As filed with the SEC on February 10, 2000
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. [8]
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 [X]
Amendment No. [10]
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, 1998 was filed March 30, 1999.
It is proposed that this filing will become effective (check
appropriate space):
immediately upon filing pursuant to paragraph (b) of rule 485
on ______, pursuant to paragraph (b) (1) (iii) of rule 485
60 days after filing pursuant to paragraph (a) (1) of rule 485
X on April 30, 2000, pursuant to paragraph (a) (1) of rule 485
75 days after filing pursuant to paragraph (a) (2) of rule 485
on , pursuant to paragraph (a) (2) of rule 485
Page _ of _
Exhibit Index Appears on Page __
CROSS REFERENCE TO ITEMS REQUIRED BY FORM N-4
Part A
Item N-4 Item Heading in Prospectus
Item 1. Cover Page Cover Page
Item 2. Definitions Glossary
Item 3. Synopsis or Highlights Summary of the Contract
Item 4. Condensed Financial Information 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. Not Applicable
PROSPECTUS
FIDELITY INCOME ADVANTAGE
INTRODUCTION
This prospectus describes a single premium variable income
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.
There are three types of Contracts. You may purchase:
(1) a "NON-QUALIFIED CONTRACT" with money from any source;
(2) 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; and
(3) a "TAX-SHELTERED ANNUITY CONTRACT" arranged with your employer
using money from a 403(b) tax-sheltered annuity plan.
The Con tract provides you (the "Annuitant") with the opportunity to
receive annuity income for life 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.
Or, i f you have a qualified Contract, you may choose a Contract
which permits you to withdraw part or all of the Withdrawal Value of
your Contract. Withdrawals are only available for allocations to
variable annuity income. Withdrawals may result in a reduction or
elimination of future annuity income. A Contract with a Withdrawal
Option will provide slightly less annuity income than an otherwise
identical Contract that does not permit withdrawals.
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.
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 145.
INVESTMENT OPTIONS
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.
The Investment Options also invest in mutual fund portfolios managed
by MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC. ("MSDW
INVESTMENT MANAGEMENT"), PILGRIM BAXTER & ASSOCIATES, LTD. or PILGRIM
BAXTER VALUE INVESTORS, INC., ("PBHG"), Strong Capital Management,
Inc. ("STRONG") and Warburg Pincus Asset Management, Inc. ("WARBURG
PINCUS") ("Other Funds").
All mutual fund portfolios available in this prospectus are
collectively known as the "Funds." Additional Investment Options may
be added in the future.
LEGAL INFORMATION
This prospectus provides information that you should know before
purchasing a Contract. We have filed additional information about the
Contract and the Variable Account with the U.S. Securities and
Exchange Commission in a Statement of Additional Information dated
April 30, 2000. The Statement of Additional Information is
incorporated by reference in this prospectus and is available without
charge by calling FILI at 1-800-544-2442 or by accessing the SEC
Internet website at (http://www.sec.gov). The table of contents of the
Statement of Additional Information appears on page 164.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. 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 PROSPECTUSES FOR ALL THE
INVESTMENT OPTIONS AVAILABLE IN THE CONTRACT.
THE CONTRACT IS NOT AVAILABLE IN ALL STATES. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT BE LAWFULLY MADE. NO PERSON IS AUTHORIZED TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS.
FOR FURTHER INFORMATION CALL FIDELITY INVESTMENTS LIFE
Nationally 1-800-544-2442
Date: April 30, 2000
PROSPECTUS CONTENTS
GLOSSARY 9
Summary of the Contract 11
FACTS ABOUT FILI, THE
VARIABLE ACCOUNT AND THE FUNDS
FILI 15
The Variable Account 6
The Funds 16
FACTS ABOUT THE CONTRACT
Purchase of a Contract 32
Free Look Privilege 32
Investment Allocation of Your 33
Purchase Payment
Charges 35
Annuity Income Dates 36
Signature Guarantee 36
Death Benefit 36
Fixed, Variable or 37
Combination Annuity Income
Benchmark Rate of Return 38
Types of Annuity Income 39
Options
Annuity Income Including 40
Withdrawal Options
Guarantee Period 40
Variable Annuity Income 42
Provisions
Surrender and Withdrawal 43
Provisions
Reports 44
MORE ABOUT THE CONTRACT
Tax Considerations 146
OTHER CONTRACT PROVISIONS
Selling the Contracts 52
Postponement of Benefits 52
MORE ABOUT THE VARIABLE
ACCOUNT AND THE FUNDS
Changes in Investment Options 53
Total Return for an 53
Investment Option
Voting Rights 149
Resolving Material Conflicts 54
Performance 54
Litigation 55
Appendix - Illustrations of 151
Values
Table of Contents of the 164
Statement of Additional
Information
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 and the following description assumes you make no
withdrawals.
The estimated first annuity income amount is calculated assuming
that the Investment Options will earn the Benchmark Rate of Return you
choose. If the annualized Total Return (performance after all
expenses) of the Investment Options you choose matches the benchmark,
annuity income will stay constant. If the Total Return exceeds the
benchmark, annuity income will increase. If the Total Return 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.
EXCHANGES AMONG VARIABLE SUBACCOUNTS - Transactions where
you transfer amounts among the investment options.
FUNDS - Variable Insurance Products Fund, Variable Insurance Products
Fund II, Variable Insurance Products Fund III, and Other Funds
available in the Contract.
GUARANTEE PERIOD - The minimum period of time that income is
guaranteed to you or your heirs. If the Annuitant(s) die prior to the
end of the Guarantee Period, your beneficiary will continue to receive
income for the remainder of the Guarantee Period (or can choose a
commuted value as a lump sum benefit). Guarantee Periods available
range from 5 - 45 years.
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.
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.
TOTAL RETURN - An index used to measure the investment
performance of an Investment Option, after all expenses.
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.
WITHDRAWAL (LIQUIDITY) PERIOD - Period of time you can take
money out of your annuity. The initial Withdrawal Period will be equal
to the life expectancy of the Annuitant(s). The life expectancy in
whole numbers is determined by IRS guidelines. If no withdrawals are
made from your annuity, the Withdrawal Period will operate as a
Guarantee Period. The length of the Withdrawal Period may shorten if a
withdrawal is made five or more years after your first income annuity
date. Withdrawals are only available for allocations to variable
annuity income.
WITHDRAWAL VALUE - The total amount you can take out of your
annuity during the Withdrawal Period is known as your Withdrawal
Value. The Withdrawal Value is only available for allocations to
variable annuity income.
YOU - The Annuitant. The Annuitant is always an Owner.
THIS PAGE INTENTIONALLY LEFT BLANK
SUMMARY OF THE CONTRACT
PURPOSE
This variable annuity contract provides periodic annuity income for
your life, or for your life and the life of a Joint Annuitant unless
you choose to surrender the Contract, if allowed. You may select from
a number of annuity income options. You may also choose a guaranteed
minimum number of years of annuity income or, if you h ave a
qualified Contract, you may choose a Withdrawal option. See TYPES OF
ANNUITY INCOME OPTIONS on page 144 and ANNUITY INCOME INCLUDING
WITHDRAWAL OPTIONS on page 40. 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
37.
ANNUITY INCOME
We guarantee to provide annuity income for each Annuity Income Date
for your lifetime and for the lifetime of the Joint Annuitant, if any
(unless you choose to surrender the Contract, if allowed). 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.
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.
PURCHASE OF CONTRACT
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.
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.
INVESTMENT OPTIONS
You allocate your Purchase Payment between variable and fixed annuity
income on your application. This allocation may not be changed. 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.
There are currently twenty-eight variable Subaccounts.
(small solid bullet) Five Subaccounts invest in shares of one of the
mutual fund portfolios of Fidelity Variable Insurance Products Fund.
The Variable Insurance Products Fund currently offers Money Market
Portfolio, High Income Portfolio, Equity-Income Portfolio, Growth
Portfolio, and Overseas Portfolio.
(small solid bullet) Five Investment Options invest in shares of one
of the mutual fund portfolios of Fidelity Variable Insurance Products
Fund II. The Variable Insurance Products Fund II currently offers
Investment Grade Bond Portfolio, Asset Manager Portfolio, Index 500
Portfolio, Asset Manager: Growth Portfolio, and Contrafund Portfolio.
(small solid bullet) Three Investment Options invest in shares of one
of the mutual fund portfolios of Fidelity Variable Insurance Products
Fund III. The Variable Insurance Products Fund III currently offers
Growth & Income Portfolio, Balanced Portfolio, and Growth
Opportunities Portfolio.
(small solid bullet) The remaining Investment Options invest in shares
of one of the mutual fund portfolios of Morgan Stanley Dean Witter,
PBHG, Strong, or Warburg Pincus.
FREE LOOK PERIOD
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, YOU CANNOT RETURN THE CONTRACT 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 141.
IMPORTANT
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.
FEE TABLE
This information may assist you in understanding the various costs and
expenses that a Contract Owner 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 for additional information.
CONTRACT EXPENSES
NONE
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of Portfolio average net assets)
Mortality and Expense Risk 0.75%
Charge
Account Fees and Expenses:
Administrative Charge 0.25%
Total Separate Account Annual 1.00%
Expenses
PORTFOLIO ANNUAL EXPENSES
(as a percentage of Portfolio average net assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITYA Management Fees Other Expenses Total Annual Expenses (after
reimbursement)
Asset Manager 0.54% 0.09% 0.63%
Money Market 0.20% 0.10% 0.30%
Investment Grade Bond 0.43% 0.14% 0.57%
High Income 0.58% 0.12% 0.70%
Equity-Income 0.49% 0.08% 0.57%
Index 500 0.24% 0.04% 0.28%B
Growth 0.59% 0.07% 0.66%
Overseas 0.74% 0.15% 0.89%
Asset Manager: Growth 0.59% 0.13% 0.72%
Contrafund 0.59% 0.07% 0.66%
Growth Opportunities 0.59% 0.11% 0.70%
Balanced 0.44% 0.14% 0.58%
Growth & Income 0.49% 0.11% 0.60%
MSDW INVESTMENT MANAGEMENT
Emerging Markets Debt 0.27% 1.25% 1.52%C
Emerging Markets Equity 0.00% 1.95% 1.95%C
Global Equity 0.32% 0.83% 1.15%C
International Magnum 0.15% 1.00% 1.15%C
PBHG
Select 20 0.84% 0.36% 1.20%D
Growth II 0.51% 0.69% 1.20%D
Large Cap Value 0.18% 0.82% 1.00%D
Small Cap Value 0.74% 0.46% 1.20%D
Technology & Communications 0.49% 0.71% 1.20%D
STRONG
Discovery Fund II 1.00% 0.18% 1.18%
Growth Fund II* 1.00% 0.20% 1.20%E
Opportunity Fund II 1.00% 0.16% 1.16%
WARBURG PINCUS
International Equity 1.00% 0.33% 1.33%F
Post-Venture Capital 1.08% 0.32% 1.40%F
Small Company Growth 0.90% 0.24% 1.14%F
</TABLE>
A A PORTION OF THE BROKERAGE COMMISSIONS THAT CERTAIN FUNDS PAY WAS
USED TO REDUCE FUND EXPENSES. IN ADDITION, CERTAIN FUNDS, OR FMR ON
BEHALF OF CERTAIN FUNDS, HAVE ENTERED INTO ARRANGEMENTS WITH THEIR
CUSTODIAN WHEREBY CREDITS REALIZED AS A RESULT OF UNINVESTED CASH
BALANCES WERE USED TO REDUCE CUSTODIAN EXPENSES. WITHOUT THESE
REDUCTIONS, THE TOTAL OPERATING EXPENSES PRESENTED IN THE TABLE WOULD
HAVE BEEN .58% FOR EQUITY-INCOME PORTFOLIO, .68% FOR GROWTH PORTFOLIO,
.91% FOR OVERSEAS PORTFOLIO, .64% FOR ASSET MANAGER PORTFOLIO, .70%
FOR CONTRAFUND PORTFOLIO, .73% FOR ASSET MANAGER: GROWTH PORTFOLIO,
.71% FOR GROWTH OPPORTUNITIES PORTFOLIO, .59% FOR BALANCED PORTFOLIO,
AND .61% FOR GROWTH AND INCOME PORTFOLIO.
B 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 .24%, .11% AND
.35%, RESPECTIVELY.
C MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC., WITH RESPECT
TO THE PORTFOLIOS, HAS VOLUNTARILY AGREED TO WAIVE RECEIPT OF ITS
MANAGEMENT FEES AND AGREED TO REIMBURSE CERTAIN EXPENSES OF THE
PORTFOLIO. MSDW INVESTMENT MANAGEMENT MAY TERMINATE THIS VOLUNTARY
WAIVER AND REIMBURSEMENT AT ANY TIME AT ITS SOLE DISCRETION. WITHOUT
WAIVERS AND REIMBURSEMENTS, "MANAGEMENT FEES," "OTHER EXPENSES" AND
"TOTAL ANNUAL EXPENSES," RESPECTIVELY, WOULD BE AS FOLLOWS: EMERGING
MARKETS DEBT PORTFOLIO (0.80%, 1.25%, 2.05%); EMERGING MARKETS EQUITY
PORTFOLIO (1.25%, 2.20%, 3.45%); GLOBAL EQUITY PORTFOLIO (0.80%,
0.83%, 1.63%); INTERNATIONAL MAGNUM PORTFOLIO (0.80%, 1.00%, 1.80%).
D PILGRIM BAXTER & ASSOCIATES, LTD. (THE "ADVISER") HAS VOLUNTARILY
AGREED TO WAIVE OR LIMIT ITS ADVISORY FEES OR ASSUME OTHER EXPENSES IN
AN AMOUNT THAT OPERATES TO LIMIT TOTAL OPERATING EXPENSES OF THE
PORTFOLIOS TO NOT MORE THAN 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, 1999.
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 .85% AND
1.54%; 1.00% AND 1.46%; 0.65% AND 1.47%; 0.85% AND 1.56%; AND 0.85%
AND 1.21%, RESPECTIVELY.
E 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.
MANAGEMENT FEES, OTHER EXPENSES, AND TOTAL ANNUAL EXPENSES FOR
DISCOVERY II, OPPORTUNITY II, AND GROWTH FUND II ARE CALCULATED ON AN
ANNUALIZED BASIS FROM THE BEGINNING OF THE FISCAL YEAR THROUGH THE
CURRENT QUARTER END. THE ADVISOR FOR THE GROWTH FUND II PORTFOLIO IS
ABSORBING EXPENSES OF 0.35%. WITHOUT THESE ABSORPTIONS THE EXPENSE
RATIO WOULD HAVE BEEN 1.55%. *GROWTH FUND II IS CURRENTLY CALLED MID
CAP GROWTH FUND II.
F 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, 1998, 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
0.33%, 0.45% AND 0.24%; AND TOTAL ANNUAL EXPENSES WOULD HAVE EQUALLED
1.33%, 1.70% AND 1.14% FOR THE INTERNATIONAL EQUITY, POST-VENTURE
CAPITAL, AND SMALL COMPANY GROWTH PORTFOLIOS, RESPECTIVELY. FEE
WAIVERS AND EXPENSE REIMBURSEMENTS OR CREDITS MAY BE DISCONTINUED AT
ANY TIME.
FACTS ABOUT FILI, THE VARIABLE ACCOUNT, AND THE FUNDS
FIDELITY INVESTMENTS LIFE
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. Edward C.
Johnson 3d, the Johnson family members, and various key employees of
FMR Corp. own the voting common stock of 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.
We own the assets in the Variable Account. The assets of the Variable
Account are kept separate from our general account assets and from any
other separate accounts we may have, as required by law. The assets of
the Variable Account may not be charged with liabilities from any
other business we conduct. 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, we
may transfer the excess to our 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 is an open-ended, 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, 1998. 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 Total
Return for that month is higher than the Benchmark Rate of Return, and
decreases for a given month if the annualized Total 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 or withdrawal period and he chooses a 5% Benchmark
Rate of Return, the Purchase Payment needed would be $74,279. If the
purchaser were female, the Purchase Payment necessary would be
$83,175. 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.
ASSET MANAGER PORTFOLIO OF FIDELITY 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 instruments.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Allocating the fund's assets among stocks, bonds,
and short-term and money market instruments.
(small solid bullet) Maintaining a neutral mix over time of 50% of
assets in stocks, 40% of assets in bonds, and 10% of assets in
short-term and money market instruments.
(small solid bullet) Adjusting allocation among asset classes
gradually within the following ranges: stock class (30% - 70%), bond
class (20% - 60%), and short-term/money market class (0% - 50%).
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Analyzing an issuer using fundamental and/or
quantitative factors and evaluating each security's current price
relative to estimated long-term value in selecting investments.
INVESTOR PROFILE. The fund may be appropriate for investors who want
to diversify among stocks, bonds, short-term instruments, and other
types of securities. The fund's assets may also be invested in other
instruments that do not fall within these classes. The graph below is
based on a 5% Benchmark Rate of Return and initial monthly annuity
income of $500.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E ASSET MANAGER
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00
Nov-86 30.00
Dec-86 31.00
Jan-87 31.00
Feb-87 28.00
Mar-87 31.00
Apr-87 30.00
May-87 31.00
Jun-87 30.00
Jul-87 31.00
Aug-87 31.00
Sep-87 30.00
Oct-87 31.00
Nov-87 30.00
Dec-87 31.00
Jan-88 31.00
Feb-88 29.00
Mar-88 31.00
Apr-88 30.00
May-88 31.00
Jun-88 30.00
Jul-88 31.00
Aug-88 31.00
Sep-88 30.00
Oct-88 31.00
Nov-88 30.00
Dec-88 31.00
Jan-89 31.00
Feb-89 28.00
Mar-89 31.00
Apr-89 30.00
May-89 31.00
Jun-89 30.00
Jul-89 31.00
Aug-89 31.00
Sep-89 30.00 $500
Oct-89 31.00 0.20 100.11% $499
Nov-89 30.00 0.40 100.32% $498
Dec-89 31.00 0.31 100.22% $497
Jan-90 31.00 -2.21 97.71% $484
Feb-90 28.00 1.03 100.95% $486
Mar-90 31.00 0.81 100.73% $488
Apr-90 30.00 -1.31 98.61% $479
May-90 31.00 5.10 105.01% $501
Jun-90 30.00 0.78 100.69% $503
Jul-90 31.00 -0.19 99.72% $499
Aug-90 31.00 -3.28 96.64% $480
Sep-90 30.00 -2.10 97.82% $468
Oct-90 31.00 0.51 100.42% $468
Nov-90 30.00 4.87 104.78% $489
Dec-90 31.00 2.90 102.81% $500
Jan-91 31.00 4.79 104.70% $522
Feb-91 28.00 3.91 103.83% $540
Mar-91 31.00 1.61 101.53% $545
Apr-91 30.00 1.50 101.42% $551
May-91 31.00 2.26 102.17% $561
Jun-91 30.00 -1.79 98.13% $548
Jul-91 31.00 2.51 102.42% $559
Aug-91 31.00 2.03 101.94% $567
Sep-91 30.00 0.58 100.50% $568
Oct-91 31.00 0.66 100.57% $569
Nov-91 30.00 -1.64 98.28% $557
Dec-91 31.00 4.32 104.23% $578
Jan-92 31.00 1.27 101.19% $582
Feb-92 29.00 1.94 101.86% $591
Mar-92 31.00 -0.24 99.67% $587
Apr-92 30.00 1.47 101.38% $592
May-92 31.00 1.04 100.96% $596
Jun-92 30.00 -0.08 99.84% $592
Jul-92 31.00 1.67 101.58% $599
Aug-92 31.00 -0.31 99.60% $594
Sep-92 30.00 0.63 100.54% $595
Oct-92 31.00 0.16 100.07% $593
Nov-92 30.00 2.18 102.10% $603
Dec-92 31.00 1.60 101.51% $610
Jan-93 31.00 1.80 101.71% $618
Feb-93 28.00 0.94 100.86% $621
Mar-93 31.00 2.83 102.74% $635
Apr-93 30.00 0.60 100.52% $636
May-93 31.00 1.70 101.61% $643
Jun-93 30.00 0.80 100.72% $645
Jul-93 31.00 1.23 101.14% $650
Aug-93 31.00 2.92 102.83% $666
Sep-93 30.00 0.07 99.99% $663
Oct-93 31.00 2.70 102.61% $677
Nov-93 30.00 -0.13 99.79% $673
Dec-93 31.00 4.05 103.96% $697
Jan-94 31.00 3.18 103.09% $716
Feb-94 28.00 -3.18 96.75% $690
Mar-94 31.00 -4.70 95.22% $654
Apr-94 30.00 0.07 99.99% $651
May-94 31.00 0.86 100.77% $654
Jun-94 30.00 -1.91 98.01% $638
Jul-94 31.00 1.73 101.64% $646
Aug-94 31.00 2.34 102.25% $658
Sep-94 30.00 -1.18 98.74% $647
Oct-94 31.00 0.49 100.40% $647
Nov-94 30.00 -1.47 98.45% $634
Dec-94 31.00 -2.20 97.72% $617
Jan-95 31.00 -0.65 99.27% $610
Feb-95 28.00 1.62 101.54% $617
Mar-95 31.00 1.32 101.23% $622
Apr-95 30.00 1.59 101.51% $629
May-95 31.00 1.28 101.19% $634
Jun-95 30.00 0.84 100.76% $636
Jul-95 31.00 3.56 103.47% $655
Aug-95 31.00 1.21 101.12% $660
Sep-95 30.00 1.26 101.18% $665
Oct-95 31.00 -1.31 98.61% $653
Nov-95 30.00 2.60 102.52% $667
Dec-95 31.00 2.53 102.44% $680
Jan-96 31.00 2.15 102.06% $692
Feb-96 29.00 -0.27 99.65% $686
Mar-96 31.00 1.06 100.97% $690
Apr-96 30.00 1.05 100.97% $694
May-96 31.00 0.78 100.69% $696
Jun-96 30.00 0.90 100.82% $699
Jul-96 31.00 -1.66 98.26% $684
Aug-96 31.00 0.20 100.11% $682
Sep-96 30.00 3.64 103.55% $703
Oct-96 31.00 2.57 102.48% $718
Nov-96 30.00 4.95 104.86% $750
Dec-96 31.00 -1.46 98.46% $735
Jan-97 31.00 3.01 102.92% $753
Feb-97 28.00 0.86 100.78% $756
Mar-97 31.00 -3.80 96.12% $724
Apr-97 30.00 3.42 103.33% $745
May-97 31.00 4.80 104.71% $777
Jun-97 30.00 2.66 102.58% $794
Jul-97 31.00 5.78 105.69% $836
Aug-97 31.00 -2.73 97.19% $809
Sep-97 30.00 3.22 103.13% $831
Oct-97 31.00 1.00% -1.64 98.28% $813
Nov-97 30.00 1.00% 2.31 102.23% $828
Dec-97 31.00 1.00% 1.52 101.43% $836
Jan-98 31.00 1.00% 0.33 100.24% $835
Feb-98 28.00 1.00% 4.50 104.42% $868
Mar-98 31.00 1.00% 2.90 102.81% $889
Apr-98 30.00 1.00% -0.12 99.80% $884
May-98 31.00 1.00% -0.53 99.39% $875
Jun-98 30.00 1.00% 1.95 101.87% $888
Jul-98 31.00 1.00% -0.64 99.28% $877
Aug-98 31.00 1.00% -9.10 90.82% $794
Sep-98 30.00 1.00% 3.34 103.25% $816
Oct-98 31.00 1.00% 4.35 104.26% $847
Nov-98 30.00 1.00% 3.81 103.72% $875
Dec-98 31.00 1.00% 4.13 104.04% $907
Listed in Order Max 907
to match MFPR Min 468
</TABLE>
MONEY MARKET PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND seeks as
high a level of current income as is consistent with the preservation
of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Investing in U.S. dollar-denominated money market
securities, including U.S. Government securities and repurchase
agreements, and entering into reverse repurchase agreements.
