not be
treated as annuity contracts for Federal income tax purposes, and each
Owner would be taxable currently on the income and gain from the
assets of the Variable Account. Although FILI does not control the
investments of the Funds, FILI has entered into agreements with the
Funds requiring them to operate in compliance with the Treasury
Department regulations so that the Variable Account will be considered
"adequately diversified."
OWNERSHIP TREATMENT. In certain circumstances, variable annuity
contract owners may be considered the owners, for Federal income tax
purposes, of the assets of the separate account used to support their
contracts. In those circumstances, income and gains from the separate
account assets would be includible in the contract owners' gross
income. Several years ago, the Internal Revenue Service (the
"Service") stated in published rulings that a variable contract owner
will be considered the owner of separate account assets if the owner
possesses incidents of ownership in those assets, such as the ability
to exercise investment control over the assets. More recently, the
Treasury Department announced, in connection with the issuance of
regulations concerning investment diversification, that those
regulations "do not provide guidance concerning the circumstances in
which investor control of the investments of a segregated asset
account may cause the investor, rather than the insurance company, to
be treated as the owner of the assets in the account." This
announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may
direct their investments to particular sub-accounts [of a separate
account] without being treated as owners of the underlying assets." As
of the date of this Prospectus, no such guidance has been issued.
The ownership rights under the Contract are similar to, but different
in certain respects from, those described by the Service in rulings in
which it was determined that contract owners were not owners of
separate account assets. For example, the Owner of the Contract has a
choice of more Investment Options to which to allocate the Purchase
Payment, and may be able to transfer among Investment Options more
frequently than in such rulings. These differences could result in the
Owner being treated as the owner of the assets of the Variable
Account, and thus income and gain from such assets would be includible
in the Owner's income annually. In addition, it is not known what
standards will be set forth in the regulations or rulings which the
Treasury Department has stated it expects to issue. The Company
therefore reserves the right to modify the Contract as necessary to
attempt to prevent the Owner from being considered the owner of the
assets of the Variable Account.
DISTRIBUTION REQUIREMENTS. To qualify as an annuity for Federal tax
purposes, the Contract must satisfy certain distribution requirements
in the event of your death. The Contract contains the required
distribution provisions. In certain situations, those provisions may
limit the guaranteed period over which annuity income distributions
can be made (if such a period is selected).
This discussion of the Tax Considerations assumes that the Contract
will be treated as an annuity contact for Federal income tax purposes
and that FILI will be treated as the owner of the Variable Account
assets.
FILI'S TAX STATUS
FILI is taxed as a life insurance company under Subchapter L of the
Code. Since the operations of the Variable Account are part of, and
are taxed with, the operations of FILI, the Variable Account is not
separately taxed as a "regulated investment company" under Subchapter
M of the Code. Under existing Federal income tax laws, investment
income and capital gains of the Variable Account are not taxed to the
extent they are applied to increase reserves under a contract. FILI
does not expect to incur Federal income taxes attributable to the
Variable Account. Based on this, no charge is being made currently to
the Variable Account for Federal income taxes. FILI will periodically
review the need for a charge to the Variable Account for its 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 existing laws, FILI may incur state and local taxes (in addition
to premium taxes) in several states. At present, these taxes (other
than premium taxes) are not significant and are not charged against
the Contracts or the Variable Account. If the amount of these taxes
changes substantially, FILI may make charges for such taxes against
the Variable Account.
GENERAL TAX CONSIDERATIONS
The above discussion is not exhaustive and is not intended as tax
advice. The Federal income tax consequences associated with the
purchase of an immediate annuity, like the Contract, are complex, and
the application of the pertinent tax rules to a particular person may
vary according to facts specific to that person. A qualified tax
Adviser should always be consulted regarding the application of law to
individual circumstances. In particular, if you name a Joint Annuitant
who is not your spouse (or if the Joint Annuitant is your spouse and
you and your spouse do not file joint income tax returns), you should
consult a qualified tax Adviser as to the tax consequences of your
particular arrangement.
This discussion is based on the Code, Treasury Department regulations,
and interpretations existing on the date of this Prospectus. These
authorities, however, are subject to change by Congress, the Treasury
Department, and judicial decisions.
This discussion does not address Federal estate and gift tax
consequences, or state or local tax consequences, associated with the
purchase of a Contract. In addition, Fidelity Investments Life
Insurance Company makes no guarantee regarding any tax treatment
- Federal, state, or local - of any contract or of any
transaction involving a Contract.
9.OTHER CONTRACT PROVISIONS
You should also be aware of the following important provisions of your
Contract.
1. OWNER(S). Before a Contract is issued, the Owner(s) have the right
to (a) name the Joint Annuitant, (if any); (b) allocate the Purchase
Payment between fixed and variable annuity income; (c) choose an
annuity income option; (d) allocate the Purchase Payment among the
Investment Options; (e) choose the Benchmark Rate of Return; (f) name
the Beneficiary or Beneficiaries; and (g) select the first Annuity
Income Date and how often you will receive annuity income.
After a Contract is issued, each Owner named in the application has
the following rights: (a) the right to change any Beneficiary; (b) the
right to cancel the Contract during the free look period; (c) any
right to reallocate among the Investment Options; and (d) the right to
instruct us how to vote shares of an investment portfolio attributable
to the Contract.
A Joint Annuitant who is not an Owner when a Contract is issued will
succeed to the rights in the paragraph above if he or she survives the
Owner. When no Owner or Joint Annuitant is still alive, each
Beneficiary will have (a) the right to reallocate among the Investment
Options, and (b) the right to instruct us how to vote shares of an
investment portfolio attributable to the Contract, with respect to his
or her share of annuity income.
2. ANNUITANT. You have the right to receive annuity income under the
terms of the Contract. You also have rights as an Owner as described
above.
3. JOINT ANNUITANT. For Non-qualified Contracts, the Joint Annuitant,
(if any), has the right to receive annuity income jointly with you
under the terms of the Contract. The Joint Annuitant may also be an
Owner, or succeed to the rights of the Owner(s) as described above.
For Qualified Contracts and Tax-Sheltered Annuity Contracts, (a) all
annuity income during your lifetime must be received only by you, and
(b) the Joint Annuitant may not be an Owner.
4. BENEFICIARY. You may name one or more Beneficiaries when you
complete your application. You may change Beneficiaries later, unless
you have designated an irrevocable Beneficiary, in which case we will
require the consent of the irrevocable Beneficiary in writing. The
Beneficiary (or Beneficiaries) will receive (a) annuity income for the
remainder of any guarantee period after the death(s) of the Annuitant
(and Joint Annuitant if any); and (b) a refund of your Purchase
Payment if you (and the Joint Annuitant, if any) do not live to the
first Annuity Income Date. Surviving Beneficiaries will receive equal
shares unless you specify otherwise. A Beneficiary may be a "Primary
Beneficiary" or a "Contingent Beneficiary". No Contingent Beneficiary
has the right to proceeds unless all of the Primary Beneficiaries die
before proceeds are determined. If a Beneficiary receiving annuity
income dies, we will provide a lump sum to his or her estate. See
TYPES OF ANNUITY INCOME OPTIONS on page .
5. MISSTATEMENT OF DATE OF BIRTH OR SEX. If the date of birth or sex
of you or the Joint Annuitant has been misstated, FILI will change the
benefits to those which the proceeds would have purchased had the
correct date(s) of birth and sex(es) been stated.
If the misstatement is not discovered until after the first Annuity
Income Date, FILI will take the following action: (1) if FILI provided
too much annuity income, FILI will add interest at the rate of 6% per
year compounded annually and withhold annuity income on subsequent
following Annuity Income Date(s) until it has recovered the excess;
(2) if FILI provided too little annuity income, we will make up the
balance plus interest at the rate of 6% per year compounded annually
in a lump sum.
6. ASSIGNMENT. The Contract may not be assigned.
7. DIVIDENDS. The Contract is "non-participating." This means that
there are no dividends. Investment results of the Investment Options
are reflected in benefits.
8. NOTIFICATION OF DEATH. Any Beneficiary claiming an interest in the
Contract must provide us in writing with due proof of your death and
the death of the Joint Annuitant, (if any), at the Annuity Service
Center. We will not be responsible for any annuity income paid to you
or the Joint Annuitant, (if any), before we receive due proof of death
at the Annuity Service Center.
You and the Joint Annuitant are each responsible for notifying FILI of
the death of the other. Each Beneficiary is responsible for notifying
FILI of the death of the last surviving Annuitant or Joint Annuitant.
Upon the death of the last person with the right to receive annuity
income under a Contract, that person's executor is responsible for
notifying FILI. If too much annuity income is provided because FILI is
not notified of a death, FILI may withhold annuity income on
subsequent Annuity Income Dates, or take legal action, until it has
recovered any excess amounts.
SELLING THE CONTRACTS
The Contracts are distributed through Fidelity Brokerage Services,
Inc. and Fidelity Insurance Agency, Inc. Each is a subsidiary of FMR
Corp., the parent company of FILI. 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. Fidelity Insurance
Agency, Inc. receives sales compensation from FILI of not more than
0.10% of the reserves held to support the Contracts. Amounts paid by
FILI to Fidelity Insurance Agency, Inc. will be paid out of the
general assets of FILI, which may include proceeds derived from
mortality and expense risk charges FILI deducts from the Variable
Account.
POSTPONEMENT OF BENEFITS
We will usually send annuity income within seven days of the Annuity
Income Date. We will usually send any lump sum distributions to
Beneficiaries within seven days of the day we receive proper notice.
We will usually send any Death Benefit within seven days after we
receive due proof of your death (for a single life Contract) or the
deaths of you and the Joint Annuitant (for a joint life Contract).
However, we may delay sending these amounts 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 for any other reason.
10.MORE ABOUT THE VARIABLE ACCOUNT AND THE FUNDS
CHANGES IN INVESTMENT OPTIONS
We may from time to time make additional investment options available
to you. These investment options will invest in investment portfolios
that we find suitable for the Contract.
FILI also has the right to eliminate any Investment Option, to combine
two or more Investment Options, or substitute a new portfolio or fund
for the Portfolio in which an Investment Option invests. A
substitution may become necessary if, in FILI's judgment, a Portfolio
or Fund no longer suits the purpose of the Contract. 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. FILI would
obtain prior approval from the SEC and any other required approvals
before making such a substitution.
FILI also reserves 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 AN INVESTMENT OPTION
The Net Rate of Return reflects the investment performance of the
Investment Option, less all expenses and charges, for the Valuation
Period. FILI determines the Net Rate of Return of an Investment Option
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.
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
FILI 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 FILI decides that it is permitted to vote the shares of the Funds
in its own right, it may decide to do so.