(small solid bullet) Investing more than 25% of total assets in the
financial services industry.
(small solid bullet) Investing in compliance with industry-standard
requirements for money market funds for the quality, maturity, and
diversification of investments.
INVESTOR PROFILE. 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. An investment in the fund is not a deposit
of a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the
fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund. The
graph below is based on a 5% Benchmark Rate of Return and initial
monthly annuity income of $500.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E MONEY MARKET
Apr-82 0.01 $500
May-82 31.00 1.16 101.07% $503
Jun-82 30.00 1.12 101.04% $506
Jul-82 31.00 1.18 101.09% $510
Aug-82 31.00 1.03 100.94% $513
Sep-82 30.00 0.89 100.81% $515
Oct-82 31.00 0.86 100.78% $516
Nov-82 30.00 0.80 100.71% $518
Dec-82 31.00 0.77 100.68% $519
Jan-83 31.00 0.72 100.63% $521
Feb-83 28.00 0.63 100.56% $521
Mar-83 31.00 0.70 100.61% $523
Apr-83 30.00 0.68 100.60% $524
May-83 31.00 0.69 100.60% $525
Jun-83 30.00 0.68 100.60% $526
Jul-83 31.00 0.77 100.69% $527
Aug-83 31.00 0.80 100.72% $529
Sep-83 30.00 0.79 100.70% $530
Oct-83 31.00 0.80 100.71% $532
Nov-83 30.00 0.76 100.68% $533
Dec-83 31.00 0.77 100.68% $535
Jan-84 31.00 0.77 100.69% $536
Feb-84 29.00 0.73 100.65% $537
Mar-84 31.00 0.80 100.71% $539
Apr-84 30.00 0.80 100.72% $541
May-84 31.00 0.85 100.76% $543
Jun-84 30.00 0.85 100.77% $545
Jul-84 31.00 0.91 100.82% $547
Aug-84 31.00 0.92 100.83% $549
Sep-84 30.00 0.90 100.82% $551
Oct-84 31.00 0.90 100.81% $553
Nov-84 30.00 0.79 100.71% $555
Dec-84 31.00 0.75 100.66% $557
Jan-85 31.00 0.71 100.62% $558
Feb-85 28.00 0.62 100.54% $559
Mar-85 31.00 0.70 100.61% $560
Apr-85 30.00 0.68 100.60% $561
May-85 31.00 0.68 100.60% $562
Jun-85 30.00 0.62 100.54% $563
Jul-85 31.00 0.63 100.54% $563
Aug-85 31.00 0.63 100.55% $564
Sep-85 30.00 0.62 100.53% $565
Oct-85 31.00 0.65 100.56% $566
Nov-85 30.00 0.63 100.55% $566
Dec-85 31.00 0.65 100.57% $567
Jan-86 31.00 0.65 100.56% $568
Feb-86 28.00 0.57 100.50% $569
Mar-86 31.00 0.62 100.54% $570
Apr-86 30.00 0.57 100.49% $570
May-86 31.00 0.56 100.47% $570
Jun-86 30.00 0.54 100.45% $571
Jul-86 31.00 0.55 100.46% $571
Aug-86 31.00 0.52 100.44% $571
Sep-86 30.00 0.48 100.39% $571
Oct-86 31.00 0.49 100.40% $571
Nov-86 30.00 0.47 100.38% $571
Dec-86 31.00 0.49 100.40% $571
Jan-87 31.00 0.50 100.41% $571
Feb-87 28.00 0.43 100.36% $571
Mar-87 31.00 0.48 100.40% $570
Apr-87 30.00 0.48 100.40% $570
May-87 31.00 0.52 100.43% $571
Jun-87 30.00 0.52 100.44% $571
Jul-87 31.00 0.54 100.45% $571
Aug-87 31.00 0.54 100.45% $571
Sep-87 30.00 0.53 100.45% $572
Oct-87 31.00 0.57 100.49% $572
Nov-87 30.00 0.54 100.46% $572
Dec-87 31.00 0.59 100.51% $573
Jan-88 31.00 0.58 100.49% $573
Feb-88 29.00 0.51 100.43% $573
Mar-88 31.00 0.54 100.46% $574
Apr-88 30.00 0.52 100.44% $574
May-88 31.00 0.55 100.47% $574
Jun-88 30.00 0.56 100.48% $575
Jul-88 31.00 0.60 100.51% $575
Aug-88 31.00 0.63 100.55% $576
Sep-88 30.00 0.63 100.55% $577
Oct-88 31.00 0.66 100.57% $578
Nov-88 30.00 0.65 100.57% $579
Dec-88 31.00 0.71 100.63% $580
Jan-89 31.00 0.74 100.65% $581
Feb-89 28.00 0.67 100.59% $582
Mar-89 31.00 0.78 100.69% $584
Apr-89 30.00 0.77 100.69% $586
May-89 31.00 0.79 100.71% $587
Jun-89 30.00 0.75 100.67% $589
Jul-89 31.00 0.75 100.67% $590
Aug-89 31.00 0.73 100.64% $592
Sep-89 30.00 0.71 100.63% $593
Oct-89 31.00 0.69 100.60% $594
Nov-89 30.00 0.68 100.59% $595
Dec-89 31.00 0.71 100.62% $597
Jan-90 31.00 0.66 100.57% $597
Feb-90 28.00 0.60 100.53% $598
Mar-90 31.00 0.69 100.60% $600
Apr-90 30.00 0.63 100.55% $600
May-90 31.00 0.67 100.58% $601
Jun-90 30.00 0.64 100.56% $602
Jul-90 31.00 0.66 100.58% $603
Aug-90 31.00 0.65 100.56% $604
Sep-90 30.00 0.63 100.54% $605
Oct-90 31.00 0.65 100.57% $606
Nov-90 30.00 0.63 100.55% $607
Dec-90 31.00 0.65 100.56% $608
Jan-91 31.00 0.64 100.55% $608
Feb-91 28.00 0.54 100.46% $609
Mar-91 31.00 0.50 100.41% $609
Apr-91 30.00 0.56 100.48% $609
May-91 31.00 0.50 100.41% $609
Jun-91 30.00 0.44 100.36% $609
Jul-91 31.00 0.52 100.43% $609
Aug-91 31.00 0.46 100.38% $609
Sep-91 30.00 0.47 100.39% $609
Oct-91 31.00 0.45 100.37% $609
Nov-91 30.00 0.41 100.33% $608
Dec-91 31.00 0.44 100.35% $608
Jan-92 31.00 0.41 100.32% $607
Feb-92 29.00 0.34 100.26% $606
Mar-92 31.00 0.37 100.28% $606
Apr-92 30.00 0.33 100.25% $605
May-92 31.00 0.30 100.22% $604
Jun-92 30.00 0.33 100.25% $603
Jul-92 31.00 0.31 100.22% $601
Aug-92 31.00 0.30 100.22% $600
Sep-92 30.00 0.28 100.20% $599
Oct-92 31.00 0.28 100.19% $598
Nov-92 30.00 0.29 100.21% $597
Dec-92 31.00 0.30 100.21% $595
Jan-93 31.00 0.28 100.19% $594
Feb-93 28.00 0.26 100.18% $593
Mar-93 31.00 0.29 100.20% $592
Apr-93 30.00 0.26 100.18% $590
May-93 31.00 0.24 100.15% $589
Jun-93 30.00 0.29 100.21% $588
Jul-93 31.00 0.26 100.17% $586
Aug-93 31.00 0.27 100.18% $585
Sep-93 30.00 0.25 100.17% $584
Oct-93 31.00 0.24 100.15% $582
Nov-93 30.00 0.27 100.19% $581
Dec-93 31.00 0.27 100.18% $580
Jan-94 31.00 0.27 100.18% $578
Feb-94 28.00 0.24 100.16% $577
Mar-94 31.00 0.29 100.20% $576
Apr-94 30.00 0.28 100.20% $575
May-94 31.00 0.34 100.25% $574
Jun-94 30.00 0.34 100.26% $573
Jul-94 31.00 0.34 100.25% $572
Aug-94 31.00 0.40 100.31% $571
Sep-94 30.00 0.38 100.30% $571
Oct-94 31.00 0.41 100.32% $570
Nov-94 30.00 0.41 100.33% $570
Dec-94 31.00 0.45 100.36% $570
Jan-95 31.00 0.50 100.41% $570
Feb-95 28.00 0.45 100.37% $569
Mar-95 31.00 0.50 100.41% $569
Apr-95 30.00 0.45 100.37% $569
May-95 31.00 0.53 100.44% $569
Jun-95 30.00 0.48 100.40% $569
Jul-95 31.00 0.49 100.40% $569
Aug-95 31.00 0.48 100.39% $569
Sep-95 30.00 0.45 100.37% $569
Oct-95 31.00 0.49 100.40% $569
Nov-95 30.00 0.46 100.38% $569
Dec-95 31.00 0.44 100.35% $568
Jan-96 31.00 0.49 100.40% $568
Feb-96 29.00 0.42 100.34% $568
Mar-96 31.00 0.41 100.32% $568
Apr-96 30.00 0.45 100.37% $567
May-96 31.00 0.43 100.34% $567
Jun-96 30.00 0.39 100.31% $567
Jul-96 31.00 0.47 100.38% $566
Aug-96 31.00 0.43 100.34% $566
Sep-96 30.00 0.45 100.37% $566
Oct-96 31.00 0.45 100.36% $565
Nov-96 30.00 0.42 100.34% $565
Dec-96 31.00 0.46 100.37% $565
Jan-97 31.00 0.45 100.36% $565
Feb-97 28.00 0.40 100.32% $564
Mar-97 31.00 0.44 100.35% $564
Apr-97 30.00 0.44 100.36% $564
May-97 31.00 0.44 100.35% $563
Jun-97 30.00 0.46 100.38% $563
Jul-97 31.00 0.46 100.37% $563
Aug-97 31.00 0.43 100.34% $563
Sep-97 30.00 0.47 100.39% $562
Oct-97 31.00 1.00% 0.46 100.37% $562
Nov-97 30.00 1.00% 0.41 100.33% $562
Dec-97 31.00 1.00% 0.50 100.41% $562
Jan-98 31.00 1.00% 0.45 100.36% $562
Feb-98 28.00 1.00% 0.42 100.34% $561
Mar-98 31.00 1.00% 0.47 100.38% $561
Apr-98 30.00 1.00% 0.44 100.36% $561
May-98 31.00 1.00% 0.43 100.34% $561
Jun-98 30.00 1.00% 0.47 100.39% $560
Jul-98 31.00 1.00% 0.46 100.37% $560
Aug-98 31.00 1.00% 0.46 100.37% $560
Sep-98 30.00 1.00% 0.44 100.36% $560
Oct-98 31.00 1.00% 0.43 100.34% $559
Nov-98 30.00 1.00% 0.44 100.36% $559
Dec-98 31.00 1.00% 0.43 100.34% $559
Listed in Order Max 609
to match MFPR Min 500
</TABLE>
INVESTMENT GRADE BOND PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND II
seeks a high level of current income.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Investing in U.S. dollar-denominated
investment-grade bonds.
(small solid bullet) Managing the fund to have similar overall
interest rate risk to the Lehman Brothers Aggregate Bond Index.
(small solid bullet) Allocating assets across different market sectors
and maturities.
(small solid bullet) Analyzing a security's structural features,
current pricing and trading opportunities, and the credit quality of
its issuer in selecting investments.
INVESTOR PROFILE. The fund may be appropriate for investors who want
the potential for high current income from a portfolio of
investment-grade debt securities. The fund's level of risk and
potential reward depend on the quality and maturity of its
investments, and has overall interest rate risk similar to the index.
The graph below is based on a 5% Benchmark Rate of Return and initial
monthly annuity income of $500.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E INVESTMENT GRADE BOND
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00
Nov-86 30.00
Dec-86 31.00
Jan-87 31.00
Feb-87 28.00
Mar-87 31.00
Apr-87 30.00
May-87 31.00
Jun-87 30.00
Jul-87 31.00
Aug-87 31.00
Sep-87 30.00
Oct-87 31.00
Nov-87 30.00
Dec-87 31.00
Jan-88 31.00
Feb-88 29.00
Mar-88 31.00
Apr-88 30.00
May-88 31.00
Jun-88 30.00
Jul-88 31.00
Aug-88 31.00
Sep-88 30.00
Oct-88 31.00
Nov-88 30.00
Dec-88 31.00 $500
Jan-89 31.00 0.87 100.78% $502
Feb-89 28.00 0.22 100.14% $501
Mar-89 31.00 0.62 100.54% $501
Apr-89 30.00 1.11 101.03% $504
May-89 31.00 1.11 101.03% $507
Jun-89 30.00 1.92 101.84% $515
Jul-89 31.00 1.56 101.47% $520
Aug-89 31.00 -0.80 99.12% $513
Sep-89 30.00 0.39 100.31% $513
Oct-89 31.00 1.55 101.46% $518
Nov-89 30.00 0.86 100.78% $520
Dec-89 31.00 0.41 100.32% $520
Jan-90 31.00 -0.23 99.69% $516
Feb-90 28.00 0.57 100.49% $517
Mar-90 31.00 0.30 100.22% $516
Apr-90 30.00 0.04 99.96% $513
May-90 31.00 1.57 101.48% $519
Jun-90 30.00 0.78 100.70% $520
Jul-90 31.00 0.99 100.91% $523
Aug-90 31.00 -0.01 99.91% $520
Sep-90 30.00 0.39 100.31% $520
Oct-90 31.00 0.01 99.92% $517
Nov-90 30.00 0.60 100.52% $518
Dec-90 31.00 1.04 100.95% $521
Jan-91 31.00 0.20 100.12% $519
Feb-91 28.00 1.01 100.93% $522
Mar-91 31.00 1.69 101.61% $528
Apr-91 30.00 1.47 101.39% $533
May-91 31.00 0.77 100.69% $535
Jun-91 30.00 0.19 100.11% $533
Jul-91 31.00 0.86 100.77% $535
Aug-91 31.00 2.09 102.00% $543
Sep-91 30.00 1.86 101.77% $551
Oct-91 31.00 1.09 101.01% $554
Nov-91 30.00 1.08 101.00% $557
Dec-91 31.00 2.98 102.90% $571
Jan-92 31.00 -0.99 98.92% $563
Feb-92 29.00 0.55 100.47% $563
Mar-92 31.00 -0.18 99.73% $559
Apr-92 30.00 0.73 100.65% $561
May-92 31.00 1.54 101.45% $566
Jun-92 30.00 1.16 101.08% $570
Jul-92 31.00 2.03 101.94% $579
Aug-92 31.00 0.60 100.52% $580
Sep-92 30.00 1.20 101.12% $584
Oct-92 31.00 -1.27 98.65% $573
Nov-92 30.00 -0.26 99.66% $569
Dec-92 31.00 1.42 101.33% $574
Jan-93 31.00 2.10 102.01% $583
Feb-93 28.00 1.70 101.62% $591
Mar-93 31.00 0.44 100.35% $590
Apr-93 30.00 0.61 100.53% $591
May-93 31.00 0.17 100.08% $589
Jun-93 30.00 1.91 101.83% $597
Jul-93 31.00 0.68 100.59% $599
Aug-93 31.00 1.78 101.69% $606
Sep-93 30.00 0.50 100.42% $606
Oct-93 31.00 0.50 100.41% $606
Nov-93 30.00 -0.49 99.43% $600
Dec-93 31.00 0.59 100.50% $601
Jan-94 31.00 1.13 101.04% $605
Feb-94 28.00 -1.64 98.28% $592
Mar-94 31.00 -2.28 97.64% $576
Apr-94 30.00 -0.90 99.02% $568
May-94 31.00 -0.27 99.64% $563
Jun-94 30.00 -0.27 99.65% $559
Jul-94 31.00 1.64 101.55% $566
Aug-94 31.00 0.09 100.00% $563
Sep-94 30.00 -1.08 98.84% $554
Oct-94 31.00 0.09 100.00% $552
Nov-94 30.00 0.18 100.10% $550
Dec-94 31.00 -0.45 99.47% $545
Jan-95 31.00 1.45 101.36% $550
Feb-95 28.00 1.93 101.85% $559
Mar-95 31.00 0.64 100.55% $559
Apr-95 30.00 1.36 101.28% $564
May-95 31.00 4.01 103.92% $584
Jun-95 30.00 0.77 100.69% $586
Jul-95 31.00 -0.34 99.57% $581
Aug-95 31.00 1.19 101.10% $585
Sep-95 30.00 0.93 100.85% $587
Oct-95 31.00 1.34 101.25% $592
Nov-95 30.00 1.48 101.40% $598
Dec-95 31.00 1.38 101.29% $603
Jan-96 31.00 0.64 100.55% $604
Feb-96 29.00 -1.83 98.09% $590
Mar-96 31.00 -0.77 99.15% $583
Apr-96 30.00 -0.60 99.32% $576
May-96 31.00 -0.17 99.74% $573
Jun-96 30.00 1.21 101.13% $577
Jul-96 31.00 0.26 100.17% $575
Aug-96 31.00 -0.09 99.82% $572
Sep-96 30.00 1.62 101.54% $578
Oct-96 31.00 2.19 102.10% $588
Nov-96 30.00 1.65 101.57% $595
Dec-96 31.00 -0.89 99.03% $587
Jan-97 31.00 0.25 100.16% $585
Feb-97 28.00 0.13 100.05% $583
Mar-97 31.00 -1.04 98.88% $574
Apr-97 30.00 1.49 101.41% $580
May-97 31.00 0.78 100.69% $582
Jun-97 30.00 1.20 101.12% $586
Jul-97 31.00 2.70 102.61% $599
Aug-97 31.00 -0.90 99.02% $590
Sep-97 30.00 1.49 101.41% $596
Oct-97 31.00 1.00% 1.31 101.22% $601
Nov-97 30.00 1.00% 0.24 100.16% $600
Dec-97 31.00 1.00% 1.12 101.03% $603
Jan-98 31.00 1.00% 1.27 101.18% $608
Feb-98 28.00 1.00% -0.07 99.85% $605
Mar-98 31.00 1.00% 0.41 100.32% $604
Apr-98 30.00 1.00% 0.50 100.42% $604
May-98 31.00 1.00% 0.90 100.81% $607
Jun-98 30.00 1.00% 0.81 100.73% $609
Jul-98 31.00 1.00% 0.24 100.15% $607
Aug-98 31.00 1.00% 1.21 101.12% $611
Sep-98 30.00 1.00% 2.47 102.39% $623
Oct-98 31.00 1.00% -0.54 99.38% $617
Nov-98 30.00 1.00% 0.86 100.78% $619
Dec-98 31.00 1.00% 0.47 100.38% $619
Listed in Order Max 623
to match MFPR Min 500
</TABLE>
HIGH INCOME PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND seeks a high
level of current income. Growth of capital may also be considered.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Investing at least 65% of total assets in
income-producing debt securities, preferred stocks and convertible
securities, with an emphasis on lower-quality debt securities.
(small solid bullet) Potentially investing in non-income producing
securities, including defaulted securities and common stocks.
(small solid bullet) Investing in companies in troubled or uncertain
financial condition.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
INVESTOR PROFILE. 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E HIGH INCOME
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00 $500
Oct-85 31.00 1.25 101.16% $504
Nov-85 30.00 1.44 101.36% $509
Dec-85 31.00 3.34 103.25% $523
Jan-86 31.00 1.24 101.15% $527
Feb-86 28.00 3.38 103.30% $542
Mar-86 31.00 2.47 102.38% $553
Apr-86 30.00 1.70 101.62% $559
May-86 31.00 1.53 101.44% $565
Jun-86 30.00 1.26 101.18% $569
Jul-86 31.00 -0.30 99.61% $565
Aug-86 31.00 0.40 100.31% $564
Sep-86 30.00 0.85 100.77% $566
Oct-86 31.00 2.99 102.90% $580
Nov-86 30.00 0.32 100.24% $579
Dec-86 31.00 0.63 100.54% $580
Jan-87 31.00 3.65 103.56% $598
Feb-87 28.00 1.73 101.65% $606
Mar-87 31.00 0.91 100.82% $608
Apr-87 30.00 -3.13 96.79% $587
May-87 31.00 -0.93 98.99% $578
Jun-87 30.00 2.16 102.08% $588
Jul-87 31.00 0.11 100.02% $586
Aug-87 31.00 0.83 100.74% $588
Sep-87 30.00 -3.48 96.44% $564
Oct-87 31.00 -4.78 95.14% $535
Nov-87 30.00 2.95 102.86% $548
Dec-87 31.00 1.60 101.51% $554
Jan-88 31.00 3.29 103.20% $569
Feb-88 29.00 2.99 102.91% $583
Mar-88 31.00 -0.72 99.20% $576
Apr-88 30.00 0.78 100.70% $578
May-88 31.00 -0.15 99.76% $574
Jun-88 30.00 2.10 102.02% $584
Jul-88 31.00 1.04 100.95% $587
Aug-88 31.00 -0.48 99.44% $581
Sep-88 30.00 0.80 100.72% $583
Oct-88 31.00 1.09 101.00% $586
Nov-88 30.00 -0.38 99.54% $581
Dec-88 31.00 0.79 100.70% $583
Jan-89 31.00 2.40 102.31% $594
Feb-89 28.00 0.49 100.41% $594
Mar-89 31.00 -1.28 98.64% $584
Apr-89 30.00 -1.11 98.81% $574
May-89 31.00 1.85 101.76% $582
Jun-89 30.00 2.86 102.78% $596
Jul-89 31.00 -0.66 99.26% $589
Aug-89 31.00 -0.58 99.34% $582
Sep-89 30.00 -3.50 96.42% $559
Oct-89 31.00 -4.29 95.63% $533
Nov-89 30.00 0.08 100.00% $531
Dec-89 31.00 -0.27 99.64% $527
Jan-90 31.00 -2.21 97.71% $512
Feb-90 28.00 -1.54 98.38% $502
Mar-90 31.00 -1.06 98.86% $494
Apr-90 30.00 0.30 100.22% $493
May-90 31.00 2.05 101.96% $501
Jun-90 30.00 1.58 101.50% $507
Jul-90 31.00 1.54 101.45% $512
Aug-90 31.00 -1.67 98.25% $501
Sep-90 30.00 -2.37 97.55% $486
Oct-90 31.00 -2.43 97.49% $472
Nov-90 30.00 2.35 102.27% $481
Dec-90 31.00 1.40 101.31% $485
Jan-91 31.00 2.12 102.03% $493
Feb-91 28.00 5.54 105.46% $518
Mar-91 31.00 3.54 103.45% $534
Apr-91 30.00 3.55 103.46% $550
May-91 31.00 1.47 101.38% $555
Jun-91 30.00 2.17 102.09% $565
Jul-91 31.00 3.78 103.69% $583
Aug-91 31.00 1.37 101.28% $588
Sep-91 30.00 2.24 102.16% $598
Oct-91 31.00 3.40 103.31% $616
Nov-91 30.00 0.85 100.77% $618
Dec-91 31.00 0.53 100.44% $618
Jan-92 31.00 5.34 105.25% $648
Feb-92 29.00 3.63 103.55% $668
Mar-92 31.00 3.23 103.14% $686
Apr-92 30.00 0.71 100.63% $688
May-92 31.00 1.20 101.11% $693
Jun-92 30.00 1.09 101.01% $697
Jul-92 31.00 1.96 101.87% $707
Aug-92 31.00 2.12 102.03% $718
Sep-92 30.00 1.04 100.96% $722
Oct-92 31.00 -1.49 98.43% $708
Nov-92 30.00 1.23 101.15% $713
Dec-92 31.00 1.03 100.94% $717
Jan-93 31.00 2.68 102.59% $733
Feb-93 28.00 1.71 101.63% $742
Mar-93 31.00 2.31 102.22% $755
Apr-93 30.00 0.66 100.58% $756
May-93 31.00 1.49 101.40% $764
Jun-93 30.00 2.58 102.50% $780
Jul-93 31.00 0.99 100.90% $784
Aug-93 31.00 1.07 100.98% $788
Sep-93 30.00 0.35 100.27% $787
Oct-93 31.00 2.36 102.27% $802
Nov-93 30.00 0.94 100.86% $805
Dec-93 31.00 1.61 101.52% $814
Jan-94 31.00 3.34 103.25% $837
Feb-94 28.00 -0.12 99.80% $832
Mar-94 31.00 -3.37 96.55% $800
Apr-94 30.00 -1.01 98.91% $788
May-94 31.00 0.19 100.10% $786
Jun-94 30.00 -0.37 99.55% $779
Jul-94 31.00 0.37 100.28% $778
Aug-94 31.00 0.00 99.91% $774
Sep-94 30.00 0.74 100.66% $776
Oct-94 31.00 -0.92 99.00% $765
Nov-94 30.00 -0.83 99.09% $755
Dec-94 31.00 0.56 100.47% $756
Jan-95 31.00 1.12 101.03% $760
Feb-95 28.00 3.43 103.35% $783
Mar-95 31.00 1.25 101.16% $789
Apr-95 30.00 2.93 102.85% $808
May-95 31.00 2.57 102.48% $825
Jun-95 30.00 0.27 100.19% $823
Jul-95 31.00 2.41 102.32% $838
Aug-95 31.00 0.79 100.70% $841
Sep-95 30.00 1.65 101.57% $851
Oct-95 31.00 0.94 100.85% $854
Nov-95 30.00 0.51 100.43% $855
Dec-95 31.00 1.18 101.09% $860
Jan-96 31.00 2.32 102.23% $876
Feb-96 29.00 1.65 101.57% $886
Mar-96 31.00 -0.26 99.65% $880
Apr-96 30.00 1.49 101.41% $888
May-96 31.00 1.38 101.29% $896
Jun-96 30.00 0.51 100.43% $896
Jul-96 31.00 -0.34 99.57% $889
Aug-96 31.00 1.45 101.36% $897
Sep-96 30.00 2.94 102.86% $919
Oct-96 31.00 -0.33 99.58% $912
Nov-96 30.00 1.06 100.98% $917
Dec-96 31.00 1.38 101.29% $925
Jan-97 31.00 1.36 101.27% $933
Feb-97 28.00 1.81 101.73% $945
Mar-97 31.00 -3.11 96.81% $911
Apr-97 30.00 1.56 101.48% $921
May-97 31.00 4.18 104.09% $955
Jun-97 30.00 1.80 101.72% $967
Jul-97 31.00 3.62 103.53% $997
Aug-97 31.00 0.85 100.76% $1,001
Sep-97 30.00 3.54 103.45% $1,031
Oct-97 31.00 1.00% -0.89 99.03% $1,017
Nov-97 30.00 1.00% 0.75 100.67% $1,020
Dec-97 31.00 1.00% 1.13 101.04% $1,026
Jan-98 31.00 1.00% 2.28 102.19% $1,044
Feb-98 28.00 1.00% 0.76 100.68% $1,047
Mar-98 31.00 1.00% 2.09 102.00% $1,064
Apr-98 30.00 1.00% 0.39 100.31% $1,063
May-98 31.00 1.00% -0.71 99.21% $1,050
Jun-98 30.00 1.00% -0.08 99.84% $1,044
Jul-98 31.00 1.00% 0.55 100.46% $1,045
Aug-98 31.00 1.00% -12.36 87.57% $911
Sep-98 30.00 1.00% -0.99 98.93% $898
Oct-98 31.00 1.00% -2.72 97.20% $869
Nov-98 30.00 1.00% 8.21 108.12% $936
Dec-98 31.00 1.00% -0.60 99.32% $925
Listed in Order Max 1,064
to match MFPR Min 472
</TABLE>
EQUITY-INCOME PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND seeks
reasonable income. The fund will consider the potential for capital
appreciation. The fund seeks a yield for its shareholders that exceeds
the yield on the securities comprising the S&P 500.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Investing at least 65% of total assets in
income-producing equity securities, which tends to lead to investments
in large cap "value" stocks.
(small solid bullet) Potentially investing in other types of equity
securities and debt securities, including lower-quality debt
securities.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
INVESTOR PROFILE. The fund may be appropriate for investors who are
willing to ride out stock market fluctuations in pursuit of
potentially above-average long-term returns. The fund is designed for
those who want some income from equity and bond securities, 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E EQUITY INCOME
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00 $500
Nov-86 30.00 2.18 102.09% $508
Dec-86 31.00 -3.00 96.92% $491
Jan-87 31.00 11.48 111.38% $544
Feb-87 28.00 2.33 102.25% $554
Mar-87 31.00 2.54 102.45% $566
Apr-87 30.00 -2.49 97.43% $549
May-87 31.00 0.62 100.53% $550
Jun-87 30.00 2.08 102.00% $558
Jul-87 31.00 3.81 103.72% $577
Aug-87 31.00 2.75 102.66% $590
Sep-87 30.00 -2.10 97.82% $574
Oct-87 31.00 -19.51 80.42% $460
Nov-87 30.00 -4.47 95.45% $437
Dec-87 31.00 5.11 105.02% $457
Jan-88 31.00 7.11 107.02% $488
Feb-88 29.00 4.96 104.87% $509
Mar-88 31.00 -1.74 98.18% $498
Apr-88 30.00 1.66 101.57% $504
May-88 31.00 1.34 101.25% $508
Jun-88 30.00 5.69 105.60% $534
Jul-88 31.00 -0.18 99.73% $531
Aug-88 31.00 -1.72 98.19% $519
Sep-88 30.00 2.97 102.89% $532
Oct-88 31.00 1.73 101.64% $538
Nov-88 30.00 -1.61 98.31% $527
Dec-88 31.00 0.91 100.83% $529
Jan-89 31.00 6.18 106.09% $559
Feb-89 28.00 -0.51 99.41% $554
Mar-89 31.00 2.17 102.08% $563
Apr-89 30.00 3.86 103.77% $582
May-89 31.00 2.97 102.88% $596
Jun-89 30.00 0.07 99.99% $594
Jul-89 31.00 5.83 105.74% $625
Aug-89 31.00 1.61 101.52% $632
Sep-89 30.00 -1.12 98.79% $622
Oct-89 31.00 -5.77 94.15% $583
Nov-89 30.00 0.57 100.49% $584
Dec-89 31.00 0.83 100.75% $585
Jan-90 31.00 -6.75 93.17% $543
Feb-90 28.00 0.59 100.52% $544
Mar-90 31.00 0.16 100.08% $542
Apr-90 30.00 -3.47 96.45% $521
May-90 31.00 6.62 106.53% $552
Jun-90 30.00 -1.00 98.92% $544
Jul-90 31.00 -2.45 97.47% $528
Aug-90 31.00 -7.99 91.94% $484
Sep-90 30.00 -7.76 92.17% $444
Oct-90 31.00 -2.55 97.37% $431
Nov-90 30.00 7.17 107.08% $459
Dec-90 31.00 2.33 102.24% $468
Jan-91 31.00 5.36 105.27% $490
Feb-91 28.00 6.89 106.80% $522
Mar-91 31.00 2.07 101.99% $530
Apr-91 30.00 0.47 100.38% $530
May-91 31.00 5.49 105.40% $556
Jun-91 30.00 -4.09 95.83% $531
Jul-91 31.00 5.67 105.58% $558
Aug-91 31.00 2.11 102.02% $567
Sep-91 30.00 -0.69 99.23% $560
Oct-91 31.00 1.67 101.58% $567
Nov-91 30.00 -4.31 95.61% $540
Dec-91 31.00 7.90 107.81% $579
Jan-92 31.00 1.35 101.26% $584
Feb-92 29.00 3.25 103.16% $601
Mar-92 31.00 -1.23 98.69% $590
Apr-92 30.00 3.13 103.05% $606
May-92 31.00 0.80 100.71% $608
Jun-92 30.00 -0.88 99.04% $599
Jul-92 31.00 3.06 102.98% $615
Aug-92 31.00 -2.19 97.73% $598
Sep-92 30.00 1.04 100.95% $601
Oct-92 31.00 1.20 101.11% $606
Nov-92 30.00 3.63 103.54% $625
Dec-92 31.00 2.82 102.73% $639
Jan-93 31.00 2.99 102.90% $655
Feb-93 28.00 2.25 102.17% $667
Mar-93 31.00 2.98 102.89% $683
Apr-93 30.00 -0.42 99.50% $677
May-93 31.00 1.81 101.72% $686
Jun-93 30.00 1.18 101.10% $690
Jul-93 31.00 1.36 101.27% $696
Aug-93 31.00 3.83 103.74% $719
Sep-93 30.00 -0.38 99.54% $713
Oct-93 31.00 0.91 100.82% $716
Nov-93 30.00 -1.75 98.17% $700
Dec-93 31.00 2.31 102.22% $713
Jan-94 31.00 4.40 104.31% $740
Feb-94 28.00 -2.58 97.34% $718
Mar-94 31.00 -4.18 95.74% $685
Apr-94 30.00 3.45 103.36% $705
May-94 31.00 0.95 100.86% $708
Jun-94 30.00 -0.62 99.30% $700
Jul-94 31.00 3.34 103.25% $720
Aug-94 31.00 5.15 105.06% $753
Sep-94 30.00 -1.64 98.28% $737
Oct-94 31.00 2.05 101.96% $749
Nov-94 30.00 -3.27 96.65% $721
Dec-94 31.00 0.33 100.24% $720
Jan-95 31.00 1.56 101.47% $727
Feb-95 28.00 3.81 103.73% $751
Mar-95 31.00 3.45 103.36% $773
Apr-95 30.00 2.78 102.70% $791
May-95 31.00 3.01 102.92% $811
Jun-95 30.00 1.44 101.36% $819
Jul-95 31.00 3.85 103.76% $846
Aug-95 31.00 1.25 101.16% $852
Sep-95 30.00 3.32 103.23% $876
Oct-95 31.00 -1.15 98.77% $862
Nov-95 30.00 4.32 104.23% $895
Dec-95 31.00 2.93 102.84% $916
Jan-96 31.00 2.91 102.82% $938
Feb-96 29.00 0.34 100.26% $937
Mar-96 31.00 1.05 100.96% $942
Apr-96 30.00 1.30 101.22% $950
May-96 31.00 1.08 100.99% $955
Jun-96 30.00 -0.92 99.00% $942
Jul-96 31.00 -4.88 95.04% $892
Aug-96 31.00 2.05 101.96% $905
Sep-96 30.00 4.28 104.19% $939
Oct-96 31.00 1.62 101.53% $950
Nov-96 30.00 6.69 106.60% $1,009
Dec-96 31.00 -1.64 98.28% $987
Jan-97 31.00 3.90 103.81% $1,020
Feb-97 28.00 1.11 101.03% $1,027
Mar-97 31.00 -3.72 96.20% $984
Apr-97 30.00 3.55 103.46% $1,014
May-97 31.00 6.20 106.11% $1,072
Jun-97 30.00 4.65 104.56% $1,116
Jul-97 31.00 7.30 107.21% $1,191
Aug-97 31.00 -4.69 95.23% $1,130
Sep-97 30.00 5.50 105.41% $1,186
Oct-97 31.00 1.00% -3.66 96.26% $1,137
Nov-97 30.00 1.00% 3.66 103.57% $1,173
Dec-97 31.00 1.00% 2.15 102.06% $1,192
Jan-98 31.00 1.00% -0.25 99.66% $1,183
Feb-98 28.00 1.00% 6.45 106.37% $1,254
Mar-98 31.00 1.00% 4.63 104.54% $1,306
Apr-98 30.00 1.00% 0.00 99.92% $1,299
May-98 31.00 1.00% -1.62 98.30% $1,272
Jun-98 30.00 1.00% 1.12 101.04% $1,280
Jul-98 31.00 1.00% -2.46 97.46% $1,242
Aug-98 31.00 1.00% -15.27 84.66% $1,047
Sep-98 30.00 1.00% 5.87 105.78% $1,103
Oct-98 31.00 1.00% 7.40 107.31% $1,179
Nov-98 30.00 1.00% 4.23 104.14% $1,223
Dec-98 31.00 1.00% 3.12 103.03% $1,255
Listed in Order Max 1,306
to match MFPR Min 431
</TABLE>
INDEX 500 PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND II seeks
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, as represented by the S&P 500, while
keeping transaction costs and other expenses low.
PRINCIPAL INVESTMENT STRATEGIES. Bankers Trust Company's ("BT," a New
York banking corporation serving as sub-adviser and custodian for VIP
II Index 500) principal investment strategies include:
(small solid bullet) Investing at least 80% of assets in common stocks
included in the S&P 500.
(small solid bullet) Lending securities to earn income for the fund.
(small solid bullet) 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. 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.
INVESTOR PROFILE. The fund may be appropriate for investors who are
willing to ride out stock market fluctuations in pursuit of
potentially above-average long-term returns in relation to the S&P
500. The graph below is based on a 5% benchmark Rate of Return and
initial annuity income of $500.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E INDEX 500
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00
Nov-86 30.00
Dec-86 31.00
Jan-87 31.00
Feb-87 28.00
Mar-87 31.00
Apr-87 30.00
May-87 31.00
Jun-87 30.00
Jul-87 31.00
Aug-87 31.00
Sep-87 30.00
Oct-87 31.00
Nov-87 30.00
Dec-87 31.00
Jan-88 31.00
Feb-88 29.00
Mar-88 31.00
Apr-88 30.00
May-88 31.00
Jun-88 30.00
Jul-88 31.00
Aug-88 31.00
Sep-88 30.00
Oct-88 31.00
Nov-88 30.00
Dec-88 31.00
Jan-89 31.00
Feb-89 28.00
Mar-89 31.00
Apr-89 30.00
May-89 31.00
Jun-89 30.00
Jul-89 31.00
Aug-89 31.00
Sep-89 30.00
Oct-89 31.00
Nov-89 30.00
Dec-89 31.00
Jan-90 31.00
Feb-90 28.00
Mar-90 31.00
Apr-90 30.00
May-90 31.00
Jun-90 30.00
Jul-90 31.00
Aug-90 31.00
Sep-90 30.00
Oct-90 31.00
Nov-90 30.00
Dec-90 31.00
Jan-91 31.00
Feb-91 28.00
Mar-91 31.00
Apr-91 30.00
May-91 31.00
Jun-91 30.00
Jul-91 31.00
Aug-91 31.00
Sep-91 30.00
Oct-91 31.00
Nov-91 30.00
Dec-91 31.00
Jan-92 31.00
Feb-92 29.00
Mar-92 31.00
Apr-92 30.00
May-92 31.00
Jun-92 30.00
Jul-92 31.00
Aug-92 31.00
Sep-92 30.00 1.16 $500
Oct-92 31.00 0.22 100.13% $499
Nov-92 30.00 3.41 103.32% $513
Dec-92 31.00 1.26 101.17% $517
Jan-93 31.00 0.64 100.55% $518
Feb-93 28.00 1.32 101.24% $522
Mar-93 31.00 2.20 102.11% $531
Apr-93 30.00 -2.55 97.37% $515
May-93 31.00 2.60 102.51% $526
Jun-93 30.00 0.26 100.18% $525
Jul-93 31.00 -0.46 99.46% $520
Aug-93 31.00 3.79 103.70% $537
Sep-93 30.00 -0.81 99.11% $530
Oct-93 31.00 2.04 101.95% $538
Nov-93 30.00 -0.97 98.95% $530
Dec-93 31.00 1.20 101.11% $534
Jan-94 31.00 3.37 103.28% $549
Feb-94 28.00 -2.71 97.22% $532
Mar-94 31.00 -4.34 95.58% $506
Apr-94 30.00 1.20 101.12% $510
May-94 31.00 1.55 101.46% $515
Jun-94 30.00 -2.44 97.48% $500
Jul-94 31.00 3.30 103.21% $514
Aug-94 31.00 3.99 103.90% $532
Sep-94 30.00 -2.43 97.49% $516
Oct-94 31.00 2.22 102.13% $525
Nov-94 30.00 -3.63 96.29% $504
Dec-94 31.00 1.46 101.37% $508
Jan-95 31.00 2.65 102.56% $519
Feb-95 28.00 3.83 103.75% $537
Mar-95 31.00 2.92 102.83% $550
Apr-95 30.00 2.94 102.86% $563
May-95 31.00 3.93 103.84% $582
Jun-95 30.00 2.27 102.19% $593
Jul-95 31.00 3.34 103.25% $609
Aug-95 31.00 0.25 100.16% $608
Sep-95 30.00 4.18 104.09% $630
Oct-95 31.00 -0.34 99.57% $625
Nov-95 30.00 4.35 104.26% $649
Dec-95 31.00 1.83 101.74% $658
Jan-96 31.00 3.42 103.33% $677
Feb-96 29.00 0.93 100.85% $680
Mar-96 31.00 1.03 100.94% $683
Apr-96 30.00 1.40 101.32% $690
May-96 31.00 2.55 102.46% $704
Jun-96 30.00 0.43 100.35% $703
Jul-96 31.00 -4.43 95.49% $669
Aug-96 31.00 2.06 101.97% $679
Sep-96 30.00 5.59 105.50% $714
Oct-96 31.00 2.76 102.67% $730
Nov-96 30.00 7.50 107.41% $781
Dec-96 31.00 -1.97 97.95% $761
Jan-97 31.00 6.20 106.11% $805
Feb-97 28.00 0.75 100.67% $807
Mar-97 31.00 -4.16 95.76% $770
Apr-97 30.00 5.94 105.85% $811
May-97 31.00 6.08 105.99% $856
Jun-97 30.00 4.39 104.30% $890
Jul-97 31.00 7.95 107.86% $956
Aug-97 31.00 -5.60 94.32% $898
Sep-97 30.00 5.41 105.32% $942
Oct-97 31.00 1.00% -3.31 96.61% $906
Nov-97 30.00 1.00% 4.52 104.43% $942
Dec-97 31.00 1.00% 1.68 101.59% $953
Jan-98 31.00 1.00% 1.08 100.99% $959
Feb-98 28.00 1.00% 7.10 107.02% $1,022
Mar-98 31.00 1.00% 5.06 104.97% $1,069
Apr-98 30.00 1.00% 0.99 100.91% $1,074
May-98 31.00 1.00% -1.79 98.13% $1,049
Jun-98 30.00 1.00% 4.07 103.98% $1,087
Jul-98 31.00 1.00% -1.09 98.83% $1,070
Aug-98 31.00 1.00% -14.47 85.46% $910
Sep-98 30.00 1.00% 6.43 106.34% $964
Oct-98 31.00 1.00% 8.12 108.03% $1,037
Nov-98 30.00 1.00% 6.02 105.93% $1,094
Dec-98 31.00 1.00% 5.88 105.79% $1,153
Listed in Order Max 1,153
to match MFPR Min 499
</TABLE>
GROWTH PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND seeks capital
appreciation.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing in companies that it believes have
above-average growth potential, measured by factors such as earnings
or revenue (stocks of these companies are often called "growth
stocks").