FILI calculates the number of shares that you may instruct it to vote
by dividing the reserve maintained in each Investment Option to meet
the obligations under the Contract by the net asset value of one share
of the corresponding Portfolio. Fractional votes will be counted. FILI
reserves the right to modify the manner in which it calculates the
weight to be given to your voting instructions where such a change is
necessary to comply with federal regulations or interpretations of
those regulations.
FILI will determine the number of shares you can instruct it to vote
90 days or less before the applicable Fund shareholder meeting. At
least 14 days before the meeting, we will mail you material for
providing your voting instructions.
If your voting instructions are not received in time, FILI will vote
the shares in the same proportion as the instructions received with
regard to all other contracts issued through the Variable Account.
FILI will also vote shares it holds in the Variable Account that are
not attributable to contracts in the same proportionate manner. Under
certain circumstances, FILI 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, FILI may also disregard instructions to
vote for changes in investment policies or the investment
Adviser if it disapproves of the proposed changes. FILI would
disapprove a proposed change only if it were contrary to state law,
prohibited by state regulatory authorities, or if it decided that the
change would result in overly speculative or unsound investments. If
FILI ever disregards voting instructions, it will include a summary of
its actions in the next semi-annual report.
RESOLVING MATERIAL CONFLICTS
The Fidelity Funds are available to 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 FILI establishes. Other Funds maybe offered to
qualified plans as well.
Although FILI does 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 a Fund. A conflict may occur due to a change in law
affecting the operations of variable life insurance and variable
annuity separate accounts, differences in the voting instructions we
receive and instructions received by other companies, or some other
reason. In the event of a conflict, it is possible that the Variable
Account might be required to withdraw its investment in the Funds. In
the event of any conflict, we will take any steps necessary to protect
Annuitants, Joint Annuitants and Beneficiaries.
PERFORMANCE
Performance information for the Investment Options may appear in
reports and advertising to current and prospective Owners, Annuitants,
Joint Annuitants and Beneficiaries. The performance information is
based on historical investment experience of the Investment Options
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 Portfolio share price, the automatic reinvestment by the
separate account of all distributions and the deduction of applicable
annuity charges.
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 an Investment Option's returns, you should recognize
that they are not the same as actual year-by-year results.
Some Investment Options may also advertise yield. These measures
reflect the income generated by an investment in the Investment Option
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.
The Money Market Investment Option may advertise its current and
effective yield. Current yield reflects the income generated by an
investment in the Investment Option 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, High Income and
Emerging Markets Debt Subaccounts may advertise a 30 day yield which
reflects the income generated by an investment in the Investment
Option over a 30 day period.
LITIGATION
Neither FILI, the Variable Account, nor Fidelity Brokerage Services,
Inc. is a party to any material litigation.
11.APPENDIX - ILLUSTRATIONS OF VALUES
The following tables have been prepared to show how investment
performance affects your variable annuity income over time. In these
illustrations, we assume that you are the person who will receive the
variable annuity income, and that the Contract is a Non-qualified
Contract. The illustrations show variable annuity income amounts and
fixed annuity income amounts.
The variable annuity income amounts reflect three different
assumptions for a constant investment return after all expenses:
- -1. 9 5%, the Benchmark Rate of Return, and 9.82 %. These
are hypothetical rates of return and, of course, FILI does not
guarantee that you will earn these returns for any one year or any
sustained period of time. The tables are for illustrative purposes
only and do not represent past or future investment returns.
Your variable income may be more or less than the income shown if the
actual returns of the Investment Options are different than those
illustrated. Since it is very likely that your investment returns will
fluctuate over time, you can expect that the amount of your annuity
income will also fluctuate. The total amount of annuity income
ultimately received will depend on how long you live and whether you
choose a guarantee period option.
Another factor which determines the amount of variable annuity income
is the Benchmark Rate of Return. You choose the Benchmark Rate of
Return from the options available. Income will increase from one
Annuity Income Date to the next if the annualized Net Rate of Return
during that time is greater than the Benchmark Rate of Return you
choose and will decrease if the annualized Net Rate of Return is less
than the Benchmark Rate of Return.
Two tables follow. The first is based on a 3.5% Benchmark Rate of
Return and the second is based on a 5% Benchmark Rate of Return.
The income amounts shown reflect the deduction of all fees and
expenses. Portfolio management fees and operating expenses are assumed
to be at an annual rate of 0. 9 6% of their average daily net
assets. Actual fees and expenses under the Contract may be higher or
lower, will vary from year to year, and will depend on how you
allocate among the portfolios. The mortality and expense risk and
administration charge are assumed to be at an annual rate of 1% of the
average daily net assets.
Upon request, we will furnish a customized illustration based on your
individual circumstances and choice of annuity options.
12.FIDELITY INCOME ADVANTAGE ILLUSTRATION13.
N.FIA
46
ANNUITANT(S): JOHN DOE ANNUITY PURCHASE AMOUNT: $100,000
SEX: MALE CONTRACT DATE: 3/1/98
DATE OF BIRTH: 1/1/33 FIRST ANNUITY INCOME DATE: 4/1/98
PURCHASE PAYMENT ALLOCATION: 100% VARIABLE 0% FIXED
ANNUITY INCOME OPTION:
SINGLE LIFE ANNUITY FREQUENCY OF ANNUITY INCOME: MONTHLY
PREMIUM TAX FOR __________: 0%
The amount of monthly variable annuity income shown in the table below
and the graph that follows assumes a constant annual investment
return. The amount of variable annuity income you actually receive
will depend on the investment performance of the portfolios you
select. Your variable income can go up or down and no minimum dollar
amount of variable income is guaranteed. The amounts shown are based
on a 3.5% Benchmark Rate of Return.
Annual rate of return after all expenses: (1)
Annuity Income Date Age -1. 9 5% 3.5% 9.82 %
Apr. 1, 199 8 65 $58 7 $59 0 $ 59 3
Apr. 1, 199 9 66 $5 56 $59 0 $ 6 29
Apr. 1, 2000 67 $5 27 $59 0 $ 6 67
Apr. 1, 200 1 68 $ 499 $59 0 $ 7 08
Apr. 1, 200 2 69 $4 73 $59 0 $ 75 1
Apr. 1, 200 7 74 $3 61 $59 0 $1,0 10
Apr. 1, 201 2 79 $2 75 $59 0 $1,3 59
Apr. 1, 201 7 84 $2 10 $59 0 $1,8 28
(1) The corresponding returns before annuity and investment expenses
are: 0%, 5. 56 %, and 1 2 . 00 %
N.FIA
47
IF YOU APPLIED 100% OF YOUR PURCHASE PAYMENT TO FIXED ANNUITY INCOME
ON THE DATE OF THIS ILLUSTRATION, THE AMOUNT OF YOUR FIXED ANNUITY
INCOME WOULD BE $ 650.39.
FIDELITY INCOME ADVANTAGE
ANNUITY INCOME GRAPH
Current Expenses: 0.66%
"Male, Age 65, Life Only" Updated 2/26/97
3.5% Benchmark
First Payment: $591.16
Net Returns
Year -1.65% 3.50% 10.00%
1 $589 $592 $595
2 $560 $592 $632
3 $532 $592 $672
4 $506 $592 $714
5 $481 $592 $759
6 $457 $592 $807
7 $434 $592 $858
8 $412 $592 $911
9 $392 $592 $969
10 $372 $592 "$1,030 "
11 $354 $592 "$1,094 "
12 $336 $592 "$1,163 "
13 $319 $592 "$1,236 "
14 $303 $592 "$1,314 "
15 $288 $592 "$1,396 "
16 $274 $592 "$1,484 "
17 $260 $592 "$1,577 "
18 $247 $592 "$1,676 "
19 $235 $592 "$1,781 "
20 $223 $592 "$1,893 "
$5,000.00 of your annuity income is tax free each year until the total
amount of tax-free income equals the amount of your original
investment.
14.FIDELITY INCOME ADVANTAGE ILLUSTRATION15.
N.FIA
48
ANNUITANT(S): JOHN DOE ANNUITY PURCHASE AMOUNT: $100,000
SEX: MALE CONTRACT DATE: 3/1/98
DATE OF BIRTH: 1/1/33 FIRST ANNUITY INCOME DATE: 4/1/98
PURCHASE PAYMENT ALLOCATION: 100% VARIABLE 0% FIXED
ANNUITY INCOME OPTION:
SINGLE LIFE ANNUITY FREQUENCY OF ANNUITY INCOME: MONTHLY
PREMIUM TAX FOR __________: 0%
The amount of monthly variable annuity income shown in the table below
and the graph that follows assumes a constant annual investment
return. The amount of variable annuity income you actually receive
will depend on the investment performance of the portfolios you
select. Your variable income can go up or down and no minimum dollar
amount of variable income is guaranteed. The amounts shown are based
on a 5.0% Benchmark Rate of Return.
Annual rate of return after all expenses: (1)
Annuity Income Date Age -1. 9 5% 5% 9.82 %
Apr. 1, 199 8 65 $67 7 $68 1 $ 68 3
Apr. 1, 199 9 66 $63 2 $68 1 $ 71 5
Apr. 1, 2000 67 $59 0 $68 1 $ 7 47
Apr. 1, 200 1 68 $55 1 $68 1 $ 78 2
Apr. 1, 200 2 69 $5 15 $68 1 $ 8 18
Apr. 1, 200 7 74 $3 65 $68 1 $1,0 23
Apr. 1, 201 2 79 $2 59 $68 1 $1, 281
Apr. 1, 201 7 84 $1 84 $68 1 $1,6 03
(1) The corresponding returns before annuity and investment expenses
are: 0%, 7 .09 %, and 1 2.00 %
N.FIA
49
IF YOU APPLIED 100% OF YOUR PURCHASE PAYMENT TO FIXED ANNUITY INCOME
ON THE DATE OF THIS ILLUSTRATION, THE AMOUNT OF YOUR FIXED ANNUITY
INCOME WOULD BE $ 650.39 .
FIDELITY INCOME ADVANTAGE
ANNUITY INCOME GRAPH
Current Expenses: 0.66%
"Male, Age 65, Life Only"
5% Benchmark
First Payment: $681.59
Net Returns
Year -1.65% 5.00% 10.00%
1 $679 $683 $686
2 $636 $683 $718
3 $596 $683 $753
4 $558 $683 $788
5 $523 $683 $826
6 $490 $683 $865
7 $459 $683 $906
8 $430 $683 $950
9 $402 $683 $995
10 $377 $683 "$1,042 "
11 $353 $683 "$1,092 "
12 $331 $683 "$1,144 "
13 $310 $683 "$1,198 "
14 $290 $683 "$1,255 "
15 $272 $683 "$1,315 "
16 $254 $683 "$1,378 "
17 $238 $683 "$1,443 "
18 $223 $683 "$1,512 "
19 $209 $683 "$1,584 "
20 $196 $683 "$1,659 "
$5,000.00 of your annuity income is tax free each year until the total
amount of tax-free income equals the amount of your original
investment.