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
INVESTOR PROFILE. The fund may be appropriate for investors who are
willing to ride out stock market fluctuations in pursuit of
potentially above-average long-term returns. The fund is designed for
those who want to pursue growth potential, and who understand that
this strategy often leads to investments in smaller, less well-known
companies with higher than average price/earnings ratios. 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E GROWTH
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00 $500
Nov-86 30.00 2.20 102.12% $509
Dec-86 31.00 -1.86 98.06% $497
Jan-87 31.00 10.67 110.58% $547
Feb-87 28.00 4.95 104.87% $571
Mar-87 31.00 1.63 101.54% $578
Apr-87 30.00 0.00 99.92% $575
May-87 31.00 0.68 100.59% $576
Jun-87 30.00 2.94 102.86% $590
Jul-87 31.00 4.00 103.91% $611
Aug-87 31.00 2.98 102.89% $626
Sep-87 30.00 -1.14 98.78% $616
Oct-87 31.00 -21.97 77.96% $478
Nov-87 30.00 -7.02 92.90% $442
Dec-87 31.00 10.31 110.22% $485
Jan-88 31.00 2.17 102.08% $493
Feb-88 29.00 8.11 108.02% $531
Mar-88 31.00 -0.89 99.03% $524
Apr-88 30.00 1.26 101.18% $528
May-88 31.00 -0.89 99.03% $520
Jun-88 30.00 5.03 104.94% $544
Jul-88 31.00 -0.51 99.41% $538
Aug-88 31.00 -2.41 97.51% $523
Sep-88 30.00 2.82 102.74% $535
Oct-88 31.00 0.26 100.17% $534
Nov-88 30.00 -0.94 98.98% $526
Dec-88 31.00 1.03 100.94% $529
Jan-89 31.00 7.17 107.08% $564
Feb-89 28.00 -2.07 97.85% $550
Mar-89 31.00 3.02 102.93% $564
Apr-89 30.00 5.29 105.20% $591
May-89 31.00 3.58 103.49% $609
Jun-89 30.00 -1.32 98.60% $598
Jul-89 31.00 8.94 108.85% $648
Aug-89 31.00 1.71 101.62% $656
Sep-89 30.00 0.87 100.79% $658
Oct-89 31.00 -2.80 97.12% $637
Nov-89 30.00 1.64 101.56% $644
Dec-89 31.00 2.36 102.27% $656
Jan-90 31.00 -5.80 94.12% $615
Feb-90 28.00 0.96 100.88% $618
Mar-90 31.00 1.22 101.13% $622
Apr-90 30.00 -2.91 97.01% $601
May-90 31.00 8.85 108.76% $651
Jun-90 30.00 2.08 102.00% $661
Jul-90 31.00 -1.58 98.34% $648
Aug-90 31.00 -10.30 89.62% $578
Sep-90 30.00 -10.29 89.64% $516
Oct-90 31.00 -3.57 96.35% $495
Nov-90 30.00 8.10 108.01% $533
Dec-90 31.00 2.95 102.86% $546
Jan-91 31.00 6.66 106.57% $579
Feb-91 28.00 7.46 107.38% $620
Mar-91 31.00 3.02 102.93% $635
Apr-91 30.00 -0.93 98.99% $626
May-91 31.00 5.91 105.82% $660
Jun-91 30.00 -7.42 92.50% $608
Jul-91 31.00 9.53 109.44% $663
Aug-91 31.00 4.44 104.35% $689
Sep-91 30.00 0.78 100.70% $691
Oct-91 31.00 3.09 103.00% $708
Nov-91 30.00 -5.71 94.21% $665
Dec-91 31.00 13.21 113.11% $749
Jan-92 31.00 6.10 106.01% $791
Feb-92 29.00 2.09 102.01% $803
Mar-92 31.00 -6.13 93.79% $750
Apr-92 30.00 -3.92 96.00% $717
May-92 31.00 -0.85 99.07% $708
Jun-92 30.00 -3.88 96.04% $677
Jul-92 31.00 3.86 103.77% $700
Aug-92 31.00 -2.75 97.17% $677
Sep-92 30.00 1.76 101.68% $686
Oct-92 31.00 3.87 103.78% $709
Nov-92 30.00 6.68 106.59% $752
Dec-92 31.00 3.08 102.99% $772
Jan-93 31.00 1.97 101.88% $783
Feb-93 28.00 -2.06 97.86% $763
Mar-93 31.00 3.99 103.90% $790
Apr-93 30.00 -1.05 98.87% $778
May-93 31.00 7.45 107.36% $831
Jun-93 30.00 1.03 100.95% $836
Jul-93 31.00 -0.28 99.63% $830
Aug-93 31.00 5.02 104.93% $867
Sep-93 30.00 1.86 101.78% $879
Oct-93 31.00 0.96 100.87% $883
Nov-93 30.00 -4.05 95.87% $843
Dec-93 31.00 3.54 103.45% $868
Jan-94 31.00 2.51 102.42% $886
Feb-94 28.00 -1.03 98.89% $873
Mar-94 31.00 -4.54 95.38% $829
Apr-94 30.00 0.62 100.54% $830
May-94 31.00 -2.32 97.60% $807
Jun-94 30.00 -5.08 94.84% $762
Jul-94 31.00 3.47 103.38% $785
Aug-94 31.00 5.67 105.58% $825
Sep-94 30.00 -1.21 98.71% $811
Oct-94 31.00 4.06 103.97% $840
Nov-94 30.00 -3.99 95.93% $802
Dec-94 31.00 2.55 102.46% $819
Jan-95 31.00 -1.89 98.03% $799
Feb-95 28.00 4.14 104.06% $828
Mar-95 31.00 3.63 103.54% $854
Apr-95 30.00 3.37 103.28% $879
May-95 31.00 3.90 103.81% $909
Jun-95 30.00 8.85 108.76% $984
Jul-95 31.00 9.89 109.80% $1,076
Aug-95 31.00 1.23 101.14% $1,084
Sep-95 30.00 2.59 102.51% $1,107
Oct-95 31.00 -1.02 98.90% $1,090
Nov-95 30.00 -0.07 99.85% $1,084
Dec-95 31.00 -3.12 96.80% $1,045
Jan-96 31.00 1.58 101.49% $1,056
Feb-96 29.00 3.35 103.27% $1,086
Mar-96 31.00 0.39 100.30% $1,085
Apr-96 30.00 3.91 103.82% $1,122
May-96 31.00 3.13 103.04% $1,151
Jun-96 30.00 -1.96 97.96% $1,123
Jul-96 31.00 -7.65 92.27% $1,032
Aug-96 31.00 2.99 102.90% $1,058
Sep-96 30.00 6.72 106.63% $1,124
Oct-96 31.00 -0.23 99.68% $1,115
Nov-96 30.00 5.55 105.46% $1,172
Dec-96 31.00 -3.08 96.84% $1,130
Jan-97 31.00 5.75 105.66% $1,189
Feb-97 28.00 -2.27 97.65% $1,157
Mar-97 31.00 -5.60 94.32% $1,086
Apr-97 30.00 4.81 104.72% $1,133
May-97 31.00 6.93 106.84% $1,206
Jun-97 30.00 4.11 104.02% $1,249
Jul-97 31.00 7.51 107.42% $1,336
Aug-97 31.00 -3.86 96.06% $1,278
Sep-97 30.00 5.80 105.71% $1,346
Oct-97 31.00 1.00% -3.77 96.15% $1,289
Nov-97 30.00 1.00% 2.86 102.78% $1,319
Dec-97 31.00 1.00% 0.22 100.13% $1,315
Jan-98 31.00 1.00% 1.35 101.26% $1,327
Feb-98 28.00 1.00% 7.51 107.43% $1,420
Mar-98 31.00 1.00% 3.51 103.42% $1,462
Apr-98 30.00 1.00% 1.96 101.88% $1,484
May-98 31.00 1.00% -2.57 97.35% $1,438
Jun-98 30.00 1.00% 6.33 106.24% $1,522
Jul-98 31.00 1.00% 2.04 101.95% $1,545
Aug-98 31.00 1.00% -16.32 83.61% $1,287
Sep-98 30.00 1.00% 10.33 110.24% $1,413
Oct-98 31.00 1.00% 7.06 106.97% $1,505
Nov-98 30.00 1.00% 6.96 106.87% $1,602
Dec-98 31.00 1.00% 8.54 108.45% $1,730
Listed in Order Max 1,730
to match MFPR Min 442
</TABLE>
OVERSEAS PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND seeks long-term
growth of capital.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Investing at least 65% of total assets in foreign
securities.
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Allocating investments across countries and
regions considering the size of the market in each country and region
relative to the size of the international market as a whole.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition, industry position, and market and economic
conditions to select investments.
INVESTOR PROFILE AND RISK:
(small solid bullet) 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.
(small solid bullet) 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E OVERSEAS
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00
Nov-86 30.00
Dec-86 31.00
Jan-87 31.00 $500
Feb-87 28.00 0.10 100.02% $498
Mar-87 31.00 4.50 104.41% $518
Apr-87 30.00 7.27 107.18% $553
May-87 31.00 -1.43 98.49% $542
Jun-87 30.00 -4.88 95.04% $513
Jul-87 31.00 -1.14 98.77% $505
Aug-87 31.00 8.85 108.75% $547
Sep-87 30.00 -2.21 97.71% $532
Oct-87 31.00 -20.87 79.07% $419
Nov-87 30.00 0.91 100.83% $421
Dec-87 31.00 7.04 106.95% $448
Jan-88 31.00 -3.42 96.50% $431
Feb-88 29.00 2.66 102.58% $440
Mar-88 31.00 4.53 104.44% $458
Apr-88 30.00 1.65 101.57% $463
May-88 31.00 -1.83 98.09% $452
Jun-88 30.00 -1.76 98.16% $442
Jul-88 31.00 -0.74 99.18% $437
Aug-88 31.00 -3.50 96.42% $419
Sep-88 30.00 4.29 104.20% $435
Oct-88 31.00 4.43 104.34% $452
Nov-88 30.00 1.82 101.73% $458
Dec-88 31.00 0.20 100.11% $457
Jan-89 31.00 2.97 102.88% $468
Feb-89 28.00 1.73 101.65% $474
Mar-89 31.00 -0.09 99.82% $471
Apr-89 30.00 2.95 102.87% $483
May-89 31.00 -3.70 96.22% $463
Jun-89 30.00 -0.38 99.53% $459
Jul-89 31.00 9.35 109.26% $499
Aug-89 31.00 -0.71 99.21% $493
Sep-89 30.00 6.22 106.13% $521
Oct-89 31.00 -5.43 94.48% $490
Nov-89 30.00 5.39 105.31% $514
Dec-89 31.00 6.29 106.20% $544
Jan-90 31.00 -1.34 98.57% $534
Feb-90 28.00 -2.33 97.59% $519
Mar-90 31.00 3.78 103.69% $536
Apr-90 30.00 0.55 100.47% $537
May-90 31.00 6.54 106.44% $569
Jun-90 30.00 2.22 102.13% $579
Jul-90 31.00 5.06 104.97% $605
Aug-90 31.00 -10.19 89.74% $541
Sep-90 30.00 -9.50 90.42% $487
Oct-90 31.00 9.31 109.22% $530
Nov-90 30.00 -3.10 96.82% $511
Dec-90 31.00 -0.72 99.20% $504
Jan-91 31.00 0.97 100.88% $507
Feb-91 28.00 3.37 103.29% $522
Mar-91 31.00 -2.92 96.99% $504
Apr-91 30.00 2.20 102.11% $512
May-91 31.00 0.24 100.15% $511
Jun-91 30.00 -5.48 94.44% $481
Jul-91 31.00 4.96 104.87% $502
Aug-91 31.00 0.32 100.23% $501
Sep-91 30.00 4.07 103.99% $519
Oct-91 31.00 0.69 100.60% $520
Nov-91 30.00 -3.58 96.34% $499
Dec-91 31.00 3.48 103.39% $514
Jan-92 31.00 1.22 101.14% $517
Feb-92 29.00 -2.08 97.84% $504
Mar-92 31.00 -2.03 97.89% $492
Apr-92 30.00 6.22 106.13% $520
May-92 31.00 4.35 104.27% $539
Jun-92 30.00 -1.87 98.05% $527
Jul-92 31.00 -6.38 93.54% $491
Aug-92 31.00 -0.86 99.05% $484
Sep-92 30.00 -4.03 95.89% $462
Oct-92 31.00 -6.83 93.09% $429
Nov-92 30.00 -0.53 99.39% $424
Dec-92 31.00 2.49 102.40% $433
Jan-93 31.00 2.86 102.77% $443
Feb-93 28.00 1.96 101.88% $450
Mar-93 31.00 6.94 106.85% $478
Apr-93 30.00 6.65 106.56% $508
May-93 31.00 2.15 102.06% $516
Jun-93 30.00 -2.47 97.45% $501
Jul-93 31.00 3.95 103.86% $518
Aug-93 31.00 5.44 105.35% $543
Sep-93 30.00 -0.48 99.44% $538
Oct-93 31.00 3.62 103.53% $555
Nov-93 30.00 -4.22 95.70% $529
Dec-93 31.00 6.61 106.52% $561
Jan-94 31.00 6.52 106.43% $595
Feb-94 28.00 -1.76 98.16% $582
Mar-94 31.00 -2.48 97.44% $564
Apr-94 30.00 3.31 103.22% $580
May-94 31.00 -1.23 98.69% $570
Jun-94 30.00 -1.06 98.86% $562
Jul-94 31.00 2.65 102.56% $574
Aug-94 31.00 1.17 101.08% $577
Sep-94 30.00 -2.61 97.31% $560
Oct-94 31.00 2.06 101.97% $568
Nov-94 30.00 -3.79 96.13% $544
Dec-94 31.00 -0.57 99.35% $538
Jan-95 31.00 -4.15 95.77% $513
Feb-95 28.00 0.26 100.18% $512
Mar-95 31.00 3.08 102.99% $526
Apr-95 30.00 2.86 102.78% $538
May-95 31.00 1.39 101.30% $543
Jun-95 30.00 0.81 100.73% $544
Jul-95 31.00 4.44 104.35% $566
Aug-95 31.00 -2.78 97.14% $547
Sep-95 30.00 1.46 101.38% $553
Oct-95 31.00 -1.98 97.94% $539
Nov-95 30.00 1.16 101.08% $543
Dec-95 31.00 2.96 102.87% $556
Jan-96 31.00 1.88 101.79% $564
Feb-96 29.00 0.22 100.14% $562
Mar-96 31.00 1.53 101.44% $568
Apr-96 30.00 2.78 102.70% $581
May-96 31.00 0.06 99.97% $578
Jun-96 30.00 0.73 100.65% $580
Jul-96 31.00 -2.96 96.96% $560
Aug-96 31.00 0.75 100.66% $561
Sep-96 30.00 2.92 102.84% $575
Oct-96 31.00 -1.00 98.92% $566
Nov-96 30.00 5.22 105.13% $593
Dec-96 31.00 0.53 100.44% $593
Jan-97 31.00 0.00 99.91% $590
Feb-97 28.00 2.32 102.24% $601
Mar-97 31.00 0.91 100.82% $603
Apr-97 30.00 0.84 100.76% $606
May-97 31.00 6.25 106.16% $640
Jun-97 30.00 5.25 105.16% $671
Jul-97 31.00 3.39 103.30% $690
Aug-97 31.00 -7.53 92.39% $635
Sep-97 30.00 7.36 107.27% $678
Oct-97 31.00 1.00% -7.00 92.92% $628
Nov-97 30.00 1.00% -0.47 99.45% $622
Dec-97 31.00 1.00% 0.84 100.75% $624
Jan-98 31.00 1.00% 3.28 103.19% $641
Feb-98 28.00 1.00% 5.63 105.55% $674
Mar-98 31.00 1.00% 4.54 104.45% $701
Apr-98 30.00 1.00% 2.81 102.73% $717
May-98 31.00 1.00% -0.14 99.77% $713
Jun-98 30.00 1.00% -0.96 98.96% $702
Jul-98 31.00 1.00% 0.78 100.69% $704
Aug-98 31.00 1.00% -18.19 81.74% $573
Sep-98 30.00 1.00% -0.12 99.80% $570
Oct-98 31.00 1.00% 9.13 109.04% $619
Nov-98 30.00 1.00% 5.88 105.79% $652
Dec-98 31.00 1.00% 2.19 102.10% $663
Listed in Order Max 717
to match MFPR Min 419
</TABLE>
ASSET MANAGER: GROWTH PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND II
seeks to maximize total return over the long term by allocating its
assets among stocks, bonds, short-term instruments, and other
investments.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Allocating the fund's assets among stocks, bonds,
and short-term and money market instruments.
(small solid bullet) Maintaining a neutral mix over time of 70% of
assets in stocks, 25% of assets in bonds, and 5% of assets in
short-term and money market instruments.
(small solid bullet) Adjusting allocation among asset classes
gradually within the following ranges: stock class (50% - 100%), bond
class (0% - 50%), and short-term/money market class (0% - 50%).
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Analyzing an issuer using fundamental and/or
quantitative factors and evaluating each security's current price
relative to estimated long-term value in selecting investments.
INVESTOR PROFILE. 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, while spreading
its assets among all three asset classes, uses a more aggressive
approach by focusing on stocks for a higher potential return. The
value of each fund's investments and the income they generate will
vary. The graph below is based on a 5% Benchmark Rate of Return and
initial monthly annuity income of $500.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E ASSET MANAGER:GROWTH
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00
Nov-86 30.00
Dec-86 31.00
Jan-87 31.00
Feb-87 28.00
Mar-87 31.00
Apr-87 30.00
May-87 31.00
Jun-87 30.00
Jul-87 31.00
Aug-87 31.00
Sep-87 30.00
Oct-87 31.00
Nov-87 30.00
Dec-87 31.00
Jan-88 31.00
Feb-88 29.00
Mar-88 31.00
Apr-88 30.00
May-88 31.00
Jun-88 30.00
Jul-88 31.00
Aug-88 31.00
Sep-88 30.00
Oct-88 31.00
Nov-88 30.00
Dec-88 31.00
Jan-89 31.00
Feb-89 28.00
Mar-89 31.00
Apr-89 30.00
May-89 31.00
Jun-89 30.00
Jul-89 31.00
Aug-89 31.00
Sep-89 30.00
Oct-89 31.00
Nov-89 30.00
Dec-89 31.00
Jan-90 31.00
Feb-90 28.00
Mar-90 31.00
Apr-90 30.00
May-90 31.00
Jun-90 30.00
Jul-90 31.00
Aug-90 31.00
Sep-90 30.00
Oct-90 31.00
Nov-90 30.00
Dec-90 31.00
Jan-91 31.00
Feb-91 28.00
Mar-91 31.00
Apr-91 30.00
May-91 31.00
Jun-91 30.00
Jul-91 31.00
Aug-91 31.00
Sep-91 30.00
Oct-91 31.00
Nov-91 30.00
Dec-91 31.00
Jan-92 31.00
Feb-92 29.00
Mar-92 31.00
Apr-92 30.00
May-92 31.00
Jun-92 30.00
Jul-92 31.00
Aug-92 31.00
Sep-92 30.00
Oct-92 31.00
Nov-92 30.00
Dec-92 31.00
Jan-93 31.00
Feb-93 28.00
Mar-93 31.00
Apr-93 30.00
May-93 31.00
Jun-93 30.00
Jul-93 31.00
Aug-93 31.00
Sep-93 30.00
Oct-93 31.00
Nov-93 30.00
Dec-93 31.00
Jan-94 31.00
Feb-94 28.00
Mar-94 31.00
Apr-94 30.00
May-94 31.00
Jun-94 30.00
Jul-94 31.00
Aug-94 31.00
Sep-94 30.00
Oct-94 31.00
Nov-94 30.00
Dec-94 31.00
Jan-95 31.00 $500
Feb-95 28.00 1.50 101.42% $505
Mar-95 31.00 1.38 101.29% $510
Apr-95 30.00 2.62 102.54% $520
May-95 31.00 1.42 101.33% $525
Jun-95 30.00 4.01 103.92% $544
Jul-95 31.00 3.67 103.58% $561
Aug-95 31.00 4.49 104.40% $583
Sep-95 30.00 1.49 101.41% $589
Oct-95 31.00 -3.83 96.09% $564
Nov-95 30.00 1.78 101.70% $571
Dec-95 31.00 2.52 102.43% $582
Jan-96 31.00 2.38 102.29% $593
Feb-96 29.00 0.35 100.27% $592
Mar-96 31.00 1.80 101.71% $600
Apr-96 30.00 2.36 102.28% $611
May-96 31.00 1.56 101.47% $618
Jun-96 30.00 0.40 100.32% $617
Jul-96 31.00 -2.50 97.42% $599
Aug-96 31.00 0.74 100.65% $600
Sep-96 30.00 4.11 104.02% $622
Oct-96 31.00 2.92 102.83% $637
Nov-96 30.00 6.51 106.42% $675
Dec-96 31.00 -1.90 98.02% $659
Jan-97 31.00 4.27 104.18% $684
Feb-97 28.00 0.95 100.87% $687
Mar-97 31.00 -4.72 95.20% $651
Apr-97 30.00 4.19 104.10% $675
May-97 31.00 6.07 105.98% $713
Jun-97 30.00 2.97 102.88% $730
Jul-97 31.00 6.76 106.67% $776
Aug-97 31.00 -3.14 96.78% $748
Sep-97 30.00 3.69 103.60% $772
Oct-97 31.00 1.00% -2.37 97.55% $750
Nov-97 30.00 1.00% 2.88 102.80% $767
Dec-97 31.00 1.00% 1.74 101.65% $777
Jan-98 31.00 1.00% 0.00 99.91% $773
Feb-98 28.00 1.00% 6.11 106.03% $817
Mar-98 31.00 1.00% 3.71 103.62% $843
Apr-98 30.00 1.00% -0.31 99.61% $836
May-98 31.00 1.00% -1.01 98.91% $823
Jun-98 30.00 1.00% 2.35 102.27% $839
Jul-98 31.00 1.00% -0.87 99.05% $827
Aug-98 31.00 1.00% -12.59 87.34% $719
Sep-98 30.00 1.00% 3.73 103.64% $743
Oct-98 31.00 1.00% 6.36 106.27% $786
Nov-98 30.00 1.00% 5.00 104.91% $821
Dec-98 31.00 1.00% 5.38 105.29% $861
Listed in Order Max 861
to match MFPR Min 500
</TABLE>
CONTRAFUND PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND II seeks
capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Investing in securities of companies whose value
it believes is not fully recognized by the public.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Investing in either "growth" stocks or "value"
stocks or both.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
INVESTOR PROFILE. The fund may be appropriate for investors who are
willing to ride out stock market fluctuations in pursuit of
potentially above-average long-term returns. The graph below is based
on a 5% Benchmark Rate of Return and initial monthly annuity income of
$500.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E CONTRAFUND
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00
Nov-86 30.00
Dec-86 31.00
Jan-87 31.00
Feb-87 28.00
Mar-87 31.00
Apr-87 30.00
May-87 31.00
Jun-87 30.00
Jul-87 31.00
Aug-87 31.00
Sep-87 30.00
Oct-87 31.00
Nov-87 30.00
Dec-87 31.00
Jan-88 31.00
Feb-88 29.00
Mar-88 31.00
Apr-88 30.00
May-88 31.00
Jun-88 30.00
Jul-88 31.00
Aug-88 31.00
Sep-88 30.00
Oct-88 31.00
Nov-88 30.00
Dec-88 31.00
Jan-89 31.00
Feb-89 28.00
Mar-89 31.00
Apr-89 30.00
May-89 31.00
Jun-89 30.00
Jul-89 31.00
Aug-89 31.00
Sep-89 30.00
Oct-89 31.00
Nov-89 30.00
Dec-89 31.00
Jan-90 31.00
Feb-90 28.00
Mar-90 31.00
Apr-90 30.00
May-90 31.00
Jun-90 30.00
Jul-90 31.00
Aug-90 31.00
Sep-90 30.00
Oct-90 31.00
Nov-90 30.00
Dec-90 31.00
Jan-91 31.00
Feb-91 28.00
Mar-91 31.00
Apr-91 30.00
May-91 31.00
Jun-91 30.00
Jul-91 31.00
Aug-91 31.00
Sep-91 30.00
Oct-91 31.00
Nov-91 30.00
Dec-91 31.00
Jan-92 31.00
Feb-92 29.00
Mar-92 31.00
Apr-92 30.00
May-92 31.00
Jun-92 30.00
Jul-92 31.00
Aug-92 31.00
Sep-92 30.00
Oct-92 31.00
Nov-92 30.00
Dec-92 31.00
Jan-93 31.00
Feb-93 28.00
Mar-93 31.00
Apr-93 30.00
May-93 31.00
Jun-93 30.00
Jul-93 31.00
Aug-93 31.00
Sep-93 30.00
Oct-93 31.00
Nov-93 30.00
Dec-93 31.00
Jan-94 31.00
Feb-94 28.00
Mar-94 31.00
Apr-94 30.00
May-94 31.00
Jun-94 30.00
Jul-94 31.00
Aug-94 31.00
Sep-94 30.00
Oct-94 31.00
Nov-94 30.00
Dec-94 31.00
Jan-95 31.00 $500
Feb-95 28.00 5.07 104.99% $523
Mar-95 31.00 5.01 104.92% $546
Apr-95 30.00 5.42 105.33% $573
May-95 31.00 2.18 102.09% $583
Jun-95 30.00 6.56 106.47% $618
Jul-95 31.00 7.85 107.76% $663
Aug-95 31.00 1.26 101.17% $668
Sep-95 30.00 2.20 102.12% $680
Oct-95 31.00 -2.08 97.84% $662
Nov-95 30.00 1.83 101.75% $671
Dec-95 31.00 0.44 100.35% $671
Jan-96 31.00 0.73 100.64% $672
Feb-96 29.00 0.36 100.28% $672
Mar-96 31.00 3.26 103.17% $690
Apr-96 30.00 3.30 103.21% $709
May-96 31.00 1.15 101.06% $714
Jun-96 30.00 -0.81 99.11% $705
Jul-96 31.00 -4.67 95.25% $668
Aug-96 31.00 3.83 103.74% $691
Sep-96 30.00 4.24 104.15% $716
Oct-96 31.00 3.08 102.99% $735
Nov-96 30.00 5.98 105.89% $775
Dec-96 31.00 -0.60 99.32% $766
Jan-97 31.00 3.86 103.77% $792
Feb-97 28.00 -2.78 97.15% $767
Mar-97 31.00 -2.59 97.33% $743
Apr-97 30.00 2.41 102.33% $757
May-97 31.00 6.18 106.09% $800
Jun-97 30.00 4.37 104.28% $831
Jul-97 31.00 8.59 108.50% $898
Aug-97 31.00 -2.82 97.10% $868
Sep-97 30.00 6.77 106.68% $922
Oct-97 31.00 1.00% -3.02 96.90% $890
Nov-97 30.00 1.00% -0.05 99.87% $885
Dec-97 31.00 1.00% 1.84 101.75% $897
Jan-98 31.00 1.00% -0.10 99.81% $892
Feb-98 28.00 1.00% 7.27 107.19% $952
Mar-98 31.00 1.00% 4.86 104.77% $994
Apr-98 30.00 1.00% 0.95 100.87% $998
May-98 31.00 1.00% -2.34 97.58% $970
Jun-98 30.00 1.00% 5.38 105.29% $1,017
Jul-98 31.00 1.00% 0.14 100.05% $1,014
Aug-98 31.00 1.00% -14.97 84.96% $858
Sep-98 30.00 1.00% 5.83 105.74% $903
Oct-98 31.00 1.00% 3.29 103.20% $928
Nov-98 30.00 1.00% 6.66 106.57% $985
Dec-98 31.00 1.00% 12.16 112.06% $1,100
Listed in Order Max 1,100
to match MFPR Min 500
</TABLE>
GROWTH OPPORTUNITIES PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND III
seeks to provide capital growth.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Investing primarily in common stocks.
(small solid bullet) Potentially investing in other types of
securities, including bonds which may be lower-quality debt
securities. These securities can be more volatile due to increased
sensitivity to interest rate increases and adverse issuer, political,
regulatory, market, or economic developments.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Investing in either "growth" stocks or "value"
stocks or both. The value of the fund's investments will vary and can
decline in response to adverse issuer, political, regulatory, market,
or economic developments.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position and market and economic
conditions to select investments.
INVESTOR PROFILE. The fund may be appropriate for investors seeking
growth of capital. The investment philosophy is not constrained by any
particular investment style. The fund's assets may be invested in
securities of foreign issuers in addition to securities of domestic
issuers. The graph below is based on a 5% Benchmark Rate of Return and
initial monthly annuity income of $500.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E GROWTH OPPORTUNITIES
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00
Nov-86 30.00
Dec-86 31.00
Jan-87 31.00
Feb-87 28.00
Mar-87 31.00
Apr-87 30.00
May-87 31.00
Jun-87 30.00
Jul-87 31.00
Aug-87 31.00
Sep-87 30.00
Oct-87 31.00
Nov-87 30.00
Dec-87 31.00
Jan-88 31.00
Feb-88 29.00
Mar-88 31.00
Apr-88 30.00
May-88 31.00
Jun-88 30.00
Jul-88 31.00
Aug-88 31.00
Sep-88 30.00
Oct-88 31.00
Nov-88 30.00
Dec-88 31.00
Jan-89 31.00
Feb-89 28.00
Mar-89 31.00
Apr-89 30.00
May-89 31.00
Jun-89 30.00
Jul-89 31.00
Aug-89 31.00
Sep-89 30.00
Oct-89 31.00
Nov-89 30.00
Dec-89 31.00
Jan-90 31.00
Feb-90 28.00
Mar-90 31.00
Apr-90 30.00
May-90 31.00
Jun-90 30.00
Jul-90 31.00
Aug-90 31.00
Sep-90 30.00
Oct-90 31.00
Nov-90 30.00
Dec-90 31.00
Jan-91 31.00
Feb-91 28.00
Mar-91 31.00
Apr-91 30.00
May-91 31.00
Jun-91 30.00
Jul-91 31.00
Aug-91 31.00
Sep-91 30.00
Oct-91 31.00
Nov-91 30.00
Dec-91 31.00
Jan-92 31.00
Feb-92 29.00
Mar-92 31.00
Apr-92 30.00
May-92 31.00
Jun-92 30.00
Jul-92 31.00
Aug-92 31.00
Sep-92 30.00
Oct-92 31.00
Nov-92 30.00
Dec-92 31.00
Jan-93 31.00
Feb-93 28.00
Mar-93 31.00
Apr-93 30.00
May-93 31.00
Jun-93 30.00
Jul-93 31.00
Aug-93 31.00
Sep-93 30.00
Oct-93 31.00
Nov-93 30.00
Dec-93 31.00
Jan-94 31.00
Feb-94 28.00
Mar-94 31.00
Apr-94 30.00
May-94 31.00
Jun-94 30.00
Jul-94 31.00
Aug-94 31.00
Sep-94 30.00
Oct-94 31.00
Nov-94 30.00
Dec-94 31.00
Jan-95 31.00 $500
Feb-95 28.00 3.08 103.00% $513
Mar-95 31.00 1.83 101.74% $520
Apr-95 30.00 3.50 103.41% $535
May-95 31.00 4.67 104.58% $558
Jun-95 30.00 3.06 102.97% $572
Jul-95 31.00 3.31 103.22% $588
Aug-95 31.00 0.66 100.57% $589
Sep-95 30.00 1.71 101.63% $596
Oct-95 31.00 0.72 100.63% $597
Nov-95 30.00 2.87 102.79% $612
Dec-95 31.00 2.57 102.48% $624
Jan-96 31.00 1.45 101.36% $630
Feb-96 29.00 -0.07 99.85% $627
Mar-96 31.00 -0.30 99.61% $622
Apr-96 30.00 1.60 101.52% $629
May-96 31.00 2.24 102.15% $639
Jun-96 30.00 0.80 100.72% $641
Jul-96 31.00 -2.90 97.02% $620
Aug-96 31.00 0.60 100.51% $620
Sep-96 30.00 4.83 104.74% $647
Oct-96 31.00 4.11 104.02% $670
Nov-96 30.00 7.56 107.47% $718
Dec-96 31.00 -2.53 97.39% $696
Jan-97 31.00 4.74 104.65% $725
Feb-97 28.00 0.95 100.87% $729
Mar-97 31.00 -5.10 94.82% $688
Apr-97 30.00 4.57 104.48% $716
May-97 31.00 6.49 106.40% $759
Jun-97 30.00 3.32 103.23% $780
Jul-97 31.00 7.71 107.62% $836
Aug-97 31.00 -3.80 96.12% $801
Sep-97 30.00 4.17 104.08% $830
Oct-97 31.00 1.00% -2.00 97.92% $809
Nov-97 30.00 1.00% 3.53 103.44% $834
Dec-97 31.00 1.00% 2.77 102.68% $853
Jan-98 31.00 1.00% 0.42 100.33% $852
Feb-98 28.00 1.00% 6.25 106.17% $901
Mar-98 31.00 1.00% 3.11 103.02% $924
Apr-98 30.00 1.00% -0.50 99.42% $915
May-98 31.00 1.00% -0.70 99.22% $904
Jun-98 30.00 1.00% 2.40 102.32% $922
Jul-98 31.00 1.00% 0.34 100.25% $920
Aug-98 31.00 1.00% -12.97 86.96% $797
Sep-98 30.00 1.00% 6.16 106.07% $842
Oct-98 31.00 1.00% 7.65 107.56% $902
Nov-98 30.00 1.00% 6.42 106.33% $955
Dec-98 31.00 1.00% 5.39 105.30% $1,002
Listed in Order Max 1,002
to match MFPR Min 500
</TABLE>
BALANCED PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND III seeks both
income and growth of capital.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Investing approximately 60% of assets in stocks
and other equity securities and the remainder in bonds and other debt
securities, including lower-quality debt securities when its outlook
is neutral.
(small solid bullet) Investing at least 25% of total assets in
fixed-income senior securities (including debt securities and
preferred stock).
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) With respect to equity investments, emphasizing
above-average income-producing equity securities, which tend to lead
to investments in stocks that have more "value" characteristics than
"growth" characteristics.
(small solid bullet) Analyzing a security's issuer using fundamental
factors and evaluating each security's current price relative to
estimated long-term value in selecting investments. The value of the
fund's investments will vary from day to day, and can decline in
response to interest rate increases, adverse issuer, political,
regulatory or economic developments.
INVESTOR PROFILE. The fund may be appropriate for investors who seek a
balance between stocks and bonds. The fund may invest its assets in
securities of foreign issuers in addition to domestic issuers. The
graph below is based on a 5% benchmark Rate of Return and initial
monthly annuity income of $500.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E BALANCED
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00
Nov-86 30.00
Dec-86 31.00
Jan-87 31.00
Feb-87 28.00
Mar-87 31.00
Apr-87 30.00
May-87 31.00
Jun-87 30.00
Jul-87 31.00
Aug-87 31.00
Sep-87 30.00
Oct-87 31.00
Nov-87 30.00
Dec-87 31.00
Jan-88 31.00
Feb-88 29.00
Mar-88 31.00
Apr-88 30.00
May-88 31.00
Jun-88 30.00
Jul-88 31.00
Aug-88 31.00
Sep-88 30.00
Oct-88 31.00
Nov-88 30.00
Dec-88 31.00
Jan-89 31.00
Feb-89 28.00
Mar-89 31.00
Apr-89 30.00
May-89 31.00
Jun-89 30.00
Jul-89 31.00
Aug-89 31.00
Sep-89 30.00
Oct-89 31.00
Nov-89 30.00
Dec-89 31.00
Jan-90 31.00
Feb-90 28.00
Mar-90 31.00
Apr-90 30.00
May-90 31.00
Jun-90 30.00
Jul-90 31.00
Aug-90 31.00
Sep-90 30.00
Oct-90 31.00
Nov-90 30.00
Dec-90 31.00
Jan-91 31.00
Feb-91 28.00
Mar-91 31.00
Apr-91 30.00
May-91 31.00
Jun-91 30.00
Jul-91 31.00
Aug-91 31.00
Sep-91 30.00
Oct-91 31.00
Nov-91 30.00
Dec-91 31.00
Jan-92 31.00
Feb-92 29.00
Mar-92 31.00
Apr-92 30.00
May-92 31.00
Jun-92 30.00
Jul-92 31.00
Aug-92 31.00
Sep-92 30.00
Oct-92 31.00
Nov-92 30.00
Dec-92 31.00
Jan-93 31.00
Feb-93 28.00
Mar-93 31.00
Apr-93 30.00
May-93 31.00
Jun-93 30.00
Jul-93 31.00
Aug-93 31.00
Sep-93 30.00
Oct-93 31.00
Nov-93 30.00
Dec-93 31.00
Jan-94 31.00
Feb-94 28.00
Mar-94 31.00
Apr-94 30.00
May-94 31.00
Jun-94 30.00
Jul-94 31.00
Aug-94 31.00
Sep-94 30.00
Oct-94 31.00
Nov-94 30.00
Dec-94 31.00
Jan-95 31.00 $500
Feb-95 28.00 2.00 101.92% $508
Mar-95 31.00 0.69 100.60% $509
Apr-95 30.00 1.27 101.19% $513
May-95 31.00 2.12 102.03% $521
Jun-95 30.00 1.23 101.15% $525
Jul-95 31.00 1.30 101.21% $529
Aug-95 31.00 0.37 100.28% $528
Sep-95 30.00 0.92 100.84% $531
Oct-95 31.00 -1.18 98.74% $522
Nov-95 30.00 2.94 102.86% $534
Dec-95 31.00 1.62 101.53% $540
Jan-96 31.00 0.72 100.63% $542
Feb-96 29.00 -1.34 98.58% $532
Mar-96 31.00 -0.81 99.11% $525
Apr-96 30.00 0.27 100.19% $524
May-96 31.00 1.09 101.00% $527
Jun-96 30.00 0.63 100.55% $528
Jul-96 31.00 -1.97 97.95% $515
Aug-96 31.00 0.64 100.55% $515
Sep-96 30.00 4.26 104.17% $535
Oct-96 31.00 2.70 102.61% $546
Nov-96 30.00 5.25 105.16% $572
Dec-96 31.00 -1.61 98.31% $560
Jan-97 31.00 3.19 103.10% $575
Feb-97 28.00 1.68 101.60% $582
Mar-97 31.00 -2.80 97.12% $563
Apr-97 30.00 3.78 103.69% $582
May-97 31.00 3.96 103.87% $602
Jun-97 30.00 3.66 103.57% $621
Jul-97 31.00 5.58 105.49% $652
Aug-97 31.00 -4.66 95.26% $619
Sep-97 30.00 4.01 103.92% $640
Oct-97 31.00 1.00% -2.11 97.81% $624
Nov-97 30.00 1.00% 2.44 102.36% $636
Dec-97 31.00 1.00% 2.03 101.94% $645
Jan-98 31.00 1.00% 1.10 101.01% $649
Feb-98 28.00 1.00% 3.72 103.64% $670
Mar-98 31.00 1.00% 3.76 103.67% $692
Apr-98 30.00 1.00% 0.81 100.73% $694
May-98 31.00 1.00% 0.00 99.91% $691
Jun-98 30.00 1.00% 2.26 102.18% $703
Jul-98 31.00 1.00% -0.07 99.84% $699
Aug-98 31.00 1.00% -10.81 89.11% $620
Sep-98 30.00 1.00% 5.70 105.61% $653
Oct-98 31.00 1.00% 3.66 103.57% $673
Nov-98 30.00 1.00% 3.73 103.64% $695
Dec-98 31.00 1.00% 3.53 103.44% $716
Listed in Order Max 716
to match MFPR Min 500
</TABLE>
GROWTH & INCOME PORTFOLIO OF VARIABLE INSURANCE PRODUCTS FUND III
seeks high total return through a combination of current income and
capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES:
(small solid bullet) Investing a majority of assets in common stocks
with a focus on those that pay current dividends and show potential
for capital appreciation.