16.TABLE OF CONTENTS
OF THE STATEMENT OF ADDITIONAL INFORMATION
General Information
Performance
Safekeeping of Variable Account Assets
Distribution of the Contracts
State Regulation
Legal Matters
Registration Statement
Independent Accountants
Financial Statements
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 Annuity (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 thirty (30)
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 Contract for earnings, nor
charging it with any administrative expenses; or (2) your Purchase
Payment plus the investment performance of the Money Market Investment
Option.
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
A notice of revocation shall be deemed mailed on the date of the
postmark (or if sent by certified or registered mail, the date of
certification or registration) if it is deposited in the mail in the
United States in an envelope, or other appropriate wrapper, first
class postage prepaid, properly addressed.
Any question regarding this procedure may be directed to a Fidelity
Annuity Specialist at 1-800-544-2442.
CONTRIBUTIONS
3. You may establish an IRA for the purpose of rolling over all or a
portion of certain distributions from a qualified plan, tax sheltered
annuity, individual retirement account or other IRA within 60 days of
receipt of the distribution. The amount of your rollover IRA
contribution will not be included in your taxable income for the year
in which you receive the distribution.
4. Subsequent contributions will not be accepted.
5. No deduction is allowed for a rollover contribution.
INVESTMENTS
6. The assets in your IRA are nonforfeitable.
7. The IRA is not transferable and is established for the exclusive
benefit of you and your designated beneficiary or beneficiaries.
DISTRIBUTIONS
8. Distributions from your IRA generally will be included in your
gross income for federal income tax purposes for the year in which you
receive them.
9. To the extent they are included in taxable income, distributions
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 "substantially equal periodic payments" over your
life (or life expectancy) or the joint lives (or joint life
expectancies) of yourself and the second person designated by you.
10. 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.
11. Generally, you may select any of the annuity income options under
the Contract as the method of distribution for the assets of this IRA.
However, if you name a Joint Annuitant who is not your spouse, the
joint and survivor annuity income options from which you may select
may be limited, depending on the difference in ages between you and
the Joint Annuitant. Also, if you name a Joint Annuitant, all
distributions made while you are alive must be made to you.
Furthermore, if you choose a guarantee period, it generally may not be
longer than your life expectancy (or the joint life and last survivor
expectancy of you and the Joint Annuitant, if any).
12. 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.
13. If you die before your entire interest is distributed, the
remaining interest, if any. will be distributed as follows:
(a) If you die after distribution of your interest has begun, 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 your death.
(b) If you die before distributions have begun, the entire remaining
interest must be distributed as follows:
(1) if there is no Joint Annuitant, by December 31st of the year
containing the fifth anniversary of your death, and usually within
seven days after we receive due proof of your death; or
(2) if there is a Joint Annuitant, in equal or substantially equal
payments over the life or the life with a period certain not exceeding
the life expectancy of the Joint Annuitant starting by December 31st
of the year following the year of your death.
14. There is a 15% excise tax assessed against annual distributions
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.
15. 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
16. Distributions are taxed generally as ordinary income under federal
income tax laws.
17. The tax treatment of single sum distributions under Section 402(d)
of the Code is not applicable to distributions from IRAs.
18. 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, excess distributions are made, 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
19. If you or your designated beneficiary borrow any money under, or
by use of, all or a portion of your IRA, then the entire Contract will
lose its IRA classification, and you must include in gross income the
fair market value of the Contract as of the first day of the tax year.
If you are younger than age 59 1/2 at that time, you may have to pay
the 10% penalty tax on premature distributions.
FINANCIAL INFORMATION
20. The value of your investment will depend on how you allocate your
Purchase Payment between fixed and variable annuity income. The
portion of your Purchase Payment allocated to fixed annuity income
results in income that is the same from one Annuity Income Date to the
next unless you choose an annuity income option that calls for
decreasing annuity income upon your death or the death of the Joint
Annuitant. The annuity income from the portion of your Purchase
Payment allocated to the Investment Options will depend upon the
actual investment performance of the Investment Options you choose. No
minimum amount of variable annuity income is guaranteed. See your
prospectus for a more detailed description.
21. As further described in the prospectus, the following are all the
charges that FILI currently makes:
(a) ADMINISTRATIVE CHARGE
FILI deducts a daily charge from the assets of the Investment
Options equivalent to an effective annual rate of 0.25%. This charge
is not made against any portion of your Purchase Payment allocated to
the purchase of fixed annuity income.
(b) MORTALITY AND EXPENSE RISK CHARGE
FILI deducts a daily charge from the assets of the Investment
Options equivalent to an effective annual rate of 0.75%. This charge
is not made against any portion of your Purchase Payment allocated to
the purchase of fixed annuity income.
(c) PORTFOLIO EXPENSES
The Portfolios associated with the Investment Options incur
operating expenses and pay monthly management fees to Fidelity
Management & Research Company. The level of expenses varies by
Portfolio. These charges do not apply to any portion of your Purchase
Payment allocated to the purchase of fixed annuity income.
FIDELITY INCOME ADVANTAGE
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1998
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 Variable Annuity Account I (the "Variable Account"). You
may obtain a copy of the Prospectus dated A pril 30, 1998 ,
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 Service Agreements
General Information
Performance
Yields
Annuity Income
Safekeeping of Variable Account Assets
Distribution of the Contracts
State Regulation
Legal Matters
Registration Statement
Independent Accountants
Financial Statements
SERVICE AGREEMENTS
We have entered into a service agreement with Fidelity Investments
Life Insurance Company ("FILI"), our parent. FILI may provide
accounting, underwriting, claims, actuarial and data processing
services.
GENERAL INFORMATION
We may advertise quotes of Owners, Annuitants, Joint Annuitants or
Beneficiaries discussing Fidelity Income Advantage or services
provided by FILI. 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 ; and charitable giving.
In addition, Fidelity Investments Life 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, 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 Investment Option may be compared, in
reports and advertising to: (1) the Standard & Poor's Index of 500
stocks ("S&P 500"), Dow Jones Industrial Average ("DJIA"), Donoghue's
Money Market Institutional Averages; (2) other variable annuity
separate accounts or other investment products tracked by Lipper
Analytical Services, Morningstar, or the Variable Annuity Research and
Data Service, widely used independent research firms which rank mutual
funds and other investment companies by overall performance,
investment objectives, and assets; and (3) the Consumer Price Index
(measure for inflation) to assess the real rate of return from an
investment. 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 the ranking
of any Investment Option derived from rankings of variable annuity
separate accounts or other investment products tracked by Lipper
Analytical Services, rating services, companies, publications or other
persons who rank separate accounts or other investment products.
The tables below provide performance results for each Investment
Option through 12/31/9 7 . The performance information is based
on the historical investment experience of the Investment Options and
of the Portfolios. It does not indicate or represent future
performance.
TOTAL RETURN
Total returns quoted in advertising reflect all aspects of an
Investment Option's return, including the automatic reinvestment by
the separate account of all distributions and any change in the
Investment Option'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 Investment Option 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 Investment Option'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 an Investment Option.
Table 1 shows the average annual total return on a hypothetical
investment in the Investment Options 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, through December 31,
199 7 . The returns reflect the risk and administrative
charge (1% on an annual basis).
Table 1: Average Annual Total Return for Period Ending on
12/31/9 7 .
Investment Option Start Date One Year Five Years Life of Fund
Fidelity
Asset Manager 9/6/89 19.45% 11.82% 11.61%
Money Market 4/1/82 4.42% 3.79% 4.81%*
Investment Grade Bond 12/5/88 7.97% 6.04% 7.21%
Equity-Income 10/9/86 26.83% 18.94% 15.56%*
Growth 10/9/86 22.25% 16.82% 16.02%*
High Income 9/19/85 16.49% 12.80% 11.68%*
Overseas 1/28/87 10.44% 12.96% 7.13%
Index 500 8/27/92 31.37% 18.71% 18.67%
Asset Manager: Growth 1/3/95 23.82% N/A 21.52%
Contrafund 1/3/95 22.90% N/A 26.89%
Growth Opportunities 1/3/95 28.65% N/A 25.55%
Balanced 1/3/95 20.96% N/A 14.13%
Growth & Income 12/30/96 28.80% N/A 27.51%
Morgan Stanley
Emerging Markets Equity 10/1/96 (0.19)% N/A (1.98)%
Strong
Discovery Fund II 5/8/92 9.99% 10.71% 10.95%
Opportunity Fund II 5/8/92 24.19% 18.12% 18.85%
Growth Fund II 12/31/96 28.48% N/A 28.48%
Warburg Pincus
International Equity 6/30/95 (3.23)% N/A 4.80%
Small Company Growth 6/30/95 14.59% N/A 20.84%
Post-Venture Capital 9/30/95 12.21% N/A 7.31%
* 10 Years
In addition to average annual returns, the Investment Options 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
Investment Options from the date the Portfolios began operations
through December 31, 199 7 . The returns reflect the risk and
administrative charge (1% on an annual basis).
Table 2: Cumulative Total Return for Period Ending on 12/31/9 7 .
Investment Option Start Date One Year Five Years Life of Fund
Fidelity
Asset Manager 9/6/89 19.45% 74.83% 149.44 %
Money Market 4/1/82 4.42% 20.47 % 59.89%*
Investment Grade Bond 12/5/88 7.97% 34.09% 88.14 %
Equity-Income 10/9/86 26.83% 138.05% 324.65 %*
Growth 10/9/86 22.25% 117.61% 341.72 %*
High Income 9/19/85 16.49% 82.59% 201.91 %*
Overseas 1/28/87 10.44% 83.90% 126.58%*
Index 500 8/27/92 31.37% 135.78% 149.80 %
Asset Manager: Growth 1/3/95 23.82% N/A 79.25 %
Contrafund 1/3/95 22.90% N/A 104.06 %
Growth Opportunities 1/3/95 28.65% N/A 97.66 %
Balanced 1/3/95 20.96% N/A 48.56 %
Growth & Income 12/30/96 28.80% N/A 27.51%
Morgan Stanley
Emerging Markets Debt 6/16/97 N/A N/A (0.14) %
Emerging Markets Equity 10/1/96 (0.19)% N/A (2.46) %
Global Equity 1/2/97 N/A N/A 24.23 %
International Magnum 1/2/97 N/A N/A 7.43%
PBHG
Growth II 5/1/97 N/A N/A 6.78%
Technology &
Communications 5/1/92 N/A N/A 3.39%
Large Cap Value 10/29/97 N/A N/A 4.04%
Small Cap Value 10/29/97 N/A N/A 4.54%
Select 20 9/26/97 N/A N/A 0.03%
Strong
Discovery Fund II 5/8/92 9.99% 66.30% 79.89%
Growth Fund II 12/31/96 28.48% N/A 28.48%
Opportunity Fund II 5/8/92 2 4.19% 129.94% 165.42%
Warburg Pincus
International Equity 6/30/95 (3.23)% N/A 12.47%
Small Company Growth 6/30/95 14.59% N/A 60.74%
Post-Venture Capital 6/30/95 12.21% N/A 9.24%
* 10 Years
YIELDS
Some Investment Options may also advertise yields. Yields quoted in
advertising reflect the change in value of a hypothetical investment
in the Investment Option over a stated period of time, not taking into
account capital gains or losses. Yields are annualized and stated as a
percentage. Yields quoted in advertising may be based on historical
seven day periods.