(small solid bullet) Potentially investing in bonds, including
lower-quality debt securities, as well as stocks that are not
currently paying dividends, but offer prospects for future income or
capital appreciation.
(small solid bullet) Investing in domestic and foreign issuers.
(small solid bullet) Investing in either "growth" stocks or "value"
stocks or both.
(small solid bullet) Using fundamental analysis of each issuer's
financial condition and industry position, and market and economic
conditions to select investments.
INVESTOR PROFILE. 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
investments. The graph below is based on a 5% benchmark Rate of Return
and initial monthly annuity income rate of $500.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PROSPECTUS CHARTS CUMULATIVE ONE MONTH TOTAL
RETURNS
M&E 0.01
BRR 0.05
Month # of Days M&E GROWTH & INCOME
Apr-82 0.01
May-82 31.00
Jun-82 30.00
Jul-82 31.00
Aug-82 31.00
Sep-82 30.00
Oct-82 31.00
Nov-82 30.00
Dec-82 31.00
Jan-83 31.00
Feb-83 28.00
Mar-83 31.00
Apr-83 30.00
May-83 31.00
Jun-83 30.00
Jul-83 31.00
Aug-83 31.00
Sep-83 30.00
Oct-83 31.00
Nov-83 30.00
Dec-83 31.00
Jan-84 31.00
Feb-84 29.00
Mar-84 31.00
Apr-84 30.00
May-84 31.00
Jun-84 30.00
Jul-84 31.00
Aug-84 31.00
Sep-84 30.00
Oct-84 31.00
Nov-84 30.00
Dec-84 31.00
Jan-85 31.00
Feb-85 28.00
Mar-85 31.00
Apr-85 30.00
May-85 31.00
Jun-85 30.00
Jul-85 31.00
Aug-85 31.00
Sep-85 30.00
Oct-85 31.00
Nov-85 30.00
Dec-85 31.00
Jan-86 31.00
Feb-86 28.00
Mar-86 31.00
Apr-86 30.00
May-86 31.00
Jun-86 30.00
Jul-86 31.00
Aug-86 31.00
Sep-86 30.00
Oct-86 31.00
Nov-86 30.00
Dec-86 31.00
Jan-87 31.00
Feb-87 28.00
Mar-87 31.00
Apr-87 30.00
May-87 31.00
Jun-87 30.00
Jul-87 31.00
Aug-87 31.00
Sep-87 30.00
Oct-87 31.00
Nov-87 30.00
Dec-87 31.00
Jan-88 31.00
Feb-88 29.00
Mar-88 31.00
Apr-88 30.00
May-88 31.00
Jun-88 30.00
Jul-88 31.00
Aug-88 31.00
Sep-88 30.00
Oct-88 31.00
Nov-88 30.00
Dec-88 31.00
Jan-89 31.00
Feb-89 28.00
Mar-89 31.00
Apr-89 30.00
May-89 31.00
Jun-89 30.00
Jul-89 31.00
Aug-89 31.00
Sep-89 30.00
Oct-89 31.00
Nov-89 30.00
Dec-89 31.00
Jan-90 31.00
Feb-90 28.00
Mar-90 31.00
Apr-90 30.00
May-90 31.00
Jun-90 30.00
Jul-90 31.00
Aug-90 31.00
Sep-90 30.00
Oct-90 31.00
Nov-90 30.00
Dec-90 31.00
Jan-91 31.00
Feb-91 28.00
Mar-91 31.00
Apr-91 30.00
May-91 31.00
Jun-91 30.00
Jul-91 31.00
Aug-91 31.00
Sep-91 30.00
Oct-91 31.00
Nov-91 30.00
Dec-91 31.00
Jan-92 31.00
Feb-92 29.00
Mar-92 31.00
Apr-92 30.00
May-92 31.00
Jun-92 30.00
Jul-92 31.00
Aug-92 31.00
Sep-92 30.00
Oct-92 31.00
Nov-92 30.00
Dec-92 31.00
Jan-93 31.00
Feb-93 28.00
Mar-93 31.00
Apr-93 30.00
May-93 31.00
Jun-93 30.00
Jul-93 31.00
Aug-93 31.00
Sep-93 30.00
Oct-93 31.00
Nov-93 30.00
Dec-93 31.00
Jan-94 31.00
Feb-94 28.00
Mar-94 31.00
Apr-94 30.00
May-94 31.00
Jun-94 30.00
Jul-94 31.00
Aug-94 31.00
Sep-94 30.00
Oct-94 31.00
Nov-94 30.00
Dec-94 31.00
Jan-95 31.00
Feb-95 28.00
Mar-95 31.00
Apr-95 30.00
May-95 31.00
Jun-95 30.00
Jul-95 31.00
Aug-95 31.00
Sep-95 30.00
Oct-95 31.00
Nov-95 30.00
Dec-95 31.00
Jan-96 31.00
Feb-96 29.00
Mar-96 31.00
Apr-96 30.00
May-96 31.00
Jun-96 30.00
Jul-96 31.00
Aug-96 31.00
Sep-96 30.00
Oct-96 31.00
Nov-96 30.00
Dec-96 31.00 $500
Jan-97 31.00 2.50 102.41% $510
Feb-97 28.00 0.20 100.12% $509
Mar-97 31.00 -4.38 95.54% $484
Apr-97 30.00 5.40 105.31% $508
May-97 31.00 5.60 105.51% $533
Jun-97 30.00 5.12 105.03% $558
Jul-97 31.00 8.09 108.00% $600
Aug-97 31.00 -5.07 94.85% $567
Sep-97 30.00 5.26 105.17% $594
Oct-97 31.00 1.00% -2.82 97.10% $574
Nov-97 30.00 1.00% 4.48 104.39% $597
Dec-97 31.00 1.00% 2.22 102.13% $607
Jan-98 31.00 1.00% 0.56 100.47% $608
Feb-98 28.00 1.00% 6.85 106.77% $646
Mar-98 31.00 1.00% 5.08 104.99% $676
Apr-98 30.00 1.00% 0.00 99.92% $672
May-98 31.00 1.00% -1.49 98.43% $659
Jun-98 30.00 1.00% 5.12 105.03% $690
Jul-98 31.00 1.00% -0.69 99.23% $681
Aug-98 31.00 1.00% -14.17 85.76% $582
Sep-98 30.00 1.00% 7.49 107.40% $622
Oct-98 31.00 1.00% 7.79 107.70% $668
Nov-98 30.00 1.00% 6.39 106.30% $707
Dec-98 31.00 1.00% 5.49 105.40% $742
Listed in Order Max 742
to match MFPR Min 484
</TABLE>
MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
EMERGING MARKETS DEBT PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) The Portfolio seeks high total return by
investing primarily in Fixed Income Securities of government and
government-related issuers and, to a lesser extent, of corporate
issuers located in emerging market countries.
(small solid bullet) APPROACH. MSDW Investment Management seeks high
total return by investing in a portfolio of emerging market debt that
offers low correlation to many other asset classes. Using
macroeconomic and fundamental analysis, MSDW Investment Management
seeks to identify developing countries that are undervalued and have
attractive or improving fundamentals. After the country allocation is
determined, the sector and security selection is made within each
country.
(small solid bullet) PROCESS. MSDW Investment Management's global
allocation team analyzes the global economic environment and its
impact on emerging markets. MSDW Investment Management focuses on
investing in countries that show signs of positive fundamental change.
This analysis considers macroeconomic factors, such as GDP growth,
inflation, monetary policy, fiscal policy and interest rates and
sociopolitical factors such as political risk, leadership, social
stability, and commitment to reform. In selecting securities, MSDW
Investment Management first examines yield curves with respect to a
country and then considers instrument-specific criteria, including:
(1) spread duration; (2) real interest rates; and (3) liquidity. The
Portfolio's holdings may range in maturity from overnight to 30 years
or more and will not be subject to any minimum credit rating standard.
MSDW Investment Management may, when or if available, use hedging
strategies, including the use of derivatives to protect the Portfolio
from overvalued currencies or to take advantage of undervalued
currencies.
EMERGING MARKETS EQUITY PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) The Portfolio seeks long-term capital
appreciation by investing primarily in Equity Securities of issuers in
emerging market countries.
(small solid bullet) APPROACH. MSDW Investment Management seeks to
maximize returns by investing primarily in growth-oriented equity
securities in undervalued emerging markets and, from time to time, in
fixed income securities. MSDW Investment Management's investment
approach combines top-down country allocation with bottom-up stock
selection. Investment selection criteria include attractive growth
characteristics, reasonable valuations and managements that focus on
shareholder value.
(small solid bullet) PROCESS. MSDW Investment Management's global
allocation team analyzes the global economic environment, particularly
its impact on emerging markets and allocates the Portfolio's assets
among emerging markets based on relative economic, political, and
social fundamentals, stock valuations and investor sentiment. MSDW
Investment Management invests within countries based on the work of
country specialists who conduct extensive fundamental analysis of
issuers within these markets and seek to identify issuers with strong
earnings growth prospects. To manage risk, MSDW Investment Management
emphasizes thorough macroeconomic and fundamental research.
GLOBAL EQUITY PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) The Portfolio seeks long-term capital
appreciation by investing primarily in Equity Securities of issuers
throughout the world, including U.S. issuers.
(small solid bullet) APPROACH. MSDW Investment Management seeks to
maintain a diversified portfolio of global equity securities based on
individual stock selection. MSDW Investment Management emphasizes a
bottom-up approach to investing that seeks to identify securities of
undervalued issuers. The investment process is value driven and based
on individual stock selection. In assessing investment opportunities,
MSDW Investment Management considers value criteria with an emphasis
on cash flow and the intrinsic value of company assets. Securities
which appear undervalued according to these criteria are then
subjected to in-depth fundamental analysis. MSDW Investment Management
conducts a thorough investigation of the issuer's balance sheet, cash
flow and income statement and assesses the company's business
franchise, including product, competitiveness, market positioning, and
industry structure. Meetings with senior company management are
integral to the investment process.
(small solid bullet) PROCESS. MSDW Investment Management selects
securities for investment from a universe of eligible issuers
consisting of approximately 3,200 companies in the Morgan Stanley
Capital International (MSCI) World Index. MSDW Investment Management
expects to invest at least 20% of the Portfolio's total assets in the
common stocks of U.S. issuers.
INTERNATIONAL MAGNUM PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) The Portfolio seeks long-term capital
appreciation by investing primarily in Equity Securities of non-U.S.
issuers domiciled in EAFE countries.
(small solid bullet) APPROACH. MSDW Investment Management seeks to
achieve superior long-term returns by creating a diversified portfolio
of undervalued international equity securities. To achieve this goal,
MSDW Investment Management uses a combination of strategic geographic
asset allocation and fundamental, value oriented stock selection.
(small solid bullet) PROCESS. The Portfolio is managed using a
two-part process combining the expertise of investment teams based in
New York, London, Tokyo, and Singapore. The New York-based portfolio
management team decides upon the appropriate allocation of the
Portfolio's assets among Europe, Japan and developed Asia, including
Australia and New Zealand. Regional allocation decisions are based on
variety of factors, including relative valuations, earnings
expectations, macroeconomic factors, as well as input from the
regional stock selection teams from the MSDW Investment Management's
Asset Allocation Committee, which is made up of several of the MSDW
Investment Management's most senior investment officers. Once the
allocations to Europe, Asia, and Japan have been determined, three
overseas investment teams in London (for European stocks), Tokyo (for
Japanese stocks) and Singapore (for Asian stocks) decide which stocks
to purchase for their respective geographic regions. The regional
portfolio management teams look for stocks that they believe to be
undervalued by the market. The regional specialists analyze each
company's finances, products and management, typically meeting with
each company's management before a stock is purchased for the
Portfolio. The Portfolio invests primarily in countries comprising the
MSCI Europe, Australiasia, Far East (EAFE) Index (the "EAFE Index").
EAFE countries include Japan, most nations in Western Europe, and the
more developed nations of Asia, such as Australia, New Zealand, Hong
Kong, and Singapore. However, the Portfolio also may invest up to 5%
of its assets in countries not included in the EAFE Index.
PBHG
SELECT 20 PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) The Select 20 Portfolio, a non-diversified
Portfolio, seeks long-term growth of capital.
(small solid bullet) Under normal market conditions, the Portfolio
will invest at least 65% of its total assets in growth 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 strong earnings growth and capital appreciation
potential. These companies will generally have market capitalization
in excess of $1 billion.
(small solid bullet) The growth securities in the Portfolio are
primarily common stocks, but may also include other equity securities
such as warrants and rights to purchase common stocks, and convertible
securities.
(small solid bullet) The Portfolio is non-diversified, which means its
performance is dependent upon the securities of a smaller number of
companies. As a result, the impact of a single change in value
(positive or negative) of a single holding may be magnified.
GROWTH II PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) The Portfolio seeks capital appreciation.
(small solid bullet) Under normal market conditions, the Portfolio
will invest at least 65% of its total assets in growth securities of
small and medium sized companies that, in the Adviser's opinion, have
strong earnings growth and capital appreciation potential. These
companies will generally have market capitalizations or annual
revenues between $500 million and $10 billion.
(small solid bullet) The growth securities in the Portfolio are
primarily common stocks, but may also include other equity securities
such as warrants and rights to purchase common stocks, and convertible
securities.
(small solid bullet) The Portfolio emphasizes small and medium sized
growth companies, so it may be more volatile than the stock market in
general, as measured by the S&P 500.
LARGE CAP VALUE PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) The Portfolio seeks long-term growth of capital
and income. Current income is a secondary objective.
(small solid bullet) Under normal market conditions, the Portfolio
will invest at least 65% of its total assets in value securities of
large capitalization companies that, in the opinion of the Adviser and
Pilgrim Baxter Value Investors, Inc. (the "Sub-Adviser"), are
currently underpriced using certain financial measurements, such as
their price-to-earnings ratios.
(small solid bullet) The value securities in the Portfolio are
primarily common stocks that, in the opinion of the Adviser and the
Sub-Adviser, are currently underpriced using certain financial
measurements, such as their price-to-earnings ratios, but may also
include other equity securities such as warrants and rights to
purchase common stocks and convertible securities.
SMALL CAP VALUE PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) The Portfolio seeks to achieve above-average
total return over a market cycle of three to five years, consistent
with reasonable risk.
(small solid bullet) Under normal market conditions, the Portfolio
will invest at least 65% of its total assets in value securities of
companies whose market capitalizations are within the range of the
Russell 2000 index.
(small solid bullet) The value securities in the Portfolio are
primarily common stocks that, in the opinion of the Adviser and the
Sub-Adviser, are currently underpriced using certain financial
measurements, such as their price-to-earnings ratios, but may also
include other equity securities such as warrants and rights to
purchase common stocks and convertible securities.
(small solid bullet) The Portfolio's sector weightings are generally
within 10% of the Russell 2000's sector weightings. In addition, the
Portfolio generally has lower price-to-earnings ratios than the
Russell 2000.
(small solid bullet) The Portfolio emphasizes value securities of
smaller sized companies, so it is likely to be more volatile than the
stock market in general, as measured by the S&P 500 Index.
TECHNOLOGY & COMMUNICATIONS PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) The Portfolio seeks long-term growth of capital.
Current income is incidental to the Portfolio's objective.
(small solid bullet) Under normal market conditions, the Portfolio
will invest at least 65% of its total assets in common stocks of
companies that rely extensively on technology or communications in
their product development or operations, are expected to benefit from
technological advances and improvements, or may be experiencing
exceptional growth in sales and earnings driven by technology- or
communication-related products and services.
These companies may be in different industries, 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.
(small solid bullet) The Portfolio offers investors significant growth
potential because it invests in companies that may be responsible for
breakthrough products or technologies or are positioned to take
advantage of cutting-edge developments.
(small solid bullet) The Portfolio's holdings may range from small
companies developing new technologies or pursuing scientific
breakthroughs to large, blue chip firms with established track records
in developing and marketing scientific advances.
(small solid bullet) Securities of technology companies are strongly
affected by worldwide scientific and technological developments and
governmental policies and, therefore, are generally more volatile than
securities of companies not dependent upon or associated with
technology issues.
STRONG
DISCOVERY FUND II
OBJECTIVE AND STRATEGY
(small solid bullet) Discovery Fund II seeks capital growth.
(small solid bullet) The Fund invests in securities that the Adviser
believes represent attractive growth opportunities.
(small solid bullet) 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.
(small solid bullet) The Fund may invest up to 100% of its total
assets in equity securities, including (a) common stocks, (b)
preferred stocks, and (c) securities that are convertible into common
or preferred stocks, such as warrants and convertible bonds.
(small solid bullet) 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. 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.
(small solid bullet) 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.
(small solid bullet) 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.
(small solid bullet) 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.
MID CAP GROWTH FUND II (FORMERLY GROWTH FUND II)
OBJECTIVE AND STRATEGY
(small solid bullet) Mid Cap Growth Fund II seeks capital growth
through investments in mid-sized companies.
(small solid bullet) The Fund invests primarily in equity securities
that the Adviser believes have above-average growth prospects.
(small solid bullet) Under normal market conditions, the Fund will
invest at least 65% of its total assets in equity securities,
including (a) common stocks, (b) preferred stocks, and (c) securities
that are convertible into common or preferred stocks, such as warrants
and convertible bonds.
(small solid bullet) 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.
(small solid bullet) 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. 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.
(small solid bullet) 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.
(small solid bullet) The Fund may invest up to 25% of its assets in
foreign securities, including both direct investments and investments
made through depository receipts.
(small solid bullet) The Fund generally will invest in mid-sized
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.
(small solid bullet) In identifying companies with favorable growth
prospects, the Adviser ordinarily looks to certain characteristics,
such as (a) prospects for above-average sales and earnings growth; (b)
high return on invested capital; (c) overall financial strength,
including sound financial and accounting policies and a strong balance
sheet; (d) competitive advantages, including innovative products and
services; (e) effective research, product development, and marketing;
and (f) stable, capable management.
OPPORTUNITY FUND II
OBJECTIVE AND STRATEGY
(small solid bullet) Opportunity Fund II seeks capital growth.
(small solid bullet) The Fund invests primarily in equity securities
and currently emphasizes investments in medium-sized companies the
Adviser believes are under-researched and attractively valued.
(small solid bullet) The Fund will invest at least 70% of its total
assets in equity securities, including (a) common stocks, (b)
preferred stocks, and (c) securities that are convertible into common
or preferred stocks, such as warrants and convertible bonds.
(small solid bullet) Under normal market conditions, the Fund expects
to be fully invested in equities.
(small solid bullet) 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. 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.
(small solid bullet) 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.
(small solid bullet) The Fund may invest up to 25% of its assets in
foreign securities, including both direct investments and investments
made through depository receipts.
(small solid bullet) 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.
(small solid bullet) 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
OBJECTIVE AND STRATEGY
(small solid bullet) The Portfolio seeks long-term capital
appreciation.
(small solid bullet) The Portfolio pursues its investment objective by
investing in equity securities of companies located or conducting
business outside the United States.
(small solid bullet) 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.
(small solid bullet) The Portfolio intends to be widely diversified
across securities of many corporations located in a number of foreign
countries, but from time to time may invest a significant portion of
its assets in a single country.
(small solid bullet) Although the Portfolio emphasizes developed
countries, it may also invest in emerging markets.
(small solid bullet) In choosing equity securities, the Portfolio
managers look for companies of any size whose securities appear to be
discounted relative to earnings, assets, or projected growth. The
Portfolio managers determine value based on research and analysis,
taking all relevant factors into account.
(small solid bullet) 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.
RISK. In addition to risks associated with equity securities,
international investment entails special risk considerations including
currency fluctuations, lower liquidity, economic instability,
political uncertainty, and differences in accounting methods.
POST-VENTURE CAPITAL PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) Post-Venture Capital Portfolio seeks long-term
growth of capital.
(small solid bullet) The Portfolio pursues an aggressive investment
strategy by investing primarily in equity securities of U.S. companies
considered to be in their post-venture capital stage of development.
(small solid bullet) 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. In
addition, the investment of venture capital financing, distribution of
such company's securities to venture capital investors, or initial
public offering ("IPO"), will have been made within ten years prior to
the Portfolio's purchase of the company's securities.
(small solid bullet) Up to 10% of the Portfolio's assets may be
invested in private equity portfolios that invest in venture capital
companies.
(small solid bullet) A portion of the Portfolio's assets may be
invested in assets of companies expected to experience "special
situations," such as mergers or reorganizations.
(small solid bullet) Up to 20% of the Portfolio's assets may be
invested in foreign securities.
RISK. The main risks associated with the portfolio include risks
associated with equity securities, particularly small, start-up and
special-situation companies. The Portfolio employs aggressive
strategies and may not be appropriate for all investors.
SMALL COMPANY GROWTH PORTFOLIO
OBJECTIVE AND STRATEGY
(small solid bullet) The Portfolio seeks capital growth by investing
primarily in equity securities of small sized U.S. companies that
represent attractive opportunities for capital growth.
(small solid bullet) The Portfolio considers a "small" company to be
one that has a market capitalization, measured at the time 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.
Companies that outgrow the definition of small company after the
Portfolio has purchased its securities continue to be considered small
for purposes of the Portfolio's investment policies.
(small solid bullet) Small companies may (1) still be in the
development stage, (2) be older companies that appear to be entering a
new stage of growth, or (3) be companies providing products or
services with a high unit volume growth rate.