Current yield for the Money Market Investment Option reflects the
income generated by the Investment Option over a 7 day period. Current
yield is calculated by determining the change (net of management fees
and the 1% insurance charge) of a hypothetical account containing one
share of the underlying Portfolio exclusive of capital changes. This
change is divided by the value of the account at the beginning of the
base period to obtain the base period return. This base period return
is annualized by multiplying by (365/7). The resulting yield figure is
carried to the nearest hundredth of a percent. Effective yield is
obtained by compounding the base period return over a one year period.
Since the reinvestment of income is assumed in the calculation of the
effective yield, it will generally be higher than the current yield.
For the 7 day period ending on 12/31/9 7, the Money Market
Investment Option had a current yield of 4. 53 % and an effective
yield of 4. 6 3%.
A 30 day yield for bond Investment Options reflects the income
generated by an Investment Option over a 30 day period. Current yield
is calculated by determining the interest income (net of management
fees and the 1% insurance charge) of a hypothetical account containing
one share exclusive of capital changes. Yield will be computed by
dividing the net interest income during the period by the value of the
hypothetical account at the end of the period. Income is calculated
for purposes of yield quotations in accordance with standardized
methods applicable to all bond funds. In general, interest income is
reduced with respect to bonds trading at a premium over their par
value by subtracting a portion of premium from income on a daily basis
and is increased with respect to bonds trading at a discount by adding
a portion of the discount to daily income. Capital gains and losses
are generally excluded from the calculation. The 30 day yield for the
period ending on 12/31/9 7 was 4.76 % for the Investment
Grade Bond Investment Option, 7.37 % for the High Income
Investment Option and 8.96 % for Emerging Markets Debt
Investment Option.
ANNUITY INCOME
Periodic annuity income amounts may be illustrated using the
historical performance of the Investment Options, the Standard &
Poor's 500 Composite Stock Price Index or other recognized investment
benchmark portfolios. All illustrations will reflect the 1% annual
annuity charge and actual or assumed Portfolio expenses.
SAFEKEEPING OF VARIABLE ACCOUNT ASSETS
The assets of the Variable Account are held by FILI. 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 Investment Options. 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 FILI. 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
FILI 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 Fidelity Investment Life Insurance
Company. Jorden Burt Boros Cicchetti 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 statements of financial condition of Fidelity Investments Life
Insurance Company as of December 31, 199 7 and 199 6 , 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 7, and the statement of assets and liabilities
of the Fidelity Investments Variable Annuity Account I as of December
31, 199 7 , and the related statements of operations and changes
in net assets 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 FILI 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, 1997, 1996 and 1995
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
CONSOLIDATED FINANCIAL STATEMENTS
for the years ended December 31, 1997, 1996 and 1995
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 6-14
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, 1997 and
1996, 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, 1997. 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, 1997
and 1996, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31,
1997, in conformity with generally accepted accounting principles.
Boston, Massachusetts
January 28, 1998
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except share data)
December 31, 1997 and 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
ASSETS 1997 1996
Debt securities available-for-sale $ 199,525 $ 167,974
Common stocks 3,817 3,576
Policy loans 168 128
Total investments 203,510 171,678
Cash and cash equivalents 4,770 2,886
Accrued investment income 3,527 2,729
Deferred policy acquisition costs 18,091 16,866
Goodwill, net of accumulated amortization of 3,401 3,515
$1,385 in 1997 and $1,271 in 1996
Other assets 1,725 1,040
Deferred taxes 17,288 13,110
Separate account assets 8,317,683 6,165,793
Total assets $ 8,569,995 $ 6,377,617
LIABILITIES
Future contract and policy benefits $ 63,440 $ 66,269
Payable to affiliates 4,309 1,685
Other liabilities and accrued expenses 4,764 3,117
Separate account liabilities 8,316,204 6,164,194
Total liabilities 8,388,717 6,235,265
Commitments and contingencies (Note 8)
STOCKHOLDER'S EQUITY
Common stock, par value $10 per share - 3,000 3,000
1,000,000 shares authorized; 300,000 shares
issued and outstanding
Additional paid-in capital 68,048 68,048
Unrealized gain on securities available-for-sale, 2,144 717
net of tax
Retained earnings 108,086 70,587
Total stockholder's equity 181,27 142,352
Total liabilities and stockholder's equity $ 8,569,995 $ 6,377,617
</TABLE>
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
for the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
REVENUES 1997 1996 1995
Fees charged to contractholders $ 73,553 $ 56,601 $ 39,172
Net investment income 12,509 11,056 10,687
Realized gains (losses), net 946 (38) (14)
Premium revenue, net 286 -- --
Other income 263 -- --
$ 87,557 $ 67,619 $ 49,845
BENEFITS AND EXPENSES
Return credited to contractholders and 3,379 3,630 4,180
other benefits
Underwriting, acquisition and 26,354 20,615 16,518
insurance expenses (1)
29,733 24,245 20,698
Income before before provision income tax 57,824 43,374 29,147
Provision for income taxes 20,325 15,575 10,800
Net income $ 37,499 $ 27,799 $ 18,347
</TABLE>
(1) Includes affiliated party transaction (Note 6)
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(in thousands)
for the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Common Additional Unrealized Retained Total
stock paid-in gain (loss) on earnings stockholder's
capital securities equity
available-for-
sale
Balance at January 1, 1995 $ 3,000 $ 68,048 $ (2,690) $ 24,411 $ 92,799
Net income 18,347 18,347
Change in unrealized gain (loss), 5,055 5,055
net of tax of $2,722
Balance at December 31, 1995 3,000 68,048 2,365 42,788 116,201
Net income 27,799 27,799
Change in unrealized gain (loss), (1,648) (1,648)
net of tax benefit of $887
Balance at December 31, 1996 3,000 68,048 717 70,587 142,352
Net income 37,499 37,499
Change in unrealized gain (loss), 1,427 1,427
net of tax of $813
$ 3,000 $ 68,048 $ 2,144 $ 108,086 $ 181,278
Balance at December 31, 1995
</TABLE>
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
for the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1997 1996 1995
Cash flows from operating activities:
Net income $ 37,499 $ 27,799 $ 18,347
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of bond discount and premium 1,110 1,133 1,112
Realized gain (loss) on investments (946) 38 14
Amortization of goodwill 114 114 114
Depreciation and amortization 3,464 1,241 870
Change in deferred taxes (4,991) (4,282) (3,163)
Increase in future contract and policy benefits 2,639 3,296 1,875
Addition to deferred policy acquisition costs (4,137) (4,407) (3,381)
Changes in assets and liabilities:
Accrued investment income (798) (124) (523)
Amounts due to (from) separate accounts 120 2,789 (1,586)
Payable to parent and affiliates, net 2,624 (1,209) 2,052
Other assets and liabilities 697 (916) 2,054
Net cash provided by (used in) operating activities 37,395 25,472 17,785
Cash flows from investing activities:
Purchase of investments (178,474) (83,411) (54,337)
Proceeds from disposal of investments 148,758 67,910 23,221
Additions to separate accounts (748,800) (1,007,858) (785,157)
Additions to fixed assets (328) (819) (570)
Net cash used in investing activities (788,844) (1,024,178) (816,843)
Cash flows from financing activities:
Considerations and deposits on variable 1,042,482 1,153,250 908,482
annuity products
Payments to contractholders (299,149) (153,956) (109,797)
Net cash provided by financing activities 743,333 999,294 798,685
Net increase (decrease) in cash and cash equivalents 1,884 588 (373)
Cash and cash equivalents:
Beginning of year 2,886 2,298 2,671
End of year $ 4,770 $ 2,886 $ 2,298
</TABLE>
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
Notes to Consolidated Financial Statements
1. 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 transactions 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 Annuity Accounts are invested in the portfolios
of the Variable Insurance Products Fund, the Variable Insurance
Products Fund II and, beginning in 1997, the Variable Insurance
Products Fund III, the Morgan Stanley Universal Funds, the PBGH
Insurance Series Funds, the Strong Variable Insurance Funds and the
Warburg Pincus Trust Funds. The assets of the Variable Life Account
are invested in the portfolios of the Variable Insurance Products Fund
and the Variable Insurance Products Fund II. The invested assets are
reported at the net asset value of such portfolios.
FILI also offers a term life insurance product with level premium
paying periods of one, five, ten, fifteen and twenty years.
2. Summary of Significant Accounting Policies:
BASIS OF PRESENTATION
The accompanying consolidated financial statements of the Company
have been prepared on the basis of generally accepted accounting
principles, which vary in certain respects from reporting practices
prescribed or permitted by state insurance regulatory authorities.
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, excluding loan-backed bonds
and structured securities, is amortized using the effective interest
method. Amortization of loan-backed bonds and structured securities
includes anticipated prepayments over the estimated economic life of
the security. When actual prepayments differ significantly from
anticipated prepayments, the effective yield is recalculated to
reflect actual payments to date and anticipated future payments and
any resulting adjustment is included in investment income. 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 fair 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 and realized 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.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
Notes to Consolidated Financial Statements (continued)
2. Summary of Significant Accounting Policies: (continued)
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 or
decrease 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.
REVENUE RECOGNITION
Fees charged to contractholders include the cost of providing
insurance protection for variable life contractholders, mortality
risk, expense risk, administrative charges and surrender charges for
variable annuity contractholders. Premium revenues for term life
insurance products are recognized as revenues over the premium-paying
period.
FUTURE CONTRACT AND POLICY BENEFITS
Future contract and policy benefits represent the reserve liability
which approximates the contractholder's account balance. The
liabilities for future policy benefits for term life insurance
products are computed by the natural reserve method, including
provision for adverse deviation with respect to estimates for future
investment yield, mortality and withdrawal experience.
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 federal income tax 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 financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the related
amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
RECLASSIFICATIONS
Certain prior year balances have been reclassified to conform with
current year presentation.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
Notes to Consolidated Financial Statements (continued)
3. INVESTMENTS:
The components of net investment income were as follows:
Years ended December 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1995
(in thousands)
Debt securities $ 11,840 $ 10,510 $ 9,762
Common stocks 271 216 --
Cash and cash equivalents 529 551 459
Policy loans 10 9 8
Investment in separate accounts 610 419 1,002
Total investment income 13,260 11,705 11,231
Investment expenses 751 649 544
Net investment income $ 12,509 $ 11,056 $ 10,687
</TABLE>
Gross realized gains and losses from the sale of debt securities were
as follows:
Years ended December 31,
1997 1996 1995
(in thousands)
Gross realized gains $ 1,030 $ 28 $ 5
Gross realized losses $ 84 $ 66 $ 19
The amortized cost and estimated fair value of debt securities, by
type of issuer, and common stock were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997
Amortized Gross Gross Estimated
cost unrealized unrealized Fair
gains losses value
(in thousands)
U.S. Treasury securities $ 61,949 $ 1,671 $ (2) $ 63,618
Corporate securities 118,700 1,695 (17) 120,378
Loan-backed bonds and 15,363 166 15,529
structured securities
Total debt securities $ 196,012 $ 3,532 $ (19) $ 199,525
Common stock $ 3,987 $ -- $ (170) $ 3,817
</TABLE>
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
Notes to Consolidated Financial Statements (continued)
3. INVESTMENTS: (continued)
December 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Amortized Gross Gross Estimated
cost unrealized unrealized Fair
gains losses value
(in thousands)
U.S. Treasury securities $ 52,032 $ 272 $ (94) $ 52,210
Corporate securities 97,374 1,072 (116) 98,330
Loan-backed bonds and 17,325 109 -- 17,434
structured securities
Total debt securities $ 166,731 $ 1,453 $ (210) $ 167,974
Common stock $ 3,716 $ -- $ (140) $ 3,576
</TABLE>
The amortized cost and estimated fair value of debt securities at
December 31, 1997, 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Amortized Estimated
cost Fair value
(in thousands)
Due in 1 year or less $ 14,237 $ 14,262
Due after 1 year through 5 years 78,550 79,443
Due after 5 years through 10 years 82,911 84,876
Due after 10 years 4,951 5,415
Subtotal 180,649 183,996
Loan-backed bonds and structured securities 15,363 15,529
$ 196,012 $ 199,525
</TABLE>
All debt securities are investment grade and there are no significant
concentrations by issuer or by industry other than U.S. Treasury
securities.
4. INCOME TAXES:
The components of the provision for federal and state income taxes
attributable to operations were as follows:
Years ended December 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1995
(in thousands)
Current $ 25,316 $ 19,857 $ 13,963
Deferred (4,991) (4,282) (3,163)
Provision for income taxes $ 20,325 $ 15,575 $ 10,800
</TABLE>
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
Notes to Consolidated Financial Statements (continued)
4. INCOME TAXES: (continued)
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:
Year ended December 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1997 1996
(in thousands)
Deferred income tax assets:
Deferred policy acquisition costs $ 14,503 $ 11,272
Reserves 4,205 2,328
Unrealized gain on securities available for sale (1,198) (386)
Other, net (222) (104)
Total net deferred tax assets $ 17,288 $ 13,110
</TABLE>
Management believes that the Company's future income will be
sufficient to realize the net deferred tax assets.
FILI paid federal income taxes of $25,314,000, $19,445,000, and
$13,790,000 in 1997, 1996 and 1995, respectively. State income taxes
of $884,000, $782,000 and $390,000 were paid in 1997, 1996 and 1995,
respectively.
The effective tax rates approximate the statutory federal income tax
rates for the years ended 1997, 1996 and 1995.
5. STOCKHOLDER'S EQUITY AND DIVIDEND RESTRICTIONS:
Generally, the net assets of the Company available for transfer to
FMR Corp. are limited to the excess of FILI's net assets, as
determined in accordance with statutory accounting practices, over
minimum statutory capital requirements; however, payments of such
amounts as dividends may be subject to approval by regulatory
authorities.
Net income and capital stock and surplus as determined in accordance
with statutory accounting practices were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Years ended December 31,
1997 1996 1995
(in thousands)
Statutory net income $ 30,620 $ 19,673 $ 12,652
Statutory capital stock and surplus $ 136,356 $ 105,643 $ 86,495
</TABLE>
6. 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 per deferred annuity contract and renewal
sales compensation of 0.10% of the annuity contract value each year.
FILI also pays FIA 37.5% of term life insurance first-year sales.
EFILI pays FIA sales compensation of 3% of annuity payments received.
The Company compensated FIA in the amount of $10,637,000, $9,361,000
and $6,834,000 in 1997, 1996 and 1995, respectively.
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(a wholly-owned subsidiary of FMR Corp.)
Notes to Consolidated Financial Statements (continued)
6. AFFILIATED COMPANY TRANSACTIONS: (continued)
The Company has entered into administrative service agreements with
its affiliates whereby the Company provides certain administrative and
accounting functions. The Company received $1,044,000, $807,000 and
$989,000 in 1997, 1996 and 1995, 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 $204,000, $182,000 and $107,000
were charged to the Company in 1997, 1996 and 1995, 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 $621,000, $441,000 and $424,000 in 1997,
1996 and 1995, 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 $424,000, $603,000 and $709,000 in 1997, 1996 and 1995,
respectively.
7. UNDERWRITING, ACQUISITION AND INSURANCE EXPENSES:
Underwriting, acquisition and insurance expenses were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Years ended December 31,
1997 1996 1995
(in thousands)
Commissions $ 10,6737 $ 9,396 $ 6,834
Amortization of deferred policy 15 (2,661) (1,933)
acquisition costs and goodwill
Taxes, licenses and fees 1,175 1,052 896
General insurance expenses 14,527 12,828 10,721
$ 26,354 $ 20,615 $ 16,518
</TABLE>
During 1997, EFILI amortized an additional $1,850,000 of deferred
policy acquisition costs. Amortization is adjusted periodically when
estimates of future gross profits are revised to reflect actual
experience. This adjustment has been reflected in underwriting,
acquisition and insurance expenses.
8. COMMITMENTS AND CONTINGENCIES:
Reinsurance
FILI reinsures certain of its life insurance products 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. Premiums and
deposits ceded under these reinsurance contracts were not material to
the consolidated financial statements.
The Company is contingently liable for claims reinsured that the
assuming companies are unable to pay.
STATEMENT OF ASSETS AND LIABILITIES
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
<S> <C>
ASSETS DECEMBER 31, 1997
Investments at current market value:
Variable Insurance Products Fund (VIP)
Money Market Portfolio - 460,982,572 shares (cost $ 460,982,572) $ 460,982,572
High Income Portfolio - 23,562,757 shares (cost $285,396,045) 319,982,242
Equity-Income Portfolio - 68,854,231 shares (cost $1,172,384,612) 1,671,780,722
Growth Portfolio - 27,119,930 shares (cost $720,172,839) 1,006,149,404
Overseas Portfolio - 13,057,776 shares (cost $226,119,324) 250,709,295
Variable Insurance Products Fund II (VIP II)
Investment Grade Bond Portfolio - 8,678,689 shares (cost $105,071,360) 109,004,339
Asset Manager Portfolio - 43,062,200 shares (cost $639,821,964) 775,550,216
Index 500 Portfolio - 6,478,500 shares (cost $575,914,283) 741,075,671
Asset Manager: Growth Portfolio - 19,819,521 shares (cost $258,793,890) 324,247,367
Contrafund Portfolio - 61,077,832 shares (cost $876,225,604) 1,217,891,969
Variable Insurance Products Fund III (VIP III)
Balanced Portfolio - 4,224,346 shares (cost $57,173,868) 61,590,960
Growth & Income Portfolio - 20,276,256 shares (cost $226,604,918) 254,061,491
Growth Opportunities Portfolio - 14,481,673 shares (cost $241,548,958) 279,061,839
Morgan Stanley Universal Funds (MSUF)
Emerging Markets Equity Portfolio - 188,634 shares (cost $1,833,208) 1,778,822
Emerging Markets Debt Portfolio - 295,288 shares (cost $2,922,674) 2,855,436
Global Equity Portfolio - 188,287 shares (cost $2,216,615) 2,210,491
International Magnum Portfolio - 133,450 shares (cost $1,437,953) 1,385,206
PBHG Insurance Series Funds (PBHG)
Growth II Portfolio - 204,826 shares (cost $2,132,436) 2,201,877
Small Cap Value Portfolio - 785,346 shares (cost $8,033,806) 8,230,420
Large Cap Value Portfolio - 72,842 shares (cost $746,849) 759,743
Technology & Communications Portfolio - 720,879 shares (cost $7,534,752) 7,504,351
Select 20 Portfolio - 700,903 shares (cost $6,898,930) 7,030,055
Strong Variable Insurance Funds (SVIF)
Discovery Fund II Portfolio - 69,643 shares (cost $856,201) 837,800
Growth Fund II Portfolio - 117,876 shares (cost $1,490,880) 1,467,550
Opportunity Fund II Portfolio - 138,820 shares (cost $2,987,628) 3,012,387
Warburg Pincus Trust (WPT)
Small Company Growth Portfolio - 388,177 shares (cost $6,245,903) 6,397,165
International Equity Portfolio - 53,141 shares (cost $585,839) 557,449
Post-Venture Capital Portfolio - 112,196 shares (cost $1,220,247) 1,240,887
Total Assets $ 7,519,557,726
NET ASSETS
Variable Annuity Contracts $ 7,262,735,649
Annuity Reserves 255,519,966
Retained in Variable Account by Fidelity Investments Life Insurance Company 1,302,111