(small solid bullet) 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.
(small solid bullet) 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.
(small solid bullet) The Portfolio is non-diversified and may invest a
greater proportion of its assets in the securities of a smaller number
of issuers.
RISK. The Portfolio's main risks are the risks associated with equity
securities, particularly small, start-up, and special-situation
companies. The Portfolio may be subject to volatility resulting from
its non-diversified status.
FUNDS' AVAILABILITY TO OTHER SEPARATE ACCOUNTS
Other separate accounts of FILI and separate accounts of other
insurance companies may also purchase shares of the Funds. For a
discussion of the possible consequences associated with having the
Funds available to other separate accounts, see RESOLVING MATERIAL
CONFLICTS on page .
THE INVESTMENT ADVISERS
FIDELITY
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, 1998, it advised funds having more than
39 million shareholder accounts with a total value of more than $694
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'
expenses. 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 and
Investment Grade Bond Portfolio. 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. BT is a wholly-owned subsidiary of Bankers Trust
Corporation (formerly Bankers Trust New York Corporation). BT
currently serves as sub-adviser and custodian for the Index 500
Portfolio. BT chooses the Index 500 Portfolio's investments and places
orders to buy, sell, and lend the fund's investments.
MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.
The investment Adviser for the Morgan Stanley Dean Witter Universal
Funds, Inc. is Morgan Stanley Dean Witter Investment 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. MSDW
Investment Management, 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. MSDW Investment Management's principal
business office is located at 1221 Avenue of the Americas, New York,
New York 10020.
PBHG
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.
STRONG
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.
WARBURG PINCUS
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."), with 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.
On February 15, 1999, WP & Co. and Credit Suisse Group announced that
they reached an agreement for Credit Suisse Group to acquire Warburg
Pincus. It is expected that Warburg Pincus will be combined with
Credit Suisse Asset Management (New York), the institutional asset
management and mutual fund arm of Credit Suisse Group. As of December
31, 1998, Credit Suisse Asset Management had global assets under
management of $210 billion. Under the terms of the arrangement, no
immediate changes are planned to Warburg's investment portfolio
managers and investment professionals.
IMPORTANT
You will find more complete information about the Funds, including the
risks associated with each portfolio, in their respective
prospectuses. You should read them along with this prospectus.
FACTS ABOUT THE CONTRACT
PURCHASE OF A CONTRACT
We offer the Contracts only in states in which we have obtained
approval. Three types of Contracts are available. You may purchase:
(1) a NON-QUALIFIED CONTRACT using money from any source; (2) a
QUALIFIED CONTRACT with money rolled over from a qualified retirement
plan, such as a 401(k) plan, 403(b) plan or IRA; and (3) through an
arrangement with your employer, a TAX-SHELTERED ANNUITY CONTRACT with
money in a tax-sheltered annuity under section 403(b) of the Code.
(small solid bullet) The minimum Purchase Payment for a Contract is
generally $25,000.
(small solid bullet) 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.
(small solid bullet) 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.
(small solid bullet) 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.
(small solid bullet) Generally, for all Contracts either y o u or
the Joint Annuitant must be no more than 85 years old. To choose the
Withdrawal option e i ther you or the Joint Annuitant must be no
more than 80 y e ars old.
(small solid bullet) APPLICATION AND INITIAL PURCHASE PAYMENT
When we receive your properly completed application, we will apply
your payment to the purchase of a Contract within two Valuation
Periods after receipt at the Annuity Service Center. We will consider
your application 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) we receive the entire amount of your Purchase Payment.
The date we credit the payment and issue your Contract is called the
Contract Date. If your application is incomplete, we will request the
information necessary to complete the application. If you do not
furnish the information within five days of the time we receive your
application, we will return your payment unless we obtain 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, we 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. We will
promptly refund the greater of (1) your Purchase Payment (without
interest), or (2) the amount of your Purchase Payment plus the
investment performance of the Money Market Investment Option.
We will also make an adjustment for the amount of any annuity income
we paid before we received the Contract. This provision may vary by
state where required by applicable state insurance law. ONCE THE FREE
LOOK PERIOD EXPIRES, YOU CANNOT RETURN THE CONTRACT 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 we estimate or calculate 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.
(small solid bullet) EXCHANGES AMONG VARIABLE SUBACCOUNTS
You may currently exchange amounts among the Investment Options as
often as you wish without charge. However, excessive exchange activity
can disrupt Portfolio management strategy and increase Portfolio
expenses, which are borne by everyone participating in the Portfolio
regardless of their exchange activity. Therefore, we reserve the right
to limit the number of exchanges 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 must be in whole
numbers, not fractions.
You may change the allocations among the Investment Options by writing
or telephoning the Annuity Service Center or on our Internet website.
If your instructions are incomplete (e.g. unclear or percentages do
not equal 100%), your payments will be allocated to the VIP Money
Market Portfolio until we receive your complete instructions.
(small solid bullet) TR ADING BY TELEPHONE OR INTERNET
FILI reserves the right to change telephone or Internet exchange
provisions, or to eliminate them, and to limit or reject any telephone
or Internet exchange at any time. You may make up to a combined total
of eighteen telephone/Internet exchanges per calendar year. All
exchanges made on the same day count as one exchange. After this
total is reached, you will only be permitted to complete exchanges in
writing. We will not accept exchange requests via fax.
We will not be responsible for any losses resulting from unauthorized
telephone or Internet exchanges if we follow reasonable procedures
designed to verify the identity of the caller or Internet user. We may
record calls. You should verify the accuracy of your confirmation
statements immediately after you receive them.
(small solid bullet) USE OF MARKET TIMING SERVICES
In some cases, we may sell contracts 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 exchanges among the Subaccounts on the basis of
perceived market trends. Because the large exchange 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 subaccounts may be subject
to modification if such rights are executed by a market timing firm or
similar third party authorized to initiate exchange transactions on
behalf of a Contract Owner(s). In modifying such rights, we may, among
other things, decline to accept (1) the exchange instructions of any
agent acting under a power of attorney on behalf of more than one
Contract Owner, or (2) the exchange instructions of individual
Contract Owners who have executed pre-authorized 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. We will impose such
restrictions only if we believe that doing so will prevent harm to
other Contract Owners.
(small solid bullet) EFFECTIVE DATE OF EXCHANGES AMONG INVESTMENT
OPTIONS
When you exchange among Investment Options, we will redeem shares of
the appropriate Portfolios at their prices as of the end of the
current Valuation Period. Generally, we will credit any Investment
Option you transfer to at the same time.
However, we may wait to credit the amount to a new Investment Option
until an Investment Option you exchange from becomes liquid. This will
happen only if (1) the Investment Option you exchange 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 exchange from is investing in an equity Portfolio in an illiquid
position due to substantial redemptions or exchanges that require it
to sell Portfolio securities in order to make funds available.
The Investment Option you exchange 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 exchange will be
uninvested. After seven days the exchange will be made even if the
Investment Option you exchange from is not liquid.
(small solid bullet) IMPORTANT
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 we make 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, we will deduct any amount needed to provide for the applicable
premium taxes from your Purchase Payment. We will allocate the
remainder of your Purchase Payment to the Investment Options and/or
apply it to the purchase of fixed annuity income.
2. ADMINISTRATIVE CHARGES. Administrative charges compensate us for
the expenses we incur in administering the Contracts. These expenses
include the cost of issuing the Contract, 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. We deduct a daily asset charge
for our assumption of mortality and expense risks. Each day we deduct
an amount 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 149.
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 your
protection (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.
(small solid bullet) FIXED ANNUITY INCOME. Any portion of your
Purchase Payment allocated to fixed annuity income will always remain
allocated to fixed annuity income. 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 146.
(small solid bullet) VARIABLE ANNUITY INCOME. 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 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 146.
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.
(small solid bullet) COMBINATION OF FIXED AND VARIABLE ANNUITY INCOME.
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
decreases upon the death of the Annuitant or Joint Annuitant as
described for Options 3 and 4 under TYPES OF ANNUITY INCOME OPTIONS on
page 146.
BENCHMARK RATE OF RETURN
When you purchase a Contract, we calculate an estimated first annuity
income amount, assuming that the Investment Options will earn the
Benchmark Rate of Return you choose. If the annuali zed Total Return
of the Investment Options is greater than the Benchmark Rate of Return
between the Contract Date and the first Annuity Income Date,
assuming you do not make any withdrawals, 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.
Assuming you do not make any withdrawals, i ncome will increase
from one Annuity Income Date to the next if the annualized Total
Return during that time is greater than the Benchmark Rate of Return
you choose, and will decrease if the annualized Total 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 e xpenses. Mont hly
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FIDELITY INCOME ADVANTAGE
ANNUITY INCOME GRAPH
Current Expenses: 0.96%
Male, Age 65, Life w/ 10 years Updated 2/23/98
5% Benchmark 3.5% Benchmark
First Payment: $654.77 First Payment: $568.54
Net Returns Net Returns
Year -1.95% 5.00% 7.85% Year -1.95% 3.50% 7.85%
1 $652 $656 $658 1 $567 $569 $571
2 $609 $656 $675 2 $537 $569 $595
3 $569 $656 $694 3 $509 $569 $620
4 $531 $656 $713 4 $482 $569 $646
5 $496 $656 $732 5 $456 $569 $674
6 $463 $656 $752 6 $432 $569 $702
7 $432 $656 $772 7 $410 $569 $731
8 $404 $656 $793 8 $388 $569 $762
9 $377 $656 $815 9 $368 $569 $794
10 $352 $656 $837 10 $348 $569 $828
11 $329 $656 $860 11 $330 $569 $862
12 $307 $656 $883 12 $313 $569 $899
13 $287 $656 $907 13 $296 $569 $936
14 $268 $656 $931 14 $281 $569 $976
15 $250 $656 $957 15 $266 $569 $1,017
16 $233 $656 $983 16 $252 $569 $1,059
17 $218 $656 $1,009 17 $238 $569 $1,104
18 $204 $656 $1,037 18 $226 $569 $1,150
19 $190 $656 $1,065 19 $214 $569 $1,199
20 $178 $656 $1,094 20 $203 $569 $1,249
</TABLE>
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.
ANNUITY INCOME INCLUDING WITHDRAWAL OPTIONS
If you have a qualified Contract, you may elect the following
options only if a portion or all of your purchase payment is allocated
to the variable account. Withdrawals are not available for any
allocations to fixed income. The Withdrawal option feature may not be
available in your state.
SINGLE LIFE ANNUITY WITH WITHDRAWAL OPTION . We will provide
annuity income, beginning with the first Annuity Income Date, for as
long as you live unless you surrender your Con t ract. If you
die on or after the first Annuity Income Date and before the end of
the Withd r awal Period, we will provide any remaining
annui t y income to the beneficiary(ies) according to the terms
of the Contract.
JOINT AND SURVIVOR WITH FULL ANNUITY INCO M E TO THE SURVIVOR
WITH WITHDRAWAL OPTION. Assuming you do not surrender your Contract or
make withdrawals, we will provide full annuity income,
beginning with the first Annuity Income Date, while either y o u
or the Joint Annuitant is still liv i ng.
If either you or the Joint Annuitant dies 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 with a Withdrawal
option. If the person who dies (you or the Joint Annuitant) is an
Owner and the survivor is not the deceased Owner's spouse, we will
adjust the Withdrawal Period, as required by law, so that it is not
longer than the life expectancy of the survivor. This may result in a
shorter Withdrawal Period and a higher amount of annuity income. For
any allocations to fixed income, similar adjustments will be made to
the Guarantee Period, if any.
If you and the Joint Annuitant both die on or after the first
Annuity Income Date and before the end of the Withdrawal Period, we
will provide any remaining annuity income or Withdrawal Value to the
Beneficiary(ies) according to the terms of the Contract.
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 forty-five (45). Yo u may
choose a guarantee period for a nnuity income Options 1 through 4.
If you choose an income o p tion with a Withdrawal Option, you
cannot also choose a guarantee period. 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.
(small solid bullet) ANNUITY INCOME TO BENEFICIARY. 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.
(small solid bullet) LUMP SUM PAYMENT. 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.
VARIABLE ANNUITY INCOME PROVISIONS
(THIS SECTION ONLY APPLIES TO VARIABLE ANNUITY INCOME)
WITHDRAWAL (LIQUIDITY) VALUE
If you elect annuity income with a withdrawal option the following
provisions are applicable.
The amount you can withdraw from this Contract at the close of a
Valuation Period is called the Withdrawal Value. There are two parts
to your Withdrawal Value, Part A and Part B. The sum of Part A and
Part B equals your Withdrawal Value.
(small solid bullet) Part A
Part A is based on the portion of your Purchase Payment that
provides variable annuity income during the Withdrawal Period. On the
Contract Date, Part A equals this portion of the Purchase Payment less
any deductions made from this portion for state, federal or local
taxes.
At the end of each subsequent Valuation Period, a new value for
Part A is computed, as follows:
(1) Start with Part A at the close of the prior Valuation
Period.
(2) With respect to each variable Subaccount to which your Contract
is allocated, multiply (1) by the Net Investment Factor for the
applicable Subaccount. Then add the values for each variable
Subaccount together.
(3) If an Annuity Income Date occurs during the Valuation Period,
subtract from (2) an amount equal to the amount of the variable
annuity income payment for that Annuity Income Date.
(4) Subtract from (3) an amount attributable to any withdrawals
made during the Valuation Period. To determine the amount subtracted,
multiply the amount of the withdrawal by a fraction, the numerator of
which is the value of Part A at the close of the current Valuation
Period and the denominator of which is the sum of Part A and Part B at
the close of the current Valuation Period, without regard to the
withdrawal during the Valuation Period.
Part A becomes zero at the end of your Withdrawal Period and
remains zero thereafter.
(small solid bullet) Part B
Part B is based on the remainder of your variable Purchase Payment
and reflects the portion of your Purchase Payment that provides
variable annuity income after the Withdrawal Period. On the Contract
Date, Part B equals this portion of the Purchase Payment less any
deductions made from this portion for state, federal or local
taxes.
At the end of each subsequent Valuation Period, a new value for
Part B is computed, as follows:
(1) Start with Part B at the close of the prior Valuation
Period.
(2) With respect to each variable Subaccount to which your Contract
is allocated, multiply (1) by the Net Investment Factor for the
applicable Subaccount. Then add the values for each variable
Subaccount together.
(3) Subtract from (2) an amount attributable to any withdrawals
made during the Valuation Period. To determine the amount subtracted,
multiply the amount of the withdrawal by a fraction, the numerator of
which is the value of Part B at the close of the current Valuation
Period and the denominator of which is the sum of Part A and Part B at
the close of the current Valuation Period, without regard to the
withdrawal during the Valuation Period.
(4) Multiply (3) by a fraction, the numerator of which is the
percentage factor at the end of the current Valuation Period, and the
denominator of which is the percentage factor at the end of the prior
Valuation Period.
The percentage factor is 100% until one year after your first
Annuity Income Date. The percentage factor then declines daily at a
rate of 25% each year, becoming zero on the fifth anniversary of your
first Annuity Income Date and remaining at zero thereafter. Thus Part
B becomes zero on the fifth anniversary of your first Annuity Income
Date and remains zero thereafter.
(small solid bullet) WITHDRAWAL (LIQUIDITY) PERIOD
Period of time you can take money out of your annuity. The initial
Withdrawal Period will be equal to the life expectancy of the
Annuitant(s). The life expectancy in whole numbers is determined by
IRS guidelines. If no withdrawals are made from your annuity, the
Withdrawal Period will operate as a Guarantee Period. The length of
the Withdrawal Period may shorten if a withdrawal is made five or more
years after your first annuity income date. Withdrawals are only
available for allocations to variable annuity income.
WITHDRAWAL AND SURRENDER PROVISIONS
Partial withdrawals, full withdrawals and surrenders can only be
made from allocations to variable annuity income and cannot be made
from any allocation to fixed income.
(small solid bullet) PARTIAL WITHDRAWALS
You may make partial withdrawals from your Withdrawal Value not
more than twice each calendar year during the Withdrawal Period by
sending a written request to the Annuity Service Center. Any partial
withdrawal must be for at least $500. You may not make a partial
withdrawal which will reduce your variable annuity income below $1,200
per year at the time of the withdrawal.
Prior to the fifth anniversary of the first Annuity Income Date, on
the date of a partial withdrawal, the following will occur:
(a) the amount withdrawn will be subtracted from the Withdrawal
Value; and
(b) all remaining variable annuity income will be reduced in the
same ratio that the amount withdrawn bears to the Withdrawal Value
immediately preceding the withdrawal.
After the fifth anniversary of the first Annuity Income Date, on
the date of a partial withdrawal, the following will occur:
(a) the amount withdrawn will be subtracted from the Withdrawal
Value; and
(b) all remaining variable annuity income will be reduced; and
(c) the Withdrawal Period will be reduced.
The value of the new level of variable annuity income plus the
amount withdrawn will be equivalent to the value of the annuity income
just prior to the withdrawal. These values will be based on the value
of the variable annuity income payable to the annuitant or annuitants
who are still living just prior to the withdrawal and will be
determined by the Company using modified insurance industry mortality
tables.
The Company will allocate partial withdrawals to the Investment
Options of the Variable Account in the same proportion as the value in
each bears to the Withdrawal Value on the date of the partial
withdrawal.
(small solid bullet) FULL WITHDRAWAL
You may take all the money from the Withdrawal Value by sending a
written request to the Annuity Service Center.
Prior to the fifth anniversary of the first Annuity Income Date, on
the date of a full withdrawal, the following will occur:
(a) you wil l no longer receive any variable annuity income
payments; and
(b) the Contract will terminate if your Contract does not provide
fixed income.
After the fifth anniversary of the first Annuity Income Date, on
the date of a full withdrawal, the following will occur:
(a) you will no longer have a Withdrawal Value available; and
(b) the Withdrawal Period will end; and
(c) all remaining variable annuity income will be reduced.
The value of the new level of variable annuity income plus the
amount withdrawn will be equivalent to the value of the variable
annuity income just prior to the withdrawal. These values will be
based on the value of the variable annuity income payable to the
annuitant or annuitants who are still living just prior to the
withdrawal and will be determined by the Company using modified
insurance industry mortality tables.
(small solid bullet) CASH SURRENDER AND SURRENDER VALUE
If you make a full withdrawal at any time prior to the fifth
anniversary of the first Annuity Income Date, your Contract will
terminate if it does not provide fixed income. You will no longer
receive any variable annuity income. The surrender value will be the
Withdrawal Value on the date the Company receives your request for a
full withdrawal and surrender.
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. If you choose the Withdrawal option, we will show your
Withdrawal Value at least once each calendar quarter.
You should verify the accuracy of your transaction confirmations and
monthly statements immediately after you receive them. Information
contained on transaction confirmations and account statements is
conclusive unless you object in writing within five and ten days,
respectively.
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.
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.
In the case of a Contract with a Withdrawal Value that is issued as
an IRA annuity, we believe that the annuity income payments thereunder
should satisfy the minimum distribution requirements under section
401(a)(9) of the Code. However, the application of the minimum
distribution requirements to a Contract with the Withdrawal Value is
unclear. As a result, it is possible that the IRS might determine that
the annuity income payments do not satisfy those requirements. In
addition, we do not know whether the withdrawal of all or a part of
the Withdrawal Value constitutes a minimum required distribution which
cannot be directly transferred to another IRA or rolled over. Due to
this uncertainty, we will not process direct transfers to another IRA
but will instead treat all withdrawals of the Withdrawal Value from
the Contract as distributions for tax reporting and withholding
purposes. Owners should consult a tax advisor before withdrawing an
amount with the intention of rolling it over to another IRA.
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).
(small solid bullet) IMPORTANT. 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.
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, and if an Owner chooses the Withdrawal option, then
also (e) the right to withdraw from the variable portion of the
Contract during the Withdrawal Period and the right to surrender the
variable portion of the Contract within five years from the first
annuity income date.
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.
The Beneficiary (or Beneficiaries) will receive any remaining
Withdrawal Period annuity income if neither you nor the Joint
Annuitant (if any) survives to the end of the Withdrawal Period.
Surviving Beneficiaries will receive equal shares unless you
specify otherwise. If (1) no Beneficiary survives you and the Joint
Annuitant (if any); and (2) the Withdrawal Period or guarantee period
(if any) has not ended; we will provide a lump sum to the estate of
the last to die of you and the Joint Annuitant.
The Beneficiary has choices if you (and the Joint Annuitant, if
any) die before the end of the Withdrawal Period or guarantee period,
if any:
The Beneficiary may choose (a) to continue receiving annuity income
on each remaining Annuity Income Date, or (b) to receive the
Withdrawal Value plus the present value of fixed annuity income (if
any). If a Contract with a withdrawal option is within its first five
years after the first annuity income date, it will typically be more
advantageous for the Beneficiary to choose option (b). 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.
If a Beneficiary receiving annuity income dies, a lump sum will be
provided to the Beneficiary's estate. The fixed annuity income portion
of any lump sum will be the present value of the annuity income for
the remaining guaranteed Annuity Income Dates, discounted at a rate
equal to the rate used to determine annuity income payments. The
variable annuity income portion will be the Withdrawal Value.
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. 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,
the SEC declares that an emergency exists; or (2) the SEC by order
permits postponement for any other reason.
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.
TOTAL RETURN FOR AN INVESTMENT OPTION
The Total Return reflects the investment performance of the Investment
Option, less all expenses and charges, for the Valuation Period. FILI
determines the Total 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 may be 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.