Total Net Assets $ 7,519,557,726
</TABLE>
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
12/31/97 12/31/96 12/31/96 12/31/97 12/31/96
12/31/97
INCOME:
Dividends $ 26,699,688 $ 22,183,498 $ 20,817,461 $ 16,728,273 $ 139,970,60 $ 55,685,270
3
EXPENSES:
Mortality risk, 4,865,592 2,709,414 14,608,539
expense risk
and adminis- 4,265,461 2,133,584 13,282,629
trative charges
Net investment 21,834,096 17,918,037 18,108,047 14,594,689 125,362,064 42,402,641
income (loss)
Realized gain (loss) 6,949,695 4,215,546 48,965,707 44,973,966
Unrealized
appreciation
(depreciation) 0 0 16,989,756 6,407,080 179,763,260 71,715,782
during the period
Net increase
(decrease) in
net assets 21,834,096 17,918,037 42,047,498 25,217,315 354,091,031 159,092,389
from operations
Payments
received from
contract owners 629,101,224 716,350,463 15,807,824 19,246,520 37,916,433 67,800,413
Transfers
between sub- (638,722,85 (572,043,36 19,435,560 39,372,795 (42,350,907) 8,556,850
accounts and the 8) 5)
fixed account, net
Transfers
for contract
benefits and (67,465,064) (34,497,387) (11,995,400) (4,602,693) (56,020,921) (27,944,559)
terminations
Other transfers
(to) from
Fidelity Invest-
ments Life (215,320) (117,521) (71,599) (16,920) (43,377) (375,090)
Insurance
Co., net
Net increase
(decrease) in
net assets (77,302,018) 109,692,190 23,176,385 53,999,702 (60,498,772) 48,037,614
from contract
transactions
Retained in
(returned from)
Variable 29,046 (279,345) (35,935) (113,623) (375,922) (734,182)
Annuity
Account I, net
Total increase (55,438,876) 65,187,948 293,216,337
(decrease) in 127,330,882 79,103,394 206,395,821
net assets
Net assets at
beginning 516,421,448 389,090,566 254,794,294 175,690,900 1,378,564,3 1,172,168,5
of period 85 64
Net assets at end
of period $ 460,982,57 $ 516,421,44 $ 319,982,24 $ 254,794,29 $ 1,671,780, $ 1,378,564,
2 8 2 4 722 385
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SUBACCOUNTS INVESTING IN:
VIP -
VIP - OVERSEAS
GROWTH
12/31/97 12/31/96 12/31/97 12/31/96
INCOME:
Dividends $ 33,907,980 $ 52,408,311 $ 21,080,704 $ 5,076,103
EXPENSES:
Mortality risk, 9,346,562 2,648,546
expense risk
and adminis- 8,895,743 2,325,480
trative charges
Net investment 24,561,418 43,512,568 18,432,158 2,750,623
income (loss)
Realized gain (loss) 67,921,108 34,665,280 13,687,852 4,977,991
Unrealized
appreciation
(depreciation) 99,256,428 25,231,481 (6,167,246) 17,808,822
during the period
Net increase
(decrease) in
net assets 191,738,954 103,409,329 25,952,764 25,537,436
from operations
Payments
received from
contract owners 27,687,604 65,624,862 10,161,356 15,310,022
Transfers
between sub- (133,879,50 88,618,608 (23,441,635) 27,187,801
accounts and the 5)
fixed account, net
Transfers
for contract
benefits and (32,443,849) (19,664,847) (7,577,179) (5,076,410)
terminations
Other transfers
(to) from
Fidelity Invest-
ments Life (59,301) (325,787) (36,899) (58,320)
Insurance
Co., net
Net increase
(decrease) in
net assets (138,695,05 134,252,836 (20,894,357) 37,363,093
from contract 1)
transactions
Retained in
(returned from)
Variable (258,418) (385,048) (60,265) (91,969)
Annuity
Account I, net
Total increase 52,785,485 4,998,142
(decrease) in 237,277,117 62,808,560
net assets
Net assets at
beginning 953,363,919 716,086,802 245,711,153 182,902,593
of period
Net assets at end
of period $ 1,006,149, $ 953,363,91 $ 250,709,29 $ 245,711,15
404 9 5 3
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
VIP II -
INVESTMENT VIP II - VIP II -
GRADE BOND ASSET MANAGER INDEX 500
12/31/97 12/31/96 12/31/97 12/31/96 12/31/96
12/31/97
INCOME:
Dividends $ 4,769,202 $ 3,861,311 $ 84,602,748 $ 47,469,963 $ 14,463,456 $ 5,677,684
EXPENSES:
Mortality 836,719 7,130,105 5,648,542
risk,
expense 7,112,472 2,166,085
risk 785,033
and
adminis-
trative
charges
Net 3,932,483 77,472,643 40,357,491 8,814,914 3,511,599
investment 3,076,278
income
(loss)
Realized gain 858,556 888,717 13,884,351 20,343,996 24,508,427 4,975,965
(loss)
Unrealized
appreciation
(depreciation 1,995,042 38,783,110 27,445,480 114,558,991 33,991,964
) (2,329,345)
during the
period
Net increase
(decrease) in
1,635,650 130,140,104 88,146,967 147,882,332 42,479,528
net assets 6,786,081
from
operations
Payments
received
from 4,109,827 4,922,193 12,080,157 13,647,683 46,826,607 33,319,804
contract
owners
Transfers
between 22,693,615 (32,631,061) (114,227,03 204,978,269 167,661,291
sub- 7)
accounts 9,167,153
and the
fixed
account, net
Transfers
for contract
(7,797,627) (35,791,511) (25,764,391 (15,577,435) (3,781,296)
benefits (2,141,175) )
and
termination
s
Other
transfers
(to) from
Fidelity (72,701) (155,845) (237,492) (150,934) (64,159)
Invest-
ments Life 56,907
Insurance
Co., net
Net increase
(decrease)
in 18,933,114 (56,498,260) (126,581,23 236,076,507 197,135,640
net assets 7)
from 12,005,078
contract
transactions
Retained in
(returned
from) 46,432 (92,781) (616,502) (107,699) (30,838)
Variable
Annuity (109,244)
Account I,
net
Total increase 25,765,627 73,549,063 383,851,140
(decrease) (39,050,772 239,584,330
in 13,531,484 )
net assets
Net assets at
beginning 83,238,712 702,001,153 741,051,925 357,224,531 117,640,201
of period 69,707,228
Net assets at
end $ 109,004,33 $ 83,238,712 $ 775,550,21 $ 702,001,15 $ 741,075,67 $ 357,224,53
of period 9 6 3 1 1
</TABLE>
VIP II -
ASSET MANAGER: VIP II -
GROWTH CONTRAFUND
12/31/97 12/31/96 12/31/97 12/31/96
INCOME:
Dividends $ 327,986 $ 9,328,581 $ 29,715,425 $ 4,625,874
EXPENSES:
Mortality 2,618,594 10,453,261
risk,
expense 1,063,876 6,890,563
risk
and
adminis-
trative
charges
Net (2,290,608) 8,264,705 19,262,164 (2,264,689)
investment
income
(loss)
Realized gain 5,935,984 673,453 35,690,439 8,702,452
(loss)
Unrealized
appreciation
(depreciation 52,266,796 9,972,956 161,313,279 123,250,956
)
during the
period
Net increase
(decrease) in
55,912,172 18,911,114 216,265,882 129,688,719
net assets
from
operations
Payments
received
from 19,500,391 15,662,363 54,807,976 81,653,439
contract
owners
Transfers
between 70,469,134 101,765,224 66,369,243 248,553,823
sub-
accounts
and the
fixed
account, net
Transfers
for contract
(6,744,007) (2,189,943) (25,715,125) (10,123,899
benefits )
and
termination
s
Other
transfers
(to) from
Fidelity (80,124) (38,727) (281,176) (261,226)
Invest-
ments Life
Insurance
Co., net
Net increase
(decrease)
in 83,145,394 115,198,917 95,180,918 319,822,137
net assets
from
contract
transactions
Retained in
(returned
from) (31,806) 4,437 (190,999) (180,555)
Variable
Annuity
Account I,
net
Total increase 139,025,760 311,255,801
(decrease) 134,114,468 449,330,301
in
net assets
Net assets at
beginning 185,221,607 51,107,139 906,636,168 457,305,867
of period
Net assets at
end $ 324,247,36 $ 185,221,60 $ 1,217,891, $ 906,636,16
of period 7 7 969 8
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUBACCOUNTS INVESTING IN:
VIP III - VIP III - VIP III - MSUF - MSUF -
BALANCED* GROWTH & GROWTH EMERGING EMERGING
INCOME* OPPORTUNITIES MARKETS MARKETS
* EQUITY** DEBT**
12/31/97 12/31/97 12/31/97 12/31/97 12/31/97
INCOME:
Dividends $ 24,769 $ 6,524,950 $ 490,995 $ 50,198 $ 38,854
EXPENSES:
Mortality risk, 307,802 1,300,226 1,508,291 777 1,073
expense risk
and adminis-
trative charges
Net investment (283,033) 5,224,724 (1,017,296) 49,421 37,781
income (loss)
Realized gain (loss) 1,117,028 255,257 671,295 1,555 0
Unrealized
appreciation
(depreciation) 4,417,092 27,456,573 37,512,881 (54,386) (6,124)
during the period
Net increase
(decrease) in
net assets 5,251,087 32,936,554 37,166,880 (3,410) 31,657
from operations
Payments
received from
contract owners 6,706,277 29,329,428 42,870,806 56,721 347,239
Transfers
between sub- 50,665,808 193,894,819 202,642,472 1,725,664 1,832,160
accounts and the
fixed account, net
Transfers
for contract
benefits and (1,021,595) (2,031,557) (3,368,361) (91) 0
terminations
Other transfers
(to) from
Fidelity Invest-
ments Life (11,728) (80,558) (262,599) (62) (576)
Insurance
Co., net
Net increase
(decrease) in
net assets 56,338,762 221,112,132 241,882,318 1,782,232 2,178,823
from contract
transactions
Retained in
(returned from)
Variable 1,111 12,805 12,641 0 11
Annuity
Account I, net
Total increase 61,590,960 254,061,491 279,061,839 1,778,822 2,210,491
(decrease) in
net assets
Net assets at
beginning 0 0 0 0 0
of period
Net assets at end
of period $ 61,590,960 $ 254,061,49 $ 279,061,83 $ 1,778,822 $ 2,210,491
1 9
</TABLE>
* FOR THE PERIOD JANUARY 27, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1997.
** FOR THE PERIOD NOVEMBER 24, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUBACCOUNTS INVESTING IN:
PBHG - PBHG -
SMALL CAP LARGE
MSUF - MSUF - PBHG - VALUE** CAP
GLOBAL INTERNATIONAL GROWTH II** VALUE**
EQUITY** MAGNUM**
12/31/97 12/31/97 12/31/97 12/31/97 12/31/97
INCOME:
Dividends $ 38,854 $ 38,893 $ 0 $ 0 $ 0
EXPENSES:
Mortality risk, 1,073 737 847 3,809 427
expense risk
and adminis-
trative charges
Net investment 37,781 38,156 (847) (3,809) (427)
income (loss)
Realized gain (loss) 0 1,566 726 1,588 1,407
Unrealized
appreciation
(depreciation) (6,124) (52,747) 69,441 196,614 12,894
during the period
Net increase
(decrease) in
net assets 31,657 (13,025) 69,320 194,393 13,874
from operations
Payments
received from
contract owners 347,239 130,652 110,103 604,447 56,451
Transfers
between sub- 1,832,160 1,267,297 2,022,554 7,434,078 689,520
accounts and the
fixed account, net
Transfers
for contract
benefits and 0 0 (117) (924) (102)
terminations
Other transfers
(to) from
Fidelity Invest-
ments Life (576) 268 21 (1,552) (1)
Insurance
Co., net
Net increase
(decrease) in
net assets 2,178,823 1,398,217 2,132,561 8,036,049 745,868
from contract
transactions
Retained in
(returned from)
Variable 11 14 (4) (22) 1
Annuity
Account I, net
Total increase 2,210,491 1,385,206 2,201,877 8,230,420 759,743
(decrease) in
net assets
Net assets at
beginning 0 0 0 0 0
of period
Net assets at end
of period $ 2,210,491 $ 1,385,206 $ 2,201,877 $ 8,230,420 $ 759,743
</TABLE>
* FOR THE PERIOD JANUARY 27, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1997.
** FOR THE PERIOD NOVEMBER 24, 1997 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
PBHG - SVIF - SVIF - SVIF -
SELECT 20** DISCOVERY GROWTH OPPORTUNITY
PBHG - FUND II** FUND II** FUND II**
TECHNOLOGY
&
COM-
MUNICATIONS*
*
12/31/97 12/31/97 12/31/97 12/31/97 12/31/97
INCOME:
Dividends $ 0 $ 0 $ 0 $ 51,405 $ 2,789
EXPENSES:
Mortality risk, 3,029 433 686 1,349
expense risk
and adminis-
trative charges 3,175
Net investment (3,029) (433) 50,719 1,440
income (loss) (3,175)
Realized gain (loss) 348 49 (2,563) 438 3,293
Unrealized
appreciation
(depreciation) 131,125 (18,401) (23,330) 24,759
during the period (30,401)
Net increase
(decrease) in
net assets 128,145 (21,397) 27,827 29,492
from operations (33,228)
Payments
received from
contract owners 1,166,675 241,149 115,879 210,484 316,468
Transfers
between sub- 5,661,006 743,684 1,229,535 2,666,657
accounts and the
fixed account, net 6,356,784
Transfers
for contract
benefits and (748) (383) 0 (73)
terminations (1,170)
Other transfers
(to) from
Fidelity Invest-
ments Life (2,417) (55) 20 (524)
Insurance
Co., net 15,296
Net increase
(decrease) in
net assets 5,898,990 859,125 1,440,039 2,982,528
from contract
transactions 7,537,585
Retained in
(returned from)
Variable 1,002,920 72 (316) 367
Annuity
Account I, net (6)
Total increase 7,030,055 837,800 1,467,550 3,012,387
(decrease) in
net assets 7,504,351
Net assets at
beginning 0 0 0 0
of period 0
Net assets at end
of period $ 7,504,351 $ 7,030,055 $ 837,800 $ 1,467,550 $ 3,012,387
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
WPT - WPT - WPT -
SMALL INTERNATIONAL POST-
COMPANY EQUITY** VENTURE
GROWTH** CAPITAL**
TOTAL
12/31/97 12/31/97 12/31/97 12/31/97 12/31/96
INCOME:
Dividends $ 0 $ 24,727 $ 150 $ 383,685,47 $ 223,044,86
0 8
EXPENSES:
Mortality risk, 2,764 273 679 64,003,447
expense risk
and adminis- 48,920,926
trative charges
Net investment (2,764) 24,454 (529) 319,682,023 174,123,942
income (loss)
Realized gain (loss) (1) (984) (323) 220,454,353 124,417,366
Unrealized
appreciation
(depreciation) 151,262 (28,390) 20,640 728,471,680 313,495,176
during the period
Net increase
(decrease) in
net assets 148,497 (4,920) 19,788 1,268,608,0 612,036,484
from operations 56
Payments
received from
contract owners 547,503 37,724 322,881 941,198,431 1,033,537,7
62
Transfers
between sub- 5,700,629 522,333 898,095 1,685,570 4,613,143
accounts and the
fixed account, net
Transfers
for contract
benefits and 0 (93) (0) (273,553,33 (135,786,60
terminations 2) 0)
Other transfers
(to) from
Fidelity Invest-
ments Life 1,366 (23,099) (2) (1,534,424 (1,438,335)
Insurance )
Co., net
Net increase
(decrease) in
net assets 6,249,498 536,865 1,220,974 667,796,245 900,925,970
from contract
transactions
Retained in
(returned from)
Variable (830) 25,504 125 (23,945 (2,536,869)
Annuity )
Account I, net
Total increase 6,397,165 557,449 1,240,887 1,936,380,3
(decrease) in 56 1,510,425,5
net assets 85
Net assets at
beginning 0 0 0 5,583,177,3 4,072,751,7
of period 70 85
Net assets at end
of period $ 6,397,165 $ 557,449 $ 1,240,887 $ 7,519,557, $5,583,177,
726 370
</TABLE>
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
OF
FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
17. 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 State of 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.
In 1997, FILI added eighteen new subaccounts to the Account: VIP III -
Balanced, VIP III - Growth & Income, VIP III - Growth Opportunities,
MSUF - Emerging Markets Equity, MSUF - Emerging Markets Debt, MSUF -
Global Equity, MSUF - International Magnum, PBHG - Growth II, PBHG -
Small Cap Value, PBHG - Large Cap Value, PBHG - Technology &
Communications, PBHG - Select 20, SVIF - Discovery Fund II, SVIF -
Growth Fund II, SVIF - Opportunity Fund II, WPT - Small Company
Growth, WPT - International Equity, WPT - Post-Venture Capital.
18. SIGNIFICANT ACCOUNTING POLICIES.
Investments are made in the portfolios of the subaccounts 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 related amounts and
disclosures in the financial statements. Actual results could differ
from those estimates.
19. EXPENSES.
FILI deducts a daily charge from the net assets of the Account for
administrative expenses and for the assumption of mortality risk and
expense risk. Prior to November 3, 1997, the daily charge was
equivalent to an annual effective rate of 1% of net assets. On
November 3, 1997, FILI reduced the daily charge on the Retirement
Reserves contracts to an annual effective rate of 0.8% of net assets.
FILI also deducts an annual maintenance charge of $30 from the
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.
20. 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 the VIP, VIP II and VIP III portfolios. Fidelity
Investments Institutional Operations Co., an affiliate of FMR Corp.,
is the transfer and shareholder servicing agent for the VIP, VIP II
and VIP III portfolios.
21. 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,
1997:
PURCHASES SALES
VIP - Money Market $ $
326,583,049 382,021,925
VIP - High Income 114,897,983 73,649,486
VIP - Equity-Income 198,894,123 134,406,753
VIP - Growth 56,549,510 170,941,561
VIP - Overseas 72,099,269 74,621,733
VIP II - Investment Grade Bond 47,032,620 24,120,591
VIP II - Asset Manager 98,479,844 77,598,242
VIP II - Index 500 306,095,779 61,312,057
VIP II - Asset Manager: Growth 100,798,108 19,975,128
VIP II - Contrafund 199,694,635 85,442,570
VIP III - Balanced 65,612,689 9,555,849
VIP III - Growth & Income 228,481,958 2,132,297
VIP III - Growth Opportunities 245,497,853 4,620,190
MSUF - Emerging Markets Equity 2,115,422 283,769
MSUF - Emerging Markets Debt 3,274,862 353,743
MSUF - Global Equity 2,216,615 0
MSUF - International Magnum 1,571,078 134,691
PBHG - Growth II 2,184,299 52,589
PBHG - Small Cap Value 8,166,634 134,416
PBHG - Large Cap Value 851,823 106,381
PBHG - Technology & Communications 7,552,890 18,486
PBHG - Select 20 6,910,570 11,689
SVIF - Discovery Fund II 1,033,348 174,584
SVIF - Growth Fund II 1,568,802 78,360
SVIF - Opportunity Fund II 3,262,583 278,248
WPT - Small Company Growth 6,245,904 0
WPT - International Equity 921,970 335,147
WPT - Post-Venture Capital 1,271,438 50,868
22. UNIT VALUES.
A summary of changes in accumulation units and ending unit and
contract values for variable annuity contracts at December 31, 1997
and 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
PAYMENTS
BEGINNING RECEIVED TRANSFERS CONTRACT
BALANCE FROM BETWEEN TERMINATIONS ENDING BALANCE
CONTRACT SUBACCOUNTS, UNITS UNIT VALUE DOLLARS
OWNERS NET
JANUARY 1, 1997 TO DECEMBER 31, 1997
VIP - Money Market 33,393,564 35,765,040 (40,993,364) 91,490 28,256,730 $ 15.98 $ 451,543,983
VIP - High Income 9,856,952 586,582 661,363 (623,781) 10,481,116 $ 29.00 303,988,166
VIP - Equity-Income 43,073,117 1,075,044 (1,451,095) (1,859,034) 40,838,032 $ 39.39 1,608,658,423
VIP - Growth 26,772,269 709,036 (3,594,444) (838,737) 23,048,124 $ 42.76 985,593,562
VIP - Overseas 11,419,855 436,554 (983,144) (360,741) 10,512,524 $ 23.52 247,274,432
VIP II - Investment
Grade Bond 4,615,384 228,138 1,229,196 (547,810) 5,524,907 $ 18.75 103,579,135
VIP II - Asset Manager 33,062,627 530,613 (1,505,174) (1,767,212) 30,320,855 $ 24.80 751,916,385
VIP II - Index 500 18,160,844 2,122,452 9,533,877 (1,121,909) 28,695,264 $ 24.83 712,404,342
VIP II - Asset Manager:
Growth 12,261,937 1,205,712 4,500,037 (766,657) 17,201,030 $ 17.95 308,741,994
VIP II - Contrafund 53,010,249 2,983,188 3,494,055 (1,698,427) 57,789,065 $ 20.47 1,183,200,370
VIP III - Balanced * 606,056 4,630,639 (586,884) 4,649,810 $ 11.98 55,714,035
VIP III - Growth & Income * 2,622,603 17,602,327 (1,426,696) 18,798,233 $ 12.68 238,278,772
VIP III - Growth Opportunities * 3,852,029 18,523,967 (1,221,162) 21,154,834 $ 12.63 267,246,966
MSUF - Emerging Markets Equity ** 5,745 171,206 (15) 176,936 $ 10.05 1,778,822
MSUF - Emerging Markets Debt ** 2,756 269,897 (2,040) 270,613 $ 10.48 2,834,996
MSUF - Global Equity ** 34,595 181,040 (1,155) 214,479 $ 10.25 2,198,667
MSUF - International Magnum ** 13,105 127,421 (14,455) 126,071 $ 9.86 1,242,464
PBHG - Growth II ** 11,237 205,656 (18,025) 198,868 $ 10.15 2,018,998
PBHG - Small Cap Value ** 59,114 730,068 (28,259) 760,923 $ 10.43 7,936,253
PBHG - Large Cap Value ** 5,653 68,352 (2,944) 71,061 $ 10.27 729,623
PBHG - Technology & Communications ** 120,942 639,601 (13,759) 746,784 $ 9.87 7,369,743
PBHG - Select 20 ** 23,751 554,810 (27,088) 551,473 $ 10.42 5,745,102
SVIF - Discovery Fund II ** 11,942 74,522 (17,377) 69,087 $ 9.69 669,714
SVIF - Growth Fund II ** 21,083 122,113 (3,251) 139,945 $ 10.25 1,434,554
SVIF - Opportunity Fund II ** 31,632 265,241 (19,520) 277,353 $ 10.15 2,814,079
WPT - Small Company Growth ** 55,431 572,410 (30,997) 596,845 $ 10.19 6,081,692
WPT - International Equity ** 3,884 53,678 (2,581) 54,981 $ 9.24 508,179
WPT - Post-Venture Capital ** 32,317 88,717 (836) 120,198 $ 10.25 1,232,198
$ 7,262,735,64
9
JANUARY 1, 1996 TO DECEMBER 31, 1996
VIP - Money Market 26,268,846 42,913,398 (38,375,363) 2,586,683 33,393,564 $ 15.30 $ 510,850,998
VIP - High Income 7,797,315 816,399 1,649,890 (406,652) 9,856,952 $ 24.89 245,332,651
VIP - Equity-Income 41,937,122 2,359,548 324,284 (1,547,837) 43,073,117 $ 31.05 1,337,348,204
VIP - Growth 23,019,869 1,987,476 2,629,901 (864,978) 26,772,269 $ 34.97 936,189,066
VIP - Overseas 9,560,376 770,514 1,400,639 (311,673) 11,419,855 $ 21.29 243,142,393
VIP II - Investment
Grade Bond 3,993,107 291,738 528,603 (198,064) 4,615,384 $ 17.36 80,112,903
VIP II - Asset Manager 39,821,641 708,287 (6,035,625) (1,431,676) 33,062,627 $ 20.75 686,200,145
VIP II - Index 500 7,333,800 1,943,169 9,613,725 (729,850) 18,160,844 $ 18.89 343,086,654
VIP II - Asset
Manager: Growth 4,035,434 1,168,481 7,592,101 (534,078) 12,261,937 $ 14.49 177,691,548
VIP II - Contrafund 32,421,946 5,482,352 16,672,452 (1,566,501) 53,010,249 $ 16.65 882,817,550
$ 5,442,772,11
2
* FOR THE PERIOD JANUARY 27, 1997 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1997.