(small solid bullet) 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.
(small solid bullet) A CUMULATIVE TOTAL RETURN reflects performance
over a stated period of time.
(small solid bullet) 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.
(small solid bullet) 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.
(small solid bullet) 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.
APPENDIX - ILLUSTRATIONS OF VALUES
We have prepared the following tables 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 two different
assumptions for a constant investment return before all expenses: 0%
and 12%. 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 Total 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 Contract without a
withdrawal provision and the second is based on a Contract with the
withdrawal provision .
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 0.96% 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FIDELITY INCOME ADVANTAGE
ILLUSTRATION
ANNUITANT: John Doe PURCHASE DATE:
SEX: Male FIRST INCOME DATE:
DATE OF BIRTH: June 15, 1930 FREQUENCY OF INCOME:
INCOME OPTION: Single Life ANNUITY PURCHASE AMOUNT:
GUARANTEE PERIOD: 10 Years SOURCE OF FUNDS:
PURCHASE ALLOCATION: 100% Variable BENCHMARK RATE OF RETURN:
The purpose of this
illustration is to show you
how much your future income
payments could be given a
hypothetical rate of return.
Your actual payments will
depend on the performance of
the investment Portfolios
you choose. You can expect
your income payments to go
up and down and no minimum
dollar amount of income is
guaranteed.
<MONTHLY> ANNUITY INCOME
PROJECTION
Hypothetical 0% Return *
INCOME CUMULATIVE
YEAR AGE DATE PAYMENTS PAYMENTS
1 70 7/15/1999 $721 $721
2 71 7/15/2000 $673 $9,056
3 72 7/15/2001 $628 $16,839
4 73 7/15/2002 $587 $24,107
5 74 7/15/2003 $548 $30,894
6 75 7/15/2004 $512 $37,231
7 76 7/15/2005 $478 $43,149
8 77 7/15/2006 $446 $48,676
9 78 7/15/2007 $417 $53,836
10 79 7/15/2008 $389 $58,655
11 80 7/15/2009 $363 $63,155
12 81 7/15/2010 $339 $67,357
13 82 7/15/2011 $317 $71,281
14 83 7/15/2012 $296 $74,945
15 84 7/15/2013 $276 $78,367
16 85 7/15/2014 $258 $81,562
17 86 7/15/2015 $241 $84,546
18 87 7/15/2016 $225 $87,332
19 88 7/15/2017 $210 $89,934
20 89 7/15/2018 $196 $92,363
21 90 7/15/2019 $183 $94,632
22 91 7/15/2020 $171 $96,750
23 92 7/15/2021 $160 $98,729
24 93 7/15/2022 $149 $100,576
25 94 7/15/2023 $139 $102,301
26 95 7/15/2024 $130 $103,912
* Hypothetical returns are
before all expenses. The
corresponding returns after
expenses are: -1.95% and
9.82%.
$5,652.16 of your annuity
income is tax-free each year
until the total amount of
tax-free income equals the
amount of the investment in
your contract.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
FIDELITY INCOME ADVANTAGE
ILLUSTRATION
ANNUITANT: June 5, 2000
SEX: July 15, 2000
DATE OF BIRTH: Monthly
INCOME OPTION: $100,000
GUARANTEE PERIOD: Non-IRA
PURCHASE ALLOCATION: 5.00%
The purpose of this
illustration is to show you
how much your future income
payments could be given a
hypothetical rate of return.
Your actual payments will
depend on the performance of
the investment Portfolios
you choose. You can expect
your income payments to go
up and down and no minimum
dollar amount of income is
guaranteed.
Hypothetical 12% Return *
INCOME CUMULATIVE
YEAR PAYMENTS PAYMENTS
1 $730 $730
2 $763 $9,702
3 $798 $19,086
4 $835 $28,900
5 $873 $39,164
6 $913 $49,899
7 $955 $61,127
8 $999 $72,869
9 $1,045 $85,150
10 $1,092 $97,994
11 $1,143 $111,427
12 $1,195 $125,476
13 $1,250 $140,170
14 $1,307 $155,537
15 $1,367 $171,609
16 $1,430 $188,419
17 $1,495 $205,999
18 $1,564 $224,385
19 $1,636 $243,615
20 $1,711 $263,727
21 $1,789 $284,760
22 $1,871 $306,759
23 $1,957 $329,767
24 $2,047 $353,830
25 $2,141 $378,996
26 $2,239 $405,316
* Hypothetical returns are
before all expenses. The
corresponding returns after
expenses are: -1.95% and
9.82%.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
age (x-axis) monthly income (y-axis) monthly income (y-axis)
70 $721 $730
71 $673 $763
72 $628 $798
73 $587 $835
74 $548 $873
75 $512 $913
76 $478 $955
77 $446 $999
78 $417 $1,045
79 $389 $1,092
80 $363 $1,143
81 $339 $1,195
82 $317 $1,250
83 $296 $1,307
84 $276 $1,367
85 $258 $1,430
86 $241 $1,495
87 $225 $1,564
88 $210 $1,636
89 $196 $1,711
90 $183 $1,789
91 $171 $1,871
92 $160 $1,957
93 $149 $2,047
94 $139 $2,141
95 $130 $2,239
LONGEVITY INFORMATION <UNDEF>
Assuming you're in good 50% chance of living to age 25% chance of living to age
health and age <70>,
there's a
86 92
= Source: 2000 Individual
Annuitant Mortality table.
This illustration is valid
for money received by June
5, 2000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FIDELITY INCOME ADVANTAGE
ILLUSTRATION
ANNUITANT: John Doe PURCHASE DATE: June 5, 2000
SEX: Male FIRST INCOME DATE: July 15, 2000
DATE OF BIRTH: June 15, 1930 FREQUENCY OF INCOME: Monthly
INCOME OPTION: Single Life ANNUITY PURCHASE AMOUNT: $100,000
PURCHASE ALLOCATION: 100% Variable SOURCE OF FUNDS: IRA/Qualified
BENCHMARK RATE OF RETURN: 5.00%
WITHDRAWAL OPTION: Yes
</TABLE>
The purpose of this
illustration is to show you
how much your future income
payments could be given a
hypothetical rate of return.
Your actual payments will
depend on the performance of
the investment Portfolios
you choose. You can expect
payments to go up and down
and no minimum dollar amount
of income is guaranteed.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
<MONTHLY> ANNUITY INCOME
PROJECTION
Hypothetical 0%
Return *
INCOME CUMULATIVE WITHDRAWAL
YEAR AGE DATE PAYMENTS PAYMENTS VALUE
70 6/5/2000 $100,000
1 70 07/15/2000 $653 $653 $99,784
2 71 07/15/2001 $610 $8,278 $90,312
3 72 07/15/2002 $570 $15,333 $78,527
4 73 07/15/2003 $532 $21,922 $67,494
5 74 07/15/2004 $497 $28,075 $57,161
6 75 07/15/2005 $464 $33,820 $47,498
7 76 07/15/2006 $433 $39,185 $41,219
8 77 07/15/2007 $405 $44,195 $35,430
9 78 07/15/2008 $378 $48,873 $30,084
10 79 07/15/2009 $353 $53,242 $25,151
11 80 07/15/2010 $329 $57,321 $20,602
12 81 07/15/2011 $308 $61,131 $16,410
13 82 07/15/2012 $287 $64,688 $12,550
14 83 07/15/2013 $268 $68,010 $9,000
15 84 07/15/2014 $250 $71,112 $5,739
16 85 07/15/2015 $234 $74,008 $2,745
17 86 07/15/2016 $218 $76,713 $0
18 87 07/15/2017 $204 $79,239 $0
19 88 07/15/2018 $190 $81,598 $0
20 89 07/15/2019 $178 $83,800 $0
21 90 7/15/2020 $166 $85,857 $0
22 91 7/15/2021 $155 $87,777 $0
23 92 7/15/2022 $145 $89,571 $0
24 93 7/15/2023 $135 $91,245 $0
25 94 7/15/2024 $126 $92,809 $0
26 95 7/15/2025 $118 $94,269 $0
* Hypothetical returns are
before all expenses. The
corresponding returns after
expenses are: -1.95% and
9.82%.
Hypothetical
12% Return *
INCOME CUMULATIVE WITHDRAWAL
YEAR AGE DATE PAYMENTS PAYMENTS VALUE
70 6/5/2000 $100,000
1 70 07/15/2000 $662 $662 $101,031
2 71 07/15/2001 $692 $8,870 $102,413
3 72 07/15/2002 $724 $17,376 $99,735
4 73 07/15/2003 $757 $26,274 $96,010
5 74 07/15/2004 $791 $35,579 $91,068
6 75 07/15/2005 $828 $45,310 $84,754
7 76 07/15/2006 $866 $55,489 $82,375
8 77 07/15/2007 $905 $66,134 $79,303
9 78 07/15/2008 $947 $77,267 $75,418
10 79 07/15/2009 $990 $88,911 $70,617
11 80 07/15/2010 $1,036 $101,088 $64,785
12 81 07/15/2011 $1,083 $113,825 $57,795
13 82 07/15/2012 $1,133 $127,145 $49,506
14 83 07/15/2013 $1,185 $141,076 $39,764
15 84 07/15/2014 $1,239 $155,647 $28,396
16 85 07/15/2015 $1,296 $170,885 $15,211
17 86 07/15/2016 $1,356 $186,822 $0
18 87 07/15/2017 $1,418 $203,491 $0
19 88 07/15/2018 $1,483 $220,923 $0
20 89 07/15/2019 $1,551 $239,155 $0
21 90 7/15/2020 $1,622 $258,224 $0
22 91 7/15/2021 $1,696 $278,167 $0
23 92 7/15/2022 $1,774 $299,024 $0
24 93 7/15/2023 $1,855 $320,838 $0
25 94 7/15/2024 $1,941 $343,653 $0
26 95 7/15/2025 $2,030 $367,514 $0
* Hypothetical returns are
before all expenses. The
corresponding returns after
expenses are: -1.95% and
9.82%.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
age (x-axis) monthly income(y-axis) (monthly income y-axis)
70 $662 653.336856
71 $692 610.0896895
72 $724 569.7052383
73 $757 531.994007
74 $791 496.7790437
75 $828 463.8951097
76 $866 433.1879043
77 $905 404.5133404
78 $947 377.7368688
79 $990 352.7328465
80 $1,036 329.3839477
81 $1,083 307.5806126
82 $1,133 287.2205336
83 $1,185 268.2081756
84 $1,239 250.454327
85 $1,296 233.8756817
86 $1,356 218.394448
87 $1,418 203.9379835
88 $1,483 190.4384543
89 $1,551 177.8325169
90 $1,622 166.0610205
91 $1,696 155.0687298
92 $1,774 144.804066
93 $1,855 135.2188643
94 $1,941 126.2681482
95 $2,030 117.9099183
96 $2,123 110.1049555
97 $2,220 102.8166366
98 $2,322 96.01076277
99 $2,428 89.6553989
100 $2,540 83.72072381
LONGEVITY INFORMATION +
Assuming you're in good 50% chance of living to age 25% chance of living to age
health and age
<70>, there's a
86 92
+ Source: 2000 Individual
Annuitant Mortality table.
This illustration is valid
for money received by June
5, 2000.
</TABLE>
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 ten (10) days
of the later of (1) the date of the application for the IRA; or (2)
the date you receive the IRA Contract. A revocation treats an IRA as
if it never existed and entitles you to a full refund of your entire
contribution. FILI will refund the greater of (1) your Purchase
Payment in full, neither crediting your 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 age 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. 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
15. Distributions are taxed generally as ordinary income under Federal
income tax laws.
16. The tax treatment of single sum distributions under Section 402(d)
of the Code is not applicable to distributions from IRAs.
17. 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
18. 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
19. 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.
20. 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 and the other investment
managers . 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.
PART B
INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
FIDELITY INCOME ADVANTAGE
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 2000
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 April 30, 2000, without
charge by calling 1-800-544-2442.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND
SHOULD BE READ TOGETHER WITH THE PROSPECTUS FOR THE CONTRACT.
TABLE OF CONTENTS PAGE
General Information 94
Performance 95
Safekeeping of Variable 100
Account Assets
Distribution of the Contracts 101
State Regulation 101
Legal Matters 101
Registration Statement 101
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.
Investments by the Subaccounts in securities of foreign issuers may
result in a foreign investment tax credit which we will claim on our
federal income tax filings.
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 12/31/98. 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, 1998. The
returns reflect the risk and administrative charge (1% on an annual
basis).
Table 1: Average Annual Total Return for Period Ending on 12/31/98
if contract issued at commencement of Portfolio (which in most cases
it was not).
Investment Option Start Date One Year Five Years Life of Fund
Fidelity
Asset Manager 9/6/89 13.90% 10.69% 11.85%
Money Market 4/1/82 4.41% 4.24% 4.62%*
Investment Grade Bond 12/5/88 7.76% 5.63% 7.27%*
Equity-Income 10/9/86 10.51% 17.59% 14.47%*
Growth 10/9/86 38.10% 20.52% 18.21%*
High Income 9/19/85 (5.29)% 7.71% 9.96%*
Overseas 1/28/87 11.62% 8.60% 7.50%
Index 500 8/27/92 27.04% 22.49% 19.95%
Asset Manager: Growth 1/3/95 16.39% N/A 20.21%
Contrafund 1/3/95 28.68% N/A 27.34%
Growth Opportunities 1/3/95 23.37% N/A 25.00%
Balanced 1/3/95 16.46% N/A 14.71%
Growth & Income 12/30/96 28.29% N/A 27.90%
Morgan Stanley Dean Witter
Emerging Markets Equity 10/1/96 (24.94)% N/A (12.94)%
Emerging Markets Debt 6/16/97 (29.10)% N/A (20.05)%
Global Equity 1/2/97 12.34% N/A 18.19%
International Magnum 1/2/97 7.88% N/A 7.67%
Strong
Discovery Fund II 5/8/92 6.19% 7.89% 10.22%
Opportunity Fund II 5/8/92 12.41% 15.84% 17.86%
Growth Fund II1 12/31/96 27.39% N/A 27.93%
Warburg Pincus
International Equity 6/30/95 4.29% N/A 4.65%
Small Company Growth 9/30/95 (3.82)% N/A 13.23%
Post-Venture Capital 9/30/95 5.44% N/A 6.48%
PBHG
Growth II 5/1/97 7.10% N/A 8.38%
Large Cap Value 10/29/97 36.58% N/A 34.84%
Select 20 9/26/97 60.89% N/A 45.63%
Small Cap Value 10/29/97 9.83% N/A 12.47%
Technology & Communications 5/1/92 30.88% N/A 19.87%
Average Annual Total Return for Period Ending on 12/31/98 from Date
Portfolio Began in Separate Account.
Investment Option Date When Portfolio Began in Life of Fund
Separate Account
Fidelity
Asset Manager 10/4/89 11.78%
Index 500 9/1/92 19.83%
Asset Manager: Growth 1/9/95 20.25%
Contrafund 1/9/95 27.44%
Growth Opportunities 1/3/95 25.00%
Balanced 1/3/95 14.71%
Growth & Income 12/31/96 28.55%
Morgan Stanley Dean Witter
Emerging Markets Equity 11/24/97 (11.78)%
Emerging Markets Debt 11/24/97 (17.55)%
Global Equity 11/24/97 7.32%
International Magnum 11/24/97 3.10%
Strong
Discovery Fund II 11/24/97 .43%
Opportunity Fund II 11/24/97 1.99%
Growth Fund II1 11/24/97 14.25%
Warburg Pincus
International Equity 11/24/97 .87%
Small Company Growth 11/24/97 (.58)%
Post-Venture Capital 11/24/97 3.51%
PBHG
Growth II 11/24/97 5.13%
Large Cap Value 11/24/97 33.30%
Select 20 11/24/97 50.35%
Small Cap Value 11/24/97 12.22%
Technology & Communications 11/24/97 16.55%
* 10 Year Return shown. (The Separate Account inception date is
7/22/87.)
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, 1998. The returns reflect the risk and
administrative charge (1% on an annual basis).
Table 2: Cumulative Total Return for Period Ending on 12/31/98.
Investment Option Start Date One Year Five Years Life of Fund
Fidelity
Asset Manager 9/6/89 13.90% 66.16% 184.11%
Money Market 4/1/82 4.41% 23.07% 57.04%*
Investment Grade Bond 12/5/88 7.76% 31.53% 101.82%*
Equity-Income 10/9/86 10.51% 124.80% 286.25%*
Growth 10/9/86 38.10% 154.29% 432.59%*
High Income 9/19/85 (5.29)% 44.95% 158.51%*
Overseas 1/28/87 11.62% 51.09% 136.29%*
Index 500 8/27/92 27.04% 175.71% 217.35%
Asset Manager: Growth 1/3/95 16.39% N/A 108.64%
Contrafund 1/3/95 28.68% N/A 162.59%
Growth Opportunities 1/3/95 23.37% N/A 143.86%
Balanced 1/3/95 16.46% N/A 73.02%
Growth & Income 12/30/96 28.29% N/A 63.59%
Morgan Stanley Dean Witter
Emerging Markets Debt 6/16/97 (29.10)% N/A (29.19)%
Emerging Markets Equity 10/1/96 (24.94)% N/A (26.79)%
Global Equity 1/2/97 12.34% N/A 39.56%
International Magnum 1/2/97 7.88% N/A 15.89%
PBHG
Growth II 5/1/97 7.10% N/A 14.36%
Technology &
Communications 5/1/92 30.88% N/A 35.31%
Large Cap Value 10/29/97 36.58% N/A 42.09%
Small Cap Value 10/29/97 9.83% N/A 14.81%
Select 20 9/26/97 60.89% N/A 60.94%
Strong
Discovery Fund II 5/8/92 6.19% 46.19% 91.02%
Growth Fund II1 12/31/96 27.39% N/A 63.67%
Opportunity Fund II 5/8/92 12.41% 108.58% 198.35%
Warburg Pincus
International Equity 6/30/95 4.29% N/A 17.30%
Small Company Growth 6/30/95 (3.82)% N/A 54.59%
Post-Venture Capital 6/30/95 5.44% N/A 15.19%
* 10 Year Return shown. (The Separate Account inception date is
7/22/87.)
1 Strong Growth Fund II is currently called Strong Mid Cap Growth Fund
II.
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 12/31/98, the Money Market Investment
Option had a current yield of 4.06% and an effective yield of 4.14%.
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 12/31/98 was 4.56% for the Investment Grade Bond
Investment Option, 9.36% for the High Income Investment Option and
11.94% 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 Investments 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.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a) There are no financial statements associated with this
filing.
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)
(10) Not Applicable.
(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 7)
(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
7)
(15) Powers of Attorney
Powers of Attorney (Note 3)
Powers of Attorney for David C. Weinstein and Stephen
P. Jonas (Note 6)
(Note 1) Incorporated by reference from 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 herein.
(Note 3) Incorporated by reference from Post-Effective Amendment No.
10 to Registration Statement 33-24400 filed on April 26, 1996.
(Note 4) Incorporated by reference from Post-Effective Amendment No.
4 to Registration Statement 33-54926 filed April 25, 1997.
(Note 5) Incorporated by reference from 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.
(Note 6) Incorporated by reference from Post-Effective Amendment No.
16 to this Registration Statement filed on January 25, 1999.
(Note 7) Incorporated by reference from Post-Effective Amendment No.
13 to Registration Statement No. 33-24400 filed on April 29, 1998.
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
STEPHEN P. JONAS, Director
DAVID C. WEINSTEIN, 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
MELANIE CALZETTI-SPAHR, Executive Vice President, Operations
The principal business address of all persons listed in Item 25 is 82
Devonshire Street, Boston, Massachusetts 02109.
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, 1998, there were 7,489 Qualified Contracts and
105,462 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:
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.
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
Thomas G. McNichols Vice President, Operations
Lawrence G. Smith Vice President
(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.
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.
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. 8 to the Registration
Statement to be signed on its behalf in the city of Boston and the
Commonwealth of Massachusetts, on this 10th day of February, 2000.
FIDELITY INVESTMENTS VARIABLE ANNUITY ACCOUNT I
(Registrant)
By: FIDELITY INVESTMENTS LIFE INSURANCE COMPANY
(Depositor)
By: /s/ Rodney R. Rohda Attest: /s/ David J. Pearlman
Rodney R. Rohda, David J. Pearlman,
President, Chairman, Secretary
Chief Operating Officer and
Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities
indicated on this 10th day of February, 2000.
Signature Title
/s/Rodney R. Rohda President, Chairman and Director
Rodney R. Rohda (Chief Executive Officer)
(Chief Operating Officer)
________________ )
Joseph L. Kurtzer Jr. Treasurer )
)
________________ )
Edward C. Johnson 3d Director )
)
________________ )
J. Gary Burkhead Director ) By: /s/ David J. Pearlman
) David J. Pearlman
_________________ ) (Attorney-in-Fact)
James C. Curvey Director )
)
_________________ )
John J. Remondi Director )
)
_________________ )
David C. Weinstein Director )
)
_________________ )
Stephen P. Jonas Director )
EXHIBIT INDEX
Exhibit
(9) Opinion and consent of David J. Pearlman,
as to the legality of securities being issued.
FIDELITY (LOGO) FMR Corp. 82 Devonshire
INVESTMENTS(registered Street Boston MA 02109-3614
trademark) 617 563 7000
February 10, 2000
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. 8 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