** FOR THE PERIOD NOVEMBER 24, 1997 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31, 1997.
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE CONTRACT OWNERS OF FIDELITY INVESTMENTS VARIABLE ANNUITY
ACCOUNT I:
We have audited the accompanying statement of assets and liabilities
of Fidelity Investments Variable Annuity Account I (comprised of VIP -
Money Market, VIP - High Income, VIP - Equity-Income, VIP - Growth,
VIP - Overseas, VIP II - Investment Grade Bond, VIP II - Asset
Manager, VIP II - Index 500, VIP II - Asset Manager: Growth, VIP II -
Contrafund, VIP III - Balanced, VIP III - Growth & Income, VIP III -
Growth Opportunities, MSUF - Emerging Markets Equity, MSUF - Emerging
Markets Debt, MSUF - Global Equity, MSUF - International Magnum, PBHG
- - Growth II, PBHG - Small Cap Value, PBHG - Large Cap Value, PBHG -
Technology & Communications, PBHG - Select 20, SVIF - Discovery Fund
II, SVIF - Growth Fund II, SVIF - Opportunity Fund II, WPT - Small
Company Growth, WPT - International Equity and WPT - Post-Venture
Capital) of Fidelity Investments Life Insurance Company as of December
31, 1997, 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, 1997, 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 28, 1998
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. (Note 4)
Statement of Assets and Liabilities for Fidelity Investments
Variable Annuity Account I as of December 31, 1997. (Note 4)
Statements of Operations and Changes in Net Assets for Fidelity
Investments Variable Annuity Account I for Years Ended December 31,
1997 and 1996. (Note 4)
Report of Coopers & Lybrand on the Financial Statements of Fidelity
Investments Variable Annuity Account I. (Note 4)
Balance Sheets of Fidelity Investments Life Insurance Company as of
December 31, 1997 and 1996. (Note 4)
Statements of Income for Fidelity Investments Life Insurance Company
for the Years Ended December 31, 1997, 1996, and 1995. (Note 4)
Statements of Changes in Stockholder's Equity for Fidelity
Investments Life Insurance Company for the Years Ended December 31,
1997, 1996 and 1995. (Note 4)
Statements of Cash Flows for Fidelity Investments Life Insurance
Company for the Years Ended December 31, 1997, 1996 and 1995. (Note 4)
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)
(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).
C-1
(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)
(c) Form of Participation Agreement between Fidelity Investments
Life and Strong Variable Insurance Funds, Inc. on behalf of the
Portfolios, and Strong Opportunity Fund II, Inc., Strong Capital
Management, Inc. (the "Adviser"), (Note 5)
(d) Form of Participation Agreement between Fidelity Investments
Life and PBHG INSURANCE SERIES FUND, INC. ("FUND"), and PILGRIM
BAXTER & ASSOCIATES, LTD. ("ADVISER"). (Note 5)
`
(e) Form of Participation Agreement between Fidelity Investments
Life and MORGAN STANLEY UNIVERSAL FUNDS, INC. (the "Fund"), and MORGAN
STANLEY ASSET MANAGEMENT INC. and MILLER ANDERSON & SHERRERD, LLP (the
"Advisers"). (Note 5)
(f) Form of Participation Agreement between Fidelity Investments
Life and Warburg, Pincus Trust, (the "Fund"); Warburg, Pincus
Counsellors, Inc. (the "Adviser"); and Counsellors Securities Inc.
(Note 5)
(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.
(Note 4) Incorporated by reference to Post-Effective Amendment No. 4
to Registration Statement 33-54926 filed April 25, 1997.
(Note 5) Incorporated by reference to Post-Effective Amendment No. 12
to Registration Statement on Form N-4, Reg. No. 33-24400, on behalf of
Fidelity Investments Variable Annuity Account I, filed August 29,
1997.
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
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, 1997, there were 5,036 Qualified Contracts and
93,380 Non-qualified Contracts.
Item 28. Indemnification
FMR Corp. and its subsidiaries own a directors' and officers'
liability reimbursement contract (the "Policy"), issued by National
Union Fire Insurance Company, that provides coverage for "Loss" (as
defined in the Policy) arising from any claim or claims by reason of
any breach of duty, neglect, error, misstatement, misleading
statement, omission or other act done or wrongfully attempted by a
person while he or she is acting in his or her capacity as a director
or officer. The coverage is provided to these insureds, including
Fidelity Investments Life, to the extent required or permitted
according to applicable law, common or statutory, or under their
respective charters or by-laws, to indemnify directors or officers for
Loss arising from the above-described matters. Coverage is also
provided to the individual directors or officers for such Loss, for
which they shall not be indemnified, subject to relevant contract
exclusions. Loss is essentially the legal liability on claims against
a director or officer, including damages, judgements, settlements,
costs, charges and expenses (excluding salaries of officers or
employees) incurred in the defense of actions, suits or proceedings
and appeals therefrom.
There are a number of exclusions from coverage. Among the matters
excluded are Losses arising as the result of (1) fines or penalties
imposed by law or other matters that may be deemed uninsurable under
the law pursuant to which the Policy is construed, (2) claims brought
about or contributed to by the fraudulent, dishonest, or criminal acts
of a director or officer, (3) any claim made against the directors or
officers for violation of any of the responsibilities, obligations, or
duties imposed upon fiduciaries by the Employee Retirement Income
Security Act of 1974 or amendments thereto, (4) professional errors or
omissions, and (5) claims for an accounting of profits in fact made
from the purchase or sale by a director or officer of any securities
of the insured corporations within the meaning of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any state statutory law.
The limit of coverage of the Policy is $10 million, as an annual
aggregate limit, with 95% co-insurance for the first $1 million of
coverage, and with a deductible of $500,000 in the event that Fidelity
Investments Life indemnifies the director or officer, or a deductible
of $5,000 per individual director or officer (with a maximum aggregate
per loss deductible of $25,000) if Fidelity Investments Life does not
indemnify the director or officer.
Utah 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
Robert P. Mazzarella Director and President
Rodney R. Rohda Director
Edward L. McCartney Executive Vice President
J. Peter Benzie Executive Vice President
Bruce MacAlpine Vice President
Kenneth Klipper Treasurer
Gary Greenstein Assistant Treasurer
Jeffrey R. Larsen Legal Counsel & Clerk
Linda Holland Compliance Officer
Richard Blades Compliance Registered Options Principal
Jay Freedman Assistant Clerk
(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. 6 to the Registration
Statement to be signed on its behalf in the city of Boston and the
Commonwealth of Massachusetts, on this 28th day of April, 1998.
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
(Registrant)
By: FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(Depositor)
By: Attest:
Rodney R. Rohda, President Chairman David J. Pearlman,
Chief Operating Officer and Chief Executive Officer
Secretary
As required by the Securities Act of 1933, this Post-Effective
Amendment No. 6 to the Registration Statement has been signed below by
the following persons in the capacities indicated on this 28th day of
August, 1998.
Signature Title
_________________ President, Chairman and Director
Rodney R. Rohda (Chief Executive Officer)
(Chief Operating 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 )
Denis M. McCarthy )
FIDELITY (LOGO) INVESTMENTS(registered trademark) FMR Corp.
82 Devonshire Street
Boston MA 02109-3614
617 563 7000
April 28, 1998
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., I have
provided legal advice to Fidelity Investments Life Insurance Company
("Fidelity Life"), with respect to the existence of Fidelity
Investments Variable Annuity Account I (the "Account") pursuant to
Section 31A-5-217.5 of the Utah Insurance Code. The Account was
established by Fidelity Life on July 22, 1987 for investment of assets
under certain variable annuity contracts (the "Contracts"). I have
participated in the preparation and review of Post-Effective Amendment
No. 6 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. 33-54926 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 was duly created under the laws of the Commonwealth of
Pennsylvania and validly exists as a separate account of Fidelity Life
under the laws 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,
/s/David J. Pearlman
David J. Pearlman
April 10, 1997
Fidelity Investments Life Insurance Company
Fidelity Investments Variable Annuity Account I
82 Devonshire Street
Boston, Massachusetts 02109
Re: Registration No. 33-54926
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. 6 to the Registration Statement on
Form N-4 (File No. 33-54926) 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 BOROS CICCETTI 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. 33-54926) of our reports dated January 28, 1998, 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 24, 1998
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